FIRST KEYSTONE FINANCIAL, INC. AMENDED AND RESTATED 1995 RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
Exhibit
10.6
FIRST
KEYSTONE FINANCIAL, INC.
AMENDED
AND RESTATED 1995 RECOGNITION AND RETENTION
PLAN
AND TRUST AGREEMENT
ARTICLE
I
ESTABLISHMENT
OF THE PLAN AND TRUST
1.01 First
Keystone Financial, Inc. (the "Corporation") hereby amends and restates its
Recognition and Retention Plan of First Keystone Federal Savings Bank (as
amended and restated, the "Plan") and Trust (the "Trust") upon the terms and
conditions hereinafter stated in this amended and restated 1995 Recognition and
Retention Plan and Trust Agreement (the "Agreement"), with the amendment and
restatement effective as of November 25, 2008. The Plan is being
amended and restated in order to comply with Section 409A of the Code, as
defined herein.
1.02 The
Trustee hereby accepts this Trust and agrees to hold the Trust assets existing
on the date of this Agreement and all additions and accretions thereto upon the
terms and conditions hereinafter stated.
ARTICLE
II
PURPOSE
OF THE PLAN
2.01 The
purpose of the Plan is to retain personnel of experience and ability in key
positions by providing Directors and Employees of the Bank and the Corporation
with a proprietary interest in the Corporation and its Subsidiaries as
compensation for their contributions to the Corporation, the Bank, and any other
Subsidiaries and as an incentive to make such contributions in the
future.
ARTICLE
III
DEFINITIONS
The
following words and phrases when used in this Agreement with an initial capital
letter, unless the context clearly indicates otherwise, shall have the meanings
set forth below. Wherever appropriate, the masculine pronouns shall
include the feminine pronouns and the singular shall include the
plural.
3.01 "Bank"
means First Keystone Bank, the wholly owned subsidiary of the
Corporation.
3.02 "Beneficiary"
means the person or persons designated by a Recipient to receive any benefits
payable under the Plan in the event of such Recipient's death. Such
person or persons shall be designated in writing on forms provided for this
purpose by the Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written designation, the
Beneficiary shall be the Recipient's surviving spouse, if any, or if none, his
estate.
3.03 "Board"
means the Board of Directors of the Corporation.
3.04 "Code"
means the Internal Revenue Code of 1986, as amended.
3.05 "Committee"
means the committee appointed by the Board pursuant to Article IV
hereof.
3.06 "Common
Stock" means shares of the common stock, $.01 par value per share, of the
Corporation.
3.07 "Disability"
means the Recipient (i) 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, or (ii) is, 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, receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the
Corporation or the Bank (or would have received such benefits for at least three
months if he or she had been eligible to participate in such
plan).
3.08 "Effective
Date" means the day upon which the Board originally adopted this
Plan.
3.09 "Employee"
means any person who is employed by the Corporation, the Bank, or any
Subsidiary, or is an officer of the Corporation, the Bank, or any Subsidiary,
including officers or other employees who may be directors of the
Corporation.
3.10 "Exchange
Act" means the Securities Exchange Act of 1934, as amended.
3.11 "Non-Employee
Director" means a member of the Board who is not an Employee of the Corporation
or any Subsidiary.
3.12 "Plan
Shares" or "Shares" means shares of Common Stock held in the Trust which may be
distributed to a Recipient pursuant to the Plan.
3.13 "Plan
Share Award" or "Award" means a right granted under this Plan to receive a
distribution of Plan Shares upon completion of the service requirements
described in Article VII.
3.14 "Recipient"
means an Employee or a Non-Employee Director who receives a Plan Share Award
under the Plan.
3.15 "Subsidiary"
means First Keystone Bank and any other subsidiaries of the Corporation or the
Bank which, with the consent of the Board, agree to participate in this
Plan.
3.16 "Trustee"
means such persons, firm or entity nominated by the Committee and approved by
the Board pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan for
the purposes set forth herein.
2
ARTICLE
IV
ADMINISTRATION
OF THE PLAN
4.01 Role
of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall consist of two or more members of the
Board, none of whom shall be an officer or employee of the Corporation and each
of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3
under the Exchange Act. The Committee shall have all of the powers
allocated to it in this and other Sections of the Plan. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Plan Share Award granted hereunder shall be final and
binding. The Committee shall act by vote or written consent of a
majority of its members. Subject to the express provisions and
limitations of the Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its
affairs. The Committee shall report its actions and decisions with
respect to the Plan to the Board at appropriate times, but in no event less than
one time per calendar year. The Committee shall recommend to the
Board a firm or other entity or one or more person to act as Trustee in
accordance with the provisions of this Plan and Trust and the terms of Article
VIII hereof.
4.02 Role
of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will serve at the pleasure of, the
Board. The Board may in its discretion from time to time remove
members from, or add members to, the Committee, and may remove or replace the
Trustee, provided that any directors who are selected as members of the
Committee shall not be officers or employees of the Corporation and shall be
"Non-Employee Directors" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
4.03 Limitation
on Liability. No
member of the Board or the Committee shall be liable for any determination made
in good faith with respect to the Plan or any Plan Shares or Plan Share Awards
granted under it. If a member of the Board or the Committee is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Corporation shall, subject to the
requirements of applicable laws and regulations, indemnify such member against
all liabilities and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in the best interests of the Corporation and any
Subsidiaries and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
4.04 Compliance
with Laws and Regulations. All
Awards granted hereunder shall be subject to all applicable federal and state
laws, rules and regulations and to such approvals by any government or
regulatory agency or stockholders as may be required.
4.05 No
Deferral of Compensation Under Section 409A of the Code. All
Awards granted under the Plan are designed to not constitute a deferral of
compensation for purposes of Section 409A of the Code. No Recipient
shall be permitted to defer the recognition of income beyond the date an Award
shall be deemed earned pursuant to Article VII of this Plan.
3
ARTICLE
V
CONTRIBUTIONS
5.01 Amount
and Timing of Contributions. The
Board shall determine the amount (or the method of computing the amount) and
timing of any contributions by the Corporation and any Subsidiaries to the Trust
established under this Plan. Such amounts may be paid in cash or in
shares of Common Stock and shall be paid to the Trust at the designated time of
contribution. No contributions by Employees shall be
permitted.
5.02 Investment
of Trust Assets; Number of Plan Shares. Subject
to Section 8.02 hereof, the Trustee shall invest all of the Trust's assets
primarily in Common Stock. The aggregate number of Plan Shares
initially available for distribution pursuant to this Plan shall be 54,400
shares of Common Stock, which shares shall be purchased (from the Corporation
and/or, if permitted by applicable regulations, from stockholders thereof) by
the Trust with funds contributed by the Corporation.
ARTICLE
VI
ELIGIBILITY;
ALLOCATIONS
6.01 Awards
to Non-Employee Directors. Plan Share Awards shall be made to
Non-Employee Directors as follows:
(a) Initial
Allocation. A Plan Share Award shall be allocated to each
Non-Employee Director as of the day on which the Plan was initially approved by
stockholders of the Corporation. Specifically, each Non-Employee
Director shall receive an initial Plan Share Award of 1,088 shares of Common
Stock (except that each Non-Employee Director who has served as a director of
the Bank for more than 30 years shall receive an initial Plan Share Award of
2,176 shares of Common Stock).
(b) Subsequent
Allocation. A Plan Share Award shall be allocated to each
Non-Employee Director one year from the date on which the Plan was initially
approved by stockholders of the Corporation and on the next anniversary date
thereafter. Specifically, each Non-Employee Director shall receive a
Plan Share Award of 136 shares of Common Stock on each of the two anniversary
dates after the initial awards pursuant to Section 6.01(a) hereof (except that
each Non-Employee Director who has served as a director of the Bank for more
than 30 years shall receive a Plan Share Award of 272 shares of Common Stock on
each of the two anniversary dates after the initial awards pursuant to Section
6.01(a) hereof).
6.02 Awards
to Employees. Plan Share Awards may be made to such Employees
as may be selected by the Committee. In selecting those Employees to
whom Plan Share Awards may be granted and the number of Shares covered by such
Awards, the Committee shall consider the duties, responsibilities and
performance of each respective Employee, his present and potential contributions
to the growth and success of the Corporation, his salary and such other factors
as the Committee shall deem relevant to accomplishing the purposes of the
Plan. The Committee may but shall not be required to request the
written recommendation of the Chief Executive Officer of the Corporation other
than with respect to Plan Share Awards to be granted to him.
4
6.03 Form
of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.01 that a Plan Share Award is to be
issued, the Committee shall notify the Recipient in writing of the grant of the
Award, the number of Plan Shares covered by the Award, and the terms upon which
the Plan Shares subject to the Award shall be distributed to the
Recipient. The date on which the Committee so notifies the Recipient
shall be considered the date of grant of the Plan Share Award. The
Committee shall maintain records as to all grants of Plan Share Awards under the
Plan.
6.04 Allocations
Not Required to any Specific Employee. Notwithstanding
anything to the contrary in Section 6.01 hereof, no Employee shall have any
right or entitlement to receive a Plan Share Award hereunder, with such Awards
being at the total discretion of the Committee.
ARTICLE
VII
EARNING
AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning
Plan Shares; Forfeitures.
(a) General
Rules. Unless the Committee shall specifically state to the
contrary at the time a Plan Share Award is granted, Plan Shares subject to an
Award shall be earned by a Recipient at the rate of twenty percent (20%) of the
aggregate number of Shares covered by the Award as of each annual anniversary of
the date of grant of the Award. If the employment or service of the
Recipient is terminated prior to the fifth (5th) annual anniversary of the date
of grant of a Plan Share Award for any reason (except as specifically provided
in subsections (b), (c) and (d) below), the Recipient shall forfeit the right to
any Shares subject to the Award which have not theretofore been
earned. No fractional shares shall be distributed pursuant to this
Plan.
(b) Exception
for Terminations Due to Death or Disability. Notwithstanding
the general rule contained in Section 7.01(a), all Plan Shares subject to a Plan
Share Award held by a Recipient whose employment or service with the Corporation
or any Subsidiary terminates due to death or Disability shall be deemed earned
as of the Recipient's last day of employment with the Corporation or any
Subsidiary and shall be distributed as soon as practicable thereafter; provided,
however, that Awards shall be distributed in accordance with Section
7.03(a).
(c) Exception
for a Change in Control. Notwithstanding
the general rule contained in Section 7.01(a), all Plan Shares subject to a Plan
Share Award held by a Recipient shall be deemed to be earned in the event of a
"change in control of the Corporation." A "change in control of the
Corporation" is defined as a change in the ownership of the Corporation or the
Bank, a change in the effective control of the Corporation or the Bank or a
change in the ownership of a substantial portion of the assets of the
Corporation or the Bank, in each case as provided under Section 409A of the Code
and the regulations thereunder.
(d) Revocation
for Misconduct. Notwithstanding anything hereinafter to the
contrary, the Board may by resolution immediately revoke, rescind and terminate
any Plan Share Award, or portion thereof, previously awarded under this Plan, to
the extent Plan Shares have not been distributed hereunder to the Recipient,
whether or not yet earned, in the case of a Recipient who is discharged from the
employ or service of the Corporation or any Subsidiary for cause (as hereinafter
defined). Termination for cause shall mean termination because of
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order.
5
7.02 Distribution
of Dividends. Any cash dividends or stock dividends declared
in respect of each Plan Share held by the Trust will be paid by the Trust, as
soon as practicable after the Trust's receipt thereof, to the Recipient on whose
behalf such Plan Share is then held by the Trust.
7.03 Distribution
of Plan Shares.
(a) Timing
of Distributions: General Rule. Plan Shares shall
be distributed to the Recipient or his Beneficiary, as the case may be, as soon
as practicable after they have been earned, provided, however, that no Plan
Shares shall be distributed to the Recipient or Beneficiary pursuant to a Plan
Share Award within six months from the date on which that Plan Share Award was
granted to such person.
(b) Form
of Distributions. All Plan Shares, together with any Shares
representing stock dividends, shall be distributed in the form of Common
Stock. One share of Common Stock shall be given for each Plan Share
earned and distributable. Payments representing cash dividends shall
be made in cash.
(c) Withholding. The
Trustee may withhold from any cash payment or Common Stock distribution made
under this Plan sufficient amounts to cover any applicable withholding and
employment taxes, and if the amount of a cash payment is insufficient, the
Trustee may require the Recipient or Beneficiary to pay to the Trustee the
amount required to be withheld as a condition of delivering the Plan
Shares. The Trustee shall pay over to the Corporation or any
Subsidiary which employs or employed such Recipient any such amount withheld
from or paid by the Recipient or Beneficiary.
(d) Restrictions
on Selling of Plan Shares. Plan
Share Awards may not be sold, assigned, pledged or otherwise disposed of prior
to the time that they are earned and distributed pursuant to the terms of this
Plan. Following distribution, the Committee may require the Recipient
or his Beneficiary, as the case may be, to agree not to sell or otherwise
dispose of his distributed Plan Shares except in accordance with all then
applicable federal and state securities laws, and the Committee may cause a
legend to be placed on the stock certificate(s) representing the distributed
Plan Shares in order to restrict the transfer of the distributed Plan Shares for
such period of time or under such circumstances as the Committee, upon the
advice of counsel, may deem appropriate.
7.04 Voting
of Plan Shares. After a Plan Share Award has been made, the
Recipient shall be entitled to direct the Trustee as to the voting of the Plan
Shares which are covered by the Plan Share Award and which have not yet been
earned and distributed to him pursuant to Section 7.03, subject to rules and
procedures adopted by the Committee for this purpose.Provided that the Recipient
informs the Trustee how the Recipient voted Plan Shares which have been earned
and distributed for and against proposals to stockholders, the Trustee shall
vote all Plan Shares which have not yet been earned and distributed pursuant to
Section 7.03 in the same proportion for and against proposals to stockholders as
the Recipient actually votes Plan Shares which have been earned and distributed
pursuant to Section 7.03. If the Recipient does not provide the Trustee with
such information, Plan Shares which have not yet been earned and distributed
pursuant to Section 7.03 shall not be voted by the Trustee. In the event a
tender offer is made for Plan Shares, the Trustee shall tender Plan Shares held
by it which have not yet been earned and distributed in the same proportion in
which the Recipient actually tenders Plan Shares which have been earned and
distributed.
6
ARTICLE VIII
TRUST
8.01 Trust. The
Trustees shall receive, hold, administer, invest and make distributions and
disbursements from the Trust in accordance with the provisions of the Plan and
Trust and the applicable directions, rules, regulations, procedures and policies
established by the Committee pursuant to the Plan.
8.02 Management
of Trust. It is the intent of this Plan and Trust that the
Trustees shall have complete authority and discretion with respect to the
arrangement, control and investment of the Trust, and that the Trustees shall
invest all assets of the Trust in Common Stock to the fullest extent
practicable, except to the extent that the Trustees determine that the holding
of monies in cash or cash equivalents is necessary to meet the obligations of
the Trust. In performing their duties, the Trustees shall have the
power to do all things and execute such instruments as may be deemed necessary
or proper, including the following powers:
(a) To
invest up to one hundred percent (100%) of all Trust assets in Common Stock
without regard to any law now or hereafter in force limiting investments for
trustees or other fiduciaries. The investment authorized herein may
constitute the only investment of the Trust, and in making such investment, the
Trustees are authorized to purchase Common Stock from the Corporation or from
any other source, and such Common Stock so purchased may be outstanding, newly
issued, or treasury shares.
(b) To
invest any Trust assets not otherwise invested in accordance with (a) above, in
such deposit accounts, and certificates of deposit, obligations of the United
States Government or its agencies or such other investments as shall be
considered the equivalent of cash.
(c) To
sell, exchange or otherwise dispose of any property at any time held or acquired
by the Trust.
(d) To
cause stocks, bonds or other securities to be registered in the name of a
nominee, without the addition of words indicating that such security is an asset
of the Trust (but accurate records shall be maintained showing that such
security is an asset of the Trust).
(e) To
hold cash without interest in such amounts as may in the opinion of the Trustees
be reasonable for the proper operation of the Plan and
Trust.
7
(f) To
employ brokers, agents, custodians, consultants and
accountants.
(g) To
hire counsel to render advice with respect to their rights, duties and
obligations hereunder, and such other legal services or representation as they
may deem desirable.
(h) To
hold funds and securities representing the amounts to be distributed to a
Recipient or his Beneficiary as a consequence of a dispute as to the disposition
thereof, whether in a segregated account or held in common with other assets of
the Trust.
Notwithstanding anything herein contained to the
contrary, the Trustees shall not be required to make any inventory, appraisal or
settlement or report to any court, or to secure any order of a court for the
exercise of any power herein contained, or give bond.
8.03 Records
and Accounts. The Trustees shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 Expenses. All
costs and expenses incurred in the operation and administration of this Plan
shall be borne by the Corporation.
8.05 Indemnification. Subject
to the requirements of applicable laws and regulations, the Corporation shall
indemnify, defend and hold the Trustees harmless against all claims, expenses
and liabilities arising out of or related to the exercise of the Trustees'
powers and the discharge of their duties hereunder, unless the same shall be due
to their gross negligence or willful misconduct.
ARTICLE
IX
MISCELLANEOUS
9.01 Adjustments
for Capital Changes. The aggregate number of Plan Shares
available for distribution pursuant to the Plan Share Awards and the number of
Shares to which any Plan Share Award relates shall be proportionately adjusted
for any increase or decrease in the total number of outstanding shares of Common
Stock issued subsequent to the Effective Date of the Plan resulting from any
split, subdivision or consolidation of shares or other capital adjustment, or
other increase or decrease in such shares effected without receipt or payment of
consideration by the Corporation.
9.02 Amendment
and Termination of Plan. The Board may, by resolution, at any
time amend or terminate the Plan, subject to any required stockholder approval
or any stockholder approval which the Board may deem to be advisable for any
reason, such as for the purpose of obtaining or retaining any statutory or
regulatory benefits under tax, securities or other laws or satisfying any
applicable stock exchange listing requirements. The Board may not,
without the consent of the Recipient, alter or impair his Plan Share Award
except as specifically authorized herein. Notwithstanding any other provision of
the Plan, this Plan may not be terminated prior to such time as all outstanding
Plan Share Awards granted to Recipients have been earned or forfeited in
accordance with the Plan.
8
9.03 Nontransferable. Plan
Share Awards and rights to Plan Shares shall not be transferable by a Recipient,
and during the lifetime of the Recipient, Plan Shares may only be earned by and
paid to a Recipient who was notified in writing of an Award by the Committee
pursuant to Section 6.03. No Recipient or Beneficiary shall have any
right in or claim to any assets of the Plan or Trust, nor shall the Corporation
or any Subsidiary be subject to any claim for benefits
hereunder.
9.04 Employment
or Service Rights. Neither the Plan nor any grant of a Plan
Share Award or Plan Shares hereunder nor any action taken by the Trustee, the
Committee or the Board in connection with the Plan shall create any right on the
part of any Employee or any Non-Employee Director to continue in such
capacity.
9.05 Voting
and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a stockholder in respect of any Plan Shares
covered by a Plan Share Award, except as expressly provided in Sections 7.02 and
7.04 above, prior to the time said Plan Shares are actually earned and
distributed to him.
9.06 Governing
Law. To the extent not governed by federal law, the Plan and
Trust shall be governed by the laws of the Commonwealth of
Pennsylvania.
9.07 Effective
Date. This Plan as originally adopted shall be effective as of
the Effective Date, and Awards may be granted hereunder no earlier than the date
the Plan was approved by the requisite vote of the holders of outstanding voting
shares of the Corporation at a meeting of stockholders of the Corporation and no
later than the termination of the Plan. The Plan, as originally adopted, was
approved by stockholders at a meeting thereof.
9.08 Term
of Plan. This Plan shall remain in effect until the earlier of
(1) ten (10) years from the Effective Date, (2) termination by the Board, or (3)
the distribution to Recipients and Beneficiaries of all assets of the
Trust.
9.09 Tax
Status of Trust. It is intended that the trust established
hereby be treated as a Grantor Trust of the Corporation under the provisions of
Section 671 et seq. of the Code, as the same may be amended from time to
time.
9
IN WITNESS
WHEREOF, the Corporation has caused this amended and restated Agreement
to be executed by its duly authorized officer and the corporate seal to be
affixed and duly attested, and the Trustees of the Trust established pursuant
hereto have duly and validly executed this Agreement, all on this 25th day
of November 2008.
| FIRST KEYSTONE FINANCIAL, INC. | ||||
| By: | /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||||
| Interim Chief Executive Officer | ||||
| TRUSTEES: | ||||
| /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| /s/▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ | ||||
10