Document:

Mr. [Name]

[Title]

Tri-County Financial Corporation

3035 Leonardtown Road

Waldorf, Maryland  20601

Dear Mr. [Name]:

Tri-County Financial Corporation (the “Company”) previously entered into an agreement with the United States Department of the Treasury (the “Treasury”) to participate in the Capital Purchase Program (the “CPP”).  In connection with the Company’s participation in the CPP, on December 19, 2008, you agreed, in accordance with a written letter (which letter is incorporated into this letter by reference), to the following for the period of time during which (i) you were a senior executive officer and (B) the Treasury held an equity or debt position acquired from the Company in the CPP (the “CPP Covered Period”):

(1)           No Golden Parachute Payments. The Company could not make any golden parachute payment to you during the CPP Covered Period.

(2)           Recovery of Bonus and Incentive Compensation. Any bonus and incentive compensation paid to you during the CPP Covered Period was 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.

In addition, you agreed that each of the Company’s compensation, bonus, incentive and other benefit plans, arrangements and agreements (including golden parachute, severance and employment agreements) (collectively, “Benefit Plans”) with respect to you was amended to the extent necessary to give effect to provisions (1) and (2). For reference, those certain affected Benefit Plans are set forth in Appendix A to this letter. If the payments and benefits provided under the Benefit Plans would exceed the golden parachute limitations of the CPP, the payments and benefits would be reduced or revised, in the manner determined by you, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits exceeding the limitations.  In addition, the Company was required to review its Benefit Plans to ensure that they did not encourage senior executive officers to take unnecessary and excessive risks that threaten the value of the Company and, to the extent the review required revisions to any Benefit Plan with respect to you, you and the Company agreed to negotiate those changes promptly and in good faith.

As of this date, the Treasury no longer holds an equity or debt position acquired from the Company and you are no longer a senior executive officer subject to the restrictions of the CPP.  As a result, any amendment to or any agreement to amend any Benefit Plan in accordance with the letter entered into by and between you and the Company on December 19, 2008, is hereby rescinded and without force and effect from this day forward.

  

  

  

 

To the extent not subject to federal law, this letter will be governed by and construed in accordance with the laws of Maryland. 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.

	
Yours sincerely,

	  
	
TRI-COUNTY FINANCIAL CORPORATION

	  
	  	  
	
Name:

	
Louis P. Jenkins, Jr.

	
Title:

	
Chair, Governance Committee

Intending to be legally bound, I agree with and accept the foregoing terms on the date set forth below.

	  
	
[NAME]

	
Date:  September 22, 2011Unassociated Document

 

UNITED STATES DEPARTMENT OF THE TREASURY

1500 PENNSYLVANIA AVENUE, NW

WASHINGTON, D.C. 20220

 

September 22, 2011

 

Dear Ladies and Gentlemen:

Reference is made to that certain Letter Agreement incorporating the Securities Purchase Agreement – Standard Terms (the “Securities Purchase Agreement”), dated as of the date set forth on Schedule A hereto, between the United States Department of the Treasury (the “Investor”) and the company set forth on Schedule A hereto (the “Company”).  Capitalized terms used but not defined herein shall have the meanings assigned to them in the Securities Purchase Agreement.  Pursuant to the Securities Purchase Agreement, at the Closing, the Company issued to the Investor the number of shares of the series of its preferred stock set forth on Schedule A hereto (the “Preferred Shares”) and a warrant (the “Warrant”) to purchase the number of shares of the series of its preferred stock set forth on Schedule A hereto (such shares, the “Warrant Shares”), which was exercised by the Investor at Closing.

In connection with the consummation of the repurchase (the “Repurchase”) by the Company from the Investor, on the date hereof, of the number of Preferred Shares listed on Schedule A hereto (the “Repurchased Preferred Shares”) and the number of Warrant Shares listed on Schedule A hereto (the “Repurchased Warrant Shares”), as permitted by the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009:

(a)           The Company hereby acknowledges receipt from the Investor of the share certificate(s) set forth on Schedule A hereto representing the Preferred Shares;

(b)           The Investor hereby acknowledges receipt from the Company of a wire transfer for the account of the Investor in immediately available funds of the aggregate purchase price set forth on Schedule A hereto, representing payment in full for the Repurchased Preferred Shares at a price per share equal to the Liquidation Amount per share, together with any accrued and unpaid dividends to, but excluding, the date hereof;

(c)           The Company hereby acknowledges receipt from the Investor of the share certificate(s) set forth on Schedule A hereto representing the Warrant Shares; and

(d)           The Investor hereby acknowledges receipt from the Company of a wire transfer for the account of the Investor in immediately available funds of the aggregate purchase price set forth on Schedule A hereto, representing payment in full for the Repurchased Warrant Shares at a price per share equal to the Liquidation Amount per share, together with any accrued and unpaid dividends to, but excluding, the date hereof.

 

	
Tri-County Financial Corporation – SBLF No. 0057

	
Page 1

 

  

  

  

           This letter agreement will be governed by and construed in accordance with the federal law of the United States if and to the extent such law is applicable, and otherwise in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

This letter agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this letter agreement may be delivered by facsimile and such facsimiles will be deemed sufficient as if actual signature pages had been delivered.

[Remainder of this page intentionally left blank]

 

	
Tri-County Financial Corporation – SBLF No. 0057

	
Page 2

  

  

  

 

In witness whereof, the parties have duly executed this letter agreement as of the date first written above.

	
UNITED STATES DEPARTMENT OF THE TREASURY

	  	  
	
By:

	/s/ Timothy G. Massad
	  	
Name: Timothy G. Massad

	  	
Title: Assistant Secretary for Financial Stability

	  	  
	
TRI-COUNTY FINANCIAL CORPORATION

	  	  
	
By:

	/s/ Michael L. Middleton
	  	
Name:  Michael L. Middleton

	  	
Title:  President and Chief Executive Officer

 

	
Tri-County Financial Corporation – SBLF No. 0057

	
Page 3

 

  

  

  

SCHEDULE A

 

General Information:

 

	
Date of Letter Agreement incorporating the Securities Purchase Agreement:

	  	
December 19, 2008

	  	  	  
	
Name of the Company:

	  	
Tri-County Financial Corporation

	  	  	  
	
Corporate or other organizational form of the Company:

	  	
Corporation

	  	  	  
	
Jurisdiction of organization of the Company:

	  	
Maryland

	  	  	  
	
Number and series of preferred stock issued to the Investor at the Closing (Preferred Shares):

	  	
15,540 shares of Fixed Rate Cumulative Perpetual

	  	  	
Preferred Stock, Series A

	  	  	  
	
Number and series of preferred stock underlying the Warrant issued to the Investor at the Closing (Warrant Shares):

	  	
777 shares of Fixed Rate Cumulative Perpetual

	  	  	
Preferred Stock, Series B

 

Terms of the Repurchase of Preferred Shares:

	
Number of Preferred Shares purchased by the Company:

	  	
15,540

	  	  	  
	
Share certificate number (representing the Preferred Shares previously issued to the Investor at the Closing):

	  	
A-1

	  	  	  
	
Per share Liquidation Amount of Preferred Shares:

	  	
$1,000

	  	  	  
	
Accrued and unpaid dividends on Preferred Shares:

	  	
$79,858.33

	  	  	  
	
Aggregate purchase price for Repurchased Preferred Shares:

	  	
$15,619,858.33

 

Terms of the Repurchase of the Warrant Shares:

 

	
Number of Warrant Shares purchased by the Company:

	  	
777

	  	  	  
	
Share certificate (representing the Warrant Shares previously issued to the Investor at the Closing):

	  	
B-1

	  	  	  
	
Per share Liquidation Amount of Warrant Shares:

	  	
$1,000

 

	
Tri-County Financial Corporation – SBLF No. 0057

	
Page 4

 

  

  

  

 

	
Accrued and unpaid dividends on Warrant Shares;

	  	
$7,187.25

	  	  	  
	
Aggregate purchase price for Repurchased Warrant Shares:

	  	
$784,187.25

 

	
Aggregate purchase price for Repurchased Preferred Shares and Repurchased Warrant Shares:

	  	
$16,404,045.58

 

	
Investor wire information for payment of purchase price:

	  	
ABA Number:

	  	  	
Bank:

	  	  	
Account Name:

	  	  	
Account Number:

 

	
Tri-County Financial Corporation – SBLF No. 0057

	
Page 5

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