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EXHIBIT 10(iii)A(2)
CONFIDENTIAL
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January 27, 1998
Stanley N. Pontius
President & CEO
First Financial Bancorp
300 High Street
P.O. Box 476
Hamilton, OH 45012
Dear Stan:
You are employed by First Financial Bancorp and First National Bank of
Southwestern Ohio, a wholly owned subsidiary of FFBC, ("FFBC") in a key
executive position. Continuity of the management of FFBC and its affiliate banks
is a critical factor in the continued success of FFBC. The Board of Directors of
FFBC believes it is in the best interest of FFBC to encourage the continued
effort and dedication of key members of management to their assigned duties.
In consideration of the mutual promises contained in this letter, FFBC
shall provide to you, and you shall receive from FFBC, the benefits set forth in
this letter ("Agreement"), if your employment with FFBC, or its affiliate bank,
is terminated during the term of this Agreement.
1. Purpose.
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This Agreement establishes certain basic terms and conditions
relating to your employment with FFBC, and special arrangements and
dispute resolution proceedings relating to the termination of your
employment for any reason other than: (i) your retirement; (ii) your
becoming totally and permanently disabled under the FFBC long-
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term disability plan or policy; or (iii) your death. This Agreement
supersedes all prior agreements with FFBC and any of its affiliate
banks or any predecessor businesses, except the Confidentiality
Agreement concurrently entered, or previously entered, between you and
FFBC, and the special severance benefits provided under this Agreement
are to be provided instead of any other severance arrangements offered
by FFBC or its affiliate banks. Notwithstanding the foregoing, neither
your termination of employment nor anything contained in this Agreement
shall have any affect upon your rights under any tax-qualified "pension
benefit plan," as such term is defined in the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"); or under any
"welfare benefit plan" as defined in ERISA, including by way of
illustration and not limitation, any medical surgical or
hospitalization benefit coverage or long-term disability benefit
coverage; or under any non-qualified deferred compensation arrangement,
including by way of illustration and not limitation, any stock
incentive plan or non-qualified pension plan; or under the FFBC
Performance Incentive Plan for any completed plan year.
2. Employment.
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FFBC agrees that, during the term of this Agreement, you will
be employed with FFBC, and any other direct or indirect subsidiary or
affiliate of FFBC to which you may be transferred, in your present
position or in a position that is comparable to your present position
in compensation, responsibility and stature and for which you are
suited by education and background and that:
(a) you are, and will continue to be, eligible to participate in
any employee benefit plan of FFBC in accordance with its
terms; and
(b) you will be entitled to the same treatment under any generally
applicable employment policy or practice as any other member
of Executive Management Group whose position in the
organization is comparable to yours.
Those plans, policies and practices that generally apply to other
members of the Executive Management Group will be referred to in this
Agreement as your "Employment Benefits." Your Employment Benefits may
be modified from time to time after the date hereof without violation
of this Agreement if the changes apply generally to other members of
the Executive Management Group.
3. Term of Agreement.
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This Agreement shall become effective on the date of this
Agreement ("Commencement Date") and shall continue in effect through
the earlier of (i) the fifth anniversary of the
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Commencement Date; (ii) the date of your retirement, death or total and
permanent disability; or (iii) the completion of full payment of all
benefits promised hereunder. Absent your death, total and permanent
disability or retirement, this Agreement shall be renewed annually from
and after the fifth anniversary of the Commencement Date unless written
notice to the contrary is given by you or by FFBC at least six (6)
months prior to the expiration of the term, including any extension
thereof.
4. Termination of Employment.
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Your employment may be terminated in accordance with any of
the following paragraphs, but only upon one (1) month's advance written
notice (which period shall be referred to in this Agreement as the
"Notice Period"):
(a) INVOLUNTARY TERMINATION. FFBC may terminate your employment
without cause. In such an event, you shall continue to receive
your full salary and Employment Benefits during the Notice
Period. The expiration of the Notice Period shall be your
"Date of Termination." Upon your Date of Termination, you
shall be entitled to those benefits provided under Section 5,
provided you give FFBC the release and covenant not to sue
described in Section 5.
(b) INVOLUNTARY TERMINATION FOR CAUSE. FFBC may terminate your
employment for "Cause" with written notice setting forth the
Cause for termination. "Cause" means a willful engaging in
gross misconduct materially and demonstrably injurious to
FFBC. "Willful" means an act or omission in bad faith and
without reasonable belief that such act or omission was in, or
not opposed to, the best interests of FFBC. The expiration of
the Notice Period is your "Date of Termination for Cause."
Upon your Date of Termination for Cause, you shall only be
entitled to those benefits provided under Section 6.
(c) VOLUNTARY TERMINATION. You may voluntarily terminate your
employment. In such an event, you shall continue to receive
your full salary and Employment Benefits during the Notice
period provided you satisfactorily perform your duties during
the Notice Period unless relieved of those duties by FFBC. The
expiration of the Notice Period is your "Voluntary Date of
Termination." Upon your Voluntary Date of Termination, you
shall only be entitled to those benefits provided under
Section 6.
(d) VOLUNTARY TERMINATION FOR GOOD REASON. You may terminate your
employment by notice setting forth a Good Reason for
termination if the notice is delivered to FFBC within thirty
(30) days following the occurrence of any "Good Reason." "Good
Reason" means a (i) change in the duties of your position, or
the transfer
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to a new position, in violation of Section 2; (ii) substantial
alteration in the nature or status of your responsibilities in
violation of Section 2; (iii) reduction in your base salary;
(iv) refusal by FFBC, or its successor, to renew the term of
this Agreement for any reason, prior to your reaching your
normal retirement date under the FFBC Pension Benefit Plan; or
(v) changes in your Employment Benefits in violation of
Section 2. If you give notice of termination for Good Reason,
you shall continue to receive your full base salary and
Employment Benefits during the Notice Period as in effect
prior to the event that is the Good Reason for termination,
subject to the right of FFBC to make any changes to your
Employment Benefits permitted in accordance with Section 2.
The expiration of the Notice Period is your "Date of
Termination." Upon your Date of Termination, you shall be
entitled to those benefits provided under Section 5, provided
you give FFBC the written release and covenant not to sue
described in Section 5.
5. Special Severance Benefits.
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If your employment with FFBC is involuntarily terminated in
accordance with Section 4(a) or you voluntarily terminate your
employment for Good Reason in accordance with Section 4(d) and you
provide FFBC with a separate, written release and covenant not to sue
(on a form provided by and satisfactory to FFBC) which releases FFBC
from all claims arising from your employment and termination of your
employment, and you do not revoke this release and covenant not to sue,
then you shall receive the following benefits, less any applicable
withholding required for federal, state or local taxes:
(a) your base salary shall be continued in effect for a period of
thirty-six (36) months from your Date of Termination
(hereinafter called your "Severance Pay Period");
(b) if, prior to your Date of Termination, you have participated
in the FFBC Performance Incentive Plan for a complete calendar
year, you will receive an incentive compensation payment
within thirty (30) days of your Date of Termination in one
lump-sum in an amount equal to 3.0 times the percentage of the
incentive payment made or required to be made for the calendar
year pursuant to the Performance Incentive Plan immediately
preceding the calendar year in which your Date of Termination
occurs;
(c) if your Date of Termination is within twelve (12) months after
a Change in Control, you will receive a payment within thirty
(30) days of your Date of Termination in one lump-sum in an
amount equal to the total of the following:
(i) With respect to any shares of Stock subject to an
Option granted to you
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as of the time of the Change in Control under the
First Financial Bancorp 1991 Stock Incentive Plan
(the "Incentive Plan") that you cannot exercise as a
result of your termination of employment, the
difference between the fair market value of such
Stock, determined as of your Date of Termination, and
the Option Price.
(ii) With respect to any Restricted Stock granted to you
under the Incentive Plan as of the time of the Change
in Control which you forfeit as a result of your
termination of employment, the fair market value of
such Restricted Stock, determined as of your Date of
Termination and as if all restrictions had been
removed.
(iii) For purposes of this Section 5, "Stock," "Options,"
"Option Price," "Restricted Stock" and "Committee"
will have the meaning given those terms in the
Incentive Plan, and your right to exercise Options or
to receive Restricted Stock without forfeiture will
be determined after any adjustments made by the
Committee under Sections 8.8 and 11.1 of the
Incentive Plan, and after any amendments made to the
Incentive Plan in connection with the Change in
Control.
(iv) For purposes of this Section 5, "Change in Control"
will have the following meaning: (a) a plan has been
approved by the shareholders of FFBC and consummated
for FFBC to be merged or consolidated with another
corporation and as a result of such merger or
consolidation less than 75% of the outstanding voting
securities of the surviving or resulting corporation
will be owned in the aggregate by the former
shareholders of FFBC as the same shall have existed
immediately prior to such merger or consolidation;
(b) an agreement for the sale by FFBC of
substantially all of its assets to another
corporation which is not a wholly owned subsidiary
has been approved by the shareholders (or the Board
of Directors or appropriate officers if shareholder
approval is not required) and consummated; (c)
"beneficial ownership" as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934
(the "Exchange Act") of twenty percent (20%) or more
of the total voting capital stock of FFBC then issued
and outstanding has been acquired by any person or
"group" as defined in Section 13(d)(3) of the
Exchange Act; or (d) individuals who were members of
the Board of FFBC immediately prior to a meeting of
the shareholders of FFBC involving a contest for the
election of directors do not constitute a majority of
the Board immediately following such election, unless
the election of such new directors was recommended to
the shareholders by the management of FFBC. The
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Board of FFBC has final authority to determine the
exact date on which a Change in Control has occurred
under the foregoing definitions.
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(d) your Employment Benefits shall be continued during your
Severance Pay Period, subject to the right of FFBC to make any
changes to your Employment Benefits permitted in accordance
with Section 2; provided, however, that you shall not:
(i) accumulate vacation pay for periods after your Date
of Termination;
(ii) first qualify for long-term disability benefits or
sickness and accident plan benefits by reason of an
illness, accident or disability occurring, or a
sickness or illness first manifesting itself, after
your Date of Termination;
(iii) be eligible to continue to make contributions to any
Internal Revenue Code ss. 401(k) plan maintained by
FFBC or qualify for a share of any employer
contribution made to any tax-qualified defined
contribution plan; or
(iv) be eligible to accumulate service for pension plan
purposes;
(e) you shall qualify for full COBRA health benefit continuation
coverage upon the expiration of your Severance Pay Period;
(f) you shall be entitled to full executive outplacement
assistance with an agency selected by FFBC with the fee paid
by FFBC in an amount not to exceed five percent (5%) of your
annual base salary;
(g) with respect to the Endorsement Method Split Dollar Plan
Agreement (the "Split Dollar Agreement") to which you are a
party (and solely for purposes of the Split Dollar Agreement),
the duration of your Severance Pay Period shall be considered
as if it were active employment for purposes of determining
whether you were eligible to receive a retirement benefit
under the early retirement provisions of First Financial
Bancorp Employees' Pension Plan, as provided in Section VI(B)
of the Split Dollar Agreement; and
(h) if your Date of Termination is within twelve (12) months after
a Change in Control, you will receive a payment (the "Split
Dollar Payment") within ninety (90) days of your Date of
Termination in one lump-sum equal to the present value of the
death benefit you would have received under the Split Dollar
Agreement, determined as if you had terminated on your Date of
Termination, were then eligible to receive a retirement
benefit under the early retirement provisions of First
Financial Bancorp Employees' Pension Plan (whether or not this
is actually the case), and died at age 75 when the Split
Dollar Agreement was still in effect. For purposes of this
Section 5, present value will be determined using an annual
discount rate of 7%. Notwithstanding the prior two sentences,
if you elect to receive an assignment of the policy under
Section X of the Split Dollar
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Agreement, the Split Dollar Payment shall be applied to the
cash payment to FFBC required under Section X of the Split
Dollar Agreement, and any portion of the Split Dollar Payment
in excess of the amount required under Section X shall be paid
to you.
(i) Notwithstanding any other provision of this Agreement, if the
receipt of any payment under Section 5 of this Agreement, in
combination with any other payments to you from FFBC or its
affiliates, shall, in the opinion of independent tax counsel
of recognized standing selected by FFBC, result in the payment
by you of any excise tax provided for in Section 280G and
Section 4999 of the Internal Revenue Code, then the amount of
payments under Section 5 of this Agreement shall be reduced to
the extent required, in the opinion of independent tax
counsel, to prevent the imposition of such excise tax. The
reduction of payments under this Agreement shall be made after
any reduction made under Section 11.2 of the First Financial
Bancorp 1991 Stock Incentive Plan and you will have the right
to select the order in which payments under this Section 5
will be reduced.
The release and covenant not to sue which you agree to provide prior to
the receipt of special severance benefits under this Section 5 of this
Agreement shall comply with the requirements of the Older Workers
Benefit Protection Act and applicable state and federal laws and
regulations. If you do not provide FFBC with a written release and
covenant not to sue, any claims concerning this Agreement or otherwise
arising from your employment with FFBC, or its affiliate banks, shall
be subject to final and binding arbitration as described in Section 7.
6. Benefits Upon Voluntary Termination or Termination for Cause.
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Upon your Date of Termination for Cause in accordance with Section 4(b)
or your Voluntary Date of Termination in accordance with Section 4(c),
all special severance benefits under this Agreement will be void. In
such an event, you shall be eligible for any benefits provided in
accordance with the plans and practices of FFBC that are applicable to
employees generally.
7. Arbitration.
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Any dispute under this Agreement, and any claims of wrongful or
discriminatory termination based on any state or federal statute, tort,
public policy, contract or promissory estoppel theory, including any
dispute as to the cause or reason for termination, shall be submitted
to final and binding arbitration, subject to the National Rules for the
Resolution of Employment Disputes of the American Arbitration
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Association, effective June 1, 1997, except as hereinafter provided:
(a) FFBC shall pay the arbitrator's fee;
(b) Each party shall bear the cost of its own attorney's fees.
However, if you prevail in a challenge to FFBC's determination
as to cause for your termination or if you prevail on any
claim that you were discriminated against in violation of any
federal law or statute, you shall be reimbursed by FFBC for
the filing fee and any reasonable costs or expenses incurred
in such a challenge, including reasonable attorney's fees;
(c) The arbitration hearing shall be held in Hamilton, Ohio,
unless the parties mutually agree to another location;
(d) Each party shall exchange documents to be utilized as exhibits
in the arbitration hearing and each party shall be limited to
two (2) pre-hearing depositions of two (2) hours each, unless
the arbitrator orders additional discovery;
(e) The arbitrator shall be appointed in accordance with Rule 12
of the above-referenced Rules of the American Arbitration
Association, except that if, for any reason, an arbitrator
cannot be selected by the process described in Rule 12,
subparts (i) through (iii), the American Arbitration
Association shall submit the names of seven (7) additional
arbitrators from its Roster and the parties shall select the
arbitrator by alternately striking names with the party
requesting arbitration first striking; and
(f) Either party shall be entitled to an injunction or other
appropriate equitable relief to enforce the arbitration
provisions of this Agreement and FFBC shall be entitled to an
injunction to prevent any breach, pending arbitration, of the
Confidentiality Agreement described below in paragraph 8 or
the Covenant Not to Compete described below in paragraph 10.
It is the intention of the parties to avoid litigation in any
court of all claims concerning this Agreement, or otherwise arising
from your employment with FFBC, or its affiliate bank, and that all
such claims will be subject to this arbitration agreement. Neither
party shall commence or pursue any litigation on any claim that is or
was the subject of arbitration under this Agreement. Each party agrees
that this agreement to arbitrate and the arbitration award are
enforceable under and subject to the Federal Arbitration Act, 9 U.S.C.
ss. I, et seq. ("FAA"). If the FAA is held not to apply for any reason
and the law of the state in which you are employed recognizes the
enforceability of this Agreement and the arbitration award, then this
Agreement and the arbitration award are enforceable under the laws of
the state in which you are employed. Both
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parties consent that judgment upon the arbitration award may be entered
in any federal or state court that has jurisdiction. The acceptance of
any benefit under this Agreement shall be deemed ratification of this
agreement to arbitrate claims. In the event you breach this Agreement
by filing a lawsuit, at the time your lawsuit is filed, you will return
any Special Severance Benefits paid to you and be subject to injunctive
relief enforcing this Agreement.
8. Confidentiality.
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You will not disclose to any person or use for the benefit of yourself
or any other person any confidential or proprietary information of FFBC
without the prior written consent of the Chief Executive Officer of
FFBC. Upon your termination of employment, you will return to FFBC all
written or electronically stored memoranda, notes, plans, customer
lists, records, reports or other documents of any kind or description
(including all copies in any form whatsoever) relating to the business
of FFBC and fully comply with any separate confidentiality agreement to
which you and FFBC are parties.
9. Conflicts of Interest.
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You agree for so long as you are employed by FFBC to avoid dealings and
situations that would create the potential for a conflict of interest
with FFBC. In this regard, you agree to comply with the FFBC policy
regarding conflicts of interest and all applicable state or federal
regulations concerning conflicts of interest applicable to commercial
bank or savings bank officers.
10. Covenant Not to Compete.
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During the term of this Agreement, and for a period of six (6) months
following the termination of your employment for any reason other than
as set forth in Section 4(b), you agree not to be employed by, serve as
officer or director of, consultant to or advisor to any business that
engages either directly or indirectly in commercial banking, savings
banking or mortgage lending in the geographic area of Ohio, Indiana,
Michigan or Kentucky or which is reasonably likely to engage in such
businesses in the same geographic area during the six (6) month period
following your termination of employment.
11. Notice.
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Notices required or permitted under this Agreement shall be in writing
and shall be deemed to have been given when delivered or mailed by
United States certified mail, return receipt requested, postage
prepaid, in a properly addressed envelope. Notices to
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FFBC shall be addressed to the Chief Executive Officer.
12. Modification; Waiver; Successors.
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No provision of this Agreement may be waived, modified or discharged
except pursuant to a written instrument signed by you and the Chief
Executive Officer of FFBC. This Agreement is binding upon any successor
to all or substantially all of the business or assets of FFBC.
13. Validity; Counterparts.
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This Agreement shall be governed by and construed under the law of the
State of Ohio. The validity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other provision
hereof. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
Sincerely yours,
FIRST FINANCIAL BANCORP
By:
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and
FIRST NATIONAL BANK OF
SOUTHWESTERN OHIO
By:
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ACCEPTED AND AGREED TO
THIS ____ DAY OF ________, 1998.
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Stanley N. Pontius