EXHIBIT 10.2
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS AGREEMENT, made and entered
into as of January 20, 2005 (the “ Effective Date
”), by and among Royal Financial, Inc. (hereinafter referred
to as “ Royal Financial ”), Royal Savings Bank
(the “ Bank ” and together with Royal Financial,
hereinafter the “ Employer ”), and Donald A.
Moll (hereinafter called the “ Executive
”).
W I T N E S
S E T H T H
A T :
WHEREAS, the Employer desires to
continue to employ the Executive as President and Chief Executive
Officer of the Bank, and the Executive desires to continue in such
employment;
NOW, THEREFORE, in consideration of
the mutual promises herein contained and subject to the conditions
precedent set forth herein, the parties agree as
follows:
1. Employment and Term
.
(a) Employment . Royal
Financial shall, and shall cause the Bank to, employ the Executive
as the President and Chief Executive Officer of the Company and the
Bank, and the Executive shall so serve, for the term set forth in
Paragraph 1(b).
(b) Term . The
Executive’s employment under this Agreement shall commence on
the Effective Date and extend through January 20, 2008,
subject to the extension of such term as hereinafter provided and
subject to earlier termination as provided in Paragraph 7. The
term of this Agreement shall automatically be extended for an
additional year as of January 20, 2008 and each anniversary
date thereof unless, no later than ninety (90) days prior to
any such renewal date, either the board of directors of Royal
Financial (the “ Board ”), or a duly authorized
committee thereof, on behalf of the Employer, or the Executive
gives written notice to the other, in accordance with
Paragraph 15, that the term of this Agreement shall not be so
extended.
2. Duties and
Responsibilities .
(a) The duties and responsibilities
of the Executive shall be of an executive nature as shall be
required by the Employer in the conduct of its business. The
Executive’s powers and authority shall be as prescribed by
the by-laws of the Employer, if applicable, and shall include all
those presently delegated to the Executive, together with the
performance of such other duties and responsibilities as the
Chairman of the Employer may from time to time assign to the
Executive not inconsistent with the Executive’s position(s)
with the Employer. The Executive recognizes, that during the period
of the Executive’s employment hereunder, the Executive owes
an undivided duty of loyalty to the Employer, and agrees to devote
the Executive’s entire business time and attention to the
performance of said duties and responsibilities and to use the
Executive’s best efforts to promote and develop the business
of the Employer. Recognizing and acknowledging that it is essential
for the protection and enhancement of the name and business of the
Employer and the goodwill pertaining thereto, the Executive shall
perform his duties under this Agreement professionally, in
accordance with the
applicable laws, rules and regulations and such
standards, policies and procedures established by the Employer and
the industry from time to time. The Executive will not perform any
duties for any other business without the prior written consent of
the Employer, but may engage in charitable, civic or community
activities, provided that such duties or activities do not
materially interfere with the proper performance of the
Executive’s duties under this Agreement. During the period of
employment, the Executive agrees to serve as a director on the
Board of Directors of the Employer and/or the board of directors or
managers, as applicable, of any of its subsidiaries and affiliates,
as well as to serve as a member of any committee of any said
boards, to which the Executive may be elected or
appointed.
(b) Notwithstanding that this
Agreement provides for the employment of the Executive in the
Executive’s capacity as the President and Chief Executive
Officer of the Company and the Bank, nothing herein contained shall
assure the Executive of, nor in any manner shall be construed to
constitute an agreement by the Employer to the, continued
employment of the Executive after the expiration or termination of
this Agreement in such capacity or in any other
capacity.
3. Base Salary . For services
performed by the Executive for the Employer pursuant to this
Agreement during the period of employment as provided in
Paragraph 1(b) hereof, the Employer shall pay the Executive a
base salary at the rate of one hundred seven thousand eight hundred
eighty dollars ($107,880) per year, payable in substantially equal
installments in accordance with the Employer’s regular
payroll practices. The Executive’s base salary (with any
increases under this Paragraph 3) shall not be subject to reduction
without the Executive’s written consent. Any compensation
which may be paid to the Executive under any additional
compensation or incentive plan of the Employer or which may be
otherwise authorized from time to time by the Board (or an
appropriate committee thereof) shall be in addition to the base
salary to which the Executive shall be entitled under this
Agreement. Executive’s base salary shall be subject to review
from time to time, and the Employer may (but is not required to)
increase the base salary as the Board, in its discretion, may
determine.
4. Annual Bonuses . For each
fiscal year during the term of employment, the Executive shall be
eligible to receive a bonus in the amount, if any, as may be
determined from time to time by the Board in its
discretion.
5. Equity Incentive
Compensation . During the term of employment hereunder, the
Executive shall be eligible to participate in any equity-based
incentive compensation plan or program adopted by the
Employer.
6. Other Benefits . In
addition to the compensation described in Paragraphs 3, 4 and
5, above, the Executive shall also be entitled to the
following:
(a) Participation in Benefit
Plans . The Executive shall be entitled to participate in such
life insurance, disability, medical, dental, pension, profit
sharing and retirement plans and other programs as may be made
generally available from time to time by the Employer for the
benefit of executives of the Executive’s level or its
employees generally.
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(b) Vacation . The Executive
shall be entitled to such number of days of vacation with pay
during each calendar year during the period of employment in
accordance with the Employer’s applicable personnel policy as
in effect from time to time.
(c) Executive Perquisites .
The Employer shall furnish Executive with such perquisites as are
provided from time to time by the Employer to its officers
generally and are suitable to the Executive’s position,
adequate for the performance of the Executive’s duties
hereunder, and reasonable in the circumstances.
(d) Expense Reimbursement .
The Employer shall reimburse the Executive for all reasonable
expenses incurred by the Executive in performing services
hereunder, which are incurred and accounted for in accordance with
the Employer’s policies and procedures applicable
thereto.
7. Termination . Unless
earlier terminated in accordance with the following provisions of
this Paragraph 7, the Employer shall continue to employ the
Executive and the Executive shall remain employed by the Employer
during the entire term of this Agreement as set forth in
Paragraph 1(b). Paragraph 8 hereof sets forth certain
obligations of the Employer in the event that the Executive’s
employment hereunder is terminated. Certain capitalized terms used
in this Paragraph 7 and in Paragraph 8 hereof are defined
in Paragraph 7(d), below. In the event of termination of the
Executive’s employment with the Employer for any reason, or
if the Executive is required by the Board, the Executive agrees to
resign, and shall automatically be deemed to have resigned, from
any offices (including any directorship) the Executive holds with
the Employer and/or any of its affiliates effective as of the
termination date of the Executive’s employment hereunder, or,
if applicable, effective as of a date selected by the Board;
provided, however, that the foregoing resignation shall not
prejudice or otherwise affect the Executive’s rights and
obligations, if any, under this Agreement.
(a) Death or Disability .
Except to the extent otherwise provided in Paragraphs 8, 12
and 13 with respect to death benefits and certain post-Date of
Termination obligations of the parties, this Agreement shall
terminate immediately as of the Date of Termination in the event of
the Executive’s death or in the event that the Executive
becomes Disabled (as hereinafter defined). The Board shall promptly
give the Executive written notice of any such determination of the
Executive’s Disability and of any decision of the Board to
terminate the Executive’s employment by reason thereof. In
the event of Disability, until the Date of Termination, the base
salary payable to the Executive under Paragraph 3 hereof shall
be reduced dollar-for-dollar by the amount of disability benefits,
if any, paid to the Executive in accordance with any disability
policy or program of the Employer.
(b) Discharge for Cause . In
accordance with the procedures hereinafter set forth, the Board may
discharge the Executive from the Executive’s employment
hereunder for Cause (as hereinafter defined). Except to the extent
otherwise provided in Paragraphs 8, 12 and 13 with respect to
certain post-Date of Termination obligations of the parties, this
Agreement shall terminate immediately as of the Date of Termination
in the event the Executive is discharged for Cause. Any discharge
of the Executive for Cause shall be communicated by a Notice of
Termination to the Executive given in accordance with
Paragraph 15 of this Agreement.
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(c) Termination for Other
Reasons . The Employer may discharge the Executive without
Cause by giving written notice to the Executive in accordance with
Paragraph 15. The Executive may resign from the Executive’s
employment with or without Good Reason, without liability to the
Employer, by giving written notice to the Employer in accordance
with Paragraph 15 at least thirty (30) days prior to the Date of
Termination; provided, however, that no resignation shall be
treated as a resignation for Good Reason unless the written notice
thereof is given within sixty (60) days after the occurrence which
constitutes “Good Reason” or during the ninety (90) day
period described in the final sentence of Paragraph 7(d)(vi);
provided, further, that the Employer retains the right after proper
notice of the Executive’s voluntary termination to require
the Executive to cease the Executive’s employment
immediately. Except to the extent otherwise provided in Paragraphs
8, 12 and 13 with respect to certain post-Date of Termination
obligations of the parties, this Agreement shall terminate
immediately as of the Date of Termination in the event the
Executive is discharged without Cause or resigns for any reason or
no reason.
(d) Definitions . For
purposes of this Agreement, the following capitalized terms shall
have the meanings set forth below:
(i) “ Accrued
Obligations ” shall mean, as of the Date of Termination,
the sum of (A) the Executive’s base salary under Paragraph 3
through the Date of Termination to the extent not theretofore paid,
(B) the amount of any deferred compensation and other cash
compensation accrued by the Executive as of the Date of Termination
to the extent not theretofore paid, (C) any vacation pay, expense
reimbursements and other cash entitlements accrued by the Executive
as of the Date of Termination to the extent not theretofore paid,
(D) any grants and awards vested or accrued under any equity-based
incentive compensation plan or program and (E) all other benefits
which have accrued as of the Date of Termination. For the purpose
of this Paragraph 7(d)(i), except as provided in the applicable
plan, program or policy, amounts shall be deemed to accrue ratably
over the period during which they are earned, but no discretionary
compensation shall be deemed earned or accrued until it is
specifically approved by the Board in accordance with the
applicable plan, program or policy.
(ii) “ Cause ”
shall mean (A) the Executive’s willful and continued (for a
period of not less than ten (10) business days after written notice
thereof) failure to perform substantially the duties of his
employment (other than as a result of physical or mental
incapacity, or while on vacation); or (B) the Executive’s
engaging in illegal conduct or gross misconduct which is materially
and demonstrably injurious to the Employer; or (C) the
Executive’s conviction of a felony involving moral turpitude;
provided, however, that no act or omission by the Executive shall
constitute Cause hereunder unless the Employer has given detailed
written notice thereof to the Executive, and the Executive has
failed to remedy such act or omission.
(iii) “ Change in
Control ” shall mean the occurrence of any one of the
following events:
(A) Any “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than (i) a
trustee
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or other fiduciary holding
securities under an employee benefit plan of Royal Financial or any
of its subsidiaries, or (ii) a corporation owned directly or
indirectly by the stockholders of Royal Financial in substantially
the same proportions as their ownership of stock of Royal
Financial, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of Royal Financial representing 25% or more of the total
voting power of the then outstanding shares of capital stock of
Royal Financial entitled to vote generally in the election of
directors (the “ Voting Stock ”), provided,
however, that the following shall not constitute a change in
control: (1) such person becomes a beneficial owner of 25% or more
of the Voting Stock as the result of an acquisition of such Voting
Stock directly from Royal Financial, or (2) such person becomes a
beneficial owner of 25% or more of the Voting Stock as a result of
the decrease in the number of outstanding shares of Voting Stock
caused by the repurchase of shares by Royal Financial,
or
(B) During any period of two
consecutive years, individuals (the “ Incumbent Board
”), who at the beginning of such period constitute the Board,
and any new director, whose election by the Board or nomination for
election by Royal Financial’s stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof,
or
(C) Consummation of a
reorganization, merger or consolidation or the sale or other
disposition of all or substantially all of the assets of Royal
Financial (a “ Business Combination ”), in each
case, unless (1) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Voting Stock immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
total voting power represented by the voting securities entitled to
vote generally in the election of directors of the corporation
resulting from the Business Combination (including, without
limitation, a corporation which as a result of the Business
Combination owns Royal Financial or all or substantially all of
Royal Financial’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to the Business Combination of the
Voting Stock of Royal Financial, and (2) at least a majority of the
members of the board of directors of the corporation resulting from
the Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or action of the
Incumbent Board, providing for such Business Combination;
or
(D) Approval by the stockholders of
Royal Financial of a plan of complete liquidation or dissolution of
Royal Financial.
The Board has final authority to
construe and interpret the provisions of the foregoing Paragraphs
(A), (B), (C) and (D) and to determine the exact date on which a
Change in Control has been deemed to have occurred
thereunder.
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(iv) “ Date of
Termination ” shall mean (A) in the event of a discharge
of the Executive for or without Cause, the date the Executive
receives a Notice of Termination, or any later date specified in
such Notice of Termination, as the case may be, (B) in the event of
a resignation by the Executive, the date specified in the written
notice to the Employer, which date shall be no less than thirty
(30) days from the date of such written notice (or such earlier
date as the Employer may elect in its sole discretion), (C) in the
event of the Executive’s death, the date of the
Executive’s death, and (D) in the event of termination of the
Executive’s employment by reason of Disability pursuant to
Paragraph 7(a), the date the Executive receives written notice of
such termination.
(v) “ Disabled ”
and “ Disability ” shall mean that the Executive
will be deemed to be disabled upon the earlier of (i) the end of a
six (6) consecutive month period, or an aggregate period of nine
(9) months out of any consecutive twelve (12) months, during which,
by reason of physical or mental injury or disease, the Executive
has been unable to perform substantially all of the
Executive’s usual and customary duties under this Agreement
or (ii) the date that a reputable physician selected by the Board,
and as to whom the Executive has no reasonable objection,
determines in writing that the Executive will, by reason of
physical or mental injury or disease, be unable to perform
substantially all of the Executive’s usual and customary
duties under this Agreement for a period of at least six (6)
consecutive months. If any question arises as to whether the
Executive is Disabled, upon reasonable request therefore by the
Board, the Executive shall submit to a reasonable medical
examination for the purpose of determining the existence, nature
and extent of any such disability.
(vi) “ Good Reason
” shall mean the occurrence, other than in connection with a
discharge, of any of the following without the Executive’s
consent: (A) the Executive is not re-elected or is removed from the
positions with the Employer set forth in Paragraph 1(a), other than
as a result of the Executive’s election or appointment to
positions of equal or superior scope and responsibility; or (B) the
Executive shall fail to be vested by the Employer with the power
and authority of any of said positions, excluding for this purpose
any isolated action not taken in bad faith and which is remedied by
the Employer promptly after receipt of written notice thereof given
by the Executive in accordance with Paragraph 15; or (C) any
failure by the Employer to materially comply with any of the
provisions of this Agreement, other than any isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Employer promptly after receipt of
written notice thereof given by the Executive in accordance with
Paragraph 15; or (D) the Employer requiring the Executive to be
based at an office or location which is more than twenty (20) miles
from any location of Royal Financial, the Bank or any of their
subsidiaries as of the Effective Date or any renewal date of the
extended term of this Agreement. In addition, any termination by
the Executive during the ninety (90) day period beginning on the
first anniversary of the date of a Change in Control shall be
deemed to be for “Good Reason.”
(vii) “ Notice of
Termination ” shall mean a written notice which (A)
indicates the specific termination provision in this Agreement
relied upon, (B) 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 and
(C) if the Date of Termination is to be other than the date of
receipt of such notice or the date otherwise specified under this
Agreement, specifies the termination date.
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8. Obligations of the Employer
Upon Termination . The following provisions describe the
obligations of the Employer to the Executive under this Agreement
upon termination of employment. However, except as explicitly
provided in this Agreement, nothing in this Agreement shall limit
or otherwise adversely affect any rights which the Executive may
have under applicable law, under any other agreement with the
Employer or any of its affiliates or subsidiaries, or under any
compensation or benefit plan, program, policy or practice of the
Employer or any of its affiliates or subsidiaries.
(a) Death, Disability, Discharge
for Cause, or Resignation without Good Reason . In the event
this Agreement terminates pursuant to Paragraph 7(a) by reason of
the death or Disability of the Executive, pursuant to Paragraph
7(b) by reason of the discharge of the Executive by the Employer
for Cause, or pursuant to Paragraph 7(c) by reason of the
resignation of the Executive other than for Good Reason, the
Employer shall pay to the Executive, or the Executive’s heirs
or estate in the event of the Executive’s death, all Accrued
Obligations in a lump sum in cash within thirty (30) days after the
Date of Termination; provided, however, that any portion of the
Accrued Obligations which consists of bonus, deferred compensation,
incentive compensation, insurance benefits or other employee
benefits shall be determined and paid in accordance with the terms
of the relevant plan or policy as applicable to the Executive. In
addition, in the event this Agreement terminates pursuant to
Paragraph 7(a) by reason of death of the Executive, the Employer
shall pay to the Executive’s heirs or estate death benefits
in a lump sum amount equal to six (6) months of the
Executive’s then-current annual base salary.
(b) Discharge without Cause or
Resignation with Good Reason . In the event that this Agreement
terminates pursuant to Paragraph 7(c) by reason of the discharge of
the Executive by the Employer other than for Cause, death or
Disability or by reason of the resignation of the Executive for
Good Reason:
(i) The Employer shall pay all
Accrued Obligations to the Executive in a lump sum in cash within
thirty (30) days after the Date of Termination; provided, however,
that any portion of the Accrued Obligations which consists of
bonus, deferred compensation, incentive compensation, insurance
benefits or other employee benefits shall be determined and paid in
accordance with the terms of the relevant plan or policy as
applicable to the Executive;
(ii) Within thirty (30) days after
the Date of Termination, the Employer shall pay to the Executive a
bonus for the year during which termination occurs, calculated as a
prorata portion of the Executive’s prior year’s bonus
amount (if any) based on the number of days elapsed during the year
through the Date of Termination;
(iii) Severance payments equal to
one hundred percent (100%) of the sum of (A) the Executive’s
then-current annual base salary, plus (B) the average of the sum of
the bonus amounts earned by the Executive with respect to the three
(3) calendar years (or such fewer number of years as Executive has
been employed) immediately
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preceding the calendar year in which
the Executive’s Date of Termination occurs, payable in
substantially equal monthly installments for a period of twelve
(12) months (the “ Severance Period ”) in
accordance with the Employer’s regular payroll practices;
and
(iv) Continuation for the Severance
Period of the Executive’s right to maintain COBRA
continuation coverage under the applicable plans at premium rates
on the same “cost-sharing” basis as the applicable
premiums paid for such coverage by active employees as of the Date
of Termination.
In the event that upon the
expiration of the Severance Period, Executive is not employed or
otherwise providing compensated services of any type, and has not
done so during the final ninety (90) days of the Severance Period,
the Employer may, in its sole discretion (which discretion need not
be applied in a consistent manner from one executive to another),
agree to extend the Severance Period for up to an additional six
(6) months (the “ Extended Severance Period ”).
The payments to Executive described in sub-paragraph (iii) above
and the reduced COBRA continuation premium described in
sub-paragraph (iv) above shall continue during the Extended
Severance Period, subject to earlier termination effect
