Document:

Exhibit 10.2

 

UNITED STATES
DEPARTMENT OF THE TREASURY

1500 Pennsylvania
Avenue, NW

Washington, D.C.
20220

 

July 24, 2009

 

Ladies and Gentlemen:

 

Reference
is made to that certain Letter Agreement incorporating the Securities Purchase
Agreement — Standard Terms dated of as of the date of this letter agreement
(the “Securities Purchase Agreement”) between
United States Department of Treasury (“Investor”) and
the company named on the signature page hereto (the “Company”).  Capitalized terms used but not defined herein
shall have the meanings assigned to them in the Securities Purchase Agreement.

 

The
American Recovery and Reinvestment Act of 2009, as it may be amended from time
to time (the “Act”), includes
provisions relating to executive compensation and other matters that may be
inconsistent with the Securities Purchase Agreement, the Warrant and the
Certificate of Designation (the “Transaction
Documents”).  Accordingly,
Investor and the Company desire to confirm their understanding as follows:

 

1.             Notwithstanding anything in the
Transaction Documents to the contrary, in the event that the Act or any rules or
regulations promulgated thereunder are inconsistent with any of the terms of
the Transaction Documents, the Act and such rules and regulations shall
control.

 

2.             For the avoidance of doubt (and
without limiting the generality of Paragraph 1):

 

(a)           the provisions of Section 111 of
the Emergency Economic Stabilization Act of 2008, as amended by the Act or
otherwise from time to time (“EESA”),
shall apply to the Company;

 

(b)           the waiver to be delivered by each of
the Company’s Senior Executive Officers pursuant to Section 1.2(d)(v) of
the Securities Purchase Agreement shall, in addition, be delivered by any
additional highly compensated employees required by applicable rules or
regulations under EESA;

 

(c)           the Company’s chief executive officer
and chief financial officer shall provide the written certification of
compliance by the Company with the requirements of Section 111 of EESA in
the manner specified by Section 111(b)(4) thereunder or in any rules or
regulations under EESA; and

 

(d)           the Company shall be permitted to
repay preferred shares, and when such preferred shares are repaid, the Investor
shall liquidate warrants associated with such preferred shares, all in
accordance with the Act and any rules and regulations thereunder.

 

From
and after the date hereof, each reference in the Securities Purchase Agreement
to “this Agreement” or “this Securities Purchase Agreement” or words of like
import shall mean 

 

UST Sequence No. 1251

 

 

and be a reference to the Agreement (as defined in the
Securities Purchase Agreement) as amended by this letter agreement.

 

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, the Securities Purchase
Agreement, the Warrant, the Certificate of Designation and any other documents
executed by the parties at the Closing constitute the entire agreement of the
parties with respect to the subject matter hereof.

 

Nothing in this letter
agreement shall be deemed an admission by Investor as to the necessity of
obtaining the consent of the Company in order to effect the changes to the
Transaction Documents contemplated by this letter agreement, nor shall anything
in this letter agreement be deemed to require Investor to obtain the consent of
any other TARP recipient (as defined in the Act) participating in the Capital
Purchase Program (the “CPP”) in
order to effect changes to their documentation under the CPP.

 

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]

 

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/ Herbert
  M. Allison, Jr.

  
	
   

  	
  Name: Herbert M.
  Allison, Jr.

  
	
   

  	
  Title: Assistant
  Secretary for Financial Stability

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:  YADKIN VALLEY FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William A. Long

  
	
   

  	
  Name: William A.
  Long

  
	
   

  	
  Title: President
  and Chief Executive Officer

  

 

SINGNATURE
PAGE TO LETTER AGREEMENTExhibit 10.3

 

WAIVER

 

In
consideration for the benefits I will receive as a result of my employer’s
participation in the United States Department of the Treasury’s TARP Capital
Purchase Program, I hereby voluntarily waive any claim against the United States
or any state or territory thereof or my employer or any of its directors,
officers, employees and agents for any changes to my compensation or benefits
that are required in order to comply with Section 111(b) of the
Emergency Economic Stabilization Act of 2008, as amended (“EESA”), and rules, regulations, guidance
or other requirements issued thereunder (collectively, the “EESA Restrictions”).

 

I
acknowledge that the EESA Restrictions may require modification of the
employment, compensation, bonus, incentive, severance, retention and other
benefit plans, arrangements, policies and agreements (including so-called “golden
parachute” agreements), whether or not in writing, that I have with my employer
or in which I participate as they relate to the period the United States holds
any equity or debt securities of my employer acquired through the TARP Capital
Purchase Program and I hereby consent to all such modifications.  I further acknowledge and agree that if my
employer notifies me in writing that I have received payments in violation of
the EESA Restrictions, I shall repay the aggregate amount of such payments to
my employer no later than fifteen business days following my receipt of such
notice.

 

This
waiver includes all claims I may have under the laws of the United States or
any other jurisdiction related to the requirements imposed by the EESA
Restrictions (including without limitation, any claim for any compensation or
other payments or benefits I would otherwise receive absent the EESA
Restrictions, any challenge to the process by which the EESA Restrictions were
adopted and any tort or constitutional claim about the effect of the foregoing
on my employment relationship) and I hereby agree that I will not at any time
initiate, or cause or permit to be initiated on my behalf, any such claim
against the United States, my employer or its directors, officers, employees or
agents in or before any local, state, federal or other agency, court or body.

 

In
witness whereof, I execute this waiver on my own behalf, thereby communicating
my acceptance and acknowledgement to the provisions herein.

 

	
   

  	
  Respectfully,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: [Executive]

  
	
   

  	
  Date:  July 24, 2009

  
			

 

UST
Sequence No. 1251Exhibit 10.4

 

July 24, 2009

 

[Executive]

Yadkin
Valley Financial Corporation

209
North Bridge Street

Elkin,
North Carolina 28621

 

Dear
[Executive],

 

Yadkin
Valley Financial Corporation (the “Company”) anticipates entering into a
Securities Purchase Agreement (the “Participation Agreement”) with the United
States Department of Treasury (the “Treasury”) that provides, among other
things, for the purchase by the Treasury of securities issued by the Company.
This purchase is anticipated to occur as part of the Company’s participation in
the Treasury’s Troubled Asset Relief Program - Capital Purchase Program (the “CPP”).

 

As
a condition to the closing of the investment contemplated by the Participation
Agreement, the Company is required to take certain actions with respect to
compensation arrangements of its senior executive officers, including senior
executive officers of its wholly owned subsidiary, Yadkin Valley Bank and Trust
Company. The Company has determined that you are or may be a senior executive
officer for purposes of the CPP. To comply with the requirements of the CPP,
and in consideration of the benefits that you will receive as a result of the
Company’s participation in the CPP and for other good and valuable
consideration, the sufficiency of which you hereby acknowledge, you agree as
follows:

 

(1)           No Golden Parachute Payments. You will not be
entitled to receive from the Company any golden parachute payment (as defined
below) during any period in which the Treasury holds an equity or debt position
acquired from the Company in the CPP, as defined by Section 111(a)(5) of
EESA (as defined below) (the “CPP Covered Period”) (or during the year
following any acquisition of the Company, to the extent required by the CPP
Limitations (as defined below)).

 

(2)           No Bonus, Retention Award, or Incentive
Compensation.  You will not be entitled
to receive from the Company any bonus, retention award, or incentive
compensation during the CPP Covered Period, except for certain long term
restricted stock payments and previously determined bonus payments to the
extent permitted by Section 111(b)(3)(D) of EESA (as defined below).

 

(3)           No Tax Gross-Up Payments.  You will not be entitled to receive from the
Company any tax gross-up (as defined below), including a right to a payment of
such gross-up at a date following the CPP Covered Period, or other
reimbursements for the payment of taxes during the CPP Covered Period.

 

(4)           Recovery of Bonus and Incentive Compensation. You
will be required to and shall return to the Company any bonus or incentive
compensation paid to you by the Company during the CPP Covered Period if such
bonus or incentive compensation is paid to you based on materially inaccurate
financial statements or any other materially inaccurate performance metric criteria.

 

UST Sequence No. 701

 

 

(5)           Compensation Program Amendments. Each of the Company’s
compensation, bonus, incentive and other benefit plans, arrangements and
agreements, including your Employment Agreement (all such plans, arrangements
and agreements, the “Benefit Plans”) are hereby amended to the extent necessary
to give effect to provisions (1)-(4) of this letter.

 

The
Company is also required as a condition to participation in the CPP to review
the Benefit Plans to ensure that the Benefit Plans do not encourage its senior
executive officers to take unnecessary and excessive risks that threaten the
value of the Company. To the extent that the Company determines that the
Benefit Plans must be revised as a result of such review, or determines that the
Benefit Plans must otherwise be revised to comply with Section 111(b) of
the EESA (as defined below) as implemented by any guidance or regulation
thereunder that has been issued and is in effect as of the closing date of the
Company’s issuance of preferred stock and warrants to acquire common stock to
the Treasury pursuant to the CPP (the “CPP Limitations”), you and the Company
agree to negotiate and effect such changes promptly and in good faith.

 

(6)           Definitions and
Interpretation. This letter shall be interpreted as follows:

 

·      “Senior executive officer” means the Company’s “senior
executive officers” as defined under Q&A 1 of the Interim Final Rule issued
by the Treasury at 31 CFR Part 30, effective on June 15, 2009 (the “Interim
Final Rule”).

 

·      “Golden parachute payment” shall have the meaning
set forth under Q&A 1 of the Interim Final Rule.

 

·      “Gross-up” shall have the meaning set forth under
Q&A 1 of the Interim Final Rule.

 

·      The term “Company” includes any entities treated as
a single employer with the Company under Q&A 1 of the Interim Final Rule.

 

·      This letter is intended to, and shall be
interpreted, administered and construed to comply with Section 111 of the
Emergency Economic Stabilization Act of 2008 (the “EESA”), as amended by the
American Recovery and Reinvestment Act of 2009 and the regulations and guidance
promulgated 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).

 

(7)           Miscellaneous. To the extent not subject to federal
law, this letter will be governed by and construed in accordance with the laws
of the State of South Carolina. 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.

 

(8)           In addition, upon such time as the Treasury no
longer holds securities or debt of the Company acquired under the CPP, this
letter shall be of no further force or effect, except to the extent required by
the CPP Limitations. If you cease to be a senior executive officer of the
Company for purposes of the CPP, you shall be released from the restrictions
and obligations set forth in this letter to the extent permissible under the CPP.
If it is determined that you are not a senior executive officer of the Company
as of the date hereof, this letter shall be of no force or effect.

 

 

The
Company appreciates the concessions you are making and looks forward to your
continued leadership during these financially turbulent times.

 

[Signature page follows]

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  YADKIN
  VALLEY FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
   [Executive]

  	
   

  
	
   

  	
  Title:  [Executive’s
  Title]

  
	
   

  	
   

  
	
   

  	
   

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

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:
  [Executive]

  
	
  Title:[Executive’s
  Title]

  
	
  Date:
  July 24, 2009

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