CHANGE OF CONTROL AGREEMENT
Exhibit 10.2 - Change of Control Agreement - Xxxxxxxx X.
Xxxxxxxx
THIS
AGREEMENT, is entered into as of October 18, 2005, by and between First
Commonwealth Financial Corporation, a Pennsylvania corporation (the "Company"),
and XXXXXXXX X. XXXXXXXX ("Executive").
RECITALS
The
Executive Compensation Committee of the Company's Board of Directors (the
"Board") has determined that it is in the best interests of the
Company and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a "Change of Control" (as defined below) of the
Company. The Board believes that it is
important to diminish the inevitable distraction of the Executive that would
result from the personal uncertainties and risks created by a pending or
threatened Change of Control and to encourage the Executive to continue to
devote Executive's full attention and dedication to the Company currently and
in the event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefit arrangements upon the termination of
Executive's employment following a Change of Control. In order to accomplish these objectives, the Board has authorized
the Company to enter into this Agreement with Executive.
AGREEMENT
Accordingly, Executive and the Company hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1. "Cause"
for termination shall be deemed to exist if:
(a) The
Executive is convicted of, or pleads guilty or nolo contendere to, any crime
which constitutes a felony under the laws of the United States of America or of
any state or territory thereof, and the commission of that felony resulted in,
or was intended to result in, a loss (monetary or otherwise) to the Company, or
any of their respective clients, customers, directors, officers or employees;
or
(b) The
Executive deliberately and intentionally fails or refuses to perform the
Executive's duties to the Company (other than during such time as the Executive
is incapacitated due to an accident or illness or during the Executive's
regularly scheduled vacation periods) for a period of thirty (30) consecutive
days following the receipt by the Executive of a notice from the Company sent
by certified mail, return receipt requested, setting forth in detail the facts
upon which the Company relies in concluding that the Executive has deliberately
and intentionally refused to perform the Executive's duties and indicating with
specificity the duties that the Company demands that the Executive perform
without delay.
1.2. "Change
of Control" shall mean:
(a) The
acquisition, other than from the Company, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the then outstanding shares of common stock of
the Company; or
(b) Individuals
who, as of October 18, 2005, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to October
18, 2005, whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; or
(c) Consummation
of a reorganization, merger, consolidation, sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, with respect to which all or substantially
all of the individuals and entities who were the beneficial owners of shares
outstanding shares of the Company's common stock immediately prior to such
Business Combination do not, following such Business Combination, beneficially
own, directly or indirectly, more than 50% of the then outstanding shares of
common stock of the corporation resulting from such a Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries).
1.3. "Client" means any client or
prospective client of the Company to whom Executive provided services, or for
whom Executive transacted business, or whose identity became known to Executive
in connection with Executive's relationship with or employment by the Company
1.4. "Code"
means the Internal Revenue Code of 1986, as amended.
1.5. "Competitive
Enterprise" means any business enterprise that either (a) engages in any activity closely associated with commercial banking or
the operation of an institution, the deposits of which are insured by the
Federal Deposit Insurance Corporation, in a Restricted Territory, or
(b) holds a 25% or greater equity, voting or profit participation interest
in any enterprise that engages in such a competitive activity.
1.6. "Exchange
Act" means the Securities Exchange Act of 1934, as amended.
1.7. "Good
Reason" means:
(a) the
assignment to the Executive of any duties inconsistent in any respect with the
Executive's position, authority, duties or responsibilities immediately prior
to the Change of Control or any other action by the Company which results in a
diminution of such position, authority, duties or responsibilities, other than
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after the receipt of notice thereof
given by the Executive;
(b) any
requirement of the Company that Executive (i) be based anywhere more than fifty
(50) miles from the office where Executive is located immediately prior to the
2
Change of Control or (ii) travel on Company business to an
extent substantially greater than the travel obligations of Executive
immediately prior to the Change of Control; or
(c)
(i) a reduction by the Company in Executive's rate of annual base salary as in
effect immediately prior to the Change of Control or (ii) the failure of the
Company to continue in effect any employee benefit plan, compensation plan,
welfare benefit plan or material fringe benefit plan in which Executive is
participating or entitled to participate immediately prior to the Change of
Control, unless Executive is permitted to participate in other plans providing
Executive with substantially equivalent benefits in the aggregate (at
substantially equivalent cost with respect to welfare benefit plans).
1.8. "Qualifying
Termination" means a termination of Executive's employment (i) by the
Company other than for Cause or (ii) by Executive for Good Reason.
1.9. "Restricted
Territory" means the geographic area within a radius of fifty (50) air
miles from the location of the Company's office at which Executive's employment
was based as of the date of the termination of Executive's employment.
1.10. "Solicit" means any direct or
indirect communication of any kind, regardless of who initiates it, that in any
way invites, advises, encourages or requests any person to take or refrain from
taking any action.
1.11. "Termination
Period" means the period of time beginning with a Change of Control and
ending two years following such Change of Control.
ARTICLE 2
SEVERANCE PAYMENT
2.1. Payments. If during the Termination Period the
employment of Executive shall terminate pursuant to a Qualifying Termination,
then the Company shall pay to the Executive (or Executive's beneficiary as
provided in Article 4) severance payments on the first day of the calendar
month following the month in which the Qualifying Termination occurred and each
of the twenty-four (24) calendar months thereafter (the "Severance
Period"), so that a total of twenty-four (24) consecutive monthly payment
shall be made. The amount of each
monthly severance payment shall be equal to one-twelfth (1/12) of the sum of
the following: (a) Executive's annual base salary immediately prior to the Change
of Control, (b) the aggregate amount of all bonuses paid to Executive during
the twelve-month period preceding the Change of Control, (c) the aggregate
amount of all contributions by the Company for the account of Executive under
the First Commonwealth Financial Corporation 401(k) Savings and Investment Plan
and the First Commonwealth Financial Corporation Stock Ownership Plan during
the twelve-month period preceding the Change of Control, and (d) the aggregate
of all contributions by Executive and by the Company for the account of
Executive to the Company's Supplemental Executive Retirement Plan during the
twelve-month period preceding the Change of Control.
2.2. Benefits. In addition to the monthly severance
payments, during the Severance Period, the Company shall, at the Company's sole
cost and expense, continue to provide the Executive and the Executive's family
with the same level of medical, dental, accident, disability and life insurance
benefits upon substantially the same terms and conditions as existed
3
immediately prior to the Qualifying Termination (or, if more
favorable to the Executive, as such benefits and terms and conditions existed
immediately prior to the Change of Control).
2.3. Severance
Not Exclusive. The severance
payments and benefits provided in this Article 2 shall be in addition to any
other compensation or remuneration to which the Executive is, or shall become,
entitled to receive from the Company.
2.4. Termination
at Retirement Age. Notwithstanding
anything to the contrary in this Agreement, the Executive shall no longer be
entitled to receive severance payments and benefits pursuant to this Agreement
beginning on the first day of the first calendar month after the Executive
reaches "full retirement age" for purposes of receiving full Social
Security benefits.
2.5. Release. The Company's obligation to make any
payment to Executive as described in this Article 2 is contingent upon
Executive's execution of a release, in form and substance reasonably
satisfactory to the Company, that, in the opinion of the Company's counsel, is
effective to release the Company from all claims relating to Executive's
employment or the termination thereof, and the Company will have no obligation
to make any payment unless and until such a release has become effective.
ARTICLE 3
LIMITATION ON PAYMENT OF BENEFITS
Notwithstanding
anything to the contrary in this Agreement, if the payments and benefits
pursuant to Article 2 hereof, either alone or together with other payments and
benefits which the Executive has the right to receive from the Company or any
of its subsidiaries, would constitute a "parachute payment" under
Section 280G of the Code, the payments and benefits pursuant to Article 2
hereof shall be reduced, in the manner determined by independent tax counsel
selected as provided below, by the amount, if any, which is the minimum
necessary to result in no portion of the payments and benefits under Article 2
being non-deductible to the Company or such subsidiary pursuant to Section 280G
of the Code and subject to the excise tax imposed under Section 4999 of the
Code. The determination of whether any
reduction in the payments and benefits is to be made pursuant to Article 3
shall be based upon the written advice of independent tax counsel selected by
the Company and reasonably acceptable to the Executive. The fees and expenses of the tax counsel
shall be paid by the Company. The
Company shall use its best efforts to cause such counsel to prepare the
foregoing opinion as promptly as practicable, and in any event, within thirty
(30) days after the date of the Qualifying Termination. The Company and the Executive agree to be
bound by the determination of such tax counsel and to make appropriate payments
to each other to give effect to the intent and purpose of this Article 3.
ARTICLE 4
BENEFICIARIES
If the
Executive shall die after the occurrence of a Qualifying Termination, but prior
to the payment of all of the monthly severance payments required by Article 2
hereof, then all remaining severance payments shall be paid to the beneficiary
designated in writing by the Executive at the same time, and in the same
amount, as would have been payable to the Executive. The designation of a beneficiary for purposes of this Article 4
shall be revocable
4
during the lifetime of the Executive. If the Executive does not designate a beneficiary under this Agreement, the beneficiary shall be deemed to be the same person that the Executive designated with respect to the Executive's group life insurance program maintained by the Company.
ARTICLE 5
COVENANTS NOT TO COMPETE OR SOLICIT CLIENTS
5.1. Non-Compete. During Executive's employment with the
Company and throughout the Severance Period (the "Restricted Period"), Executive shall not directly or
indirectly (without the prior written consent of the Company) associate
(including as a director, officer, employee, partner, consultant, agent or
advisor) with a Competitive Enterprise in the Restricted Territory and in
connection with Executive's association engage, or directly or indirectly
manage or supervise personnel engaged, in any activity:
(a) that
is substantially related to any activity that Executive was engaged in with the
Company during the 12 months prior to the date of termination of
Executive's employment,
(b) that
is substantially related to any activity for which Executive had direct or
indirect managerial or supervisory responsibility with the Company during the
12 months prior to the date of termination of Executive's employment, or
(c) that
calls for the application of specialized knowledge or skills substantially
related to those used by Executive in Executive's activities with the Company
during the 12 months prior to the date of termination of Executive's
employment.
5.2. Non-Solicitation. During the Restricted Period, Executive
shall not, in any manner, directly or indirectly (without the prior written
consent of the Company):
(i) Solicit any Client to transact business with a Competitive
Enterprise in the Restricted Territory or to reduce or refrain from doing any
business with the Company, (ii) interfere with or damage any relationship
between the Company and a Client or (iii) Solicit anyone who is then an
employee of the Company (or who was an employee of the Company within the prior
12 months) to resign from the Company or to apply for or accept employment with
any other business or enterprise.
5.3. Validity. The terms and provisions of this Article 5
are intended to be separate and divisible provisions and if, for any reason,
any one or more of them is held to be invalid or unenforceable, neither the
validity nor the enforceability of any other provision of this Agreement shall
thereby be affected. The parties hereto
acknowledge that the potential restrictions on Executive's future employment
imposed by this Article 5 are reasonable in both duration and geographic scope
and in all other respects. If for any
reason any court of competent jurisdiction shall find any provisions of this
Article 5 unreasonable in duration or geographic scope or otherwise, Executive
and the Company agree that the restrictions and prohibitions contained herein
shall be effective to the fullest extent allowed under applicable law in such
jurisdiction.
5.4. Consideration. The parties acknowledge that this Agreement
would not have been entered into and the benefits described herein would not
have been promised in the absence of Executive's promises under this Article 5.
5
5.5. Cease Payments. In the event that Executive breaches Section 5.1 or 5.2, the Company's obligation to make or provide payments or benefits under Article 2 shall cease, to the extent not already paid or provided.
ARTICLE 6
SUCCESSORS; BINDING AGREEMENT
6.1. This
Agreement will inure to the benefit of and be binding upon the Company and its
successors and assigns.
6.2. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as defined above and any successor
to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law or otherwise.
6.3. This
Agreement shall be binding upon, and shall inure to the benefit of and be
enforceable by, the Executive, the Executive's heirs, personal representatives,
executors and administrators.
ARTICLE 7
ATTORNEY'S FEES
Each
party will bear all attorney's fees and related expenses in connection with or
relating to the negotiation and enforcement of this Agreement; provided, that
if Executive is wholly successful on the merits of any action or proceeding to
enforce Executive's rights under this Agreement, the Company shall reimburse
all reasonable attorney's fees and related expenses incurred by Executive in
connection with such action or proceeding.
ARTICLE 8
EMPLOYMENT WITH SUBSIDIARIES
Employment
with the Company for purposes of this Agreement shall include employment with
any subsidiary of the Company.
ARTICLE 9
NO SETOFF
No
amounts otherwise due or payable under this Agreement shall be subject to
setoff by the Company.
6
ARTICLE 10
NOT A CONTRACT FOR EMPLOYMENT
This
Agreement shall not in any way constitute an employment agreement between the
Company and the Executive and it shall not oblige the Executive to continue in
the employ of Company, nor shall it oblige the Company to continue to employ
the Executive.
ARTICLE 11
RIGHTS UNDER OTHER PLANS AND AGREEMENTS
The
severance benefits herein provided shall be in addition to, and are not
intended to reduce, restrict or eliminate any benefit to which the Executive
may otherwise be entitled by virtue of his termination of employment or
otherwise.
ARTICLE 12
NOTICES
All
notices and other communications required to be given hereunder shall be in
writing and shall be deemed to have been delivered or made when mailed, by
certified mail, return receipt requested, if to the Executive, to the last address
which the Executive shall provide to the Employer, in writing, for this
purpose, but if the Executive has not then provided such an address, then to
the last address of the Executive then on file with the Company; and if to the
Company, then to the last address which the Company shall provide to the
Executive, in writing, for this purpose, but if the Company has not then
provided the Executive with such an address, then to:
President
and Chief Executive Officer
First
Commonwealth Financial Corporation
Old
Courthouse Square
00
Xxxxx Xxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxxxxxx 00000
ARTICLE 13
GOVERNING LAW AND JURISDICTION
This
Agreement shall be governed by, and construed in accordance with, the laws of
the Commonwealth of Pennsylvania, except for the laws governing conflict of
laws. In the event that either party
shall institute suit or other legal proceeding, whether in law or equity, the
Courts of the Commonwealth of Pennsylvania shall have exclusive jurisdiction
with respect thereto.
ARTICLE 14
ENTIRE AGREEMENT
This
Agreement constitutes the entire understanding between the Company and the
Executive concerning the subject matter hereof and supersedes all prior written
or oral agreements or understandings between the parties hereto, including,
without limitation, the Agreement for Severance Payments in the Event of
Termination of Employment under Certain Circumstances dated May 3, 2002,
between the Executive and the Company (the "Existing
7
Agreement").
The Company and the Executive agree that the Existing Agreement shall be
terminated upon execution of this Agreement.
No term or provision of this Agreement may be changed, waived, amended
or terminated except by a written instrument of equal formality to this
Agreement.
Signature page follows.
8
IN
WITNESS WHEREOF, the parties have executed this Change of Control Agreement as
of the date set forth above.
|
(Corporate Seal) |
FIRST COMMONWEALTH FINANCIAL CORPORATION |
|
Corporate Secretary |
Xxxxxx
X. O'Dell |
|
|
|
|
/S/ XXXXXX X. XXXXXXXXX |
/S/ XXXXXXXX X. XXXXXXXX |
|
Witness |
Xxxxxxxx X. Xxxxxxxx |
9
FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
Schedule to Exhibit 10.2
Change in Control Agreements were entered into between First Commonwealth
Financial Corporation and the individuals listed below on October 18,
2005. These agreements are
substantially identical to that filed as Exhibit 10.2.
Parties to Change of Control Agreements with First Commonwealth Financial
Corporation:
R. Xxxx Xxxxxxx
