FIRST KEYSTONE FINANCIAL, INC. FIRST KEYSTONE BANK AMENDED AND RESTATED TRANSITION, CONSULTING, NONCOMPETITION AND RETIREMENT AGREEMENT
Exhibit
10.3
FIRST
KEYSTONE FINANCIAL, INC.
FIRST
KEYSTONE BANK
AMENDED
AND RESTATED
This
Transition, Consulting, Noncompetition and Retirement Agreement (the
“Agreement”) by and between First Keystone Financial, Inc. (the “Company”),
First Keystone Bank (the “Bank”) and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the “Consultant”) is
hereby amended and restated effective as of November 25,
2008.
WHEREAS,
the Company and the Consultant were parties to an employment agreement dated as
of December 1, 2004, pursuant to which the Consultant served as Chief Executive
Officer of the Company (the “Company Employment Agreement”);
WHEREAS,
the Bank and the Consultant were parties to an employment agreement dated as of
December 1, 2004, pursuant to which the Consultant served as Chief Executive
Officer of the Bank (the “Bank Employment Agreement”);
WHEREAS,
the Consultant was a participant in the Supplemental Executive Retirement Plan
adopted by the Bank effective March 31, 2004 (the “SERP”);
WHEREAS,
the Company, the Bank and the Consultant entered into a Transition, Consulting,
Noncompetition and Retirement Agreement dated as of March 23, 2005 (the “Prior
Agreement”), which superseded the Company Employment Agreement, the Bank
Employment Agreement and the SERP (collectively, the “Plans”), and by which the
Consultant agreed to relinquish his rights under the Plans in exchange for the
payments and benefits set forth in the Prior Agreement;
WHEREAS,
the Consultant became the interim Chief Executive Officer of both the Company
and the Bank effective as of August 15, 2008 and is currently serving in such
capacity;
WHEREAS,
when the Company and the Bank hire a new president and chief executive officer,
the Consultant will relinquish his position as the interim Chief Executive
Officer and will continue to provide Consulting Services for the remainder of
the Consulting Period (as such terms are defined below); and
WHEREAS,
the Company and the Bank desire to amend and restate the Prior Agreement in
order to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and to reflect the Consultant’s current position as the
interim Chief Executive Officer;
NOW,
THEREFORE, in consideration of the mutual covenants set forth herein and other
good and valuable consideration, the parties hereto agree as
follows:
1. Effective
Date. The “Effective Date” of the Agreement is May 1,
2005.
2. Consulting
Period. The Company and the Bank hereby agree to engage the
Consultant, and the Consultant hereby agrees to provide services to the Company
and the Bank, subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on April 30, 2010 (the
“Consulting Period”).
3. Consulting
Services.
(a) Duties. During
the Consulting Period, the Consultant shall report to the President of the
Company and the Bank, except that during the time period the Consultant serves
as the interim Chief Executive Officer of the Company and the Bank, the
Consultant shall report directly to the Boards of Directors of the Company and
the Bank. During the Consulting Period, the Consultant shall provide
his personal advice and counsel to the Company and the Bank regarding their
operations, customer relationships, growth and expansion opportunities and other
business matters that may arise in connection with the business and operations
of the Company and its subsidiaries in the Commonwealth of Pennsylvania and as
may be reasonably requested by the President of the Company and the Bank or his
designee (or by the Boards of Directors of the Company and the Bank while the
Consultant is serving as the interim Chief Executive Officer) from time to time
(collectively, the “Consulting Services”). Except as set forth below,
the Consulting Services will include, without limitation, monthly meetings or
teleconferences between the Consultant and the President of the Company and the
Bank; efforts by the Consultant to enhance the business activities of the
Company and its subsidiaries in the Commonwealth of Pennsylvania, including
without limitation meeting with existing and potential customers of the Company
and its subsidiaries located in such state; attendance at certain public
functions in the Commonwealth of Pennsylvania on behalf of the Company and its
subsidiaries; attendance at meetings of the Board of Directors of the Company
and the Bank to report on the business activities of the Company and its
subsidiaries in the Commonwealth of Pennsylvania and attendance at certain
functions of the Company and its subsidiaries. During the time period
that the Consultant serves as the interim Chief Executive Officer of the Company
and the Bank, he shall manage the operations of the Company and the Bank,
oversee the officers that report to him, oversee the implementation of the
policies adopted by the Boards of Directors of the Company and the Bank, and
perform such executive services for the Company and the Bank as may be
consistent with his title of interim Chief Executive
Officer. Consulting Services may be provided in person,
telephonically, electronically or by correspondence to the extent appropriate
under the circumstances.
(b) Geographic
Location. The Consultant shall provide the Consulting Services
in the Commonwealth of Pennsylvania, including without limitation the market
areas of the Company and the Bank.
(c) Time
Limitation. Other than during the time period that the
Consultant serves as the interim Chief Executive Officer of the Company and the
Bank, the Consultant shall not be required to provide Consulting Services
hereunder for more than 25 hours per week or 100 hours in any calendar month
during the Consulting Period, with the maximum monthly hours being pro-rated for
the first and last month of the Consulting Period.
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(d) Directorship. The
Consultant was appointed as Chairman of the Board of Directors of the Bank as of
the Effective Date. The Consultant shall continue to serve as
Chairman of the Board of Directors of the Company and of the Bank throughout the
Consulting Period, provided that the Consultant continues to be a director in
good standing during such period. In addition to the compensation set
forth in Section 4 hereof and any fees paid to directors of the Company and the
Bank for attendance at meetings, the Consultant shall receive an annual fee of
$15,000.00 for serving as Chairman of the Board of the Company and the Bank
during the Consulting Period.
4. Compensation.
(a) Monthly
Payments. In consideration of the obligations and commitments
of the Consultant under this Agreement, including but not limited to Sections 3
and 8 hereof, the Company and/or the Bank agrees to pay to the Consultant an
amount equal to $12,500.00 per month on the first business day of each month
during the Consulting Period, commencing May 1, 2005 through and including April
1, 2010 (the “Monthly Fee”). No additional compensation shall be paid
to the Consultant during the time period that he serves as the interim Chief
Executive Officer of the Company and the Bank. During the Consulting
Period, the Consultant shall be treated as an independent contractor and shall
not be deemed to be an employee of the Company or any affiliate or subsidiary of
the Company.
(b) Medical and
Other Benefits. The Company and the Bank shall provide medical insurance
for the benefit of the Consultant and his spouse during the Consulting Period,
at no cost to the Consultant and his spouse, with the terms of such coverage
being similar to the coverage provided by the Company and the Bank to their
employees. In addition, the Company and the Bank shall provide dental
and long-term care insurance coverage for the benefit of the Consultant and his
spouse during the Consulting Period, at no cost to the Consultant and his
spouse, with the terms of such coverage being similar to the coverage provided
by the Company and the Bank as of the Effective Date of this
Agreement. Any insurance premiums payable by the Company and the Bank
pursuant to this Section 4(b) shall be payable at such times and in such amounts
(except that the Company and the Bank shall also pay any employee portion of the
premiums) as if the Consultant was still an employee of the Company and the
Bank, subject to any increases in such amounts imposed by the insurance company
or COBRA, and the amount of insurance premiums required to be paid by the
Company and the Bank in any taxable year shall not affect the amount of
insurance premiums required to be paid by the Company and the Bank in any other
taxable year; and provided further that if the Consultant’s participation in any
group insurance plan is barred, the Company and the Bank shall either arrange to
provide the Consultant with insurance benefits substantially similar to those
which the Consultant was entitled to receive under such group insurance plan or,
if such coverage cannot be obtained, pay a lump sum cash equivalency amount
within thirty (30) days following such bar for the then remaining period based
on the annualized rate of premiums then being paid by the Company and the
Bank.
(c) Existing
Stock Options. The 9,750 vested stock options held by the
Consultant as of the Effective Date of this Agreement to purchase shares of
common stock of the Company shall remain outstanding and exercisable in
accordance with their terms, and the Consultant had three months following the
Effective Date to exercise his incentive stock options.
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(d) Employee
Benefit Plans. The Consultant shall be entitled to receive his
vested benefits under the Company=s
Employee Stock Ownership Plan and the Bank=s
401(k) Profit Sharing Plan as of the Effective Date in accordance with the terms
of such plans. As of the Effective Date, the Consultant shall no longer be
entitled to participate in any of the employee benefit plans or programs offered
by the Company, the Bank or any of their subsidiaries, and no additional
benefits shall accrue or vest on behalf of the Consultant under such employee
benefit plans or programs after the Effective Date, except as set forth in
Sections 4(b) and 4(c) hereof.
(e) Lump Sum
Payment. In recognition of the years of service that the
Consultant provided to the Company and the Bank prior to the Effective Date and
in satisfaction of the Consultant’s accrued and/or carried over but unused
vacation leave, the Consultant acknowledges the receipt from the Company and/or
the Bank prior to the Effective Date of a lump sum cash payment equal to
$165,519.27.
(f) Use of an
Automobile. During the Consulting Period, the Company and/or
the Bank shall provide the Consultant with the continued use of the automobile
that was provided for the Consultant’s use immediately prior to the Effective
Date. At the end of the Consulting Period, the Company and/or the
Bank shall transfer title to the automobile to the Consultant for no additional
consideration.
(g) Expenses. The
Company and/or the Bank shall reimburse the Consultant or otherwise provide for
or pay for all reasonable expenses incurred by the Consultant at the request of
the Company and/or the Bank, including, but not by way of limitation, the costs
of insurance, repair, maintenance and licensing of the automobile provided by
Section 4(f) hereof, subject to such reasonable documentation as may be
requested by the Company and/or the Bank. If such expenses are paid
in the first instance by the Consultant, the Company and/or the Bank shall
reimburse the Consultant therefor upon receipt of such reasonable documentation
as may be requested by the Company. Such reimbursements or payments
shall be made promptly by the Company or the Bank and, in any event, no later
than March 15 of the year immediately following the year in which such expenses
were incurred.
(h) Proration. The
Consultant’s compensation, benefits and expenses shall be paid by the Company
and the Bank in the same proportion as the time and services actually expended
by the Consultant on behalf of the Company and the Bank.
5. Termination
of Consulting Services.
(a) Death or
Disability. The Consultant’s services shall terminate
automatically upon the Consultant’s death during the Consulting
Period. If the Consultant becomes Disabled during the Consulting
Period (pursuant to the definition of Disability set forth below), the Company
and/or the Bank may give to the Consultant written notice in accordance with
Section 15 of this Agreement of its intention to terminate the Consultant’s
services. In such event, the Consultant’s services with the Company
and the Bank shall terminate effective on the 60th day after receipt of such
notice by the Consultant (the “Disability Effective Date”), provided that,
within the 60 days after such receipt, the Consultant shall not have returned to
performance of the Consultant’s duties. For purposes of this
Agreement, “Disability” shall mean the Consultant 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 can be expected to
last for a continuous period of not less than 12 months, as determined by a
physician selected by the Company or its insurers and reasonably acceptable to
the Consultant or the Consultant’s legal representative.
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(b) Cause. The
Company and the Bank may terminate the Consultant’s services during the
Consulting Period for Cause. For purposes of this Agreement, “Cause”
shall mean:
(i) the
continued failure of the Consultant to perform substantially the Consultant’s
duties with the Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the Consultant by the Board
of Directors of the Company or the Bank which specifically identifies the manner
in which the Board of Directors believes that the Consultant has not
substantially performed the Consultant’s duties and after the Consultant has
been given a 15 day period to cure such failure; or
(ii) the
willful engaging by the Consultant in illegal conduct or gross misconduct which
violates any code of conduct of the Company and/or the Bank or which is
otherwise materially and demonstrably injurious to the Company or the Bank;
or
(iii) conviction
of a felony or a guilty or nolo
contendere plea by the Consultant with respect
thereto.
For
purposes of this provision, no act or failure to act, on the part of the
Consultant, shall be considered “willful” unless it is done, or omitted to be
done, by the Consultant in bad faith or without reasonable belief that the
Consultant’s action or omission was in the best interests of the Company and/or
the Bank. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board of Directors or upon the
instructions of the President or a senior officer of the Company and/or the Bank
or based upon the advice of counsel for the Company and/or the Bank shall be
conclusively presumed to be done, or omitted to be done, by the Consultant in
good faith and in the best interests of the Company and the Bank. The
cessation of the services of the Consultant for conduct described in
subparagraph (i) or (ii) above shall not be deemed to be for Cause unless and
until there shall have been delivered to the Consultant a copy of a resolution
duly adopted by the affirmative vote of a majority of the entire membership of
the Board of Directors of the Company or the Bank at a meeting of the Board of
Directors called and held for such purpose (after not less than ten days’
advance notice is provided to the Consultant and the Consultant is given an
opportunity, together with counsel chosen by the Consultant, to be heard before
the Board of Directors), finding that, in the good faith opinion of the Board,
the Consultant is guilty of the conduct described in subparagraph (i) or (ii)
above, and specifying the particulars thereof in detail. The Company
and/or the Bank may suspend the Consultant’s authority (with a continuation of
the Monthly Fee during such period of suspension) after the provision of a
notice of intention to terminate the Consultant’s services for conduct described
in subparagraph (i) or (ii) above and prior to the time the Consultant is given
an opportunity to meet with the Board of Directors, and any such suspension
shall not constitute “Good Reason” as defined in Section 5(c)
below.
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(c) Good
Reason. The Consultant’s services may be terminated by the
Consultant for Good Reason. For purposes of this Agreement, “Good
Reason” shall mean, in the absence of a written consent of the Consultant, any
material breach of this Agreement by the Company and/or the Bank, including
without limitation any of the following: (A) a material reduction in the Monthly
Fees payable to the Consultant; or (B) a material diminution in the authority,
duties or responsibilities of the individual to whom the Consultant is required
to report; provided, however, that prior to any termination of service for Good
Reason, the Consultant must first provide written notice to the Company and the
Bank within ninety (90) days of the initial existence of the condition,
describing the existence of such condition, and the Company and the Bank shall
thereafter have the right to remedy the condition within thirty (30) days of the
date the Company and the Bank received the written notice from the
Consultant. If the Company and the Bank remedy the condition within
such thirty (30) day cure period, then no Good Reason shall be deemed to exist
with respect to such condition. If the Company and the Bank do not
remedy the condition within such thirty (30) day cure period, then the
Consultant may deliver a Notice of Termination for Good Reason at any time
within sixty (60) days following the expiration of such cure
period.
(d) Notice of
Termination. Any termination by the Company and/or the Bank
for Cause, or by the Consultant for Good Reason, shall be communicated by a
written Notice of Termination to the other party hereto given in accordance with
Section 15 of this Agreement. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Consultant’s services under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than 30 days after the giving of such
notice). The failure by the Consultant or the Company and/or the Bank
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Consultant or the Company and/or the Bank, respectively, hereunder or
preclude the Consultant or the Company and/or the Bank, respectively, from
asserting such fact or circumstance in enforcing the Consultant’s or the
Company’s or the Bank’s rights hereunder.
(e) Date of
Termination. “Date of Termination” means (i) if the
Consultant’s services are terminated by the Company and/or the Bank for Cause,
or by the Consultant for Good Reason, the date on which the Notice of
Termination is given, or any later date specified therein within 30 days of
delivery of such notice, as the case may be, or (ii) if the Consultant’s
services are terminated for any other reason, the Date of Termination shall be
the date specified in such Notice of Termination.
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6. Obligations
of the Company and the Bank upon Termination of Consulting
Services.
(a) Good
Reason; Other Than for Cause, Death or Disability. If, during
the Consulting Period, the Company and/or the Bank shall terminate the
Consultant’s services other than for Cause, Death or Disability or the
Consultant shall terminate his services by the Company and the Bank for Good
Reason, the Company and/or the Bank shall pay to the Consultant in a lump sum in
cash within 30 days after the Date of Termination the sum of (1) any accrued but
unpaid Monthly Fee of the Consultant through the Date of Termination (the
“Accrued Obligations”), (2) an amount equal to the present value of the Monthly
Fees that would have been paid through and including April 30, 2010 (the
“Remaining Monthly Fees”), and (3) the present value of the Retirement Benefits
(as defined in Section 9 hereof), with the present values calculated as set
forth in Section 6(e) below. In addition, the Company and the Bank
shall provide the Consultant and his spouse with the medial and other benefits
set forth in Section 4(b) hereof through April 30, 2010 (the “Medical Benefits”)
and shall transfer title to the automobile to the Consultant as provided in
Section 4(f) hereof.
(b) Death. If
the Consultant’s services are terminated by reason of the Consultant’s death
during the Consulting Period, the Company and/or the Bank shall pay to the
Consultant’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days after the Date of Termination the sum of (1) any Accrued Obligations,
(2) the present value of the Remaining Monthly Fees, and (3) the present value
of the Retirement Benefits (as defined in Section 9 hereof), with the present
values calculated as set forth in Section 6(e) below. In addition,
the Company and the Bank shall provide the Consultant’s spouse with the Medical
Benefits and shall transfer title to the automobile to the Consultant’s spouse
as provided in Section 4(f) hereof.
(c) Disability. If
the Consultant’s services are terminated by reason of the Consultant’s
Disability during the Consulting Period, the Company and/or the Bank shall pay
to the Consultant in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) any Accrued Obligations, and (2) the present value of
the Retirement Benefits (as defined in Section 9 hereof), with the present value
calculated as set forth in Section 6(e) below. In addition, the
Company and the Bank shall provide the Consultant and his spouse with the
Medical Benefits and shall transfer title to the automobile to the Consultant as
provided in Section 4(f) hereof.
(d) Cause;
Other than for Good Reason. If the Consultant’s services shall
be terminated for Cause or the Consultant terminates his services without Good
Reason during the Consulting Period, this Agreement shall terminate without
further obligations to the Consultant other than for payment of the Accrued
Obligations. The Accrued Obligations shall be paid to the Consultant
in a lump sum in cash within 30 days of the Date of
Termination.
(e) Calculation
of Present Values. In calculating the present value of any
benefits hereunder that would otherwise be paid in the future, the future
benefits shall be discounted to present value using a discount rate equal to
120% of the applicable short-term, mid-term or long-term federal rate, as
published by the Internal Revenue Service for the month in which the Date of
Termination occurs.
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7. Full
Settlement. Except as provided in Section 8(d), the
obligations of the Company and/or the Bank to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company and/or the Bank may have against the Consultant or
others. In no event shall the Consultant be obligated to seek other
services or take any other action by way of mitigation of the amounts payable to
the Consultant under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Consultant obtains other
services.
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8.
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Non-Compete;
Confidentiality.
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(a) The
Consultant agrees that during the Consulting Period the Consultant will not,
directly or indirectly, (i) become a director, officer, employee, principal,
agent, consultant or independent contractor of any insured depository
institution, trust company or parent holding company of any such institution or
company (excluding the Company and the Bank) which has an office in the
Commonwealth of Pennsylvania (a “Competing Business”), provided, however, that
this provision shall not prohibit the Consultant from owning bonds, non-voting
preferred stock or up to five percent (5%) of the outstanding common stock of
any such entity if such common stock is publicly traded, (ii) solicit or induce,
or cause others to solicit or induce, any employee of the Company or any of its
subsidiaries to leave the services of such entities or (iii) solicit (whether by
mail, telephone, personal meeting or any other means) any customer of the
Company or any of its subsidiaries to transact business with any other entity,
whether or not a Competing Business, or to reduce or refrain from doing any
business with the Company or its subsidiaries, or interfere with or damage (or
attempt to interfere with or damage) any relationship between the Company or its
subsidiaries and any such customers.
(b) Except as
required by law or regulation (including without limitation in connection with
any judicial or administrative process or proceeding), the Consultant shall keep
secret and confidential and shall not disclose to any third party (other than
the Company or any of its subsidiaries or any persons employed or engaged by
such entities) in any fashion or for any purpose whatsoever any information
regarding the Company or any of its subsidiaries which is not available to the
general public to which the Consultant had access at any time during the course
of the Consultant’s service to the Company or any of its subsidiaries,
including, without limitation, any such information relating
to: business or operations; plans, strategies, prospects or
objectives; products, technology, processes or specifications; research and
development operations or plans; customers and customer lists; distribution,
sales, service, support and marketing practices and operations; financial
condition, results of operations and prospects; operational strengths and
weaknesses; and personnel and compensation policies and
procedures.
(c) The
Consultant agrees that damages at law will be an insufficient remedy to the
Company and the Bank in the event that the Consultant violates any of the
provisions of paragraph (a) or (b) of this Section 8, and that the Company
and/or the Bank may apply for and, upon the requisite showing, have injunctive
relief in any court of competent jurisdiction to restrain the breach or
threatened or attempted breach of or otherwise to specifically enforce any of
the covenants contained in paragraph (a) or (b) of this Section
8. The Consultant hereby consents to any injunction (temporary or
otherwise) which may be issued against the Consultant and to any other court
order which may be issued against the Consultant from violating, or directing
the Consultant to comply with, any of the covenants in paragraph (a) or (b) of
this Section 8. The Consultant also agrees that such remedies shall
be in addition to any and all remedies, including damages, available to the
Company and/or the Bank against the Consultant for such breaches or threatened
or attempted breaches.
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(d) In
addition to the rights of the Company and the Bank set forth in paragraph (c) of
this Section 8, in the event that the Consultant shall violate the terms and
conditions of paragraphs (a) or (b) of this Section 8, the Company and its
subsidiaries may terminate any payments or benefits of any type and regardless
of source payable by the Company or its subsidiaries, if applicable, to the
Consultant, other than with respect to payments or benefits to the Consultant
under plans or arrangements that are covered by the Employee Retirement Income
Security Act of 1974, as amended.
9. Retirement
Benefits.
(a) Retirement
Benefits. If the Consultant satisfies all of his obligations
under Sections 3 and 8 of this Agreement, then following the end of the
Consulting Period on April 30, 2010, the Company and/or the Bank shall pay to
the Consultant an annual supplemental retirement benefit of $135,175.00 per
year, payable in equal monthly installments on the first day of each month
commencing on May 1, 2010 and continuing thereafter for a period of ten (10)
years (i.e., ten years certain and continuous) (the “Retirement
Benefits”). The Retirement Benefits are subject to earlier payment as
set forth in Section 6 hereof.
(b) Death
Following the End of the Consulting Period. If the Consultant
dies after the end of the Consulting Period but before all of the Retirement
Benefits have been paid, then the Company and/or the Bank shall pay to the
Consultant’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days after the date the Company and/or the Bank receives notice of the
Consultant’s death, the present value of the remaining unpaid Retirement
Benefits. The present value shall be calculated in accordance with
Section 6(e) hereof, with the date of death substituted for the Date of
Termination.
(c) Supplemental
Insurance. During the ten years following the end of the Consulting
Period, the Company and/or the Bank shall provide medical insurance which
supplements Medicare coverage for the benefit of the Consultant and his spouse
at no cost to the Consultant and his spouse. Any insurance premiums
payable by the Company and the Bank pursuant to this Section 9(c) shall be
payable at such times and in such amounts as required by the insurance company,
and the amount of insurance premiums required to be paid by the Company and the
Bank in any taxable year shall not affect the amount of insurance premiums
required to be paid by the Company and the Bank in any other taxable year;
provided that if the Consultant’s participation in any insurance plan is barred,
the Company and the Bank shall either arrange to provide the Consultant with
insurance benefits substantially similar to those which the Consultant was
entitled to receive under such insurance plan or, if such coverage cannot be
obtained, pay a lump sum cash equivalency amount within thirty (30) days
following such bar for the then remaining period based on the annualized rate of
premiums then being paid by the Company and the Bank.
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10. Designation
of Beneficiary. The Consultant may from time to time, by
providing a written notification to the Company and the Bank, designate any
person or persons (who may be designated concurrently, contingently or
successively), his estate or any trust or trusts created by him to receive
benefits which are payable under this Agreement. Each beneficiary
designation shall revoke all prior designations and will be effective only when
filed in writing with the Compensation Committees of the Boards of Directors of
the Company and the Bank (the “Committee”). If the Consultant fails
to designate a beneficiary or if a beneficiary dies before the date of the
Consultant’s death and no contingent beneficiary has been designated, then the
benefits which are payable as aforesaid shall be paid to his
estate. If benefits commence to be paid to a beneficiary and such
beneficiary dies before all benefits to which such beneficiary is entitled have
been paid, the remaining benefits shall be paid to the successive beneficiary or
beneficiaries designated by the Consultant, if any, and if none to the estate of
such beneficiary.
11. Claims
Procedure. The Consultant or his designated beneficiary or
beneficiaries may make a claim for benefits under this Agreement by filing a
written request with the Committee. If a claim is wholly or partially
denied, the Committee shall furnish the claimant with written notice setting
forth in a manner calculated to be understood by the claimant;
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(a)
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the
specific reason or reasons for the
denial;
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(b) specific
reference to the pertinent provisions of this Agreement on which the denial is
based;
(c) a
description of any additional material or information necessary for the claimant
to perfect his claim and an explanation why such material or information is
necessary; and
(d) appropriate
information as to the steps to be taken if the claimant wishes to submit his
claim for review.
Such
notice shall be furnished to the claimant within ninety (90) days after the
receipt of his claim, unless special circumstances require an extension of time
for processing his claim. If an extension of time for processing is
required, the Committee shall, prior to the termination of the initial ninety
(90) day period, furnish the claimant with written notice indicating the special
circumstances requiring an extension and the date by which the Committee expects
to render its decision. In no event shall an extension exceed a
period of ninety (90) days from the end of the initial ninety (90) day
period.
A
claimant may request the Committee to review a denied claim. Such
request shall be in writing and must be delivered to the Committee within sixty
(60) days after receipt by the claimant of written notification of denial of
claim. A claimant or his duly authorized representative
may:
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(a) review
pertinent documents, and
(b) submit
issues and comments in writing.
The
Committee shall notify the claimant of its decision on review not later than
sixty (60) days after receipt of a request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later than one hundred
twenty (120) days after receipt of a request for review. If an
extension of time for review is required because of special circumstances,
written notice of the extension must be furnished to the claimant prior to the
commencement of the extension. The Committee’s decision on the review
shall be in writing and shall include specific reasons for the decision, as well
as specific references to the pertinent provisions of this Agreement on which
the decision is based.
12. Resolution
of Disputes. With the exception of proceedings for equitable
relief brought pursuant to Section 8(c) of this Agreement, any dispute or
controversy arising under or in connection with this Agreement may, at the
option of any party hereto, be settled exclusively by arbitration in Media,
Pennsylvania in accordance with the rules of the American Arbitration
Association then in effect and at the expense of the Company and/or the
Bank. Judgment may be entered on the arbitrator’s award in any court
having jurisdiction. If a claim for any payments or benefits under
this Agreement or any other provision of this Agreement is disputed by the
Company and/or the Bank or the Consultant, the Consultant shall, to the extent
and at such time or times as is not prohibited by applicable law, regulation,
regulatory bulletin and/or any other regulatory requirements, as the same exists
or may be hereafter promulgated or amended, if the Consultant is successful in
his claim, be reimbursed for all reasonable attorney’s fees and expenses
incurred by the Consultant in pursuing such claim. Any payments made
pursuant to this Section 12 shall be paid promptly by the Company and/or the
Bank and, in any event, within sixty (60) days following the resolution of such
dispute.
13. Representations
and Warranties. Each party hereto represents and warrants to
each other that they have carefully read this Agreement and consulted with
respect thereto with their respective counsel and that each of them fully
understands the content of this Agreement and its legal effect. Each
party hereto also represents and warrants that this Agreement is a legal, valid
and binding obligation of such party which is enforceable against it in
accordance with its terms.
14. Successors
and Assigns. This Agreement will inure to the benefit of and
be binding upon the Consultant and his assigns and upon the Company and the
Bank, including any successor to the Company or the Bank by merger or
consolidation or any other change in form or any other person or firm or
corporation to which all or substantially all of the assets and business of the
Company or the Bank may be sold or otherwise transferred. Any
successor to the Company or the Bank by merger, consolidation or other change in
form shall expressly in writing assume all obligations of the Company and the
Bank hereunder as fully as if it had been originally made a party hereto, and
this Agreement shall continue in effect following any change in control of the
Company and/or the Bank. This Agreement may not be assigned by any
party hereto without the written consent of the other party.
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15. Notices. Any
communication to a party required or permitted under this Agreement, including
any notice, direction, designation, consent, instruction, objection or waiver,
shall be in writing and shall be deemed to have been given at such time as it is
delivered personally, or five days after mailing if mailed, postage prepaid, by
registered or certified mail, return receipt requested, addressed to such party
at the address listed below or at such other address as one such party may by
written notice specify to the other party or parties, as
applicable:
If to the
Consultant:
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
At the
address last appearing on the
personnel
records of the Bank
If to the
Company and the Bank:
First
Keystone Financial, Inc.
First
Keystone Bank
▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
16. Withholding. The
Company and/or the Bank may withhold from any amounts payable under this
Agreement such federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
17. Unsecured
Promise. Nothing contained in this Agreement shall create or
require the Company or the Bank to create a trust of any kind to fund the
benefits payable hereunder. Any insurance policy or other asset
acquired or held by, or on behalf of, the Company and/or the Bank or funds
allocated by the Company and/or the Bank in connection with the liabilities
assumed by the Company and/or the Bank pursuant to this Agreement shall not be
deemed to be held under any trust for the benefit of the Consultant or his
beneficiaries or to be a security for the performance of the obligations of the
Company and/or the Bank pursuant hereto but shall be and remain a general asset
of the Company and/or the Bank. To the extent that the Consultant or
any other person acquires a right to receive payments from the Company and/or
the Bank hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company and/or the Bank.
18. Spendthrift
Provision. Neither the Consultant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be non-assignable and
non-transferable. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by the Consultant or any
other person, nor be transferable by operation of law in the event of the
Consultant’s or any other person’s bankruptcy or insolvency.
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19. Entire
Agreement; Severability.
(a) This
Agreement incorporates the entire understanding between the parties relating to
the subject matter hereof, recites the sole consideration for the promises
exchanged and supersedes any prior agreements between the Company and the
Consultant or between the Bank and the Consultant with respect to the subject
matter hereof, including but not limited to the Plans and the Prior
Agreement. In reaching this Agreement, no party has relied upon any
representation or promise except those set forth herein.
(b) Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be only so broad as
is enforceable. In all such cases, the parties shall use their
reasonable best efforts to substitute a valid, legal and enforceable provision
which, insofar as practicable, implements the original purposes and intents of
this Agreement.
20. Amendment;
Waiver.
(a) This
Agreement may not be amended, supplemented or modified except by an instrument
in writing signed by each party hereto; provided, however, that notwithstanding
anything in this Agreement to the contrary, the Company and the Bank may amend
in good faith any terms of this Agreement, including retroactively, in order to
comply with Section 409A of the Internal Revenue Code of 1986, as
amended.
(b) Failure
to insist upon strict compliance with any of the terms, covenants or conditions
hereof shall not be deemed a waiver of such term, covenant or
condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or
power hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or
times.
21. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, and all of which shall constitute one and the same
Agreement.
22. Governing
Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and entirely to be performed within such
jurisdiction.
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23. Headings. The
headings of sections in this Agreement are for convenience of reference only and
are not intended to qualify the meaning of any section. Any reference
to a section number shall refer to a section of this Agreement, unless otherwise
stated.
24. Release of
the Company and Related Parties.
(a) In
consideration of the payments and benefits to be provided to the Consultant
pursuant to this Agreement, the sufficiency of which is acknowledged hereby, the
Consultant, with the intention of binding himself and his heirs, executors,
administrators and assigns, does hereby release, remise, acquit and forever
discharge the Company and its subsidiaries and affiliates (the “Company
Affiliated Group”), their present and former officers, directors,
executives, agents, attorneys and employees, and the successors, predecessors
and assigns of each of the foregoing (collectively, the “Company
Released Parties”), of and from any and all claims, actions, causes of
action, complaints, charges, demands, rights, damages, debts, sums of money,
accounts, financial obligations, suits, expenses, attorneys’ fees and
liabilities of whatever kind or nature in law, equity or otherwise, whether
accrued, absolute, contingent, unliquidated or otherwise and whether now known
or unknown, suspected or unsuspected, which the Consultant, individually or as a
member of a class, had, owned or held as of the Effective Date, or had at any
time prior to the Effective Date had, owned or held, against any Company
Released Party in any capacity, including, without limitation, any and all
claims (i) arising out of or in any way connected with the Consultant’s service
to any member of the Company Affiliated Group (or the predecessors thereof) in
any capacity, or the termination of such service in any such capacity, (ii) for
severance or vacation benefits, unpaid wages, salary or incentive payments,
other than base salary accrued but unpaid as of the Effective Date, (iii) for
breach of contract, wrongful discharge, impairment of economic opportunity,
defamation, intentional infliction of emotional harm or other tort, (iv) for any
violation of applicable state and local labor and employment laws (including,
without limitation, all laws concerning unlawful and unfair labor and employment
practices), (v) for employment discrimination under any applicable federal,
state or local statute, provision, order or regulation, and including, without
limitation, any claim under Title VII of the Civil Rights Act of 1964 (“Title
VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the
Americans with Disabilities Act (“ADA”),
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
the Age Discrimination in Employment Act (“ADEA”)
and any similar or analogous state statute, and (vi) under the Plans, excepting
only:
(A) the
rights of the Consultant (i) relating to the vested stock options set forth in
Section 4(c) hereof (collectively, the “Equity
Arrangements”) and (ii) as a stockholder of the
Company;
(B) the
right of the Consultant to receive COBRA continuation coverage in accordance
with applicable law;
(C) rights
to indemnification the Consultant may have under (i) applicable corporate law,
(ii) the articles of incorporation, charter or bylaws of any Company Released
Party, (iii) any other agreement between the Consultant and a Company Released
Party, or (iv) as an insured under any director’s and officer’s liability
insurance policy now or previously in force;
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(D) claims
for vested benefits under any health, disability, retirement, life insurance or
other similar “employee benefit plan” (within the meaning of Section 3(3) of
ERISA) of the Company Affiliated Group existing as of the Effective Date (the
“Company
Benefit Plans”); and
(E) the
rights of the Consultant under this Agreement.
(b) The
Consultant acknowledges and agrees that the release of claims set forth in this
Section 24 is not to be construed in any way as an admission of any liability
whatsoever by any Company Released Party, with any such liability being
expressly denied.
(c) The
release of claims set forth in this Section 24 applies to any relief no matter
how called, including, without limitation, wages, back pay, front pay,
compensatory damages, liquidated damages, punitive damages, damages for pain or
suffering, costs, and attorney’s fees and expenses.
(d) The
Consultant specifically acknowledges that his acceptance of the terms of the
release of claims set forth in this Section 24 is, among other things, a
specific waiver of his rights, claims and causes of action under Title VII,
ADEA, ADA and any state or local law or regulation in respect of discrimination
of any kind.
(e) The
Consultant had a period of 21 days to consider whether to execute the Prior
Agreement. To the extent the Consultant executed the Prior Agreement within less
than twenty-one (21) days after its delivery to him, the Consultant hereby
acknowledges that his decision to execute such Agreement prior to the expiration
of such twenty-one (21) day period was entirely
voluntary. Following the Consultant’s acceptance of the terms and
execution of the Prior Agreement, the Consultant had the right for a period of
seven days following (and not including) the date of execution to revoke the
Prior Agreement. Since no such revocation occurred, the Prior Agreement became
irrevocable in its entirety, and binding and enforceable against the Consultant,
on the day next following the day on which the foregoing 7 day period
elapsed.
(f) The
Consultant acknowledges and agrees that he has not, with respect to any
transaction or state of facts existing prior to the Effective Date hereof, filed
any complaints, charges or lawsuits against any Company Released Party with any
governmental agency, court or tribunal.
(g) In addition to
any other remedy available to the Company and the Bank hereunder, in the event
that, as a result of a challenge brought by a Consultant Released Party (as
defined below), the release of claims set forth in Section 24 becomes null and
void or is otherwise determined not to be enforceable, then the obligation of
the Company and/or the Bank to make any additional payments or to provide any
additional benefits under this Agreement shall immediately cease to be of any
force and effect, and the Consultant shall promptly return to the Company and
the Bank any payments or benefits the provision of which by the Company and the
Bank was conditioned on the enforceability of this
Agreement.
(h) Notwithstanding
any other provision of this Agreement to the contrary, in consideration of any
payments to be provided by the Company and/or the Bank to the Consultant under
Section 6 of this Agreement, the Consultant (or, if applicable, his legal
representatives) upon termination of the Consultant’s services by the Company
and/or the Bank shall execute a general release of claims in favor of the
Company, its affiliates, subsidiaries and personnel in a form similar to that
set forth in this Section 24 and which is reasonably acceptable to the Company
and the Bank. The Consultant (or his legal representatives) shall not be
eligible for any payments under Section 6 of this Agreement until the Consultant
(or his legal representatives) has executed such a general
release.
15
25. Release of
Claims by the Company and the Bank.
(a) The
Company and the Bank, with the intention of binding themselves and their
subsidiaries, affiliates, predecessors and successors and their directors and
officers (collectively, the “Releasing Entities”), do hereby release, remise,
acquit and forever discharge the Consultant and his heirs, estate, executors,
administrators and assigns (collectively, the “Consultant
Released Parties”), of and from any and all claims, actions, causes of
action, complaints, charges, demands, rights, damages, debts, sums of money,
accounts, financial obligations, suits, expenses, attorneys’ fees and
liabilities of whatever kind or nature in law, equity or otherwise, whether
accrued, absolute, contingent, unliquidated or otherwise and whether now known
or unknown, suspected or unsuspected, which the Company, the Bank and their
subsidiaries, affiliates, predecessors and successors, individually or as a
member of a class, had, owned or held as of the Effective Date, or had at any
time prior to the Effective Date had, owned or held, against any Consultant
Released Party, excepting only:
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(A)
the rights of the Releasing Entities under this Agreement, the Equity
Arrangements and the Company Benefit Plans;
and
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(B)
the rights of the Releasing Entities arising by reason of the Consultant
having committed a crime or an act or omission to act which constitutes
fraud, willful misconduct or gross
negligence.
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(b) The
Releasing Entities acknowledge and agree that the release of claims set forth in
this Section 25 is not to be construed in any way as an admission of any
liability whatsoever by any Consultant Released Party, with any such liability
being expressly denied.
(c) The
release of claims set forth in this Section 25 applies to any relief no matter
how called, including, without limitation, compensatory damages, liquidated
damages, punitive damages, damages for pain or suffering, costs, and attorney’s
fees and expenses.
(d) Nothing
herein shall be deemed, nor does anything contained herein purport, to be a
waiver of any right or claim or cause of action which by law the Releasing
Entities are not permitted to waive.
(e) The
Company and the Bank acknowledge and agree that they have not, with respect to
any transaction or state of facts existing prior to the Effective Date hereof,
filed any complaints, charges or lawsuits against any Consultant Released Party
with any governmental agency, court or tribunal.
16
26. Regulatory
Provisions. Notwithstanding anything to the contrary contained
in this Agreement, any payments to the Consultant by the Company and/or the
Bank, whether pursuant to this Agreement or otherwise, are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.
17
IN
WITNESS WHEREOF, the Consultant has hereunto set the Consultant’s hand and the
Company and the Bank have caused this Agreement to be executed by their duly
authorized officers, all as of the day and year first written
above.
ATTEST:
EXECUTIVE
By: /s/ ▇▇▇▇▇
▇▇▇▇▇ /s/ ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ __
Name: ▇▇▇▇▇
▇▇▇▇▇ Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Title: Senior
Vice President and Secretary
FIRST
KEYSTONE FINANCIAL, INC.
By: /s/ ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial
Officer
FIRST
KEYSTONE BANK
By: /s/ ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial
Officer
18