Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS General USBANCORP, Inc. (the "Company") is a registered bank holding company organized under the Pennsylvania Business Corporation Law and is registered under the Bank Holding Company Act of 1956, as amended (the "BHCA.") The Company became a holding company upon acquiring all of the outstanding shares of United States National Bank in Johnstown ("U.S. Bank") on January 5, 1983. The Company also acquired all of the outstanding shares of Three Rivers Bank and Trust Company ("Three Rivers Bank") in June 1984, McKeesport National Bank ("McKeesport Bank") on December 1, 1985 (which was subsequently merged into Three Rivers Bank), and Community Bancorp, Inc. (whose sole direct subsidiary is Community Savings Bank) in March 1992. On June 30, 1994, the Company acquired Johnstown Savings Bank, a $367 million savings bank headquartered in Johnstown, PA. The Company merged JSB with and into U.S. Bank with U.S. Bank surviving the merger. The separate existence of JSB ceased, and all property, rights, powers, duties, obligations, and liabilities of JSB were automatically transferred to U.S. Bank in accordance with Federal and Pennsylvania law. Immediately following the Merger, U.S. Bank caused the intracompany sale by Standard Mortgage Corporation of Georgia, a wholly-owned subsidiary of JSB, of all its assets, subject to all of its liabilities, to SMC Acquisition Corporation, an indirect subsidiary of Community. SMC Acquisition Corporation was renamed Standard Mortgage Corporation of Georgia and is a mortgage banking company organized under the laws of the State of Georgia and originates, sells, and services residential mortgage loans. In addition, the Company formed United Bancorp Life Insurance Company ("United Life") in October 1987 and USBANCORP Trust Company (the "Trust Company") in October 1992. The Company's principal activities consist of owning and operating its five wholly-owned subsidiary entities. At December 31, 1994, the Company had, on a consolidated basis, total assets, deposits, and stockholders' equity of $1.79 billion, $1.20 billion and $137 million, respectively. The Company and the subsidiary entities derive substantially all their income from banking and bank-related services. The Company functions primarily as a coordinating and servicing unit for its subsidiary entities in general management, credit policies and procedures, accounting and taxes, loan review, auditing, investment advisory, compliance, marketing, insurance risk management, general corporate services, and financial and strategic planning. The Company, as a bank holding company, is regulated under the BHCA, and is supervised by the Board of Governors of the Federal Reserve System (the "Board.") In general, the Act limits the business of bank holding companies to owning or controlling banks and engaging in such other activities as the Board may determine to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. USBANCORP Banking Subsidiaries: U.S. Bank U.S. Bank is a national banking association organized under the laws of the United States. Through 21 locations in Cambria, Clearfield, Somerset, and Westmoreland Counties, Pennsylvania, U.S. Bank conducts a general banking business. It is a full-service bank offering (i) retail banking services, such as demand, savings and time
deposits, money market accounts, secured and unsecured loans, mortgage loans, safe deposit boxes, holiday club accounts, collection services, money orders, and traveler's checks; (ii) lending, depository and related financial services to commercial, industrial, financial, and governmental customers, such as real estate-mortgage loans, short- and medium-term loans, revolving credit arrangements, lines of credit, inventory and accounts receivable financing, personal and commercial property lease financing, real estate-construction loans, business savings accounts, certificates of deposit, wire transfers, night depository, and lock box services; and (iii) credit card operations through MasterCard and VISA. U.S. Bank also operates 22 automated bank teller machines ("ATM") through its 24 Hour Banking Network which is linked with MAC and HONOR, regional ATM networks, and CIRRUS, a national ATM network. U.S. Bank's deposit base is such that loss of one depositor or a related group of depositors would not have a materially adverse effect on its business. In addition, the loan portfolio is also diversified so that one industry or group of related industries does not comprise a material portion of the loan portfolio. U.S. Bank's business is not seasonal nor does it have any risks attendant to foreign sources. Since U.S. Bank is federally chartered, it is subject to primary supervision of the Office of the Comptroller of the Currency. U.S. Bank is also subject to the regulations of the Board of Governors of the Federal Reserve Bank and the Federal Deposit Insurance Corporation. The following is a summary of key data (dollars in thousands) and ratios at December 31, 1994: Headquarters Johnstown, PA Chartered 1933 Total Assets $1,052,820 (58.9% of the Company's total) Total Investment Securities $552,458 (70.5% of Company's total) Total Loans (net of unearned income) $405,365 (47.7% of the Company's total) Total Deposits $636,758 (53.2% of the Company's total) Total Net Income before acquisition restructuring charge $6,988 (52.9% of the Company's total) Total Equity to Assets Ratio 8.39% 1994 Return on Average Assets before acquisition restructuring charge 0.89% Total Full-time Equivalent Employees 370 (47.4% of the Company's total) Number of Offices 21 (46.7% of the Company's total)
Three Rivers Bank Three Rivers Bank is a state bank chartered under the Pennsylvania Banking Code of 1965, as amended (the "Pennsylvania Banking Code.") Through 12 locations in Allegheny and Washington Counties, Pennsylvania, Three Rivers Bank conducts a general retail banking business consisting of granting commercial, consumer, construction, mortgage and student loans, and offering checking, interest bearing demand, savings and time deposit services. It also operates 12 ATMs which are
affiliated with MAC, a regional ATM network, and Plus System, a national ATM network. Three Rivers Bank also offers wholesale banking services to other banks, merchants, governmental units, and other large commercial accounts. Such services include balancing services, lock box accounts, and providing coin and currency. Three Rivers Bank has an arrangement with Statewide Security Transport, Inc. (which conducts business under the name of Landmark Security Transport) pursuant to which it also provides cash collection and deposit services to its customers. Three Rivers Bank's deposit base is such that loss of one depositor or a related group of depositors would not have a materially adverse effect on its business. In addition, the loan portfolio is also diversified so that one industry or group of related industries does not comprise a material portion of the loan portfolio. Three Rivers Bank's business is not seasonal nor does it have any risks attendant to foreign sources. As a state chartered, federally-insured bank and trust company which is not a member of the Federal Reserve System, Three Rivers Bank is subject to supervision and regular examination by the Pennsylvania Department of Banking and the Federal Deposit Insurance Corporation. Various federal and state laws and regulations govern many aspects of its banking operations. The following is a summary of key data (dollars in thousands) and ratios at December 31, 1994:
Headquarters McKeesport, PA Chartered 1965 Total Assets $338,354 (18.9% of the Company's total) Total Investment Securities $129,356 (16.5% of Company's total) Total Loans (net of unearned income) $185,160 (21.8% of the Company's total) Total Deposits $297,222 (24.8% of the Company's total) Total Net Income $3,546 (31.3% of the Company's total) Total Equity to Assets Ratio 7.00% 1994 Return on Average Assets 1.04% Total Full-time Equivalent Employees 209 (26.8% of the Company's total) Number of Offices 12 (26.7% of the Company's total)
Community As part of the Company's strategy of expanding in suburban Pittsburgh, in March 1992, USBANCORP acquired Community Bancorp, Inc., which subsequently became a bank holding company regulated under the BHCA and supervised by the Federal Reserve Board, and its sole direct subsidiary, Community Savings Bank ("Community.") Community is a Pennsylvania-chartered savings bank registered under the Pennsylvania Banking Code. Community currently conducts its banking operation through 12 locations in Allegheny, Washington, and Westmoreland counties,
Pennsylvania. Traditionally, Community originated and held fixed-rate residential mortgage loans which were funded primarily by certificates of deposit and offered a few fee-based services. Under the direction of personnel transferred to Community from U.S. Bank and Three Rivers Bank, Community has begun the process of expanding its product offerings through the introduction of commercial lending and expanded consumer lending and deposit gathering in order to position it as a full service community bank. As part of the Community acquisition, USBANCORP acquired Community's direct subsidiaries: Community First Capital Corporation (a special purpose finance subsidiary), Community First Financial Corporation (a subsidiary engaged in real estate joint ventures with assets totalling $1.3 million), and Frontier Consumer Discount Company. Additionally, as part of the JSB acquisition on June 30, 1994, Standard Mortgage Corporation became a direct subsidiary of Community as a result of the intra-company purchase of all its assets, subject to all its liabilities. Standard Mortgage Corporation is a mortgage banking company that originates, sells, and services residential mortgage loans. In accordance with Federal Reserve policy, USBANCORP has committed to divest its equity investment in Community First Financial Corporation by March 22, 1995, or such longer period as the Federal Reserve Board may approve. Community's deposit base is such that loss of one depositor or a related group of depositors would not have a materially adverse effect on its business. In addition, the loan portfolio contains a high portion of residential mortgage and consumer loans that have less credit risk associated with them. In addition, the loan portfolio is also diversified so that one industry or group of related industries does not comprise a material portion of the loan portfolio. Community's business is not seasonal nor does it have any risks attendant to foreign sources. As a Pennsylvania-chartered, federally-insured savings bank that is not a member of the Federal Reserve System, Community Savings Bank is subject to supervision and regular examination by the Pennsylvania Department of Banking and the FDIC. Various federal and state laws and regulations also govern many aspects of its banking and bank-related operations. The following is a summary of key data (dollars in thousands) and ratios at December 31, 1994:
Headquarters Monroeville, PA Chartered 1890 Total Assets $395,935 (22.1% of the Company's total) Total Investment Securities $82,082 (10.5% of Company's total) Total Loans (net of unearned income) $259,556 (30.5% of the Company's total) Total Deposits $262,266 (21.9% of the Company's total) Total Net Income $2,961 (26.2% of the Company's total) Total Equity to Assets Ratio 6.10% 1994 Return on Average Assets 0.78% Total Full-time Equivalent Employees 146 (18.7% of the Company's total) Number of Offices 12 (26.7% of the Company's total)
USBANCORP Non-Banking Subsidiaries: United Life United Life is a captive insurance company organized under the laws of the State of Arizona. United Life engages in underwriting as reinsurer of credit life and disability insurance within the Company's six county market area. Operations of United Life are conducted in each office of the Company's banking subsidiaries. United Life is subject to supervision and regulation by the Arizona Department of Insurance, the Insurance Department of the Commonwealth of Pennsylvania, and the Board of Governors of the Federal Reserve Bank. At December 31, 1994, United Life had total assets of $1.4 million and total shareholder's equity of $713,000. USBANCORP Trust Company USBANCORP Trust Company is a trust company organized under Pennsylvania law in October 1992. USBANCORP Trust Company was formed to consolidate the trust functions of U.S. Bank and Three Rivers Bank and to increase market presence. As a result of this formation, the Trust Company now offers a complete range of trust services through each of the Company's subsidiary banks. At December 31, 1994, USBANCORP Trust Company had $1.03 billion in assets under management which included both discretionary and non-discretionary assets. Executive Officers Information relative to current executive officers of the Company or its subsidiaries is listed in the following table:
Name Age Office with USBANCORP, Inc. and/or Subsidiary
Terry K. Dunkle 53 Chairman, President & Chief Executive Officer of USBANCORP, Inc., and Chairman of U.S. Bank, Three Rivers Bank, Community Bancorp, Inc., and USBANCORP Trust Company
Orlando B. Hanselman 35 Executive Vice President, Chief Financial Officer & Manager of Corporate Services of USBANCORP, Inc.
Louis Cynkar 50 President & Chief Executive Officer of U.S. Bank
W. Harrison Vail 54 President & Chief Executive Officer of Three Rivers Bank
Dennis J. Fantaski 50 President & Chief Executive Officer of Community Bancorp, Inc. and Community Savings Bank
In July 1993, it was announced that Mr. Dunkle would succeed Clifford A. Barton as Chairman, President and Chief Executive Officer of USBANCORP. In April 1988, Mr. Dunkle was appointed as President and Chief Executive Officer of U.S. Bank and Executive Vice President and Secretary of USBANCORP. Mr. Dunkle served the five previous years as Executive Vice President of Commonwealth National Bank in Harrisburg, Pennsylvania. Mr. Hanselman joined U.S. Bank in January 1987 as Vice President and Chief Financial Officer and received his present title in February 1994. Prior to joining U.S. Bank, he served as Senior Accountant and Consultant in the Financial Industry Specialty Group of Price Waterhouse in Pittsburgh, Pennsylvania. Mr. Cynkar was designated to succeed Mr. Dunkle as President and Chief Executive Officer of U.S. Bank in July 1993. Mr. Cynkar joined U.S. Bank in 1986 as Senior Vice President, commercial lending. Mr. Vail has been President and Chief Executive Officer of Three Rivers Bank since January 1985. He joined Three Rivers Bank as President on August 1, 1984. Mr. Fantaski was named President and Chief Executive Officer of Community in March 1993. Prior to joining Community, Mr. Fantaski was Senior Vice President and head of retail banking at U.S. Bank from 1988 through 1991.
Monetary Policies Commercial banks are affected by policies of various regulatory authorities including the Federal Reserve System. An important function of the Federal Reserve System is to regulate the national supply of bank credit. Among the instruments of monetary policy used by the Board of Governors are: open market operations in U.S. Government securities, changes in the discount rate on member bank borrowings, and changes in reserve requirements on bank deposits. These means are used in varying combinations to influence overall growth of bank loans, investments, and deposits, and may also affect interest rate charges on loans or interest paid for deposits. The monetary policies of the Board of Governors have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. In view of changing conditions in the national economy and the money markets (as well as the effect of actions by monetary and fiscal authorities including the Board of Governors), no prediction can be made as to possible future changes in interest rates, deposit levels or loan demand, or as to the impact of such changes on the business and earnings of the Company and its subsidiary entities. Competition The subsidiary entities face strong competition from other commercial banks, savings banks, savings and loan associations, and several other financial or investment service institutions for business in the communities they serve. Several of these institutions are affiliated with major banking and financial institutions, such as Mellon Bank Corporation and PNC Financial Corporation, which are substantially larger and have greater financial resources than the subsidiary entities. As the financial services industry continues to consolidate, the scope of potential competition affecting the subsidiary entities will also increase. For most of the services that the subsidiary entities perform, there is also competition from credit unions and issuers of commercial paper and money market funds. Such institutions, as well as brokerage houses, consumer finance companies, factors, insurance companies, and pension trusts, are important competitors for various types of financial services. In addition, personal and corporate trust investment counseling services are offered by insurance companies, other firms, and individuals. Market Area The Company, headquartered in Johnstown, Pennsylvania, operates through 45 branch offices in six southwestern Pennsylvania counties with a combined population of approximately 2.2 million: Allegheny, Cambria, Clearfield, Somerset, Washington, and Westmoreland. With the acquisition of Johnstown Savings Bank, the Company's largest subsidiary, U.S. Bank has 21 offices and a $1.1 billion asset presence primarily in the Greater Johnstown marketplace. U.S. Bank now has a leading 25% deposit market share in Cambria County. Community Bank and Three Rivers Bank have a combined 24 offices and a $734 million asset presence in the western region, largely comprised of the suburban Pittsburgh marketplace. The Pennsylvania economy appears to be slowing down as the nation-at-large continues to enjoy a faster growth rate. The strongest economic activity in Pennsylvania seems to be concentrated in the southeast and central regions of the state. Retail sales, durable goods orders, and consumer real estate activity continue to foster the expansion. However, the statewide seasonally adjusted unemployment rate for December 1994 increased slightly to 5.9%, compared with the seasonally adjusted December 1993 unemployment rate of 5.8%. It must be emphasized, however, that Pennsylvania has spent in excess of $2 billion to create 294,000 jobs since the beginning of 1987; further more, each public dollar spent has been leveraged to an additional $2.55 from the private
sector over this same time period. The Company believes that as the national economy begins to slow, the conditions in the state will continue to slowly improve throughout 1995 as a result of this strong historic public and private sector support for jobs creation. Furthermore, Pennsylvania has separate House and Senate bills in committee which attempt to relieve both the buyer and the lender of any responsibility for pollution from former owners. This law could be in place by Spring of 1995 and continues the recent history of creating a state eagerly receptive to new business development. The Greater Johnstown economy is trailing Pennsylvania and the nation; however, the seasonally adjusted unemployment rate for December 1994 dropped to 8.5% compared with 9.0% for December 1993. Recent economic activity in the Johnstown region includes: The Johnstown Industrial Park, which accommodates new business and manufacturing ventures, has reached its capacity, leading to the development of a second 68 acre industrial park. Attracting defense industry contracts, the goal of a proactive community business development plan, has resulted in $156.2 million in defense contracts and more than 650 new jobs since 1990. Veritas Capital, Inc. has agreed to the purchase of the Conemaugh & Blacklick Railroad and the Manufacturers Water Company, Bethlehem Steel Corporation's only remaining Johnstown operation. The Erie Sailors of the independent Frontier League entered a three year lease with the City of Johnstown to move the baseball team to the Point Stadium. The Point Stadium will receive funds from the state of Pennsylvania for renovations to upgrade the facility for the new minor league baseball franchise. Several small, diversified steel production companies are expected to hire nearly 2,500 high-skilled local steel workers. Local tradesmen and subcontractors are expecting roles in the construction of a $30 million Army Reserve aviation facility near the Johnstown airport. As evidenced by the above, Greater Johnstown continues to shift from an over-reliance on heavy industry to a more diversified economy including more light manufacturing and service related businesses. This diversification of the local economy is further exemplified by the nature of the ten largest non-government employers in the region which include: three hospitals; a state-wide electric utility; a regional food retailer; a steel manufacturer; a ladies apparel manufacturer; a national life insurance company; and a long distance trucking company. The Greater Pittsburgh region, where Three Rivers Bank and Community operate, is benefitting from the national economic expansion. Manufacturing, retail housing, and new auto sales have all seen expansionary activity. Overall office building leasing has been steady throughout 1994, with special strength noted in the Oakland, Parkway West, and North suburban markets. Suburban office space is expected to be a popular investment in 1995. With vacancy rates trending downward, effective rental rates climbing, and little new space being created, suburban office space is becoming less readily available. It is quite possible that 1995 may see the return of speculative office construction in the Pittsburgh suburbs. Recent economic activity in the Pittsburgh region includes: Lukens Steel Co. announced a $6.4 million project at its Washington Steel plant, Washington County, that will increase production by 14,000 tons or 5.0%. Hillman Company is divesting a significant portion of its nationwide real estate holdings.
The Southwestern Pennsylvania Planning Commission, covering the six-county Pittsburgh region, has adopted a $14.7 billion transportation plan aimed at improving the area's highway and mass transit system over the next 20 years. Hospitality Franchise Systems, Inc. purchased 130 acres along the Monongahela River. Hospitality is interested in a riverboat gambling operation for the site. Other smaller lot purchases for this purpose have also been made in 1994 in reaction to the Pittsburgh mayor's active support of this revenue concept. $13.5 million in funding was approved for projects at Three Rivers Stadium, $2.5 million for the renovation of Heinz Hall and $2 million for the development of the Steel Heritage Center. The Commonwealth of Pennsylvania granted $6 million to NASA Robotics Engineering Consortium to help convert an abandoned industrial site on the Allegheny River to a robotics research center. U.S. Steel has agreed to a two year contract with General Motors Corp. which could boost steel prices by as much as 16%. Links Development Co. is developing a $32 million residential and retail development along a major transportation artery. The Pittsburgh economy is generally well diversified as exemplified by the ten largest non-government employers in the region which include: USAir; the University of Pittsburgh; Westinghouse; two money center banks; USX Corporation; a multi-state grocery retailer; and a multi-state restaurant chain. The Company believes that the state and regional economies will continue this diversification and show modest improvement throughout 1995. Consequently, the Company's marketplace should continue to display modest strengthening. Employees The Company employed approximately 780 persons as of December 31, 1994, in full- and part-time positions. Approximately 235 non-supervisory employees of U.S. Bank are represented by a union. U.S. Bank and such employees are parties to a labor contract pursuant to which employees have agreed not to engage in any work stoppage during the term of the contract which will expire on October 15, 1995. U.S. Bank has not experienced a work stoppage since 1979. Management considers relations with employees to be satisfactory. Commitments and Lines of Credit The Company's banking subsidiaries are obligated under commercial, standby, and trade-related irrevocable letters of credit aggregating $6.4 million at December 31, 1994. In addition, the subsidiary banks have issued lines of credit to customers generally for periods of up to one year. Borrowings under such lines of credit are usually for the working capital needs of the borrower. At December 31, 1994, the Company's banking subsidiaries had unused loan commitments of approximately $161.8 million. Statistical Disclosures for Bank Holding Companies Certain information regarding statistical disclosure for bank holding companies pursuant to Guide 3 is provided in the 1994 Annual Report to Shareholders and such pages are incorporated herein by reference. The remaining Guide 3 information is included in this Form 10-K as listed below:
I. Distribution of Assets, Liabilities, and Stockholders' Equity; Interest Rates and Interest Differential Information. This section is presented on pages 53, 54, and 66.
II. Investment Portfolio Information required by this section is presented on pages 82, 83, 84, and 85. III. Loan Portfolio Information required by this section appears on pages 24, 25, 85, and 86. IV. Summary of Loan Loss Experience Information required by this section is presented on pages 24, 57, 58, and 59. V. Deposits Information required by this section follows on pages 86 and 87. VI. Return on Equity and Assets Information required by this section is presented on page 45. VII. Short-Term Borrowings Information required by this section is presented on page 26. Investment Portfolio Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards ("SFAS") #115, "Accounting for Certain Investments in Debt and Equity Securities." This statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Investment securities held to maturity are carried at amortized cost while investment securities classified as available for sale are reported at fair value. At December 31, 1994, approximately 67% of the portfolio was categorized as held to maturity and 33% as available for sale. Prior to the adoption of SFAS #115, the entire securities portfolio was classified as available for sale and carried at the lower of amortized cost or market value. The following table sets forth the book and market value of USBANCORP's investment portfolio as of the periods indicated:
The $364.5 million increase in 1994 can be attributed to the following: $190.1 million securities acquired through the acquisition of Johnstown Savings Bank, and a $122 million increase due primarily to increased leveraging of the Company's balance sheet through the utilization of funding sources from the Federal Home Loan Bank. Subsequent to the JSB acquisition, the Company elected to sell approximately 90% of JSB's securities portfolio (see further discussion under JSB Acquisition on page 50). Within the portfolio, the Company placed an emphasis on the purchase of mortgage-backed securities, which provide a more predictable cash flow stream than CMO's, and municipal securities in an effort to generate increased tax-free earnings. The book value of total investment securities increased from $366.9 million at December 31, 1992, to $428.7 million at December 31, 1993. The increase in the total investment securities was due entirely to the redeployment of a significant portion of the $88 million of acquired Integra deposits and the $24.6 million of funds from the secondary market common stock issuance into the securities portfolio. Within the portfolio, the decline in other securities reflects a shift in emphasis towards mortgage-backed securities and collateralized mortgage obligations which provide a recurrent source of cash flow. At December 31, 1994, investment securities having a book value of $275.2million were pledged as collateral for public funds and other purposes as required by law. The Company and its subsidiaries, collectively, did not hold securities of any single issuer, excluding U.S. Treasury and U.S. Agencies, that exceeded 10% of stockholders' equity at December 31, 1994. Maintaining investment quality is a primary objective of the Company's investment policy which, subject to certain minor exceptions, prohibits the purchase of any investment security below a Moody's Investor Service or Standard & Poor's rating of "A." At December 31, 1994, 96.1% of the portfolio was rated "AAA" and 97.0% was rated at least "AA" as compared to 89.2% and 91.0%, respectively, at December 31, 1993. Only 0.5% was rated below "A" or unrated at December 31, 1994. The following table sets forth the contractual maturity distribution of the investment securities, book and market values, and the weighted average yield for each type and range of maturity as of December 31, 1994. Yields are not presented on a tax-equivalent basis, are based upon book value and are weighted for the scheduled maturity. Average maturities are based upon the original contractual maturity dates with the exception of mortgage-backed securities and asset-backed securities for which the average lives were used. Also, where applicable, put-dates were used as the maturity dates. At December 31, 1994, USBANCORP's consolidated investment securities portfolio had an average contractual maturity of approximately 15.05 years and an average cash flow payback of approximately 3.67 years.
During 1994 and 1993, the Company sold approximately $168 million and $22 million, respectively, of investment securities available for sale which resulted in the realization of net investment security losses of $3,972,000 and net investment security gains of $583,000, respectively. The 1994 loss resulted primarily from an investment portfolio repositioning strategy executed late in the fourth quarter which was designed to enhance future net interest income performance (see complete discussion under Net Interest Income and Margin on page 49). The 1993 gains resulted from several investment strategies to capture available market premiums on mortgage-backed securities which had the characteristics of low remaining balances and fast prepayment histories. Loan Portfolio The following table sets forth the Company's loans by major category as of the dates set forth below:
Excluding the $125.6 million of loans acquired with the JSB acquisition and the $17 million of student loans sold, total loans and loans held for sale also increased by $32.2 million or 4.4% since year-end 1993. This growth occurred primarily in the second and third quarters of 1994 and reflects the economic stability and diversification of both regions of the Company's marketplace - Greater Johnstown and suburban Pittsburgh. The majority of the loan growth occurred in the commercial loan portfolio which grew by $11.5 million or 11.6%. The Company experienced increased demand for both taxable and tax-free commercial loans in 1994. Total real estate loans (including home equity products) also grew modestly by 3.7% during 1994 despite the Company's practice of selling all newly originated 30 year fixed-rate mortgage loans amounting to approximately $60 million in 1994. This commercial and mortgage loan growth more than offset reduced consumer loan balances caused largely by the sale of the Company's $17 million student loan portfolio late in the second quarter of 1994. Management elected to divest of this line of business since future profitability will be adversely impacted by scheduled changes in regulations and servicing requirements. Consumer loan balances have also been negatively impacted by intense competitive pressures in the indirect auto loan business segment. From December 31, 1992, to December 31, 1993, loans increased by $72.2million or 10.9% from $659.8 million to $732.0 million. As a result of the low rate environment, less inflationary fears, and a moderate economic recovery, each of the Company's banking subsidiaries experienced heightened loan demand in 1993. Within the loan portfolio, each of the major loan categories experienced growth in the following amounts since December 31, 1992: commercial loans up by $22.7 million or 29.5%, real estate-mortgage loans up by $39.8 million or 13.3%, consumer loans up by $9.5 million or 6.0%, and commercial loans secured by real estate up by $200,000 or only .2%. The commercial loan growth resulted from successful business development efforts in both regions of the Company's marketplace which includes suburban Pittsburgh and Greater Johnstown. The net growth in mortgage
loans (including home equity) occurred despite the sale of approximately $22 million of 30 year fixed-rate product that originated during 1993. The majority of the mortgage growth occurred at Community with approximately 60% of this growth related to refinancing activity with new customers. The net growth of consumer loans outstanding is noteworthy since it represents a significant reversal of the trend of net consumer loan run-off which had occurred throughout 1992. Improved consumer demand, acquisition of Integra loans, and heavy marketing of debt consolidation loans, combined with a general stabilizing of indirect auto loan run-off, were the factors responsible for the increase in consumer loan balances outstanding. The amount of loans outstanding by category as of December 31, 1994, which are due in (i) one year or less, (ii) more than one year through five years, and(iii) over five years, are shown in the following table. Loan balances are also categorized according to their sensitivity to changes in interest rates.
The loan maturity information is based upon original loan terms and is not adjusted for "rollovers." In the ordinary course of business, loans maturing within one year may be renewed, in whole or in part, as to principal amount at interest rates prevailing at the date of renewal. At December 31, 1994, 73.1% of total loans were fixed-rate compared to 71.6% at December 31, 1993. Total real estate loans (including home equity products) grew modestly by 3.7% during 1994 despite the Company's practice of selling all newly originated 30 year fixed-rate mortgage loans amounting to approximately $60 million in 1994. During 1993, $22 million of this type of loan product was sold. For additional information regarding interest rate sensitivity, see "Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations - Interest Rate Sensitivity." Deposits The following table sets forth the average balance of the Company's deposits and the average rates paid thereon for the past three calendar years:
The Company's deposits, excluding JSB, decreased $43 million or 4.1% since December 31, 1993. The decline in deposits can be attributed to management's application of the previously discussed pricing philosophy which emphasizes profitable net interest margin management rather than increased deposit size. This deposit pricing strategy was maintained during a period of aggressively increasing competitive deposit rates particularly in the Greater Pittsburgh suburban area. Regarding the JSB acquisition, the Company used quality customer service to achieve its goal of retaining over 90% of the total deposits acquired in this intra-market consolidation. The following table indicates the maturities and amounts of certificates of deposit issued in denominations of $100,000 or more as of December 31, 1994:
ITEM 2.



ITEM 2. PROPERTIES The principal offices of the Company and U.S. Bank occupy a five-story building at the corner of Main and Franklin Streets in Johnstown plus several floors of the building adjacent thereto. The Company occupies the main office and its subsidiary entities have 36 other locations which are owned in fee. Sixteen additional locations are leased with terms expiring from November 1, 1995, to December 31, 2003. ITEM 3.

ITEM 3. LEGAL PROCEEDINGS The Company is subject to a number of asserted and unasserted potential legal claims encountered in the normal course of business. In the opinion of both management and legal counsel as of January 27, 1995, there is no present basis to conclude that the resolution of these claims will have a material adverse effect on the Company's consolidated financial position or results of operations. ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted by the Company to its shareholders through the solicitation of proxies or otherwise during the fourth quarter of the fiscal year covered by this report.
PART II ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Information relating to the Company's Common Stock is presented on pages 33 and 44. As of January 31, 1995, the Company had 6,345 shareholders of its Common Stock. ITEM 6.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA Information required by this section is presented on page 45. ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information required by this section is presented on pages 47 to 69. ITEM 8.


ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Information required by this section is presented on pages 15 to 39. ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable for the years presented.
PART III ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information required by this section relative to Directors of the Registrant is presented in the Proxy Statement for the Annual Meeting of Shareholders. Executive officer information has been provided in Item 1. ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION Information required by this section is presented in the Proxy Statement for the Annual Meeting of Shareholders.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information required by this section is presented in the Proxy Statement for the Annual Meeting of Shareholders. ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information required by this section is presented in the Proxy Statement for the Annual Meeting of Shareholders.
PART IV ITEM 14.

ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K Consolidated Financial Statements Filed: The consolidated financial statements listed below are from the 1994 Annual Report to Shareholders and Part II - Item 8. Page references are to said Annual Report. Consolidated Financial Statements: USBANCORP, Inc. and Subsidiaries Consolidated Balance Sheet, 15 Consolidated Statement of Income, 16 Consolidated Statement of Changes in Stockholders' Equity, 17 Consolidated Statement of Cash Flows, 18 Notes to Consolidated Financial Statements, 21 Statement of Management Responsibility, 40 Report of Independent Public Accountant, 41 Consolidated Financial Statement Schedules: These schedules are not required or are not applicable under Securities and Exchange Commission accounting regulations and therefore have been omitted. Reports on Form 8-K: There were no reports filed on Form 8-K for the quarter ended December 31, 1994.
Exhibits: The exhibits listed below are filed herewith or to other filings.
Exhibit Prior Filing or Exhibit Number Description Page Number Herein
3.1 Articles of Incorporation, as amended on February 24, 1995. Exhibit III, Part II to Form S-14 File No. 2-79639 Exhibit 4.2 to Form S-2 File No. 33-685 Exhibit 4.3 to Form S-2 File No. 33-685 Exhibit 4.1 to Form S-3 File No. 33-56604
3.2 Bylaws, as amended and restated on February 24, 1995. Exhibit IV, Part II to Form S-14 File No. 2-79639 Exhibit 3.2
4.1 Rights Agreement, dated as of February 24, 1995, between USBANCORP, Inc. and USBANCORP Trust Company, as Rights Agent. Exhibit 1 to Form 8-A Dated March 1, 1995
10.1 Agreement and Plan of Merger, dated November 10, 1993, as amended on January 18, 1994, among USBANCORP, Inc., United States National Bank in Johnstown, and Johnstown Savings Bank. Exhibit 2.1 to Form S-4 File No. 33-52837
10.2 Agreement, dated June 22, 1994, between USBANCORP, Inc. and Terry K. Dunkle. Exhibit 10.2
10.3 Agreement, dated October 25, 1994, between USBANCORP, Inc. and W. Harrison Vail. Exhibit 10.3
10.4 Agreement, dated October 25, 1994, between USBANCORP, Inc. and Louis Cynkar. Exhibit 10.4
10.5 Agreement, dated October 25, 1994, between USBANCORP, Inc. and Dennis J. Fantaski. Exhibit 10.5
10.6 Loan Agreement, dated March 26, 1992, between USBANCORP, Inc. and Pittsburgh National Bank. Exhibit 10.6 to Form S-2 File No. 33-56684
10.7 Collective Bargaining Agreement, dated October 16, 1991, as extended March 30, 1994, between United States National Bank in Johnstown and Steel Workers of America, AFL-CIO-CLC Local Union 8204. Exhibit 10.7 to Form S-2 File No. 33-56684
10.8 Agreement, dated October 25, 1994, between USBANCORP, Inc. and Orlando B. Hanselman. Exhibit 10.8
10.9 1991 Stock Option Plan, dated August 23, 1991, as amended and restated on February 24, 1995. Exhibit 10.9
10.10 Agreement, dated December 1, 1994, between USBANCORP, Inc. and Ronald W. Virag. Exhibit 10.10
10.11 Agreement, dated July 15, 1994, between USBANCORP, Inc. and Kevin J. O'Neil. Exhibit 10.11
13 1994 Annual Report to Shareholders. Page 1
21 Subsidiaries of the Registrant. Below
24.1 Consent of Arthur Andersen LLP.
EXHIBIT A (21) Subsidiaries of the Registrant
Percent Jurisdiction Name of Ownership of Organization United States National Bank in Johnstown Main and Franklin Streets P.O. Box 520 Johnstown, PA 15907 100% United States of America
Three Rivers Bank and Trust Company 633 State Route 51, South Jefferson Borough P.O. Box 10915 Pittsburgh, PA 15236 100% Commonwealth of Pennsylvania
Community Bancorp, Inc. 2681 Moss Side Boulevard Monroeville, PA 15146 100% Commonwealth of Pennsylvania
United Bancorp Life Insurance Company 1421 East Thomas Road Phoenix, AZ 85014 100% State of Arizona
USBANCORP Trust Company Main and Franklin Streets P.O. Box 520 Johnstown, PA 15907 100% Commonwealth of Pennsylvania
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
USBANCORP, Inc. (Registrant)
Date: February 24, 1995 By:/s/Terry K. Dunkle TERRY K. DUNKLE Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 24, 1995:
/s/Terry K. Dunkle TERRY K. DUNKLE Chairman, President and Chief Executive Officer; Director
/s/Orlando B. Hanselman ORLANDO B. HANSELMAN Executive Vice President, Chief Financial Officer & Manager of Corporate Services
/s/Jerome M. Adams JEROME M. ADAMS, Director
/s/Robert A. Allen ROBERT A. ALLEN, Director
/s/Clifford A. Barton CLIFFORD A. BARTON, Director
/s/Michael F. Butler MICHAEL F. BUTLER, Director
/s/Louis Cynkar LOUIS CYNKAR, Director
/s/James C. Dewar JAMES C. DEWAR, Director
/s/James M. Edwards, Sr. JAMES M. EDWARDS, SR., Director
/s/Dennis J. Fantaski DENNIS J. FANTASKI, Director
/s/Richard W. Kappel RICHARD W. KAPPEL, Director
JOHN H. KUNKLE, JR., Director
JAMES F. O'MALLEY, Director
/s/Frank J. Pasquerilla FRANK J. PASQUERILLA, Director
/s/Jack Sevy JACK SEVY, Director
/s/Thomas C. Slater THOMAS C. SLATER, Director
/s/James C. Spangler JAMES C. SPANGLER, Director
/s/W. Harrison Vail W. HARRISON VAIL, Director
/s/Robert L. Wise ROBERT L. WISE, Director
USBANCORP, INC.
DIRECTORS, GENERAL OFFICERS, and ADVISORY BOARDS
COMMUNITY OFFICES
SHAREHOLDER INFORMATION
THIS PAGE IS INTENTIONALLY LEFT BLANK
USBANCORP, INC.
Board of Directors
Jerome M. Adams Senior Partner, Adams, Myers & Baczkowski Attorneys-at-Law
Robert A. Allen Retired; Former President, Sani-Dairy
Clifford A. Barton Retired; Former Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
Michael F. Butler Business Consultant & Attorney-at-Law
Louis Cynkar President & CEO, United States National Bank
James C. Dewar President & Owner, Jim Dewar Oldsmobile, Inc.
Terry K. Dunkle Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
James M. Edwards, Sr. President & CEO, WJAC, Inc.
Dennis J. Fantaski President & CEO, Community Bancorp, Inc. and Community Savings Bank
Richard W. Kappel CEO, Secretary & Treasurer, William J. Kappel Wholesale Co.
John H. Kunkle, Jr. Retired; Former Vice-Chairman & Director, Commonwealth Land Title Insurance Co.
James F. O'Malley Senior Lawyer, Yost & O'Malley Attorneys-at-Law
Frank J. Pasquerilla Chairman of the Board & CEO, Crown American Realty Trust
Jack Sevy Retired; Former Owner & Operator, New Stanton West Auto/Truck Plaza
Thomas C. Slater Owner, President & Director, Slater Laboratories, Inc. Clinical Laboratory
James C. Spangler Retired; Former Owner, Somerset Auction and Transfer, Inc.
W. Harrison Vail President & CEO, Three Rivers Bank & Trust Company
Robert L. Wise President, Fossil Generation of GPU Service Corporation Directors Remembered General Officers
Terry K. Dunkle Chairman, President & Chief Executive Officer
Orlando B. Hanselman Executive Vice President, Chief Financial Officer & Manager of Corporate Services
Gary M. McKeown Senior Vice President, Manager of Credit Policy and Administration & Assistant Secretary
Richard L. Barron Vice President & Human Resources Director
Ray M. Fisher Vice President & Chief Investment Officer
John H. Follansbee, III Vice President, Compliance
Dan L. Hummel Vice President & Marketing Director
John J. Legath Vice President, Community Reinvestment Administration
Leslie N. Morgenstern Vice President, Loan Review
Jeffrey A. Stopko Vice President, Chief Accounting Officer & Comptroller
John Suierveld, Jr. Vice President & Chief Auditor
James E. Vennebush Vice President & Manager of General Services
Betty L. Jakell Secretary
U.S. BANK
Board of Directors
Robert A. Allen Retired; Former President, Sani-Dairy
Clifford A. Barton Retired; Former Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
Michael F. Butler Business Consultant & Attorney-at-Law
William F. Casey President & CEO, Conemaugh Memorial Hospital
Louis Cynkar President & CEO, United States National Bank
Daniel R. DeVos President and CEO, Concurrent Technologies Corporation
James C. Dewar President & Owner, Jim Dewar Oldsmobile, Inc.
Bruce E. Duke III, M.D. Surgeon, Valley Surgeons
Terry K. Dunkle Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
James M. Edwards, Sr. President & CEO, WJAC, Inc.
Kim W. Kunkle President & CEO, Laurel Holding Company
James F. O'Malley Senior Lawyer, Yost & O'Malley, Attorneys-at-Law
Rev. Christian R. Oravec President, St. Francis College
Frank J. Pasquerilla Chairman of the Board & CEO, Crown American Realty Trust
Howard M. Picking, III President, Miller-Picking Corporation
Fred R. Shaffer Manager/President, Findley's Pharmacy, Inc.
Thomas C. Slater Owner, President & Director, Slater Laboratories, Inc. Clinical Laboratory
James C. Spangler Retired; Former Owner, Somerset Auction and Transfer, Inc.
Robert L. Wise President, Fossil Generation of GPU Service Corporation
General Officers
Terry K. Dunkle Chairman of the Board
Louis Cynkar President & Chief Executive Officer
William J. Locher, Jr. Senior Vice President & Manager of Commercial Lending
Paul E. Lovett, Jr. Senior Vice President & Manager of Retail Credit Administration
William E. Wood Senior Vice President & Manager of Community Banking
James S. Bubenko Vice President & Manager of Retail Credit Operations
Leo J. Fronczek Vice President, Management Information Systems & Security Officer
Michael F. Komara Vice President, Human Resources
Frank A. Krall Vice President, Mortgage Lending
Kermit L. Miller Vice President & Branch Manager
Victor L. Tatum Vice President & Commercial Equipment Leasing Manager
Directors Emeriti
John N. Crichton Owen D. Griffith John L. Williams
Advisory Boards
Carrolltown
Joseph E. Lacue Joseph E. Stevens, Sr.
Coalport
Charles Glasgow Richard W. Hegarty Loretto
Frank J. Kuzemchak
Somerset
E. Charles Kaufman, Chairman James R. Cascio Fred R. Shaffer Marlin C. Sherbine James C. Spangler
Windber, Central City, St. Michael, University Heights
John F. Hollern, Chairman Chester F. Fluder David J. Rizzo
Westmont, West End, Seward
Edward J. Cernic, Chairman Dr. Frank H. Blackington, III Robert A. Cameron Teresa T. Chianese David N. Crichton Max J. Critchfield John B. Gunter John M. Kriak Carl R. Sax John B. Stockton Harvey Supowitz Carl H. Vulcan Dr. William A. Yates
THREE RIVERS BANK
Board of Directors
Jerome M. Adams Senior Partner, Adams, Myers, & Baczkowski Attorneys-at-Law
Clifford A. Barton Retired; Former Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
Janey D. Barton Retired; Vice President, Three Rivers Bank & Trust Company
Terry K. Dunkle Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
J. Terrence Farrell Attorney-at-Law
James R. Ferry President, Ferry Electric Company Electrical Contractor
Michael D. Hanna, Jr. President, Tippecanoe Insurance Agency, Inc.
Stephen I. Richman Senior Partner, Ceisler, Richman, Smith Law Firm
Jack Sevy Retired; Former Owner & Operator, New Stanton West Auto/Truck Plaza
W. Harrison Vail President & CEO, Three Rivers Bank & Trust Company
General Officers
Terry K. Dunkle Chairman of the Board
W. Harrison Vail President & Chief Executive Officer
Louis S. Klippa Executive Vice President, Chief Operating Officer & Secretary
Jeryl L. Graham Senior Vice President, Commercial Loan Division
Harry G. King Senior Vice President, Community Banking
James F. Ackman Vice President, Consumer Loans
Robert J. DeGrazia Vice President, Information Systems
Anita L. Elder Vice President & Credit Administrator
Vincent W. Locher Vice President & Commercial Loan Officer
Patricia M. Smarra Vice President & Operations Officer
Robert J. Smerker Vice President, Operations, Bank Secrecy Act Officer & Assistant Secretary
Mary Pat Soltis Vice President, Regional Manager
Joseph M. Trifaro, Jr. Vice President, Regional Manager
Directors Emeriti
J. Paul Farrell William R. Hoag
COMMUNITY BANCORP, INC.
Board of Directors
Clifford A. Barton Retired; Former Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
Terry K. Dunkle Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
Dennis J. Fantaski President & CEO, Community Bancorp, Inc. and Community Savings Bank
Marylouise Fennell, RSB, Ed.D. Senior Consultant, Counsel of Independent Colleges
James R. Ferry President, Ferry Electric Company Electrical Contractor
Richard W. Kappel CEO, Secretary & Treasurer, William J. Kappel Wholesale Co.
John H. Kunkle, Jr. Retired; Former Vice-Chairman & Director, Commonwealth Land Title Insurance Co.
Thomas J. McCaffrey Grubb & Ellis Company
William C. McNary Retired; Financial Consultant, CIGNA Individual Financial Services Co.
Edward W. Seifert Attorney-at-Law, Partner, Reed, Smith, Shaw & McClay
General Officers
Terry K. Dunkle Chairman of the Board
Dennis J. Fantaski President & Chief Executive Officer
Thomas J. Chunchick Senior Vice President, Retail Banking & Secretary
Anthony D. DeNunzio Senior Vice President & CRA Officer
Fred Geisler Vice President, Mortgage Lending
Delbert O. Hague Vice President, Residential Lending
Robert L. Rogers Vice President, Commercial Loans
USBANCORP TRUST COMPANY
Board of Directors
Jerome M. Adams Senior Partner, Adams, Myers & Baczkowski Attorneys-at-Law
Clifford A. Barton Retired; Former Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
John N. Crichton Chairman, Concurrent Technologies Corporation
Louis Cynkar President & CEO, United States National Bank
Terry K. Dunkle Chairman, President & CEO, USBANCORP, Inc., and Chairman of the Board of United States National Bank, Three Rivers Bank & Trust Company, Community Bancorp, Inc., and USBANCORP Trust Company
Dennis J. Fantaski President & CEO, Community Bancorp, Inc. and Community Savings Bank
Richard W. Kappel CEO, Secretary & Treasurer, William J. Kappel Wholesale Co.
John H. Kunkle, Jr. Retired; Former Vice Chairman & Director, Commonwealth Land Title Insurance Co.
Kim W. Kunkle President & CEO, Laurel Holding Company
Rev. Christian R. Oravec President, St. Francis College
W. Harrison Vail President & CEO, Three Rivers Bank & Trust Company
Ronald W. Virag, CTFA President & CEO, USBANCORP Trust Company
Robert L. Wise President, Fossil Generation of GPU Service Corporation
General Officers
Terry K. Dunkle Chairman of the Board
Ronald W. Virag, CTFA President & Chief Executive Officer
Orlando B. Hanselman Treasurer
Gerald R. Baxter, CPA Vice President & Trust Officer
Anne G. Bump Vice President, Institutional Trust Services
Judith A. Duchene Vice President & Business Development Officer
Steven R. Garstad Vice President & Business Development Officer
David L. Mordan, CPA Vice President & Manager of Personal Trust Services
Mildred L. Nelson Vice President & Trust Officer
James T. Vaughan Vice President & Manager of Western Region
M. Randolph Westlund, CFA Vice President & Trust Investment Officer
James M. Young, CFA, CFP Vice President & Chief Investment Officer
William E. Wood Vice President, Branch Administration
Trust Company Offices
Main and Franklin Streets, 11th Floor U.S. Bank Building P.O. Box 520 Johnstown, Pennsylvania 15907-0520
500 Fifth Avenue, 2nd Floor Three Rivers Bank and Trust Company Building McKeesport, Pennsylvania 15132-2500
2681 Moss Side Boulevard, First Floor Community Savings Building Monroeville, Pennsylvania 15146-3394
U.S. BANK
OFFICE LOCATIONS
*Main Office Downtown Main & Franklin Streets Johnstown, PA 15901 (814) 533-5300
*Westmont Office 110 Plaza Drive Johnstown, PA 15905-1207 (814) 255-6836
*University Heights Office 1404 Eisenhower Boulevard Johnstown, PA 15904-3280 (814) 266-9691
*East Hills Office 1219 Scalp Avenue Johnstown, PA 15904 (814) 266-3181
*Richland Mall Office 3200 Elton Road Johnstown, PA 15904 (814) 266-8965
*Eighth Ward Office 1059 Franklin Street Johnstown, PA 15905 (814) 535-8317
West End Office 163 Fairfield Avenue Johnstown, PA 15906-2392 (814) 533-5436
*Carrolltown Office Main & Carroll Streets Carrolltown, PA 15722-0507 (814) 344-6501
Ebensburg Office High & Center Streets P.O. Box 209 Ebensburg, PA 15931-0209 (814) 472-8706
*Lovell Park Office New Germany Road & Park Avenue R.D. 3, Box 598 Ebensburg, PA 15931-9004 (814) 472-5200
Nanty Glo Office 928 Roberts Street Nanty Glo, PA 15943-1303 (814) 749-9227
Nanty Glo Drive-In 1383 South Shoemaker Street Nanty Glo, PA 15943-1254 (814) 749-0955
Loretto Office 180 St. Mary's Street P.O. Box 116 Loretto, PA 15940-0116 (814) 472-8452
*Galleria Mall Office 500 Galleria Drive Johnstown, PA 15904 (814) 266-5969
St. Michael Office Locust Street, P.O. Box C St. Michael, PA 15951-0393 (814) 495-5514
Coalport Office Main Street, P.O. Box 356 Coalport, PA 16627-0356 (814) 672-5303
*Seward Office #1, Roadway Plaza Seward, PA 15954-9501 (814) 446-5655
Windber Office 1501 Somerset Avenue Windber, PA 15963-1745 (814) 467-4591
Central City Office 104 Sunshine Avenue Central City, PA 15926-1129 (814) 754-4141
*Somerset Office 108 W. Main Street Somerset, PA 15501-2035 (814) 445-4193
*Derry Office 112 South Chestnut Street Derry, PA 15627-1938 (412) 537-9180 (412) 694-8887
THREE RIVERS BANK
OFFICE LOCATIONS
*Boston Office 1701 Boston Hollow Road McKeesport, PA 15135-1217 (412) 754-2014
*Century III Office 269 Clairton Boulevard Pittsburgh, PA 15236-1499 (412) 653-7199
*Franklin Mall Office 1500 W. Chestnut Street Washington, PA 15301-5871 (412) 228-0065
*Glassport Office 600 Monongahela Avenue Glassport, PA 15045-1608 (412) 664-8760
*Jefferson Borough Office Route 51, South P.O. Box 10915 Pittsburgh, PA 15236-0915 (412) 382-1000
*Liberty Boro Office 3107 Liberty Way McKeesport, PA 15133-2198 (412) 664-8707
*McKeesport Office 500 Fifth Avenue McKeesport, PA 15132-2500 (412) 664-8715
*Motor Bank 1415 Fifth Avenue McKeesport, PA 15132-2427 (412) 664-8755
*Port Vue Office 1194 Romine Avenue McKeesport, PA 15133-3596 (412) 664-8975
*Rainbow Village Office 1 Rainbow Village Shopping Center White Oak, PA 15131-2415 (412) 664-8771
*South Strabane Office 590 Washington Road Washington, PA 15301-9621 (412) 225-9800
*University Office 2016 Eden Park Boulevard McKeesport, PA 15132-7619 (412) 664-8780
*Remote 24-Hour Banking Locations *Main Office, Main & Franklin Streets, Johnstown *Richland Mall, Elton Road, Johnstown *Lee Hospital, Main Street, Johnstown *Century III Mall, West Mifflin *Sheetz, Broad Street, Johnstown *The Galleria, Johnstown *Sheetz, Graham Avenue, Windber *BiLo Supermarket, Scalp Avenue, Johnstown *Hills, Clairton Road, West Mifflin *Shop & Save, Ohio Avenue, Glassport *Wal-Mart, Oak Spring Road, Washington *Washington Mall, Oak Springs Road, Washington
COMMUNITY SAVINGS BANK
OFFICE LOCATIONS
*Lawrenceville 4319 Butler Street Pittsburgh, PA 15201-3094 (412) 681-8390
*New Kensington 2 Feldarelli Square 2300 Freeport Road New Kensington, PA 15068-4669 (412) 335-9811
*North Side 401 East Ohio Street Pittsburgh, PA 15212-5588 (412) 231-4300
*Northway Mall 1102 Northway Mall Pittsburgh, PA 15237-3098 (412) 364-8692
*Moon Township 914 Narrows Run Road Coraopolis, PA 15108-2306 (412) 262-2210
*Monroeville 2681 Moss Side Boulevard Monroeville, PA 15146-3394 (412) 856-8410
*North Versailles Great Valley Shopping Center 500 Lincoln Highway North Versailles, PA 15137-1524 (412) 829-1360
*Baldwin Brownsville Plaza 5253 Brownsville Road Pittsburgh, PA 15236-2796 (412) 655-2217
*Carrick 1817 Brownsville Road Pittsburgh, PA 15210-3999 (412) 881-3500
*Bethel Park 2739 South Park Road Bethel Park, PA 15102-3805 (412) 835-2100
*Finleyville 3576 Sheridan Avenue Finleyville, PA 15332-1018 (412) 348-6626
*Jeannette 401 Clay Avenue Jeannette, PA 15644-2124 (412) 527-1501
*24-Hour Banking Available
SHAREHOLDER INFORMATION
Securities Markets USBANCORP, Inc. Common Stock is publicly traded and quoted on the NASDAQ National Market System. The common stock is traded under the symbol of "UBAN." The listed market makers for the stock are:
Bear Stearns & Co., Inc. 245 Park Avenue New York, NY 10167 Telephone: (212) 272-4506
Boenning & Scattergood, Inc. 200 Four Falls Corporate Center Suite 212 West Conshohocken, PA 19428 Telephone: (800) 883-8383
Gruntal & Co., Incorporated 14 Wall Street New York, NY 10005 Telephone: (212) 267-8800
Herzog, Heine, Geduld, Inc. 26 Broadway First Floor New York, NY 10004 Telephone: (212) 908-4156
Janney Montgomery Scott, Inc. 1801 Market Street_10th Floor Philadelphia, PA 19103 Telephone: (215) 665-6500
Legg Mason Wood Walker, Inc. 227 Franklin Street P.O. Box 1207 Johnstown, PA 15907-1207 Telephone: (814) 535-5551
Merrill Lynch Equity Markets Group North Tower World Financial Center New York, NY 10281-1305 Telephone: (212) 449-4162
Anthony Misciagna & Co., Inc. 6 Bird Cage Walk Hollidaysburg, PA 16648 Telephone: (800) 343-5149 Not a NASDAQ Dealer
F. J. Morrissey & Co., Inc. 1700 Market Street Suite 1420 Philadelphia, PA 19103-3913 Telephone: (215) 563-8500
Oppenheimer & Co., Inc. Oppenheimer Tower One World Financial Center New York, NY 10281 Telephone: (212) 667-7000
Parker/Hunter, Inc. 416 Main Street Johnstown, PA 15901 Telephone: (814) 535-8403
Ryan, Beck & Co., Inc. 80 Main Street West Orange, NJ 07052 Telephone: (800) 325-7926
Sandler O'Neill & Partners, L.P. 2 World Trade Center 104th Floor New York, NY 10048 Telephone: (800) 635-6860
Sherwood Securities Corp. One Exchange Plaza New York, NY 10006 Telephone: (800) 435-1235
Troster Singer Corporation, Inc. 10 Exchange Place Jersey City, NJ 07302 Telephone: (212) 422-2400
Wheat First Securities 100 Pasquerilla Plaza P.O. Box 96 Johnstown, PA 15907 Telephone: (814) 535-1516
Form 10-K USBANCORP, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K is integrated within this Annual Report.
Corporate Offices The corporate offices of USBANCORP, Inc. are located in the United States National Bank Building at Main and Franklin Streets, Johnstown, PA 15901. Mailing address: P.O. Box 430 Johnstown, PA 15907 (814) 533-5300
Agents The transfer agent and registrar for USBANCORP, Inc.'s common stock is USBANCORP Trust Company.
Shareholder Data As of January 31, 1995, there were 6,345 shareholders of common stock and 5,582,155 shares outstanding. Of the total shares outstanding, approximately 254,000 or 5% are held by insiders (directors and executive officers) while approximately 1,631,270 or 29% are held by institutional investors (mutual funds, employee benefit plans, etc.).
Dividend Reinvestment Shareholders seeking information about USBANCORP, Inc.'s dividend reinvestment plan should contact Betty L. Jakell, Executive Office, at (814) 533-5158.
Information Analysts, investors, shareholders, and others seeking financial data about USBANCORP, Inc. or any of its subsidiaries annual and quarterly reports, proxy statements, 10-K, 10-Q, 8-K, and call reports-are asked to contact Orlando B. Hanselman, Executive Vice President, Chief Financial Officer & Manager of Corporate Services at (814) 533-5319.
Annex A
ANNEX A TO USBANCORP, INC. 1994 ANNUAL REPORT & FORM 10-K
The following is a listing of the graphs presented in USBANCORP, Inc.'s 1994 Annual Report & Form 10-K.
Page 2: The following six graphs present Financial Highlights- At A Glance:
The first graph is an area graph showing non-performing assets as a percentage of loans and OREO at December 31 for the periods presented:
1990 1991 1992 1993 1994 0.87% 1.10% 1.58% 0.89% 0.91%
Asset quality is critical to a bank's safety and ongoing earnings power. Non-performing assets are those loans and foreclosed properties that are not generating income and represent high collection risk. USBANCORP's non-performing assets are significantly lower than peer.
The second graph is a bar graph showing the allowance for loan losses as a percentage of total non-accrual loans at December 31 for the periods presented:
1990 1991 1992 1993 1994 507.74% 387.22% 245.75% 287.71% 286.27%
The allowance for loan losses helps protect a bank's future earnings from losses due to credit risk. USBANCORP's allowance reflects a reserve of $2.86 for each $1.00 of non-accrual loans.
The third graph is an area graph showing net overhead expense (excluding acquisition charge) to average assets:
1990 1991 1992 1993 1994 2.89% 3.01% 2.68% 2.51% 2.32%
Note: The 1994 net overhead expense calculations exclude $3.8 million net security losses recognized in the fourth quarter which resulted from a specific investment portfolio restructuring strategy.
Net overhead expense as a percentage of average assets reflects a company's ability to generate non-interest income and control its non-interest expenses. Over the last five years USBANCORP has significantly improved its performance in this key area of non-interest sensitive profitability.
The fourth graph is a bar graph showing assets per full time equivalent employee at December 31 for the periods presented (in thousands):
1990 1991 1992 1993 1994 $1,447 $1,499 $1,770 $1,867 $2,293
We are aggressively capturing the financial benefits from each of our past acquisitions, including our most recent intra-market merger. Improved employee productivity is one such integral benefit from our acquisitions.
The fifth graph is a bar graph showing the return on equity before extraordinary item, SFAS #109 benefit and acquisition charge:
1990 1991 1992 1993 1994 10.00% 9.39% 11.41% 10.13% 10.41%
The return on average equity (ROE) is a standard measurement of a bank's profitability. Historically, a 12.50% to 13.50% ROE was considered above average profitability. USBANCORP will not be satisfied until this targeted ROE is consistently achieved.
The sixth graph is a area graph showing net interest margin dollars (in thousands):
1990 1991 1992 1993 1994 $31,706 $32,908 $44,441 $49,485 $55,818
As a result of prudent acquisitions and effective asset/liability management practices, USBANCORP has increased net interest margin dollars for each of the past five years.
Page 4: The following six graphs present Shareholder Information-At A Glance:
The first graph is a bar graph showing pre-tax income excluding acquisition charge (in thousands):
1990 1991 1992 1993 1994 $8,933 $9,181 $14,323 $16,520 $19,688
USBANCORP's pre-tax income has shown progressive growth. Such income is a key determinant of shareholder value and the Company's ongoing financial soundness.
The second graph is a bar graph showing dividends per common share:
1990 1991 1992 1993 1994 $0.15 $0.55 $0.75 $0.86 $0.97
Common dividends per share represent a payment by the company from its accumulated shareholder wealth. When this cash is paid to the shareholder it is no longer available to the company. Many shareholders, however, choose to reinvest these dividends in the company.
The third graph is a bar graph showing common stock price per share at December 31:
1990 1991 1992 1993 1994 $12.75 $18.00 $22.00 $23.75 $21.00
A second key element of shareholder return is the price appreciation of each common share. USBANCORP's common stock price per share has appreciated 65% since December 31, 1990.
The fourth graph is a bar graph showing common dividend yield (based upon dividends declared and purchased at average market price each year):
1990 1991 1992 1993 1994 1.20% 3.50% 3.70% 3.50% 4.20%
The common dividend yield is similar to the interest rate on a deposit. Common dividends are only one element of total shareholder return. Common dividend yields for Pennsylvania bank holding companies were, as of January 31, 1995, 3.0%. USBANCORP's yield approximated 4.5%.
The fifth graph is a bar graph showing book value per common share - December 31:
1990 1991 1992 1993 1994 $19.85 $21.71 $23.08 $24.67 $24.57
A company's book value per common share represents the accumulated and undistributed shareholder wealth. This wealth is used by the company to finance profitable growth and to fund shareholder dividends. USBANCORP has increased this shareholder wealth by 24% since December 31, 1990.
The sixth graph is an area graph showing asset leverage ratio compared to the management minimum target of 6%:
1990 1991 1992 1993 1994 8.05% 8.56% 7.08% 9.18% 6.64%
Fundamental to shareholder and depositor safety is the capital strength of the financial institution. USBANCORP well exceeds all governmental regulatory capital requirements. As we did during 1994, the Company will continue to pursue several strategic alternatives to leverage this capital strength in 1995.
Page 5: The graph at the top left is a bar graph showing net interest income (NII) in thousands and data points showing the net interest margin (NIM) percentage:
1990 1991 1992 1993 1994 NII $31,706 $32,908 $44,441 $49,485 $55,818
NIM 4.56% 4.69% 4.58% 4.34% 4.03%
The graph at the bottom left is a bar graph showing assets per full time equivalent employee at December 31 for the periods presented (in thousands):
1990 1991 1992 1993 1994 $1,447 $1,499 $1,770 $1,867 $2,293
Page 6: The graph at the top left is a area graph showing total market capitalization (in thousands):
1990 1991 1992 1993 1994 $65,050 $70,023 $82,971 $116,615 $137,136
The graph at the bottom left is a bar graph showing total assets at December 31 for the periods presented (in thousands):
1990 1991 1992 1993 1994 $774,403 $784,036 $1,139,855 $1,241,521 $1,788,890
Page 7: The graph at the top left is a pie chart showing 1994 gross revenue contribution by product segment.
Investments 29%, Trust 3%, Commercial 17%, Wholesale 1%, Consumer 50%
The graph at the bottom left is bar graph showing net income per common share before extraordinary item, SFAS #109 benefit, and acquisition charge on a fully diluted basis:
1990 1991 1992 1993 1994 $1.95 $1.97 $2.53 $2.41 $2.54
Page 8: The graph is a pie chart showing loan portfolio composition at December 31, 1994, by loan type:
Commercial 14% Commercial secured by real estate 20% Real estate - mortgage 47% Consumer 19%
Page 9: The graph at the top left is an area graph showing the asset leverage ratio compared to the management minimum target of 6%:
1990 1991 1992 1993 1994 8.05% 8.56% 7.08% 9.18% 6.64%
The graph at the bottom left is a bar graph showing common dividend yield (based upon dividends declared and purchased at average market price each year):
1990 1991 1992 1993 1994 1.20% 3.50% 3.70% 3.50% 4.20%
Page 10: The graph at the top left is a pie chart showing the deposit composition as of December 31, 1994:
DDA 12%, CD's 48% Savings & NOW 29%, Money market 11%
The graph at the bottom left is a pie chart showing the deposit composition as of December 31, 1994:
DDA 13%, CD's 44% Savings & NOW 32%, Money market 11%
Page 11: Shows a service area map of USBANCORP, Inc.'s six southwestern Pennsylvania counties. The map shows a closeup of the six counties identifying branch locations by subsidiary.
Page 44: The top left graph is a bar graph showing common stock price per share at December 31:
1990 1991 1992 1993 1994 $12.75 $18.00 $22.00 $23.75 $21.00
The fourth graph is a bar graph showing common dividend yield (based upon dividends declared and purchased at average market price each year):
1990 1991 1992 1993 1994 1.20% 3.50% 3.70% 3.50% 4.20%
Page 47: The graph at the top left is a bar graph showing total assets at December 31 for the periods presented (in thousands):
1990 1991 1992 1993 1994 $774,403 $784,036 $1,139,855 $1,241,521 $1,788,890
The graph at the bottom left is a pie chart showing market leadership in Cambria County:
U.S. Bank 25% Pittsburgh National Bank 13% BT Financial 17% Cenwest 11% Other (No more than 7% individually) 34%
Page 48: The graph at the top left is a bar graph showing net income per common share before extraordinary item, SFAS #109 benefit, and acquisition charge (fully diluted basis):
1990 1991 1992 1993 1994 $1.95 $1.97 $2.53 $2.41 $2.54
The graph at the bottom left is an area graph showing total common shares outstanding at December 31:
1990 1991 1992 1993 1994 2,552,407 2,568,189 2,982,124 4,726,181 5,582,155
Page 49: The graph at the top left is an bar graph showing return on average assets before extraordinary item, SFAS #109 benefit, and acquisition charge:
1990 1991 1992 1993 1994 0.82% 0.83% 0.85% 0.91% 0.87%
The graph at the bottom left is a bar graph showing net interest income (NII) in thousands and data points showing the net interest margin (NIM) percentage:
1990 1991 1992 1993 1994 NII $31,706 $32,908 $44,441 $49,485 $55,818
NIM 4.56% 4.69% 4.58% 4.34% 4.03%
Page 50: The table at the top left shows the investment leverage program (dollar amounts in thousands):
Securities in the amount of $121,735 were purchased with a weighted average maturity of 54 months and a weighted average coupon of 7.35%. Of these securities 39% were variable and 61% were fixed.
Funding for the securities was $121,735 with a weighted average maturity of 3 months and a weighted average coupon of 5.10%.
Hedge transactions total $100,000 with a weighted average maturity of 12 months and a weighted average coupon of 0.29%.
Note: The leverage program was in place from 7-01-94 to 12-31-94 and contributed an incremental $1.2 million to pre-tax income.
The table at the bottom left shows Johnstown Savings Bank (JSB) investment security portfolio repositioning (dollar amounts in thousands):
The Company sold JSB securities amounting to $175,454 with a weighted average maturity of 41 months and a weighted average coupon of 5.5%. Of these securities 23% were variable rates and 77% were fixed.
The Company purchased JSB securities of $165,000 with a weighted average maturity of 45 months and a weighted average coupon of 7.27%. Of these securities purchased 11% were variable rates and 89% were fixed.
Note: The annual pre-tax income effect of this repositioning approximates $2.9 million.
Page 51: The graph at the top left is a bar graph showing net interest income (NII) in thousands and data points showing the net interest margin (NIM) percentage:
1990 1991 1992 1993 1994 NII $31,706 $32,908 $44,441 $49,485 $55,818
NIM 4.56% 4.69% 4.58% 4.34% 4.03%
The table at the bottom left shows Three Rivers Bank (TRB) and U.S. Bank (USNB) investment security portfolio repositioning (dollar amounts in thousands):
TRB sold securities amounting to $15,932 with a weighted average maturity of 43 months and a weighted average coupon of 4.80%. Of these securities 0% were variable rates and 100% were fixed.
USNB sold securities amounting to $65,445 with a weighted average maturity of 26 months and a weighted average coupon of 6.32%. Of these securities 2% were variable rates and 98% were fixed.
Total securities sold amounted to $81,377 with a weighted average maturity of 29 months and a weighted average coupon of 6.02%. Of these securities 1% were variable rates and 99% were fixed.
TRB purchased securities amounting to $14,926 with a weighted average maturity of 45 months and a weighted average coupon of 8.65%. Of these securities 40% were variable rates and 60% were fixed.
USNB purchased securities amounting to $62,451 with a weighted average maturity of 50 months and a weighted average coupon of 8.83%. Of these securities 84% were variable rates and 16% were fixed.
Total securities purchased amounted to $77,377 with a weighted average maturity of 49 months and a weighted average coupon of 8.80%. Of these securities 76% were variable rates and 24% were fixed.
Note: The annual pre-tax income effect of this repositioning approximates $2.1 million.
Page 52: The top left graph is a area graph showing net interest margin dollars (in thousands):
1990 1991 1992 1993 1994 $31,706 $32,908 $44,441 $49,485 $55,818
The bottom left graph is a pie chart showing loan portfolio composition at December 31, 1994 by loan type:
Commercial 14% Commercial secured by real estate 20% Real estate - mortgage 47% Consumer 19%
Page 55: The table at the top left shows the investment portfolio (dollar amounts in thousands):
Total securities at December 31, 1994, amounted to $784,100 with a weighted average maturity of 3.8 years and a weighted average coupon of 6.84%. Of these securities 25% were variable rates and 75% were fixed.
Total securities at December 31, 1993, amounted to $426,320 with a weighted average maturity of 2.8 years and a weighted average coupon of 5.45%. Of these securities 15% were variable rates and 85% were fixed.
Total peer group securities at September 30, 1994 have weighted average maturity of 4.7 years and a weighted average coupon of 6.32%. Of these securities 9% were variable rates and 91% were fixed.
Note: The peer group is defined as BT Financial, Keystone Financial, Susquehanna Bancshares, S & T Bancorp, First Western Bancorp, First Commonwealth Financial, and Southwest National Corporation. Peer information was derived from the 9/30/94 call reports.
The bottom left graph is a pie chart showing the liability funding mix at December 31, 1994:
Deposits 67% Borrowings 25% Equity 8%
Page 56: The graph at the top left is a pie chart showing the deposit composition as of December 31, 1994:
DDA 12%, CD's 48% Savings & NOW 29%, Money market 11%
The bottom left graph is an area graph showing non- performing assets as a percentage of loans and OREO at December 31 for the periods presented:
1990 1991 1992 1993 1994 0.87% 1.10% 1.58% 0.89% 0.91%
Page 57: The middle left graph is a bar graph showing the allowance for loan losses at December 31 for the periods presented:
1990 1991 1992 1993 1994 2.80% 3.02% 2.12% 2.10% 1.80%
Page 58: The bottom left graph is a bar graph showing the loan loss provision as a percentage of average loans:
1990 1991 1992 1993 1994 0.20% 0.21% 0.36% 0.34% (0.34%)
Page 59: The top left graph is a bar graph showing the net charge-offs as a percentage of average loans:
1990 1991 1992 1993 1994 0.17% 0.08% 0.58% 0.13% 0.04%
Page 60: The top left graph is an bar graph showing non-interest income excluding investment security gains and losses (in thousands):
1990 1991 1992 1993 1994 $5,383 $6,085 $7,953 $9,567 $12,159
Page 61: The top left graph is a bar graph showing trust fee income (in thousands):
1990 1991 1992 1993 1994 $1,306 $1,633 $2,054 $2,578 $3,023
The bottom left graph is a pie chart showing the composition of 1994 trust assets (dollar amounts in thousands):
Corporate trust $339,029 33% Employee benefits (excluding Pathroad) $331,652 32% Personal trust (excluding Pathroad) $299,221 29% Pathroad $57,351 6%
Page 62: The top left graph is a bar graph showing the total non-interest expense excluding acquisition charge (in thousands):
1990 1991 1992 1993 1994 $27,198 $28,862 $36,248 $40,715 $47,082
The bottom left graph is an bar graph showing the components of non-interest expense excluding acquisition charge (in thousands):
1990 1991 1992 1993 1994 All other $7,998 $8,506 $11,083 $12,605 $16,410 FDIC Ins. $ 775 $1,381 $ 2,040 $ 2,157 $ 2,576 Occupancy & Equipment $4,021 $4,320 $ 5,087 $ 6,001 $ 7,222 Salaries & benefits $14,306 $14,655 $18,038 $19,952 $23,311
Page 63: The top left graph is a bar graph showing net overhead expense (excluding acquisition charge) as a percent of tax equivalent net interest income compared to management's strategic target is 55%:
1990 1991 1992 1993 1994 67.63% 68.24% 61.66% 60.86% 60.99%
Note: Net overhead expense calculations exclude $3.8 million net security losses recognized in the fourth quarter 1994 which resulted from a specific investment restructuring strategy.
The bottom left graph is a bar graph showing assets per full time equivalent employee at December 31 for the periods presented (in thousands):
1990 1991 1992 1993 1994 $1,447 $1,499 $1,770 $1,867 $2,293
Page 64: The top left graph is an area graph showing net overhead expense (excluding acquisition charge) to average assets:
1990 1991 1992 1993 1994 2.89% 3.01% 2.68% 2.51% 2.32%
Note: The 1994 net overhead expense calculations exclude $3.8 million net security losses recognized in the fourth quarter which resulted from a specific investment portfolio restructuring strategy.
The bottom left graph is an area graph showing core net income excluding significant non-recurring items (in thousands):
1990 1991 1992 1993 1994 $7,141 $7,637 $8,797 $11,281 $13,068
Page 65: The top left graph is a pie chart showing loan portfolio composition at December 31, 1994 by loan type:
Commercial 14% Commercial secured by real estate 20% Real estate - mortgage 47% Consumer 19%
The bottom left graph is an bar graph showing the Company's one year GAP ratio compared to a neutral one year GAP of 1.00x at December 31 for the periods presented:
1990 1991 1992 1993 1994 0.97x 1.06x 1.14x 1.10x 0.79x
Page 67: The graph at the top left is a pie chart showing the deposit composition as of December 31, 1994:
DDA 12%, CD's 48%, Savings & NOW 29%, Money market 11%,
The graph at the bottom left is a pie chart showing the deposit composition as of December 31, 1993:
DDA 13%, CD's 44% Savings & NOW 32%, Money market 11%
Page 68: The top left graph is a pie chart showing the investment portfolio liquidity(scheduled maturities) as of December 31, 1994:
Less than 1 year is 6% Greater than 1 year but less than 5 years is 64% Greater than 5 year but less than 10 years is 24% Greater than 10 years is 6%
The bottom left graph is a pie chart showing the liability funding mix at December 31, 1994:
Deposits 67% Borrowings 25% Equity 8%
Page 69: The middle left graph is a bar graph showing the risk based capital ratio compared to the regulatory requirement of 8.00%.
1990 1991 1992 1993 1994 5.10% 5.70% 4.54% 7.97% 5.70%
Page 74: The middle left graph is a pie chart showing 1994 gross revenue contribution by product segment (in thousands):
Investments $32,339, Trust $3,023, Commercial $18,783, Wholesale $1,237, Consumer $55,616,
The bottom left graph is a pie chart showing 1993 gross revenue contribution by product segment (in thousands):
Investments $25,603, Trust $2,578, Commercial $16,820, Wholesale $1,281, Consumer $49,603,
Page 78: The graph at the top left is a bar graph showing trust assets. The graph presents the book value of client assets which is discretionary and non-discretionary (in millions):
1990 1991 1992 1993 1994 $550 $631 $650 $943 $1,027
Note: 193% growth rate from 1990 to 1994.
Page 79: The graph at the bottom left is a pie chart showing market leadership in Cambria County:
U.S. Bank 25% Pittsburgh National Bank 13% BT Financial 17% Cenwest 11% Other (No more than 7% individually) 34%
Page 81: The middle left graph is a bar graph showing assets per full time equivalent employee at December 31 for the periods presented (in thousands):
1990 1991 1992 1993 1994 $1,447 $1,499 $1,770 $1,867 $2,293
Page 82: The two graphs at the left are pie charts showing the Company's composition of the investment portfolio at December 31, 1993, and 1994, respectively:
1993 1994 U.S. Treasury and Agency Debentures 20% 11% U.S. Agency CMO's 34% 7% U.S. Agency Pools 22% 60% Tax Exempt 10% 6% Other 14% 16%
Page 83: The two graphs at the left are pie charts showing the Company's composition of the investment portfolio credit quality distribution at December 31, 1993, and 1994, respectively:
1993 1994 AAA 90.76% 96.43% AA 2.52% 0.85% A 5.89% 2.49% Other 0.83% 0.23%
Page 85: The middle left graph is a bar graph showing average loans to average deposits at December 31 for the periods presented:
1990 1991 1992 1993 1994 67.55% 65.47% 68.23% 69.01% 71.82%
Page 87: The top left graph is a pie chart showing the deposit composition as of December 31, 1994:
DDA 12%, CD's 48%, Savings & NOW 29%, Money market 11%,
Page 100: The graph at the bottom right is a bar graph showing common stock price earnings ratio (calculated on a fully diluted basis before SFAS #109 benefit and acquisition charge). Based upon December 31 stock prices for the periods presented):
1990 1991 1992 1993 1994 5.29x 7.86x 8.70x 9.85x 8.27x
The graph at the bottom left is a bar graph showing common stock price to book value at December 31 for the periods presented:
1990 1991 1992 1993 1994 64.23% 82.91% 95.32% 96.27% 85.47%
EXHIBIT 3.2
BYLAWS OF USBANCORP, INC.
ADOPTED November 20, 1992
REVISED February 24, 1995
ARTICLE I
Meetings of Shareholders
Section 1.1. Annual Meeting. The regular annual meeting of the shareholders for the election of directors and the transaction of whatever other business may properly come before the meeting, shall be held at the Main Office of the Corporation, Main and Franklin Streets, City of Johnstown, Commonwealth of Pennsylvania, at 1:30 p.m., on the 4th Tuesday of April of each year, or at such other place on such date and at such time as the Board of Directors may in their discretion determine. Written notice stating the place, day, and hour of the meeting and, in case of special meeting, the general nature of the business to be transacted, shall be delivered not less than five (5) nor more than forty (40) days before the date of the meeting, or in case of a merger or consolidation not less than ten (10) nor more than forty (40) days before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the books of the Corporation or as supplied by him to the Corporation for the purpose of notice, with postage thereon prepaid.
Section 1.2. Special Meetings. Special meetings of the shareholders may be called at any time by the Chairman of the Board, President, the Chief Executive Officer or by the Board of Directors, or by any two (2) or more directors. The Secretary shall fix the date of such meeting, to be held not more than sixty (60) days after receipt of the request, and shall give due notice thereof.
Section 1.3. Nominations for Director. Nominations for election to the Board of Directors may be made by the Board of Directors or by any shareholder of any outstanding class of capital stock of the Corporation entitled to vote for the election of directors. Nominations, other than those made by or on behalf of the existing management of the Corporation, shall be made in writing and shall be delivered or mailed to the President of the Corporation not less than 60 days nor more than 90 days prior to any meeting of shareholders called for the election of directors. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the Corporation that will be voted; (d) the total number of shares of capital stock of the Corporation that will be voted for each proposed nominee; (e) the name and residence address of the notifying shareholder; and (f) the number of shares of capital stock of the Corporation owned by the notifying shareholder. Nominations not made in accordance herewith may, in his discretion, be disregarded by the Chairperson of the meeting, and upon his instructions, the vote tellers may disregard all votes cast for each such nominee.
Section 1.4. Judges of Election. Every election of directors shall be managed by three judges, who shall be appointed from among the shareholders by the Board of Directors. The judges of election shall hold and conduct the election at which they are appointed to serve; and, after the election, they shall file with the Secretary a certificate under their hands, certifying the result thereof and the names of the directors elected. The judges of election, at the request of the Chairperson of the meeting, shall act as tellers of any other vote by ballot taken at such meeting, and shall certify the result thereof. No person who is a candidate for office, or an officer or an employee of this Corporation or a subsidiary thereof, shall act as a judge.
Section 1.5. Proxies. Shareholders may vote at any meeting of the shareholders in person or by proxies duly authorized in writing. Proxies, unless otherwise provided, shall be valid for only one meeting to be specified therein, and any adjournments of such meeting. No proxy shall be valid after eleven (11) months from the date of its execution unless otherwise provided in the proxy. Proxies shall be dated and shall be filed with the records of the meeting.
Section 1.6. Quorum. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, unless otherwise provided by law; but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. A majority of the votes cast shall decide every question or matter
submitted to the shareholders at any meeting, at which a quorum is present, unless otherwise provided by law or by the Articles of Incorporation.
Section 1.7. Voting. Only persons in whose names shares appear on the share transfer books of the Corporation on the date on which notice of the meeting is mailed shall be entitled to vote at such meeting, unless some other day is fixed by the Board of Directors for the determination of shareholders of record, but such date shall not be less than ten (10) nor more than fifty (50) days before the date of the meeting, or in the case of a merger or consolidation not less than twenty (20) nor more than fifty (50) days before the date of the meeting. Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote, except that in all elections for directors every shareholder shall have the right to vote, in person or by proxy, for the number of shares owned by him, for as many persons as there are directors to be elected, or to cumulate said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares shall equal, or to distribute them on the same principle among as many candidates as he shall think fit.
Section 1.8. Subchapters G and H of Business Corporation Law. The provisions of Subchapter G of Chapter 25 (Section 2561 et seq.) and the provisions of Subchapter H of Chapter 25 (Section 2571 et seq.) of the Pennsylvania Business Corporation Law of 1988, as amended (effected by the Act of April 27, 1990 (No. 36)) shall not be applicable to the Corporation.
ARTICLE II
Directors
Section 2.1. Board of Directors. The Board of Directors shall have the power to manage and administer the business and affairs of the Corporation. Except as expressly limited by law or required or directed by these Bylaws or by the Articles of Incorporation to be exercised or done by the shareholders, all corporate powers of the Corporation shall be vested in and may be exercised by the Board of Directors.
Section 2.2. Number; Term; Vacancies. The number, classification, election and appointment, term of office and removal from office of directors shall be in accordance with and governed by the provisions of Article Seventh of the Articles of Incorporation of this Corporation which provisions are incorporated herein with the same effect as if fully set forth. The Board of Directors may appoint each year such number of advisory directors or directors emeritus as the Board of Directors may from time to time determine.
Section 2.3. Organization Meeting. The Secretary, upon receiving the certificate of the judges, of the result of any election, shall notify the directors-elect of their election and of the time at which they are required to meet at the Main Office of the Corporation for the purpose of organizing the new Board and electing and appointing officers of the Corporation for the succeeding year. Such meeting shall be held on the day of the election or as soon thereafter as practicable, and, in any event, within thirty days thereof. If, at the time fixed for such meeting, there shall not be a quorum present, the directors present may adjourn the meeting, from time to time, until a quorum is obtained.
Section 2.4. Regular Meetings. The regular meetings of the Board of Directors shall be held quarterly at a time and place determined by the Board of Directors. No notice of regular meetings need be given.
Section 2.5. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President, the Chief Executive Officer or at the request of three (3) or more directors to be held at the principal place of business of the Corporation or such other place as designated by the person or persons calling the meeting. Each member of the Board of Directors shall be given notice stating the time and place, by telephone, telegram, facsimile transmission, letter, or in person, of each such special meeting.
Section 2.6. Quorum. A majority of the directors shall constitute a quorum at any meeting, except when otherwise provided by law; but a less number may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice.
Section 2.7. Remuneration. No stated fee shall be paid to directors, as such, for their service, but by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board of Directors; provided, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of standing or special committees may be allowed like compensation for attending committee meetings.
Section 2.8. Action by Directors Without a Meeting. Any action which may be taken at a meeting of the directors, or of a committee thereof, may be taken without a meeting if a consent in writing setting forth the action so taken or to be taken, shall be signed by all of the directors, or all of the members of the committee, as the case may be. Such consent shall have the same effect as a unanimous vote.
Section 2.9. Action of Directors by Communications Equipment. Any action which may be taken at a meeting of directors, or of a committee thereof, may be taken by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time.
Section 2.10. Age Limitation. No person shall be eligible for election, re-election, appointment or re-appointment to the Board of Directors if such person shall have attained the age of seventy (70) years, at the time of any such action.
Section 2.11. Share Ownership. Each director shall own in his or her own right unencumbered shares of common stock in the Corporation having a par value of not less than $1,000.
Section 2.12. Minutes. The Board of Directors and each committee hereinafter provided for shall keep minutes of its meetings. Minutes of the committees shall be submitted at the next regular meeting of the Board of Directors, and any action taken with respect thereto shall be entered as the minutes of the Board of Directors.
ARTICLE III
Committees of the Board
Section 3.1. Special Committees. The Board of Directors may appoint from time to time, from its own members, special committees of two or more persons, for such purposes and with such powers as the Board may authorize.
Section 3.2. Executive Committee. The Committee shall consist of not less than three (3) members of the Board of Directors (who are not officers of the Corporation or a subsidiary or affiliate of the Corporation) appointed by the Chairman of the Board, who, together with the Chairman of the Board, the President and the Chief Executive Officer, shall constitute the Executive Committee, which may exercise all of the powers of the Board of Directors except where action of the Board of Directors is by law specifically required. It shall act by the concurrent vote of not less than three members thereof. The Secretary shall keep a record of its proceedings and report the same at each regular meeting of the Board of Directors.
It shall have general supervision of, and direct the affairs and practical operation of the subsidiaries. It shall meet weekly or monthly, as it shall determine, on such day as it may designate and at such times as it shall appoint, and at other times upon the call of the Chairman of the Board, the Chief Executive Officer and the President, upon the call of the Chairman of the Committee, and upon call of any two members thereof. The Board of Directors shall accept or decline the report of the Executive Committee, such action to be recorded in the minutes of the meeting.
Section 3.3. Audit Committee. The Audit Committee shall include six or more USBANCORP, Inc. Board Members, with two or more Board Members from each banking affiliate, none being officers or employees of any banking affiliate or the Corporation.
One member shall be rotating, serving for a period of one year so that the Audit Committee will annually include a new member. Members shall be elected annually to serve a term of one year. One of the members shall be appointed chairman by the Chairman of the Board. The Committee shall appoint a secretary who shall keep minutes of all meetings. Three members of the Committee shall constitute a quorum. The Committee shall meet six times per year.
In discharging its duty, the Audit Committee may rely on the evaluations and conclusions of regulatory examiners as well as internal and/or external auditors utilized by the Committee in the performance or review of audit functions.
The Corporation's auditors shall report directly to the Audit Committee. The Committee shall meet with the internal auditors and review internal audit reports, independent auditor findings, and all official reports from regulatory authorities along with management's responses to these reports.
The Corporation's chief auditor, chief loan review and chief compliance officers shall functionally report directly to the Audit Committee and also provide their findings to the subsidiaries of the Corporation. The loan review and compliance function will report administratively to the chief auditor. Administratively, the chief auditor reports to the Chairman of the Board.
The Committee shall, annually, report formally, in writing, to the Board of Directors the performance of its supervisory and audit functions. The report must set forth the Committee's evaluations, conclusions, and recommendations with respect to the condition of the Corporation and the effectiveness of its policies, practices and controls.
The Committee shall recommend to the Board of Directors for its action the appointment or discharge of the Corporation's - independent auditors. The Committee shall consider the auditor's independence, audit and non-audit fees and the quality of their work. If the auditors are to be replaced, the Committee shall document the reason for replacement along with a recommendation for the appointment of new auditors.
The Committee shall meet with the independent auditors periodically and review, among other things, the Scope and Audit Plan, report or opinion on the Corporation's financial statements, the effectiveness of the subsidiaries' internal controls, along with any recommendations for improvement and any major problems encountered.
The Committee shall insure that an internal audit department and loan review and compliance department are adequately staffed and independent from the management of the subsidiaries. In fulfilling this role, the Committee shall review the content and completeness of the audit, loan review and compliance programs and procedures, appraise the audit staff and loan review and compliance staff and approve salaries and insure that the audit staff and loan review and compliance staff are maintaining their technical proficiency through continuing education programs.
It is also the responsibility of the Audit Committee to ascertain on the basis of observation and audit, whether the trust function is being administered in accordance with law, regulations and sound fiduciary principles. It shall evaluate the policies, practices and controls employed by the trust function to effect compliance and enforce correction of any violations, deficiencies or weaknesses. In discharging its duty, the Audit Committee may rely on the evaluations and conclusions of internal and/or external auditors utilized by the Committee in the performance or review of audit functions.
The Audit Committee must ensure that the responsible parties have before them the last report of examination of the trust functions by the Pennsylvania Department of Banking and the Federal Reserve System and any letters to or from the such agencies in order to verify correction of exceptions, weaknesses or deficiencies. The Committee also should confirm the correction of all exceptions, weaknesses or deficiencies which may be brought to the Corporation's attention by internal and external auditors.
The Audit Committee is required to report formally in writing to the Board of Directors the performance of its trust supervisory and audit functions. The report must set forth the Committee's evaluations, conclusions and recommendations with respect to the condition of the trust function, and the effectiveness of its policies, practices and controls. It also must include a specific statement of the Committee's conclusion as to whether that function is being administered in accordance with all applicable laws and sound fiduciary principles.
The Committee shall have such other duties as may be lawfully delegated to it from time to time by the Board of Directors.
Section 3.4. Nominating Committee. There shall be a Nominating Committee of at least three (3) members of the Board of Directors who shall be nominated by the Chairman of the Board and appointed at least annually by the Board of Directors. It shall be the duty of this Committee to nominate directors for consideration at the annual meeting of the shareholders.
Section 3.5. Management Compensation Committee. There shall be a Management Compensation Committee of at least three (3) members of the Board of Directors who shall be the three (3) directors (who are not officers of the Corporation or a subsidiary or affiliate of the Corporation) appointed by the Chairman of the Board to the Executive Committee. It shall be the duty of the Committee to review and make recommendations to the Board of Directors concerning officers' compensation.
Section 3.6 Stock Option Plan Committee. There shall be a Stock Option Plan Committee of at least three (3) members of the Board of Directors appointed from time to time by the Board of Directors of the Corporation to administer the 1991 Stock Option Plan in accordance with the provisions thereof.
ARTICLE IV Officers and Employees
Section 4.1. Designations. The officers of the Corporation shall be the Chairman of the Board, President, Chief Executive Officer, Secretary and Treasurer who shall be elected for one year by the Board of Directors at their first meeting after the annual meeting of shareholders and who shall hold office until their successors are elected and qualify. Any two or more offices may be held by the same person, except the offices of President and Treasurer.
Section 4.2. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors and in general shall perform such duties as are incident to his office and as prescribed by the Board of Directors. The Chairman of the Board shall perform the duties and have the powers of the Chief Executive Officer in his absence or his inability or refusal to act.
Section 4.3. President. The Board of Directors shall appoint one of its members to be President of the Corporation. He shall be an ex officio member of all committees except the Stock Option, Management Compensation and Audit Committees. The President shall have and may exercise any and all other powers and duties pertaining by law, regulation, or practice to the office of President or imposed by these Bylaws. He shall also have and may exercise such further powers and duties as from time to time may be
conferred upon or assigned to him by the Board of Directors. In the absence of the Chairman of the Board and the Chief Executive Officer, or their inability or refusal to act, he shall preside at all meetings of the Board of Directors.
Section 4.4. The Chief Executive Officer. The Chief Executive Officer shall have general supervision of all departments and business of the Corporation, he shall prescribe the duties of other officers and see to the performance thereof. He shall be an ex officio member of all committees except the Stock Option, Management Compensation and Audit Committees. In the absence of the Chairman of the Board or his inability or refusal to act, he shall preside at all meetings of the Board of Directors.
Section 4.5. Secretary. The Board of Directors shall appoint a Secretary, who shall be Secretary of the Board and of the Corporation, and shall keep accurate minutes of meetings. He shall attend to the giving of all notices required by these Bylaws to be given. He shall be custodian of the corporate seal, records, documents and papers of the Corporation. He shall have and may exercise any and all other powers and duties pertaining by law, regulation or practice to the office of Secretary or imposed by these Bylaws. He shall perform such other duties as may be assigned to him from time to time by the Board of Directors.
Section 4.6. Treasurer. The Board of Directors shall appoint a Treasurer, who shall be the Treasurer of the Corporation. He shall have and may exercise any and all powers and duties pertaining by law, regulation or practice to the office of Treasurer or imposed by these Bylaws. He shall perform such other duties as may be assigned to him from time to time by the Board of Directors.
Section 4.7. Other Officers. The Board of Directors may appoint one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, a Chief Auditor, and such other officers, officers emeritus and Attorneys-in-fact found necessary for the orderly transaction of business. Such officers shall respectively exercise such powers and perform such duties as pertain to the respective offices or as may be conferred upon or assigned to them by the Board of Directors, the Chief Executive Officer or the President.
Section 4.8. Clerks and Agents. The Board of Directors may appoint, from time to time, such agents or employees as it may deem advisable for the prompt and orderly transaction of the business of the Corporation, define their duties, fix salaries to be paid them and dismiss them. Subject to the authority of the Board of Directors, the President or any other officer of the Corporation
authorized by him, may appoint and dismiss all or any agents or employees, prescribe their duties and the conditions of their employment, and from time to time, fix their compensation.
Section 4.9. Tenure of Office. All officers shall hold office for the current year for which the Board of Directors was elected, unless they shall resign, become disqualified, or be removed; and any vacancy occurring in the office of President shall be filled promptly by the Board of Directors.
ARTICLE V
Authority of Officers
Section 5.1. Corporate Seal. The Chairman of the Board, the President, the Chief Executive Officer, any Vice President (excluding the Chief Auditor), the Secretary, and the Treasurer, shall each have authority to affix and attest the corporate seal of the Corporation.
Section 5.2. Other Powers. The Chairman of the Board, the President, the Chief Executive Officer or any Vice President (excluding the Chief Auditor), acting in conjunction with the Secretary or Treasurer or Assistant Secretary or Assistant Treasurer are authorized to perform such corporate and official acts as are necessary to carry on the business of the Corporation, subject to the directions of the Board of Directors and the Executive Committee.
The above-named officers are fully empowered, subject to policies and established committee approvals:
a. To sell, assign and transfer any and all shares of stock, bonds or other personal property standing in the name of the Corporation or held by the Corporation either in its own name or as agent;
b. To assign and transfer any and all registered bonds and to execute requests for payment or reissue of any such bonds that may be issued now or hereafter and held by the Corporation in its own right or as agent;
c. To sell at public or private sale, lease, mortgage or otherwise dispose of any real estate or interest therein held or acquired by the Corporation in its own right or as agent, except the real estate and buildings occupied by the Corporation in the transaction of its business, and to execute and deliver any instrument necessary to completion of the transaction;
d. To receive and receipt for any sums of money or property due or owing to the Corporation in its own right or as agent and to execute any instrument of satisfaction therefor for any lien of record;
e. To execute and deliver any deeds, contracts, agreements, leases, conveyances, bills of sale, petitions, writings, instruments, releases, acquittance and obligations necessary in the exercise of the corporate powers of the Corporation.
Section 5.3. Checks and Drafts. Such of the officers and other employees as may from time to time be designated by the Board of Directors or Executive Committee, shall have the authority to sign checks, drafts, letters of credit, orders, receipts, and to endorse checks, bills of exchange, orders, drafts, and vouchers made payable or endorsed to the Corporation.
Section 5.4. Loans. Each of the Chairman of the Board, President, the Chief Executive Officer, any Vice President (excluding the Chief Auditor), the Secretary or the Treasurer, acting in conjunction with any other of these designated officers may effect loans on behalf of the Corporation from any banking institution, executing notes or obligations and pledging assets of the Corporation therefor.
ARTICLE VI
Section 6.1. Limitation of Liability. To the fullest extent permitted by the Law of the Commonwealth of Pennsylvania, a director of the Corporation shall not be personally liable to the Corporation or others for monetary damages for any action taken or any failure to take any action, unless the director has breached or failed to perform the duties of his or her office and such breach or failure constitutes self-dealing, willful misconduct or recklessness. The provisions of this Section 6.1 shall not apply with respect to the responsibility or liability of a director under any criminal statute or the liability of a director for the payment of taxes pursuant to local, state or federal law.
Section 6.2. Indemnification. (a) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving, at the request of the Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), amounts paid in settlement, judgments, and fines actually and reasonably incurred by such person in connection with
such action, suit, or proceeding; provided, however, that no indemnification shall be made in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness.
(b) Advance of Expenses. Expenses (including attorneys' fees) incurred in defending a civil or criminal action, suit, or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit, or proceeding, upon receipt of a written statement by or on behalf of the director, officer, employee, or agent to repay such amount if it shall be ultimately determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article VI.
(c) Indemnification not Exclusive. The indemnification and advancement of expenses provided by this Article VI shall not be deemed exclusive of any other right to which persons seeking indemnification and advancement of expenses may be entitled under any agreement, vote of disinterested directors or otherwise, both as to actions in such persons' official capacity and as to their actions in another capacity while holding office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such person.
(d) Insurance, Contracts, Security. The Corporation may purchase and maintain insurance on behalf of any person, may enter into contracts of indemnification with any person, and may create a fund of any nature which may, but need not be, under the control of a trustee for the benefit of any person, and may otherwise secure in any manner its obligations with respect to indemnification and advancement of expenses, whether arising under this Article VI or otherwise, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VI.
Section 6.3. Effect of Amendment. Any repeal or modification of this Article VI shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation or any right of any person to indemnification from the Corporation with respect to any action or failure to take any action occurring prior to the time of such repeal or modification.
Section 6.4. Severability. If, for any reason, any provision of this Article VI shall be held invalid, such invalidity shall not affect any other provision not held so invalid, and each such other provision shall, to the full extent consistent with law, continue in full force and effect. If any provision of this Article VI shall be held invalid in part, such invalidity shall in no way affect the remainder of such provision, and the remainder
of such provision, together with all other provisions of this Article VI, shall, to the full extent consistent with law, continue in full force and effect.
ARTICLE VII
Stock and Stock Certificates
Section 7.1. Transfers. Shares of stock shall be transferable on the books of the Corporation, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all rights of the prior holder of such shares.
Section 7.2. Share Certificates. Every share certificate shall be signed by the President, or any Vice President, or by any one of their facsimile signatures, or by the Secretary, or any Assistant Secretary or by any one of their facsimile signatures, and shall be signed by a transfer agent. Every shareholder of record shall be entitled to a share certificate representing the shares owned by him or her and, when stock is transferred, the certificates representing such stock shall be returned to the Corporation and new certificates issued. The corporate seal shall appear on each share certificate and may be a facsimile, engraved or printed. Each certificate shall recite on its face that the stock represented thereby is transferable only upon the books of the Corporation, properly endorsed.
Section 7.3. Shares of Another Corporation. Shares owned by the Corporation in another corporation, domestic or foreign, shall be voted by the President or such other officer, agent or proxy as the Board of Directors may determine.
ARTICLE VIII
Miscellaneous Provisions
Section 8.1. Fiscal Year. The Fiscal Year of the Corporation shall be the calendar year. The Corporation shall be subject to an annual audit as of the end of its fiscal year by independent public accountants appointed by and responsible to the Board of Directors through the Audit Committee.
Section 8.2. Records. The Articles of Incorporation, the Bylaws and the proceedings of all meetings of the shareholders, the Board of Directors, and standing committees of the Board, shall be recorded in appropriate minute books provided for the purpose. The minutes of each meeting shall be signed by the Secretary or other officer appointed to act as secretary of the meeting.
Section 8.3. Gender and Number. Where the context permits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular.
ARTICLE IX
Bylaws
Section 9.1. Inspection. A copy of the Bylaws, with all amendments thereto, shall at all times be kept in a convenient place at the Main Office of the Corporation, and shall be open for inspection to all shareholders during normal business hours.
Section 9.2. Amendments. These Bylaws may be altered, amended, added to or repealed by a vote of the majority of the Board of Directors at any regular meeting of the Board, or at any special meeting of the Board called for that purpose, except they shall not make or alter any Bylaw fixing their qualifications, classification or term of office. Such action by the Board of Directors is subject, however, to the general right of the shareholders to change such action.
EXHIBIT 10.2 AGREEMENT
THIS AGREEMENT (the "Agreement") made the 22nd day of June, 1994, by and between USBANCORP, Inc. (the "Company"), a Pennsylvania corporation, having its principal place of business at Main and Franklin Streets, Post Office Box 430, Johnstown, Pennsylvania 15907-0430, and TERRY K. DUNKLE ("Executive"). WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interest of the Company and its shareholders to ensure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide the Executive with compensation and benefits arrangements upon a Change in Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.
NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Term. This Agreement shall be for a three (3) year period commencing on the date first set forth above and shall be automatically renewed on the first and on each subsequent annual anniversary of the above day and month ("Annual Renewal Date") for a period ending three (3) years from each Annual Renewal Date unless either party shall give written notice of non-renewal at least sixty (60) days prior to the Annual Renewal Date.
2. Change in Control. As used in this Agreement, Change in Control shall mean the occurrence of any of the following:
(a) any "person" or "group" (as those terms are defined or used in Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as enacted and in force on the date hereof) is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange Act, as enacted and in force on the date hereof) of securities of the Company representing 24.99% or more of the combined voting power of the Company's securities then outstanding;
(b) there occurs a merger, consolidation, share exchange, division or other reorganization involving the Company and another entity in which Company shareholders do not continue to hold a majority of the capital stock of the resulting entity, or a sale, exchange, transfer, or other disposition of substantially all of the assets of the Company to another entity or other person; or (c) there occurs a contested proxy solicitation or solicitations of the Company's shareholders which results in the contesting party or parties obtaining the ability to elect a majority of the members of the Board of Directors standing for election at one or more meetings of the Company's shareholders.
3. Triggering Events. If a Change in Control shall occur and if thereafter, at any time during the term of this Agreement there shall be: (a) any involuntary termination of the Executive by the Company, other than for Cause as defined in Section 4 below; (b) any reduction in the Executive's title, responsibilities, including reporting responsibilities, or authority, including such title, responsibilities, or authority as such may be increased from time to time during the term of this Agreement; (c) the assignment to the Executive of duties inconsistent with the Executive's office as such duties existed on the day immediately prior to the date of a Change in Control; (d) any reassignment of the Executive to a location greater than twenty-five (25) miles from Johnstown, Pennsylvania;
(e) any reduction in the Executive's annual base salary in effect on the day immediately prior to the date of a Change in Control; (f) any failure to continue the Executive's participation, on substantially similar terms, in any incentive compensation or bonus plans of the Company in which the Executive participated in immediately prior to the Change in Control, or any change or amendment to any of the substantive provisions of any of such plans which would materially decrease the potential benefits to the Executive under any of such plans; (g) any failure to provide the Executive with benefits at least as favorable as those enjoyed by the Executive under any pension, life insurance, medical, health and accident, disability or other employee plans of the Company in which the Executive participated in immediately prior to the time of the Change in Control, or the taking of any action that would materially reduce any of such benefits in effect at the time of the Change in Control, unless such reduction relates to a reduction in benefits applicable to all employees generally; or (h) any breach of any provision of this Agreement by the Company, which breach shall not have been cured by the Company within thirty (30) days of the Company's receipt from the Executive or his agent of written notice specifying in reasonable detail the nature of the Company's breach;
then Executive, at his sole discretion, may upon no less than ninety (90) days written notice to the Company, resign from employment with the Company (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering written notice to the Company at any time during the term of this Agreement.
4. Termination of Executive for Cause. Upon or following a Change in Control, the Company shall have the right at any time to terminate the Executive's employment for Cause. In such event, the Company shall give prompt notice to the Executive, specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean the following conduct of the Executive: (a) Material breach of any provision of this Agreement, which breach Executive shall have failed to cure within thirty (30) days after Employee's receipt of written notice from the Company specifying the specific nature of the Executive's breach; (b) Willful misconduct of Executive that is materially inimical to the best interests, monetary or otherwise, of the Company; (c) Conviction of a felony or of any crime involving moral turpitude, fraud or deceit; (d) Adjudication as a bankrupt under the United States Bankruptcy Code.
5. Compensation and Benefits. Upon the occurrence of an event set forth in Section 3 hereof and the delivery of a notice of termination to the Company pursuant to Section 3 hereof, the Executive shall be absolutely entitled to receive the compensation and benefits set forth below: (a) the Executive shall select, in his absolute discretion, and receive either (i) monthly installments equal to one thirty-sixth (1/36) of an amount equal to 2.99 times the following: (x) During the initial three-year term of this Agreement (the "Initial Term") commencing on the date hereof, the highest combined base salary and bonus paid or payable to the Executive in the then current year or in any one of the last five fiscal years preceding the Executive's delivery of a notice of termination; or (y) After the expiration of the Initial Term, the quotient obtained by dividing the sum of the Executive's combined salary and bonuses in the five years preceding the Executive's delivery of a notice of termination by five, such monthly installments shall be payable for a period of three years (the "Payment Period") commencing on the first day of the first calendar month after Executive's delivery of notice of termination, or (ii) a one time lump sum payment equal to the non-discounted sum of the payments provided for in Section 5(a)(i) immediately above; (b) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be entitled to continue to participate in the employee retirement plan(s) of the Company and any supplemental executive retirement plan(s) (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan, as the case may be, as if the Executive's employment had not terminated; (c) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be provided with life, disability, and medical insurance benefits at levels equivalent to the highest levels in effect for the Executive during any one of the three (3) calendar years preceding the year in which the notice of termination is delivered; and (d) on the date of the notice of termination, all options held by the Executive to acquire common stock of the Company, to the extent not immediately exercisable by their terms, shall become immediately exercisable, and such options shall be exercisable by the Executive at any time prior to the earlier of the expiration date(s) of such stock options or the date which is ninety (90) days after the Executive's termination of employment with the Company. (e) as soon as possible upon a Change in Control, but in no event later than 30 days following a Change in
Control, the Company shall, in accordance with Section 1.05(b) of the Rabbi Trust Agreement dated June 22, 1994 between the Company and USBANCORP Trust Company, make an irrevocable contribution to the Trust established pursuant to such Trust Agreement in an amount that is sufficient to guarantee payment to the Participant or his beneficiaries the benefits to which they would be entitled to pursuant to the terms of any supplemental executive retirement plan(s) of the Company as in effect on the date on which the Change in Control occurred. In the event the Executive is ineligible to continue participation in the employee retirement plan of the Company and/or any supplemental executive retirement plan (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan or in any of the Company's life, disability or medical insurance plans or programs, the Company shall, in lieu of such participation, pay the Executive a dollar amount equal to the dollar amount of the benefit forfeited by the Executive as a result of such ineligibility or a dollar amount equal to the cost to the Executive to obtain such benefits in the case of any life, disability or medical insurance plans or programs.
6. Certain Additional Payments by the Company.
Notwithstanding anything in this Agreement to the contrary, in the event it is determined that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), on excess parachute payments, as that term is used and defined in Sections 4999 and 280G of the Code, then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount equal to the then current rate of tax under said Section 4999 multiplied by the total of the amount so paid or payable, including this Gross-Up Payment, which are deemed to be a part of an excess parachute payment. All calculations under this provision shall be made by the Company whose determinations shall be final. 7. Beneficiary. Should the Executive die after entitlement but prior to payment in full of amounts due pursuant to Section 5(a)(i) hereof, such monthly payments shall continue (if such payment option was so elected by Executive) to the Executive's designated beneficiary or his estate until such entitlement has been paid in full.
8. Employment at Will. This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof and, subject to the provisions of any other agreement between the Executive and the Company, the Executive shall remain an employee at will and nothing herein shall confer upon the Executive any right to continued employment and shall not affect the right of the Company to terminate the Executive for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Executive may have to compensation and benefits as provided for in Section 5 hereof.
9. Arbitration. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof. If any relief other than injunctive relief is sought, the Company and the Executive agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with this Section 9 and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The matter shall be heard and decided, and awards rendered, by a panel of three (3) arbitrators (the "Arbitration Panel"). The Company and Executive shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof. Each party shall pay their professional fees, expenses and costs incurred in connection with the resolution of any controversy, dispute or claim arising out of, or relating to this Agreement.
10. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and the Company shall require any successor to expressly acknowledge and assume its obligations hereunder. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Executive or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him/her shall be void and of no force and effect.
11. Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with the Company is terminated prior to the date on which a Change in Control occurs either (a) by the Company other than for Cause or (b) by the Executive for any one of the reasons set forth in Section 3 hereof, and it is reasonably demonstrated that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or anticipation of the Change in Control, then for all purposes of this Agreement the termination shall deemed to have occurred upon a Change in Control and the Executive will be entitled to the compensation and benefits provided for in Section 5 hereof.
12. Release. The Executive hereby acknowledges and agrees that prior to the occurrence of the Executive's or his dependent's right to receive from the Company or any of its representatives or agents any compensation or benefit to be paid or provided to him or his dependents pursuant to Section 5 of this Agreement, the Executive may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims the Executive has or may have against the Company or its subsidiaries, agents, officers, directors, successors or assigns.
13. Compliance with Laws. The parties hereto acknowledge and agree that this Agreement and each party's enforcement of their rights hereunder are subject to the Comprehensive Thrift and Bank Fraud Prosecutions Act of 1990 (12 USC 1828) as enacted and in force on the date hereof.
14. Notice. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested -- in the case of the Executive, to his residence address as set forth below, and in the case of the Company, to the address of its principal place of business, in care of the Board -- or to such other person or at such other address with respect to each party as such party shall notify the other in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
Attest: USBANCORP, Inc.
By:\s\Betty L. Jakell By:\s\Orlando B. Hanselman Betty L. Jakell Orlando B. Hanselman, Executive Secretary Vice President
By:\s\Terry K. Dunkle Terry K. Dunkle Address: 1508 Donato Court Johnstown, PA 15905-1528
EXHIBIT 10.3 AGREEMENT
This Agreement (the "Agreement") made the 25th day of October, 1994, by and between USBANCORP, Inc. (the "Company"), a Pennsylvania corporation, having its principal place of business at Main and Franklin Streets, Post Office Box 430, Johnstown, Pennsylvania 15907-0430, and W. HARRISON VAIL ("Executive"). WHEREAS, the Executive is the President and Chief Executive Officer of Three Rivers Bank and Trust Company, ("Three Rivers Bank"), a Pennsylvania bank and trust company, directly owned by the Company. WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interest of the Company and its shareholders to ensure that the Company and Three Rivers Bank will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control and to encourage the Executive's full attention and dedication to Three Rivers Bank currently and in the event of any threatened or pending Change in Control, and to provide the Executive with compensation and benefits arrangements upon a Change in Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Term. This Agreement shall be for a three (3) year period commencing on the date first set forth above and shall be automatically renewed on the first and on each subsequent annual anniversary of the above day and month ("Annual Renewal Date") for a period ending three (3) years from each Annual Renewal Date unless either party shall give written notice of non-renewal at least sixty (60) days prior to the Annual Renewal Date.
2. Change in Control. As used in this Agreement, Change in Control shall mean the occurrence of any of the following:
(a) any "person" or "group" (as those terms are defined or used in Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as enacted and in force on the date hereof) is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange Act, as enacted and in force on the date hereof) of securities of the Company representing 24.99% or more of the combined voting power of the Company's securities then outstanding;
(b) there occurs a merger, consolidation, share exchange, division or other reorganization involving the Company and another entity in which Company shareholders do not continue to hold a majority of the capital stock of the resulting entity, or a sale, exchange, transfer, or other disposition of substantially all of the assets of the Company to another entity or other person; or
(c) there occurs a contested proxy solicitation or solicitations of the Company's shareholders which results in the contesting party or parties obtaining the ability to elect a majority of the members of the Board of Directors standing for election at one or more meetings of the Company's shareholders.
3. Triggering Events. If a Change in Control shall occur and if thereafter, at any time during the term of this Agreement there shall be: (a) any involuntary termination of the Executive by Three Rivers Bank, other than for Cause as defined in Section 4 below; (b) any reduction in the Executive's title, responsibilities, including reporting responsibilities, or authority, including such title, responsibilities, or authority as such may be increased from time to time during the term of this Agreement; (c) the assignment to the Executive of duties inconsistent with the Executive's office as such duties existed on the day immediately prior to the date of a Change in Control; (d) any reduction in the Executive's annual base salary in effect on the day immediately prior to the date of a Change in Control; (e) any failure to continue the Executive's participation, on substantially similar terms, in any incentive compensation or bonus plans of Three Rivers Bank in which the Executive participated in immediately prior to the Change in Control, or any change or amendment to any of the substantive provisions of any of such plans which would materially decrease the potential benefits to the Executive under any of such plans; (f) any failure to provide the Executive with benefits at least as favorable as those enjoyed by the Executive under any pension, life insurance, medical, health and accident, disability or other employee plans of Three Rivers Bank in which the Executive participated in immediately prior to the time of the Change in Control, or the taking of any action that would materially reduce any of such benefits in effect at the time of the Change in Control, unless such reduction relates to a reduction in benefits applicable to all employees generally; or (g) any breach of any provision of this Agreement by the Company or Three Rivers Bank, which breach shall not have been cured by the Company or Three Rivers Bank within thirty (30) days of the Company's receipt from the Executive or his agent of written notice specifying in reasonable detail the nature of the Company's or Three Rivers Bank's breach; then Executive, at his sole discretion, may upon no less than ninety (90) days written notice to Company, resign from employment with Three Rivers Bank (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering written notice to the Company at any time during the term of this Agreement.
4. Termination of Executive for Cause. Upon or following a Change in Control, the Company or Three Rivers Bank shall have the right at any time to terminate the Executive's employment for Cause. In such event, the Company shall give prompt notice to the Executive, specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean the following conduct of the Executive: (a) Material breach of any provision of this Agreement, which breach Executive shall have failed to cure within thirty (30) days after Employee's receipt of written notice from the Company specifying the specific nature of the Executive's breach; (b) Willful misconduct of Executive that is materially inimical to the best interests, monetary or otherwise, of the Company or Three Rivers Bank; (c) Conviction of a felony or of any crime involving moral turpitude, fraud or deceit; (d) Adjudication as a bankrupt under the United States Bankruptcy Code. 5. Compensation and Benefits. Upon the occurrence of an event set forth in Section 3 hereof and the delivery of a notice of termination to the Company pursuant to Section 3 hereof, the Executive shall be absolutely entitled to receive the compensation and benefits set forth below: (a) the Executive shall select, in his absolute discretion, and receive either (i) monthly installments equal to one thirty-sixth (1/36) of an amount equal to 2.99 times the following: (x) During the initial three-year term of this Agreement (the "Initial Term") commencing on the date hereof, the highest combined base salary and bonus paid or payable to the Executive in the then current year or in any one of the last five fiscal years preceding the Executive's delivery of a notice of termination; or (y) After the expiration of the Initial Term, the quotient obtained by dividing the sum of the Executive's combined salary and bonuses in the five years preceding the Executive's delivery of a notice of termination by five, such monthly installments shall be payable for a period of one year (the "Payment Period") commencing on the first day of the first calendar month after Executive's delivery of notice of termination, or (ii) a one time lump sum payment equal to the non-discounted sum of the twelve (12) monthly payments provided for in Section 5(a)(i) immediately above; (b) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be entitled to continue to participate in the employee retirement plan(s) of the Company and any supplemental executive retirement plan(s) (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan, as the case may be, as if the Executive's employment had not terminated; (c) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be provided with life, disability, and medical insurance benefits at levels equivalent to the highest levels in effect for the Executive during any one of the three (3) calendar years preceding the year in which the notice of termination is delivered; and (d) on the date of the notice of termination, all options held by the Executive to acquire common stock of the Company, to the extent not immediately exercisable by their terms, shall become immediately exercisable, and such options shall be exercisable by the Executive at any time prior to the earlier of the expiration date(s) of such stock options or the date which is ninety (90) days after the Executive's termination of employment with the Company. In the event the Executive is ineligible to continue participation in the employee retirement plan of Three Rivers Bank and/or any supplemental executive retirement plan (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan or in any of Three Rivers Bank's life, disability or medical insurance plans or programs, the Company shall, in lieu of such participation, pay the Executive a dollar amount equal to the dollar amount of the benefit forfeited by the Executive as a result of such ineligibility or a dollar amount equal to the cost to the Executive to obtain such benefits in the case of any life, disability or medical insurance plans or programs.
6. Beneficiary. Should the Executive die after entitlement but prior to payment in full of amounts due pursuant to Section 5(a)(i) hereof, such monthly payments shall continue (if such payment option was so elected by Executive) to the Executive's designated beneficiary or his estate until such entitlement has been paid in full.
7. Employment at Will. This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof and, subject to the provisions of any other agreement between the Executive and the Company, the Executive shall remain an employee at will and nothing herein shall confer upon the Executive any right to continued employment and shall not affect the right of Three Rivers Bank to terminate the Executive for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Executive may have to compensation and benefits as provided for in Section 5 hereof. 8. Arbitration. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof. If any relief other than injunctive relief is sought, the Company and the Executive agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with this Section 8 and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The matter shall be heard and decided, and awards rendered, by a panel of three (3) arbitrators (the "Arbitration Panel"). The Company and Executive shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof. Each party shall pay their professional fees, expenses and costs incurred in connection with the resolution of any controversy, dispute or claim arising out of, or relating to this Agreement.
9. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and the Company shall require any successor to expressly acknowledge and assume its obligation hereunder. This Agreement shall be void and no further force and effect upon the Company's sale of all the voting stock or assets of Three Rivers Bank to an unrelated third party or to combine with another Company affiliate, except if it is reasonably demonstrated such sale was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or such sale otherwise arose in connection with or in anticipation of a Change in Control. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Executive or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him/her shall be void and of no force and effect.
10. Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with Three Rivers Bank is terminated prior to the date on which a Change in Control occurs either (a) by the Company or Three Rivers Bank other than for Cause or (b) by the Executive for any one of the reasons set forth in Section 3 hereof, and it is reasonably demonstrated that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or anticipation of the Change in Control, then for all purposes of this Agreement the termination shall deemed to have occurred upon a Change in Control and the Executive will be entitled to the compensation and benefits provided for in Section 5 hereof.
11. Release. The Executive hereby acknowledges and agrees that prior to the occurrence of the Executive's or his dependent's right to receive from the Company or any of its representatives or agents any compensation or benefit to be paid or provided to him or his dependents pursuant to Section 5 of this Agreement, the Executive may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims the Executive has or may have against the Company or its subsidiaries, agents, officers, directors, successors or assigns.
12. Compliance with Laws. The parties hereto acknowledge and agree that this Agreement and each party's enforcement of their rights hereunder are subject to the Comprehensive Thrift and Bank Fraud Prosecutions Act of 1990 (12 USC 1828) as enacted and in force on the date hereof.
13. Notice. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested -- in the case of the Executive, to his residence address as set forth below, and in the case of the Company, to the address of its principal place of business, in care of the Board -- or to such other person or at such other address with respect to each party as such party shall notify the other in writing.
This Agreement supersedes the Agreement between Executive and Three Rivers Bank dated June 23, 1988.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Attest: USBANCORP, Inc.
By:\s\Betty L. Jakell By:\s\Terry K. Dunkle Betty L. Jakell Terry K. Dunkle Secretary Chairman, President & CEO
By:\s\W. Harrison Vail W. Harrison Vail Address: 237 Meadowfield Lane Clairton, PA 15025-3021
EXHIBIT 10.4 AGREEMENT
This Agreement (the "Agreement") made the 25th day of October, 1994, by and between USBANCORP, Inc. (the "Company"), a Pennsylvania corporation, having its principal place of business at Main and Franklin Streets, Post Office Box 430, Johnstown, Pennsylvania 15907-0430, and LOUIS CYNKAR ("Executive"). WHEREAS, the Executive is the President and Chief Executive Officer of United States National Bank in Johnstown, ("U. S. Bank"), a national banking association, directly owned by the Company. WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interest of the Company and its shareholders to ensure that the Company and U. S. Bank will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control and to encourage the Executive's full attention and dedication to U. S. Bank currently and in the event of any threatened or pending Change in Control, and to provide the Executive with compensation and benefits arrangements upon a Change in Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.
NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Term. This Agreement shall be for a three (3) year period commencing on the date first set forth above and shall be automatically renewed on the first and on each subsequent annual anniversary of the above day and month ("Annual Renewal Date") for a period ending three (3) years from each Annual Renewal Date unless either party shall give written notice of non-renewal at least sixty (60) days prior to the Annual Renewal Date.
2. Change in Control. As used in this Agreement, Change in Control shall mean the occurrence of any of the following:
(a) any "person" or "group" (as those terms are defined or used in Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as enacted and in force on the date hereof) is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange Act, as enacted and in force on the date hereof) of securities of the Company representing 24.99% or more of the combined voting power of the Company's securities then outstanding;
(b) there occurs a merger, consolidation, share exchange, division or other reorganization involving the Company and another entity in which Company shareholders do not continue to hold a majority of the capital stock of the resulting entity, or a sale, exchange, transfer, or other disposition of substantially all of the assets of the Company to another entity or other person; or
(c) there occurs a contested proxy solicitation or solicitations of the Company's shareholders which results in the contesting party or parties obtaining the ability to elect a majority of the members of the Board of Directors standing for election at one or more meetings of the Company's shareholders.
3. Triggering Events. If a Change in Control shall occur and if thereafter, at any time during the term of this Agreement there shall be: (a) any involuntary termination of the Executive by U. S. Bank, other than for Cause as defined in Section 4 below; (b) any reduction in the Executive's title, responsibilities, including reporting responsibilities, or authority, including such title, responsibilities, or authority as such may be increased from time to time during the term of this Agreement; (c) the assignment to the Executive of duties inconsistent with the Executive's office as such duties existed on the day immediately prior to the date of a Change in Control; (d) any reduction in the Executive's annual base salary in effect on the day immediately prior to the date of a Change in Control; (e) any failure to continue the Executive's participation, on substantially similar terms, in any incentive compensation or bonus plans of U. S. Bank in which the Executive participated in immediately prior to the Change in Control, or any change or amendment to any of the substantive provisions of any of such plans which would materially decrease the potential benefits to the Executive under any of such plans; (f) any failure to provide the Executive with benefits at least as favorable as those enjoyed by the Executive under any pension, life insurance, medical, health and accident, disability or other employee plans of U. S. Bank in which the Executive participated in immediately prior to the time of the Change in Control, or the taking of any action that would materially reduce any of such benefits in effect at the time of the Change in Control, unless such reduction relates to a reduction in benefits applicable to all employees generally; or (g) any breach of any provision of this Agreement by the Company or U. S. Bank, which breach shall not have been cured by the Company or U. S. Bank within thirty (30) days of the Company's receipt from the Executive or his agent of written notice specifying in reasonable detail the nature of the Company's or U. S. Bank's breach; then Executive, at his sole discretion, may upon no less than ninety (90) days written notice to Company, resign from employment with U. S. Bank (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering written notice to the Company at any time during the term of this Agreement.
4. Termination of Executive for Cause. Upon or following a Change in Control, the Company or U. S. Bank shall have the right at any time to terminate the Executive's employment for Cause. In such event, the Company shall give prompt notice to the Executive, specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean the following conduct of the Executive: (a) Material breach of any provision of this Agreement, which breach Executive shall have failed to cure within thirty (30) days after Employee's receipt of written notice from the Company specifying the specific nature of the Executive's breach; (b) Willful misconduct of Executive that is materially inimical to the best interests, monetary or otherwise, of the Company or U. S. Bank; (c) Conviction of a felony or of any crime involving moral turpitude, fraud or deceit; (d) Adjudication as a bankrupt under the United States Bankruptcy Code. 5. Compensation and Benefits. Upon the occurrence of an event set forth in Section 3 hereof and the delivery of a notice of termination to the Company pursuant to Section 3 hereof, the Executive shall be absolutely entitled to receive the compensation and benefits set forth below: (a) the Executive shall select, in his absolute discretion, and receive either (i) monthly installments equal to one thirty-sixth (1/36) of an amount equal to 2.99 times the following: (x) During the initial three-year term of this Agreement (the "Initial Term") commencing on the date hereof, the highest combined base salary and bonus paid or payable to the Executive in the then current year or in any one of the last five fiscal years preceding the Executive's delivery of a notice of termination; or (y) After the expiration of the Initial Term, the quotient obtained by dividing the sum of the Executive's combined salary and bonuses in the five years preceding the Executive's delivery of a notice of termination by five, such monthly installments shall be payable for a period of one year (the "Payment Period") commencing on the first day of the first calendar month after Executive's delivery of notice of termination, or (ii) a one time lump sum payment equal to the non-discounted sum of the twelve (12) monthly payments provided for in Section 5(a)(i) immediately above; (b) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be entitled to continue to participate in the employee retirement plan(s) of the Company and any supplemental executive retirement plan(s) (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan, as the case may be, as if the Executive's employment had not terminated; (c) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be provided with life, disability, and medical insurance benefits at levels equivalent to the highest levels in effect for the Executive during any one of the three (3) calendar years preceding the year in which the notice of termination is delivered; and (d) on the date of the notice of termination, all options held by the Executive to acquire common stock of the Company, to the extent not immediately exercisable by their terms, shall become immediately exercisable, and such options shall be exercisable by the Executive at any time prior to the earlier of the expiration date(s) of such stock options or the date which is ninety (90) days after the Executive's termination of employment with the Company. In the event the Executive is ineligible to continue participation in the employee retirement plan of U. S. Bank and/or any supplemental executive retirement plan (including deferred profit sharing plan) or other plan in effect during the -7- term of this Agreement designed to supplement payments made under such employee retirement plan or in any of U. S. Bank's life, disability or medical insurance plans or programs, the Company shall, in lieu of such participation, pay the Executive a dollar amount equal to the dollar amount of the benefit forfeited by the Executive as a result of such ineligibility or a dollar amount equal to the cost to the Executive to obtain such benefits in the case of any life, disability or medical insurance plans or programs.
6. Beneficiary. Should the Executive die after entitlement but prior to payment in full of amounts due pursuant to Section 5(a)(i) hereof, such monthly payments shall continue (if such payment option was so elected by Executive) to the Executive's designated beneficiary or his estate until such entitlement has been paid in full.
7. Employment at Will. This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof and, subject to the provisions of any other agreement between the Executive and the Company, the Executive shall remain an employee at will and nothing herein shall confer upon the Executive any right to continued employment and shall not affect the right of U. S. Bank to terminate the Executive for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Executive may have to compensation and benefits as provided for in Section 5 hereof. 8. Arbitration. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof. If any relief other than injunctive relief is sought, the Company and the Executive agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with this Section 8 and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The matter shall be heard and decided, and awards rendered, by a panel of three (3) arbitrators (the "Arbitration Panel"). The Company and Executive shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof. Each party shall pay their professional fees, expenses and costs incurred in connection with the resolution of any controversy, dispute or claim arising out of, or relating to this Agreement.
9. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and the Company shall require any successor to expressly acknowledge and assume its obligation hereunder. This Agreement shall be void and no further force and effect upon the Company's sale of all the voting stock or assets of U. S. Bank to an unrelated third party or to combine with another Company affiliate, except if it is reasonably demonstrated such sale was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or such sale otherwise arose in connection with or in anticipation of a Change in Control. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Executive or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him/her shall be void and of no force and effect.
10. Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with U. S. Bank is terminated prior to the date on which a Change in Control occurs either (a) by the Company or U. S. Bank other than for Cause or (b) by the Executive for any one of the reasons set forth in Section 3 hereof, and it is reasonably demonstrated that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or anticipation of the Change in Control, then for all purposes of this Agreement the termination shall deemed to have occurred upon a Change in Control and the Executive will be entitled to the compensation and benefits provided for in Section 5 hereof.
11. Release. The Executive hereby acknowledges and agrees that prior to the occurrence of the Executive's or his dependent's right to receive from the Company or any of its representatives or agents any compensation or benefit to be paid or provided to him or his dependents pursuant to Section 5 of this Agreement, the Executive may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims the Executive has or may have against the Company or its subsidiaries, agents, officers, directors, successors or assigns.
12. Compliance with Laws. The parties hereto acknowledge and agree that this Agreement and each party's enforcement of their rights hereunder are subject to the Comprehensive Thrift and Bank Fraud Prosecutions Act of 1990 (12 USC 1828) as enacted and in force on the date hereof.
13. Notice. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested -- in the case of the Executive, to his residence address as set forth below, and in the case of the Company, to the address of its principal place of business, in care of the Board -- or to such other person or at such other address with respect to each party as such party shall notify the other in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Attest: USBANCORP, Inc.
\s\Betty L. Jakell By:\s\Terry K. Dunkle Secretary Terry K. Dunkle Chairman, President & CEO
\s\Louis Cynkar Louis Cynkar Address: 141 Peggy Lane Johnstown, PA 15904-1242
EXHIBIT 10.5 AGREEMENT
This Agreement (the "Agreement") made the 25th day of October, 1994, by and between USBANCORP, Inc. (the "Company"), a Pennsylvania corporation, having its principal place of business at Main and Franklin Streets, Post Office Box 430, Johnstown, Pennsylvania 15907-0430, and DENNIS J. FANTASKI ("Executive"). WHEREAS, the Executive is the President and Chief Executive Officer of Community Savings Bank, ("Community"), a Pennsylvania- chartered savings bank, indirectly owned by the Company. WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interest of the Company and its shareholders to ensure that the Company and Community will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control and to encourage the Executive's full attention and dedication to Community currently and in the event of any threatened or pending Change in Control, and to provide the Executive with compensation and benefits arrangements upon a Change in Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.
NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Term. This Agreement shall be for a three (3) year period commencing on the date first set forth above and shall be automatically renewed on the first and on each subsequent annual anniversary of the above day and month ("Annual Renewal Date") for a period ending three (3) years from each Annual Renewal Date unless either party shall give written notice of non-renewal at least sixty (60) days prior to the Annual Renewal Date.
2. Change in Control. As used in this Agreement, Change in Control shall mean the occurrence of any of the following:
(a) any "person" or "group" (as those terms are defined or used in Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as enacted and in force on the date hereof) is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange Act, as enacted and in force on the date hereof) of securities of the Company representing 24.99% or more of the combined voting power of the Company's securities then outstanding;
(b) there occurs a merger, consolidation, share exchange, division or other reorganization involving the Company and another entity in which Company shareholders do not continue to hold a majority of the capital stock of the resulting entity, or a sale, exchange, transfer, or other disposition of substantially all of the assets of the Company to another entity or other person; or
(c) there occurs a contested proxy solicitation or solicitations of the Company's shareholders which results in the contesting party or parties obtaining the ability to elect a majority of the members of the Board of Directors standing for election at one or more meetings of the Company's shareholders.
3. Triggering Events. If a Change in Control shall occur and if thereafter, at any time during the term of this Agreement there shall be: (a) any involuntary termination of the Executive by Community, other than for Cause as defined in Section 4 below; (b) any reduction in the Executive's title, responsibilities, including reporting responsibilities, or authority, including such title, responsibilities, or authority as such may be increased from time to time during the term of this Agreement; (c) the assignment to the Executive of duties inconsistent with the Executive's office as such duties existed on the day immediately prior to the date of a Change in Control; (d) any reduction in the Executive's annual base salary in effect on the day immediately prior to the date of a Change in Control; (e) any failure to continue the Executive's participation, on substantially similar terms, in any incentive compensation or bonus plans of Community in which the Executive participated in immediately prior to the Change in Control, or any change or amendment to any of the substantive provisions of any of such plans which would materially decrease the potential benefits to the Executive under any of such plans; (f) any failure to provide the Executive with benefits at least as favorable as those enjoyed by the Executive under any pension, life insurance, medical, health and accident, disability or other employee plans of Community in which the Executive participated in immediately prior to the time of the Change in Control, or the taking of any action that would materially reduce any of such benefits in effect at the time of the Change in Control, unless such reduction relates to a reduction in benefits applicable to all employees generally; or (g) any breach of any provision of this Agreement by the Company or Community, which breach shall not have been cured by the Company or Community within thirty (30) days of the Company's receipt from the Executive or his agent of written notice specifying in reasonable detail the nature of the Company's or Community's breach; then Executive, at his sole discretion, may upon no less than ninety (90) days written notice to Company, resign from employment with Community (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering written notice to the Company at any time during the term of this Agreement.
4. Termination of Executive for Cause. Upon or following a Change in Control, the Company or Community shall have the right at any time to terminate the Executive's employment for Cause. In such event, the Company shall give prompt notice to the Executive, specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean the following conduct of the Executive: (a) Material breach of any provision of this Agreement, which breach Executive shall have failed to cure within thirty (30) days after Employee's receipt of written notice from the Company specifying the specific nature of the Executive's breach; (b) Willful misconduct of Executive that is materially inimical to the best interests, monetary or otherwise, of the Company or Community; (c) Conviction of a felony or of any crime involving moral turpitude, fraud or deceit; (d) Adjudication as a bankrupt under the United States Bankruptcy Code. 5. Compensation and Benefits. Upon the occurrence of an event set forth in Section 3 hereof and the delivery of a notice of termination to the Company pursuant to Section 3 hereof, the Executive shall be absolutely entitled to receive the compensation and benefits set forth below: (a) the Executive shall select, in his absolute discretion, and receive either (i) monthly installments equal to one thirty-sixth (1/36) of an amount equal to 2.99 times the following: (x) During the initial three-year term of this Agreement (the "Initial Term") commencing on the date hereof, the highest combined base salary and bonus paid or payable to the Executive in the then current year or in any one of the last five fiscal years preceding the Executive's delivery of a notice of termination; or (y) After the expiration of the Initial Term, the quotient obtained by dividing the sum of the Executive's combined salary and bonuses in the five years preceding the Executive's delivery of a notice of termination by five, such monthly installments shall be payable for a period of one year (the "Payment Period") commencing on the first day of the first calendar month after Executive's delivery of notice of termination, or (ii) a one time lump sum payment equal to the non-discounted sum of the twelve (12) monthly payments provided for in Section 5(a)(i) immediately above; (b) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be entitled to continue to participate in the employee retirement plan(s) of the Company and any supplemental executive retirement plan(s) (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan, as the case may be, as if the Executive's employment had not terminated; (c) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be provided with life, disability, and medical insurance benefits at levels equivalent to the highest levels in effect for the Executive during any one of the three (3) calendar years preceding the year in which the notice of termination is delivered; and (d) on the date of the notice of termination, all options held by the Executive to acquire common stock of the Company, to the extent not immediately exercisable by their terms, shall become immediately exercisable, and such options shall be exercisable by the Executive at any time prior to the earlier of the expiration date(s) of such stock options or the date which is ninety (90) days after the Executive's termination of employment with the Company. In the event the Executive is ineligible to continue participation in the employee retirement plan of Community and/or any supplemental executive retirement plan (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan or in any of Community's life, disability or medical insurance plans or programs, the Company shall, in lieu of such participation, pay the Executive a dollar amount equal to the dollar amount of the benefit forfeited by the Executive as a result of such ineligibility or a dollar amount equal to the cost to the Executive to obtain such benefits in the case of any life, disability or medical insurance plans or programs.
6. Beneficiary. Should the Executive die after entitlement but prior to payment in full of amounts due pursuant to Section 5(a)(i) hereof, such monthly payments shall continue (if such payment option was so elected by Executive) to the Executive's designated beneficiary or his estate until such entitlement has been paid in full.
7. Employment at Will. This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof and, subject to the provisions of any other agreement between the Executive and the Company, the Executive shall remain an employee at will and nothing herein shall confer upon the Executive any right to continued employment and shall not affect the right of Community to terminate the Executive for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Executive may have to compensation and benefits as provided for in Section 5 hereof. 8. Arbitration. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof. If any relief other than injunctive relief is sought, the Company and the Executive agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with this Section 8 and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The matter shall be heard and decided, and awards rendered, by a panel of three (3) arbitrators (the "Arbitration Panel"). The Company and Executive shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof. Each party shall pay their professional fees, expenses and costs incurred in connection with the resolution of any controversy, dispute or claim arising out of, or relating to this Agreement.
9. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and the Company shall require any successor to expressly acknowledge and assume its obligation hereunder. This Agreement shall be void and no further force and effect upon the Company's sale of all the voting stock or assets of Community to an unrelated third party or to combine with another Company affiliate, except if it is reasonably demonstrated such sale was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or such sale otherwise arose in connection with or in anticipation of a Change in Control. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Executive or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him/her shall be void and of no force and effect.
10. Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with Community is terminated prior to the date on which a Change in Control occurs either (a) by the Company or Community other than for Cause or (b) by the Executive for any one of the reasons set forth in Section 3 hereof, and it is reasonably demonstrated that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or anticipation of the Change in Control, then for all purposes of this Agreement the termination shall deemed to have occurred upon a Change in Control and the Executive will be entitled to the compensation and benefits provided for in Section 5 hereof.
11. Release. The Executive hereby acknowledges and agrees that prior to the occurrence of the Executive's or his dependent's right to receive from the Company or any of its representatives or agents any compensation or benefit to be paid or provided to him or his dependents pursuant to Section 5 of this Agreement, the Executive may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims the Executive has or may have against the Company or its subsidiaries, agents, officers, directors, successors or assigns.
12. Compliance with Laws. The parties hereto acknowledge and agree that this Agreement and each party's enforcement of their rights hereunder are subject to the Comprehensive Thrift and Bank Fraud Prosecutions Act of 1990 (12 USC 1828) as enacted and in force on the date hereof.
13. Notice. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested -- in the case of the Executive, to his residence address as set forth below, and in the case of the Company, to the address of its principal place of business, in care of the Board -- or to such other person or at such other address with respect to each party as such party shall notify the other in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Attest: USBANCORP, Inc.
By:\s\Betty L. Jakell By:\s\Terry K. Dunkle Betty L. Jakell Terry K. Dunkle Secretary Chairman, President & CEO
BY:\s\Dennis J. Fantaski Dennis J. Fantaski Address: 304 Red Oak Court Monroeville, PA 15146-3100
EXHIBIT 10.8 AGREEMENT
This Agreement (the "Agreement") made the 25th day of October, 1994, by and between USBANCORP, Inc. (the "Company"), a Pennsylvania corporation, having its principal place of business at Main and Franklin Streets, Post Office Box 430, Johnstown, Pennsylvania 15907-0430, and ORLANDO B. HANSELMAN ("Executive"). WHEREAS, the Executive is the Executive Vice President, Chief Financial Officer and Manager of Corporate Services of the Company. WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interest of the Company and its shareholders to ensure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide the Executive with compensation and benefits arrangements upon a Change in Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.
NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Term. This Agreement shall be for a three (3) year period commencing on the date first set forth above and shall be automatically renewed on the first and on each subsequent annual anniversary of the above day and month ("Annual Renewal Date") for a period ending three (3) years from each Annual Renewal Date unless either party shall give written notice of non-renewal at least sixty (60) days prior to the Annual Renewal Date.
2. Change in Control. As used in this Agreement, Change in Control shall mean the occurrence of any of the following:
(a) any "person" or "group" (as those terms are defined or used in Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as enacted and in force on the date hereof) is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange Act, as enacted and in force on the date hereof) of securities of the Company representing 24.99% or more of the combined voting power of the Company's securities then outstanding;
(b) there occurs a merger, consolidation, share exchange, division or other reorganization involving the Company and another entity in which Company shareholders do not continue to hold a majority of the capital stock of the resulting entity, or a sale, exchange, transfer, or other disposition of substantially all of the assets of the Company to another entity or other person; or
(c) there occurs a contested proxy solicitation or solicitations of the Company's shareholders which results in the contesting party or parties obtaining the ability to elect a majority of the members of the Board of Directors standing for election at one or more meetings of the Company's shareholders.
3. Triggering Events. If a Change in Control shall occur and if thereafter, at any time during the term of this Agreement there shall be: (a) any involuntary termination of the Executive by the Company, other than for Cause as defined in Section 4 below; (b) any reduction in the Executive's title, responsibilities, including reporting responsibilities, or authority, including such title, responsibilities, or authority as such may be increased from time to time during the term of this Agreement; (c) the assignment to the Executive of duties inconsistent with the Executive's office as such duties existed on the day immediately prior to the date of a Change in Control; (d) any reduction in the Executive's annual base salary in effect on the day immediately prior to the date of a Change in Control; (e) any failure to continue the Executive's participation, on substantially similar terms, in any incentive compensation or bonus plans of the Company in which the Executive participated in immediately prior to the Change in Control, or any change or amendment to any of the substantive provisions of any of such plans which would materially decrease the potential benefits to the Executive under any of such plans; (f) any failure to provide the Executive with benefits at least as favorable as those enjoyed by the Executive under any pension, life insurance, medical, health and accident, disability or other employee plans of the Company in which the Executive participated in immediately prior to the time of the Change in Control, or the taking of any action that would materially reduce any of such benefits in effect at the time of the Change in Control, unless such reduction relates to a reduction in benefits applicable to all employees generally; or (g) any breach of any provision of this Agreement by the Company, which breach shall not have been cured by the Company within thirty (30) days of the Company's receipt from the Executive or his agent of written notice specifying in reasonable detail the nature of the Company's breach; then Executive, at his sole discretion, may upon no less than ninety (90) days written notice to Company, resign from employment with the Company (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering written notice to the Company at any time during the term of this Agreement.
4. Termination of Executive for Cause. Upon or following a Change in Control, the Company shall have the right at any time to terminate the Executive's employment for Cause. In such event, the Company shall give prompt notice to the Executive, specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean the following conduct of the Executive: (a) Material breach of any provision of this Agreement, which breach Executive shall have failed to cure within thirty (30) days after Employee's receipt of written notice from the Company specifying the specific nature of the Executive's breach; (b) Willful misconduct of Executive that is materially inimical to the best interests, monetary or otherwise, of the Company; (c) Conviction of a felony or of any crime involving moral turpitude, fraud or deceit; (d) Adjudication as a bankrupt under the United States Bankruptcy Code.
5. Compensation and Benefits. Upon the occurrence of an event set forth in Section 3 hereof and the delivery of a notice of termination to the Company pursuant to Section 3 hereof, the Executive shall be absolutely entitled to receive the compensation and benefits set forth below: (a) the Executive shall select, in his absolute discretion, and receive either (i) monthly installments equal to one thirty-sixth (1/36) of an amount equal to 2.99 times the following: (x) During the initial three-year term of this Agreement (the "Initial Term") commencing on the date hereof, the highest combined base salary and bonus paid or payable to the Executive in the then current year or in any one of the last five fiscal years preceding the Executive's delivery of a notice of termination; or (y) After the expiration of the Initial Term, the quotient obtained by dividing the sum of the Executive's combined salary and bonuses in the five years preceding the Executive's delivery of a notice of termination by five, such monthly installments shall be payable for a period of one and one half (1 1/2) years (the "Payment Period") commencing on the first day of the first calendar month after Executive's delivery of notice of termination, or (ii) a one time lump sum payment equal to the non-discounted sum of the eighteen (18) monthly payments provided for in Section 5(a)(i) immediately above; (b) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be entitled to continue to participate in the employee retirement plan(s) of the Company and any supplemental executive retirement plan(s) (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan, as the case may be, as if the Executive's employment had not terminated; (c) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be provided with life, disability, and medical insurance benefits at levels equivalent to the highest levels in effect for the Executive during any one of the three (3) calendar years preceding the year in which the notice of termination is delivered; and (d) on the date of the notice of termination, all options held by the Executive to acquire common stock of the Company, to the extent not immediately exercisable by their terms, shall become immediately exercisable, and such options shall be exercisable by the Executive at any time prior to the earlier of the expiration date(s) of such stock options or the date which is ninety (90) days after the Executive's termination of employment with the Company. In the event the Executive is ineligible to continue participation in the employee retirement plan of the Company and/or any supplemental executive retirement plan (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan or in any of the Company's life, disability or medical insurance plans or programs, the Company shall, in lieu of such participation, pay the Executive a dollar amount equal to the dollar amount of the benefit forfeited by the Executive as a result of such ineligibility or a dollar amount equal to the cost to the Executive to obtain such benefits in the case of any life, disability or medical insurance plans or programs.
6. Beneficiary. Should the Executive die after entitlement but prior to payment in full of amounts due pursuant to Section 5(a)(i) hereof, such monthly payments shall continue (if such payment option was so elected by Executive) to the Executive's designated beneficiary or his estate until such entitlement has been paid in full.
7. Employment at Will. This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof and, subject to the provisions of any other agreement between the Executive and the Company, the Executive shall remain an employee at will and nothing herein shall confer upon the Executive any right to continued employment and shall not affect the right of the Company to terminate the Executive for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Executive may have to compensation and benefits as provided for in Section 5 hereof. 8. Arbitration. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof. If any relief other than injunctive relief is sought, the Company and the Executive agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with this Section 8 and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The matter shall be heard and decided, and awards rendered, by a panel of three (3) arbitrators (the "Arbitration Panel"). The Company and Executive shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof. Each party shall pay their professional fees, expenses and costs incurred in connection with the resolution of any controversy, dispute or claim arising out of, or relating to this Agreement.
9. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and the Company shall require any successor to expressly acknowledge and assume its obligation hereunder. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Executive or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him/her shall be void and of no force and effect.
10. Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with the Company is terminated prior to the date on which a Change in Control occurs either (a) by the Company other than for Cause or (b) by the Executive for any one of the reasons set forth in Section 3 hereof, and it is reasonably demonstrated that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or anticipation of the Change in Control, then for all purposes of this Agreement the termination shall deemed to have occurred upon a Change in Control and the Executive will be entitled to the compensation and benefits provided for in Section 5 hereof.
11. Release. The Executive hereby acknowledges and agrees that prior to the occurrence of the Executive's or his dependent's right to receive from the Company or any of its representatives or agents any compensation or benefit to be paid or provided to him or his dependents pursuant to Section 5 of this Agreement, the Executive may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims the Executive has or may have against the Company or its subsidiaries, agents, officers, directors, successors or assigns.
12. Compliance with Laws. The parties hereto acknowledge and agree that this Agreement and each party's enforcement of their rights hereunder are subject to the Comprehensive Thrift and Bank Fraud Prosecutions Act of 1990 (12 USC 1828) as enacted and in force on the date hereof.
13. Notice. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested -- in the case of the Executive, to his residence address as set forth below, and in the case of the Company, to the address of its principal place of business, in care of the Board -- or to such other person or at such other address with respect to each party as such party shall notify the other in writing. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Attest: USBANCORP, Inc.
By:\s\Betty L. Jakell By:\s\Terry K. Dunkle Betty L. Jakell Terry K. Dunkle Secretary Chairman, President & CEO
By:\s\Orlando B. Hanselman Orlando B. Hanselman Address: P.O. Box 337 Johnstown, PA 15907-0337
EXHIBIT 10.9 USBANCORP, INC. 1991 STOCK OPTION PLAN August 23, 1991, as amended on February 24, 1995
The purposes of the 1991 Stock Option Plan (the "Plan") are to encourage eligible employees of USBANCORP, INC. (the "Corporation") and its Subsidiaries, including Directors and officers of the Corporation who are employees, to increase their efforts to make the Corporation and each Subsidiary more successful, to provide an additional inducement for such employees to remain with the Corporation or a Subsidiary, to reward such employees by providing an opportunity to acquire the Common Stock, par value $2.50 per share, of the Corporation (the "Common Stock") on favorable terms and to provide a means through which the Corporation may attract able persons to enter the employment of the Corporation or one of its Subsidiaries. For purposes of the Plan, the term "Subsidiary" means any corporation in an unbroken chain of corporations beginning with the Corporation if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing at least fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
SECTION 1 Administration The Plan shall be administered by a Committee (the "Committee") appointed from time to time by the Board of Directors of the Corporation (the "Board") and consisting of no fewer than three members of the Board, none of whom is, or was within one year prior to becoming a member of the Committee, eligible for selection as a person to whom stock options may be granted pursuant to the Plan or any other plan of the Corporation or any of its affiliates (as "affiliates" is defined in regulations of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) entitling the participants therein to acquire stock or stock options of the Corporation or any of its affiliates. If at any time a member of the Committee would not be eligible for initial appointment to the Committee, said member shall be deemed to have resigned from the Committee. The Board may at any time, without cause, remove any person from the Committee by written notice to such person. Any member of the Committee may resign by written notice to the Board.
The Committee shall interpret the Plan and prescribe such rules, regulations and procedures in connection with the operations of the Plan as it shall deem to be necessary and advisable for the administration of the Plan consistent with the purposes of the Plan. The Committee shall keep records of any action taken at its meetings. A majority of the Committee shall constitute a quorum at any meeting and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee, shall be the acts of the Committee. SECTION 2 Eligibility Those salaried employees of the Corporation or any Subsidiary with executive, managerial, technical or professional responsibility, who may or may not be an officer or a member of the Board of Directors, shall be eligible to receive stock options as described herein. Subject to the provisions of the Plan, the Committee shall have full and final authority, in its discretion, to grant stock options as described herein and to determine the employees to whom stock options shall be granted and the number of shares to be covered by each stock option. In determining the eligibility of any employee, as well as in determining the number of shares which may be acquired pursuant to each stock option, the Committee shall consider the positions and the responsibilities of the employee being considered, the nature and value to the Corporation or a Subsidiary of his or her services, his or her present and/or potential contribution to the success of the Corporation or a Subsidiary and such other factors as the Committee may deem relevant. SECTION 3 Shares Available under the Plan The aggregate number of shares of the Common Stock which may be issued or delivered and as to which stock options may be granted under the Plan is 285,000 shares. All of such shares are subject to adjustment and substitution as set forth in Section 6. If any stock option granted under the Plan is cancelled by mutual consent or terminates or expires for any reason without having been exercised in full, the number of shares subject to such stock option shall again be available for purposes of the Plan. The shares which may be issued or delivered under the Plan may be either authorized but unissued shares or treasury shares or partly each, as shall be determined from time to time by the Board. SECTION 4 Grant of Stock Options The Committee shall have authority, in its discretion, to grant "incentive stock options" pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to grant "non-statutory stock options" (stock options which do not qualify under such Section 422 of the Code) or to grant both types of stock options, provided that the exercise of one type of option shall not affect the other type. To the extent that the aggregate fair market value of stock with respect to which incentive stock options are exercisable for the first time by any individual during any calendar year (under all plans of the individual's employer corporation and its parent and subsidiary corporations) exceeds $100,000, such stock options shall be treated as options which are non-statutory stock options. The preceding sentence shall be applied by taking options into account in the order in which they are granted. Also, for this purpose, the fair market value of any stock shall be determined as of the date the option with respect to such stock was granted. SECTION 5 Terms and Conditions of Stock Options Stock options granted under the Plan shall be subject to the following terms and conditions:
(A) The purchase price at which each stock option may be exercised (the "option price") shall be such price as the Committee, in its discretion, shall determine but shall not be less than one hundred percent (100%) of the fair market value per share of Common Stock which may be acquired pursuant to the stock option on the date of grant, except that in the case of an incentive stock option granted to an employee who, immediately prior to such grant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or any Subsidiary (a "Ten Percent Employee"), the option price shall not be less than 110% of such fair market value on the date of grant. For purposes of this Section 5(A), the fair market value of the Common Stock shall be determined as provided in Section 5(H) below. Also, for purposes of this Section 5(A), an individual (i) shall be considered as owning not only shares of the Common Stock owned individually, but also all shares that are at the time owned, directly or indirectly, by or for the spouse, ancestors, lineal descendants and brothers and sisters (whether by the whole or half blood) of such individual and (ii) shall be considered as owning proportionately any shares owned, directly or indirectly, by or for any corporation, partnership, estate or trust in which such individual shall be a stockholder, partner or beneficiary.
(B) The option price shall be payable in full in any one or more of the following ways:
(i) in cash; and/or (ii) in shares of the Common Stock (which are owned by the optionee free and clear of all liens and other encumbrances and which are not subject to the restrictions set forth in Section 7 below) having a fair market value on the date of exercise of the stock option, determined as provided in Section 5(H), equal to the option price for the shares being purchased.
If the option price is paid in whole or in part in shares of Common Stock, any portion of the option price representing a fraction of a share shall be paid in cash. The date of exercise of a stock option shall be determined under procedures established by the Committee, and the option price shall be payable at such time or times as the Committee, in its discretion, shall determine. No shares shall be issued or delivered upon exercise of a stock option until full payment of the option price has been made. When full payment of the option price has been made and subject to the restrictions set forth in Section 7, the optionee shall be considered for all purposes to be the owner of the shares with respect to which payment has been made. Payment of the option price with shares shall not increase the number of shares of Common Stock which may be issued or delivered under the Plan as provided in Section 3.
(C) Subject to Section 8 hereof, stock options may be exercised at the following rate. On or after the first anniversary of the date on which the options were granted (the "Grant Date"), one-third of such options may be exercised (rounded upward to the nearest whole share). On or after the second anniversary of the Grant Date two-thirds of such options may be exercised (rounded upward to the nearest whole share) minus the aggregate number of such options previously exercised. On or after the third anniversary of the Grant Date, the remainder of the options may be exercised. No incentive stock option shall be exercisable after the expiration of ten years (five years in the case of a Ten Percent Employee) from the date of grant. No non-statutory stock option shall be exercisable after the expiration of ten years and six months from the date of grant. Subject to this Section 5(C) and Sections 5(F), 5(G) and 5(H) below, stock options may be exercised at such times, in such amounts and subject to such restrictions as shall be determined, in its discretion, by the Committee.
(D) No stock option rights shall be transferable by an optionee other than by will, or if an optionee dies intestate, by the laws of descent and distribution of the state of domicile of the optionee at the time of death, and all stock options shall be exercisable during the lifetime of an optionee only by the optionee.
(E) Unless otherwise determined by the Committee and set forth in the stock option agreement referred to in Section 5(G) or an amendment thereto:
(i) If the employment of an optionee who is not a Disabled Optionee (as defined in Section 5(F) below) is voluntarily terminated with the consent of the Corporation or a Subsidiary, any then outstanding stock option held by such an optionee shall be exercisable (to the extent exercisable on the date of termination of employment) by such an optionee at any time prior to the earlier of the expiration date of such stock option or the date which is three months after the date of termination of employment; (ii) If an optionee retires under any retirement plan of the Corporation or a Subsidiary, any then outstanding stock option held by such an optionee shall be exercisable in full (whether or not so exercisable on the date of termination of employment) by such an optionee at any time prior to the earlier of the expiration date of such stock option or the date which is three months after the date of termination of employment; (iii) If the employment of an optionee who is a Disabled Optionee is terminated, any then outstanding stock option held by such optionee shall be exercisable in full (whether or not so exercisable on the date of termination of employment) by the optionee at any time prior to the earlier of the expiration date of such stock option or the date which is one year after the date of termination of employment; (iv) The following transfers of employees will not be treated as a termination of employment: (a) A transfer of an employee between Subsidiaries of the Corporation; (b) A transfer of an employee from the Corporation to one of its Subsidiaries; or (c) A transfer of an employee to the Corporation from one of its Subsidiaries. (v) Following the death of an optionee during employment, any outstanding stock option held by the optionee at the time of death shall be exercisable in full (whether or not so exercisable on the date of the death of the optionee) by the person or persons entitled to do so under the will of the optionee, or, if the optionee shall fail to make testamentary disposition of the stock option or shall die intestate, by the legal representative of the optionee, at any time prior to the expiration date of such stock option or within one year after the date of death, whichever is the shorter period. Following the death of an optionee after termination of employment during a period when a stock option is exercisable as provided in clauses (i), (ii) and (iii) above, any outstanding stock option held by the optionee at the time of death shall, to the extent the stock option was exercisable by the optionee at the time of death, be exercisable by such person or persons as would have been so entitled had the employee died prior to the termination of employment, so long as such exercise occurs prior to the earlier of the expiration date of such stock option or the date which is one year after the date of death. (F) If the employment of an optionee terminates for any reason other than voluntary termination with the consent of the Corporation or a Subsidiary, disability, retirement under any retirement plan of the Corporation or a Subsidiary, or death, the rights of such optionee under any then outstanding stock option shall terminate at the time of such termination of employment. In addition, the Committee may in its discretion immediately terminate all stock options held by the optionee if an optionee (i) engages in the operation or management of a business, whether as owner, partner, officer, director, employee or otherwise and whether during or after termination of employment, which is in competition with the Corporation or any of its Subsidiaries; (ii) uses for his own benefit or discloses to a third party information pertaining to the Corporation or any of its Subsidiaries which the Corporation or its Subsidiaries consider to be confidential; or (iii) interferes with the relationship between the Corporation or a Subsidiary and its employees, suppliers or customers.
"Disabled Optionee" shall mean an individual who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.
Whether termination of employment is a voluntary termination with the consent of the Corporation or a Subsidiary; whether an optionee is a Disabled Optionee; whether an optionee has engaged in the operation or management of a business which is in competition with the Corporation or any of its Subsidiaries; whether an optionee uses for his own benefit or discloses to a third party information pertaining to the Corporation or any of its Subsidiaries which is confidential; and whether an optionee has interfered with the relationship between the Corporation or a Subsidiary and its employees, suppliers or customers shall be determined in each case by the Committee, whose determination shall be final and binding unless such determination is demonstratably arbitrary and capricious.
(G) All stock options shall be confirmed by a stock option agreement, or an amendment thereto, which shall be executed by the Chief Executive Officer, the President (if other than the Chief Executive Officer) or any Executive Vice President on behalf of the Corporation and by the employee to whom such stock options are granted.
(H) Fair market value of the Common Stock, so long as the Common Stock trades in the Over-the-Counter market or on a stock exchange, shall be computed by taking a weighted average of the mean between the highest and lowest selling prices per share of the Common Stock as quoted in such reliable publication as the Committee, in its discretion, may choose to rely upon, on the nearest date before and the nearest date after the date as of which fair market value is to be determined on which there are sales.
If at any time the Common Stock does not trade in the Over-the-Counter market or on a stock exchange, the fair market value of the Common Stock shall be determined by an independent and experienced appraiser which is selected by the Committee. Fair market value shall be determined without regard to any restriction applicable to the Common Stock other than a restriction which, by its terms, will never lapse.
(I) The obligation of the Corporation to issue or deliver shares of the Common Stock under the Plan shall be subject to (i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such shares, if deemed necessary or appropriate by counsel for the Corporation, (ii) the condition that the shares shall have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange on which such shares may then be listed and (iii) all other applicable laws, regulations, rules and orders which may then be in effect; provided, however, that if the Company Stock shall be delisted from all national stock exchanges and/or deregistered in accordance with the provisions of the Securities Exchange Act of 1934, as amended, the Corporation shall have the obligation to issue and deliver shares of Common Stock under the Plan upon the exercise of any then outstanding stock option.
Subject to the foregoing provisions of this Section 5 and the other provisions of the Plan, any stock option granted under the Plan shall be subject to such other terms and conditions as the Committee shall deem advisable. SECTION 6 Adjustment and Substitution of Shares If a dividend or other distribution shall be declared upon the Common Stock payable in shares of Common Stock, the number of shares of Common Stock then subject to any outstanding stock option and the number of shares which may be issued or delivered under the Plan but are not then subject to an outstanding stock option shall be adjusted by adding thereto the number of shares which would have been distributable thereon if such shares had been outstanding on the date fixed for determining the stockholders entitled to receive such stock dividend or distribution.
If the outstanding shares of Common Stock shall be changed into or exchangeable for a different number or kind of shares of stock or other securities of the Corporation or another corporation, whether through reorganization, reclassification, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for each share of Common Stock subject to any then outstanding stock option and for each share of Common Stock which may be issued or delivered under the Plan but is not then subject to an outstanding stock option, the number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or for which each such share shall be exchangeable.
In the case of any adjustment or substitution as provided for in this Section 6, the aggregate option price for all shares subject to each then outstanding stock option prior to such adjustment or substitution shall be the aggregate option price for all shares of stock or other securities (including any fraction) to which such shares shall have been adjusted or which shall have been substituted for such shares. Any new option price per share shall be carried to at least three decimal places with the last decimal place rounded upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 6 shall require the Corporation to issue or sell a fraction of a share or other security. Accordingly, all fractional shares or other securities which result from any such adjustment or substitution shall be eliminated and not carried forward to any subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this Section 6 requires the approval of stockholders in order to enable the Corporation to grant incentive stock options, then no such adjustment or substitution shall be made without prior stockholder approval. Notwithstanding the foregoing, in the case of incentive stock options, if the effect of any such adjustment or substitution would be to cause the stock option to fail to continue to qualify as an incentive stock option or to cause a modification, extension or renewal of such stock option within the meaning of Section 424 of the Code, the Committee may elect that such adjustment or substitution not be made but rather shall use reasonable efforts to effect such other adjustment of each then outstanding stock option as the Committee in its sole discretion shall deem equitable and which will not result in any disqualification, modification, extension or renewal (within the meaning of Section 424 of the Code) of such incentive stock option. SECTION 7 Restrictions on Transfer of Certain Shares Shares of Common Stock acquired under exercise of an option pursuant to Section 5(B)(ii) by a person then subject to the provisions of Section 16 of the Exchange Act shall not be sold or otherwise transferred prior to the expiration of six months after the date of the grant of the option. The Corporation is authorized to (i) retain the certificate(s) representing such shares or place such certificates in the custody of its transfer agent, (ii) place a restrictive legend on such shares, and/or (iii) issue a stop transfer order to the transfer agent with respect to such shares in order to enforce the transfer restrictions of this Section. SECTION 8 Acceleration of the Exercise Date of Stock Options Notwithstanding any other provision of this Plan, all stock options shall become exercisable upon the occurrence of any of the events listed below whether or not such options are then exercisable under the provisions of the applicable agreements relating thereto:
(A) Stock option rights shall be exercisable during any one or more of the following periods:
(i) for a period of 60 days beginning on the date on which shares of Common Stock are first purchased pursuant to a tender offer or exchange offer (other than such an offer by the Corporation or a Subsidiary), whether or not such offer is approved or opposed by the Corporation or a Subsidiary and regardless of the number of shares of Common Stock purchased pursuant to such offer; (ii) for a period of 60 days beginning on the date the Corporation acquires knowledge that any person or group deemed a person under Section 13(d)(3) of the Exchange Act (other than any director of the Corporation on August 23, 1991, any Affiliate or Associate of any such director (with such terms having the respective meanings set forth in Rule 12b-2 under the Exchange Act as in effect on August 23, 1991), any member of the family of any such director, any trust (including the trustees thereof) established by or for the benefit of any such persons, or any charitable foundation, whether a trust or a corporation (including the trustees and directors thereof) established by any of such persons), in a transaction or series of transactions shall become the beneficial owner, directly or indirectly (with beneficial ownership determined as provided in Rule 13d- 3, or any successor rule, under the Exchange Act), of securities of the Corporation entitling the person or group to 20% or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate class vote) to which all shareholders of the Corporation would be entitled if the election of Directors were an election held on such date; (iii) for a period of 60 days beginning on the date of filing under the Exchange Act of a Statement on Schedule 13D, or any amendment thereto, by any person or group deemed a person under Section 13(d)(3) of the Exchange Act, disclosing an intention or possible intention to acquire or change control of the Corporation; (iv) for a period of 60 days beginning on the date, during any period of two consecutive years, when individuals who at the beginning of such period constitute the Board of Directors of the Corporation cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the shareholders of the Corporation, of each new Director was approved by a vote of at least two- thirds of the Directors then still in office who were Directors at the beginning of such period; and (v) for a period of 60 days beginning on the date of approval by the shareholders of the Corporation of an agreement (a "reorganization agreement") providing for (a) the merger or consolidation of the Corporation with another corporation where the shareholders of the Corporation, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares of the corporation issuing cash or securities in the merger or consolidation entitling such shareholders to 40% or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate class vote) to which all shareholders of such corporation would be entitled in the election of Directors or where the members of the Board of Directors of the Corporation, immediately prior to the merger or consolidation, do not, immediately after the merger or consolidation, constitute a majority of the Board of Directors of the corporation issuing cash or securities in the merger or consolidation or (b) the sale or other disposition of all or substantially all the assets of the Corporation. SECTION 9 Effect of the Plan on the Rights of Employees and Employer Neither the adoption of the Plan nor any action of the Board or the Committee pursuant to the Plan shall be deemed to give any employee any right to be granted a stock option under the Plan and nothing in the Plan, in any stock option granted under the Plan or in any stock option agreement shall confer any right upon any employee to continue in the employment of the Corporation or any Subsidiary or diminish in any way the right of the Corporation or any Subsidiary to terminate the employment of any employee at any time. The granting of a stock option shall impose no obligation upon the Optionee to exercise such option. SECTION 10 Amendment The right to alter and amend the Plan at any time and from time to time and the right to revoke or terminate the Plan are hereby specifically reserved to the Board; provided always that no such revocation or termination shall terminate any outstanding stock option theretofore granted under the Plan; and provided further that no such alteration or amendment of the Plan shall, without prior stockholder approval, (a) increase the total number of shares which may be issued under the Plan, (b) increase the total number of shares issuable pursuant to any stock option granted to any one optionee, (c) make any changes in the class of eligible employees or (d) extend the period set forth in the Plan during which stock options may be granted. No alteration, amendment, revocation or termination of the Plan shall, without the written consent of the holder of a stock option theretofore granted under the Plan, adversely affect the rights of such holder with respect to such stock option. SECTION 11 Effective Date and Duration of Plan The effective date and date of adoption of the Plan shall be August 23, 1991 (the "Effective Date"), the date of adoption of the Plan by the Board, provided that such adoption of the Plan by the Board is approved by the affirmative vote of the holders of at least a majority of the outstanding shares of Common Stock at a meeting of such holders duly called, convened and held within one year of the Effective Date. Notwithstanding any provision of the Plan to the contrary, no stock option granted under the Plan prior to such shareholder approval may be exercised until after such approval. No stock option may be granted under the Plan subsequent to the date which is ten (10) years following the effective date of the Plan. SECTION 12 Application of Funds The proceeds received by the Corporation for the sale of the Common Stock pursuant to exercise of stock options shall be used for general corporate purposes. SECTION 13 Reservation of the Stock The Corporation shall be under no obligation to purchase or reserve Common Stock to satisfy the exercise of stock options. The grant of stock options to employees hereunder shall not be construed to constitute the establishment of a trust of the Common Stock issuable pursuant to such stock options, and no particular Common Stock shall be identified as optioned and reserved for employees hereunder. The Corporation shall be deemed to have complied with the terms of the Plan if, at the time of issuance and delivery pursuant to the exercise of a stock option, it has a sufficient number of shares of the Common Stock authorized and unissued or in its treasury which may then be appropriated and issued for purposes of the Plan, irrespective of the date when such Common Stock was authorized. SECTION 14 Governing Law The Plan and all determinations and actions taken pursuant thereto shall be governed by the laws of the Commonwealth of Pennsylvania and construed in accordance therewith.
This Plan has been prepared, negotiated and delivered in, and shall be construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania.
Microfilm Number__________ Filed with the Department of State on __________________
Entity Number_____________ ____________________________________ Secretary of the Commonwealth
STATEMENT WITH RESPECT TO SHARES - DOMESTIC BUSINESS CORPORATION In compliance with the requirements of 15 Pa.C.S. Section 1522(b) (relating to statement with respect to shares), the undersigned corporation, desiring to state the designation and voting rights, preferences, limitations, and special rights, if any, of a class or series of its shares, hereby states that:
1 The name of the corporation is: USBANCORP, INC.
2 (Check and complete one of the following): ____ The resolution amending the Articles under 15 Pa.C.S. Section 1522(b) (relating to divisions and determinations by the board), set forth in full, is as follows:
X The resolution amending the Articles under 15 Pa.C.S. Section 1522(b) is set forth in full in Exhibit A attached hereto and made a part hereof.
3 The aggregate number of shares of such class or series established and designated by (a) such resolution, (b) all prior statements, if any, filed under 15 Pa.C.S. Section 1522 or corresponding provisions of prior law with respect thereto, and (c) any other provision of the Articles is 60,000 shares.
4 The resolution was adopted by the Board of Directors or an authorized committee thereof on: February 24, 1995
5 (Check, and if appropriate complete, one of the following):
X The resolution shall be effective upon the filing of this statement with respect to shares in the Department of State.
____ The resolution shall be effective on: ________________ at _______ Date Hour
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement to be signed by a duly authorized officer thereof this 3rd day of March, 1995. USBANCORP, INC. (Name of Corporation) By /s/ Orlando B. Hanselman Title: Orlando B. Hanselman, Executive Vice President Exhibit A
TERM OF SERIES C JUNIOR PARTICIPATING PREFERRED STOCK OF USBANCORP, INC.
RESOLVED that, pursuant to the authority vested in the Board of Directors of the Corporation by the Articles of Incorporation, the Board of Directors does hereby provide for the issue of a series of Preferred Stock, without par value, of the Corporation, to be designated "Series C Junior Participating Preferred Stock" (hereinafter referred to as the "Series C Preferred Stock" or "this Series"), initially consisting of 60,000 shares, and to the extent that the designations, powers, preferences and relative and other special rights and the qualifications, limitations and restrictions of the Series C Preferred Stock are not stated and expressed in the Articles of Incorporation, does hereby fix and herein state and express such designations, powers, preferences and relative and other special rights and the qualifications, limitations and restrictions thereof, as follows (all terms used herein which are defined in the Articles of Incorporation shall be deemed to have the meanings provided therein):
1. Designation and Amount. The designation of the series of Preferred Stock created by this resolution shall be Series C Junior Participating Preferred Stock and the number of shares constituting such Series is Sixty Thousand (60,000). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series C Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities of the Corporation convertible into shares of this Series.
2. Dividends. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of this Series with respect to dividends, the holders of shares of this Series shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on April 1, July 1, October 1, and January 1 of each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of this Series, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of this Series. In the event the Company shall at any time after February 24, 1995 (the "Rights Declaration Date") declare any dividend on the Common Stock payable in shares of Common Stock, subdivide the outstanding shares of Common Stock, or combine the outstanding shares of Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of this Series were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Series C Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on Series C Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of this Series, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of this Series entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of this Series in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of this Series entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than ten (10) days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series C Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each share of Series C Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Shares payable in Common Shares, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other resolutions creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series C Preferred Stock and the holders of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders of Series C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series C Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series C Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except dividends paid ratably on the Series C Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series C Preferred Stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series C Preferred Stock, or any shares of stock ranking on a parity with the Series C Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Articles of Incorporation, or in any other resolutions creating a series of Preferred Stock or any similar stock or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (A) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock unless, prior thereto, the holders of shares of Series C Preferred Stock shall have received $100.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series C Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock, or (B) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except distributions made ratably on the Series C Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the outstanding shares of Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event under the proviso in clause (A) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
7. Consolidation, Merger, Etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the outstanding shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series C Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series C Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
8. No Redemption. The shares of Series C Preferred Stock shall not be redeemable.
9. Rank. The Series C Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation's Preferred Stock.
10. Amendment. The Articles of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series C Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series C Preferred Stock, voting together as a single class.
EXHIBIT 10.10 AGREEMENT
This Agreement (the "Agreement") made the 1st day of December, 1994, by and between USBANCORP, Inc. (the "Company"), a Pennsylvania corporation, having its principal place of business at Main and Franklin Streets, Post Office Box 430, Johnstown, Pennsylvania 15907-0430, and RONALD W. VIRAG ("Executive"). WHEREAS, the Executive is the President and Chief Executive Officer of USBANCORP Trust Company, ("USBANCORP Trust"), a trust company organized under Pennsylvania law, directly owned by the Company. WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interest of the Company and its shareholders to ensure that the Company and USBANCORP Trust will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control and to encourage the Executive's full attention and dedication to USBANCORP Trust currently and in the event of any threatened or pending Change in Control, and to provide the Executive with compensation and benefits arrangements upon a Change in Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.
NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Term. This Agreement shall be for a three (3) year period commencing on the date first set forth above and shall be automatically renewed on the first and on each subsequent annual anniversary of the above day and month ("Annual Renewal Date") for a period ending three (3) years from each Annual Renewal Date unless either party shall give written notice of non-renewal at least sixty (60) days prior to the Annual Renewal Date.
2. Change in Control. As used in this Agreement, Change in Control shall mean the occurrence of any of the following: (a) any "person" or "group" (as those terms are defined or used in Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as enacted and in force on the date hereof) is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange Act, as enacted and in force on the date hereof) of securities of the Company representing 24.99% or more of the combined voting power of the Company's securities then outstanding; (b) there occurs a merger, consolidation, share exchange, division or other reorganization involving the Company and another entity in which Company shareholders do not continue to hold a majority of the capital stock of the resulting entity, or a sale, exchange, transfer, or other disposition of substantially all of the assets of the Company to another entity or other person; or (c) there occurs a contested proxy solicitation or solicitations of the Company's shareholders which results in the contesting party or parties obtaining the ability to elect a majority of the members of the Board of Directors standing for election at one or more meetings of the Company's shareholders.
3. Triggering Events. If a Change in Control shall occur and if thereafter, at any time during the term of this Agreement there shall be: (a) any involuntary termination of the Executive by USBANCORP Trust, other than for Cause as defined in Section 4 below; (b) any reduction in the Executive's title, responsibilities, including reporting responsibilities, or authority, including such title, responsibilities, or authority as such may be increased from time to time during the term of this Agreement; (c) the assignment to the Executive of duties inconsistent with the Executive's office as such duties existed on the day immediately prior to the date of a Change in Control; (d) any reduction in the Executive's annual base salary in effect on the day immediately prior to the date of a Change in Control;
(e) any failure to continue the Executive's participation, on substantially similar terms, in any incentive compensation or bonus plans of USBANCORP Trust in which the Executive participated in immediately prior to the Change in Control, or any change or amendment to any of the substantive provisions of any of such plans which would materially decrease the potential benefits to the Executive under any of such plans; (f) any failure to provide the Executive with benefits at least as favorable as those enjoyed by the Executive under any pension, life insurance, medical, health and accident, disability or other employee plans of USBANCORP Trust in which the Executive participated in immediately prior to the time of the Change in Control, or the taking of any action that would materially reduce any of such benefits in effect at the time of the Change in Control, unless such reduction relates to a reduction in benefits applicable to all employees generally; or (g) any breach of any provision of this Agreement by the Company or USBANCORP Trust, which breach shall not have been cured by the Company or USBANCORP Trust within thirty (30) days of the Company's receipt from the Executive or his agent of written notice specifying in reasonable detail the nature of the Company's or USBANCORP Trust's breach; then Executive, at his sole discretion, may upon no less than ninety (90) days written notice to Company, resign from employment with USBANCORP Trust (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering written notice to the Company at any time during the term of this Agreement.
4. Termination of Executive for Cause. Upon or following a Change in Control, the Company or USBANCORP Trust shall have the right at any time to terminate the Executive's employment for Cause. In such event, the Company shall give prompt notice to the Executive, specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean the following conduct of the Executive: (a) Material breach of any provision of this Agreement, which breach Executive shall have failed to cure within thirty (30) days after Employee's receipt of written notice from the Company specifying the specific nature of the Executive's breach; (b) Willful misconduct of Executive that is materially inimical to the best interests, monetary or otherwise, of the Company or USBANCORP Trust; (c) Conviction of a felony or of any crime involving moral turpitude, fraud or deceit; (d) Adjudication as a bankrupt under the United States Bankruptcy Code. 5. Compensation and Benefits. Upon the occurrence of an event set forth in Section 3 hereof and the delivery of a notice of termination to the Company pursuant to Section 3 hereof, the Executive shall be absolutely entitled to receive the compensation and benefits set forth below: (a) the Executive shall select, in his absolute discretion, and receive either (i) monthly installments equal to one thirty-sixth (1/36) of an amount equal to 2.99 times the following: (x) During the initial three-year term of this Agreement (the "Initial Term") commencing on the date hereof, the highest combined base salary and bonus paid or payable to the Executive in the then current year or in any one of the last five fiscal years preceding the Executive's delivery of a notice of termination; or (y) After the expiration of the Initial Term, the quotient obtained by dividing the sum of the Executive's combined salary and bonuses in the five years preceding the Executive's delivery of a notice of termination by five, such monthly installments shall be payable for a period of one year (the "Payment Period") commencing on the first day of the first calendar month after Executive's delivery of notice of termination, or (ii) a one time lump sum payment equal to the non-discounted sum of the twelve (12) monthly payments provided for in Section 5(a)(i) immediately above; (b) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be entitled to continue to participate in the employee retirement plan(s) of the Company and any supplemental executive retirement plan(s) (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan, as the case may be, as if the Executive's employment had not terminated; (c) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be provided with life, disability, and medical insurance benefits at levels equivalent to the highest levels in effect for the Executive during any one of the three (3) calendar years preceding the year in which the notice of termination is delivered; and (d) on the date of the notice of termination, all options held by the Executive to acquire common stock of the Company, to the extent not immediately exercisable by their terms, shall become immediately exercisable, and such options shall be exercisable by the Executive at any time prior to the earlier of the expiration date(s) of such stock options or the date which is ninety (90) days after the Executive's termination of employment with the Company. In the event the Executive is ineligible to continue participation in the employee retirement plan of USBANCORP Trust and/or any supplemental executive retirement plan (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan or in any of USBANCORP Trust's life, disability or medical insurance plans or programs, the Company shall, in lieu of such participation, pay the Executive a dollar amount equal to the dollar amount of the benefit forfeited by the Executive as a result of such ineligibility or a dollar amount equal to the cost to the Executive to obtain such benefits in the case of any life, disability or medical insurance plans or programs.
6. Beneficiary. Should the Executive die after entitlement but prior to payment in full of amounts due pursuant to Section 5(a)(i) hereof, such monthly payments shall continue (if such payment option was so elected by Executive) to the Executive's designated beneficiary or his estate until such entitlement has been paid in full.
7. Employment at Will. This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof and, subject to the provisions of any other agreement between the Executive and the Company, the Executive shall remain an employee at will and nothing herein shall confer upon the Executive any right to continued employment and shall not affect the right of USBANCORP Trust to terminate the Executive for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Executive may have to compensation and benefits as provided for in Section 5 hereof. 8. Arbitration. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof. If any relief other than injunctive relief is sought, the Company and the Executive agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with this Section 8 and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The matter shall be heard and decided, and awards rendered, by a panel of three (3) arbitrators (the "Arbitration Panel"). The Company and Executive shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof. Each party shall pay their professional fees, expenses and costs incurred in connection with the resolution of any controversy, dispute or claim arising out of, or relating to this Agreement.
9. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and the Company shall require any successor to expressly acknowledge and assume its obligation hereunder. This Agreement shall be void and no further force and effect upon the Company's sale of all the voting stock or assets of USBANCORP Trust to an unrelated third party or to combine with another Company affiliate, except if it is reasonably demonstrated such sale was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or such sale otherwise arose in connection with or in anticipation of a Change in Control. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Executive or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him/her shall be void and of no force and effect.
10. Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with USBANCORP Trust is terminated prior to the date on which a Change in Control occurs either (a) by the Company or USBANCORP Trust other than for Cause or (b) by the Executive for any one of the reasons set forth in Section 3 hereof, and it is reasonably demonstrated that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or anticipation of the Change in Control, then for all purposes of this Agreement the termination shall deemed to have occurred upon a Change in Control and the Executive will be entitled to the compensation and benefits provided for in Section 5 hereof.
11. Release. The Executive hereby acknowledges and agrees that prior to the occurrence of the Executive's or his dependent's right to receive from the Company or any of its representatives or agents any compensation or benefit to be paid or provided to him or his dependents pursuant to Section 5 of this Agreement, the Executive may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims the Executive has or may have against the Company or its subsidiaries, agents, officers, directors, successors or assigns.
12. Compliance with Laws. The parties hereto acknowledge and agree that this Agreement and each party's enforcement of their rights hereunder are subject to the Comprehensive Thrift and Bank Fraud Prosecutions Act of 1990 (12 USC 1828) as enacted and in force on the date hereof.
13. Notice. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested -- in the case of the Executive, to his residence address as set forth below, and in the case of the Company, to the address of its principal place of business, in care of the Board -- or to such other person or at such other address with respect to each party as such party shall notify the other in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Attest: USBANCORP, Inc.
By:\s\Betty L. Jakell By:\s\Terry K. Dunkle Betty L. Jakell Terry K. Dunkle Secretary Chairman, President & CEO
By:\s\Ronald W. Virag Ronald W. Virag Address: 3 Greenbrier Hurricane, West Virginia
EXHIBIT 10.11 AGREEMENT This Agreement (the "Agreement") made the 15th day of July, 1994, by and between USBANCORP, Inc. (the "Company"), a Pennsylvania corporation, having its principal place of business at Main and Franklin Streets, Post Office Box 430, Johnstown, Pennsylvania 15907-0430, and KEVIN J. O'NEIL ("Executive"). WHEREAS, the Executive is the President and Chief Executive Officer of Standard Mortgage Corporation of Georgia, a mortgage banking corporation ("Standard") indirectly owned by the Company. WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interest of the Company and its shareholders to ensure that the Company and Standard will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control and to encourage the Executive's full attention and dedication to Standard currently and in the event of any threatened or pending Change in Control, and to provide the Executive with compensation and benefits arrangements upon a Change in Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.
NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Term. This Agreement shall be for a three (3) year period commencing on the date first set forth above and shall be automatically renewed on the first and on each subsequent annual anniversary of the above day and month ("Annual Renewal Date") for a period ending three (3) years from each Annual Renewal Date unless either party shall give written notice of non-renewal at least sixty (60) days prior to the Annual Renewal Date.
2. Change in Control. As used in this Agreement, Change in Control shall mean the occurrence of any of the following: (a) any "person" or "group" (as those terms are defined or used in Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as enacted and in force on the date hereof) is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange Act, as enacted and in force on the date hereof) of securities of the Company representing 24.99% or more of the combined voting power of the Company's securities then outstanding; (b) there occurs a merger, consolidation, share exchange, division or other reorganization involving the Company and another entity in which Company shareholders do not continue to hold a majority of the capital stock of the resulting entity, or a sale, exchange, transfer, or other disposition of substantially all of the assets of the Company to another entity or other person; or (c) there occurs a contested proxy solicitation or solicitations of the Company's shareholders which results in the contesting party or parties obtaining the ability to elect a majority of the members of the Board of Directors standing for election at one or more meetings of the Company's shareholders.
3. Triggering Events. If a Change in Control shall occur and if thereafter, at any time during the term of this Agreement there shall be: (a) any involuntary termination of the Executive by Standard, other than for Cause as defined in Section 4 below; (b) any reduction in the Executive's title, responsibilities, including reporting responsibilities, or authority, including such title, responsibilities, or authority as such may be increased from time to time during the term of this Agreement; (c) the assignment to the Executive of duties inconsistent with the Executive's office as such duties existed on the day immediately prior to the date of a Change in Control; (d) any reduction in the Executive's annual base salary in effect on the day immediately prior to the date of a Change in Control; (e) any failure to continue the Executive's participation, on substantially similar terms, in any incentive compensation or bonus plans of Standard in which the Executive participated in immediately prior to the Change in Control, or any change or amendment to any of the substantive provisions of any of such plans which would materially decrease the potential benefits to the Executive under any of such plans; (f) any failure to provide the Executive with benefits at least as favorable as those enjoyed by the Executive under any pension, life insurance, medical, health and accident, disability or other employee plans of Standard in which the Executive participated in immediately prior to the time of the Change in Control, or the taking of any action that would materially reduce any of such benefits in effect at the time of the Change in Control, unless such reduction relates to a reduction in benefits applicable to all employees generally; or (g) any breach of any provision of this Agreement by the Company or Standard, which breach shall not have been cured by the Company or Standard within thirty (30) days of the Company's receipt from the Executive or his agent of written notice specifying in reasonable detail the nature of the Company's or Standard's breach; then Executive, at his sole discretion, may upon no less than ninety (90) days written notice to Company, resign from employment with Standard (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering written notice to the Company at any time during the term of this Agreement.
4. Termination of Executive for Cause. Upon or following a Change in Control, the Company or Standard shall have the right at any time to terminate the Executive's employment for Cause. In such event, the Company shall give prompt notice to the Executive, specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean the following conduct of the Executive: (a) Material breach of any provision of this Agreement, which breach Executive shall have failed to cure within thirty (30) days after Employee's receipt of written notice from the Company specifying the specific nature of the Executive's breach; (b) Willful misconduct of Executive that is materially inimical to the best interests, monetary or otherwise, of the Company or Standard; (c) Conviction of a felony or of any crime involving moral turpitude, fraud or deceit; (d) Adjudication as a bankrupt under the United States Bankruptcy Code. 5. Compensation and Benefits. Upon the occurrence of an event set forth in Section 3 hereof and the delivery of a notice of termination to the Company pursuant to Section 3 hereof, the Executive shall be absolutely entitled to receive the compensation and benefits set forth below: (a) the Executive shall select, in his absolute discretion, and receive either (i) monthly installments equal to one thirty-sixth (1/36) of an amount equal to 2.99 times the following: (x) During the initial three-year term of this Agreement (the "Initial Term") commencing on the date hereof, the highest combined base salary and bonus paid or payable to the Executive in the then current year or in any one of the last five fiscal years preceding the Executive's delivery of a notice of termination; or (y) After the expiration of the Initial Term, the quotient obtained by dividing the sum of the Executive's combined salary and bonuses in the five years preceding the Executive's delivery of a notice of termination by five, such monthly installments shall be payable for a period of one year (the "Payment Period") commencing on the first day of the first calendar month after Executive's delivery of notice of termination, or (ii) a one time lump sum payment equal to the non-discounted sum of the twelve (12) monthly payments provided for in Section 5(a)(i) immediately above; (b) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be entitled to continue to participate in the employee retirement plan(s) of the Company and any supplemental executive retirement plan(s) (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan, as the case may be, as if the Executive's employment had not terminated; (c) from the date of the notice of termination through and including the last day of the Payment Period, the Executive shall be provided with life, disability, and medical insurance benefits at levels equivalent to the highest levels in effect for the Executive during any one of the three (3) calendar years preceding the year in which the notice of termination is delivered; and (d) on the date of the notice of termination, all options held by the Executive to acquire common stock of the Company, to the extent not immediately exercisable by their terms, shall become immediately exercisable, and such options shall be exercisable by the Executive at any time prior to the earlier of the expiration date(s) of such stock options or the date which is ninety (90) days after the Executive's termination of employment with the Company. In the event the Executive is ineligible to continue participation in the employee retirement plan of Standard and/or any supplemental executive retirement plan (including deferred profit sharing plan) or other plan in effect during the term of this Agreement designed to supplement payments made under such employee retirement plan or in any of Standard's life, disability or medical insurance plans or programs, the Company shall, in lieu of such participation, pay the Executive a dollar amount equal to the dollar amount of the benefit forfeited by the Executive as a result of such ineligibility or a dollar amount equal to the cost to the Executive to obtain such benefits in the case of any life, disability or medical insurance plans or programs.
6. Beneficiary. Should the Executive die after entitlement but prior to payment in full of amounts due pursuant to Section 5(a)(i) hereof, such monthly payments shall continue (if such payment option was so elected by Executive) to the Executive's designated beneficiary or his estate until such entitlement has been paid in full.
7. Employment at Will. This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof and, subject to the provisions of any other agreement between the Executive and the Company, the Executive shall remain an employee at will and nothing herein shall confer upon the Executive any right to continued employment and shall not affect the right of Standard to terminate the Executive for any reason not prohibited by law; provided, however, that any such removal shall be without prejudice to any rights the Executive may have to compensation and benefits as provided for in Section 5 hereof. 8. Arbitration. Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to this Agreement, or the breach thereof, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof. If any relief other than injunctive relief is sought, the Company and the Executive agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance with this Section 8 and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The matter shall be heard and decided, and awards rendered, by a panel of three (3) arbitrators (the "Arbitration Panel"). The Company and Executive shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof. Each party shall pay their professional fees, expenses and costs incurred in connection with the resolution of any controversy, dispute or claim arising out of, or relating to this Agreement.
9. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and the Company shall require any successor to expressly acknowledge and assume its obligations hereunder. This Agreement shall be void and no further force and effect upon the Company's sale of all the voting stock or assets of Standard to an unrelated third party, except if it is reasonably demonstrated such sale was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or such sale otherwise arose in connection with or in anticipation of a Change in Control. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Executive or his/her legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive may not delegate any of his/her duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation by him/her shall be void and of no force and effect.
10. Prior Termination. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with Standard is terminated prior to the date on which a Change in Control occurs either (a) by the Company or Standard other than for Cause or (b) by the Executive for any one of the reasons set forth in Section 3 hereof, and it is reasonably demonstrated that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or anticipation of the Change in Control, then for all purposes of this Agreement the termination shall deemed to have occurred upon a Change in Control and the Executive will be entitled to the compensation and benefits provided for in Section 5 hereof.
11. Release. The Executive hereby acknowledges and agrees that prior to the occurrence of the Executive's or his dependent's right to receive from the Company or any of its representatives or agents any compensation or benefit to be paid or provided to him or his dependents pursuant to Section 5 of this Agreement, the Executive may be required by the Company, in its sole discretion, to execute a release in a form reasonably acceptable to the Company, which releases any and all claims the Executive has or may have against the Company or its subsidiaries, agents, officers, directors, successors or assigns.
12. Compliance with Laws. The parties hereto acknowledge and agree that this Agreement and each party's enforcement of their rights hereunder are subject to the Comprehensive Thrift and Bank Fraud Prosecutions Act of 1990 (12 USC 1828) as enacted and in force on the date hereof.
13. Notice. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested -- in the case of the Executive, to his residence address as set forth below, and in the case of the Company, to the address of its principal place of business, in care of the Board -- or to such other person or at such other address with respect to each party as such party shall notify the other in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Attest: USBANCORP, Inc.
By:\s\Betty L. Jakell By:\s\Orlando B. Hanselman Betty L. Jakell Orlando B. Hanselman, Executive Secretary Vice President
By:\s\Kevin J. O'Neil Kevin J. O'Neil Address: 9305 Saint Georgen Common Duluth, GA 30136