Form of National Bank Holdings Corporation 2014 Omnibus Incentive Plan Performance Stock Unit Award Agreement (ROTA) (For Management
2014 Omnibus Incentive Plan
rota PERFORMANCE Stock UNIT Award Agreement
THIS PERFORMANCE STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated as of [_________] (the “Date of Grant”), is made by and between National Bank Holdings Corporation, a Delaware corporation (“NBHC”), and [______________] (“Participant”). Capitalized terms used herein without definition have the meanings ascribed to such terms in the National Bank Holdings Corporation 2014 Omnibus Incentive Plan (the “Plan”).
WHEREAS, NBHC has adopted the Plan to provide NBHC officers, employees, directors, and consultants an opportunity to participate in NBHC’s future performance and align the interests of such officers, employees, directors, and consultants with those of the shareholders of NBHC; and
WHEREAS, the Committee has determined that it would be in the best interests of NBHC and its shareholders to grant Participant a number of performance vesting Restricted Stock Units on the terms and subject to the conditions set forth in this Agreement and the Plan.
NOW THEREFORE, in consideration of the premises and the covenants of the parties contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:
|(b)||Determination of Earned PSUs and Vesting and Settlement in Connection with a Change in Control.|
|(i)||Determination of Earned PSUs. Notwithstanding anything in the Plan, effective as of immediately prior to a Change in Control, subject to the occurrence of such Change in Control, the number of Earned PSUs shall be established by the Committee based on the greater of the ROTA Target Number and the level of achievement of actual performance as determined through the latest practicable date prior to such Change in Control (as determined by the Committee in its sole discretion).|
|(ii)||Vesting and Settlement of Earned PSUs. The Earned PSUs shall be settled within five days following the occurrence of such Change in Control, unless a replacement or substitute award meeting the requirements of this Section 2(b)(ii) is provided to Participant in respect of the Earned PSUs (an award meeting the requirements of this Section 2(b)(ii), a “Replacement Award”). An award shall qualify as a Replacement Award if: (A) it is a restricted stock unit with respect to a publicly traded equity security of NBHC or the surviving corporation or the ultimate parent of the applicable entity following the Change in Control, (B) it has a fair market value at least equal to the value of the Earned PSUs established pursuant to Section 2(b)(i) as of the date of the Change in Control, (C) it contains terms relating to service-based vesting (including with respect to Termination of Employment) that are substantially identical to the terms set forth in this Agreement and does not contain any terms related to performance-based vesting, and (D) its other terms and conditions are not less favorable to Participant than the terms and conditions set forth in this Agreement or in the Plan (including provisions that apply in the event of a subsequent Change in Control) as of the date of the Change in Control. The determination of whether the conditions of this Section 2(b)(ii) are satisfied shall be made by the Committee, as constituted immediately prior to the Change in Control, in its sole discretion, prior to a Change in Control. If a Replacement Award is provided, the Earned PSUs shall not be settled upon a Change in Control in accordance with the first sentence of this Section 2(b)(ii).|
|(iii)||Replacement Award. If, in connection with a Change in Control, Participant is provided with a Replacement Award, such Replacement Award shall vest on the Vesting Date and be settled at the time provided in Section 2(a), subject to Participant having not incurred a Termination of Employment prior to the Vesting Date; provided that, if, within two years following such Change in Control, Participant incurs a Termination of Employment without Cause, due to Participant’s resignation with Good Reason (as defined in Section 7(b)), or due to Participant’s death or Disability, then the Replacement Award shall become fully vested effective as of the date of Termination of Employment, and NBHC shall issue one Share to Participant for each Replacement Award as soon as reasonably practicable, and in no event more than ten days, following the date of Termination of Employment.|
|(c)||Other Terminations of Employment. If Participant incurs a Termination of Employment prior to a Change in Control or under circumstances other than those set forth in Section 2(b)(ii) as applicable to a Replacement Award, any unvested PSUs shall be forfeited by Participant without consideration effective as of the date of Termination of Employment.|
|7.||Certain Definitions and Administration.|
|(b)||“Good Reason” shall have the meaning given to such term in an Individual Agreement, or if there is no such Individual Agreement or if it does not define Good Reason, then, Good Reason shall mean the occurrence of the following, in the absence of Participant’s written consent:|
|(i)||a material diminution in Participant’s annual base salary from that in effect immediately prior to a Change in Control; or|
|(ii)||the assignment to Participant of any duties materially inconsistent with Participant’s positions (including status, offices, titles, and reporting requirements), authority, duties, or responsibilities, or any other action by NBHC that results in a material diminution in such positions, authority, duties, or responsibilities, in each case, from those in effect immediately prior to a Change in Control;|
provided that, in each case, (A) Participant provides written notice to NBHC of the existence of one or more of the conditions described in clauses (i) through (ii) within 30 days following Participant’s knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason; (B) NBHC and its Affiliates fail to cure such event or condition within 30 days following the receipt of such notice; and (C) Participant incurs a Termination of Employment within 30 days following the expiration of such cure period.
|(a)||If the Company is required to prepare an accounting restatement due to material noncompliance of the Company in connection with any financial reporting requirement under the federal securities laws as a result of Participant’s misconduct, the Committee may require Participant to forfeit unvested PSUs and dividend equivalents, and/or to reimburse the Company for all Shares and amounts received under this Agreement from the Company during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying such financial reporting requirement, and any amounts received with respect to, or amounts realized|
|upon the settlement of the PSUs or the subsequent sale of the Shares that were issued upon settlement of the PSUs or the cancellation of the PSUs during that 12-month period;|
|(b)||If the Committee shall determine that Participant has engaged in a serious breach of conduct, the Committee may require Participant to forfeit unvested PSUs, may terminate this Agreement and/or require Participant to repay any amounts realized upon the settlement of the PSUs or on the subsequent sale of the Shares that were issued upon settlement of the PSUs or the cancellation of the PSUs; and|
|(c)||If Participant is found guilty of misconduct by any judicial or administrative authority in connection with any (i) formal investigation by the Securities and Exchange Commission or (ii) other federal or state regulatory investigation, then the Committee may require Participant to forfeit unvested PSUs and/or may require the repayment of any amounts realized upon the settlement of the PSUs or on the subsequent sale of the Shares that were issued upon settlement of the PSUs or the cancellation of the PSUs without regard to the timing of the determination of misconduct in relation to the timing of the settlement of the PSU or sale of Shares issued pursuant to the PSU.|
The foregoing provisions of this Section 8 shall cease to apply following a Change in Control, except as otherwise required by applicable law.
|(a)||Confidentiality of this Agreement. Participant agrees to keep confidential the terms of this Agreement, unless and until such terms have been disclosed publicly other than through a breach by Participant of this covenant. This provision does not prohibit Participant from providing this information on a confidential and privileged basis to Participant’s attorneys or accountants for purposes of obtaining legal or tax advice or as otherwise required by law.|
|(b)||Restrictive Covenants. The grant, vesting, and settlement of the PSUs pursuant to this Agreement shall be in partial consideration for, and subject to Participant’s continued compliance with, (i) any restrictive covenants set forth in an Individual Agreement or (ii) if there are no confidentiality and/or non-solicitation provisions in an Individual Agreement, the restrictive covenants as set forth in Annex B hereto. For the avoidance of doubt, if there are confidentiality and/or non-solicitation provisions in an Individual Agreement, the restrictive covenants in the Individual Agreement shall govern.|
|(c)||Section 409A of the Code. It is intended that the Awards granted pursuant to this Agreement and the provisions of this Agreement be exempt from or comply with Section 409A of the Code, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with Section 11(e) of the Plan and the requirements for avoiding taxes or penalties under Section 409A of the Code.|
|(d)||Waiver and Amendment. The Committee may waive any conditions or rights under, or amend any terms of, this Agreement and the PSUs granted hereunder; provided that any such waiver or amendment that would impair the rights of any Participant or any holder or beneficiary of any PSUs heretofore granted shall not to that extent be effective without the consent of Participant. No waiver of any right hereunder by any party shall operate as a waiver of any other right, or as a waiver of the same right with respect to any subsequent occasion for its exercise, or as a waiver of any right to damages. No waiver by any party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation of the same breach.|
|(e)||Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, email, courier service or personal delivery:|
if to NBHC to:
National Bank Holdings Corporation
7800 East Orchard Road, Suite 300
Greenwood Village, CO 80111
Attention: General Counsel
if to Participant: at the address last on the records of NBHC.
All such notices, demands and other communications shall be deemed to have been duly given (i) when delivered by hand, if personally delivered; (ii) when delivered by courier, if delivered by commercial courier service; (iii) five business days after being deposited in the mail, postage prepaid, if mailed; and (iv) when receipt is acknowledged, if by email.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
NATIONAL BANK HOLDINGS CORPORATION
[Signature Page to PSU Award Agreement]
For purposes of this Agreement, the following terms have the meanings ascribed thereto below:
“Adjusted Relative ROTA Factor” shall mean (a) if NBHC’s ROTA for any calendar year during the Measurement Period is less than zero, then the lesser of (i) the Relative ROTA Factor and (ii) 1.000; and (b) if NBHC’s ROTA for each calendar year during the Measurement Period is equal to or greater than zero, then the Relative ROTA Factor.
“Earned PSUs” shall mean the product of (a) the ROTA Target Number multiplied by (b) the Adjusted Relative ROTA Factor (such product shall be rounded to the nearest whole number).
“Measurement Period” shall mean the period commencing on January 1, 20[__] and ending on December 31, 20[end of 3rd fiscal year from commencement date].
“Relative ROTA” shall mean the percentile ranking of NBHC’s ROTA among the ROTAs for the companies included in the KBW Regional Banking Index for each respective calendar year of the Measurement Period, calculated by determining the quotient of (a) the sum of each of NBHC’s ROTA percentile rankings at the end of each calendar year during the Measurement Period divided by (b) three (3) provided that the Committee may, in its sole discretion, exclude from the KBW Regional Banking Index a company that has not implemented the Current Expected Credit Losses accounting standard (“CECL”) at any point during the Measurement Period, even if such company subsequently implements CECL during the Measurement Period. Notwithstanding the foregoing, in the event of a Change of Control prior to the final determination of Relative ROTA for the Measurement Period, the determination of Relative ROTA will be made by the Committee as contemplated by Section 2(b)(i) based on information that is publicly available with respect to the portion of the Measurement Period completed (including calendar quarters, if practicable) prior to the Change in Control and as of the date of the Committee’s determination, and the Measurement Period shall end.
“Relative ROTA Factor” shall mean the factor determined and certified by the Committee based on Relative ROTA for the Measurement Period as follows:
Linear interpolation shall be used between the applicable Relative ROTA targets set forth above. In no event will the Relative ROTA Factor exceed 1.500.
“ROTA” shall mean a company’s return on tangible assets and shall mean, as of any date, a company’s ratio of (i) consolidated net income plus intangible amortization expense (net of taxes using the marginal federal tax rate in effect at the time of calculation) for the four completed calendar quarters for the relevant calendar year (including the calendar quarter ending December 31 of such year) to (ii) the average assets of the company, excluding all assets that would be classified as intangible assets (such as goodwill) on the company’s consolidated balance sheet, averaged for the four completed calendar quarters for the relevant calendar year (including the calendar quarter ending December 31 of such year). ROTA shall be calculated utilizing the data (including the applicable tax rate) provided through the SNL Financial Database (or its qualified successor) for all companies in the KBW Regional Banking Index for the applicable calendar year of the Measurement Period. Notwithstanding the foregoing, the Committee shall have the discretion to adjust net income for one-time expenses related to mergers and acquisitions as reported in the public filings with the Securities and Exchange Commission, as applicable.
Notwithstanding the above confidentiality provisions, nothing in this Agreement, in any other agreement, or in the Company’s policies should be interpreted as prohibiting Participant from: (1) reporting possible violations of federal law or regulations, including any securities laws violations, to any governmental agency or entity, including but not limited to the Department of Justice, the U.S. Securities & Exchange Commission, the U.S. Congress, or any agency Inspector General; (2) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; or (3) otherwise fully participating in any federal whistleblower programs.
Please refer to the NBHC Associate Handbook, a copy of which is available upon request, regarding Participant’s rights related to the disclosure of the Company’s trade secrets.