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AGREEMENT
THIS AGREEMENT made this 15th day of September, 1998, by and
between:
FIRST WESTERN BANCORP, INC., a Pennsylvania corporation which
is hereinafter referred to as the "Company",
AND
XXXX X. XXXXXXX, an employee of the Company, and hereinafter
referred to as the "Executive";
W I T N E S S E T H:
WHEREAS, the Executive serves in the capacity of, and performs
the duties of, an Executive Officer for the Company; and
WHEREAS, the Board of Directors of the Company considers it to
be in the best interest of the Company and the stockholders of the
Company that the Executive continue to serve in an executive capacity of
the Company; and
WHEREAS, the Company desires to assure the continuing services
of the Executive on behalf of the Company on an objective and impartial
basis and without distraction or conflict of interest due to the
uncertainties of his position in the event of an actual, attempted or
threatened Change in Control (as such Change in Control is hereinafter
defined in Paragraph 1); and
WHEREAS, in view of the foregoing, the Company desires to
provide the Executive with a degree of employment security in the event
of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Company and
the Executive hereby agree as follows:
1. as used herein, the following definitions apply:
(a) "Bank" means First Western Bank, National Association, or any
successor thereto.
(b) "Beneficial Owner" shall have the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(c) "Board" means the Board of Directors of the Company and/or the
Board of Directors of the Bank, as indicated by the context in
which the term is used.
(d) "Change in Control" shall be deemed to have occurred as of the
first day that any one or more of the following conditions shall
have been satisfied:
(i) Final regulatory approval is obtained for any Person (other
than those Persons in control of the Company and/or the Bank,
as applicable, as of the effective date of this Agreement, or
other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company and/or the Bank,
as applicable, or a
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corporation owned directly or indirectly by the
stockholders of the Company and/or the Bank, as
applicable, in substantially the same proportions as
their ownership of stock of the Company and/or the
Bank), to become the Beneficial Owner, directly or
indirectly, of securities of the Company and/or the
Bank, as applicable, representing twenty (20) percent
or more of the combined voting power of the Company's
(or the Bank's as applicable) then outstanding
securities; or
(ii) During any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the
Board of the Company and/or the Board of the Bank (and any new
Director, whose election by the Company's stockholders or the
Bank's stockholders, as applicable, was approved by a vote of
at least two-thirds (2/3) of the Directors then still in
office who either were Directors at the beginning of the
period or whose election or nomination for election was so
approved), cease for any reason to constitute a majority
thereof; or
(iii) Final regulatory approval is obtained with respect to:
(A) a plan of complete liquidation of the Company or
the Bank; or (B) an agreement for the sale or
disposition of all or substantially all the Company's
or the Bank's assets; or (C) a merger, consolidation,
or reorganization of the Company and/or the Bank with
or involving any other corporation, other than a
merger, consolidation, or reorganization that would
result in the voting securities of the Company or the
Bank (as applicable) outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity), at least fifty
(50) percent of the combined voting power of the voting
securities of the Company of the Bank (as applicable)
(or such surviving entity) outstanding immediately
after such merger, consolidation, or reorganization.
Notwithstanding the foregoing, in no event shall a Change in
Control be deemed to have occurred, with respect to the
Executive, if the Executive is part of a purchasing group which
consummates the Change in Control transaction. The Executive
shall be deemed "part of a purchasing company or group (except
for: (A) passive ownership of less than three (3) percent of
the stock of the purchasing company or group which is otherwise
not significant, as determined prior to the Change in Control by
a majority of the nonemployed continuing Directors of the
Company or the Bank, as applicable).
(e) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(f) "Person" shall have the meaning ascribed to such term in Sec.
3(a)(9) of the Exchange Act and used in Sec. 13(d) and Sec.
14(d) thereof, including a "group" as defined in Sec. 13(d).
The term Person shall not include the Company or the Bank, any
executive officer or Director of the Company, the Bank, or a
subsidiary of the Company or Bank, or a group controlled by
such Directors or executive officers, or any employee benefit
plan of the Company, the Bank, or a subsidiary of the Company
or Bank; provided, however, that the term Person shall include
any individual who is a Director on the effective date of this
Agreement beneficially owned five (5) percent or more of the
voting shares of common stock of the Company, or a group
controlled by such a Director.
2. If at the time of a Change in Control the Executive is still
serving in the capacity of, and performing the duties of, an
Executive Officer for the Company or the Bank, the
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Company shall continue to employ the Executive in an executive
position during his "Term of Employment" which, for purposes of
this Agreement is defined as the earliest of (i) the date upon
which the Executive would attain age 65 ("Normal Retirement Age"),
(ii) the date upon which the Executive's elected early retirement
is scheduled to begin and (iii) the date that is thirty-six (36)
months after the date of the Change in Control, such employment to
be all upon the terms and conditions hereinafter set forth.
3. During the Term of Employment the Company shall:
(a) pay the Executive, during the first year of the Term of
Employment (or such portion thereof if the Term of Employment is
less than a year), a monthly salary at least equal to the
Executive's highest salary for any month during the twelve (12)
months immediately preceding the Change in Control and, during
each subsequent year of the Term of Employment, an annual salary
(payable on at least a monthly basis) at least equal to the
Executive's salary for the immediately preceding year plus an
amount calculated in a manner at least as favorable to the
Executive as the manner in which the pay increases for other
Company executives or of new Company executives are calculated,
or in the case of an implemented salary freeze or decrease
across the board, an increase calculated in accordance with the
prior twelve (12) months' increase in the U.S. Government
Consumer Price Index;
(b) pay the Executive an annual bonus calculated in a manner at
least as favorable to the Executive as the manner in which (i)
the last annual bonus paid to the Executive prior to the Change
in Control was calculated, or (ii) the annual bonus paid to the
Executive by the Company in the immediately preceding year was
calculated (whichever would result in a greater payment to the
Executive); this annual bonus may be pro-rated for that portion
of the year covered by the Term of Employment if the Term of
Employment expires prior to year end;
(c) provide and maintain in full force and effect through existing
plans or through equivalent plans at least the types and amounts
of group insurance coverages (including conversion features) and
benefits, including life, health, disability and hospitalization
insurance, and other health care benefits, including medical,
hospital and surgical benefits and health care benefits for the
Executive's family (collectively "Insurance and Health Care
Benefits"), to which the Executive was entitled immediately
prior to the Change in Control or the Insurance and Health Care
Benefits provided by the Company or its successor to its other
executives after a Change in Control (whichever would result in
greater Insurance and Health Care Benefits to the Executive);
(d) continue to provide benefits to the Executive under the
Company's pension plan, profit sharing plan (including Section
401(k) election and matching contribution provisions), ESOP
plans and other fringe benefits programs and arrangements,
including employee benefit plans, as in effect immediately prior
to the Change in Control or, if such plans, programs or
arrangements are discontinued or superseded, provide benefits to
the Executive on the same basis as such benefits are provided to
the other executives of the Company or its successor after a
Change in Control; and
(e) provide and maintain in full force and effect at least those
additional executive benefits and perquisites which the
Executive was entitled to from the Company immediately prior to
the Change in Control, including any social and/or club
memberships and any Company provided automobiles (which
automobiles may be purchased at termination at the lower of fair
market value per NADA blue book wholesale value or at book value
on the Company's books and records).
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4. "Termination of Employment", for the purposes of this Agreement,
shall occur if the Executive's employment in an executive position
is terminated during the Term of Employment:
(i) by the Company for any reason, including disability or
incapacity, but excepting a termination for "cause," as shall be
determined by the Board of the Company and the Board of the
Bank, in exercise of good faith and reasonable judgment, upon
the occurrences of any one or more of the following:
(a) the Executive's conviction for committing an act of fraud,
embezzlement, theft, or other act constituting a felony; or
(b) the willful engaging by the Executive in gross misconduct
materially and demonstrably injurious to the Company and/or
the Bank; however, no act or failure to act, on the
Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and
without reasonable belief that his action or omission was in
the best interest of the Company and/or the Bank; or
(c) the conviction of the Executive of any criminal offense or act
involving dishonesty or a breach of trust which requires the
Company or the Bank to terminate the employment of the
Executive, and/or precludes the payment of severance
compensation under Federal law; or
(d) any conduct, act, or omission by the Executive which would
constitute grounds for the imposition upon the Executive, the
Company or the Bank of a civil penalty under Sec. 8(i)(2)(B)
or (C) of the Federal Deposit Insurance Act; or
(ii) by the Executive for "good reason," which shall mean, without
the Executive's express written consent, the occurrence after a
Change in Control of the Company or the Bank of any one or more
of the following:
(a) the assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, titles, and
reporting requirements) as an officer of the Company and/or
the Bank, or a reduction or alteration in the nature or status
of the Executive's authorities, duties, or responsibilities
form those in effect as of ninety (90) days prior to the
Change in Control, other than an insubstantial and inadvertent
act that this remedied by the Company and/or the Bank promptly
after receipt of notice thereof given by the Executive, and
other than any such alteration which is consented to by the
Executive in writing;
(b) the Company's requiring the Executive to be based at a
location in excess of thirty-five (35) miles from the location
of the Executive's principal job location or office
immediately prior to the Change in Control; except for
required travel on the Company's and/or the Bank's business to
an extent substantially consistent with the Executive's
present business obligations; and further except as may be
waived by the Executive provided the Company pays all expenses
related to a move, including purchasing any existing house
used by the Executive as his principal residence which the
Executive is not able to sell within One-Hundred Twenty (120)
days of listing at fair market value as fair market value is
determined by two (2) independent appraisals;
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(c) a material reduction by the Company or the Bank of the
Executive's compensation or benefits; and
(d) the failure of the Company or the Bank to obtain a
satisfactory agreement from any successor to the Company or
the Bank to assume and agree to perform the Company's and the
Bank's obligations under this Agreement.
The Executive's right to terminate employment for good reason
shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued
employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting good
reason herein.
5. In the event of a Termination of Employment, the Company shall pay
or cause to be paid to the Executive or after the Executive's death
to his designated beneficiary, or if there be none, to his personal
representative, executor or administrator (for the purposes of this
Paragraph 5 the term "Executive" shall include the Executive's
designated beneficiary, personal representative, executor or
administrator) a single lump sum payment in an amount equal to the
present value of the total amount calculated below, such present
value to be determined by discount based upon an interest rate two
(2) percentage points less than the Pittsburgh prime rate in effect
at the date of Termination of Employment. The Company shall pay
the Executive such lump sum amount within thirty (30) days
following the date of Termination of Employment. The total amount
upon which the present value is to be determined, shall be
calculated as follows:
The sum of:
(a) the equivalent of all monthly salaries during the "Payment
Period" with each monthly salary being equal to the greater of
the Executive's highest salary from the Company for any month
during the twelve (12) months immediately preceding (A) the
change of control and (B) the termination of employment ("Annual
Base Compensation"), plus
(b) the greater of the average of the annual bonuses received by the
Executive from the Company during the three (3) calendar years
immediately preceding (A) the change in control and (B) the
Termination of Employment ("Annual Bonus"), plus
(c) the cost of any social and/or club memberships and the cost of
any Company provided automobiles.
The "Payment Period", for purposes of this Agreement, is defined to be
the period beginning on the date of Termination of Employment and
ending on the earlier of (i) the date upon which the Executive would
attain Normal Retirement Age and (ii) the date that is thirty-six (36)
months from the date of the Change of Control.
The Executive's right to receive compensation from the Company
pursuant to this Paragraph 5 shall not be affected by the Executive's
receipt of compensation in connection with any subsequent employment
by any other corporation or entity.
6. In the event that during the Term of Employment following a Change
in Control the Executive ceases to be employed by the Company for
any reason, including retirement at or at any time before Normal
Retirement Age, Termination of Employment or dismissal by the
Company for reasons other than for cause (pursuant to Paragraph 4
hereof), the Executive and/or his spouse shall continue to receive
from the Company, until the date the Executive attains or would
have attained Normal Retirement Age, insurance and health care
benefits equivalent to the greater of the insurance and health care
benefits to which the Executive was entitled (i) immediately
preceding the date the Executive ceased to be
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employed by the Company and (ii) immediately preceding the
Change in Control (provided that the Company may reduce such
insurance and health care benefits to the extent of any
duplication of the types and amounts of coverages and benefits
provided to the Executive in connection with any subsequent
employment by any other corporation or other entity prior to the
Executive attaining Normal Retirement Age), and from and after
the date the Executive attains or would have attained Normal
Retirement Age, the Executive and/or his spouse shall
receive the insurance and health care benefits, if any, to which
he would be entitled as a retired executive employee under the
Company's benefit plans and programs in effect immediately prior
to the Change in Control or immediately prior to the date the
Executive ceased to be employed by the Company (whichever would
result in greater benefits to the Executive).
7. In the event that during the Term of Employment following a Change
in Control the Executive ceases to be employed by the Company for
any reason, including retirement at or at any time before Normal
Retirement Age, Termination of Employment or dismissal by the
Company for reasons other than for cause (pursuant to Paragraph 4
hereof), the Executive shall receive retirement benefits in
accordance with the Company's retirement plans, including any
supplemental executive retirement plan (the "Retirement Plan") as
in effect immediately prior to the Change in Control or immediately
prior to the Termination of Employment (whichever would result in
greater benefits for the Executive ). In the event of a
Termination of Employment prior to the date the Executive attains
Normal Retirement Age, in addition to benefits payable to the
Executive pursuant to the Retirement Plan, the Executive shall be
entitled to receive supplemental retirement benefits from the
Company equal in value to the difference between:
(i) the benefits to which the Executive would have been entitled
under the Retirement Plan assuming years of Service under the
Retirement Plan equal to the Executive's years of Service under
the Retirement Plan to the Termination of Employment plus the
number of years of Service that the Executive would have earned
by continuing employment with the Company until the termination
of the Payment Period (at an assumed annual salary during each
year of assumed Service following the date of the Termination of
Employment equal to the Executive's compensation including bonus
club memberships and the like as set forth in par.3 above), and
(ii) the benefits which the Executive is entitled to receive under
the Retirement Plan.
Any supplemental retirement benefits payable by the Company shall
be payable to the same extent and in the same form as, and
commencing on the date on which, benefit payments commence under
the Retirement Plan (including payment pursuant to any option
thereunder, including early retirement or any early retirement
program where years may be added or included for early retirement
benefit calculations, payment elections and beneficiary
designations).
8. In the event of the death of the Executive during the Term of
Employment, in addition to the amounts, if any, payable pursuant to
Paragraphs 5, 6 or 7 hereof, the estate of the Executive shall
receive benefits at least equal to the greater of:
(i) such other benefits which would have been payable to the estate
of the Executive by the Company if such event had occurred
immediately prior to the date of the Change in Control and
(ii) such other benefits payable to the estate of the Executive under
benefit plans and programs of the Company existing as of the
date of the Executive's death.
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9. In the event any excise tax under Section 4999 (or any successor
section) of the Internal Revenue Code (the "Excise Tax") is
levied at any time on any amount paid pursuant to Paragraphs 3,
5, 6 or 7 of this Agreement, in addition to the amounts payable
to the Executive pursuant to Paragraphs 3, 5, 6 or 7 of this
Agreement, the Company shall promptly pay the Executive an
amount designated as the "Gross-Up Amount" such that the Gross-
Up Amount minus the Excise Tax on the Gross-Up Amount equals the
Excise Tax on the amounts payable to the Executive pursuant to
such Paragraphs.
10. Notwithstanding any provision of this Agreement to the contrary,
this Agreement and any payments, benefits or rights of the
Executive as provided herein are subject to Sec. 18(k) of the
Federal Deposit Insurance Act, as amended, and any applicable
regulations thereunder.
11. Unless specifically provided otherwise herein, the Company's and
the Bank's obligation to make the payments and the arrangements
provided for herein shall be absolute and unconditional, and shall
not be affected by any circumstances, including, without
limitation, any offset, counterclaim, recoupment, defense or other
right which the Company or the bank may have against the Executive
or any other party. All amounts payable by the Company and the
Bank hereunder shall be paid without notice or demand. Each and
every payment made hereunder by the Company and the Bank shall be
final, and neither the Company nor the Bank shall seek to recover
all or any part of such payment from the Executive or from
whomsoever may be entitled thereto, for any reasons whatsoever.
12. This Agreement establishes and vests in the Executive a contractual
right to the benefits to which he is entitled hereunder. However,
nothing herein contained shall require or be deemed to require, or
prohibit or be deemed to prohibit, the Company or the Bank to
segregate, earmark, or otherwise set aside any funds or other
assets, in trust or otherwise, to provide for any payments to be
made or required hereunder.
13. In the event that it shall be necessary or desirable for the
Executive to retain legal counsel and/or incur other costs and
expenses in connection with the enforcement of any or all of his
rights under this Agreement, and provided that the executive
substantially prevails in the enforcement of such rights, the
Company or the Bank, as applicable, shall pay (or the Executive
shall be entitled to recover from the Company or the Bank, as the
case may be) the Executive's reasonable attorneys' fees, costs and
expenses in connection with the enforcement of his rights including
the enforcement of any arbitration award.
14. The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and the obtaining of any such other
employment shall in no event effect any reduction of the Company's
or the Bank's obligations to make the payments and arrangements
required to be made under this Agreement, except to the extent
otherwise specifically provided herein.
15. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof (including the arbitrability of any
controversy or claim), shall be settled by arbitration in the City
of Pittsburgh in accordance with the laws of the Commonwealth of
Pennsylvania by three (3) arbitrators, one of whom shall be
appointed by the Company or the Bank, as applicable, one by the
Executive, and the third of whom shall be appointed by the first
two (2) arbitrators. If the first two (2) arbitrators cannot agree
on the appointment of a third arbitrator, then the third arbitrator
shall be
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appointed by the American Arbitration Association. The
arbitration shall be conducted in accordance with the rules of
the American Arbitration Association, except with respect to the
selection of arbitrators which shall be as provided in this Sec.
7.1. The cost of any arbitration proceeding hereunder shall be
borne equally by the Company or the Bank, as applicable, and the
Executive. The award of the arbitrators shall be binding upon
the parties. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction
thereof.
16. The Executive, the Company, and the Bank acknowledge that, except
as may be provided under any other agreement between the Executive
and the Company or the Bank, the employment of the Executive by the
Company and the Bank is "at will," and, prior to the effective date
of a Change in Control, may be terminated by either the Executive,
the Company, or the Bank, at any time. Upon a termination of the
Executive's employment prior to the effective date of a Change in
Control, there shall be no further rights under this Agreement;
provided, however, that if such an employment termination shall
arise in connection with, or in anticipation of, a Change in
Control, then the Executive's rights shall be the same as if the
termination had occurred during the Term of Employment hereunder.
17. All notices, requests, demands, and other communications hereunder
must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by
first-class certified mail, return receipt requested, postage
prepaid, to the other party, addressed as follows:
(a) as to the Company:
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000-0000
(b) if to the Executive:
X.X. #0
Xxx 0000
Xxxxxxx, XX 00000
18. The compensation and benefits provided pursuant to Paragraph 5
hereof, to the extent received by the Executive, are granted to the
Executive in lieu of any compensation, benefits or amounts the
Executive might otherwise be entitled to under the Company's
severance policy or otherwise from the Company by reason of a
Termination of Employment. Except as otherwise set forth herein,
this Agreement shall not in any way alter the rights and
obligations of the Company and the Executive under any of the
Company's benefit plans.
19. The rights of the Executive under this Agreement shall not be
transferable by assignment or otherwise, shall not be subject to
commutation or encumbrance and shall not be subject to the claims
of the creditors of the Executive.
20. This Agreement shall be binding upon and inure to the benefit of
the Executive, his designated beneficiary, personal representative,
executor or administrator, the Company and any successor, including
any organization which shall succeed to substantially all of the
business and property of the Company, whether by means of merger,
consolidation, acquisition or substantially all of the assets of
the Company or otherwise, including by operation of law (a
"Successor Organization"). The Company shall not merge,
reorganize, consolidate, sell all or substantially all of its
assets,
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combine by operation of law or otherwise combine, to or with any
Successor Organization, unless, as a condition to such
transaction, the Successor Organization assumes the obligations
of the Company under this Agreement. For purposes of this
Agreement the term Company shall include any Successor
Organization.
21. This Agreement has been made in and shall be governed and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
22. The invalidity of any term of this Agreement shall not invalidate
or otherwise affect any other term of this Agreement.
23. All costs and expenses, including attorneys' fees and court costs,
reasonably incurred by the Executive to enforce this Agreement or
defend the validity of this Agreement shall be paid by the Company.
24. (a) Notwithstanding anything to the contrary contained above, this
Agreement shall remain in effect through December 31, 1998 at
which time, if there has not been a Change in Control, this
Agreement shall lapse and become null and void unless extended
by the Company.
(b) The Executive understands that the Company is in no way
obligated to either extend or renew the Executive's change in
control agreement. The Executive further understands that in
the event the Company should decide to extend to the Executive
a new change in control agreement, such new agreement may
contain terms and conditions materially different from the
terms and conditions set forth in this change in control
agreement.
25. This Agreement supersedes and makes void any prior agreement
between the parties and sets forth the entire agreement and
understanding of the parties hereto with respect to the matters
covered hereby and may not be amended or modified except by further
written agreement of the parties. Any beneficiary designation, or
any termination or amendment to any existing designation under this
Agreement shall be by written instrument executed by the Executive
and delivered to the Company.
IN WITNESS WHEREOF, the undersigned have set their hands and seals
or caused this Agreement to be signed by a duly authorized officer, on
the date first set out above.
ATTEST: FIRST WESTERN BANCORP, INC.
/s/Xxxxx X. Xxxx BY: /s/Xxxxxx X. X'Xxxxx
---------------- --------------------
XXXXXX X. X 'XXXXX, CHAIRMAN
& C.E.O.
WITNESS: EXECUTIVE:
/s/Xxxxx X. Xxxx /s/Xxxx X. Xxxxxxx
---------------- ------------------
Xxxx X. Xxxxxxx
doc\tsm96\Xxxxxxx.agr
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