CHANGE IN CONTROL SEVERANCE AGREEMENT AMONG PARKVALE FINANCIAL CORPORATION, PARKVALE SAVINGS BANK AND GILBERT A. RIAZZI
Exhibit 10.1
CHANGE IN CONTROL SEVERANCE AGREEMENT AMONG
PARKVALE FINANCIAL CORPORATION, PARKVALE
SAVINGS BANK AND XXXXXXX X. XXXXXX
PARKVALE FINANCIAL CORPORATION, PARKVALE
SAVINGS BANK AND XXXXXXX X. XXXXXX
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the “Agreement”), dated this 1st day of
February 2010, 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 Xxxxxxx 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 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.
(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
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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 his 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.
(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:
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(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.
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
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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.
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:
|
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:
|
Xxxxxxx 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 all applicable IRS guidance under Section 409A of the Code, 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.
(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, 2012,
unless extended as set forth below. Commencing on January 1, 2011 and each subsequent January 1st,
the term of this Agreement shall extend for an additional year until
such time as the
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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 January 1, 2011, 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. Section 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 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.
| 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/ Xxxxxxx X. Xxxxxx | ||
| Xxxxxxx X. Xxxxxxxx, Corporate Secretary | Xxxxxxx X. Xxxxxx | |||
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