Exhibit 10.19
MANAGEMENT COMMITTEE
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT is made on the ____ day of ______________, 1997 between
KEYSTONE FINANCIAL, INC. (the "Corporation"), a Pennsylvania corporation with
its principal office at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxx, XX, and
____________________ (the "Executive"), residing
at________________________________.
WHEREAS, the Executive has substantial knowledge, ability and
experience which are beneficial to the successful operation of the Corporation;
and
WHEREAS, the Corporation desires to secure for itself the benefit of
the Executive's knowledge, ability and experience and be assured of the
Executive's continued active participation in the business operations of the
Corporation; and
WHEREAS, the Executive has acquired and uses and will continue to
acquire and use extensive knowledge and information about the Corporation's
operations, much of which is confidential and proprietary in nature; and
WHEREAS, the Corporation wishes to protect its confidential and
proprietary information as well as its general business interests; and
WHEREAS, the Corporation has adopted the Keystone Financial, Inc.
Severance Plan Following Change of Control, effective as of September 30, 1994
(the "Severance Plan"), which provides severance benefits to eligible employees
who lose their jobs under certain circumstances set forth in the Severance Plan;
and
WHEREAS, the Executive and the Corporation wish to enter into this
Agreement in order to protect the confidential and proprietary interests of the
Corporation and to induce the Executive to remain actively involved in the
business operations of the Corporation by providing the Executive with the
opportunity to receive benefits in excess (and in lieu) of the benefits that
would be available to the Executive under the Severance Plan in the event of his
termination of employment in conjunction with a Change of Control (as defined
herein).
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) "Annual Salary" shall be the stated annual base cash compensation
payable to the Executive by the Corporation without regard to any
elective deferral or salary reduction plan or program of the
Corporation.
(b) "Board of Directors" shall mean the Board of Directors of the
Corporation, as constituted from time to time.
(c) "Cause" shall be (I) the willful failure by the Executive to
substantially perform his duties 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 injurious to the Corporation or a Subsidiary, (iii) the
willful violation by the Executive of the provisions of Section 3
hereof, (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 office of the Chief
Executive Officer (or its successor) .
(d) "Change of Control" shall be as defined in Section 8 of this
Agreement.
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(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Good Reason" shall mean (I) within the period beginning on the date
of the Change of Control (as defined in Section 8(g)) and ending on
the date that is twenty-four (24) months following the later of (A)
the date of the Change of Control or (B) in the case of a Change of
Control described in Sections 8(c) or (d), the date on which the
transaction resulting in the Change of Control was consummated, there
is a reduction in the Executive's Annual Salary or his total cash
compensation opportunities (e.g. annual incentive awards under the
MICP, 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), or the Executive's position is eliminated and he is not
offered a comparable position within thirty (30) days following the
effective date of the elimination of the position, or the Executive
terminates employment due to a lessening of job responsibilities or an
unacceptable relocation (defined as more than 35 miles from the
Executive's prior work site), 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 8(g)) or (B) in
the case of a Change of Control described in Sections 8(c) or (d), the
date that is twelve (12) months following the date on which the
transaction resulting in the Change of Control was consummated.
(g) "Management Committee" means the individuals designated by the
executive management of the Corporation from time to time. The members
of the Management Committee are listed in Exhibit A hereto.
(h) "MICP" means the Corporation's Management Incentive Compensation Plan
as in effect from time to time, or any successor plan thereto.
(I) "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. DURATION OF AGREEMENT. This Agreement shall remain in effect only while
the Executive is a member of the Management Committee (or such other covered
position as designated by executive management of the Corporation, in which case
the Corporation shall have an affirmative obligation to inform the Executive in
writing that this Agreement shall remain in effect notwithstanding the change in
the Executive's position; the absence of notice expressly provides notice to the
Executive that the Agreement is no longer in effect); provided however, that if
the Executive ceases to be a member of the Management Committee as a result of a
Change of Control, Sections 3 and 4 of the Agreement shall no longer remain in
effect but the Corporation and the Executive shall otherwise be obligated to
abide by the terms of this Agreement.
3. 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,
customers, 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 confidential by persons engaged in the same business or
a business similar to that conducted by the Corporation.
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4. RESTRICTIVE COVENANTS. Except as otherwise provided below and in Section
2, upon termination of his employment with the Corporation (or a Subsidiary),
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 the twelve
months preceding 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 is in conjunction with a
Change of Control as described in Section 5(c), in which case this
restrictive covenant shall not be imposed upon the Executive. 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 therefore 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 Corpora-
for any reason, including termination in conjunction with a Change of
Control as described in Section 5(c), the Executive shall immediately
deliver to the Corporation all corrrespondence, manuals, letters,
notes, notebooks, reports and any other documents and tangible items
containing or constituting confidential information about the Corpora-
tion 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 5(c).
(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 5(c).
(e) REMEDY. The Executive acknowledges and agrees that any breach of the
restrictions set forth in Sections 3 and 4 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.
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5. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) The Executive shall be entitled to the benefits described in Section
5(c) only in the event that his employment with the Corporation is
terminated in conjunction with a Change of Control as described in
Section 5(c).
(b) If the Executive's employment is terminated by the Corporation for
Cause or if the Executive terminates his employment other than for
Good Reason, the Executive shall not be entitled to the benefits set
forth in Section 5(c) but the restrictions set forth in Sections 3 and
4 hereof shall continue in full force and effect.
(c) If the Executive's employment is terminated by the Corporation other
than for Cause within the period beginning on the date of the Change
of Control (as defined in Section 8(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 8(c) or (d), the date on which the transaction resulting
in the Change of Control was consummated, or if the Executive
terminates his employment for Good Reason, then the Corporation shall
make a lump-sum cash payment to the Executive equal to one 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. The lump sum payment shall be made
no later than thirty (30) days following 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 eighteen (18) months following the
termination, all employee benefit plans and programs to which the
Executive was entitled prior to the date of termination, including,
but not limited to, pension, profit-sharing, savings, supplemental
retirement income, medical and health-and-accident plans and
arrangements and the Corporation's Automobile Capital Cost
Reimbursement Plan, if the Executive'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 participation is
barred, except that if Executive's participation 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
Executive's behalf, individual insurance plans, policies or programs
which provide to Executive health, medical, life and disability
insurance coverage which is equivalent to the insurance coverage to
which Executive was entitled prior to the date of termination.
6. GROSS-UP PROVISION. In the event any payments made to the Executive upon
termination 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.
7. 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.
8. 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.
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(b) A majority of the Board of Directors 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 securities 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;
(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 consolidated 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 Subsidiary 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 8(c), hereof,
following such Change of Control the term "Corporation" as used herein
shall mean the Person which following such Change of Control holds the
largest percentage of Corporation's Total Assets, including for this
purpose Total Assets which are held by such Person directly or
indirectly through one or more Subsidiaries. The Corporation 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 the Corporation hereunder.
(f) For purposes of this Section 8, "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 the Corporation's Restated Articles of Incorporation, as
in effect on the date first written above.
(g) For purposes of Sections 8(a) and (b), the date of the "Change of
Control" is the date on which the Change of Control occurs. For
purposes of Sections 8(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.
9. COORDINATION WITH SEVERANCE PLAN. It is the intent of the parties that
the benefits provided to the Executive hereunder shall be in lieu of the
benefits that would be available to the Executive under the Severance Plan. If
the Executive would be eligible to receive benefits under the Severance Plan,
however, he shall elect in writing within ten (10) days of his last day of
employment whether to receive the benefits under the Severance Plan or those
provided under this Agreement. The Executive's decision in this regard shall be
irrevocable. If the Executive fails to make an election, the terms of this
Agreement shall be controlling and the Executive shall not be entitled to any
benefits under the Severance Plan.
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10. 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:
If to the Corporation: Keystone Financial, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
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.
11. 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.
12. ENFORCEMENT OF SEPARATE PROVISIONS. Should any provision of this
Agreement be ruled unenforceable for any reason, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect.
13. AMENDMENT. Except as otherwise provided herein, this Agreement may be
amended or canceled only by mutual agreement of the parties in writing without
the consent of any other person. In the event the Corporation wishes to
terminate this Agreement or reduce the benefits available to the Executive
hereunder, the Corporation may unilaterally effectuate any such action, provided
that the Corporation provides the Executive with written notice of such action
at least two (2) years in advance of the effective date of any such termination
or reduction in benefits. This two-year notice requirement may be reduced or
waived by the Executive. This Agreement may be amended to enhance the benefits
available to the Executive hereunder at any time, provided the Executive
consents in writing to any such amendment.
14. 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.
15. EMPLOYMENT. Nothing contained herein shall be construed as conferring
upon the Executive the right to continue in the employ of the Corporation.
16. PAYMENT OF MONEY DUE DECEASED EXECUTIVE. If the Executive dies prior
the payment of any moneys that may be due him from the Corporation under this
Agreement as of the date of death, such moneys shall be paid to the executor,
administrator, or other personal representative of the Executive's estate.
17. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
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18. CAPTIONS; PRONOUNS. All captions are for convenience only and do not
form a substantive part of this Agreement. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the person or persons may require.
KEYSTONE FINANCIAL, INC.
ATTEST:
__________________________ By:______________________________
Secretary
WITNESS: EXECUTIVE
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EXHIBIT A
August 1997
Members of KFI Management Committee (those noted are members who do not have
employment agreements) for purposes of a Change of Control (COC) Agreement:
The following positions are those positions designated by Executive Management
to be offered a COC Agreement:
NOTE: Positions set forth in this list are subject to change
at any time in the sole discretion of the Office of
the CEO.
Corporate Controller
Deputy General Counsel
Director of Audit and Risk Assessment
Director of Human Resources
Director of Information Services
Director of Investments & ALCO Support
Director of KeyCall Center
Director of Marketing Services
Director of Operation Services
President & CEO of Dealer Center Division
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