Exhibit 10.6
June 4, 2002
Xx. Xxxxx X. Xxxxx
President and Chief Executive Officer
Palmyra Savings
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Xxxxx:
The purpose of this letter is to set forth our mutual understanding
regarding the termination of your existing employment agreement with Palmyra
Savings ("Palmyra") and PFSB Bancorp, Inc. ("PFSB"), and your ongoing
relationship with First Federal Bank ("First Federal") following the
consummation of the merger of PFSB and First Federal Bancshares, Inc. ("FFBI").
Your execution of this letter will constitute your binding agreement to enter
into the Non-Competition and Consulting Agreement described below effective on
the date of the merger.
At the closing of the merger, your employment as President and Chief
Executive Officer of Palmyra will terminate. Therefore, we hereby offer to enter
into a non-competition agreement with you at the closing of the merger for a
term of 12 months covering the geographic areas where First Federal and Palmyra
currently do business and relating to your involvement with a competing
financial institution or similar business. In consideration of your acceptance
of these restrictions, we will make a payment to you of $1,500 during each month
of the agreement. In addition, we would like to retain your services as a
consultant on an ongoing basis for a period of 12 months following the
completion of the merger. You would be required to render up to 15 hours of
consulting services per month for which we will make a payment to you of $4,335
during each month of the agreement. The foregoing is reflected in the "form of"
Non-Competition and Consulting Agreement attached to this letter.
We look forward to working with you toward the completion of the merger
and to our ongoing relationship. If the foregoing arrangements are acceptable to
you, please indicate your acceptance in the place indicated below.
Sincerely,
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Accepted and Agreed:
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
FORM OF
NON-COMPETITION AND CONSULTING AGREEMENT
This Non-Competition and Consulting Agreement ("Agreement") is entered
into this ___ day of _______________, 2002 ("Effective Date") by and between
First Federal Bank (the "Bank") and Xxxxx X. Xxxxx ("Consultant").
RECITALS
A. First Federal Bancshares, Inc. ("FFBI") and PFSB Bancorp, Inc.
("PFSB"), parent of Palmyra Savings ("Palmyra"), have signed an Agreement and
Plan of Merger, pursuant to which PFSB will merge with and into FFBI, with FFBI
surviving the merger.
B. The Bank recognizes the specialized knowledge and expertise of
the Consultant related to the operations of Palmyra.
C. To ensure the continued availability of the Consultant, the
Bank desires to enter into a non-competition agreement and consulting
relationship with Consultant upon the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and terms set forth
in this Agreement and of the mutual benefits accruing to the Bank and Consultant
from the relationship to be established between the parties by the terms of this
Agreement, the Bank and Consultant hereby agree as follows:
1. Consulting Relationship
-----------------------
The Bank hereby retains Consultant, and Consultant hereby agrees to be
retained by the Bank, as an independent contractor, and not as an employee.
2. Consulting Services
-------------------
Consultant agrees that during the term of this Agreement:
A. Consultant will consult on matters related to the operations
of Palmyra, or such other subsidiary of FFBI as shall continue
the historic business of Palmyra.
B. Consultant shall exercise a reasonable degree of skill,
prudence and care in performing the services referred to in
Paragraph A above.
C. During the Term of this Agreement, Consultant shall provide
services under this Agreement on a schedule mutually agreed
upon with senior management of the Bank; PROVIDED, HOWEVER,
that Consultant shall not be required to render more than 15
hours of service per month, it being understood and agreed
that time spent for service as a director of the Bank
(including time spent traveling to and
2
attending meetings of the Bank's Board of Directors) shall not
count towards Consultant's performance obligations. It is
expressly acknowledged that Consultant may perform services as
an employee or independent contractor of another company,
subject to the restrictions in Section 6 hereof, and if
Consultant performs such services for another company, the
Bank shall use its best efforts to schedule his consulting
services so as not to interfere with such activities.
Consultant shall not be obligated to render any services under
this Agreement during such period when he is unable to do so
due to illness, disability or injury, subject to the terms of
Section 5(b) hereof.
D. Consultant shall not enter into agreements or make commitments
on behalf of the Bank without prior written consent or
approval of the Bank or its chief executive officer.
3. Compensation
------------
A. The Bank agrees to pay Consultant for his consulting services
performed under this Agreement at a rate of $ 4,335 per month
for a period of 12 months, commencing as of the date of this
agreement.
B. For his commitments and agreements as described in Section 6
herein, the Bank agrees to pay consultant $1,500 per month for
a period of 12 months, commencing as of the date of this
agreement.
C. The Bank hereby agrees to reimburse the Consultant for all
reasonable expenses incurred by the Consultant on behalf of
and with the consent of the Bank, provided that the Consultant
shall furnish appropriate documentation of such expenses and
receives prior approval of such expenses.
D. The Bank agrees to provide Consultant with reasonable office
facilities for the performance of his consulting services.
4. Other Conditions
----------------
Consultant shall have no authority over any employee or officer of the
Bank, nor shall the Bank be required in any manner to implement any plans or
suggestions Consultant may provide.
5. Term and Termination; Effect of Termination
-------------------------------------------
The term of this Agreement shall begin on the date first written above
and shall continue for a period of 12 calendar months thereafter ("Term") unless
terminated in accordance with A, B or C as set forth below.
A. Termination for Cause. The Bank may terminate this Agreement
at any time for "Cause." Termination for Cause means
termination because of the Consultant's personal dishonesty,
willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties,
or willful violation of any law, rule or regulation related to
the business or operations of the Bank or its
3
subsidiaries. Any determination regarding Consultant's
termination for Cause shall be made by a majority of the
disinterested members of the Bank's Board of Directors (after
reasonable notice to Consultant and the opportunity to be
heard with counsel on the reasons therefor.)
B. Death or Disability. In the event of Consultant's death or
permanent disability (as determined by a physician selected by
the Bank), Consultant's obligations under the Agreement shall
terminate.
C. Termination Without Cause. In the event of a termination of
Consultant by the Bank during the Term, other than a
Termination for Cause, Consultant's obligation's under the
Agreement shall terminate.
D. Effect of Termination. In the event of Consultant's
Termination for Cause, no further payments or benefits shall
be payable or provided to Consultant under this Agreement. In
the event of (i) a termination by the Bank other than a
Termination for Cause or (ii) termination by reason of
Consultant's disability, Consultant (or his guardian) shall be
entitled to receive the payments and benefits Consultant would
have received under Section 3 had he continued to provide
services through the expiration of the Term. In the event of a
termination by reason of Consultant's death, Consultant's
estate shall be entitled to receive the payments Consultant
would have received under Section 3 had he continued to
provide services through the expiration of the Term.
6. Non-Competition and Confidential Business
-----------------------------------------
A. Consultant, during the Term of the Agreement, will not compete
with the Bank or an affiliate of the Bank in any city, town or
county in which the Bank or an affiliate has an office or has
filed an application for regulatory approval to establish an
office.
B. During the Term of this Agreement, the Consultant hereby
agrees that he shall not, without the Bank's prior written
consent, engage in providing professional services or enter
into employment as an employee, director, consultant,
representative, or similar relationship with any entity whose
business materially competes with the depository, lending or
other business activities of the Bank or its affiliates in any
city, town or county in which the Bank or an affiliate has an
office or has filed an application for regulatory approval to
establish an office.
C. During the Term of this Agreement, the Consultant hereby
agrees that he shall not, on his own behalf or on behalf of
others, employ, solicit, or induce, or attempt to employ,
solicit or induce, any employee of the Bank for employment
with any financial services enterprise, including, but not
limited to, a savings and loan association, bank, credit union
or mortgage banking firm, nor will Consultant directly or
indirectly, on his behalf or for others, seek to influence any
Bank employee to leave the Bank's employ.
4
D. During the Term of this Agreement, Consultant agrees that he
will not, without the express written consent of the Bank,
directly or indirectly communicate or divulge his knowledge of
the past, present or considered business activities,
proprietary data or other confidential information, of the
Bank or its affiliates, nor will he use such information for
his own benefit or for the benefit of any other person, firm,
association, or corporation, except that Consultant may
disclose such matters to the extent that disclosure is (a)
requested by the Bank in the course of the consulting
relationship or (b) required by a court or other governmental
agency of competent jurisdiction. The foregoing restriction
shall not apply to information that is or becomes generally
available to the public other than as a result of a disclosure
by Consultant.
7. Independent Contractor
----------------------
The parties hereto agree and acknowledge that the relationship between
the Bank and Consultant shall be that of an independent contractor and not that
of employer-employee, master-servant or principal-agent. Nothing in this
Agreement, or its implementation, shall be construed to the contrary.
8. Effect on Prior Agreements and Existing Benefit Plans
-----------------------------------------------------
This Agreement shall represent the complete Agreement between the Bank
and Consultant concerning the subject matter hereof and supersedes all prior
agreements or understandings, written or oral. No attempted modification or
waiver of any of the provisions hereof shall be binding on either party unless
made in writing and signed by both Consultant and the Bank.
9. Notices
-------
Any notice required or permitted to be given hereunder shall be in
writing and shall be effective three (3) business days after it is properly sent
by registered or certified mail, if to the Bank to the President at the
principal administrative offices of the Bank, or if to Consultant to the address
set forth beneath his signature to this Agreement, or to such other address as
either party may from time to time designate by notice.
10. Assignability
-------------
This Agreement may not be assigned by either party without the prior
written consent of the other party, except that no consent is necessary for the
Bank to assign this Agreement to a corporation succeeding to substantially all
of the assets or business of the Bank, whether by merger, consolidation,
acquisition or otherwise. This Agreement shall be binding upon Consultant, his
heirs and permitted assigns and the Bank, its successors and permitted assigns.
11. Severability
------------
Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render nonenforceable
any other section contained herein. If any section or
5
provision within a section is found invalid or unenforceable, it is the intent
of the parties that a court of competent jurisdiction shall reform the section
or provisions to produce its nearest enforceable economic equivalent.
12. Arbitration
-----------
Unless otherwise mutually agreed to by the Consultant and the Bank in
writing, any controversy or claim arising out of or relating to this Agreement
or the breach thereof shall be settled by binding arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, with
such arbitration hearing to be held at the offices of the American Arbitration
Association ("AAA") nearest to Palmyra, Missouri and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. Either the Consultant or the Bank may file a request for such
arbitration with the AAA.
13. Applicable Law
--------------
It is the intention of the parties hereto that all questions and
interpretations with respect to the construction and performance of this
Agreement and the rights and liabilities of the parties hereto shall be
determined in accordance with the laws of the State of Missouri, with respect to
any matter or thing arising out of this Agreement or pursuant thereto.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and the first above written.
FIRST FEDERAL BANK
By:
-------------------------------------
CONSULTANT
----------------------------------------
Xxxxx X. Xxxxx
----------------------------------------
----------------------------------------
Address
7
