Exhibit 10.4
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made on the ____ day of ______________, 1998 between KEYSTONE
FINANCIAL, INC. (the "Corporation"), a Pennsylvania corporation with its
principal office at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 and Xxxx X.
Xxxxxxxx (the "Executive"), residing at 0000 Xxxx Xxxxx Xxxx, Xxxxxxxxxx, XX
00000.
WHEREAS, the Corporation desires to employ the Executive as the Chief Executive
Officer of the Corporation under the terms and conditions set forth in this
Agreement; and
WHEREAS, the Executive desires to serve the Corporation as the Chief Executive
Officer under the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenant and agreement set forth
herein and intending to be legally bound hereby, the parties agree as follows:
1. DEFINITIONS. The following definitions shall apply in this Agreement:
a) "Anniversary Date" shall mean January 1, 1999 and the January 1 of
each successive year.
b) "Annual Salary" shall be the stated base cash compensation
defined in Section 5(a) without regard to any elective deferral
or salary reduction plan or program of the Corporation.
c) "Board of Directors" shall mean the Board of Directors of the
Corporation as constituted from time to time.
d) "Change of Control" shall be as defined in Section 14 of this
Agreement.
e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
f) "Disability" shall be as defined in Section 10(b) of this
Agreement.
g) "Early Retirement" shall be that age stipulated from time to time
by the Human Resources Committee of the Board of Directors as the
age at which key management personnel may elect to take early
retirement.
h) "LTD" means the Corporation's long-term disability insurance for
key management personnel as in effect from time to time.
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i) "MICP" means the Corporation's Management Incentive Compensation
Plan as in effect from time to time, or any successor plan
thereto.
j) "Normal Retirement" shall be that age stipulated from time to
time by the Human Resources Committee of the Board of Directors
as the age at which key management personnel are required to take
mandatory retirement.
k) "Senior Executive" shall mean any key management employee of the
Corporation or a Subsidiary whose employment relationship is gov-
erned by a contract or agreement.
l) "Subsidiary" shall mean any bank, corporation or other entity of
which the Corporation owns, directly or indirectly through one or
more Subsidiaries, a majority of each class of equity security
having ordinary voting power in an election of directors.
2. TERM OF AGREEMENT; RENEWAL.
a) This Agreement shall be initially effective for a
fifty-three-month period beginning August 1, 1998 and ending
on December 31, 2002. Except as provided in Section 2(b),
the term of this Agreement will automatically renew on
January 1, 1999 and on each subsequent Anniversary Date for
an additional five-year period unless, prior to the first
day of October preceding the first Anniversary Date within
the then current term, either party shall give written
notice of nonrenewal to the other, in which event this
Agreement shall terminate at the end of the five-year period
then in effect. For example, the initial contract period is
August 1, 1998 through December 31, 2002. On January 1,
1999, the term of this Agreement extends to December 31,
2003. On January 1, 2000, the term of this Agreement extends
to December 31, 2004 unless one of the parties provides a
written notice of intent not to renew the Agreement prior to
October 1, 1999.
b) In the event of a Change of Control, if the Corporation
provides the Executive with timely notice of nonrenewal
pursuant to Section 2(a) prior to the first Anniversary Date
following the Change of Control, the Corporation's decision
not to renew this Agreement shall not constitute "good
reason" for purposes of Section 10(d)(ii). Any subsequent
decision by the Corporation not to renew this Agreement
shall, however, constitute good reason for purposes of
Section 10(d)(ii).
3. POSITION AND DUTIES. The Executive shall serve as Chief Executive
Officer reporting to the Board of Directors and shall have supervision
and control over, and responsibility for, the general management and
operation of the Corporation, and shall have such other powers and
duties as may from time to time be prescribed by the Board of
Directors, provided that such duties are consistent with the position
of a Senior Executive.
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4. ENGAGEMENT IN OTHER EMPLOYMENT. The Executive shall devote
substantially all his working time, ability and attention to the
business of the Corporation during the term of this Agreement. The
Executive shall notify the Board of Directors in writing before the
Executive engages in any other business or commercial activities,
duties or pursuits, including, but not limited to, directorships of
other companies. Under no circumstances may the Executive engage in
any business or commercial activities, duties or pursuits which
compete with the business or commercial activities of the Corporation
or any of its Subsidiaries, nor may the Executive serve as a director
or officer or in any other capacity with any business entity unless
he shall have received advance written approval from the Board of
Directors.
5. COMPENSATION.
a) ANNUAL SALARY. For services rendered under this Agreement, the
Executive shall be entitled to receive as base compensation an
Annual Salary at an initial rate of $400,000 per year. The
Executive's Annual Salary shall be reviewed thereafter by the
Board of Directors at least once annually and may be adjusted at
the discretion of the Board of Directors in accordance with the
Corporation's then-current compensation policies and practices and
other factors deemed relevant by the Board of Directors; provided,
that at no time shall the Annual Salary be less than the Execu-
tive's Annual Salary in the prior calendar year. Annual Salary
shall be subject to withholding and other applicable taxes and
payroll deductions and payable in substantially equal monthly
installments or such other more frequent intervals as may be
determined by the Board of Directors as payroll policy for Senior
Executives.
b) INCENTIVE COMPENSATION. The Executive shall be eligible for annual
incentive awards under and in accordance with the MICP, based on
achievement of annual performance goals and other criteria set
forth in the MICP. Subject to the terms and conditions of the MICP
and all rules and regulations pertaining thereto, any incentive
award to which the Executive becomes entitled will be paid to the
Executive within ninety (90) days following the end of the fiscal
year in question. In addition to the MICP, the Executive will be
eligible to participate in any stock option, stock bonus, or other
incentive plan available generally to other Senior Executives from
time to time.
6. BENEFITS, VACATION TIME, EXPENSES AND PERQUISITES.
a) EMPLOYEE BENEFIT PLANS. During the term of this Agreement, the
Executive shall be entitled to participate in all employee benefit
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plans made available from time to time by the Corporation to its
Senior Executives, including, but not limited to, pension,
profit-sharing, savings, supplemental retirement income, medical
and health-and-accident plans and arrangements, subject to and on
a basis consistent with the terms and conditions of, and the
Corporation rules and regulations pertaining to such plans and
arrangements, and any limitations or qualifications imposed by any
applicable governmental body. Subject to the foregoing, the
benefit plans and arrangements provided to the Executive shall
include, but not be limited to, the following:
i) Retirement Income Plans: The Executive shall be entitled to
participate in any nonqualified supplemental retirement income
plans available from time to time to the Corporation's Senior
Executives, and shall become vested in such plans according to
the schedules provided in the plan documents. Benefits to be
received by the Executive pursuant to such plans will be
calculated under the formulas utilized in such plans as in
effect from time to time; provided, however, that in the event
of a Change of Control, the involuntary termination of the
Executive's employment other than for cause or the termination
of the Executive's employment for good reason (in either case,
whether or not in conjunction with a Change of Control), the
benefits to be provided to the Executive pursuant to such
plans shall be calculated under the formulas utilized by such
plans as in effect from time to time but in no event shall
such benefits be less than the benefits calculated under the
formulas utilized in such plans as in effect on the date of
the Change of Control (as defined in Section 14(g)) or the
effective date of the Executive's termination of employment ,
respectively.
ii) Life Insurance: Subject to satisfaction of conditions
imposed by the applicable insurance company for additional
coverage, the Corporation shall maintain for the Executive
during the term of this Agreement the insurance coverage
established for the Executive effective January 1, 1994, under
and in accordance with the Keystone Financial Executive Split
Dollar Agreement with Executive; provided, and notwithstanding
any contrary provisions therein, the Corporation shall have no
unilateral right to terminate or modify such Split Dollar
Agreement with the Executive.
iii) Disability Insurance: In addition to standard group
benefit provisions, the Corporation shall make available a
supplemental LTD insurance policy for purchase by the
Executive, provided the Executive qualifies as a medically
acceptable risk to the issuing company on a standard
underwriting basis. Such policy shall provide that in the
event the Executive becomes disabled in accordance with the
terms of such policy, he shall be entitled to receive benefits
from all sources (e.g., Social Security, group LTD and
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supplemental LTD) equal to 67% of his Annual Salary as in
effect at the time of disability until he reaches the age of
65 or dies, whichever occurs first. The Corporation shall
continue to pay to the Executive his Annual Salary during any
applicable "elimination" (waiting) period under the
supplemental LTD policy, not to exceed one hundred and eighty
(180) days. Notwithstanding the foregoing, supplemental LTD
coverage shall be required only if and to the extent that the
Corporation's group LTD insurance policy benefit limit is such
that it does not permit the Executive to receive the
above-stated percentage (i.e., 67%) of income replacement at
the time of said disability.
b) VACATION. During the term of this Agreement, the Executive shall
be entitled to the number of paid vacation days in each calendar
year determined by the Corporation from time to time for its
Senior Executives, but not less than four (4) weeks in any
calendar year. Such vacation entitlement shall be subject to all
rules and policies concerning vacation time as shall be applicable
to Senior Executives from time to time. The Executive shall also
be entitled to all paid holidays given by the Corporation to its
Senior Executives.
c) REIMBURSABLE GENERAL EXPENSES. During the term of this Agreement,
the Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him (in accordance with
the policies and procedures established from time to time by the
Board of Directors for its Senior Executives) in performing
services hereunder, provided that the Executive first properly
accounts therefor in accordance with such policies and procedures.
d) REIMBURSABLE AUTO EXPENSES. During the term of this Agreement, the
Executive shall be entitled to receive a monthly payment under the
Corporation's Automobile Capital Cost Reimbursement Plan (the
"ACCRP") for selected executives. Such payments shall be treated
as current income and be subject to regular payroll tax
withholding and deductions. The Executive shall also be entitled
to reimbursement for operating expenses of the automobile
associated with business travel at the established corporate
mileage rate.
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e) MISCELLANEOUS. The Executive shall be entitled to receive such
other perquisites, e.g. club memberships and "fringe benefits", as
the Board of Directors shall deem appropriate in its sole
direction.
7. INDEMNIFICATION. The Corporation shall indemnify the Executive, to the
fullest extent permitted from time to time by Pennsylvania law, with
respect to any threatened, pending or contemplated action, suit or
proceeding, brought against him by reason of the fact that he is or was
a director, officer, employee or agent of the Corporation or is or was
serving at the written request of the Corporation as a director,
officer, employee or agent of another person or entity. To the fullest
extent permitted by Pennsylvania law, the Corporation shall in advance
of final disposition pay any and all expenses incurred by the Executive
in connection with any threatened, pending or completed action, suit or
proceeding with respect to which the Executive may be entitled to indem-
nification hereunder. The Executive's right to indemnification provided
herein is not exclusive of any other rights of indemnification to which
the Executive may be entitled under any bylaw, agreement, vote of
shareholders or otherwise, and shall continue beyond the term of this
Agreement. The Corporation shall use its best efforts to obtain
insurance coverage for the Executive under an insurance policy covering
officers and directors of the Corporation against lawsuits, arbitrations
or other proceedings; however, nothing herein shall be construed to
require the Corporation to obtain such insurance if the Board of
Directors determines that such coverage cannot be obtained at a commer-
cially reasonable price. Notwithstanding the foregoing, the Executive
shall be entitled to indemnification from the Subsidiary which is his
actual employer if such indemnification is available and provides more
extensive coverage than the ndemnification provided under this Agree-
ment.
8. UNAUTHORIZED DISCLOSURE. During the term of this Agreement or at any
later time, the Executive shall not, without the written consent of a
duly authorized executive officer of the Corporation, disclose to any
person (including an employee of the Corporation or a Subsidiary),
other than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of his
duties as an executive of the Corporation, any material confidential
information obtained by him while in the employ of the Corporation or
any Subsidiary or operating unit with respect to any of the services,
products, improvements, formulas, designs or styles, processes, custo-
mers, methods of distribution or business practices, the disclosure of
which reasonably would be expected to materially damage the Corporation;
provided, however, that for purposes of this Agreement, confidential
information shall not include any information known generally to the
public (other than as a result of unauthorized disclosure by the
Executive) or any information of a type not otherwise considered confi-
dential by persons engaged in the same business or a business similar to
that conducted by the Corporation.
9. RESTRICTIVE COVENANTS. Except as otherwise provided below, upon termi-
nation of his employment hereunder regardless of the circumstances or
reasons for such termination, the Executive covenants and agrees as
follows:
a) NONCOMPETITION. The Executive shall not, directly or indirectly,
within the marketing area of the Corporation and its Subsidiaries
(defined as all areas within 100 miles of the work location to
which the Executive was assigned for the majority of time during
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the twelve months preceding the termination of his employment
where the Corporation has established an active and material
market presence) enter into or engage generally in direct or
indirect competition with the Corporation in the business of
banking or any banking or trust related business, either directly
or indirectly as an individual on his own or as a partner or joint
venturer, or as a director, officer, shareholder (except as an
incidental shareholder), employee or agent for any person, for a
period of one year after the date of termination of his
employment, except where the termination occurs in conjunction
with a Change of Control as described in Section 11(d). The
existence of any material claim or cause of action of the
Executive against the Corporation, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of this covenant. The Executive
acknowledges and agrees that enforcement of this covenant not to
compete will not prevent him from earning a livelihood and that
any breach of the restrictions set forth in this paragraph will
result in irreparable injury to the Corporation for which it shall
have no adequate remedy at law, and that the Corporation shall be
entitled to injunctive relief in order to enforce the provisions
hereof. In the event that this paragraph shall be determined by
any court of competent jurisdiction to be unenforceable in part by
reason of it being too great a period of time or covering too
great a geographical area, it shall be in full force and effect as
to that period of time or geographical area determined to be
reasonable by the court.
b) RETURN OF MATERIALS. Upon termination of employment with the
Corporation for any reason, including a termination of employment
in conjunction with a Change of Control as described in Section
11(d), the Executive shall immediately deliver to the Corporation
all correspondence, manuals, letters, notes, notebooks, reports
and any other documents and tangible items containing or
constituting confidential information about the Corporation
maintained at his office and shall promptly deliver all said
materials held by him at other locations.
c) NONSOLICITATlON OF EMPLOYEES. The Executive shall not entice or
solicit, directly or indirectly, any other executives or key
management personnel of the Corporation to leave the employ of the
Corporation or its Subsidiaries to work with the Executive or any
entity with which the Executive has affiliated for a period of one
year following the Executive's termination of employment with the
Corporation for any reason, including a termination of employment
in conjunction with a Change of Control as described in Section
11(d).
d) NONSOLICITATION OF CUSTOMERS. The Executive shall not entice or
solicit, directly or indirectly, any client or customer of the
Corporation or any Subsidiary for a period of one year following
the Executive's termination of employment with the Corporation for
any reason, including a termination of employment in conjunction
with a Change of Control as described in Section 11(d).
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e) REMEDY. The Executive acknowledges and agrees that any breach of
the restrictions set forth in Sections 8 and 9 will result in
irreparable injury to the Corporation for which it shall have no
meaningful remedy in law and the Corporation shall be entitled to
injunctive relief in order to enforce provisions hereof. Upon
obtaining such injunction, the Corporation shall be entitled to
pursue reimbursement from the Executive and/or the Executive's
employer of costs incurred in securing a qualified replacement for
any employee enticed away from the Corporation by the Executive.
Further, the Corporation shall be entitled to set off against or
obtain reimbursement from the Executive of any payments owed or
made to the Executive by the Corporation hereunder.
10. TERMINATION.
a) GENERALLY. The Executive's employment hereunder shall terminate
upon his Early Retirement, Normal Retirement or death.
b) TERMINATION DUE TO PERMANENT DISABILITY. If the Executive becomes
permanently disabled because of sickness, physical or mental
disability, or any other reason, and is unable to perform or
complete his duties under this Agreement for a period anti-
cipated to extend for a period of at least one hundred eighty
(180)consecutive calendar days (or such other length of time that
is equal to any applicable elimination period provided for in an
LTD insurance policy), the Corporation shall have the option to
terminate this Agreement by giving written notice of termination
to the Executive. Such termination shall be without prejudice to
any right the Executive may have under the LTD insurance program
maintained by the Corporation. Such disability shall be certified
by the Corporation's group LTD carrier, in conjunction with the
Executive's supplemental LTD carrier if such supplemental policy
is in effect; in the event these carriers cannot agree, they
shall designate a licensed physician whose decision shall be
binding for purposes of this Agreement.
c) TERMINATION FOR CAUSE. The Corporation may terminate the Execu-
tive's employment hereunder for cause. For the purposes of this
Agreement, the Corporation shall have "cause" to terminate the
Executive's employment hereunder upon (i) the willful failure by
the Executive to substantially perform his duties hereunder,
other than any such failure resulting from the Executive's
incapacity due to physical or mental illness, (ii) the willful
engaging by the Executive in gross misconduct materially injur-
ious to the Corporation, (iii) the willful violation by the
Executive of the provisions of Sections 4 or 8 hereof, after
notice from Corporation and a failure to cure such violation
within 30 days of said notice, or if said violation cannot be
cured within 30 days, within a reasonable time thereafter if the
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Executive is diligently attempting to cure the violation, (iv)
the gross negligence of the Executive in the performance of his
duties, or (v) receipt of a final written directive or order of
any governmental body or entity having jurisdiction over the
Corporation or any of its Subsidiaries requiring termination or
removal of the Executive. The determination of the existence of
cause shall be made in the reasonable judgment of the Board of
Directors or its delegee.
d) TERMINATION BY EMPLOYEE UPON GOOD REASON. The Executive may
terminate his employment for good reason. The term "good reason"
shall mean (i) a reduction in the Executive's Annual Salary
in violation of Section 5 hereof, or his total cash compensation
opportunities (e.g. annual incentive awards under the Corpora-
tion's MICP or equity participation awards) or benefits (except
any reductions in compensation which may be applied broadly among
all executives because of adverse financial conditions for the
Corporation or as part of a restructuring of the Corporation's
executive compensation program), (ii) the Corporation's decision
not to renew the Agreement (except as otherwise provided in Sec-
tion 2(b)), (iii) the Corporation's failure to remedy a material
breach of this Agreement within thirty (30) days following
written notice of the breach from the Executive, (iv) the
Executive's position is eliminated and he is not offered a
comparable position within thirty (30) days or (v) the lessening
of the Executive's job responsibilities or an unacceptable relo-
cation (defined as more than thirty-five (35) miles from the
Executive's prior work site).
e) SALE OF SUBSIDIARY.
i) If the entity which is the actual employer of the Executive
is a Subsidiary of the Corporation (the "Employer
Subsidiary"), the disposition of equity securities or assets
of the Employer Subsidiary by the Corporation or by another
Subsidiary such that the Employer Subsidiary ceases to qualify
as a Subsidiary for purposes of this Agreement shall not
constitute a termination of the Executive's employment
hereunder.
ii) If the Executive remains employed by the Employer
Subsidiary following its sale, the Executive shall remain
eligible to receive the payments and benefits specified in
Section 11(d) for the periods of time specified therein and
the provision of such payments and benefits shall remain the
obligation of the Corporation.
iii) If the Executive is employed by the Corporation or
another Subsidiary following the sale of the Employer
Subsidiary, the Executive shall not be eligible to receive the
payments and benefits specified in Section 11(d)
notwithstanding the fact that the sale of the Employer
Subsidiary constituted a Change of Control as defined in
Section 14. Unless the Executive and the Corporation agree
otherwise, the Executive shall, however, remain eligible to
receive the payments and benefits specified in Sections 11(a)
and 11(b).
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11. PAYMENTS UPON TERMINATION.
a) If the Executive's employment shall be terminated because of
Early Retirement, Normal Retirement, death, Disability or for
cause, the Corporation shall pay the Executive or his guardian
or estate his full Annual Salary through the date of termi-
nation at the rate in effect at the time of termination and any
other amounts owing to the Executive at the date of termination.
Further, should termination occur because of Early Retirement,
Normal Retirement, death, or Disability, the Corporation may
elect to pay the Executive, or his guardian or estate, at the end
of the fiscal year in which the termination occurred, a prorated
award under the MICP, and also may elect to accelerate vesting
of restricted stock, stock option and performance share awards to
provide a full or prorated compensation opportunity for the
retired or disabled Executive or the deceased Executive's guar-
xxxx or estate. Notwithstanding the foregoing, the Corporation
shall have no obligation to provide payments of benefits beyond
what the Executive is entitled to under the terms and conditions
of the various compensation and benefit plans and arrangements
maintained by the Corporation.
b) If (i) the Executive's employment is terminated by the Corpora-
tion other than for the reasons or circumstances set forth under
Sections 10(a), (b) or (c) hereof or (ii) if the Executive termi-
nates his employment within 90 days following the occurrence of
any of the events constituting "good reason" as defined in
Section 10(d), then the Corporation shall make a lump-sum cash
payment to the Executive equal to two times his highest Annual
Salary during the three-calendar-year period ending before the
effective date of the termination. In such event the Corporation
shall also maintain in full force and effect (and the Executive
shall remain a participant in), for a minimum period of twenty-
four (24) months, all employee benefit plans and programs to
which the Executive was entitled prior to the date of termina-
tion, including but not limited to, pension, profit-sharing,
savings, supplemental retirement income, medical and health-and-
accident plans and arrangements, but specifically excluding the
ACCRP and the Performance Unit Plan (the "PUP"), if the Execu-
tive's continued participation is permitted under the general
terms and conditions and rules and regulations of such plans
and programs. In the event that the Executive's continued
participation in any such plan or program is prohibited, the
Executive shall be entitled to receive an amount equal to the
annual contribution, payments, premiums, credits or allocations
made by the Corporation to him, to his account or on his behalf
under such plans and programs from which his continued parti-
cipation is barred, except that if the Executive's participation
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in any health, medical, life insurance, or disability plan or
program is barred, the Corporation shall use its best efforts to
obtain and pay for, on the Executive's behalf, individual
insurance plans, policies or programs which provide to the
Executive health, medical, life and disability insurance coverage
which is equivalent to the insurance coverage to which the
Executive was entitled prior to the date of termination. In the
event of a termination of the Executive's employment described in
this Section 11(b), the termination will be deemed to have been a
voluntary termination of employment with the consent of the
Corporation for purposes of any stock option plan maintained by
the Corporation.
c) If termination occurs as a result of expiration of the Agreement,
the Executive will not be entitled to receive any severance
payments or continuation of benefit coverages except as provided
under law (COBRA). The Executive will be permitted to exercise
vested stock options and grants as prescribed in the agreements
covering those options and grants.
d) If, within the period beginning on the date of the Change of
Control (as defined in Section 14(g)) and ending on the date that
is twenty-four (24) months following the later of (i) the date
of the Change of Control or (ii) in the case of a Change of
Control described in Sections 14(c) or (d), the date on which the
transaction resulting in the Change of Control was consummated,
(i) the Executive terminates his employment within ninety (90)
days following the occurrence of any of the events constituting
"good reason" as described in Section 10(d) or (ii) the
Executive terminates employment for any reason during the thirty
(30)-day period beginning on the later of (A) the date that is
twelve (12) months following the date of the Change of Control
(as defined in Section 14(g)) or (B) in the case of a Change of
Control described in Sections 14(c) or (d), the date that is
twelve (12) months following the date on which the transaction
resulting in the Change of Control is consummated, then the
Corporation shall (i) make a lump-sum payment to the Executive
equal to two and one-half times the sum of (A) his highest Annual
Salary during the three-calendar-year period ending before the
effective date of the termination and (B) an amount equal to the
highest annual MICP award earned during the three-complete-plan-
year period ending before the effective date of the termination,
(ii) maintain benefit coverages for the Executive as specified
in Section 11(b) (such coverages shall, however, include the
PUP and the ACCRP) for a period of twenty-four (24) months; (iii)
release its collateral assignment under the Split Dollar Agree-
ment with Executive without reimbursement of premiums paid for
that policy; and (iv) provide to the Executive outplacement and
career counseling services as may be requested by the Executive,
provided that the costs of such services may not exceed 15% of
the Executive's highest Annual Salary during the three-calendar
-year period ending before the effective date of the termination.
Further, notwithstanding the terms of any restricted stock, stock
option and/or performance share award or grant made to the
Executive, such award or grant will become fully vested and the
Executive will have a six-month period from date of termination
in which to exercise available stock options.
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12. GROSS-UP PROVISION. In the event any payments made to the Executive upon
termination of employment in conjunction with a Change of Control
(pursuant to this Agreement and any other plans, programs and
arrangements maintained by the Corporation) would constitute "excess
parachute payments" within the meaning of Code Section 280G, the
Corporation will make an additional payment to the Executive in an
amount such that after the payment of all income and excise taxes, the
Executive will be in the same after-tax position as if no excise tax had
been imposed on any excess parachute payments made by the Corporation to
the Executive pursuant to this Agreement or otherwise.
13. DAMAGES FOR BREACH OF CONTRACT. In the event of a breach of this
Agreement by either the Corporation or Executive resulting in damages to
either party, that party may recover from the party breaching the
Agreement any and all damages that may be sustained.
14. DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement, "Change
of Control" shall mean the occurrence of any one of the following
events:
a) The Corporation acquires actual knowledge that any Person (other
than the Corporation, any Subsidiary of the Corporation, any
employee benefit plan of the Corporation or any of its
Subsidiaries or any entity holding securities for or pursuant to
the terms of any such plan) has acquired the Beneficial Ownership,
directly or indirectly, of securities of the Corporation entitling
such Person to a majority of the voting power of the Corporation's
Voting Stock.
b) A majority of the Board of Directors of the Corporation shall
consist of persons other than (i) persons who were members of
the Board of Directors on the date first written above, or (ii)
persons (A) whose nomination or election as directors of the
Corporation was approved by at least two-thirds of the then
members of the Board of Directors (excluding any director
referred to in clause (B) of this paragraph) who either were
directors of the Corporation on the date first above written or
whose nomination or election as a director was so approved and
(B) who are not nominees or representatives of (1) any Person
having Beneficial Ownership, directly or indirectly, of securi-
ties of the Corporation entitling such Person to 10% or more of
the voting power of the Corporation's Voting Stock or (2) any
"participant," as defined in Rule 14a-11 under the Securities
Exchange Act of 1934 or any successor rule, in any actual or
threatened solicitation (other than a solicitation by the
Corporation) subject to Rule 14a-11 or any successor rule
relating to the election or removal of any directors of the
Corporation;
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c) The Corporation and/or any Subsidiary of the Corporation shall be
a party to any merger, consolidation, division, share exchange,
transfer of assets or any other transaction or series of related
transactions outside the ordinary course of business (a "Business
Combination") as a result of which the shareholders of the
Corporation immediately prior to such Business Combination
(excluding any party, other than the Corporation or a Subsidiary,
to the Business Combination or any Affiliate or Associate of any
such party) shall not hold immediately following such transaction
a majority of the voting power of the Voting Stock of a Person or
Persons immediately thereafter holding, directly or indirectly
through Subsidiaries, assets of the Corporation and its consol-
idated subsidiaries immediately prior to the Business Combination
constituting at least sixty-five percent (65%) of Total Assets;
or
d) If the entity which is the actual employer of the Executive
hereunder (the "Employer Company") is other than the Corporation,
either (i) the Employer Company shall cease to be a Subsidiary
of the Corporation or (ii) the Employer Company and/or any Subsi-
diary of the Employer Company shall be a party to any Business
Combination as a result of which the Corporation shall not hold
immediately following such transaction a majority of the voting
power of the Voting Stock of a Person or Persons immediately
thereafter holding, directly or indirectly through Subsidiaries,
assets of the Employer Company and its consolidated subsidiaries
immediately prior to the Business Combination constituting at
least seventy-five percent (75%) of the Employer Company's Total
Assets.
e) In the case of a Change of Control defined in Section 14(c)
hereof, following such Change of Control the term "Employer
Company" as used herein shall mean the Person which following
such Change of Control holds the largest percentage of Employer
Company's Total Assets, including for this purpose Total Assets
which are held by such Person directly or indirectly through one
or more Subsidiaries. Employer Company shall not enter into any
transaction involving such a Change of Control unless at or prior
to the consummation thereof such Person assumes the obligations
of Employer Company hereunder.
f) For purposes of this Section 14, "Person," "Affiliate,"
"Associate," "Voting Stock" and "Total Assets" shall have the
definitions contained in, and "Beneficial Ownership" shall be
determined as provided in, Article 10 of Keystone's Restated
Articles of Incorporation, as in effect on the date first written
above.
g) For purposes of Sections 14(a) and (b), the date of the "Change
of Control" is the date on which the Change of Control occurs.
For purposes of Sections 14(c) and (d), the date of the "Change
of Control" is the date on which the transaction resulting in a
Change of Control is first evidenced in writing and executed by
an authorized officer of the Corporation and/or Subsidiary
including, without limitation, any letter of intent, sale or
purchase agreement and/or agreement of merger, or, in the case of
a series of Business Combination transactions resulting in a
Change of Control, the date the earliest of such transactions is
first evidenced in writing and executed by an authorized officer
of the Corporation and/or Subsidiary.
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15. NOTICE. For the purposes of this Agreement, notices and all other
communications shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive: Xxxx X. Xxxxxxxx
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Corporation: Keystone Financial, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Board of Directors
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon actual receipt.
16. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the Executive and his heirs and personal representatives,
and the Corporation and any successor to the Corporation.
17. ENFORCEMENT OF SEPARATE PROVISIONS. Should any provision of this Agree-
ment be ruled unenforceable for any reason, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full
force and effect.
18. AMENDMENT. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other
person.
19. ARBITRATION. In the event that any disagreement or dispute shall arise
between the parties concerning this Agreement, the issue(s) will be
submitted to binding arbitration in the City of Harrisburg, PA pursuant
to the rules of the American Arbitration Association. Any award entered
shall be final and binding upon the parties hereto and judgment upon the
award may be entered in any court having jurisdiction thereof.
Attorneys' fees and administrative court costs associated with such
actions shall be paid by the Corporation.
14
20. PAYMENT OF MONEY DUE DECEASED EXECUTIVE. If the Executive dies prior to
the expiration of his term of employment hereunder, any moneys that may
be due him from the Corporation under this Agreement as of the date of
death shall be paid to the executor, administrator, or other personal
representative of the Executive's estate.
21. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
22. CAPTIONS; PRONOUNS. All captions are for convenience only and do not
form a substantive part of this Agreement. All pronouns and any vari-
ations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the person or persons may
require.
23. ENTIRE AGREEMENT. This Agreement supersedes any and all agreements,
either oral or in writing, between the parties with respect to the
employment by the Executive by the Corporation, and this Agreement
contains all the covenants and agreements between the parties with
respect to such employment.
ATTEST: KEYSTONE FINANCIAL, INC.
_________________________________ By:_______________________________
Secretary Uzal X. Xxxxx, Xx.
WITNESS: EXECUTIVE
---------------------------------- ---------------------------------
Xxxx X. Xxxxxxxx
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