AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT AMONG PARKVALE FINANCIAL CORPORATION, PARKVALE SAVINGS BANK AND GAIL B. ANWYLL
Exhibit
10.3
AMENDED
AND RESTATED
PARKVALE
FINANCIAL CORPORATION, PARKVALE
SAVINGS
BANK AND XXXX X. XXXXXX
THIS
AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT (the “Agreement”),
dated as of the 20th day of December 2007 (the “Effective Date”), is 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, and the
Executive and the Employers have previously entered into a change in control
severance agreement originally effective as of February 23, 2005 and amended
and
restated as of December 15, 2005 (the “Prior Agreement”);
WHEREAS,
the Employers desire to amend
and restate the Prior Agreement in order to make changes to comply with Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), as well as
certain other changes;
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.
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(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 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 Board of Directors of the Corporation
or the
Bank (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. “Change in Control” shall mean a change in the
ownership of the Corporation or the Bank, a change in the effective control
of
the Corporation or the Bank or a change in the ownership of a substantial
portion of the assets of the Corporation or the Bank, in each case as provided
under Section 409A of the Code and the regulations thereunder.
(d)
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.
(e)
Disability. “Disability”
shall mean 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 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.
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(f)
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 based on the occurrence of any of the following
events:
(i)
(A) a
material diminution in the Executive’s base compensation as in effect
immediately prior to the date of the Change in Control or as the same may
be
increased from time to time thereafter, (B) a material diminution in the
Executive’s authority, duties or responsibilities as in effect immediately prior
to the Change in Control, or (C) a material diminution in the authority,
duties
or responsibilities of the officer (as in effect immediately prior to the
date
of the Change in Control) to whom the Executive is required to report
immediately prior to the Change in Control,
(ii)
any
material breach of this Agreement by the Employers, or
(iii)
any
material change in the geographic location at which the Executive must perform
her services under this Agreement immediately prior to the Change in
Control;
provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to the Employers within ninety
(90)
days of the initial existence of the condition, describing the existence
of such
condition, and the Employers shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Employers received the
written
notice from the Executive. If the Employers remedy the condition
within such thirty (30) day cure period, then no Good Reason shall be deemed
to
exist with respect to such condition. If the Employers do not remedy
the condition within such thirty (30) day cure period, then the Executive
may
deliver a Notice of Termination for Good Reason at any time within sixty
(60)
days following the expiration of such cure period.
(g)
IRS. “IRS”
shall mean the Internal
Revenue Service.
(h)
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 a 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.
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(i)
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 by (i) the
Employers for other than Cause, Disability, Retirement or the Executive’s death,
or (ii) the Executive for Good Reason, then the Employers shall, subject
to the
provisions of Section 3 hereof, if applicable:
(a)
pay to the Executive, in a lump sum within five business days following the
Date
of Termination, a cash severance amount equal to two (2) times the Executive’s
Annual Compensation;
(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, and disability
insurance offered by the Employers in which the Executive was participating
immediately prior to the Date of Termination; provided that any insurance
premiums payable by the Employers or any successors pursuant to this Section
2(b) shall be payable at such times and in such amounts (except that the
Employers shall also pay any employee portion of the premiums) as if the
Executive was still an employee of the Employers, subject to any increases
in
such amounts imposed by the insurance company or COBRA, and the amount of
insurance premiums required to be paid by the Employers in any taxable year
shall not affect the amount of insurance premiums required to be paid by
the
Employers in any other taxable year; and provided further that if the
Executive’s participation in any group insurance plan is barred, the Employers
shall either arrange to provide the Executive with insurance benefits
substantially similar to those which the Executive was entitled to receive
under
such group insurance plan or, if such coverage cannot be obtained, pay a
lump
sum cash equivalency amount within thirty (30) days following the Date of
Termination based on the annualized rate of premiums being paid by the Employers
as of the Date of Termination; and
(c)
pay to the Executive, in a lump sum within five business days following the
Date
of Termination, a cash amount equal to the projected cost to the Employers
of
providing benefits to the Executive for the expiration of the remaining term
of
this Agreement as of the Date Termination pursuant to any other employee
benefit
plans, programs or 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), with the projected cost to
the
Employers to be based on the costs incurred for the calendar year immediately
preceding the year in which the Date of Termination occurs and with any
automobile-related costs to exclude any depreciation on Bank-owned
automobiles.
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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, then the
payments and benefits payable by the Employers pursuant to Section 2 hereof
shall be reduced by the minimum amount 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 in this Section 3 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,
except as set forth in Section 2(b) above.
(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.
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 their
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.
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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:
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To
the Corporation:
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Corporate
Secretary
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Parkvale
Financial Corporation
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0000
Xxxxxxx Xxxx Xxxxxxx
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Xxxxxxxxxxx,
Xxxxxxxxxxxx 00000
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To
the Bank:
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Corporate
Secretary
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Parkvale
Savings Bank
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0000
Xxxxxxx Xxxx Xxxxxxx
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Xxxxxxxxxxx,
Xxxxxxxxxxxx 00000
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To
the Executive:
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Xxxx
X. Xxxxxx
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At
the address last appearing on the
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personnel
records of the Employers
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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.
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 Commonwealth
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.
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(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 terminate on
December 31, 2010, unless extended as set forth below. Commencing on
January 1, 2009 and each subsequent January 1st, the term of this Agreement
shall extend for an additional year 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 January 1, 2009,
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 January 1st. If any party gives timely notice that the term will
not be extended as of any January 1st, 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.
15.
Changes in Statutes or
Regulations. If any statutory or regulatory provision referenced herein
is subsequently changed or re-numbered, or is replaced by a separate provision,
then the references in this Agreement to such statutory or regulatory provision
shall be deemed to be a reference to such section as amended, re-numbered
or
replaced.
16.
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. §1828(k)) and
the regulations promulgated thereunder, including 12 C.F.R.
Part 359.
17.
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, including without limitation
the
Prior Agreement, are hereby superseded and shall have no force or
effect.
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IN
WITNESS WHEREOF, this Agreement has been executed effective as of the date
first
written above.
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Attest:
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PARKVALE
FINANCIAL CORPORATION
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/s/
Xxxxxxx X. Xxxxxxxx
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By: |
/s/
Xxxxxx X. XxXxxxxx, Xx.
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Xxxxxxx
X. Xxxxxxxx, Corporate Secretary
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Xxxxxx
X. XxXxxxxx, Xx.
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President
and Chief Executive Officer
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Attest:
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PARKVALE
SAVINGS BANK
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/s/
Xxxxxxx X. Xxxxxxxx
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By: |
/s/
Xxxxxx X. XxXxxxxx, Xx.
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Xxxxxxx
X. Xxxxxxxx, Corporate Secretary
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Xxxxxx
X. XxXxxxxx, Xx.
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President
and Chief Executive Officer
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Witness:
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EXECUTIVE
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/s/
Xxxxxxx X. Xxxxxxxx
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By: |
/s/
Xxxx X. Xxxxxx
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Xxxxxxx
X. Xxxxxxxx, Corporate Secretary
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Xxxx
X. Xxxxxx
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