SEPARATION AGREEMENT AND RELEASE
THIS SEPARATION AGREEMENT AND RELEASE (the "Agreement") is entered into
this 21st day of November, 1997 but is effective for all purposes hereunder as
of October 22, 1997 (the "Effective Date"), by and between KEYSTONE FINANCIAL,
INC., a Pennsylvania corporation ("Keystone") and XXXXXX X. XXXXXX ("Xxxxxx").
WHEREAS, Xxxxxx was employed by Keystone as Senior Executive
Vice President and Chief Banking Officer; and
WHEREAS, by letter dated October 24, 1997, Xxxxxx tendered to Keystone his
resignation from all positions and directorships held by him with Keystone and
with any and all of Keystone's subsidiaries and affiliates, such resignation to
be effective as of the Effective Date; and
WHEREAS, Xxxxxx resignation was accepted by and was done with the consent
of Keystone; and
WHEREAS, both parties desire to achieve an amicable separation to fully
and finally resolve and/or avoid any existing or other potential disputes
between them.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound, Keystone and Xxxxxx agree as follows:
1. PURPOSE OF AGREEMENT. The purpose of this Agreement is to confirm and
memorialize the termination of the employment relationship between Keystone and
Xxxxxx, to resolve fully and finally and/or avoid any and all existing or
potential disputes arising from the employment relationship and the termination
thereof without admission of any liability on the part of either party. To that
end, the parties acknowledge that this Agreement resolves any and all claims
either may have against the other with respect to Grove's employment and/or the
termination of such employment. For the purpose of this Agreement, the term
"Keystone" includes not only Keystone Financial, Inc. and its employee welfare
benefit, pension, fringe benefit or compensation plans, but also all other
entities affiliated with Keystone Financial, Inc.
2. TERMINATION OF EMPLOYMENT. Xxxxxx hereby acknowledges and agrees that
his employment with Keystone as Senior Executive Vice President and Chief
Banking Officer and any and all officer positions and directorships terminated
as of the Effective Date.
3. CONSIDERATION. Xxxxxx acknowledges and confirms that the only
consideration for his executing this Agreement is set forth herein, that no
other promises or agreements of any kind, save for those set forth in this
Agreement, have been made to him by any person or entity whatsoever to cause him
to sign this Agreement and that he fully understands the meaning and intent of
this Agreement.
4. SEPARATION PAYMENTS. In consideration of the promises set forth in this
Agreement, Keystone and Xxxxxx agree that Xxxxxx shall receive the separation
payments and other benefits set forth in Exhibit A, which is attached hereto and
incorporated herein. Keystone and Xxxxxx further agree that the separation
payments and benefits set forth in Exhibit A constitute all of the payments and
benefits which Xxxxxx shall receive due to the termination of his employment
with Keystone.
5. NONDISCLOSURE OF INFORMATION. Xxxxxx acknowledges that as an employee,
officer and director of Keystone, he had access to extensive confidential and/or
proprietary information. Xxxxxx agrees that he shall not, without the written
consent of a duly authorized executive officer of Keystone, disclose to any
person any material confidential information obtained by him while in the employ
of Keystone 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 Keystone; 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
Xxxxxx) 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
Keystone. Provided, further, that this section shall not apply to any disclosure
that may be required by Xxxxxx by law, regulation or court order, but only after
Xxxxxx notifies an executive officer of Keystone of such demand for disclosure
and Keystone has a reasonable opportunity to respond to such demand. Any breach
of this Nondisclosure of Information provision shall be deemed a material breach
of this Agreement.
6. RETURN OF PROPERTY. Xxxxxx represents that he has surrendered to
Keystone any and all materials in Xxxxxx' possession, or elsewhere, whether or
not said materials are proprietary in nature, relating to the business of
Keystone including, but not limited to, data, documents, reports, programs,
diskettes, computer printouts, program listings, computer hardware and/or
software specifications, client lists, client information, and any and all
similar information without regard to form of representation, including all
copies thereof. Xxxxxx acknowledges that all such materials are the sole
property of Keystone and that Xxxxxx has no right, title or other interest in or
to such materials. These materials are included in the Nondisclosure of
Information provision contained in Section 5. Further, any breach of this Return
of Property provision shall be deemed a material breach of this Agreement.
7. NO ACCESS. The parties acknowledge that Xxxxxx' office at Keystone was
fully equipped with a computer system and other equipment. In addition to the
return to Keystone of all of its property and any copies thereof as required in
Section 6 above, Xxxxxx agrees never to access Keystone's computer system for
any purpose whatsoever. Xxxxxx acknowledges and agrees that any such access
constitutes an illegal act and would cause irreparable damage and liability to
Keystone. Any breach of this No Access provision shall be deemed a material
breach of this Agreement.
8. NO SOLICITATION. Xxxxxx agrees that he shall not entice or solicit,
directly or indirectly, any other executives or key management personnel of
Keystone to leave the employ of Keystone to work with Xxxxxx or any entity with
which Xxxxxx has affiliated for a period of one (1) year from the Effective
Date. Xxxxxx acknowledges and agrees that any breach of the restrictions set
forth in this Section 8 will result in irreparable injury to Keystone for which
it may have no meaningful remedy in law and Keystone shall be entitled to
injunctive relief in order to enforce the provisions hereof. Upon obtaining such
injunction, Keystone shall be entitled to pursue reimbursement from Xxxxxx
and/or Xxxxxx' employer of costs incurred in securing a qualified replacement
for any employee enticed away from Keystone by Xxxxxx. Further, Keystone shall
be entitled to set off against or obtain reimbursement from Xxxxxx of any
payments owed or made to Xxxxxx by Keystone hereunder. Any breach of this No
Solicitation provision shall be deemed a material breach of this Agreement.
9. NONCOMPETITION. In consideration for the separation payments and other
benefits extended to Xxxxxx under this Agreement, Xxxxxx agrees that he shall
not, directly or indirectly, within the marketing area of Keystone (defined for
purposes of this Section 9 as all areas within one hundred (100) miles of the
work location to which Xxxxxx was assigned for the majority of the time during
the twelve (12) months preceding the Effective Date where Keystone has
established an active and material market presence) enter into or engage
generally in direct or indirect competition with Keystone 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 (1) year from the Effective Date. The
existence of any material claim or cause of action of Xxxxxx against Keystone,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Keystone of this provision. In the event that this
Section 9 shall be determined by any court of competent jurisdiction to be
unenforceable in part by reason of 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.
Any breach of this Noncompetition provision shall be deemed a material breach of
this Agreement.
10. NO DISPARAGEMENT. Xxxxxx agrees not to make disparaging remarks about
Keystone or its operations, its employees, or any other aspect of its operation,
and Keystone agrees not to make disparaging remarks about Xxxxxx. Any breach by
either party of this No Disparagement provision shall be deemed a material
breach of this Agreement.
11. GENERAL RELEASE. In consideration for the separation payments and
other benefits extended to Xxxxxx under this Agreement, Xxxxxx, for himself, his
heirs, executors, administrators, successors and assigns, forever releases and
discharges Keystone, its board and their successors and assigns, officers,
agents, contractors, consultants and employees, past and present, collectively
or individually, from any and all claims, demands, causes of action, losses and
expenses of every nature whatsoever, known or unknown, that Xxxxxx ever had, now
has or hereafter may have, arising out of or in conjunction with his employment
with Keystone or the termination thereof, including, but not limited to, breach
of contract (express or implied), infliction of emotional harm, defamation,
wrongful discharge or any other tort, the Age Discrimination in Employment Act
(29 U.S.C. ss.621 et seq.), the Pennsylvania Human Relations Act, or any other
federal, state or municipal statute or ordinance including, but not limited to,
those relating to employment, labor relations or wages. It is expressly agreed
and understood that this Agreement is a general release.
In consideration of the foregoing release, and the covenants set forth
therein, Keystone, for itself, its agents, employees, successors and assigns,
releases Xxxxxx, his heirs, executors, administrators and assigns from any and
all claims, demands, causes of action, losses and expenses of every nature
whatsoever, known or unknown, that Keystone ever had, now has, or hereafter may
have, arising out of or in conjunction with Xxxxxx' employment by Keystone or
the termination thereof; provided, however, that Keystone expressly does not
release Xxxxxx with respect to any acts of gross negligence or any intentional
acts by Xxxxxx that are or were materially injurious to or which may contribute
or has contributed to the material detriment of Keystone. Nothing herein shall
act as a release of Xxxxxx from complying with this Agreement.
12. COVENANT NOT TO XXX. Xxxxxx agrees that he will not bring any action, suit
or administrative proceeding or request contesting the validity of this
Agreement or attempting to negate, modify or reform it, nor will he xxx Keystone
and its successors and assigns, agents, contractors, consultants or employees,
past and present, individually or collectively, for any reason arising out of
Xxxxxx' employment or termination thereof. Any breach of this Covenant Not To
Xxx shall be deemed a material breach of this Agreement requiring Xxxxxx to
tender back to Keystone any and all payments paid to him thereunder, including
the value of any benefits provided by Keystone.
13. INDEMNIFICATION. Except as prohibited by law, Keystone agrees to defend and
indemnify Xxxxxx against expenses and any liability paid or incurred by Xxxxxx
in connection with any actual or threatened claim, cause of action, suit or
proceeding, civil or administrative, brought by any third party against Xxxxxx
by reason of Xxxxxx having been an officer of Keystone; provided, however,
Keystone does not agree to so indemnify Xxxxxx for any acts of gross negligence
or any intentional acts by Xxxxxx that are or were materially injurious to or
which may contribute or has contributed to the material detriment of Keystone.
If Xxxxxx obtains knowledge of: (a) facts that would give rise to a right of
defense or indemnification; or (b) commencement of an action that may require
defense or indemnification, Xxxxxx shall give written notice to Keystone as
promptly as practicable after his receipt of that knowledge. Following receipt
of such notice, Keystone shall be entitled to participate in the defense of such
claim, and upon notice delivered promptly to Xxxxxx, to assume the defense
thereof, with counsel reasonably satisfactory to Xxxxxx. Within a reasonable
period following the assumption of such defense by Keystone, Xxxxxx shall be
permitted to participate in the defense of such claim and may retain additional
counsel of his choice at his own expense. As an additional condition to
Keystone's obligation to defend and indemnify Xxxxxx under this paragraph,
Xxxxxx shall make himself available upon reasonable notice to testify in any
suit or proceeding which relates to Xxxxxx' duties as an officer of Keystone.
14. CONFIDENTIALITY. The parties agree that the terms and existence of this
Agreement shall remain confidential. The parties agree further not to disclose
any information concerning this Agreement to any agency or person, including but
not limited to past, present and future employees of Keystone, except where such
disclosure is required by law or is necessary to carry out the terms of this
Agreement. Any breach of this Confidentiality provision shall be regarded as a
material breach of this Agreement. There is specifically excepted from the
foregoing the right of Xxxxxx to disclose information concerning this Agreement
to his family, financial advisors and attorneys, but Xxxxxx shall assume
responsibility for the failure of such persons to comply with the terms of this
Confidentiality provision.
15. ENFORCEMENT. In the event of an actual or threatened breach by Xxxxxx
of the provisions of Sections 5, 6, 7, 8 or 9, Keystone shall be entitled to
injunctive relief restraining Xxxxxx and any other so engaged from such
violation for the entire period set forth in the applicable section(s);
provided, however, that said period shall be extended by the time which may have
elapsed between the time Xxxxxx is notified of such violation and an injunction
issues restraining Xxxxxx from such violation. Nothing herein shall be construed
as prohibiting Keystone from pursuing any other remedies available for such
breach or threatened breach including, but not limited to, the recovery of
damages, reasonable fees of counsel and costs from Xxxxxx.
16. DAMAGES. Should suit be necessary to enforce either parties' rights in
this Agreement, the party determined in such suit to have breached this
Agreement shall pay damages, reasonable fees of counsel and costs incurred by
the other party enforcing its rights under this Agreement. The parties
acknowledge, however, that any damages to Keystone that may result from a breach
of the provisions of Sections 5, 6, 7, 8 or 9 of this Agreement by Xxxxxx are
not readily ascertainable. Accordingly, in the event of a breach of the
provisions of Sections 5, 6, 7, 8 or 9 of this Agreement by Xxxxxx, the parties
agree that Xxxxxx shall be required to pay to Keystone, as liquidated damages,
the sum of Four Hundred Thousand Dollars ($400,000.00), plus reasonable fees of
counsel and costs. Nothing herein shall, however, be construed as prohibiting
Keystone from pursuing injunctive relief restraining Xxxxxx and any other as
provided in Section 15 of this Agreement.
17. REFERENCES. All requests for references about Xxxxxx by potential
future employers shall be directed to the Senior Vice President, Human
Resources, who will provide such information as Xxxxxx and Keystone mutually
determine. The parties may prepare a summary of such information which shall be
either attached to this Agreement as Exhibit B or, if prepared after the
execution of this Agreement, shall reference this Agreement and be signed by the
parties.
18. GOVERNING LAW. This Agreement shall be construed in accordance with and
be governed by the laws of the Commonwealth of Pennsylvania.
19. SEVERABILITY. Xxxxxx and Keystone acknowledge that any restrictions
contained in this Agreement are reasonable and that consideration for this
Agreement has been exchanged. In the event that any provision of this Agreement
shall be held to be void, voidable or unenforceable, the remaining portions
hereof shall remain in full force and effect; provided, that in the event that a
court shall determine that any provision is inequitably broad, it is the
intention of the parties that the court adjust such obligations of Xxxxxx rather
than eliminating such obligations entirely.
20. EXECUTIVE EMPLOYMENT AGREEMENT. Xxxxxx and Keystone hereby acknowledge
that by executing this Agreement, the Executive Employment Agreement between
Xxxxxx and Keystone dated January 27, 1994 and as modified pursuant to a
memorandum to Xxxxxx from X. X. Xxxxxxxx dated March 11, 1994 and a letter to
Xxxxxx from Xxxx X. Xxxxxxxx dated September 29, 1994 (the "Employment
Agreement") has been terminated and its terms thereby rendered null and void.
Xxxxxx hereby specifically acknowledges that he has no rights or claims to any
compensation or benefits pursuant to the terms of the Employment Agreement,
including, but not limited to, the right to arbitration and/or the payment of
attorneys fees and administrative court costs by Keystone pursuant to Section 19
of the Employment Agreement.
21. OTHER AGREEMENTS. This Agreement supersedes all other agreements, if
any, oral or written, heretofore made with respect to the subject matter hereof
and contains the entire agreement of the parties. This Agreement cannot be
amended or modified, except in writing signed by Xxxxxx and an agent of Keystone
specifically authorized to sign on behalf of Keystone in this matter.
22. ACKNOWLEDGMENT. Xxxxxx acknowledges and represents to Keystone as
follows:
a. He has had ample time (up to 21 days) to review all of the
provisions of this Agreement and fully understands it and the choices with
respect to the advisability of making the settlement and release provided
herein.
b. He acknowledges that, because of the consideration promised in
return, he has entered into this Agreement by his free will and choice
without any compulsion, duress or undue influence from anyone.
c. He acknowledges that he has been advised to seek independent
legal counsel regarding his rights and the advisability of entering into
this Agreement.
d. He acknowledges that he has been advised and understands that
once executed, he shall have up to seven (7) days thereafter to revoke
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
WITNESS:
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxxxx
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ATTEST: KEYSTONE FINANCIAL, INC.
/s/ Xxxxxx X. Xxxx By Xxxx X. Xxxxxxxx
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EXHIBIT A
SCHEDULE OF SEPARATION PAYMENTS AND BENEFITS
I. SEPARATION PAYMENTS
A. SEPARATION PAYMENTS.
1. Xxxxxx shall receive separation payments in an amount equal to Four
Hundred Fifty Thousand Dollars ($450,000.00) payable in accordance with
subsections 2 and 3 below.
2. Xxxxxx shall receive a separation payment in an amount equal to the
balance of his Annual Salary (as such term is defined in the Employment
Agreement) for 1997 under the terms of the Employment Agreement had he remained
an employee of Keystone for the remainder of 1997. The separation payment shall
be made immediately following the expiration of the statutory revocation period
referenced in Section 22(d) of the Agreement.
Xxxxxx shall receive a separation payment equal to the balance of the Four
Hundred Fifty Thousand Dollars ($450,000.00) referenced in subsection 1 above on
January 2, 1998 (or on such other date as is mutually agreed to by Keystone and
Xxxxxx.) In the event of Xxxxxx' death prior to January 2, 1998, his heirs shall
receive the separation payment.
4. Xxxxxx hereby acknowledges that the separation payments referenced above
include payment for any vacation, personal days, sick days, short-term
disability and holidays to which Xxxxxx may have otherwise been entitled and
that such separation payments represent complete satisfaction of any such
obligations.
B. SEPARATION PAYMENTS IN LIEU OF BENEFITS.
1. Xxxxxx shall receive an additional separation payment of Two Hundred
Thousand Dollars ($200,000.00) on January 2, 1998 (or on such other date as is
mutually agreed to by Keystone and Xxxxxx). In the event of Xxxxxx' death prior
to January 2, 1998, his heirs shall receive the separation payment.
2. Xxxxxx hereby acknowledges that the payment of this Two Hundred Thousand
Dollars ($200,000.00) is in lieu of any welfare, fringe benefit or other
incentive compensation benefits to which Xxxxxx may have been entitled
including, but not limited to, medical, dental, accidental death and
dismemberment, long-term disability, life, payments pursuant to the Management
Incentive Compensation Plan (MICP) for 1997, payments pursuant to the
Performance Unit Plan (PUP) for the current performance period, any
phone/secretarial support, tax consulting services, automobile allowance and/or
club memberships and that such separation payment represents complete
satisfaction of any such obligations.
C. SEPARATION PAYMENTS FOR RETIREMENT BENEFIT PURPOSES. W-2 wages are
generally included in the calculation of retirement benefits under the qualified
and nonqualified retirement programs maintained by Keystone. Employment contract
buyout payments (such as the separation payments provided herein) are
specifically excluded from the calculation of retirement benefits under the
qualified and nonqualified retirement programs maintained by Keystone.
II. BENEFITS
A. SPLIT DOLLAR LIFE INSURANCE.
1. Keystone shall continue to maintain the split dollar life insurance
policy with a death benefit of Six Hundred Thousand Dollars ($600,000.00)
(Metropolitan Life Insurance Policy No. 947590025U) on the life of Xxxxxx (the
"Policy") for a period of eighteen (18) months from the Effective Date, such
maintenance period to end on April 22, 1999.
2. In the event of Xxxxxx' death prior to April 22, 1999, Xxxxxx'
designated beneficiaries shall receive the death benefits under the terms of the
Policy and Keystone shall receive a repayment of the premium payments that are
owed by Xxxxxx to Keystone.
3. On April 22, 1999, the Policy shall be transferred to Xxxxxx and Xxxxxx
shall not be required to repay the premium payments that would have otherwise
been owed by Xxxxxx to Keystone in the amount of approximately One Hundred
Thirty Thousand Five Hundred Forty-Four Dollars ($130,544.00).
B. QUALIFIED PENSION PLANS. Any retirement benefits to which Xxxxxx is enti-
tled under the terms of the Keystone Financial Pension Plan and/or the
Keystone Financial 401(k) Savings Plan shall be paid in accordance with
the terms of such plans.
C. NONQUALIFIED RETIREMENT BENEFITS. Any benefits to which Xxxxxx may be enti-
tled under the terms of the Supplemental Retirement Income Plan and/or the
Savings Restoration Plan shall be paid in accordance with the terms of
such plans.
D. STOCK OPTIONS.
1. Xxxxxx acknowledges that he is not eligible to receive any further
grants of stock options pursuant to any program maintained by Keystone.
2. Outstanding vested incentive stock options held by Xxxxxx must be
exercised no later than the earlier of (i) three months from the Effective Date
or (ii) the scheduled expiration of the exercise period of such options.
3. Outstanding vested nonqualified stock options must be exercised no
later than the earlier of (i) one year from the Effective Date or (ii) the
scheduled expiration of the exercise period of such stock options.
4. All nonvested incentive stock options and nonvested nonqualified stock
options have lapsed as of the Effective Date.
E. MANAGEMENT STOCK OWNERSHIP PROGRAM. In accordance with the terms of the
MSOP and the underlying loan documents, Xxxxxx shall be required to repay
the outstanding loan balance within ninety (90) days from the Effective Date.
F. EMPLOYEE STOCK PURCHASE PLAN. Xxxxxx' account balance (plus accrued
interest) shall be distributed to Xxxxxx pursuant to the terms of the Plan.
G. PERFORMANCE UNIT PLAN AND MANAGEMENT INCENTIVE COMPENSATION PLAN. Xxxxxx
thereby acknowledges that the separation payment made pursuant to Section
I.B.2 hereof represents complete satisfaction of any amounts to which Xxxxxx
may have been entitled pursuant to the terms of the PUP and MICP.
H. COBRA. Xxxxxx shall be provided with a notice of his right to COBRA
continuation coverage. If Xxxxxx elects COBRA continuation coverage, the cost
of such coverage shall be paid exclusively by Xxxxxx.
III. TAX WITHHOLDING
All separation payments and benefits hereunder are subject to all
applicable federal, state and local taxes and reporting requirements.
