EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 11th day of October, 2005 (the "Agreement"),
by and between FIRST FEDERAL SAVINGS BANK, a federally-chartered savings bank
(the "Bank"), FEDFIRST FINANCIAL CORPORATION (the "Company") and XXXXXXX X.
X'XXXXX ("Executive").
WITNESSETH
WHEREAS, Executive has accepted employment with the Bank in a position
of substantial responsibility;
WHEREAS, the Bank and Executive wish to set forth the terms and
conditions of Executive's employment;
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and upon the other terms and conditions provided for in this
Agreement, the parties hereby agree as follows:
1. EMPLOYMENT. The Bank and the Company will employ Executive as
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Executive Vice President and Chief Operating Officer. Executive will perform all
duties and shall have all powers commonly incident to such offices or which,
consistent with those offices, the Boards of Directors of the Bank and the
Company (the "Board") delegates to Executive. Executive shall report to the
Board.
2. LOCATION AND FACILITIES. The Bank will furnish Executive with
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the working facilities and staff customary for the positions held by Executive.
The Bank will locate the office and staff of Executive at the principal
administrative offices of the Bank.
3. TERM.
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a. The term of this Agreement shall include (i) the
initial term, consisting of the period commencing on
September 19, 2005 (the "Effective Date") and ending
on September 19, 2007, plus (ii) any and all
extensions of the initial term made pursuant to this
Section 3.
b. Not later than September 19, 2006, and prior to each
September 19th thereafter, the disinterested members
of the Board may extend the term of this Agreement
for an additional twelve months so that the remaining
term of the Agreement becomes twenty-four months,
unless Executive elects not to extend the term of
this Agreement by giving written notice of his
intentions in accordance with Section 17 of this
Agreement. Each year, the Board will review
Executive's performance for purposes of determining
whether to extend the term of this Agreement and will
include the rationale and results of its review in
the minutes of its meeting. Executive shall receive
notice as soon as possible after such review as to
whether the Agreement will be extended for an
additional year.
4. BASE COMPENSATION.
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a. The Bank agrees to pay the Executive an annual base
salary of $150,000, payable in accordance with the
customary payroll practices of the Bank.
b. Each year, the Board will review the level of
Executive's base salary, based upon factors they deem
relevant, in order to determine whether to maintain
or increase Executive's base salary.
5. BONUSES. Executive shall receive a $12,500 signing bonus upon
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the effective date of this Agreement. In addition, Executive will participate in
discretionary bonuses or other incentive compensation programs the Bank may
sponsor or award from time to time to other senior management employees on such
terms as the Board may establish.
6. BENEFIT PLANS.
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a. Executive will participate in the employee welfare
benefit plans the Bank maintains for the benefit of
its employees on the same terms as other employees.
As of the effective date of this Agreement, those
benefits include group-term life insurance, health
and dental insurance, life insurance and short- and
long- term group disability insurance. The Bank
agrees to reimburse Executive the cost of COBRA
coverage provided by a prior employer during the
period in which Executive is not eligible to
participate in the health and welfare plans
sponsored by the Bank. During the term of this
Agreement, Executive may also participate in the
employee stock ownership plan and retirement savings
plan (i.e., 401(k) plan) sponsored by the Bank on
the same terms as other employees.
b. In connection with the implementation of any
shareholder approved equity incentive plan, the
Compensation Committee of the Company Board will
consider Executive for participation in the plan. In
the event that, at the Company's first annual
meeting occurring after the effective date of this
Agreement, fails to seek shareholder approval of
such plan, Executive will receive a one-time cash
payment equal to the difference between $75,000 and
the total cash bonuses Executive receives (e.g., the
signing bonus described in Section 5 and
discretionary bonuses) prior to the first
anniversary date of this Agreement. Said payment
will be made within ten (10) days of the first
anniversary date of this Agreement.
7. VACATION AND LEAVE. Executive may take up to four weeks paid
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vacation and three paid personal days annually. Any other leave may be taken in
accordance with the Bank's general personnel policies. Executive shall not be
charged leave of any kind for attendance at professional meetings, seminars or
continuing education programs.
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8. EXPENSE PAYMENTS AND REIMBURSEMENTS.
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a. The Bank will reimburse Executive for all reasonable
and documented out-of-pocket business expenses
(including, but not limited to, business cell phone
use, parking, business entertainment, seminars and
membership fees for organizations approved by the
Board and dues for such organizations) incurred in
connection with his services under this Agreement.
Executive must substantiate the payment of all
expenses in accordance with applicable policies of
the Bank.
b. Executive will receive a monthly payment of $948.18
as a car allowance during the term of this Agreement.
In addition, Executive shall be reimbursed at the
rate of 35 cents per mile for business use of his
vehicle.
9. LOYALTY AND CONFIDENTIALITY.
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a. During the term of this Agreement, Executive shall:
(i) devote all his business time, attention, skill,
and efforts to the faithful performance of his duties
as Executive Vice President and Chief Operating
Officer of the Bank and the Company; provided,
however, that from time to time, Executive may serve
on the board of directors of, and hold any other
offices or positions in, companies or organizations
that will not present any conflict of interest with
the Bank or any of their affiliates, and that will
not unfavorably affect the performance of Executive's
employment duties, and that will not violate any
applicable statute or regulation. Executive shall not
engage in any business or activity contrary to the
business affairs or interests of the Bank and
Company.
b. Nothing contained in this Agreement prevents or
limits Executive's right to invest in the capital
stock or other securities of any business dissimilar
from that of the Bank and Company, or, solely as a
passive, minority investor, in any business.
c. Executive agrees to maintain the confidentiality of
any and all information concerning the operation or
financial status of the Bank or the Company; the
names or addresses of any borrowers, depositors and
other customers; any information concerning or
obtained from such customers; and any other
information concerning the Bank or the Company which
he gains or of which he becomes aware during the
course of his employment with the Bank or the
Company. Executive further agrees that, unless
required by law or specifically permitted by the
Board in writing, he will not disclose to any person
or entity, either during or subsequent to his
employment, any of the above-mentioned information
not generally known to the public, nor shall he use
the information in any way other than for the benefit
of the Bank or the Company.
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10. TERMINATION AND TERMINATION PAY. Executive, the Bank or the
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Company may terminate Executive's employment under the following circumstances:
a. DEATH. Executive's employment under this Agreement
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shall terminate upon his death during the term of
this Agreement, in which event Executive's estate
shall receive the compensation due to Executive
through the last day of the calendar month in which
his death occurred.
b. RETIREMENT. This Agreement shall terminate upon
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Executive's retirement under the retirement benefit
plan or plans in which he participates pursuant to
Section 6 of this Agreement or otherwise.
c. DISABILITY.
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i. The Board or Executive may terminate
Executive's employment after having
determined Executive has suffered a
Disability. For purposes of this Agreement,
"Disability" means a physical or mental
infirmity that impairs Executive's ability
to substantially perform his duties under
this Agreement and results in Executive
becoming eligible for long-term disability
benefits under any long-term disability
plans of the Bank (or, if no such benefits
exist, that impairs Executive's ability to
substantially perform his duties under this
Agreement for a period of at least one
hundred eighty (180) consecutive days). The
Board, in good faith, shall determine
whether or not Executive becomes and
continues to be permanently disabled for
purposes of this Agreement, based upon
competent medical advice and other factors
that the Board reasonably believes to be
relevant. As a condition to any benefits,
the Board may require Executive to submit to
physical or mental evaluations and tests as
the Board or its medical experts deem
reasonably appropriate (copies of which
shall promptly be provided to Executive
and/or his designated representative).
ii. In the event of his Disability, Executive
shall no longer be obligated to perform
services under this Agreement. The Bank will
pay Executive, as Disability pay, an amount
equal to two-thirds ((2)/3) of Executive's
weekly rate of base salary in effect as of
the date of his termination of employment
due to Disability. The Bank will make
Disability payments on a monthly basis
commencing on the first day of the month
following the effective date of Executive's
termination of employment due to Disability
and ending on the earlier of: (A) the date
he returns to full-time employment at the
Bank in the same capacity as he was employed
prior to his termination for Disability; (B)
his death; (C) his attainment of age 65; or
(D) the date the Agreement would have
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expired had Executive's employment not
terminated by reason of Disability. The Bank
will reduce Disability pay otherwise due to
Executive under this provision by the amount
of any short- or long-term disability
benefits payable to Executive under any
other disability programs sponsored by the
Bank. In addition, during any period of
Executive's Disability, the Bank shall
continue to provide Executive and his
dependents, to the greatest extent possible,
all benefits (including, without limitation,
benefits under retirement plans and medical,
dental and life insurance plans) provided to
Executive and his dependents prior to his
Disability, on the same terms as if
Executive remained actively employed by the
Bank.
d. TERMINATION FOR CAUSE.
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i. The Board, by written notice to Executive in
the form and manner specified in this
paragraph, may immediately terminate
Executive's employment at any time for
"Cause". Executive shall have no rights to
receive compensation or other benefits for
any period after termination for Cause,
except for already vested benefits.
Termination for "Cause" shall mean
termination because of, in the good faith
determination of the Board, Executive's:
(1) Personal dishonesty;
(2) Incompetence;
(3) Willful misconduct;
(4) Breach of fiduciary duty involving
personal profit;
(5) Intentional failure to perform
duties under this Agreement;
(6) Willful violation of any law, rule
or regulation (other than traffic
violations or similar offenses) that
reflects adversely on the reputation
of the Bank, any felony conviction,
any violation of law involving moral
turpitude, or any violation of a
final cease-and-desist order; or
(7) Material breach by Executive of any
provision of this Agreement.
ii. Notwithstanding the foregoing, Executive's
termination for Cause will not become effective
unless the Bank has delivered to Executive a copy of
a resolution duly adopted by the affirmative vote of
a majority of the entire membership of the Board, at
a meeting of the Board called and held for the
purpose of finding that, in the good faith opinion of
the Board (after reasonable notice to Executive and
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an opportunity for Executive to be heard before the
Board with counsel), Executive was guilty of the
conduct described above and specifying the
particulars of his conduct.
e. VOLUNTARY TERMINATION BY EXECUTIVE. In addition to
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his other rights to terminate employment under this
Agreement, Executive may voluntarily terminate
employment during the term of this Agreement upon at
least sixty (60) days prior written notice to the
Board. Upon Executive's voluntary termination,
Executive will receive only his compensation, vested
rights and employee benefits up to the date of his
termination.
f. WITHOUT CAUSE.
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i. In addition to termination pursuant to
Sections 10(a) through 10(e), the Board may,
upon providing written notice to Executive,
immediately terminate his employment at any
time for a reason other than Cause (a
termination "Without Cause").
ii. In the event of his termination of
employment under this Section 10(f),
Executive shall continue to receive his base
salary at the rate in effect at his
termination date for the remaining term of
the Agreement.
g. CHANGE IN CONTROL. In the event that the employment
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of the Executive is involuntarily terminated within
one (1) year of a Change in Control (as defined in
paragraph h below) Executive shall be entitled to the
following benefit:
i. a lump sum payment equal to three (3) times
Executive's base salary as of the date of
the Change in Control; and
ii. continuation at the Bank's expense of health
and dental coverage for Executive and his
dependents for a period not to exceed the
earlier of (i) 36 months from Executive's
termination date; (ii) Executive's
employment with another employer; or (iii)
Executive's death.
h. DEFINITION OF CHANGE IN CONTROL. For purposes of this
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Agreement, a "Change in Control" means any of the
following events:
i. MERGER: The Company merges into or
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consolidates with another corporation, or
merges another corporation into the Company,
and as a result, less than a majority of the
combined voting power of the resulting
corporation immediately after the merger or
consolidation is held by persons who were
stockholders of the Company immediately
before the merger or consolidation.
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ii. ACQUISITION OF SIGNIFICANT SHARE OWNERSHIP:
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There is filed, or required to be filed, a
report on Schedule 13D or another form or
schedule (other than Schedule 13G) required
under Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934, if the
schedule discloses that the filing person or
persons acting in concert has or have become
the beneficial owner(s) of 25% or more of a
class of the Company's voting securities,
but this clause (ii) shall not apply to
beneficial ownership of Company voting
shares held in a fiduciary capacity by an
entity of which the Company directly or
indirectly beneficially owns 50% or more of
its outstanding voting securities.
iii. CHANGE IN BOARD COMPOSITION: During any
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period of two consecutive years, individuals
who constitute the Company's Board of
Directors at the beginning of the two-year
period cease for any reason to constitute at
least a majority of the Company's Board of
Directors; provided, however, that for
purposes of this clause (iii), each director
who is first elected by the board (or first
nominated by the board for election by the
stockholders) by a vote of at least
two-thirds (2/3) of the directors who were
directors at the beginning of the two-year
period shall be deemed to have also been a
director at the beginning of such period; or
iv. SALE OF ASSETS: The Company sells to a third
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party all or substantially all of its
assets.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the reorganization of the Bank from the mutual holding company form of
organization to the full stock holding company form of organization (including
the elimination of the mutual holding company) constitute a "Change in Control"
for purposes of this Agreement.
i. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the
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payments and benefits pursuant to Section 10 of this
Agreement, either alone or together with other payments and
benefits which Executive has the right to receive from the
Company and the Bank, would constitute a "parachute payment"
under Section 280G of the Code, the payments and benefits
pursuant to Section 10 shall be reduced or revised, in the
manner determined by Executive, by the amount, if any, which
is the minimum necessary to result in no portion of the
payments and benefits under Section 10 being non-deductible to
the Company and the Bank pursuant to Section 280G of the Code
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and subject to the excise tax imposed under Section 4999 of
the Code. The determination of any reduction in the payments
and benefits to be made pursuant to Section 10 shall be based
upon the opinion of the Company and the Bank's independent
public accountants and paid for by the Company and the Bank.
In the event that the Company, the Bank and/or Executive do
not agree with the opinion of such counsel, (i) the Company
and the Bank shall pay to Executive the maximum amount of
payments and benefits pursuant to Section 10, as selected by
Executive, which such opinion indicates there is a high
probability do not result in any of such payments and benefits
being non-deductible to the Company and the Bank and subject
to the imposition of the excise tax imposed under Section 4999
of the Code and (ii) the Company and the Bank may request, and
Executive shall have the right to demand that they request, a
ruling from the IRS as to whether the disputed payments and
benefits pursuant to Section 10 have such consequences. Any
such request for a ruling from the IRS shall be promptly
prepared and filed by the Company and the Bank, but in no
event later than thirty (30) days from the date of the opinion
of counsel referred to above, and shall be subject to
Executive's approval prior to filing, which shall not be
unreasonably withheld. The Company, the Bank and Executive
agree to be bound by any ruling received from the IRS and to
make appropriate payments to each other to reflect any such
rulings, together with interest at the applicable federal rate
provided for in Section 7872(f)(2) of the Code. Nothing
contained herein shall result in a reduction of any payments
or benefits to which Executive may be entitled upon
termination of employment other than pursuant to Section 10
hereof, or a reduction in the payments and benefits specified
in Section 10 below zero.
11. INDEMNIFICATION AND LIABILITY INSURANCE.
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a. INDEMNIFICATION. The Bank and Company agree to
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indemnify Executive (and his heirs, executors, and
administrators) under this Agreement, and to advance
expenses related to this indemnification, to the
fullest extent permitted under applicable law and
regulations against any and all expenses and
liabilities that Executive reasonably incurs in
connection with or arising out of any action, suit,
or proceeding in which he becomes involved by reason
of his service as an Executive of the Bank and the
Company (whether or not Executive continues to serve
as an Executive at the time of incurring the expenses
or liabilities). Covered expenses and liabilities
include, without limitation, judgments, court costs,
attorneys' fees and the costs of reasonable
settlements (subject to Board approval), provided
legal action is brought against Executive in his
capacity as an Executive of the Bank, the Company or
any of its subsidiaries. Indemnification for expenses
shall not extend to matters related to Executive's
termination for "Cause." Notwithstanding anything in
this Section 11(a) to the contrary, the Bank and the
Company shall not be required to provide any
indemnification otherwise prohibited by applicable
law or regulation. The obligations of this Section
11(a) shall survive the term of this Agreement
(including extensions thereof) by a period of six (6)
years.
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b. INSURANCE. During the period in which the Bank and
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the Company must indemnify Executive, the Bank and
the Company, at its expense, will arrange for
Executive's coverage (and his heirs, executors, and
administrators) under a directors' and executives'
liability policy at least equivalent to the insurance
coverage provided to directors and other senior
executives of the Bank and the Company.
12. REIMBURSEMENT OF EXECUTIVE'S EXPENSES TO ENFORCE THIS
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AGREEMENT. The Bank will reimburse Executive for all out-of-pocket expenses,
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including, without limitation, reasonable attorneys' fees, that Executive incurs
in connection with his successful enforcement of the Bank's obligations under
this Agreement. Successful enforcement shall mean the grant of an award of money
or the requirement that the Bank take some action specified by this Agreement:
as a result of court order; or otherwise following an initial failure by the
Bank to pay such money or take such action promptly following receipt of a
written demand from Executive stating the reason that the Bank must make payment
or take action under this Agreement.
13. INJUNCTIVE RELIEF. Upon a breach or threatened breach of the
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prohibitions upon disclosure contained in Section 9(c) of this Agreement, the
parties agree that there is no adequate remedy at law for such breach, and the
Bank shall be entitled to injunctive relief restraining Executive from such
breach or threatened breach, but such relief shall not be the exclusive remedy
for a breach of this Agreement. The parties to this Agreement further agree that
Executive, without limitation, may seek injunctive relief to enforce the Bank's
obligations under this Agreement.
14. SOURCE OF PAYMENTS. All payments provided for in this
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Agreement shall be timely paid in cash or check from the general funds of the
Bank or the Company.
15. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
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benefit of and be binding upon any corporate or other successor of the Bank and
the Company which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets or
stock of the Company. Since the Bank and the Company have contracted for the
unique and personal skills of Executive, Executive shall not assign or delegate
his rights or duties hereunder without first obtaining the written consent of
the Bank and the Company.
16. NO MITIGATION. Executive shall not be required to mitigate the
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amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no payment under this Agreement shall be offset or reduced by
any compensation or benefits provided to Executive in any subsequent employment.
17. NOTICES. All notices, requests, demands and other
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communications made in connection with this Agreement shall be made in writing
and shall be deemed to have been given when delivered by hand or 48 hours after
mailing at any general or branch United States Post Office, by registered or
certified mail, postage prepaid, addressed to the Bank at its principal business
office and to Executive at his home address as maintained in the records of the
Bank.
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18. NO PLAN CREATED BY THIS AGREEMENT. Executive, the Bank and the
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Company expressly declare and agree that this Agreement was negotiated between
them and that no provision or provisions of this Agreement are intended to, or
shall be deemed to, create any plan for purposes of the Employee Retirement
Income Security Act or any other law or regulation, and each party expressly
waives any right to assert the contrary. Any party who makes such an assertion
in any judicial or administrative filing, hearing, or process shall have
materially breached this Agreement upon making the assertion.
19. AMENDMENTS. No amendments or additions to this Agreement will
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bind the parties unless made in writing and signed by all of the parties, except
as herein otherwise specifically provided.
20. APPLICABLE LAW. Except to the extent preempted by federal law,
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Pennsylvania law shall govern this Agreement in all respects, whether as to its
validity, construction, capacity, performance or otherwise.
21. SEVERABILITY. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions of this Agreement.
22. HEADINGS. Headings contained in this Agreement are for
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convenience of reference only.
23. ENTIRE AGREEMENT. This Agreement, together with any
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understanding or modifications agreed to in writing by the parties, shall
constitute the entire agreement among the parties hereto with respect to the
subject matter of this Agreement, other than written agreements with respect to
specific plans, programs or arrangements described in Sections 5 and 6.
24. REQUIRED PROVISIONS. In the event any of the foregoing
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provisions of this Agreement are in conflict with the terms of this Section 24,
this Section 24 shall prevail.
a. The Board may terminate Executive's employment at any
time, but any termination by the Board, other than
Termination for Cause, shall not prejudice
Executive's right to compensation or other benefits
under this Agreement. Executive shall not have the
right to receive compensation or other benefits for
any period after termination for Cause as defined in
Section 10 of this Agreement.
b. If Executive is suspended from office and/or
temporarily prohibited from participating in the
conduct of the Bank's affairs by a notice served
under Section 8(e)(3) or 8(g)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. Sec. 1818(e)(3) or
(g)(1), the Bank's obligations under this Agreement
shall be suspended as of the date of service, unless
stayed by appropriate proceedings. If the charges in
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the notice are dismissed, the Bank may in its
discretion: (i) pay Executive all or part of the
compensation withheld while contract obligations were
suspended; and (ii) reinstate (in whole or in part)
any of the obligations which were suspended.
c. If Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank's
affairs by an order issued under Section 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. Sec. 1818(e)(4) or (g)(1), all obligations of
the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of
the contracting parties shall not be affected.
d. If the Bank is in default as defined in Section
3(x)(1) of the Federal Deposit Insurance Act, 12
U.S.C. Sec. 1813(x)(1), all obligations of the Bank
under this Agreement shall terminate as of the date
of default, but this paragraph shall not affect any
vested rights of the contracting parties.
e. All obligations of the Bank under this Agreement
shall be terminated, except to the extent determined
that continuation of the Agreement is necessary for
the continued operation of the institution: (i) by
the Director of the OTS (or his designee) or the
FDIC, at the time the FDIC enters into an agreement
to provide assistance to or on behalf of the Bank
under the authority contained in Section 13(c) of the
Federal Deposit Insurance Act, 12 U.S.C. Sec.
1823(c); or (ii) by the Director of the OTS (or his
designee) at the time the Director (or his designee)
approves a supervisory merger to resolve problems
related to the operations of the Bank or when the
Bank is determined by the Director to be in an unsafe
or unsound condition. Any rights of the parties that
have already vested, however, shall not be affected
by such action.
f. Any payments made to Executive pursuant to this
Agreement, or otherwise, are subject to and
conditioned upon compliance with 12 U.S.C. Sec.
828(k) and 12 C.F.R. Sec. 545.121 and any rules and
regulations promulgated thereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
Attest: FIRST FEDERAL SAVINGS BANK
/s/ XxXxxxx Xxxxx, III By: /s/ Xxxx X. XxXxxxxx
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Attest: FEDFIRST FINANCIAL CORPORATION
/s/ XxXxxxx Xxxxx, III By: /s/ Xxxx X. XxXxxxxx
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EXECUTIVE
/s/ XxXxxxx Xxxxx, III /s/ Xxxxxxx X. X'Xxxxx
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Witness Xxxxxxx X. X'Xxxxx
