Document:

Exhibit 10.1

PORTER BANCORP, INC.

NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PROGRAM

1.            PURPOSE

This Non-Employee Director Stock Incentive Program (this “Program”) is established by the Board of Directors pursuant to the authority granted under Section 3 of the Porter Bancorp 2016 Stock Option and Incentive Compensation Plan.

The purpose of this Program is to advance the interests of Porter Bancorp, Inc. ("Company") and its subsidiaries, by providing non-employee directors of the Company and its principal subsidiary, PBI Bank, Inc. with an ownership interest in the Company.  This Program is also intended to enhance the Company's ability to attract and retain persons of outstanding ability to serve as directors of the Company and the Bank.

2.            DEFINITIONS AND CONSTRUCTION

2.1            Definitions.  Capitalized terms not defined in this Program shall have the meanings set forth in the Plan.  In addition, as used in this Program, terms defined parenthetically immediately after their use shall have the respective meanings provided by such definitions, and the terms set forth below shall have the following meanings:

(a)            “2006 Director Plan” shall mean the Porter Bancorp, Inc. Non-Employee Director Stock Incentive Plan (as amended and restated as of March 26, 2014).

(b)            "Award" or "Restricted Stock Award" shall mean a Stock Award of Restricted Stock under Section 9 of the Plan.

(c)            "Award Date" shall mean the first business day of the first calendar month after the date of the Company’s annual meeting of shareholders.

(d)            "Director" shall mean a member of the board of directors of the Company who is not an employee of the Company or the Bank.

(e)            "Plan" shall mean the Porter Bancorp 2016 Omnibus Equity Compensation Plan, as it may be amended from time to time.

(f)            "Restriction Period" shall mean the period of time from the Grant Date of a Restricted Stock Award to the date when the restrictions placed on the Award in the Award Agreement lapse.

(g)            "Restricted Stock" shall mean Company Stock awarded under Section 9 of the Plan, subject to a Restriction Period and/or condition which, if not satisfied, may result in the complete or partial forfeiture of such Company Stock.

2.2            Construction.  Awards granted under this Program shall be granted pursuant to the Plan, and any terms or conditions not addressed by this Program shall be governed by the terms of the Plan.

3.            ADMINISTRATION

The Plan is designed to operate automatically and not require administration.  However, to the extent administration is required, it shall be administered by the Board of Directors in accordance with Section 3 of the Plan.  The Board may delegate its authority to the extent permitted by law, the Plan, Rule 16b-3 promulgated under the Exchange Act, and the rules of the NASDAQ Stock Market.

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4.            AWARDS

4.1            Automatic Grant of Awards.  Subject to the terms and provisions of this Program:

(a)            No Restricted Stock shall be awarded under this Program on any Award Date on which a Director receives the full amount of an award to which the Director was entitled under the 2006 Director Plan.

(b)            On the first Award Date on which insufficient shares remain available for issuance under the 2006 Director Plan to award the full amount of the Awards to which Directors are entitled under the 2006 Director Plan, each Director shall automatically receive a Restricted Stock Award equal to $25,000 divided by the Fair Market Value on the Award Date, less the number of Shares received as a Restricted Stock Award under the 2006 Director Plan on the Award Date; and

(c)            On each Award Date thereafter, each Director shall automatically receive a Restricted Stock Award equal to $25,000 divided by the Fair Market Value on the Award Date.

(d)            This Program shall serve as the written statement of the terms and conditions of Restricted Stock Awards contemplated by Section 4 of the Plan, and no separate Grant Agreement shall be required.

4.2          Expiration of Restriction Period.  Subject to acceleration of vesting, as provided in Section __ below, the Restriction Period for each Award shall end, and the Award shall vest in its entirety on December 31 of the calendar year in which the Award Date occurs; provided, however, that the Director continues to serve in such capacity as of the applicable vesting date.  At the expiration of the Restriction Period, the Company shall deliver any certificates evidencing the Stock to the Director.

4.3            Rights and Limitations During Restriction Period.  Subject to the terms and conditions of the Award Agreement, a Director to whom Restricted Stock has been awarded shall have the right to receive dividends thereon during the Restricted Period and to enjoy all other stockholder rights with respect thereto, except that (i) the Company shall retain custody of any certificates evidencing the Restricted Stock during the Restricted Period, and (ii) the Director may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Restricted Stock during the Restricted Period.

4.4            Acceleration of Vesting.  The Restriction Period for Restricted Stock shall immediately end upon a Director’s death or Disability, or in the event of a Change of Control.

4.5            Termination of Service.  If a Director's service ends during the Restriction Period for any reason other than death, Disability, or a Change of Control, the Director's rights to the Shares subject to the Restricted Stock Award shall be forfeited and all such Shares shall immediately be surrendered to the Company.

4.6            Restriction on Transfer.  No Restricted Stock Award shall be transferable other than by will or the laws of descent and distribution until the Restriction Period shall have ended and a certificate evidencing the Director's ownership of the Company Stock free of restrictions has been issued. Any attempt by a Director to sell, transfer, pledge, assign or otherwise dispose of Restricted Stock during the Restriction Period shall cause immediate forfeiture of the Award.

5.            AMENDMENT, MODIFICATION, AND TERMINATION.

The Board may amend, modify or terminate this Program at any time.  No amendment, modification or termination of this Program or the Plan shall in any manner adversely affect any outstanding Restricted Stock Award without the written consent of the Director.

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7Exhibit 10.3

 

PORTER BANCORP, INC.

2016 OMNIBUS EQUITY COMPENSATION PLAN

Restricted Stock Award Agreement 

Porter Bancorp, Inc. ("Porter") grants as of [          ] (the "Grant Date") to [          ] (the "Employee" or "you") the number of common shares of Porter set forth below under the Porter Bancorp, Inc. 2016 Omnibus Equity Compensation Plan (the "Plan").  A copy of the Plan is attached, and any capitalized terms used but not defined in this Agreement shall have the meaning given them in the Plan.

Grant of Award.  Subject to the terms and conditions of this Agreement and the Plan, Porter hereby grants to you a Restricted Stock Award in the amount of [          ] shares (the "Restricted Shares").   Your Restricted Shares will be issued to you after you sign this Agreement, but are subject to forfeiture if you terminate employment with Porter or PBI Bank.

Restriction Period. The Restricted Shares vest at the rate of 1/3rd each one-year anniversary of the Grant Date stated above, provided you are still employed by PBI Bank, Porter's subsidiary, at the vesting date.  However, your Restricted Shares will become 100% vested if there is a Change in Control of Porter, as defined in the Plan, or in the event of your death or Disability, as defined in the Plan.

Taxation of Award.   Your Restricted Shares will be taxable when they vest, at the value on the vesting date.  See the attachment to this Agreement explaining your option to include the value of the Restricted Shares in income within 30 days of the Grant Date.  You may only choose this option if you make arrangements satisfactory to Porter to pay the required withholding taxes due now if the election is made.   Check below if you wish to make this election:

___    I elect to make an 83(b) tax election to include the value of Shares granted to me in income now.

Transfer Restrictions. Until such time as the Restricted Shares become vested in accordance with schedule set forth above, the Restricted Shares shall not be transferred, pledged or disposed of except by will or the laws of descent and distribution, and are subject to forfeiture in accordance with this Agreement and the Plan.  

Acknowledgments.   By signing below, you acknowledge that you have received a copy of the Plan, and you hereby accept the Restricted Shares subject to all the terms and provisions of the Plan.  Nothing contained in the Plan or this Agreement shall give you any rights to continued employment by PBI Bank or interfere in any way with the right of  Porter or the bank to terminate your employment or change your compensation at any time.

You also further agree by signing below that, should you leave employment of the Company, you will not for a period of one-year from the date of your departure, without the prior written consent of the Company, (i) solicit for employment any of the employees of the Bank; or (ii) solicit any customer or borrower of the Bank.

 

	
 

	
 

	 	
PORTER BANCORP, INC.

	
 

	
 

	 	
 

	
 

	
 

	
 

	
 

	 	
 

	
 

	
 

	
 

	
 

	 	
By:

	
 

	
 

	
Employee

	 	
 

	
 

	
 

	 	 	 	 	 	 
	Date: 	 	 	Date:	 	 
	
 

	
 

	 	
 

	
 

	
 

Important Information About Section 83(b) Election

to Include Value of Restricted Stock Grant in Income at Grant Date:

As a recipient of a restricted stock grant under the Porter Bancorp, Inc. 2016 Omnibus Equity Compensation Plan, you may make an election (called an "83(b) election") to recognize compensation income when the stock is granted, even though the stock is then subject to a risk of forfeiture (vesting).    Making an 83(b) election causes current taxation of the fair market value of the stock granted, and withholding taxes are immediately due.  If you make an 83(b) election, you must make arrangements satisfactory to Porter to pay those withholding taxes now.

By making an 83(b) election, any later appreciation in the stock will be taxed as capital gain income, and your holding period for capital gain purposes will begin on the date of taxation.  An 83(b) election must be made, if at all, within 30 days after the transfer of the stock to you.

The downside of making an 83(b) election is that the election is generally irrevocable.  Also, if you forfeit the stock, you may not receive any deduction for the amount previously included in income.

To the extent an 83(b) election is not made, Porter will be treated as the owner of the stock that continues to be subject to restriction for tax purposes, so any dividends will be treated as compensation paid to you by Porter, and will therefore be subject to withholding and FICA and Medicare taxes.

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ELECTION TO INCLUDE VALUE

OF RESTRICTED STOCK AWARD IN GROSS INCOME

 PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE

__________________________ [insert date]

The undersigned hereby elects, under IRC Section 83(b) to include in gross income, as compensation for services, the excess of the fair market value at the time of transfer of the property described below over the amount paid for such property.

The following information is supplied in accordance with Treasury Regulation §1.83-2(e):

1.            The name, address and social security number of the undersigned:

Name: __________________________

Address: ________________________________________________

________________________________________________________

_________________________________________________________

SSN: __________________________________

2.            The property with respect to which the election is being made is non-voting common stock of Porter Bancorp, Inc.

3.            The property was transferred on _____________________________ [insert date].  The taxable year for which election is made is calendar year 20____.

4.            The nature of the restrictions or risks of forfeiture to which the property is subject is that if the undersigned ceases to be employed by Porter Bancorp or its subsidiary, the unvested portion of the undersigned's restricted stock will be forfeited.   The undersigned vests in the property at the rate of 1/3 on each anniversary of the grant date or upon a change in control as defined in the Restricted Stock Grant Plan.

5.            The fair market value of property at the time of transfer (determined without regard to any lapse restriction) was $_____________.

6.            The taxpayer received the property solely for the performance of services.

7.            Copies of this statement have been have been furnished, as required by Reg 1.83-2(d), to Porter Bancorp, Inc. and its subsidiary for which the services were performed.

                                                                 ___________________________________

Instructions for Filing:   File this statement within 30 days from the Grant Date with IRS at the address you will use to file your 1040 for the tax year involved as stated in item 3 above, AND file it with your tax return for that year

 

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