Exhibit 10(i)
CHANGE IN CONTROL SEVERANCE AGREEMENT AMONG
PARKVALE FINANCIAL CORPORATION, PARKVALE
SAVINGS BANK AND XXXX X. XXXXXX
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT is dated this 23rd day of
February 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 his 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 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 Corporation or the Bank; (iv) the Executive breaches his 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 his 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 the occurrence of any of the following: (i) the
acquisition of control of the Corporation as defined in 12 C.F.R. Section 574.4,
unless a presumption of control is successfully rebutted or unless the
transaction is exempted by 12 C.F.R. Section 574.3(c)(vii), or any successor to
such sections; (ii) an event that would be required to be reported in response
to Item 5.01 of Form 8-K or Item 6(e) of Schedule 14A of Regulation 14A pursuant
to the Securities Exchange Act of 1934, as amended ("Exchange Act"), or any
successor thereto, whether or not any class of securities of the Corporation is
registered under the Exchange Act; (iii) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act, but excluding any person who on
the date hereof is a director or officer of the Corporation) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding securities; (iv) the
stockholders of the Corporation approve (or, in the event no approval of the
Corporation's stockholders is required, the Corporation consummates) a merger,
consolidation, share exchange, division or other reorganization or transaction
involving the Corporation (a "Fundamental Transaction") with any other
corporation or entity, other than a Fundamental Transaction which results in
both (a) the voting securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 60% of the
combined voting power of the surviving entity immediately after such Fundamental
Transaction, and (b) the members of the Board of Directors of the Corporation
immediately prior thereto continuing to represent at least 60% of the members of
the Board of Directors of the surviving entity; or (v) during any period of
three consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Corporation cease for any reason to
constitute at least a
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majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
(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 of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(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
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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.
(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 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
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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.
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, in the manner determined by the Employers, 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. 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 be reasonably acceptable to the
Employers and the Executive; 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.
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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
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxxxxxx 00000
8. AMENDMENT; WAIVER.
(a) Except as set forth in Section 8(b) below, 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. 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.
(b) The parties hereto acknowledge and agree that (i) the recently
enacted American Jobs Creation Act of 2004 established a new Section 409A of the
Code; (ii) Code Section 409A contains provisions governing the taxation of
deferred compensation; (iii) the compensation and other
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benefits to be paid or otherwise provided under this Agreement, whether provided
hereunder or pursuant to any of the Employers' employee benefit plans, programs,
policies or arrangements (this Agreement and the plans, programs, policies and
arrangements are collectively referred to herein as the "Agreements"), may be
negatively impacted by Section 409A of the Code; (iv) the Internal Revenue
Service has issued initial guidance and is expected to issue additional guidance
regarding the scope of Section 409A of the Code; and (v) the Employers have
until December 31, 2005 to amend the Agreements to bring them into compliance
with Section 409A of the Code. The parties hereto acknowledge and agree that the
Employers may amend any or all of the Agreements after the date hereof in order
to comply with Section 409A of the Code, without having to obtain the
Executive's consent to such amendments, provided that the Employers agree to
negotiate in good faith with the Executive any changes to this Agreement.
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 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.
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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.
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.
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IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date first above written.
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
