Exhibit 10(III)
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE AGREEMENT AMONG
PARKVALE FINANCIAL CORPORATION, PARKVALE
SAVINGS BANK AND XXXX X. XXXXXX
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT was originally made effective as
of the 23rd day of February 2005 (the "Effective Date"), and is hereby amended
and restated as of December 15, 2005, among Parkvale Financial Corporation, a
Pennsylvania corporation (the "Corporation"), Parkvale Savings Bank, a
Pennsylvania-chartered stock savings bank and a wholly owned subsidiary of the
Corporation (the "Bank"), and Xxxx X. Xxxxxx (the "Executive"). The Corporation
and the Bank, including any successors to the Corporation or the Bank by merger
or otherwise, are collectively referred to as the "Employers".
WITNESSETH
WHEREAS, the Executive is presently an officer of each of the Employers;
WHEREAS, the Employers desire to be ensured of the Executive's continued
active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that her employment with the
Employers is terminated under specified circumstances;
NOW THEREFORE, intending to be legally bound hereby and in consideration of
the mutual agreements herein contained, and upon the other terms and conditions
hereinafter provided, the parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the meanings set
forth below for the purposes of this Agreement:
(a) ANNUAL COMPENSATION. The Executive's "Annual Compensation" for purposes
of this Agreement shall be deemed to mean the highest level of aggregate base
salary and cash incentive compensation paid to the Executive by the Employers or
any subsidiary thereof during the calendar year in which the Date of Termination
occurs (determined on an annualized basis) or the calendar year immediately
preceding the calendar year in which the Date of Termination occurs, whichever
year is higher.
(b) CAUSE. Termination of the Executive's employment for "Cause" shall mean
termination because (i) the Executive intentionally engages in dishonest conduct
in connection with her performance of services for the Corporation or the Bank
resulting in her conviction of a felony; (ii) the Executive is convicted of, or
pleads guilty or nolo contendere to, a felony or any crime
2
involving moral turpitude; (iii) the Executive willfully fails or refuses to
perform her duties under this Agreement and fails to cure such breach within
fifteen (15) days following written notice thereof from the Corporation or the
Bank; (iv) the Executive breaches her fiduciary duties to the Corporation or the
Bank for personal profit; or (v) the Executive willfully breaches or violates
any law, rule or regulation (other than traffic violations or similar offenses),
or final cease and desist order in connection with her performance of services
for the Corporation or the Bank, and fails to cure such breach or violation
within fifteen (15) days following written notice thereof from the Corporation
or the Bank. For purposes of this section, no act or failure to act on the part
of the Executive shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Corporation or
the Bank. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Boards or based upon the written advice of
counsel for the Corporation or the Bank shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Corporation or the Bank. The cessation of employment by the
Executive shall not be deemed to be for "cause" within the meaning of this
section unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of three-fourths of the
non-employee members of the Boards at a meeting of the Boards called and held
for such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Boards), finding that, in the good faith opinion of the Boards, the Executive is
guilty of the conduct described in this section, and specifying the particulars
thereof in detail.
(c) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of the
Corporation" shall mean a change in the ownership of the Corporation, a change
in the effective control of the Corporation or a change in the ownership of a
substantial portion of the assets of the Corporation as provided under Section
409A of the Code, as amended from time to time, and any Internal Revenue Service
guidance, including Notice 2005-1, and regulations issued in connection with
Section 409A of the Code.
(d) CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause, the date on which the Notice of
Termination is given, and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination.
(f) DISABILITY. Termination by the Employers of the Executive's employment
based on "Disability" shall mean termination because the Executive: (i) is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12
3
months, receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the
Employers.
(g) GOOD REASON. Termination by the Executive of the Executive's employment
for "Good Reason" shall mean termination by the Executive following a Change in
Control of the Corporation based on:
(i) Without the Executive's express written consent, the assignment
by the Employers to the Executive of any duties which are
inconsistent with the Executive's positions, duties,
responsibilities and status with the Employers immediately prior
to a Change in Control of the Corporation, or a change in the
Executive's reporting responsibilities, titles or offices as an
employee and as in effect immediately prior to such a Change in
Control, or any removal of the Executive from or any failure to
re-elect the Executive to any of such responsibilities, titles or
offices, except in connection with the termination of the
Executive's employment for Cause, Disability or Retirement or as
a result of the Executive's death or by the Executive other than
for Good Reason;
(ii) Without the Executive's express written consent, a reduction by
either of the Employers in the Executive's base salary as in
effect immediately prior to the date of the Change in Control of
the Corporation or as the same may be increased from time to time
thereafter or a reduction in the package of fringe benefits
provided to the Executive;
(iii) The principal executive office of either of the Employers is
moved more than 30 miles from the current principal executive
office or, without the Executive's express written consent,
either of the Employers require the Executive to be based
anywhere other than an area in which the Employers' principal
executive office is located, except for required travel on
business of the Employers to an extent substantially consistent
with the Executive's present business travel obligations;
(iv) Any purported termination of the Executive's employment for
Cause, Disability or Retirement which is not effected pursuant to
a Notice of Termination satisfying the requirements of paragraph
(i) below; or
(v) The failure by the Employers to obtain the assumption of and
agreement to perform this Agreement by any successor as
contemplated in Section 6 hereof.
(h) IRS. IRS shall mean the Internal Revenue Service.
4
(i) NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of the Employers' termination of the Executive's employment for
Cause, which shall be effective immediately; and (iv) is given in the manner
specified in Section 7 hereof.
(j) RETIREMENT. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies, including early
retirement, generally applicable to their salaried employees.
2. BENEFITS UPON TERMINATION. If the Executive's employment by the
Employers shall be terminated subsequent to a Change in Control of the
Corporation by (i) the Employers for other than Cause, Disability, Retirement or
the Executive's death, (ii) the Executive for any reason pursuant to a Notice of
Termination dated and delivered within the first 60 days following the one-year
anniversary of the Change in Control of the Corporation, or (iii) the Executive
for Good Reason, then the Employers shall
(a) pay to the Executive, in a lump sum within five business days of the
Date of Termination, a cash severance amount equal to two (2) times the
Executive's Annual Compensation, and
(b) maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of this Agreement as of the Date of Termination
or (ii) the date of the Executive's full-time employment by another employer
(provided that the Executive is entitled under the terms of such employment to
benefits substantially similar to those described in this subparagraph (b)), at
no cost to the Executive, the Executive's continued participation in all group
insurance, life insurance, health and accident insurance, disability insurance
and other employee benefit plans, programs and arrangements offered by the
Employers in which the Executive was entitled to participate immediately prior
to the Date of Termination (excluding (y) stock benefit plans of the Employers
and (z) cash incentive compensation included in Annual Compensation), provided
that in the event that the Executive's participation in any plan, program or
arrangement as provided in this subparagraph (b) is barred, or during such
period any such plan, program or arrangement is discontinued or the benefits
thereunder are materially reduced, the Employers shall arrange to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans, programs and arrangements immediately
prior to the Date of Termination; and provided further, that if the provision of
any of the benefits covered by this Section 2(b) would trigger the 20% excise
tax and interest penalties under Section 409A of the Code either due to the
nature of such benefit or the
5
length of time it is being provided, then the benefit(s) that would trigger such
tax and interest penalties due to the nature of the benefit shall not be
provided at all and the benefit(s) that would trigger the tax and interest
penalties if provided beyond the "limited period of time" set forth in the
regulations under Section 409A shall not be provided beyond such limited period
of time (collectively, the "Excluded Benefits"), and in lieu of the Excluded
Benefits the Employers shall pay to the Executive, in a lump sum within ten
business days following termination of employment or within ten business days
after such determination should it occur after termination of employment, a cash
amount equal to the cost to the Employers of providing the Excluded Benefits.
3. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the payments and
benefits pursuant to Section 2 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employers, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits payable by the Employers pursuant to Section 2
hereof shall be reduced by the amount, if any, which is the minimum necessary to
result in no portion of the payments and benefits payable by the Employers under
Section 2 being non-deductible to the Employers pursuant to Section 280G of the
Code and subject to the excise tax imposed under Section 4999 of the Code. If
the payments and benefits are required to be reduced, the cash severance shall
be reduced first, followed by a reduction in the fringe benefits to be provided
in kind. The determination of any reduction in the payments and benefits to be
made pursuant to Section 2 shall be based upon the opinion of independent
counsel selected by the Employers and paid by the Employers. Such counsel shall
promptly prepare the foregoing opinion, but in no event later than thirty (30)
days from the Date of Termination; and may use such actuaries as such counsel
deems necessary or advisable for the purpose. Nothing contained herein shall
result in a reduction of any payments or benefits to which the Executive may be
entitled upon termination of employment under any circumstances other than as
specified in this Section 3, or a reduction in the payments and benefits
specified in Section 2 below zero.
4. MITIGATION; EXCLUSIVITY OF BENEFITS.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
5. WITHHOLDING. All payments required to be made by the Employers hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Employers may reasonably
determine should be withheld pursuant to any applicable law or regulation.
6
6. ASSIGNABILITY. The Employers may assign this Agreement and their rights
and obligations hereunder in whole, but not in part, to any corporation, bank or
other entity with or into which either of the Employers may hereafter merge or
consolidate or to which either of the Employers may transfer all or
substantially all of its respective assets, if in any such case said
corporation, bank or other entity shall by operation of law or expressly in
writing assume all obligations of the Employers hereunder as fully as if it had
been originally made a party hereto, but may not otherwise assign this Agreement
or their rights and obligations hereunder. The Executive may not assign or
transfer this Agreement or any rights or obligations hereunder.
7. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Corporation: Corporate Secretary
Parkvale Financial Corporation
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
To the Bank: Corporate Secretary
Parkvale Savings Bank
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
To the Executive: Xxxx X. Xxxxxx
At the address last appearing on the
personnel records of the Employers
8. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Boards of Directors of the Employers to sign on
their behalf; provided, however, that if the Employers determine, after a review
of the final regulations issued under Section 409A of the Code and all
applicable Internal Revenue Service guidance, that this Agreement should be
further amended to avoid triggering the tax and interest penalties imposed by
Section 409A of the Code, the Employers may amend this Agreement to the extent
necessary to avoid triggering the tax and interest penalties imposed by Section
409A of the Code. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
7
9. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of
Pennsylvania.
10. NATURE OF EMPLOYMENT AND OBLIGATIONS.
(a) Nothing contained herein shall be deemed to create other than a
terminable at will employment relationship between the Employers and the
Executive, and the Employers may terminate the Executive's employment at any
time, subject to providing any payments specified herein in accordance with the
terms hereof.
(b) Nothing contained herein shall create or require the Employers to
create a trust of any kind to fund any benefits which may be payable hereunder,
and to the extent that the Executive acquires a right to receive benefits from
the Employers hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Employers.
11. TERM OF AGREEMENT. The term of this Agreement shall be for three years,
commencing on the date of this Agreement (the "Effective Date"). Commencing on
the first annual anniversary of the Effective Date, the term of this Agreement
shall extend for an additional year on each annual anniversary of the Effective
Date of this Agreement until such time as the Boards of Directors of the
Employers or the Executive give notice in accordance with the terms of Section 7
hereof of their or her election, respectively, not to extend the term of this
Agreement. As a consequence, subsequent to the first anniversary of the
Effective Date, the remaining term of this Agreement will stay between two and
three years unless notice of non-renewal is given. Such written notice of the
election not to extend must be given not less than thirty (30) days prior to any
such anniversary date. If any party gives timely notice that the term will not
be extended as of any annual anniversary date, then this Agreement shall
terminate at the conclusion of its remaining term. References herein to the term
of this Agreement shall refer both to the initial term and successive terms.
12. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the terms of this Agreement.
13. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
8
15. REGULATORY PROHIBITION. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. Section
1828(k)) and the regulations promulgated thereunder, including 12 C.F.R. Part
359.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement between
the Employers and the Executive with respect to the matters agreed to herein.
Any prior agreements between the Employers and the Executive with respect to the
matters agreed to herein are hereby superseded and shall have no force or
effect.
IN WITNESS WHEREOF, this Agreement has been executed effective as of the
date of the restatement of this Agreement.
Attest: PARKVALE FINANCIAL CORPORATION
/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. XxXxxxxx, Xx.
------------------------------------- ------------------------------------
Xxxx X. Xxxxxx, Corporate Secretary Xxxxxx X. XxXxxxxx, Xx., President
and Chief Executive Officer
Attest: PARKVALE SAVINGS BANK
/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. XxXxxxxx, Xx.
------------------------------------- ------------------------------------
Xxxx X. Xxxxxx, Corporate Secretary Xxxxxx X. XxXxxxxx, Xx., President
and Chief Executive Officer
Attest: EXECUTIVE
/s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
------------------------------------- ------------------------------------
Xxxx X. Xxxxxx, Corporate Secretary Xxxx X. Xxxxxx
