LETTER AGREEMENT AND AMENDMENT TO EXECUTIVE COMPENSATION AND BENEFIT PLANS PURSUANT TO THE TARP CAPITAL PURCHASE PROGRAM
Exhibit 10.3
LETTER AGREEMENT AND AMENDMENT
TO
EXECUTIVE COMPENSATION AND BENEFIT PLANS
PURSUANT TO THE
TARP CAPITAL PURCHASE PROGRAM
TO
EXECUTIVE COMPENSATION AND BENEFIT PLANS
PURSUANT TO THE
TARP CAPITAL PURCHASE PROGRAM
THIS LETTER AGREEMENT AND AMENDMENT (the “Agreement”) by and between Parkvale Financial
Corporation (the “Company”), Parkvale Savings Bank (the “Bank”) and the
undersigned executive officer (the “Executive”) is entered into effective as of December 23, 2008
(the “Effective Date”).
WHEREAS, the Executive is either (1) currently deemed to be a “Senior Executive Officer” of
the Company or the Bank, as defined in Section 111(b)(3) of the Emergency Economic Stabilization
Act of 2008 (“EESA”) and the regulations issued thereunder, including the regulations set forth in
31 C.F.R. Part 30 (an “SEO”), or (2) currently an executive officer and may be deemed to be a
“Senior Executive Officer” of the Company or the Bank during the Participation Period as defined
below;
WHEREAS, in connection with the purchase by the United States Department of the Treasury (the
“Treasury”) of preferred stock and warrants of the Company (the “Purchased Securities”), pursuant
to a Letter Agreement between the Treasury and the Company dated as of December 23, 2008, which
incorporates a Securities Purchase Agreement (the “Purchase Agreement”), the Company is required to
comply with certain executive compensation and corporate governance standards under Section 111(b)
of EESA that have been implemented by guidance or regulations issued thereunder (including the
regulations set forth in 31 C.F.R. Part 30) and which are in effect as of the Closing Date (as
defined in the Purchase Agreement) (such guidance and regulations are hereinafter collectively
referred to as the “CPP Guidance”);
WHEREAS, as a condition to the Closing (as defined in Section 1.2(a) of the Purchase
Agreement), Section 1.2(d)(iv)(A) of the Purchase Agreement requires the Company and the Bank to
adopt such changes to their compensation, bonus, incentive and other benefit plans, arrangements
and agreements (including golden parachute, severance and employment agreements) (collectively, the
“Compensation and Benefit Plans”) with respect to their SEOs (and to the extent necessary for such
changes to be legally enforceable, such SEOs are required to duly consent in writing to such
changes), as may be necessary, during the period that the Treasury holds an equity or debt position
in the Company acquired pursuant to the Purchase Agreement (the “Participation Period”) in order to
comply with Section 111(b) of EESA; and
WHEREAS, in consideration of the benefits that the Executive will receive as a result of the
Company’s participation in the Treasury’s TARP Capital Purchase Program, the Executive is willing
to modify the Compensation and Benefit Plans applicable to the Executive to the extent necessary to
comply with Section 111(b) of EESA, the CPP Guidance and the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the covenants set forth herein, and such
other consideration the sufficiency of which is hereby acknowledged, and intending to be legally
bound hereby, the Executive, the Company and the Bank hereby agree as follows:
1. Amendments to the Compensation and Benefit Plans. Effective as of the Effective
Date and for as long as the Executive is an SEO during the Participation Period, the
Compensation
and Benefit Plans applicable to the Executive are hereby amended by this Agreement in order to
comply with the executive compensation and corporate governance requirements of Section 111(b) of
EESA and the CPP Guidance, and the provisions of Sections 1.2(d)(iv), 1.2(d)(v) and 4.10 of the
Purchase Agreement, including as follows:
(a) In the event that the Compensation Committee of the Board of Directors of the
Company determines that any incentive compensation arrangements pursuant to which the
Executive is or may be entitled to a payment encourages the Executive to take unnecessary
and excessive risks that threaten the value of the Company and the Bank within
the meaning of Section 111(b)(2)(A) of EESA and the CPP Guidance, including the
regulations set forth in Section 30.4 Q-4 of 31 C.F.R. Part 30, then the Compensation
Committee, on behalf of the Company and the Bank, shall take such action as is necessary to
amend the incentive compensation arrangements in order to eliminate such encouragement, and
the Executive’s incentive compensation will be determined pursuant to such amended
arrangements.
(b) Any bonus or incentive compensation paid to the Executive during the Participation
Period will be subject to recovery or “clawback” by the Company or its affiliates if the
payments were based on materially inaccurate financial statements or any other materially
inaccurate performance metric criteria, all within the meaning of Section 111(b)(2)(B) of
EESA and the CPP Guidance.
(c) In the event that any payment or benefit to which the Executive is or may become
entitled under the Compensation and Benefit Plans is a “golden parachute payment” for
purposes of Section 111(b)(2)(C) of EESA and the CPP Guidance, including the regulations set
forth in Section 30.9 Q-9 of 31 C.F.R. Part 30, then (i) the payments or benefits to be made
or provided to the Executive by the Company and the Bank during the Participation Period (or
if an acquisition of the Company or the Bank occurs during the Participation Period, any
payment or benefit to be made or provided by a successor to the Company or the Bank during
the first year following such acquisition, as required by Section 30.11 Q-11 of 31 C.F.R.
Part 30) shall be reduced by the minimum amount necessary so that none of the payments or
benefits to the Executive constitute a “golden parachute payment” for purposes of Section
111(b)(2)(C) of EESA and the CPP Guidance, and (ii) the Executive shall not be entitled to
receive during the Participation Period (or if an acquisition of the Company or the Bank
occurs during the Participation Period, during the first year following such acquisition)
any payment or benefit that would constitute a “golden parachute payment” for purposes of
Section 111(b)(2)(C) of EESA and the CPP Guidance.
2. Miscellaneous.
(a) The Executive’s execution of this Agreement shall not be determinative of the
Executive’s status as an SEO.
(b) This Agreement shall be void and without effect ab initio if the Closing (as
defined in the Purchase Agreement) of the transactions contemplated by the Purchase
Agreement does not occur.
(c) This Agreement may be executed in one or more counterparts, each of which when
executed shall be an original, but all of which when taken together shall constitute one and
the same agreement.
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(d) This Agreement shall be governed by, and interpreted in accordance with, the laws
of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date
first written above.
| ATTEST: | PARKVALE FINANCIAL CORPORATION | |||||||||
By:
|
By: | |||||||||
| Corporate Secretary | Chairman of the Board | |||||||||
| ATTEST: | PARKVALE SAVINGS BANK | |||||||||
By:
|
By: | |||||||||
| Corporate Secretary | Chairman of the Board | |||||||||
| ATTEST: | EXECUTIVE | |||||||||
By:
|
By: | |||||||||
| Name: | ||||||||||
| Corporate Secretary | Title: | |||||||||
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