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Exhibit 10.3
December 19, 2008
Mr. Jack H. Webb
President and Chief Executive Officer
Alliance Financial Corporation
120 Madison Street, 18 th
Floor
Syracuse, New York 13202
Dear Mr. Webb,
Alliance Financial Corporation (the "Company")
anticipates entering into a Securities Purchase Agreement (the
"Participation Agreement") with the United States Department
of Treasury ("Treasury") that provides for the
Company’s participation in the Treasury’s TARP Capital
Purchase Program (the "CPP") . If the Company does not
participate or ceases at any time to participate in the CPP, this
letter shall be of no further force and effect.
For the Company to participate in the CPP and as a condition to
the closing of the investment contemplated by the Participation
Agreement, the Company is required to establish specified standards
for incentive compensation to its senior executive officers and to
make changes to its compensation arrangements. To comply with these
requirements, and in consideration of the benefits that you will
receive as a result of the Company’s participation in the
CPP, you agree as follows:
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1)
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No Golden Parachute
Payments . The Company is prohibiting any golden parachute
payment to you during any "applicable tax year." An "applicable
tax year" is any period during which (a) you are a senior
executive officer, and (b) Treasury holds an equity or debt
position in the Company under the CPP.
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2)
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Recovery of Bonus and Incentive
Compensation. Any bonus and incentive compensation paid to
you during a CPP Covered Period is subject to recovery or
"clawback" by the Company if the payments were based on materially
inaccurate financial statements or any other materially inaccurate
performance metric criteria.
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3)
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Compensation Program
Amendments. Each of the Company’s compensation, bonus,
incentive and other benefit plans, arrangements and agreements
(including golden parachute, severance and employment agreements)
either currently or hereinafter in effect and including all
amendments thereto (collectively, "Benefit Plans") with respect
to you are hereby amended to the extent necessary to give effect to
provisions (l) and (2).
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4)
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Definitions and
Interpretation. This letter shall be interpreted as
follows:
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The term "Company" includes any
entities treated as a single employer with the Company under 31
C.F.R. § 30.1(b) (as in effect on the Closing Date). You are
also delivering a waiver pursuant to the Participation Agreement,
and, as between the Company and you, the term "employer" in that
waiver will be deemed to mean the Company as used in this
letter.
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The term "applicable tax year" shall
be limited by, and interpreted in a manner consistent with, 31
C.F.R. § 30.11, (as in effect on the Closing Date).
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"EESA" means the Emergency Economic
Stabilization Act of 2008 as implemented by guidance or regulation
issued by the Department of the Treasury and as published in the
Federal Register on October 20, 2008.
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"Golden parachute payment" is used
with same meaning as in Section 111(b)(2)(C) of
EESA.
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"Senior executive officer" means the
Company’s "senior executive officers" as defined in
subsection 111(b)(3) of EESA.
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Provisions (1) and (2) of
this letter are intended to, and will be interpreted, administered
and construed to, comply with Section 111 of EESA and the
guidance thereunder (and, to the maximum extent consistent with the
preceding, to permit operation of the Benefit Plans in accordance
with their terms before giving effect to this letter)
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5)
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Miscellaneous. To the
extent not subject to federal law, this letter will be governed by
and construed in accordance with the laws of New York. This letter
may be executed in two or more counterparts, each of which will be
deemed to be an original. A signature transmitted by facsimile will
be deemed an original signature.
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In addition, the Company is required to review
its Benefit Plans to ensure that they do not encourage senior
executive officers to take unnecessary and excessive risks that
threaten the value of the Company. To the extent any such review
requires revisions to any Benefit Plan with respect to you, you and
the Company agree to negotiate such changes promptly and in good
faith.
In addition to the foregoing and in consideration for the
benefits you will receive as a result of Company’s
participation in the CPP, you agree to voluntarily waive any claim
against the United States or the Company for any changes to your
compensation or benefits that are required to comply with EESA.
This waiver includes all claims you may have under the laws of the
United States or any state related to the requirements imposed by
EESA, including without limitation a claim for any compensation or
other payments you would otherwise receive, any challenge to the
process by which this regulation was adopted and any tort or
constitutional claim about the effect of these regulations on your
employment relationship.
Please indicate your agreement by signing and
returning this letter agreement.
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Yours sincerely,
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/s/ John H. Watt, Jr.
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John H. Watt, Jr.
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Executive Vice President
Alliance Financial Corporation
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Intending to be legally bound, I agree
with
and accept the foregoing terms on the date set
forth below.
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/s/ Jack H. Webb
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Jack H. Webb
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Date: December 19, 2008
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December 19, 2008
Mr. John H. Watt, Jr.
Executive Vice President
Alliance Financial Corporation
120 Madison Street, 18 th
Floor
Syracuse, New York 13202
Dear Mr. Watt,
Alliance Financial Corporation (the "Company")
anticipates entering into a Securities Purchase Agreement (the
"Participation Agreement") with the United States Department
of Treasury ("Treasury") that provides for the
Company’s participation in the Treasury’s TARP Capital
Purchase Program (the "CPP") . If the Company does not
participate or ceases at any time to participate in the CPP, this
letter shall be of no further force and effect.
For the Company to participate in the CPP and as a condition to
the closing of the investment contemplated by the Participation
Agreement, the Company is required to establish specified standards
for incentive compensation to its senior executive officers and to
make changes to its compensation arrangements. To comply with these
requirements, and in consideration of the benefits that you will
receive as a result of the Company’s particip
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