Exhibit 10(I)
CHANGE IN CONTROL SEVERANCE AGREEMENT BETWEEN
PARKVALE SAVINGS BANK AND XXXXXX X. XXXXX
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT is approved this 21st day of
December 2006 between Parkvale Savings Bank, a Pennsylvania-chartered stock
savings bank (the "Bank") and a wholly owned subsidiary of Parkvale Financial
Corporation (the "Corporation"), and Xxxxxx X. Xxxxx (the "Executive"). The
Bank, including any successors to the Bank by merger or otherwise, is referred
to as the "Employer".
WITNESSETH
WHEREAS, the Executive is presently an officer of the Employer;
WHEREAS, the Employer desire to be ensured of the Executive's
continued active participation in the business of the Employer; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employer and in consideration of the Executive's agreeing to remain in the
employ of the Employer, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employer 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 Employer 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 his performance of services for the Corporation or
the Bank resulting in his 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 his duties under this Agreement and fails to cure such breach within
fifteen (15) days following written notice thereof
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from the Bank; (iv) the Executive breaches his fiduciary duties to 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 his performance of services for the
Bank, and fails to cure such breach or violation within fifteen (15) days
following written notice thereof from 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 Bank. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or based upon the
written advice of counsel 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 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 Board at a
meeting of the Board 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 Board), finding that, in the good faith
opinion of the Board, 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 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
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 Employer 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 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Employer.
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(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 Employer to the Executive of any
duties which are inconsistent with the Executive's
positions, duties, responsibilities and status with
the Employer 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 Employer 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 the Employer is
moved more than 30 miles from the current principal
executive office or, without the Executive's express
written consent, either of the Employer requires the
Executive to be based anywhere other than an area in
which the Employer's principal executive office is
located, except for required travel on business of
the Employer 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 Employer 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.
(i) NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Employer 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
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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 Employer's 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 Employer's retirement policies, including early
retirement, generally applicable to their salaried employees.
2. BENEFITS UPON TERMINATION. If the Executive's employment by the
Employer shall be terminated subsequent to a Change in Control of the
Corporation by (i) the Employer 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 Employer 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
Employer in which the Executive was entitled to participate immediately prior
to the Date of Termination (excluding (y) stock benefit plans of the Employer
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 Employer 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 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
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(collectively, the "Excluded Benefits"), and in lieu of the Excluded Benefits
the Employer 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 Employer 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
Employer or the Corporation, would constitute a "parachute payment" under
Section 280G of the Code, the payments and benefits payable by the Employer
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 Employer under Section 2 being non-deductible to the Employer
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 Employer and paid by the
Employer. 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 Employer pursuant to employee benefit plans
of the Employer or otherwise.
5. WITHHOLDING. All payments required to be made by the Employer
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employer may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
6. ASSIGNABILITY. The Employer may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employer may hereafter merge or
consolidate or to which the Employer may transfer all or substantially all of
its respective assets, if in any such case said
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corporation, bank or other entity shall by operation of law or expressly in
writing assume all obligations of the Employer hereunder as fully as if it had
been originally made a party hereto, but may not otherwise assign this Agreement
or its 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: Xxxxxx X. Xxxxx
At the address last appearing on the
personnel records of the Employer
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 Board of Directors of the Employer to sign on
its behalf; provided, however, that if the Employer determines, 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 Employer 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 State of
Pennsylvania.
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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 Employer and the
Executive, and the Employer 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 Employer 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 Employer hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Employer.
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 Board of Directors
of the Employer or the Executive give notice in accordance with the terms of
Section 7 hereof of its or his 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.
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.
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16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Employer and the Executive with respect to the matters agreed to
herein. Any prior agreements between the Employer 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/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. XxXxxxxx, Xx.
----------------------------------------- ------------------------------
Xxxxxxx X..Xxxxxxxx, Corporate Secretary Xxxxxx X. XxXxxxxx, Xx., President
and Chief Executive Officer
Attest: PARKVALE SAVINGS BANK
/s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. XxXxxxxx, Xx.
----------------------------------------- ------------------------------
Xxxxxxx X. Xxxxxxxx, Corporate Secretary Xxxxxx X. XxXxxxxx, Xx., President
and Chief Executive Officer
Attest: EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxx
----------------------------------------- ------------------------------
Xxxxxxx X. Xxxxxxxx, Corporate Secretary Xxxxxx X. Xxxxx
