Exhibit 10.5
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. Xxxxxxx
(the "Executive"), residing at 00 Xxxxxxxxxx Xxxxx, Xxxxxxxxxxxxx, XX 00000.
WHEREAS, the Corporation desires to employ the Executive in a Senior Executive
position with the Corporation or a Subsidiary under the terms and conditions set
forth in this Agreement; and
WHEREAS, the Executive desires to serve the Corporation or a Subsidiary in a
Senior Executive position 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.
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
governed by a contract or agreement.
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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 twenty-nine-month
period beginning August 1, 1998 and ending on December 31, 2000.
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 three-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 three-year period then in effect. For example, the
initial contract period is August 1, 1998 through December 31, 2000.
On January 1, 1999, the term of this Agreement extends to December 31,
2001. On January 1, 2000, the term of this Agreement extends to
December 31, 2002 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 initially as President and
Chief Operating Officer of the Corporation reporting to the Chairman and Chief
Executive Officer of the Corporation 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 Chairman and Chief Executive Officer of the
Corporation, 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 officer of the Corporation to whom he reports as
provided in Section 3 of this Agreement.
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 $300,000 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 Executive'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.
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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
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
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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
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.
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.
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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
indemnification 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 commercially
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
indemnification provided under this Agreement.
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,
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.
9. RESTRICTIVE COVENANTS. Except as otherwise provided below, upon termination
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 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
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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 manage-
ment 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, includin 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 anticipated 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 Executive'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 injurious 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
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.
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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 Corporation's MICP or equity partic-
ipation 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 Section 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 relocation (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 termination 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 guardian 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 Corporation
other than for the reasons or circumstances set forth under Sections
10(a), (b) or (c) hereof or (ii) if the Executive terminates 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 one and one-half 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 eighteen (18) months, 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, but specifically excluding
the ACCRP and the Performance Unit Plan (the "PUP"), 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 the
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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 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 Agreement 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
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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.
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
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;
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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
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 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.
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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.
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. Xxxxxxx
00 Xxxxxxxxxx Xxxxx,
Xxxxxxxxxxxxx, XX 00000
If to the Corporation: Keystone Financial, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Chairman of the Board
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
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.
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.
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20. PAYMENT OF MONEY DUE DECEASED EXECUTIVE. If the Executive dies prior
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 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.
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.
KEYSTONE FINANCIAL, INC.
ATTEST:
______________________________ By:____________________________
Secretary Xxxx X. Xxxxxxxx
Chief Executive Officer
WITNESS: EXECUTIVE
------------------------------- --------------------------------
Xxxx X. Xxxxxxx
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