FIRST KEYSTONE BANK AMENDED AND RESTATED AGREEMENT
Exhibit
10.2
FIRST
KEYSTONE BANK
THIS
AMENDED AND RESTATED AGREEMENT (the
“Agreement”), between First Keystone Bank (the “Savings Bank”), a federally
chartered savings bank, and Xxxxx Xxxxx (the “Executive”), is hereby amended and
restated effective as of December 1, 2008, provided that the effectiveness of
this Agreement is subject to and conditioned upon the non-objection of the
Office of Thrift Supervision (the “OTS”) as set forth below.
WHEREAS, the
Executive is presently an officer and Corporate Secretary of First Keystone
Financial, Inc. (the “Corporation”) and the Savings Bank (together, the
“Employers”), pursuant to an employment agreement between the Savings Bank and
the Executive originally dated as of December 1, 2004 (the “Prior
Agreement”);
WHEREAS, the
Savings Bank entered into a Supervisory Agreement with the OTS dated as of
February 13, 2006 (the “Supervisory Agreement”), which generally precludes the
Savings Bank from (i) entering into, renewing, extending or revising any
arrangement related to compensation or benefits of any director or senior
executive officer of the Savings Bank unless the Savings Bank first: (A)
provides a minimum of 30 days’ advance written notice of the proposed
transaction to the OTS, and (B) receives a written notice of non-objection from
the OTS; and (ii) making or agreeing to make any “golden parachute payments” as
defined in 12 U.S.C. Section 1828(k) and 12 C.F.R. Part 359, except as may be
permitted by the OTS and the preceding statutory authority;
WHEREAS, the
Savings Bank previously authorized a renewal of the Prior Agreement subject to
and conditioned upon the receipt of non-objection from the OTS, which
non-objection has been requested;
WHEREAS, the
Savings Bank wishes to amend and restate the Prior Agreement in order to comply
with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
with this Agreement to supersede the Prior Agreement in its entirety, subject to
and conditioned upon the receipt of non-objection from the OTS in accordance
with the Supervisory Agreement;
WHEREAS, the
Employers desire to assure themselves of the continued availability of the
Executive’s services as provided in this Agreement; and
WHEREAS, the
Executive is willing to serve the Employers on the terms and conditions
hereinafter set forth;
NOW
THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1. Definitions. The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:
(a) Annual Compensation.
The Executive’s “Annual Compensation” for purposes of this Agreement
shall be deemed to mean the highest level of base salary paid to the Executive
by the Savings Bank or any subsidiary thereof during any of the three calendar
years ending immediately prior to the calendar year in which the Date of
Termination occurs.
(b) Cause.
Termination of the Executive’s employment for “Cause” shall mean
termination because of personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease-and-desist
order.
(c) Change in
Control. “Change in Control” shall mean a change in the
ownership of the Corporation or the Savings Bank, a change in the effective
control of the Corporation or the Savings Bank or a change in the ownership of a
substantial portion of the assets of the Corporation or the Savings Bank, in
each case as provided under Section 409A of the Code and the regulations
thereunder.
(d) Code. Code
shall mean the Internal Revenue Code of 1986, as amended.
(e) Date of Termination.
“Date of Termination” shall mean (i) if the Executive’s employment is
terminated for Cause, the date on which the Notice of Termination is given, and
(ii) if the Executive’s employment is terminated for any other reason, the date
specified in such Notice of Termination.
(f) Disability.
“Disability” shall mean the Executive (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering employees of the Savings Bank.
(g) Good
Reason. “Good Reason” means the occurrence of any of the
following events:
(i) any
material breach of this Agreement by the Savings Bank, including without
limitation any of the following: (A) a material diminution in the Executive’s
base compensation, (B) a material diminution in the Executive’s authority,
duties or responsibilities, or (C) a material diminution in the authority,
duties or responsibilities of the supervisor to whom the Executive is required
to report, or
(ii) any
material change in the geographic location at which the Executive must perform
her services under this Agreement;
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provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to the Savings Bank within ninety
(90) days of the initial existence of the condition, describing the existence of
such condition, and the Savings Bank shall thereafter have the right to remedy
the condition within thirty (30) days of the date the Savings Bank received the
written notice from the Executive. If the Savings Bank remedies the
condition within such thirty (30) day cure period, then no Good Reason shall be
deemed to exist with respect to such condition. If the Savings Bank
does not remedy the condition within such thirty (30) day cure period, then the
Executive may deliver a Notice of Termination for Good Reason at any time within
sixty (60) days following the expiration of such cure period.
(i) Notice of
Termination. Any purported termination of the Executive’s employment by
the Savings Bank for any reason, including without limitation for Cause,
Disability or Retirement, or by the Executive for any reason, including without
limitation for Good Reason, shall be communicated by a written “Notice of
Termination” to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less than thirty (30)
days nor more than ninety (90) days after such Notice of Termination is given,
except any termination of the Executive’s employment for Cause shall be
effective immediately, and (iv) is given in the manner specified in Section 7
hereof.
(j) Retirement. “Retirement”
shall mean voluntary termination by the Executive in accordance with the
Employers’ retirement policies, including early retirement, generally applicable
to their salaried employees.
2. Benefits Upon
Termination. If the Executive’s employment by the Savings Bank shall be
terminated subsequent to a Change in Control by (i) the Savings Bank other than
for Cause, Retirement or as a result of the Executive’s death or Disability, or
(ii) the Executive for Good Reason, then the Corporation or the Savings Bank
shall, subject to the provisions of Sections 2(d) and 3 hereof, as
applicable:
(a) pay
to the Executive, in a lump sum within five (5) business days following the Date
of Termination, a cash severance amount equal to two (2) times the Executive’s
Annual Compensation; and
(b) maintain
and provide for a period ending at the earlier of (i) two (2) years after the
Date of Termination or (ii) the date of the Executive’s full-time employment by
another employer (provided that the Executive is entitled under the terms of
such employment to benefits substantially similar to those described in this
subparagraph (b)), at no cost to the Executive, the Executive’s continued
participation in all group insurance, life insurance, health and accident
insurance, and disability insurance in which the Executive was participating
immediately prior to the Date of Termination; provided that any insurance
premiums payable by the Savings Bank or any successors pursuant to this Section
2(b) shall be payable at such times and in such amounts (except that the Savings
Bank shall also pay any employee portion of the premiums) as if the Executive
was still an employee of the Savings Bank, subject to any increases in such
amounts imposed by the insurance company or COBRA, and the amount of insurance
premiums required to be paid by the Savings Bank in any taxable year shall not
affect the amount of insurance premiums required to be paid by the Savings Bank
in any other taxable year; and provided further that if the Executive’s
participation in any group insurance plan is barred, the Savings Bank shall
either arrange to provide the Executive with insurance benefits substantially
similar to those which the Executive was entitled to receive under such group
insurance plan or, if such coverage cannot be obtained, pay a lump sum cash
equivalency amount within thirty (30) days following the Date of Termination
based on the annualized rate of premiums being paid by the Savings Bank as of
the Date of Termination; and
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(c) pay
to the Executive, in a lump sum within five (5) business days following the Date
of Termination, a cash amount equal to the projected cost to the Savings Bank of
providing benefits to the Executive for a period of twenty-four (24) months
pursuant to any other employee benefit plans, programs or arrangements offered
by the Savings Bank in which the Executive was entitled to participate
immediately prior to the Date of Termination (other than retirement plans or
stock compensation plans of the Savings Bank), with the projected cost to the
Savings Bank to be based on the costs incurred for the calendar year immediately
preceding the year in which the Date of Termination occurs.
(d) Notwithstanding
the provisions of Sections 2(a), 2(b) and 2(c) hereof, in the event the
Executive’s employment is terminated subsequent to a Change in Control by (i)
the Savings Bank other than for Cause, Retirement or as a result of the
Executive’s death or (ii) the Executive for Good Reason and at the time of such
termination (A) either of the supervisory agreements entered into by each of the
Corporation and the Savings Bank with the OTS as of February 13, 2006 are still
in effect or (B) either the Corporation or the Savings Bank are deemed to be in
“troubled condition” as defined in 12 C.F.R. §563.555 (or any successor thereto)
unless, with respect to clause (A) and/or (B), as applicable, prior to or in
connection with the Executive’s termination subsequent to the Change in Control,
the OTS, and, to the extent required, the FDIC, has approved or not objected to
the payment of the severance and the provision of benefits as provided by
Sections 2(a), 2(b) and 2(c), respectively, pursuant to the provisions of 12
C.F.R. Part 359, then the Employers, instead of providing Executive the benefits
set forth in Sections 2(a), 2(b) and 2(c), shall, subject to the provisions of
Section 3 hereof, if applicable:
(I) pay
to the Executive, in a lump sum within five (5) business days following the Date
of Termination, a cash severance amount equal to one (1) times the Executive’s
Annual Compensation;
(II) maintain
and provide for a period ending at the earlier of (i) one (1) year after the
Date of Termination or (ii) the date of the Executive’s full-time employment by
another employer (provided that the Executive is entitled under the terms of
such employment to benefits substantially similar to those described in this
subparagraph (b)), at no cost to the Executive, the Executive’s continued
participation in all group insurance, life insurance, health and accident
insurance and disability insurance in which the Executive was participating
immediately prior to the Date of Termination; provided that any insurance
premiums payable by the Savings Bank or any successors pursuant to this Section
2(d)(II) shall be payable at such times and in such amounts (except that the
Savings Bank shall also pay any employee portion of the premiums) as if the
Executive was still an employee of the Savings Bank, subject to any increases in
such amounts imposed by the insurance company or COBRA, and the amount of
insurance premiums required to be paid by the Savings Bank in any taxable year
shall not affect the amount of insurance premiums required to be paid by the
Savings Bank in any other taxable year; and provided further that if the
Executive’s participation in any group insurance plan is barred, the Savings
Bank shall either arrange to provide the Executive with insurance benefits
substantially similar to those which the Executive was entitled to receive under
such group insurance plan or, if such coverage cannot be obtained, pay a lump
sum cash equivalency amount within thirty (30) days following the Date of
Termination based on the annualized rate of premiums being paid by the Savings
Bank as of the Date of Termination; and
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(III) pay
to the Executive, in a lump sum within five (5) business days following the Date
of Termination, a cash amount equal to the projected cost to the Savings Bank of
providing benefits to the Executive for a period of twelve (12) months pursuant
to any other employee benefit plans, programs or arrangements offered by the
Savings Bank in which the Executive was entitled to participate immediately
prior to the Date of Termination (other than retirement plans or stock
compensation plans of the Savings Bank), with the projected cost to the Savings
Bank to be based on the costs incurred for the calendar year immediately
preceding the year in which the Date of Termination occurs.
3. Limitation of
Benefits under Certain Circumstances. If the payments and
benefits pursuant to Section 2 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Savings Bank and the Corporation, would constitute a “parachute payment” under
Section 280G of the Code, then the payments and benefits payable by the Savings
Bank pursuant to Section 2 hereof shall be reduced by the minimum amount
necessary to result in no portion of the payments and benefits under Section 2
being non-deductible to the Savings Bank pursuant to Section 280G of the Code
and subject to the excise tax imposed under Section 4999 of the
Code. If the payments and benefits under Section 2 are required to be
reduced, the cash severance shall be reduced first, followed by a reduction in
the fringe benefits. The parties hereto agree that the payments and benefits
payable pursuant to this Agreement to the Executive upon termination shall not
exceed three times the Executive’s average taxable income from the Employers for
the five calendar years preceding the year in which the Change in Control
occurs, in accordance with the provisions of Section 310 of the OTS Examination
Handbook. The determination of any reduction in the payments and
benefits to be made pursuant to Section 2 shall be based upon the opinion of
independent tax counsel selected by the Savings Bank and paid for by the Savings
Bank. Such counsel shall promptly prepare the foregoing opinion, but
in no event later than thirty (30) days from the Date of Termination, and may
use such actuaries as such counsel deems necessary or advisable for the
purpose. Nothing contained in this Section 3 shall result in a
reduction of any payments or benefits to which the Executive may be entitled
upon termination of employment other than pursuant to Section 2 hereof, or a
reduction in the payments and benefits specified in Section 2 below
zero.
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4.
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Mitigation;
Exclusivity of Benefits.
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(a) The
Executive shall not be required to mitigate the amount of any benefits hereunder
by seeking other employment or otherwise, nor shall the amount of any such
benefits be reduced by any compensation earned by the Executive as a result of
employment by another employer after the Date of Termination or otherwise,
except as set forth in Section 2(b) above.
(b) The
specific arrangements referred to herein are not intended to exclude any other
benefits which may be available to the Executive upon a termination of
employment with the Employers pursuant to employee benefit plans of the
Employers or otherwise.
5. Withholding. All
payments required to be made by the Savings Bank hereunder to the Executive
shall be subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Savings Bank may reasonably determine should be
withheld pursuant to any applicable law or regulation.
6. Assignability.
The Savings Bank may assign this Agreement and its rights and obligations
hereunder in whole, but not in part, to any corporation, bank or other entity
with or into which the Savings Bank may hereafter merge or consolidate or to
which the Savings Bank may transfer all or substantially all of its assets, if
in any such case said corporation, bank or other entity shall by operation of
law or expressly in writing assume all obligations of the Savings Bank hereunder
as fully as if it had been originally made a party hereto, but may not otherwise
assign this Agreement or its rights hereunder. The Executive may not
assign or transfer this Agreement or any rights or obligations
hereunder.
7. Notice. For
the purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below:
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To
the Savings Bank:
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President
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| First Keystone Bank | |
| 00 Xxxx Xxxxx Xxxxxx | |
| Xxxxx, Xxxxxxxxxxxx 00000 |
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To
the Executive:
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Xxxxx
Xxxxx
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| At the address last appearing on the personnel | |
| records of the Savings Bank |
8. Amendment;
Waiver. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and such officer or officers as may be specifically
designated by the Board of Directors of the Savings Bank to sign on its
behalf. No waiver by any party hereto at any time of any breach by
any other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. In addition, notwithstanding anything in this
Agreement to the contrary, the Savings Bank may amend in good faith any terms of
this Agreement, including retroactively, in order to comply with Section 409A of
the Code.
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9. Governing
Law. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the United States where applicable and otherwise by
the substantive laws of the Commonwealth of Pennsylvania.
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10.
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Nature
of Employment and Obligations.
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(a) Nothing
contained herein shall be deemed to create other than a terminable at will
employment relationship between the Savings Bank and the Executive, and the
Savings Bank may terminate the Executive’s employment at any time, subject to
providing any payments specified herein in accordance with the terms
hereof.
(b)
Nothing contained herein shall create or require the Savings Bank to create a
trust of any kind to fund any benefits which may be payable hereunder, and to
the extent that the Executive acquires a right to receive benefits from the
Savings Bank hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Savings Bank.
11.
Term of
Agreement. This Agreement shall terminate two (2) years after the date
first written above. Subject to the last sentence of this Section 11,
on or prior to the first annual anniversary of the date first written above and
each annual anniversary thereafter, the Board of Directors of the Savings Bank
shall consider (with appropriate corporate documentation thereof, and after
taking into account all relevant factors, including the Executive’s performance
as an employee) renewal of the term of this Agreement for an additional one (1)
year, and the term of this Agreement shall be so extended unless the Board of
Directors of the Savings Bank does not approve such renewal and provides written
notice to the Executive, or the Executive gives written notice to the Savings
Bank, at least thirty (30) days prior to the date of any such anniversary, of
such party’s election not to extend the term beyond its then scheduled
expiration date; provided that, notwithstanding the foregoing to the contrary,
this Agreement shall be automatically extended for an additional one (1) year
upon a Change in Control. Notwithstanding anything in this Agreement
to the contrary, as long as the Savings Bank remains subject to the Supervisory
Agreement or is deemed “troubled” as such term is defined in 12 C.F.R. §563.555
and for as long as required by the Supervisory Agreement, any renewal of this
Agreement shall be subject to and conditioned upon the written approval or
non-objection of the OTS and, if applicable, the Federal Deposit Insurance
Corporation (the “FDIC”).
12. Headings. The
section headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
13. Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement,
which shall remain in full force and effect.
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14. Changes in Statutes
or Regulations. If any statutory or regulatory provision
referenced herein is subsequently changed or re-numbered, or is replaced by a
separate provision, then the references in this Agreement to such statutory or
regulatory provision shall be deemed to be a reference to such section as
amended, re-numbered or replaced.
15. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
16. Regulatory
Prohibition. Notwithstanding any other provision of this Agreement to the
contrary, any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. §1828(k)) and 12
C.F.R. Part 359.
17. Regulatory
Actions. The following provisions shall be applicable to the
parties to the extent that they are required to be included in agreements
between a savings association and its employees pursuant to Section 563.39(b) of
the Regulations Applicable to all Savings Associations, 12 C.F.R. §563.39(b), or
any successor thereto, and shall be controlling in the event of a conflict with
any other provision of this Agreement.
(a) If
the Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Savings Bank’s affairs pursuant to notice
served under Section 8(e)(3) or Section 8(g)(1) of the FDIA (12 U.S.C.
§§1818(e)(3) and 1818(g)(1)), the Savings Bank’s obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed,
the Savings Bank may, in its discretion: (i) pay the Executive all or part of
the compensation withheld while its obligations under this Agreement were
suspended, and (ii) reinstate (in whole or in part) any of its obligations which
were suspended.
(b) If
the Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Savings Bank’s affairs by an order issued
under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. §§1818(e)(4) and
(g)(1)), all obligations of the Savings Bank under this Agreement shall
terminate as of the effective date of the order, but vested rights of the
Executive and the Savings Bank as of the date of termination shall not be
affected.
(c) If
the Savings Bank is in default, as defined in Section 3(x)(1) of the FDIA (12
U.S.C. §1813(x)(1)), all obligations under this Agreement shall terminate as of
the date of default, but vested rights of the Executive and the Savings Bank as
of the date of termination shall not be affected.
(d) All
obligations under this Agreement shall be terminated pursuant to 12 C.F.R.
§563.39(b)(5), except to the extent that it is determined that continuation of
the Agreement for the continued operation of the Savings Bank is necessary: (i)
by the Director of the OTS, or his/her designee, at the time the FDIC enters
into an agreement to provide assistance to or on behalf of the Savings Bank
under the authority contained in Section 13(c) of the FDIA (12 U.S.C. §1823(c));
or (ii) by the Director of the OTS, or his/her designee, at the time the
Director or his/her designee approves a supervisory merger to resolve problems
related to operation of the Savings Bank or when the Savings Bank is determined
by the Director of the OTS to be in an unsafe or unsound condition, but vested
rights of the Executive and the Savings Bank as of the date of termination shall
not be affected.
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18. Entire
Agreement. This Agreement embodies the entire agreement
between the Savings Bank and the Executive with respect to the matters agreed to
herein. All prior agreements between the Savings Bank and the
Executive with respect to the matters agreed to herein, including the Prior
Agreement, are hereby superseded and shall have no force or
effect. Notwithstanding the foregoing, nothing contained in this
Agreement shall affect the agreement of even date being entered into between the
Corporation and the Executive.
[signature
page follows]
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IN WITNESS
WHEREOF, this Agreement has been executed effective as of the date first
written above.
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ATTEST:
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FIRST
KEYSTONE BANK
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By:
_________________________
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By: _________________________________
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Name:
Xxxx X. Xxxxxxxxxx
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Xxxxxx X. GuthrieCarol Xxxxx,
Individually
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Title: Chief
Financial Officer
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Chairman of the Board of
Directors
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EXECUTIVE
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By: _________________________________
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Xxxxx Xxxxx,
Individually
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