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Exhibit 10.2
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into this 30th day of September,
2003, by and
between PENDLETON COUNTY BANK, a West Virginia corporation (the
"Bank") and
WILLIAM A. LOVING, (the "Executive"), and joined in by Allegheny
Bancshares,
Inc. ("Allegheny"), parent of "Bank" who agree as follows:
RECITALS:
A)
The Bank
considers it essential to the best interests of its
shareholders to foster the continuous employment of key
management
personnel.
B)
In this
connection, the Bank recognizes that the possibility of a
change in Control may arise and that such possibility, and the
uncertainty which it may raise among management, may result in
the
departure or distraction of management personnel to the detriment
of
the Bank and its shareholders.
C)
Accordingly, the
Bank's Board of Directors (the "Board") has
determined that appropriate steps should be taken to reinforce
and
encourage the continued attention and dedication of management
to
their assigned duties without distraction in circumstances
arising
from the possibility of a change in Control. In particular, the
Board
believes it important, should the Bank receive a proposal for
transfer
of control, that the Executive be able to assess and advise the
board
whether such proposal would be in the best interests of the Bank
and
its shareholders and to take such other action regarding such
proposal
as the Board might determine to be appropriate, without being
influenced by the uncertainties regarding the Executive's
personal
situation.
D)
In order to
encourage the Executive to remain in the Bank's employ,
this Agreement sets forth the severance benefits which the Bank
and
the Executive agree will provide both the Bank and the
Executive
assurances of an orderly transition in the event of a Change in
Control under the circumstances described below. This Agreement
shall
be in addition to the Employment Agreement ("Employment Agreement")
of
even date herewith.
NOW, THEREFORE, for good and valuable consideration, the receipt
and
sufficiency of which are acknowledged, the parties hereto agree as
follows:
1) Defined
Terms. The definitions of capitalized terms used in this
Agreement
are
provided in the last section of this Agreement and, if not
defined
there, are defined elsewhere in this Agreement.
2) Term of
Agreement. This Agreement shall commence on the date hereof and
shall continue in effect until December 31, 2003; provided,
however, that
commencing on January 1, 2004 and each January 1 thereafter, the
term of
this
Agreement shall automatically be extended for one (1) additional
year
unless, at least ninety (90) days prior to such January 1st date,
the Bank
or
the Executive shall have given notice that this Agreement shall not
be
extended: and provided further, that, notwithstanding the
delivery
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of
any such notice, this Agreement shall continue in effect for a
period of
twenty-four (24) months after a Change in Control, if such change
in
Control shall have occurred while this Agreement is in effect.
Notwithstanding anything in this Section 2 to the contrary, this
Agreement
shall terminate if the Executive or the bank terminates the
Executive's
employment prior to a Change in Control of the Bank.
3) Agreement to
Provide Services; Right to Terminate.
A)
Except as
otherwise provided in paragraph (B) below and in the
Executive's Employment Agreement, the Bank or the Executive may
terminate the Executive's employment at any time following a Change
in
Control, subject to the Bank's providing the benefits
hereinafter
specified in accordance with the terms hereof.
B)
In the event a
Person makes an offer which, if accepted by the Bank
and subsequently consummated, would constitute a Change in
Control,
the Executive agrees that he will not leave the employ of the
Bank
(other than as a result of Disability or upon Retirement, as
such
terms are hereinafter defined) and will render the services
contemplated in the recitals to this Agreement until such Change
in
Control offer has been abandoned or terminated or a change in
Control
has occurred.
4) Termination
following change in Control.
A)
If any of the
events constituting a Change in Control of the Bank
shall have occurred, the Executive shall be entitled to the
benefits
provided in Section 5 hereof upon the termination of the
Executive's
employment with the bank within twenty-four (24) months after
such
Change in Control, unless such termination is (i) because of
the
Executive's death, (ii) by the Bank for Cause or Disability or
(iii)
by the Executive other than for Good Reason.
B)
Notice of
Termination. Any purported termination by the Bank or by the
Executive following a Change in Control shall be communicated
by
written Notice of Termination to the other party hereto.
5) Severance
Upon Termination or During Disability; Other Agreements.
A)
During any
period following a Change in Control of the Bank that the
Executive fails to perform his duties as a result of incapacity due
to
physical or mental illness, the Executive shall continue to
receive
his base salary at the rate then in effect and any benefits or
awards
under any Plans shall continue to accrue during such period, to
the
extent not inconsistent with such Plans, until his employment
is
terminated pursuant to and in accordance with Sections 4(B), 15(d)
and
15(g) hereof. Thereafter, the Executive's benefits shall be
determined
in accordance with the Plans then in effect.
B)
If the
Executive's employment is terminated for cause following a
Change in Control of the Bank, the Bank shall pay to the Executive
his
base salary through the Date of Termination at the rate in effect
just
prior to the time a Notice of Termination is given plus any
benefits
or awards which pursuant to the terms of any Plans have been earned
or
become payable, but which have not yet been paid to the
Executive.
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Thereupon the Bank shall have no further obligations to the
Executive
under this Agreement.
C)
If, within
twenty-four (24) months after a Change in Control of the
Bank has occurred, the Executive's employment by the Bank is
terminated (i) by the Bank other than for Cause or Disability or
(ii)
by the Executive for Good Reason, then the Bank shall pay to
the
Executive, no later than the fifth (5th) day following the Date
of
Termination, without regard to any contrary provisions of any
Plan,
the following:
a) The
Executive's base salary through the Date of Termination
at the rate in effect just prior to the time a Notice of
Termination is given plus any benefits or awards which pursuant
to the terms of any Plans have been earned or become payable,
but
which have not yet been paid to the Executive (including
amounts
which previously had been deferred at the Executive's request);
b) An amount in
cash equal to two and one-half (2 1/2) times
(a) the higher of (1) the Executive's annual base salary on the
Date of Termination or (2) the Executive's annual base salary
in
effect immediately prior to the Change in Control, plus any
benefits or awards which pursuant to the terms of any Plans
which
could have been earned and payable, but which have not yet been
paid to the Executive (including amounts which previously had
been deferred at the Executive's request). For purposes of
calculating benefits or awards, said amount shall be the
average
amount (s) paid to Employee based upon the prior three (3)
years
under said plans.
For the purposes of this Agreement, the term "base salary"
shall
include any amounts deducted by the Bank with respect to the
Executive or for
his account pursuant to Sections 125 and 401(k) of the Code.
D)
If, within
twenty-four (24) months after a Change in Control of the
Bank has occurred, the Executive's employment with the Bank is
terminated (i) by the Bank other than for Cause or Disability, or
(ii)
by the executive for Good Reason, then the Bank shall maintain in
full
force and effect, for the continued benefit of the Executive and
his
dependents for a period terminating on the earliest of (a) 30
months
after the Date of Termination or (b) the commencement date of
equivalent benefits from a new employer, insured and
self-insured
employee welfare benefit Plans in which the executive was entitled
to
participate immediately prior to the date of Termination,
provided
that the Executive's continued participation is possible under
the
general terms and provisions of such plans (and any applicable
funding
media) and he continues to pay an amount equal to the
Executive's
regular contribution under such plans for such participation.
If
neither 30 months
after the Date of Termination the Executive has not
previously received, nor is then receiving, equivalent benefits
from a
new employer, the Bank shall offer the Executive continuation
of
coverage under COBRA as prescribed under Section 498OB of the Code.
At
the expiration of such continuation coverage (or, if COBRA
continuation coverage is not applicable to the Plan, then upon
the
expiration of the 30 month period beginning on the Termination
date),
the Bank shall arrange, at its sole cost and expense, to enable
the
Executive to convert him and his dependents' coverage under such
plans
to individual policies and
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programs upon the same terms as employees of the bank may apply
for
such conversions. In the event that the Executive's participation
in
any such Plan is barred, the Bank, at its sole cost and expense,
shall
arrange to have issued for the benefit of him and his
dependents
individual policies of insurance providing benefits
substantially
similar (on an after-tax basis) to those which the Executive
otherwise
would have been entitled to receive under such Plans pursuant to
this
paragraph (v) or, if such insurance is not available at a
reasonable
cost to the Bank, the Bank shall otherwise provide the Executive
and
his dependents with equivalent benefits (on an after-tax basis).
The
Executive shall not be required to pay any premiums or other
charges
in an amount greater than that which he would have paid in order
to
participate in such Plans.
E)
Except as
specifically provided in paragraph (D) above, the amount of
any payment provided for in this Section 5 shall not be
reduced,
offset or subject to recovery by the Bank by reason of any
compensation earned by the Executive as the result of employment
by
another employer after the Date of Termination, or otherwise.
6) Successors;
Binding Agreement.
A)
The Bank will
seek, by written request at least five (5) business days
prior to the time a Person becomes a Successor, to have such
Person,
by agreement in form and substance satisfactory to the
Executive,
assent to the fulfillment of the Bank's obligations under this
Agreement. Failure of such Person to furnish such assent by the
later
of (i) three (3) business days prior to the time such Person
becomes a
successor or (ii) two (2) business days after such Person receives
a
written request to so assent shall constitute Good Reason for
termination by the Executive of his employment if a change in
Control
of the Bank occurs or has occurred.
B)
This Agreement
shall inure to the benefit of and be enforceable by the
Executive's personal legal representatives, executors,
administrators,
successors, heirs, distributes, devisees and delegates. If the
Executive should die while any amount would still be payable to
him
hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms
of the Agreement to the Executive's devisee, delegate or other
designee or, if no such designee exists, to his estate.
C)
For purposes of
this Agreement, the Bank shall include any
subsidiaries and any corporation or other entity which is the
surviving or continuing entity in respect of any merger,
consolidation
or form of business combination in which the Bank ceases to
exist.
7) Fees and
Expenses; Mitigation.
A)
The Bank shall
reimburse the Executive, on a current basis, for all
reasonable legal fees and related expenses incurred by him in
connection with the Agreement following a Change in Control of
the
Bank, including without limitation, (i) all such fees and expenses,
if
any, incurred in contesting or disputing any termination of the
Executive's employment or (ii) the Executive's seeking to obtain
or
enforce any right or benefit provided by this Agreement, in each
case
regardless of whether or not his claim is
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upheld by a court of competent jurisdiction; provided by this
Agreement, provided, however, the Executive shall be required to
repay
any such amounts to the Bank to the extent that a court issues a
final
and non-appealable order setting forth the determination that
the
position taken by him was frivolous or advanced by him in bad
faith.
B)
The Executive
shall not be required to mitigate the amount of any
payment the Bank becomes obligated to make to him in connection
with
this Agreement, by seeking other employment or otherwise.
8) Taxes.
Subject to the provisions of Section 5(e), all payments to be
made
to
the Executive under this Agreement will be subject to required
withholding of federal, state and local income and employment
taxes.
9) Survival. The
respective obligations of, and benefits afforded to, the Bank
and
the Executive provided in Sections 5, 6(B), 7, 8, 12, and 14 of
this
Agreement shall survive Termination of this Agreement.
10) Notice. For the
purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing
and shall
be
deemed to have been duly given when delivered or mailed by United
States
registered mail, return receipt requested, postag
