Exhibit 10.2
FIRST AMENDMENT
TO
THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     This First Amendment (the “First Amendment”) to the Amended and Restated
Employment Agreement is made and entered into as of December 4, 2008, by and
between Sterling Financial Corporation, a Washington corporation (“Sterling”),
and                      (the “Executive”). This First Amendment shall be
effective upon the closing of the investment by the United States Department of
the Treasury (the “Treasury”) in Sterling pursuant to the Capital Purchase
Program provided under the Troubled Asset Relief Program (“TARP”) as promulgated
by the Treasury under the authority of the Emergency Economic Stabilization Act.
Capitalized terms used herein that are not otherwise defined shall have the
meaning attributed to such terms in the Amended and Restated Employment
Agreement, dated as of                     , by and between Sterling and
Executive (the “Employment Agreement”).
WITNESSETH
     WHEREAS, on or about                     , Sterling and Executive entered
into the Employment Agreement setting forth the terms and conditions of
Executive’s employment with Sterling.
     WHEREAS, Sterling, as a qualifying financial institution, seeks to
participate in the TARP Capital Purchase Program.
     WHEREAS, as a condition of participation in the TARP Capital Purchase
Program, the Executive must agree to amend and modify the Employment Agreement
to conform to the regulations and requirements set forth by the Treasury.
     WHEREAS, Executive acknowledges and agrees that Sterling’s participation in
the TARP Capital Purchase Program will benefit Executive’s employment with
Sterling.
     NOW, THEREFORE, in consideration for the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sterling and Executive hereby
agree that the Employment Agreement is amended and modified as follows:
     1. Compliance with TARP.
     The Employment Agreement is hereby amended to add the following new Section
___:
     ___. Compliance with TARP. Notwithstanding anything to the contrary
contained in this Agreement and as a condition to the closing of the investment
by the United States Department of the Treasury (the “Treasury”) in Sterling and
to the extent necessary to be in compliance with the Capital Purchase Program
provided under the Troubled Asset Relief

 

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Program (“TARP”) following the closing of the sale of preferred stock by
Sterling to the Treasury and for so long as the Treasury holds any equity or
debt securities of Sterling (such period, the “TARP Period”), Sterling and
Executive agree to be bound by the executive compensation and corporate
governance requirements of Section 111 of the Emergency Economic Stabilization
Act (“EESA”) and any guidance or regulations issued by the Secretary of the
Treasury on or prior to the date of this investment to carry out the provisions
of such subsection. Specifically, and without limiting the foregoing, Executive
and Sterling hereby agree that, during the TARP Period:
          (A) If Executive becomes entitled to the payments and equity
acceleration described in Section ___, as applicable (collectively, the
“Severance Payments”), and if any of the Severance Payments constitute a
“parachute payment” under Section 280G, Executive shall receive a sum equal to
2.99 times Executive’s “base amount,” within the meaning of §280G(b)(3) of the
Code, as the sole benefit payable under Section ___, as applicable. Any
reduction in payments pursuant to this paragraph shall be taken first from cash
payments to the Executive and second from equity awards before other benefits
are reduced.
          (B) Sterling shall be entitled to the return of, and Executive agrees
to return, any bonus or incentive compensation paid to the Executive that is
based on statements of earnings, gains, or other criteria that are later proven
to be materially inaccurate.
          (C) None of the incentives under this Agreement provide the Executive
with any incentives to take unnecessary and excessive risks that threaten the
value of Sterling.
     2. No Implied Modification. Except as specifically provided in this First
Amendment, the terms of the Employment Agreement shall not be considered as
modified, released, altered or affected, and shall remain in full force and
effect unless specifically canceled or amended by an instrument in writing
signed by Sterling and Executive.
     3. Counterparts. This First Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed one and the same instrument.
[SIGNATURE PAGE FOLLOWS]

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     This First Amendment has been executed and delivered by Sterling and
Executive as of the date first set forth above.

            STERLING FINANCIAL CORPORATION
      BY:           ROBERT B. LARRABEE   

          ATTEST:

STERLING FINANCIAL CORPORATION
    BY:      

             , Executive                       

[SIGNATURE PAGE TO FIRST AMENDMENT TO THE
AMENDED AND RESTATED EMPLOYMENT AGREEMENT]

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