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Exhibit
10.2
CHANGE OF CONTROL
AGREEMENT
THIS AGREEMENT, is entered
into as of October 18, 2005, by and between First Commonwealth
Financial Corporation, a Pennsylvania corporation (the
“Company”), and JOHN J. DOLAN
(“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 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
2
(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 three 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 thirty-six (36) calendar
months thereafter (the “Severance Period”), so that a
total of thirty-six (36) 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 Com
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