Exhibit 6(c)(1)
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THE FIRST NATIONAL BANK OF MIFFLINTOWN
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 19/th/ day of August, 1997, by and between THE
FIRST NATIONAL BANK OF MIFFLINTOWN, a national banking association located in
Mifflintown, Pennsylvania (the "Company") and JAMES McLAUGHLIN (the
"Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.
AGREEMENT
The Executive and the Company agree as follows:
Article I
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Change of Control" shall mean any of the following:
(A) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than the Corporation, a subsidiary of
the Corporation, an employee benefit plan (or related trust)
of the Corporation or a direct or indirect subsidiary of the
Corporation, or affiliates of the Corporation (as defined in
Rule 12b-2 under the Exchange Act), becomes the beneficial
owner (as determined pursuant to Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 20% of the combined
voting power of the Corporation's then outstanding
securities or announces a tender offer or exchange offer for
securities of the Corporation representing more than 20% of
the combined voting power of the Corporation's then
outstanding securities; or
(B) the occurrence of, or execution of an agreement
providing for, a reorganization, merger, consolidation or
other similar transaction or connected series of
transactions of the Corporation as a result of which either
(a) the Corporation does not survive or (b) pursuant to
which shares of the Corporation common stock ("Common
Stock") would be
converted into cash, securities or other property, unless, in case of
either (a) or (b), the holders of Corporation Common Stock immediately
prior to such transaction will, following the consummation of the
transaction, beneficially own, directly or indirectly, more than 50%
of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
corporation surviving, continuing or resulting from such transaction;
or
(C) the liquidation or dissolution of the Corporation
or the Company or the occurrence of, or execution of an
agreement providing for, a sale of all or substantially all
of the assets of the Corporation or the Company to an entity
which is not a direct or indirect subsidiary of the
Corporation; or
(D) the occurrence of, or execution of an agreement
providing for, a reorganization, merger, consolidation, or
similar transaction of the Corporation, or before any
connected series of such transactions, if, upon consummation
of such transaction or transactions, the persons who are
members of the Board of Directors of the Corporation
immediately before such transaction or transactions cease
or, in the case of the execution of an agreement for such
transaction or transactions, it is contemplated in such
agreement that upon consummation such persons would cease,
to constitute a majority of the Board of Directors of the
Corporation or, in a case where the Corporation does not
survive in such transaction, of the corporation surviving,
continuing or resulting from such transaction or
transactions; or
(E) any other event which is at any time designated as
a "Change of Control" for purposes of this Agreement by a
resolution adopted by the Board of Directors of the
Corporation with the affirmative vote of a majority of the
non-employee directors in office at the time the resolution
is adopted; in the event any such resolution is adopted, the
Change of Control event specified thereby shall be deemed
incorporated herein by reference and thereafter may not be
amended, modified or revoked without the written agreement
of Executive.
Notwithstanding anything else to the contrary set forth in
this Agreement, if (i) an agreement is executed by the
Corporation or the Company providing for any of the
transactions or events constituting a Change of Control
pursuant to this Section 1.1.1, and the agreement
subsequently expires or is terminated without the
transaction or event being consummated, and (ii) Executive's
employment has not terminated prior to such expiration or
termination, for purposes of this Agreement it shall be as
though such agreement was never executed and no Change of
Control event shall be deemed to have occurred as a result
of the execution of such agreement.
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1.1.2 "Corporation" means First Community Financial Corporation.
1.1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.1.4 "Death Benefit" means the benefit provided to the Executive's
designated beneficiary pursuant to Article 3 hereof.
1.1.5 "Disability" means the Executive suffering a sickness,
accident or injury which, in the judgment of a physician satisfactory to
the Company, prevents the Executive from performing substantially all of
the Executive's normal duties for the Company. As a condition to any
benefits, the Company may require the Executive to submit to such physical
or mental evaluations and tests as the Company's Board of Directors deems
appropriate.
1.1.6 "Disability Benefit" means the benefit provided to Executive
pursuant to Section 2.3 hereof.
1.1.7 "Early Termination" means the Termination of Employment before
Normal Retirement Age for reasons other than death, Disability, Termination
for Cause or following a Change of Control.
1.1.8 "Early Termination Benefit" means the benefit provided to
Executive pursuant to Section 2.2 hereof.
1.1.9 "Early Termination Date" means the date of the Executive's
Early Termination.
1.1.10 "Normal Retirement Age" means the Executive's 65`" birthday.
1.1.11 "Normal Retirement Benefit" means the benefit provided to
Executive pursuant to Section 2.1 hereof.
1.1.12 "Normal Retirement Date" means the first day of the month
following the date on which the Executive's Termination of Employment
occurs following his attainment of Normal Retirement Age for reasons other
than death or disability.
1.1.13 "Plan Year" means a twelve-month period commencing on January
1 and ending on December 31 of each year. The initial Plan Year shall
commence January 1, 1997.
1.1.14 "Termination for Cause" means a termination as set forth in
Section 5.2.
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1.1.15 "Termination of Employment" means that the Executive ceases to
be employed by the Company for any reason whatsoever other than by reason
of a leave of absence which is approved by the Company.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. Subject to the general limitations of
Article 5, commencing on the Executive's Normal Retirement Date, the Company
shall pay to the Executive an annual benefit described in this Section 2.1 in
lieu of any other benefit under this Agreement.
2.1.1 Amount of Benefit. The first year annual Normal Retirement
Benefit to be paid to Executive under this Section 2.1 shall be $29,000
(twenty-nine thousand dollars). Commencing on the first year anniversary of
the first Normal Retirement Benefit payment, and continuing on each
subsequent anniversary, the annual Normal Retirement Benefit shall be
increased by 3.50% each year.
2.1.2 Payment of Benefit. The Company shall pay the annual Normal
Retirement Benefit to the Executive in 12 equal monthly installments. The
annual Normal Retirement Benefit shall be paid to Executive for a term of
15 years.
2.2 Early Termination Benefit. Subject to the general limitations of
Article 5, in the event of Executive's Early Termination, the Company shall pay
to the Executive an annual Early Termination Benefit described in this Section
2.2 in lieu of any other benefit under this Agreement.
2.2.1 Amount of Benefit. The annual Early Termination Benefit to be
paid to Executive under this Section 2.2 shall be the benefit amount set
forth in Schedule A, Column B for the Plan Year ending immediately prior to
the Executive's Early Termination Date. Commencing on the first year
anniversary of the first Early Termination Benefit payment, and continuing
on each subsequent anniversary, the Early Termination benefit shall be
increased by 3.50 % each year.
2.2.2 Payment of Benefit. The Company shall pay the annual Early
Termination Benefit to the Executive in 12 equal monthly installments. The
Early Termination Benefit shall commence on the first day of the month
following the date the Executive attains Normal Retirement Age. The annual
Early Termination Benefit shall be paid to Executive for a term of fifteen
(15) years.
2.3 Disability Benefit. If the Executive's employment with the Company
terminates prior to Normal Retirement Age due to Disability, the Company shall
pay to the Executive the benefit described in this Section 2.3 in lieu of any
other benefit under this Agreement.
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2.3.1 Amount of Benefit. The Disability Benefit to be paid to
Executive pursuant to this Section 2.3 shall be a lump sum amount equal to
the Accrued Benefit set forth in Schedule A, Column A, for the Plan Year
ending immediately prior to the date in which the Executive's employment
terminates due to Disability.
2.3.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in a lump sum within 90 days after the date of the Executive's
termination of employment due to Disability.
2.3.3 Benefit Increases. The Company's Board of Directors reserves
the right to increase the lump sum Disability Benefit or to authorize
additional Disability Benefit payments.
2.4 Change of Control Benefit. If the Executive's employment should
voluntarily or involuntarily terminate for any reason, other than a Termination
for Cause, at any time after a Change of Control but not beyond the date
Executive attains Normal Retirement Age, the Company shall pay to the Executive
an Immediate Annual Benefit in lieu of the Early Termination Benefit which would
otherwise be paid to Executive as set forth in Section 2.2 hereof.
2.4.1 Amount of Benefit. The Immediate Annual Benefit to be paid
hereunder, shall be the annual benefit amount set forth in Schedule A,
Column C for the Plan Year ending immediately prior to the Executive's
termination of employment following a Change of Control.
2.4.2 Payment of Benefit. The Company shall pay the Immediate Annual
Benefit to the Executive in 12 equal monthly installments. The Immediate
Annual Benefit shall commence on the first day of the month following
Executive's termination of employment. The Immediate Annual Benefit shall
be paid to the Executive for a term of fifteen (15) years.
Article 3
Death Benefits
3.1 Death During Active Service. If the Executive dies while in the
active service of the Company, the Company shall pay to the Executive's
beneficiary a Death Benefit as described in this Section 3.1. This Death Benefit
shall be paid in lieu of the payment of benefits to Executive under Article 2.
3.1.1 Amount of Benefit. The annual Death Benefit to be paid to the
Executive's designated beneficiary under this Section 3.1 shall be an
amount equal to the annual Normal Retirement Benefit set forth in Section
2.1.1, subject to annual benefit adjustments as set forth in Section 2.1.1
hereof.
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3.1.2 Payment of Benefit. The Company shall pay the annual Death
Benefit to the Executive's designated beneficiary in 12 equal monthly
installments. The annual Death Benefit shall commence on the first day of
the month following the Executive's death. The Death Benefit shall be paid
to Executive's beneficiary for a guaranteed fifteen (15) year term.
3.2 Death During Benefit Period. If the Executive dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Executive's
beneficiary for the remaining term at the same time and in the same amounts they
would have been paid to the Executive had the Executive survived.
3.3 Death Following Termination of Employment But Before Benefits
Commence. If the Executive is entitled to benefits under this Agreement, but
dies prior to receiving said benefits, the Company shall pay to the Executive's
beneficiary the same benefits, over the same period of time and in the same
manner they would have been paid to the Executive had the Executive survived,
provided however, said benefit payments will commence on the first day of the
month following Executive's death.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written beneficiary designation with the Company. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments or remaining payments shall be made to the
Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incapacitated
person or incapable person. The Company may require proof of incapacity,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
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Article 5
General Limitations
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement pursuant to the
following:
5.1 Excess Parachute Payment. To the extent the benefit would be an
excess parachute payment under Section 2806 of the Code.
5.2 Termination for Cause. If the Company terminates the Executive's
employment for:
5.2.1 Gross negligence or gross neglect of duties;
5.2.2 Commission of a felony or of a gross misdemeanor involving
moral turpitude; or
5.2.3 Fraud, disloyalty, dishonesty or willful violation of any law
or significant Company policy committed in connection with the Executive's
employment and resulting in an adverse effect on the Company.
5.3 Competition After Termination of Employment. No benefits shall
continue to be paid or shall be payable and Executive shall forfeit any right to
benefits if the Executive, without the prior written consent of the Company,
engages in, becomes interested in, directly or indirectly, as a sole proprietor,
as a partner in a partnership, or as a substantial shareholder in a corporation,
or becomes associated with, in the capacity of employee, director, officer,
principal, agent, trustee or in any other capacity whatsoever, any enterprise
conducted in the trading area (a 50 mile radius) of the business of the Company,
which enterprise is, or may deemed to be, competitive with any business carried
on by the Company. This section 5.3 shall not apply following a Change of
Control.
5.4 Suicide or Misstatement. No benefits shall be payable if the
Executive commits suicide within two years after the date of this Agreement, or
if the Executive has made any material misstatement of fact on any application
for life insurance purchased by the Company.
Article 6
Claims and Review Procedures
6.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against the Agreement (the "Claimant") in writing, within ninety
(90) days of Claimant's written application for benefits, of his or her
eligibility or noneligibility for benefits under the Agreement. If the Company
determines that the Claimant is not eligible for benefits or full benefits, the
notice shall set forth (1) the specific reasons for such denial, (2) a specific
reference to the provisions of the Agreement on which the denial is based, (3) a
description of any
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additional information or material necessary for the Claimant to perfect his or
her claim, and a description of why it is needed, and (4) an explanation of the
Agreement's claims review procedure and other appropriate information as to the
steps to be taken if the Claimant wishes to have the claim reviewed. If the
Company determines that there are special circumstances requiring additional
time to make a decision, the Company shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.
6.2 Review Procedure. If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different benefits, the Claimant shall have the opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company within sixty (60) days after receipt of the notice issued by the
Company. Said petition shall state the specific reasons which the Claimant
believes entitle him or her to benefits or to greater or different benefits.
Within sixty (60) days after receipt by the Company of the petition, the Company
shall afford the Claimant (and counsel, if any) an opportunity to present his or
her position to the Company orally or in writing, and the Claimant (or counsel)
shall have the right to review the pertinent documents. The Company shall notify
the Claimant of its decision in writing within the sixty-day period, stating
specifically the basis of its decision, written in a manner calculated to be
understood by the Claimant and the specific provisions of the Agreement on which
the decision is based. If, because of the need for a hearing, the sixty-day
period is not sufficient, the decision may be deferred for up to another sixty-
day period at the election of the Company, but notice of this deferral shall be
given to the Claimant.
Article 7
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their respective beneficiaries, survivors, executors, successors,
administrators and transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's right to
discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.
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8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
8.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the Commonwealth of Pennsylvania, except to the extent
preempted by the laws of the United States of America.
8.6 Unfunded Arrangement. The Executive and his/her designated
beneficiary are general unsecured creditors of the Company for the payment of
benefits under this Agreement. The benefits represent the mere promise by the
Company to pay such benefits. The rights to benefits are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors. Any insurance on the
Executive's life is a general asset of the Company to which the Executive and
beneficiary have no preferred or secured claim.
8.7 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
8.8 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
8.8.1 Interpreting the provisions of the Agreement;
8.8.2 Establishing and revising the method of accounting for the
Agreement;
8.8.3 Maintaining a record of benefit payments; and
8.8.4 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
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IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
THE FIRST NATIONAL BANK OF
MIFFLINTOWN
/s/ James R. McLaughlin By: /s/ Samuel F. Metz
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James R. McLaughlin Title: Chairman
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By execution hereof, First Community Financial Corporation consents and
agrees to be bound by the terms and conditions of this Agreement.
ATTEST: CORPORATION:
FIRST COMMUNITY FINANCIAL
CORPORATION
/s/ Renee Williamson By: Samuel F. Metz
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(Assistant) Secretary Title: Chairman
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