Exhibit 10.21
TRANSITION, CONSULTING,
NONCOMPETITION AND RETIREMENT AGREEMENT
This Transition, Consulting,
Noncompetition and Retirement Agreement (the
“Agreement”) is entered into as of March 23, 2005,
by and between First Keystone Financial, Inc. (the
“Company”), First Keystone Bank (the
“Bank”) and Donald S. Guthrie (the
“Consultant”).
WITNESSETH:
WHEREAS, the Consultant currently
serves as Chairman of the Board and Chief Executive Officer of the
Company and as President and Chief Executive Officer of the
Bank;
WHEREAS, the Company and the
Consultant entered into an employment agreement as of
December 1, 2004 (the “Company Employment
Agreement”);
WHEREAS, the Bank and the Consultant
entered into an employment agreement as of December 1, 2004
(the “Bank Employment Agreement”);
WHEREAS, the Consultant is a
participant in the Supplemental Executive Retirement Plan adopted
by the Bank effective March 31, 2004 (the
“SERP”);
WHEREAS, the Consultant desires to
retire and to provide services to the Company and the Bank on a
part-time basis;
WHEREAS, the Company desires to have
the Consultant undertake, and the Consultant is willing to
undertake, certain consulting and noncompetition obligations on the
terms and conditions set forth herein; and
WHEREAS, the Consultant is willing to
relinquish his rights under the Company Employment Agreement, the
Bank Employment Agreement and the SERP;
NOW, THEREFORE, in consideration of
the mutual covenants set forth herein and other good and valuable
consideration, the parties hereto agree as follows:
1. Effective Date . The
“Effective Date” shall mean May 1, 2005.
2. Consulting Period .
The Company and the Bank hereby agree to engage the Consultant, and
the Consultant hereby agrees to provide services to the Company and
the Bank, subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on
April 30, 2010 (the “Consulting Period”).
3. Consulting Services
.
(a) Duties . During the
Consulting Period, the Consultant shall report to the President of
the Company and the Bank, and shall provide his personal advice and
counsel to the Company and the Bank regarding their operations,
customer relationships, growth and expansion
opportunities and other
business matters that may arise in connection with the business and
operations of the Company and its subsidiaries in the Commonwealth
of Pennsylvania and as may be reasonably requested by the President
of the Company and the Bank or his designee from time to time
(collectively, the “Consulting Services”). It is
contemplated that the Consulting Services will include, without
limitation, monthly meetings or teleconferences between the
Consultant and the President of the Company and the Bank; efforts
by the Consultant to enhance the business activities of the Company
and its subsidiaries in the Commonwealth of Pennsylvania, including
without limitation meeting with existing and potential customers of
the Company and its subsidiaries located in such state; attendance
at certain public functions in the Commonwealth of Pennsylvania on
behalf of the Company and its subsidiaries; attendance at meetings
of the Board of Directors of the Company and the Bank to report on
the business activities of the Company and its subsidiaries in the
Commonwealth of Pennsylvania and attendance at certain functions of
the Company and its subsidiaries. Consulting Services may be
provided in person, telephonically, electronically or by
correspondence to the extent appropriate under the
circumstances.
(b) Geographic Location
. The Consultant shall provide the Consulting Services in the
Commonwealth of Pennsylvania, including without limitation the
market areas of the Company and the Bank.
(c) Time Limitation . In
no event shall the Consultant be required to provide Consulting
Services hereunder for more than 25 hours per week or 100 hours in
any calendar month during the Consulting Period, with the maximum
monthly hours being pro-rated for the first and last month of the
Consulting Period.
(d) Directorship . The
Consultant shall be appointed as Chairman of the Board of Directors
of the Bank as of the Effective Date. The Consultant shall continue
to serve as Chairman of the Board of Directors of the Company and
of the Bank throughout the Consulting Period, provided that the
Consultant continues to be a director in good standing during such
period. Subject to compliance with its fiduciary duties, the Board
of Directors of the Company agrees to nominate the Consultant for
an additional four-year term of office as a director of the Company
when his current term expires in 2007 and to elect him as a
director of the Bank during the Consulting Period. In addition to
the compensation set forth in Section 4 hereof and any fees
paid to directors of the Company and the Bank for attendance at
meetings, the Consultant shall receive an annual fee of $15,000.00
for serving as Chairman of the Board of the Company and the Bank
during the Consulting Period.
4. Compensation .
(a) Monthly Payments .
In consideration of the obligations and commitments of the
Consultant under this Agreement, including but not limited to
Sections 3 and 8 hereof, the Company and/or the Bank agrees to
pay to the Consultant an amount equal to $12,500.00 per month on
the first business day of each month during the Consulting Period,
commencing May 1, 2005 through and including April 1,
2010 (the “Monthly Fee”). During the Consulting
Period,
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the Consultant shall be
treated as an independent contractor and shall not be deemed to be
an employee of the Company or any affiliate or subsidiary of the
Company.
(b) Medical and Other
Benefits . The Company and the Bank shall provide medical
insurance for the benefit of the Consultant and his spouse during
the Consulting Period, at no cost to the Consultant and his spouse,
with the terms of such coverage being similar to the coverage
provided by the Company and the Bank to their employees. In
addition, the Company and the Bank shall provide dental and
long-term care insurance coverage for the benefit of the Consultant
and his spouse during the Consulting Period, at no cost to the
Consultant and his spouse, with the terms of such coverage being
similar to the coverage provided by the Company and the Bank as of
the date of this Agreement.
(c) Existing Stock
Options . The existing 9,750 vested stock options currently
held by the Consultant to purchase shares of common stock of the
Company shall remain outstanding and exercisable in accordance with
their terms, with the Consultant having three months following the
Effective Date to exercise his incentive stock options.
(d) Employee Benefit
Plans . The Consultant shall be entitled to receive his vested
benefits under the Company = s Employee Stock
Ownership Plan and the Bank = s 401(k) Profit
Sharing Plan in accordance with the terms of such plans. As of the
Effective Date, the Consultant shall no longer be entitled to
participate in any of the employee benefit plans or programs
offered by the Company, the Bank or any of their subsidiaries, and
no additional benefits shall accrue or vest on behalf of the
Participant under such employee benefit plans or programs after the
Effective Date, except as set forth in Sections 4(b) and 4(c)
hereof.
(e) Lump Sum Payment .
In recognition of the years of service that the Consultant has
provided to the Company and the Bank and in satisfaction of the
Consultant’s accrued and/or carried over but unused vacation
leave, the Consultant acknowledges the receipt from the Company
and/or the Bank prior to the Effective Date of a lump sum cash
payment equal to $165,519.27.
(f) Use of an Automobile
. During the Consulting Period, the Company and/or the Bank shall
provide the Consultant with the continued use of the automobile
that was provided for the Consultant’s use immediately prior
to the Effective Date. At the end of the Consulting Period, the
Company and/or the Bank shall transfer title to the automobile to
the Consultant.
(g) Expenses . The
Company and/or the Bank shall reimburse the Consultant or otherwise
provide for or pay for all reasonable expenses incurred by the
Consultant at the request of the Company and/or the Bank,
including, but not by way of limitation, the costs of insurance,
repair, maintenance and licensing of the automobile provided by
Section 4(f) hereof, subject to such reasonable documentation as
may be requested by the Company and/or the Bank. If such expenses
are paid in the first instance by the Consultant, the Company
and/or the Bank shall reimburse the Consultant therefor upon
receipt of such reasonable documentation as may be requested by the
Company.
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(h) Proration . The
Consultant’s compensation, benefits and expenses shall be
paid by the Company and the Bank in the same proportion as the time
and services actually expended by the Consultant on behalf of the
Company and the Bank.
5. Termination of Consulting
Services .
(a) Death or Disability
. The Consultant’s services shall terminate automatically
upon the Consultant’s death during the Consulting Period. If
the Company and/or the Bank determines in good faith that the
Disability of the Consultant has occurred during the Consulting
Period (pursuant to the definition of Disability set forth below),
it may give to the Consultant written notice in accordance with
Section 15 of this Agreement of its intention to terminate the
Consultant’s services. In such event, the Consultant’s
services with the Company and the Bank shall terminate effective on
the 60th day after receipt of such notice by the Consultant (the
“Disability Effective Date”), provided that, within the
60 days after such receipt, the Consultant shall not have
returned to performance of the Consultant’s duties. For
purposes of this Agreement, “Disability” shall mean the
Consultant 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
12 months, as determined by a physician selected by the
Company or its insurers and reasonably acceptable to the Consultant
or the Consultant’s legal representative.
(b) Cause . The Company
and the Bank may terminate the Consultant’s services during
the Consulting Period for Cause. For purposes of this Agreement,
“Cause” shall mean:
(i) the continued failure of the
Consultant to perform substantially the Consultant’s duties
with the Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to the Consultant by the Board of Directors of the
Company or the Bank which specifically identifies the manner in
which the Board of Directors believes that the Consultant has not
substantially performed the Consultant’s duties and after the
Consultant has been given a 15 day period to cure such
failure; or
(ii) the willful engaging by the
Consultant in illegal conduct or gross misconduct which violates
any code of conduct of the Company and/or the Bank or which is
otherwise materially and demonstrably injurious to the Company or
the Bank; or
(iii) conviction of a felony or a
guilty or nolo contendere plea by the Consultant with
respect thereto.
For purposes of this
provision, no act or failure to act, on the part of the Consultant,
shall be considered “willful” unless it is done, or
omitted to be done, by the Consultant in bad faith or without
reasonable belief that the Consultant’s action or omission
was in the best interests of the Company and/or the Bank. Any act,
or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board of Directors or upon the
instructions of the President or a senior officer of the Company
and/or the Bank or based upon the advice of counsel for the
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Company and/or the Bank
shall be conclusively presumed to be done, or omitted to be done,
by the Consultant in good faith and in the best interests of the
Company and the Bank. The cessation of the services of the
Consultant for conduct described in subparagraph (i) or
(ii) above shall not be deemed to be for Cause unless and
until there shall have been delivered to the Consultant a copy of a
resolution duly adopted by the affirmative vote of a majority of
the entire membership of the Board of Directors of the Company or
the Bank at a meeting of the Board of Directors called and held for
such purpose (after not less than ten days’ advance notice is
provided to the Consultant and the Consultant is given an
opportunity, together with counsel chosen by the Consultant, to be
heard before the Board of Directors), finding that, in the good
faith opinion of the Board, the Consultant is guilty of the conduct
described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail. The Company and/or
the Bank may suspend the Consultant’s authority (with a
continuation of the Monthly Fee during such period of suspension)
after the provision of a notice of intention to terminate the
Consultant’s services for conduct described in subparagraph
(i) or (ii) above and prior to the time the Consultant is
given an opportunity to meet with the Board of Directors, and any
such suspension shall not constitute “Good Reason” as
defined in Section 5(c) below.
(c) Good Reason . The
Consultant’s services may be terminated by the Consultant for
Good Reason. For purposes of this Agreement, “Good
Reason” shall mean in the absence of a written consent of the
Consultant:
(i) any failure by the Company and/or
the Bank to comply with any of the provisions of this Agreement,
other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company and/or
the Bank within 25 days after receipt of written notice
thereof given by the Consultant; or
(ii) any purported termination by the
Company and/or the Bank of the Consultant’s services
otherwise than as expressly permitted by this Agreement.
(d) Notice of
Termination . Any termination by the Company and/or the Bank
for Cause, or by the Consultant for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 15 of this Agreement. For
purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Consultant’s services under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination
date (which date shall be not more than 30 days after the
giving of such notice). The failure by the Consultant or the
Company and/or the Bank to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Consultant or the
Company and/or the Bank, respectively, hereunder or preclude the
Consultant or the Company and/or the Bank, respectively, from
asserting such fact or circumstance in enforcing the
Consultant’s or the Company’s or the Bank’s
rights hereunder.
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(e) Date of Termination
. “Date of Termination” means (i) if the
Consultant’s services are terminated by the Company and/or
the Bank for Cause, or by the Consultant for Good Reason, the date
of receipt of the Notice of Termination or any later date specified
therein within 30 days of such notice, as the case may be,
(ii) if the Consultant’s services are terminated by the
Company and/or the Bank other than for Cause or Disability, the
Date of Termination shall be the date on which the Company and/or
the Bank notifies the Consultant of such termination and
(iii) if the Consultant’s services are terminated by
reason of death or Disability, the Date of Termination shall be the
date of death of the Consultant or the Disability Effective Date,
as the case may be.
6. Obligations of the
Company and the Bank upon Termination of Consulting Services
.
(a) Good Reason; Other Than
for Cause, Death or Disability . If, during the Consulting
Period, the Company and/or the Bank shall terminate the
Consultant’s services other than for Cause, Death or
Disability or the Consultant shall terminate his services by the
Company and the Bank for Good Reason, the Company and/or the Bank
shall pay to the Consultant in a lump sum in cash within
30 days after the Date of Termination the sum of (1) any
accrued but unpaid Monthly Fee of the Consultant through the Date
of Termination (the “Accrued Obligations”), (2) an
amount equal to the present value of the Monthly Fees that would
have been paid through and including April 30, 2010 (the
“Remaining Monthly Fees”), and (3) the present
value of the Retirement Benefits (as defined in Section 9
hereof), with the present values calculated as set forth below. In
addition, the Company and the Bank shall provide the Consultant and
his spouse with the medial and other benefits set forth in Section
4(b) hereof through April 30, 2010 (the “Medical
Benefits”) and shall transfer title to the automobile to the
Consultant as provided in Section 4(f) hereof.
(b) Death . If the
Consultant’s services are terminated by reason of the
Consultant’s death during the Consulting Period, the Company
and/or the Bank shall pay to the Consultant’s estate or
beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination the sum of (1) any
Accrued Obligations, (2) the present value of the Remaining
Monthly Fees, and (3) the present value of the Retirement
Benefits (as defined in Section 9 hereof), with the present
values calculated as set forth below. In addition, the Company and
the Bank shall provide the Consultant and his spouse with the
Medical Benefits and shall transfer title to the automobile to the
Consultant as provided in Section 4(f) hereof.
(c) Disability . If the
Consultant’s services are terminated by reason of the
Consultant’s Disability during the Consulting Period, the
Company and/or the Bank shall pay to the Consultant in a lump sum
in cash within 30 days of the Date of Termination the sum of
(1) any Accrued Obligations, and (2) the present value of
the Retirement Benefits (as defined in Section 9 hereof), with
the present value calculated as set forth below, provided, however,
that if the Consultant’s services are terminated by reason of
Disability prior to May 1, 2008, then the Retirement Benefits
shall be calculated as if the annual benefit was paid for
12 years rather than 10 years. In addition, the Company
and the Bank shall provide the Consultant and his spouse
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with the Medical Benefits
and shall transfer title to the automobile to the Consultant as
provided in Section 4(f) hereof.
(d) Cause; Other than for
Good Reason . If the Consultant’s services shall be
terminated for Cause or the Consultant terminates his services
without Good Reason during the Consulting Period, this Agre
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