Exhibit 10.9.2
EXECUTIVE OFFICER
SEVERANCE AGREEMENT
          This Agreement is entered into as of the ___ day of
                    , 2009, by and between the FEDERAL HOME LOAN BANK OF
PITTSBURGH, a corporation organized under the laws of the United States (the
“Bank”) and Winthrop Watson                                         (the
“Executive”).
          WHEREAS, the Executive is willing to accept employment with the Bank
but desires assurance that, in the event of a “Reorganization” (as defined in
Section 1 below) of the Bank, he will continue to have the responsibility and
status he has earned, either with the Bank or with a successor to the Bank; and
          WHEREAS, to induce the Executive to accept employment with the Bank,
in the event the Executive’s employment with the Bank terminates following a
“Reorganization” (as defined in Section 1 below) of the Bank, such Executive
shall be eligible to receive severance benefits under the terms and conditions
of this Agreement in lieu of being eligible for benefits under any Bank
severance policy.
          NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein contained, the Bank and the Executive hereby agree as follows:
          1.      Definitions.
          “Bank” shall mean the Federal Home Loan Bank of Pittsburgh and any
other entity within the definition of “Bank” in Section 6(a) hereof.
          “Cause” shall mean (i) the continued failure of the Executive to
perform his duties with the Bank (other than any such failure resulting from
Disability), after a demand for performance, pursuant to a resolution of the
Bank’s Board of Directors, is delivered to the Executive by the Chair of the
Board of Directors of the Bank, which specifically identifies the manner in
which the Executive has not performed his duties, (ii) the personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, or willful violation of
any law, rule or regulation (other than routine traffic violations or similar
offenses); or (iii) the removal of the Executive by or at the direction of the
Federal Housing Finance Agency pursuant to federal laws, rules and regulations,
including 12 U.S.C. §4501 et. seq. as amended or by any successor agency to the
Federal Housing Finance Agency pursuant to a similar statute.
          “Compensated Termination” shall have the meaning set forth in
Section 2(a).

 

--------------------------------------------------------------------------------

 

          “Disability” shall mean, as a result of the Executive’s incapacity due
to physical or mental illness, the Executive shall have been absent from
performing his duties with the Bank for an aggregate of six (6) months in a
twelve (12) months period, and, within thirty (30) days after a Notice of
Termination is thereafter given by the Bank to the Executive, the Executive
shall not have returned to the full-time performance of the Executive’s duties.
          “Good Reason” shall mean the occurrence of any of the following events
during the period beginning with the execution of a definitive agreement
regarding a Reorganization and ending twelve (12) months after the effective
date of such Reorganization:
          (i)      (1) a material diminution in the Executive’s base
compensation as in effect immediately prior to the beginning of the period or as
the same may be increased from time to time thereafter, (2) a material
diminution in the Executive’s authority, duties or responsibilities as in effect
immediately prior to the beginning of the period, or (3) a material diminution
in the authority, duties or responsibilities of the officer (as in effect
immediately prior to the beginning of the period) to whom the Executive is
required to report,
          (ii)      any material breach of this Agreement by the Bank, or
          (iii)      any material change in the geographic location at which the
Executive must perform his services for the Bank;
provided, however, that prior to any termination of employment for Good Reason,
the Executive must first provide written notice to the Bank within ninety
(90) days of the initial existence of the condition, describing the existence of
such condition, and the Bank shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Bank received the written
notice from the Executive. If the Bank remedies the condition within such thirty
(30) day cure period, then no Good Reason shall be deemed to exist with respect
to such condition. If the Bank does not remedy the condition within such thirty
(30) day cure period, then the Executive may deliver a Notice of Termination for
Good Reason at any time within sixty (60) days following the expiration of such
cure period.
          “Notice of Termination” shall mean a written notice which shall
indicate those specific termination provisions in this Agreement upon which the
Bank or the Executive, as the case may be, has relied for such termination and
which sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the
provision so indicated.
          “Payment Determination Date” shall have the meaning set forth in
Section 2(b).
          “Reorganization” of the Bank shall mean the occurrence at any time of
any of the following events:

2

--------------------------------------------------------------------------------

 

          (i)      The Bank is merged or consolidated with or reorganized into
or with another bank or other entity, or another bank or other entity is merged
or consolidated into the Bank;
          (ii)      The Bank sells or transfers all, or substantially all of its
business and/or assets to another bank or other entity; or
          (iii)      The liquidation or dissolution of the Bank;
provided the term “Reorganization” shall not include any Reorganization pursuant
to any federal statute, rule, regulation or directive (including 12 U.S.C. §4501
et. seq. as amended).
          “Release Agreement” shall mean the Bank’s standard release of claims
agreement executed by the Bank and the Executive under which the Executive
releases the Bank from claims arising during the Executive’s employment with the
Bank.
          “Retirement” shall mean the planned and voluntary termination by the
Executive of his employment on or after reaching the earliest retirement age
permitted by the Bank’s qualified retirement plans.
          2.        Compensated Termination.
          (a)      Compensated Termination. If the Executive incurs a
Compensated Termination while the Executive is employed by the Bank or within
twelve (12) months after the effective date of a Reorganization of the Bank
(whether the Executive is then employed by the Bank or a successor to the Bank
as a result of such Reorganization), the Executive shall be entitled to the
benefits provided in Section 4(a). For purposes of this Agreement, a
“Compensated Termination” means termination of the Executive’s employment under
either of the following circumstances:
          (i)      By the Executive for Good Reason; or
          (ii)      By the Bank, or by its successor in a Reorganization,
without Cause at any time during the period (1) beginning with the execution of
a definitive agreement regarding a Reorganization and (2) ending twelve
(12) months after the effective date of such Reorganization.
          (b)       Payment Determination Date. “Payment Determination Date,”
for purposes of determining when a payment resulting from a Compensated
Termination must be made pursuant to Section 4(a), shall mean the effective date
of the termination of the Executive’s employment with the Bank if such
termination is a “Compensated Termination.”

3

--------------------------------------------------------------------------------

 

          (c)        Non-Compensated Termination. For the avoidance of doubt,
none of the following events shall result in any payment to the Executive for a
Compensated Termination under Section 4(a):
          (i)      The termination of employment by the Executive without Good
Reason;
          (ii)      The termination of the Executive’s employment for Cause by
the Bank or its successor in a Reorganization;
          (iii)      The termination of the Executive’s employment Without Cause
by the Bank or its successor in a Reorganization (1) prior to the execution of a
definitive agreement regarding a Reorganization or (2) more than twelve
(12) months after the effective date of such Reorganization;
          (iv)      The termination of the Executive’s employment by the Bank or
its successor in a Reorganization for Disability;
          (v)      The death of the Executive; or
          (vi)      The Retirement of the Executive.
3.      Termination of Employment.
          (a) Termination by the Bank. The Bank may terminate the employment of
the Executive as follows:
          (i)      For Cause upon the adoption of a resolution by the
affirmative vote of not less than a majority of the entire membership of the
Bank’s Board of Directors at a meeting of the Board (after reasonable notice to
the Executive and an opportunity for the Executive, together with counsel, to be
heard by the Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth in the definition of “Cause” in
Section 1 hereof and specifying the particulars thereof in detail. A vote of the
Board is not required if the Executive is removed by or at the direction of the
Federal Housing Finance Agency pursuant to federal laws, rules and regulations,
including 12 U.S.C. §4501 et. seq. as amended;
          (ii)      Without Cause;
          (iii)      Upon the Disability of the Executive; and
          (iv)      Upon the death of the Executive.

4

--------------------------------------------------------------------------------

 

          (b) Termination by Executive. The Executive may terminate his
employment with the Bank as follows:
          (i)      For Good Reason;
          (ii)      Without Good Reason; or
          (iii)      Upon the Executive’s Retirement, in which case the
Executive shall be entitled to all benefits under any retirement plan of the
Bank and other plans to which the Executive is a party.
          (c) Preservation of Compensated Termination. The provisions of
Sections 3(a) and 3(b) are included in this Agreement for clarification of the
rights of termination of the employment relationship between the Bank and the
Executive, but such provisions shall not prejudice the Executive’s right to
receive payments or benefits required to be provided to the Executive if any
such termination is a “Compensated Termination.”
          (d) Notice of Termination.
          (i)      Any termination by the Bank for Disability or Cause shall be
communicated by a Notice of Termination; provided, however, that the failure by
the Bank to give notice in such circumstances shall not constitute a Compensated
Termination.
          (ii)      Any termination by the Bank without Cause or by the
Executive without Good Reason shall be communicated to the other party in
accordance with the general notice provisions of this Agreement.
4.       Payment for Compensated Termination.
          (a)         In the event of a Compensated Termination, the Bank shall
pay or provide the Executive the following:
          (i)      an amount equal to 2.00 times the annualized base salary of
the Executive in the calendar year of separation from the Bank; plus
          (ii)      an amount equal to 2.00 times the payout award the Executive
could have received at target in the calendar year of separation from the Bank
under the variable incentive compensation plan; plus
          (iii)      twelve months of individualized executive outplacement
services commencing on the day of the Executive’s separation from the Bank.
The amounts provided under Sections 4(a)(i) and 4(a)(ii) above shall be
distributed to the Executive in a lump sum, with the lump sum payment being made
within forty-five (45) days of the Payment Determination

5

--------------------------------------------------------------------------------

 

Date. The Bank shall directly pay the cost of the outplacement benefit provided
for in 4(a)(iii) above; provided, that, the Executive must submit to the Bank a
valid claim substantiating the expense within 45 days of incurring the expense.
Each reimbursement will be paid within 30 days following the Bank’s receipt of a
valid claim substantiating the expense, and in any event shall be paid no later
than March 15th of the year immediately following the year in which the expenses
were incurred.
          (b)      Notwithstanding Section 4(a), if the Bank is not in
compliance with any applicable regulatory capital or regulatory leverage
requirement or if the payment would cause the Bank to fall below applicable
regulatory requirements, then such payment shall be deferred until such time as
the Bank or any successor achieves compliance with its regulatory requirement.
          (c)      After a Compensated Termination, the Executive shall continue
to be covered by the Bank’s applicable medical insurance plan consistent with
the Executive’s elections then in effect immediately prior to the Compensated
Termination for a period of eighteen (18) months, subject to the Executive’s
payment of the portion of the premiums for such medical insurance equivalent to
the portion of such premiums paid by the Bank’s then active employees; provided
that any insurance premiums payable by the Bank or any successor pursuant to
this Section 4 shall be payable at such times and in such amounts as if the
Executive was still an employee of the Bank, subject to any increases in such
amounts imposed by the insurance company or COBRA, and the amount of insurance
premiums required to be paid by the Bank in any other taxable year.
          (d)      The Executive shall be responsible for the payment of all
federal, state and local income taxes which may be due with respect to any
payments made to the Executive pursuant to this Agreement.
          (e) The Executive shall be required to execute the Bank’s standard
Release Agreement as a condition precedent to receiving the payments stated
herein.
5.       No Obligation to Seek Further Employment; No Effect on Other
Contractual Rights.
          (a)      The Executive shall not be required to seek other employment,
nor shall any payment made under this Agreement be reduced by any compensation
received from other employment.
          (b)      The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive’s existing rights, or rights which would accrue solely as
a result of the passage of time, under any plan.
6.       Successor to the Bank.

6

--------------------------------------------------------------------------------

 

          (a)      This Agreement is binding upon the successors and assigns of
the Bank. The Bank and its successors and assigns will require any successor or
assign (whether direct or indirect, in a Reorganization, by operation of law, or
otherwise) to all or substantially all of the business and/or assets of the
Bank, to enter into a written agreement in form and substance satisfactory to
the Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the Bank
would be required to perform it if no such succession or assignment had taken
place. In the event of a Compensated Termination, the Bank agrees that it shall
pay or shall cause such employer to pay any amounts owed to the Executive
pursuant to Section 4 hereof.
As used in this Agreement, “Bank” shall mean the Bank as hereinbefore defined
and any successor or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. If at any time during the term of this Agreement the Executive
is employed by any corporation a majority of the voting securities of which is
then owned by the Bank, the term “Bank” shall include such employer. Whether or
not another entity becomes the successor or assign of the Bank under this
Agreement, the maximum amount which the Executive may receive from all sources
under this Agreement in a Compensated Termination shall be the amounts set forth
in Section 4 hereof.
          (b)      This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal and legal representatives, executors,
administrators, successors, heirs, distributees, and legatees. If the Executive
should die while any amounts are still payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the beneficiary designated by notice in writing
executed by the Executive and filed with the Bank, or failing such designation,
to the Executive’s estate.
7.       Late Payment of Benefits. Any payment made later than the time provided
for in Section 4(a) of this Agreement for whatever reason, including, without
limitation, the reasons set forth in Section 4(b), shall include interest at the
Fed funds rate which shall begin to accrue on the tenth (10th) day following the
Executive’s Payment Determination Date.
8.       Employment Rights. This Agreement shall not confer upon the Executive
any right to continue in the employ of the Bank and shall not in any way affect
the right of the Bank to dismiss or otherwise terminate the Executive’s
employment at any time and for any reason with or without cause. This Agreement
is not intended (i) to be an employment agreement or (ii) to define all aspects
of the employment relationship between the Bank and the Executive, including but
not limited to applicable employment or benefit policies of the Bank. To the
extent there is any conflict between the terms hereof and the terms of any
employment or benefit policies of the Bank, the terms of this Agreement shall
control. Any payments or benefits to which the Executive may be

7

--------------------------------------------------------------------------------

 

entitled under Section 4 hereof will not constitute wages for work performed by
the Executive.
9.        Tax Withholding. The Bank will withhold from any amounts payable to
the Executive under this Agreement to satisfy all applicable federal, state,
local or other withholding taxes. All amounts payable under Section 4(a) are
considered “wages” to be reported on Form W-2. The normal withholding rules for
wages apply. The Bank will also withhold any excise taxes owed under Code
Section 4999.
10.        Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand, delivered by a
nationally-recognized overnight courier service, or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:

8

--------------------------------------------------------------------------------

 

If to the Bank:
Federal Home Loan Bank of Pittsburgh
601 Grant Street
Pittsburgh, PA 15219
Attention: Chair of the Board of Directors
With a copy to the President
If to the Executive:
                                        
601 Grant Street
Pittsburgh, PA 15219
or such other address as either party may have furnished to the other in writing
in accordance herewith. Any notice shall be effective upon receipt.
11.      Legal Fees and Expenses. The Bank shall pay all reasonable legal fees
and expenses which the Executive may incur as a result of the Bank’s contesting
in bad faith the validity or enforceability of this Agreement or the calculation
of amounts payable hereunder with the fees and expenses to be paid promptly by
the Bank and in any event no later than March 15th of the year immediately
following the year in which such fees and expenses were incurred.
12.      Term. This Agreement shall remain in effect until terminated by the
Board of Directors of the Bank by formal resolution of the Board; provided,
however, that any such termination shall not be effective until three years
after the date of such formal Board action; and provided further, that if a
definitive agreement of Reorganization is executed by the Bank during such three
year period, then any such termination shall not become effective until
12 months after the effective date of the Reorganization (or such longer period
until all payments and benefits, if any, under this Agreement have been paid or
satisfied).
13.      Arbitration.
            (a)      Disputes regarding this Agreement are subject to
arbitration and shall be settled by binding arbitration administered by the
American Arbitration Association (“AAA”) in accordance with its “Employment
Arbitration Rules and Mediation Procedures” and successor rules as may be in
effect from time to time (referred to herein as the “Rules”) for individual
employment agreements. The arbitration shall be heard and determined by a panel
of three (3) arbitrators, with one selected by the Bank, one selected by the
Executive and one selected by the AAA, and each such arbitrator shall be an
attorney having experience and familiarity with employment disputes. The
arbitration proceeding shall occur in the Pittsburgh, Pennsylvania metropolitan
area. The costs of

9

--------------------------------------------------------------------------------

 

arbitration for each party and the arbitrators’ fees shall be allocated in
accordance with the above-referenced AAA Rules. The arbitration and all related
proceedings and discovery shall take place pursuant to a protective order
entered by the arbitrators that adequately protects the confidential nature of
the parties’ confidential information. In no event shall any arbitration award
provide a remedy beyond those permitted under this Agreement, and any award
providing a remedy beyond those permitted under this Agreement shall not be
confirmed, no presumption of validity shall attach, and such award shall be
vacated.
            (b)      If within thirty (30) days after any Notice of Termination
is given, the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the Termination, the parties shall
promptly proceed to arbitration as provided in (a) above. Notwithstanding the
pendency of any such dispute, the Bank shall continue to pay the Executive his
base salary and provide such other compensation and benefits, all as in effect
immediately prior to the Notice of Termination. If it is determined that the
Executive is not entitled to any compensation under Section 4 of this Agreement,
the Executive shall return all cash amounts to the Bank promptly following the
date of resolution by arbitration, with interest thereon commencing as of the
date of the resolution of the dispute by arbitration at the prime rate of
interest as published by the Wall Street Journal from time to time. Any cash
amounts paid to the Executive pending the resolution of the dispute by
arbitration shall offset any amounts determined to be due to the Executive under
Section 4.
14.      Miscellaneous.
            (a)      No Modification. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the party or parties hereto to be bound.
            (b)      No Waiver. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
            (c)      Entire Agreement. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
            (d)      Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
(excluding conflicts of laws principles), except to the extent such law is
preempted by the laws of the United States.
            (e)      Pleadings. Section or paragraph headings contained herein
are for convenience of reference only and are not to be considered a part of
this Agreement.

10

--------------------------------------------------------------------------------

 

          (f)      Validity. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
          (g)      Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
          IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written and is effective as of the ___ day of                    , 2009.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES

                      FEDERAL HOME LOAN BANK OF THE EXECUTIVE:       PITTSBURGH:
 
           
 
      By:    
 
           
 
          Chair, Board of Directors
 
           
 
           
 
           
 
      By:    
 
           
 
          Chair, Human Resources Committee
 
          of the Board of Directors

11