Exhibit 10.1
COMMUNITY BANK SHARES OF INDIANA, INC.
PERFORMANCE UNITS PLAN
1. Purpose. The Performance Units Plan (the "Plan") of Community
Bank Shares of
Indiana, Inc. ("Company") is designed to provide long-term
incentive
compensation for employees. Its purpose is to benefit the Company
by increasing
motivation on the part of its personnel in key positions who are
materially
important to the development of the Company's business. The Plan
will create an
incentive for them to remain in the employ of the Company and to
work to the
very best of their abilities for the achievement of the Company's
strategic
growth objectives. This purpose is intended to be accomplished
under the Plan by
granting Performance Units ("Performance Units") to such key
personnel (in
addition to their annual cash compensation, including bonus) which,
if
performance objectives and/or service requirements with the Company
are
achieved, will permit them to share in the Company's success.
2. Participants. Participants in the Plan ("Participants") shall be
full time
employees of the Company, its subsidiaries or any subsidiary of
its
subsidiaries, who may, but need not be, officers of the Company or
of its
subsidiaries or divisions, who are determined by the Compensation
Committee (the
"Committee") of the Board of Directors (the "Board") of the
Company, in its
discretion, to be personnel important to the growth of the Company,
and to whom
the Committee shall make any award under the Plan. Participants in
the Plan are
required to sign an Acceptance of Award form which contains, among
other things,
such non-competition/non-solicitation covenants as the Committee in
its
discretion may determine from time to time.
3. Performance Units; Company Shares. The total number of
Performance Units
available under the Plan shall be 250,000 Performance Units. In the
event any
award of Performance Units is cancelled on account of termination
of a
Participant's employment, failure to meet performance objectives,
or for any
other reason, the Committee may again award the Performance Units
canceled to an
existing or new Participant.
The total number of shares of Company common stock ("Shares") that
may be issued
in payment of Performance Units awarded under the Plan shall be
250,000 Shares
as presently constituted. This number shall be adjusted to reflect
subsequent
stock dividends, stock splits, spin-offs, spin-outs, reverse stock
splits and
similar matters affecting outstanding Shares. Shares not exceeding
this number
may be issued in payment of Performance Units awarded under the
Plan at the
discretion of the Committee.
4. Performance Period. The Committee in its discretion may award
none, all, or
any part of the Performance Units covered by the Plan as
Performance Units.
Performance objectives may be established from time to time by the
Committee.
Performance objectives need not be the same in respect to all
Participants and
may be established separately for the Company as a whole or for its
various
groups, divisions and subsidiaries, all as the Committee may
determine, in its
discretion. The performance objectives may include growth in the
Company's
earnings per share or net income, increases in the assets or
profitability of a
division or subsidiary or any other growth measure the Committee
may adopt.
Except as provided in Section 11, the performance
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period over which achievement of any performance objective shall be
determined
shall not be less than two years or more than four years. The
performance period
over which achievement of any performance objective is determined
may include
the fiscal year during which the Performance Unit to which the
performance
objective relates is awarded.
Awards of Performance Units may be conditioned on the Participant's
continued
employment by the Company or a subsidiary over the performance
period or in any
other manner the Committee may determine.
Any award of Performance Units prior to the date this Plan is
approved or
ratified by shareholders of the Company shall be contingent on the
approval or
ratification of this Plan by the shareholders of the Company, as
contemplated by
Section 15.
5. Performance Unit Awards. Performance Unit Awards shall be made
pursuant to
performance programs as follows:
(a) Performance Programs; Initial Grants. After the approval of
this Plan by the
Board, and subject to approval or ratification of this Plan by
shareholders, the
Committee shall establish one or more performance programs each
with a specified
objective or objectives and a specified performance period over
which the
specified objective is targeted for achievement. Participants may
be awarded
Units in any one or more of the performance programs. Initial
awards in any
program shall be made to such number of Participants as then
determined by the
Committee. In making its determination of who shall be Participants
in any
performance program, the Committee shall take into account such
factors as the
Participants' level of responsibility, job performance, potential
for growth,
level and types of compensation and such other factors as the
Committee deems
relevant.
(b) Subsequent Awards. During the term of the Plan, additional
Performance Units
may be awarded (subject to the maximum number provided for above)
in the
discretion of the Committee, either (i) to new Participants in the
Plan or (ii)
if the Committee determines circumstances of significant promotion
or additional
responsibility so warrant, to any one or more of the initial
Participants in the
Plan. In respect of such additional awards, the Committee may make
such
adjustments therein as it may deem reasonable on account of any
lesser period of
participation in the program by the holder of any subsequent
award.
(c) Notice of Awards. Upon the making of any award by the
Committee, the
Participant shall be advised of the number of Performance Units
awarded and of
the terms of the award. An award to a Participant shall not be
effective until
the Participant delivers to the Company an executed written
Acceptance of Award,
in such form as the Committee determines, to evidence the
Participant's
acceptance of such award and agreement to be bound by the terms and
conditions
of the award and this Plan.
6. Performance Unit Payment. Subject to Section 15, a holder of
Performance
Units shall be entitled to receive, if the applicable targeted
performance
objective is met, an amount equal to the market value of one Share
on the date
of the expiration of the applicable performance period multiplied
by the number
of Performance Units awarded. For the purposes hereof market
value
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as of any date shall be the value as of said date as reasonably
determined by
the Committee based on market activity.
Notwithstanding the provisions of the foregoing paragraph, the
Committee in its
discretion may establish at the time it establishes the targeted
performance
objective, a minimum performance target and may provide for payment
on a reduced
scale if the targeted performance objective is not achieved but the
minimum
performance target is met or exceeded. Similarly, the Committee in
its
discretion may establish at the time it establishes the targeted
performance
objective enhanced performance objective(s) and may provide for
payment on an
increased scale to the extent both the targeted and enhanced
performance
objectives are exceeded subject, however, to the limitation herein
on the
maximum number of Units and Shares covered by this Plan.
Payment amounts for Performance Units will be in the form of
Shares, except that
the Committee may, in its discretion, authorize payment in
