Document:

EX-10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of June 4, 2008
(the “Effective Date”), by and between WARWICK VALLEY TELEPHONE COMPANY (the
“Company”) and KENNETH H. VOLZ (“Executive”).

	1.	 	Employment.

The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the
Company, upon the terms and subject to the conditions set forth in this Agreement.

	2.	 	Term of Employment.

	(a)	 	The period of Executive’s employment under this Agreement shall begin as of the Effective
Date and shall continue until June 3, 2010 (the “Initial Term”), and shall be renewed
automatically for successive one-year periods thereafter (each, a “Renewal Period”),
unless Executive or the Company gives written notice of nonrenewal to the other at least sixty
(60) days before the expiration of the Initial Term or any subsequent Renewal Period.
	 
	(b)	 	Notwithstanding the foregoing, Executive’s employment may be terminated by the Company or by
Executive at any time for any reason.
	 
	(c)	 	As used in this Agreement, the term “Employment Term” refers to Executive’s period of
employment from the Effective Date until the date his employment terminates.
	 
	3.	 	Duties and Responsibilities.
	 
	(a)	 	The Company will employ Executive as its Executive Vice President, Chief Financial Officer
and Treasurer. In such capacity, Executive shall perform the customary duties and have the
customary responsibilities of such positions and such other duties as may be assigned to
Executive from time to time by the President and Chief Executive Officer (the “President”) of
the Company. Executive will exercise his judgment in accordance with the highest ethical
standards.
	 
	(b)	 	Executive agrees to faithfully serve the Company, devote his full working time, attention and
energies to the business of the Company, its subsidiaries and affiliated entities, and perform
the duties under this Agreement to the best of his abilities.
	 
	(c)	 	Executive agrees (i) to comply with all applicable laws, rules and regulations; (ii) to
comply with the Company’s rules, procedures, policies, requirements, and directions; and (iii)
not to engage in any other business or employment without the written consent of the Company
except as otherwise specifically provided herein.
	 
	4.	 	Compensation and Benefits.
	 
	(a)	 	Base Salary. During the Employment Term, the Company shall pay Executive a base salary at
the annual rate of $250,000 per year or such higher rate as may be determined annually by the
Company (“Base Salary”). Such Base Salary, less applicable withholdings, shall be
paid in accordance with the Company’s standard payroll practice

 

 

	 	 	for executives. The Base Salary set forth in this Agreement shall be retroactive to January
1, 2008; the difference between the base salary paid from January 1, 2008 and the Base
Salary set forth in this Agreement will be paid, less applicable withholdings, in the first
pay period following execution of this Agreement unless previously paid.
	 
	(b)	 	Annual Bonus. During the Employment Term, Executive will be eligible to receive an Annual
Bonus each year, as determined in accordance with the Applicable Plan approved by the Company
for executives for such year. The Company has the right to change or eliminate the Applicable
Plan at any time. The Annual Bonus to be paid to Executive in 2009 shall be based on the
Company’s financial performance in 2008, continuing in like progression with the Annual Bonus
to be paid in any year based on the Company’s prior year’s performance. Such Annual Bonus,
less applicable withholdings, shall be paid within 2.5 months of the end of the taxable fiscal
year during which it was earned. Except as otherwise provided by Section 7, in order to be
eligible to receive payment of any portion of an Incentive Bonus, Executive must be actively
employed by the Company on the payment date. Notwithstanding the foregoing, Executive
acknowledges that whether any Annual Bonus is to be paid for a given year and the amount of
that Annual Bonus is completely at the discretion of the Company.
	 
	(c)	 	Incentive Compensation. Executive shall be eligible to participate in and receive incentive
compensation under the Company’s incentive compensation plans generally made available to
other executives at a level commensurate with his position and in accordance with and subject
to the terms of such plans. Notwithstanding the foregoing, Executive acknowledges that the
grant of awards under the Company’s incentive compensation plans is completely at the
discretion of the Company.
	 
	(d)	 	Benefit Plans, Fringe Benefits and Vacation. Executive shall be eligible to participate in
any 401(k) savings plan generally made available by the Company to other executives in
accordance with the eligibility requirements of such plans and subject to the terms and
conditions set forth in such plans, except for any pension benefit. Executive shall be
eligible to participate in any health and welfare plans made available to other executives,
including, but not limited to, any medical and dental benefits plan, life insurance plan,
short-term and long-term disability plans, or other executive benefit or fringe benefit plan.
Executive will also be eligible to receive at least four (4) weeks of vacation per calendar
year, accrued and earned on a daily basis, as well as other types of paid time-off (e.g.,
holidays, personal days, absence due to illness, etc.) according to the Company’s vacation and
paid time-off policy.
	 
	(e)	 	Housing and Travel Allowance. The Company will provide Executive with a Housing and Travel
Allowance of $4,800 per month (which includes a gross up to defray tax consequences) for the
duration of his employment under this agreement. The Housing and Travel Allowance and
tax-gross up benefit for a given month shall be paid to Executive on the first day of such
month, or as soon as administratively practicable thereafter, but in no event later than the
end of that month.
	 
	(f)	 	Expense Reimbursement. The Company shall promptly reimburse Executive for the ordinary and
necessary business expenses incurred by Executive in the performance of the duties under this
Agreement in accordance with the Company’s customary practices

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	 	 	applicable to executives, provided that such expenses are incurred and accounted for in
accordance with the Company’s expense reimbursement policy. Reimbursement shall be made as
soon as administratively practicable following Executive’s submission of the necessary
documents and receipts required under the Company’s expense reimbursement policy, but in no
event later than December 31st of the calendar year following the calendar year in which the
expense was incurred.
	 
	(g)	 	Concession. Executive will be provided with paid PDA or mobile phone service for one
electronic device, as well as concession Telephone and Toll Service, DSL Internet Service and
in territory Digital TV service benefits consistent with those available to other executives.
	 
	(h)	 	Indemnification. Executive will be covered by the Company’s standard Director’s and
Officer’s Indemnification Agreement, providing for indemnification consistent with the New
York Business Corporation Law and the Company’s by-laws.
	 
	5.	 	Termination of Employment.

Executive’s employment may be terminated by the Company or by Executive at any time for any reason.
Upon termination, Executive shall be entitled to receive the compensation and benefits described
in Section 7. Executive’s employment will terminate under the following conditions:

	(a)	 	Death. Executive’s employment shall terminate upon Executive’s death.
	 
	(b)	 	Total Disability. The Company may terminate Executive’s employment upon his becoming Totally
Disabled. For purposes of this Agreement, Executive shall be “Totally Disabled” if
Executive is physically or mentally incapacitated so as to render Executive incapable of
performing his usual and customary duties under this Agreement without reasonable
accommodation. Executive’s receipt of disability benefits under the Company’s long-term
disability plan, if any, or receipt of Social Security disability benefits shall be deemed
conclusive evidence of Total Disability for purpose of this Agreement; provided, however, that
in the absence of Executive’s receipt of such long-term disability benefits or Social Security
benefits, the Company may, in its reasonable discretion (but based upon appropriate medical
evidence), determine that Executive is Totally Disabled.
	 
	(c)	 	Termination by the Company for Cause.

	 	(i)	 	The Company may terminate Executive’s employment for Cause at any time after
providing written notice to Executive.
	 
	 	(ii)	 	For purposes of this Agreement, the term “Cause” shall mean any of the
following: (A) conviction of a crime or a nolo contendere plea involving the alleged
commission by Executive of a felony or of a criminal act involving, in the good faith
judgment and sole discretion of the Board, fraud, dishonesty, or moral turpitude; (B)
deliberate and continual refusal to perform employment duties reasonably requested by
the Board after fifteen (15) days’ written notice by certified mail of such failure to
perform, specifying that the failure constitutes

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	 	 	 	cause (other than as a result of vacation, sickness, illness or injury); (C) fraud
or embezzlement as determined by the Board; (D) gross misconduct or gross negligence
in connection with the business of the Company or an affiliate which has a
substantial adverse effect on the Company or the affiliate; or (E) breach of the
terms of the confidentiality, non-solicitation and non-competition provisions of
Section 9.
	 
	 	(iii)	 	Regardless of whether Executive’s employment initially was considered to be
terminated for any reason other than Cause, Executive’s employment will be considered
to have been terminated for Cause for purposes of this Agreement if the Board
subsequently determines that Executive engaged in an act constituting Cause during the
Employment Period or Executive breached the terms of the terms of the confidentiality,
non-solicitation and non-competition provisions of Section 9 after his termination.

	(d)	 	Termination by the Company Without Cause. The Company may terminate Executive’s employment
at any time under this Agreement without Cause after providing written notice to Executive.
	 
	(e)	 	Termination by Executive. Executive may terminate his employment under this Agreement after
providing thirty (30) days’ written notice to the Company.
	 
	(f)	 	Expiration of Initial Term or Renewal Period. In the event that either party gives written
notice of non-renewal of the Initial Term or a Renewal Period, as applicable, pursuant to
Section 2, Executive’s employment shall terminate upon the expiration of the Initial Term or
Renewal Period.
	 
	6.	 	Return of Property and Information.

Executive agrees that when his employment with the Company ends, he will immediately return to the
Company all property, data, information and knowledge which are in his possession or under his
control, including without limitation all documents, forms, correspondence, financial records and
forecasts, operation manuals, notebooks, reports, proposals, computer programs, software, software
documentation, employee handbooks, supervisor’s manuals, lists of clients and referral sources,
client data, and all copies thereof, relating in any way to the business of the Company, whether
relating to the Company directly or to a client of the Company, made or obtained by Executive
during his employment with the Company, whether or not such data, information, or knowledge
constitute confidential or trade secret information.

	7.	 	Compensation Following Termination of Employment.
	 
	(a)	 	Termination for Any Reason. Upon termination of Executive’s employment for any reason under
this Agreement, Executive (or his designated beneficiary or estate, as the case may be) shall
be entitled to receive the following compensation:

	 	(i)	 	Earned but Unpaid Compensation. The Company shall pay Executive any accrued
but unpaid Base Salary for services rendered through the date of termination, any
appropriately documented and accrued but unpaid expenses

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	 	 	 	required to be reimbursed under this Agreement, and any unused vacation accrued to
the date of termination.
	 
	 	(ii)	 	Other Compensation and Benefits. Except as may be provided under this
Agreement, any benefits to which Executive may be entitled through the date of
Executive’s termination pursuant to the plans, policies and arrangements referred to in
Section 4(d) shall be determined and paid in accordance with the terms of such plans,
policies and arrangements, and except as otherwise provided by this Agreement,
Executive shall have no right to receive any other compensation, or to participate in
any other plan, arrangement or benefit, with respect to future periods after such
termination or resignation.

	(b)	 	Termination by the Company Without Cause not in Connection With a Change in Control. In the
event Executive’s employment is terminated without Cause before a Change in Control (as
defined by Section 7(c)(iii)) or more than twenty-four (24) months after a Change in Control,
if Executive executes the Release and Waiver required by Section 8 and such Release and Waiver
is not revoked on or before the expiration of the revocation period thereof, and Executive has
complied with the return of property and information provision set forth in Section 6, then in
addition to the payments to be made pursuant to Section 7(a), the Company shall also:

	 	(i)	 	Severance Pay. Pay to Executive severance pay in an amount equal to 100% of
his Base Salary in effect as of the date of his termination of employment. Payment of
such Severance Pay shall be made in a lump sum as soon as administratively practicable
after the date of Executive’s termination (or if required by Section 409A, on the six
(6) month anniversary of his termination), but no later than ninety (90) days
thereafter, and not before the expiration of the revocation period for the Release and
Waiver.
	 
	 	(ii)	 	Annual Bonus. Pay to Executive the target amount of the Annual Bonus under the
Applicable Plan for the year in which the termination of Executive’s employment occurs.
Payment of such Annual Bonus shall be made in a lump sum as soon as administratively
practicable after the date of Executive’s termination (or if required by Section 409A,
on the six (6) month anniversary of his termination), but no later than ninety (90)
days thereafter, and not before the expiration of the revocation period for the Release
and Waiver.
	 
	 	(iii)	 	Benefits Continuation. Continue to provide Executive and his family for the
one-year period following Executive’s termination with the health and welfare benefits,
including, but not limited to, benefits under any medical and dental benefits plan,
life insurance plan, short-term and long-term disability plans, or other executive
benefit or fringe benefit plan, which Executive and his family were receiving as of the
date of Executive’s termination. The Company shall provide such benefits at the same
cost to Executive as the cost, if any, charged to Executive for those benefits at the
time of his termination. To the extent that the provision of such benefits at the
Company’s expense during the six (6) month period following Executive’s termination
would violate the requirements of Section 409A, then Executive shall be required to pay
to the Company the

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	 	 	 	Company portion of the cost of such benefits during such six (6) month period, and
the Company shall reimburse Executive for the amounts so paid by Executive on the
six (6) month anniversary of his termination, or as soon as administratively
practicable thereafter, but no later than ninety (90) days thereafter.

	(c)	 	Termination by the Company Without Cause or by Executive for Good Reason in Connection With a
Change in Control.

	 	(i)	 	In the event Executive’s employment is terminated by the Company without Cause,
or by Executive for Good Reason, within the twenty-four (24) month period following a
Change in Control, if Executive executes the Release and Waiver required by Section 8
and such Release and Waiver is not revoked on or before the expiration of the
revocation period thereof, and Executive has complied with the return of property and
information provision set forth in Section 6, then in addition to the payments to be
made pursuant to Section 7(a), but subject to Section 7(c)(iv), the Company shall also:

	 	(A)	 	Severance Pay. Pay to Executive severance pay in an amount
equal to 150% of his Base Salary at its highest level in effect from the date
of the Change in Control through his termination of employment. Payment of
such Severance Pay shall be made in a lump sum as soon as administratively
practicable after the date of Executive’s termination (or if required by
Section 409A, on the six (6) month anniversary of his termination), but no
later than ninety (90) days thereafter, and not before the expiration of the
revocation period for the Release and Waiver.
	 
	 	(B)	 	Annual Bonus. Pay to Executive 150% of the target amount of
the Annual Bonus under the Applicable Plan for the year in which the
termination of Executive’s employment occurs. Payment of such Annual Bonus
shall be made in a lump sum as soon as administratively practicable after the
date of Executive’s termination (or if required by Section 409A, on the six (6)
month anniversary of his termination), but no later than ninety (90) days
thereafter, and not before the expiration of the revocation period for the
Release and Waiver.
	 
	 	(C)	 	Equity Vesting Acceleration. Accelerate the vesting of and the
lapsing of restrictions on any unvested or restricted equity compensation
(e.g., stock options, restricted stock, etc.).
	 
	 	(D)	 	Benefits Continuation. Continue to provide Executive and his
family for the one-year period following Executive’s termination with the
health and welfare benefits, including, but not limited to, benefits under any
medical and dental benefits plan, life insurance plan, short-term and long-term
disability plans, or other executive benefit or fringe benefit plan, which
Executive and his family were receiving as of the date of Executive’s
termination. The Company shall provide such benefits at the same cost to
Executive as the cost, if any, charged to Executive for those benefits at the
time of his termination. To the extent that the provision of such benefits at

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	 	 	 	the Company’s expense during the six (6) month period following Executive’s
termination would violate the requirements of Section 409A, then Executive
shall be required to pay to the Company the Company portion of the cost of
such benefits during such six (6) month period, and the Company shall
reimburse Executive for the amounts so paid by Executive on the six (6)
month anniversary of his termination, or as soon as administratively
practicable thereafter, but no later than ninety (90) days thereafter.

	 	(ii)	 	“Good Reason.” For purposes of this Agreement, the term “Good Reason”
shall mean the occurrence of any of the following in connection with a Change in
Control, without Executive’s express written consent: (A) the assignment of duties to
Executive materially inconsistent with Executive’s current authorities, duties,
responsibilities and status; (B) any reduction in Executive’s title, position, or
reporting lines; (C) the relocation of Executive to an office or location more than
seventy-five (75) miles from the office or location of Executive’s work as of the date
of the Change in Control; (D) requiring Executive to travel on Company business to a
substantially greater extent than required as of the date of the Change in Control; or
(E) the reduction in Executive’s Base Salary as in effect on the date of the Change in
Control.
	 
	 	(iii)	 	“Change in Control.” For purposes of this Agreement, the term “Change in
Control” shall mean the happening of any of the following:

	 	(A)	 	Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (a “Person”) becomes the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either (1) the then outstanding common shares of the Company (the
“Outstanding Company Common Shares”) or (2) the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that such beneficial ownership shall not
constitute a Change in Control if it occurs as a result of any of the following
acquisitions of securities: (I) any acquisition directly from the Company,
(II) any acquisition by the Company or any corporation, partnership, trust or
other entity controlled by the Company (a “Subsidiary”), (III) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, (IV) any acquisition by an
underwriter temporarily holding Company securities pursuant to an offering of
such securities, (V) any acquisition by an individual, entity or group that is
permitted to, and actually does, report its beneficial ownership on Schedule
13-G (or any successor schedule); provided that, if any such individual, entity
or group subsequently becomes required to or does report its beneficial
ownership on Schedule 13D (or any successor schedule), then, for purposes of
this paragraph, such individual, entity or group shall be deemed to have first
acquired, on the first date on which such individual, entity or group 

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	 	 	 	becomes
required
to or does so report, beneficial ownership of all of the Outstanding Company
Common Stock and Outstanding Company Voting Securities beneficially owned by
it on such date, or (VI) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (1), (2) and
(3) of Section 7(c)(iii)(C) are satisfied. Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur solely because any Person
(the “Subject Person”) became the beneficial owner of 25% or more of
the Outstanding Company Common Shares or Outstanding Company Voting
Securities as a result of the acquisition of Outstanding Company Common
Shares or Outstanding Company Voting Securities by the Company which, by
reducing the number of Outstanding Company Common Shares or Outstanding
Company Voting Securities, increases the proportional number of shares
beneficially owned by the Subject Person; provided, that if a Change in
Control would be deemed to have occurred (but for the operation of this
sentence) as a result of the acquisition of Outstanding Company Common
Shares or Outstanding Company Voting Securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the
beneficial owner of any additional Outstanding Company Common Shares or
Outstanding Company Voting Securities which increases the percentage of the
Outstanding Company Common Shares or Outstanding Company Voting Securities
beneficially owned by the Subject Person, then a Change in Control shall
then be deemed to have occurred; or
	 
	 	(B)	 	Individuals who, as of the date of this Agreement, constitute
the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board, including by reason of agreement intended to
avoid or settle any such actual or threatened contest or solicitation; or
	 
	 	(C)	 	The consummation of a reorganization, merger, statutory share
exchange, consolidation, or similar corporate transaction involving the Company
or any of its direct or indirect Subsidiaries (each a “Business
Combination”). in each case, unless, following such Business Combination,
(1) the Outstanding Company Common Shares and the Outstanding Company Voting
Securities immediately prior to such Business Combination, continue to
represent (either by remaining outstanding or being converted into voting
securities of the resulting or surviving entity or any parent

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	 	 	 	thereof) more than 50% of the then-outstanding shares of common stock and
the combined voting power of the then-outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from Business Combination (including, without
limitation, a corporation that, as a result of such transaction, owns the
Company or all or substantially all of the Company’s assets either directly
or through one or more subsidiaries), (2) no Person (excluding the Company,
any employee benefit plan (or related trust) of the Company, a Subsidiary or
such corporation resulting from such Business Combination or any parent or a
subsidiary thereof, and any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or indirectly, 25% or
more of the Outstanding Company Common Shares or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
25% or more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination (or any parent
thereof) or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (3) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination (or
any parent thereof) were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
Business Combination; or
	 
	 	(D)	 	The consummation of the sale, lease, exchange or other
disposition of all or substantially all of the assets of the Company, unless
such assets have been sold, leased, exchanged or disposed of to a corporation
with respect to which following such sale, lease, exchange or other disposition
(1) more than 50% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then outstanding
voting securities of such corporation (or any parent thereof) entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Shares and Outstanding Company Voting Securities immediately prior to such
sale, lease, exchange or other disposition in substantially the same
proportions as their ownership immediately prior to such sale, lease, exchange
or other disposition of such Outstanding Company Common Shares and Outstanding
Company Voting Shares, as the case may be, (2) no Person (excluding the Company
and any employee benefit plan (or related trust) of the Company or a Subsidiary
of such corporation or a subsidiary thereof and any Person beneficially owning,
immediately prior to such sale, lease, exchange or other disposition, directly
or indirectly, 25% or more of the Outstanding Company Common Shares or
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of such

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	 	 	 	corporation (or any parent thereof) and the combined voting power of the
then outstanding voting securities of such corporation (or any parent
thereof) entitled to vote generally in the election of directors, and (3) at
least a majority of the members of the board of directors of such
corporation (or any parent thereof) were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board
providing for such sale, lease, exchange or other disposition of assets of
the Company; or
	 
	 	(E)	 	Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

	 	(iv)	 	Potential Section 280G Adjustment. In the event that any amount or benefit to
be paid or provided to Executive pursuant to Section 7(c)(i), taken together with any
amounts or benefits otherwise paid or provided to Executive by the Company or any
affiliated company (collectively, the “Covered Payments”), would be an “excess
parachute payment,” as defined in Section 280G of the Code and the related Treasury
Regulations and other guidance issued thereunder, and would thereby subject Executive
to the tax imposed under Section 4999 of the Code (the “Excise Tax”), then the
Company shall either (A) make the Covered Payment to Executive without adjustment and
subject to the Excise Tax, or (B) reduce the Covered Payments to the maximum amount
that may be paid without Executive becoming subject to the Excise Tax (such reduced
amount, the “Payment Cap”), whichever provides the greater net after-tax
benefit to Executive. In the event that the reduction of the Covered Payments will
provide Executive with the greater net after-tax benefit, Executive shall have the
right to designate which of the payments and benefits otherwise provided for in Section
7(c)(i) that he will receive in connection with the application of the Payment Cap.

	(d)	 	Termination of Employment. For purposes of this Section 7, the term “termination of
employment” and words of similar import shall mean a “separation from service” as defined
by Section 409A, and this Section 7 shall be interpreted and administered consistent with such
definition.
	 
	(e)	 	No Mitigation; No Set-Off Against Severance Benefits. Executive shall not be required to
mitigate damages or the amount of any payment or benefits provided for under Section 7 by
seeking other employment or otherwise, nor shall the amount of any payment or benefits
provided for in Section 7 be reduced by any compensation earned by Executive as a result of
employment by another employer after the date of termination of Executive’s employment with
the Company, except as otherwise provided by the confidentiality, non-solicitation and
non-competition provisions of Section 9. In addition, the Company’s obligations under this
Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against Executive.

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	8.	 	Release and Waiver.
	 
	(a)	 	In exchange for the additional consideration under Section 7 to which Executive would not
otherwise be entitled, Executive shall generally and completely release the Company, its
subsidiaries and affiliates, and its directors, officers, executives, shareholders, partners,
agents, attorneys, predecessors, successors, insurers and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in any way
related to events, acts, conduct, or omissions occurring at any time prior to or at
Executive’s termination. Such general release shall include, but shall not be limited to:
(i) all claims arising out of or in any way related to Executive’s employment with the Company
or the termination of that employment; (ii) all claims related to Executive’s compensation or
benefits from the Company, including salary, bonuses, incentive compensation, vacation pay,
expense reimbursements, severance pay, fringe benefits, stock, stock options, restricted
stock, or any other ownership or equity interests in the Company, or its subsidiaries or
affiliates under all State and federal statutes such as the Fair Labor Standards Act, the
Family and Medical Leave Act, the Employee Retirement and Income Security Act, the New York
Labor Law and any similar State or local statute, regulation or order; (iii) all claims for
breach of contract, wrongful termination, and breach of the implied covenant of good faith and
fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (v) all federal, state, and local
statutory claims, including claims for discrimination, harassment, retaliation, attorneys’
fees, or other claims arising under, for example, the Age Discrimination in Employment Act
(the “ADEA”), Title VII of the Civil Rights Act of 1964, as amended, the
Rehabilitation Act of 1973, the Americans With Disabilities Act, the Equal Pay Act, the Family
Medical Leave Act, the New York Human Rights Law and any similar State or local statute,
regulation or order. Notwithstanding the foregoing, Executive shall not be required to
release the Company or its subsidiaries or affiliates from: (A) any obligation to indemnify
Executive pursuant to the articles and bylaws of the Company, any valid fully executed
indemnification agreement with the Company, any applicable directors and officers liability
insurance policy, and applicable law; or (B) any obligations to make payments to Executive
under Section 7. Executive shall be required to represent that he has no lawsuits, claims or
actions pending in his name, or on behalf of any other person or entity, against the Company
or its subsidiaries or affiliates, or any other person or entity subject to the release to be
granted under this Section.
	 
	(b)	 	Executive shall acknowledge that: (i) he is knowingly and voluntarily waiving and releasing
any rights he may have under the ADEA; (ii) that the consideration given for the waiver and
release (i.e., the additional consideration to be provided under Section 7) is in addition to
anything of value to which he is already entitled; and (iii) that he has been advised, as
required by the ADEA, that: (A) his waiver and release does not apply to any rights or claims
that may arise after the date that he signs such release; (B) he should consult with an
attorney prior to signing the release (although he may choose voluntarily not to do so); (C)
he has twenty-one (21) days from the date he receives the proposed release to consider the
release (although he may choose voluntarily to sign it earlier); (D) he has seven (7) days
following the date he signs the release to revoke the release by providing written notice of
his revocation to the Board; and (E) the release will

Page 11 of 17

 

	 	 	not be effective until the date upon which the revocation period has expired, which will be
the eighth day after the date that the release is signed by Executive.
	 
	(c)	 	The claims included in this release and waiver do not include vested rights, if any, under
any qualified retirement plan in which Executive participates, and his COBRA, unemployment
compensation and worker’s compensation rights, if any. Nothing in this release shall be
construed to constitute a waiver of: (i) any claims Executive may have against the Company
that arise from acts or omissions that occur after the effective date of this Release; (ii)
Executive’s right to file an administrative charge with any governmental agency concerning the
termination of that employment; or (iii) Executive’s right to participate in any
administrative or court investigation, hearing or proceeding. Executive agrees, however, to
waive and release any right to receive any individual remedy or to recover any individual
monetary or non-monetary damages as a result of any such administrative charge or proceeding.
In addition, this release does not affect Executive’s rights as expressly created by this
Agreement, and does not limit his ability to enforce this Agreement.
	 
	9.	 	Executive Covenants.
	 
	(a)	 	Non-Disclosure of Confidential Information and Trade Secrets.

	 	(i)	 	During the course of Executive’s employment with the Company, Executive will
acquire and have access to Confidential Information and Trade Secrets belonging to the
Company, its affiliates, subsidiaries, divisions and joint ventures (collectively
referred to as the “Company” throughout and for purposes of this Section 9). Such
Confidential Information and Trade Secrets include, without limitation, business and
technical information, whatever its nature and form and whether obtained orally, by
observation, from written materials or otherwise, as for example: (A) financial and
business information, such as information with respect to costs, commissions, fees,
profits, profit margins, sales, markets, mailing lists, accounts receivables and
accounts payables, pricing strategies, strategies and plans for future business, new
business, product or other development, potential acquisitions or divestitures, and new
marketing ideas; (B) marketing information, such as information on markets, end users
and applications, the identity of the Company’s customers, vendors, suppliers, and
distributors, their names and addresses, the names of representatives of the Company’s
customers, vendors, distributors or suppliers responsible for entering into contracts
with the Company, the Company’s financial arrangements with its distributors and
suppliers, the amounts paid by such customers to the Company, specific customer needs
and requirements, leads and referrals to prospective customers; and (C) personnel
information, such as the identity and number of the Company’s employees, personal
information such as social security numbers, skills, qualifications, and abilities.
Executive acknowledges and agrees that the Confidential Information and Trade Secrets
are not generally known or available to the general public, but have been developed,
complied or acquired by the Company at its great effort and expense and for commercial
advantage and, therefore, takes every reasonable precaution to prevent the use or
disclosure of any part of it by or to unauthorized

Page 12 of 17

 

	 	 	 	persons. Confidential Information and Trade Secrets can be in any form or media,
whether oral, written or machine readable, including electronic files.
	 
	 	(ii)	 	Executive agrees he will not, while associated with the Company and for so long
thereafter as the pertinent information or documentation remains confidential, directly
or indirectly use, disclose or disseminate to any other person, organization or entity
or otherwise use any Confidential Information and Trade Secrets, except as specifically
required in the performance of Executive’s duties on behalf of the Company or with
prior written authorization from the Board.

	(b)	 	Non-Solicitation of Customers. Executive acknowledges and agrees that during the course of
and solely as a result of employment with the Company, he will come into contact with some,
most or all of the Company’s customers and will have access to Confidential Information and
Trade Secrets regarding the Company’s customers, distributors and suppliers. Consequently,
Executive covenants and agrees that in the event of the termination of his employment, whether
such termination is voluntary or involuntary, Executive will not, for a period of twelve (12)
months following such termination, directly or indirectly, solicit or initiate contact with
any customer, former customer or prospective customer of the Company for the purpose of
selling products or services to the customer competitive with the products or services
purchased by the customer from the Company. This restriction shall apply to any customer,
former customer or prospective customer of the Company with whom Executive had contact or
about whom Executive obtained Confidential Information or Trade Secrets during his employment
with the Company. For the purposes of this Section, “contact” means interaction
between Executive and the customer or then prospective customer which takes place to further
the business relationship, or making sales to our performing services for the customer or
prospective customer on behalf of the Company. This restriction will not apply when a former
employee who is not working in a competitive capacity responds to a request for proposal on
behalf of his new employer who is not engaged in the same or similar businesses as the
Company.
	 
	(c)	 	Non-Compete. Executive acknowledges that his services are special and unique, and
compensation is partly in consideration of and conditioned upon Executive not competing with
Company, and that a covenant on Executive’s part not to compete is essential to protect the
business and good will of the Company. Accordingly, except as hereinafter provided, Executive
agrees that for twelve (12) months after the termination of his employment, Executive shall
not be engaged or interested as a director, officer, stockholder (except as provided herein),
employee, partner, individual proprietor, lender or in any other capacity, in any business,
which competitive with the business of the Company as conducted at the time of Executive’s
termination and which involves Executive’s knowledge, actions or assistance within the
counties of Westchester, Rockland, Ulster, Orange, Duchess and Sullivan in New York and
Sussex, Bergen and Passaic in New Jersey; however, this restriction will not apply to new
kinds of business in which Executive may engage in the future, after such termination, unless
Executive has been actively engaged in the development or otherwise involved in such business
while an employee of the Company. In addition, Executive agrees that for this same twelve
(12) months, he shall not recruit or recommend any other person who is or was an employee of
the Company while Executive was also an employee, to any business which

Page 13 of 17

 

	 	 	is competitive with the business of Executive as conducted at the time of Executive’s
termination and which involves Executive’s knowledge, actions or assistance within the
counties of Westchester, Rockland, Ulster, Orange, Duchess and Sullivan in New York and
Sussex, Bergen and Passaic in New Jersey. Nothing herein shall prohibit Executive from
investing in any securities of any corporation which is in competition with the Company,
whose securities are listed on a national exchange or traded in the over-the-counter market
if Executive shall own less than 5% of the outstanding securities of such operation.
	 
	(d)	 	Enforcement of Covenants. Executive acknowledges and agrees that compliance with the
covenants set forth in this Section 9 is necessary to protect the Confidential Information and
Trade Secrets, business and goodwill of the Company, and that any breach of this Section 9
will result in irreparable and continuing harm to the Company, for which money damages may not
provide adequate relief. Accordingly, in the event of any breach or anticipatory breach of
Section 9 by Executive, the Company and Executive agree that the Company shall be entitled to
the following particular forms of relief as a result of such breach, in addition to any
remedies otherwise available to it at law or equity: (i) injunctions, both preliminary and
permanent, enjoining or restraining such breach or anticipatory breach, and Executive hereby
consents to the issuance thereof forthwith and without bond; and (ii) recovery of all
reasonable sums and costs, including attorneys’ fees, incurred by the Company to enforce the
provisions of this Section 9.
	 
	10.	 	Withholding of Taxes

The Company shall withhold from any compensation and benefits payable under this Agreement all
applicable federal, state, local or other taxes.

	11.	 	No Claim Against Assets.

Nothing in this Agreement shall be construed as giving Executive any claim against any specific
assets of the Company or as imposing any trustee relationship upon the Company in respect of
Executive. The Company shall not be required to establish a special or separate fund or to
segregate any of its assets in order to provide for the satisfaction of its obligations under this
Agreement. Executive’s rights under this Agreement shall be limited to those of an unsecured
general creditor of the Company and its affiliates.

	12.	 	Executive Acknowledgement.

Executive acknowledges that he has had the opportunity to discuss this Agreement with and obtain
advice from his private attorney, has had sufficient time to and has carefully read and fully
understands all of the provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.

	13.	 	Successors and Assignment.
	 
	(a)	 	Except as otherwise provided in this Agreement, this Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, representatives, successors
and assigns.

Page 14 of 17

 

	(b)	 	The Company shall require any successor or successors (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to Executive, to
acknowledge expressly that this Agreement is binding upon and enforceable against the Company
in accordance with the terms hereof, and to become jointly and severally obligated with the
Company to perform this Agreement in the same manner and to the same extent that the Company
would be required to perform if no such succession or successions had taken place. Failure of
the Company to obtain such agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement by the Company.
	 
	(c)	 	The rights and benefits of Executive under this Agreement are personal to him and no such
right or benefit shall be subject to voluntary or involuntary alienation, assignment or
transfer; provided, however, that nothing in this Section 13 shall preclude Executive from
designating a beneficiary or beneficiaries to receive any benefit payable on his death.
	 
	14.	 	Entire Agreement; Amendment.

This Agreement shall supersede any and all existing oral or written agreements, representations, or
warranties between Executive and the Company (or any of its subsidiaries or affiliated entities)
relating to the terms of Executive’s employment, except for the Company’s Code of Ethics and the
Director’s and Officer’s Indemnification Agreement. This Agreement may not be amended except by a
written agreement signed by both parties.

	15.	 	Governing Law.

This Agreement shall be governed by and construed in accordance with the domestic substantive laws
of the State of New York, without giving effect to any conflicts or choice of laws rule or
provision that would result in the application of the domestic substantive laws of any other
jurisdiction.

	16.	 	Section 409A.

The parties intend that this Agreement and the payments and benefits to be provided hereunder
satisfy the requirements of Section 409A, and this Agreement shall be administered and interpreted
consistent with such intention.

	17.	 	Notices.

Any notice, consent, request or other communication made or given in connection with this Agreement
shall be in writing and shall be deemed to have been duly given when delivered or mailed by
registered or certified mail, return receipt requested, or by facsimile or by hand delivery, to
those listed below at their following respective addresses or at such other address as each may
specify by notice to the others:

To the Company:

Warwick Valley Telephone Company

Attention: Director of Human Resources

Page 15 of 17

 

47 Main Street

Warwick, New York 10990

To Executive:

At the address set forth below

	18.	 	Miscellaneous.
	 
	(a)	 	Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement
on any occasion shall not be considered a waiver thereof or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of this Agreement.
	 
	(b)	 	Severability. If any term or provision of this Agreement is declared illegal or
unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable,
such term or provision shall immediately become null and void, leaving the remainder of this
Agreement in full force and effect.
	 
	(c)	 	Headings. Section headings are used herein for convenience of reference only and shall not
affect the meaning of any provision of this Agreement.
	 
	(d)	 	Rules of Construction. Whenever the context so requires, the use of the singular shall be
deemed to include the plural and vice versa.
	 
	(e)	 	Authority to Enter into this Agreement. The officer of the Company whose signature appears
below has been authorized to enter into this Agreement on behalf of the Company.
	 
	(f)	 	Counterparts. This Agreement may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, and such counterparts will together constitute but
one agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year set
forth below.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	WARWICK VALLEY TELEPHONE COMPANY	 	 	 	EXECUTIVE  
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Duane W. Albro	 	 	 	By:	 	/s/ Kenneth H. Volz  
	 	 	 	 	 	 	 	 	   
	 

	 	Printed Name:
	 	Duane W. Albro
	 	 	 	 	 	Printed Name:
	 	Kenneth H. Volz
	 

	 	Title:
	 	President and Chief Executive Officer Duly Authorized
Officer	 	 
	 	 	 	Address:	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Date: May 28, 2008	 	 	 	Date: May 28, 2008

Page 16 of 17

 

2008 Annual Bonus and Long Term Incentive Plan — CFO

Annual Bonus

Target Amount: 50% of base salary ($125,000)

Actual Bonus Payout = Target Bonus ($125,000) x Total Payout

Factor

Methodology:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial Metric	 	Weighting	 	Result	 	Target	 	Actual / Target	 	Payout Factor
	 	 	A	 	B	 	C	 	(B / C)	 	A x (B / C)
	Revenue
	 	 	0.25	 	 	TBD	 	$	26,406,000	 	 	TBD	 	TBD
	EBITDA
	 	 	0.25	 	 	TBD	 	$	4,832,000	 	 	TBD	 	TBD
	FCF
	 	 	0.25	 	 	TBD	 	$	1,479,000	 	 	TBD	 	TBD
	NI
	 	 	0.25	 	 	TBD	 	$	5,363,000	 	 	TBD	 	TBD
	Total
	 	 	1.00	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Payout Factor

Long Term Incentive Plan

	 	 	 	 	 
	Stock Options: 

Restricted Shares:

	 	25,000

5,000
	 	 

For calculating Incentive Compensation under the Long-Term Incentive Plan for the CEO, the same
methodology used above to calculate the Annual Bonus is to be used. However, the Board of Directors
retains sole discretion to award compensation under this Appendix A.

Page 17 of 17EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS AGREEMENT, originally entered into as of the 1st day of June, 2002, by and between
EXCHANGE UNDERWRITERS, INC. (“Exchange”) and RICHARD B. BOYER (“Executive”) is hereby amended and
restated in its entirety effective as of June 1, 2008. For purposes of this Agreement, references
to the “Company” shall mean FEDFIRST FINANCIAL CORPORATION and references to the “Bank” shall mean
FIRST FEDERAL SAVINGS BANK.

W I T N E S S E T H

     WHEREAS,
in connection with that certain Stock Purchase Agreement, dated as of May 29, 2002,
by and between Executive and the Company, Executive entered into an employment agreement with
Exchange and an employment agreement with the Bank; and

     WHEREAS, the original term of the employment agreement with Exchange will expire on June
1, 2008; and

     WHEREAS, the Board of Directors of Exchange (the “Board”) wishes to extend the term of
Executive’s employment agreement with Exchange; and

     WHEREAS, the parties wish to set forth their agreement concerning Executive’s continued
employment with Exchange by amending and restating Executive’s employment agreement in its
entirety.

     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. Executive will continue to be employed as President and Chief
Operating Officer of Exchange through the term of this Agreement. Executive will perform all
duties and shall have all powers commonly incident to his position as Chief Operating Officer
or which, consistent with his position, the Board of Directors delegates to Executive.

     2. Location and Facilities. Executive will continue to be furnished with the
working facilities and staff customary for the positions held by Executive through the term of
this Agreement.

     3. Term.

         a. The term of this Agreement shall include (i) the initial term, consisting of
the period commencing on June 1, 2008 (the “Effective Date”) and ending on September 19,
2010, plus (ii) any and all extensions of the initial term made pursuant to this Section
3.

         b. Not later than September 19, 2009, 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. Not later than
September 19, 2009, and prior to each September 19th thereafter, 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. Throughout the term of this Agreement, Executive shall be
entitled to receive an annual base salary of $160,000 (“Base
Salary”) from Exchange. The Base
Salary shall be paid as and when accrued, in accordance with Exchange’s normal payroll
schedule.

     5. Bonus/Commissions. During the term of this Agreement, Executive shall receive
25% of all first-year commissions generated by any salesperson of Exchange (including
Executive) from sales of new insurance policies. Commissions will be paid on a monthly basis.
Effective as of the Effective Date, Executive will no longer receive any commissions from the
sales or renewals of insurance policies to Coveralls of North America. In addition,
Executive shall receive an annual bonus equal to 20% of the year-over-year growth in Exchange’s annual
audited net income (excluding any net income effect from the completion of any agency
acquisition). Bonuses will be paid within two and a half months after the end of the fiscal
year for which the bonus is earned. The Executive must be employed through the end of Exchange’s
fiscal year to be entitled to receive an annual bonus.

     6. Benefit Plans. Executive shall be eligible to participate in the employee welfare
benefit plans Exchange 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 and short- and long- term group disability insurance.
Executive shall also be eligible to participate in the Bank’s employee stock ownership plan
and retirement savings plan.

     7. Vacation and Leave. Executive may take up to five (5) weeks paid vacation and
three (3) paid personal days annually. Any other leave may be taken in accordance with
Exchange’s general personnel policies. Executive shall not be charged leave of any kind for
attendance at professional meetings, seminars or continuing education programs.

     8. Expense
Payments/Reimbursements/Fringe Benefits.

          a. Exchange 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. Prior to reimbursement by Exchange, Executive must submit expenses to the Chief Operating
Officer of the Bank for approval and substantiate the payment of all expenses in accordance
with applicable policies of Exchange and the Bank.

          b. During the term of this Agreement, Executive may continue his use of a
2004 Acura TL owned by Exchange. All costs associated with insuring and maintaining the
vehicle will be paid for by Exchange.

- 2 -

 

     9. Loyalty
and Confidentiality.

          a. Confidentiality. Executive acknowledges that Exchange now has and will develop in
the future, and that Executive has learned and will learn in the future, valuable Proprietary
Information (as defined below) relating to the business of soliciting, selling, renewing,
negotiating and placing insurance policies and related products and services (the “Business”).
Executive covenants and agrees to keep the Proprietary Information in confidence and to use his
best efforts, for as long as this agreement remains in effect and for a period (the “Restriction
Period”) commencing on the Effective Date and ending two (2) years after the date on which
Executive ceases to be employed by Exchange or any affiliate of Exchange (the “Termination Date”),
to prevent its dissemination other than in the normal and proper course of his duties or as
authorized in writing by the Board. Executive further covenants and agrees to use the Proprietary
Information exclusively for the benefit of Exchange during the Restriction Period.

          b. Proprietary Information. “Proprietary Information” shall include, but not be
limited to, the following types of information regarding Exchange: corporate information,
including contractual arrangements, plans and strategies; marketing information, including sales
or product plans, strategies, tactics, methods, prospects, market research data, customer and
potential customer lists; financial information, including cost and performance data; and
operational information, including manufacturing processes and methods, trade secrets, and
technical data; and personal information, including personnel lists. Proprietary Information
includes, and is limited to, that information which is not generally known and is protected as
confidential by Exchange using reasonable efforts, and does not include general skills, knowledge,
personal contacts and experience acquired by Executive prior to and during his employment with
Exchange. Any Proprietary Information developed by Executive during the term of this Agreement
shall be the property of Exchange.

          c. Non-Solicitation. Executive agrees that during the Restriction Period, he
shall not, directly or indirectly, for his own account or as agent, servant or employee of any
business entity, hire, offer to hire or in any other manner persuade or attempt to persuade
any officer or employee of Exchange or any affiliate of Exchange to discontinue or otherwise
materially and adversely alter the terms of his or her relationship with Exchange.

          d. Corporate Documents. Executive agrees that all documents of any nature
pertaining to activities of Exchange or to any of the foregoing matters in his possession at
any time, including, without limitation, memoranda, notebooks, notes, data sheets, and records,
are and shall be the property of Exchange and that they and all copies of them shall be
surrendered to Exchange whenever requested by Exchange from time to time and with or without request upon
termination of Executive’s employment.

          e. Non-Competition. Executive agrees and covenants that he will not,
directly or indirectly, whether as an officer, director, consultant, employee, representative,
agent, owner (other than as an owner of less than a 5% interest of a publicly-traded company) or
otherwise, (i) during the Non-Compete Period (as defined below), engage in providing services
to any Competing Business within a thirty (30) mile radius of any office maintained by
Exchange or an affiliate of Exchange (including all offices and branches of the Bank) on the
date hereof or on the Termination Date, or (ii) during the Restriction Period, solicit
business

- 3 -

 

from, or market services or products to, any person or entity which was, during a period of one
(1) year prior to the Termination Date, a customer of Exchange, with respect to the Business or
with respect to any other products or services offered by Exchange (or which the Exchange made
plans or took preparatory steps to offer) during the aforesaid one-year period. “Competing
Business” means the solicitation, sale, renewal, negotiation or placement of insurance
policies and related products and services. “Non Compete Period” means the period commencing on
the Effective Date and continuing to the Termination Date, provided that, in the case of a
termination of this Agreement without Cause by Exchange the Non Compete Period shall end on the
date on which Exchange ceases to pay Executive’s Base Salary and commissions pursuant to
Section 10(f), and in the case of any other termination of the Executive’s employment, the
Non Compete Period shall end on the two year anniversary of Executive’s Termination Date.

     10. Termination and Termination Pay. Executive or Exchange may terminate
Executive’s employment under the following circumstances:

          a.
Death. Executive’s employment under this Agreement shall terminate upon his death during
the term of this Agreement, in which event Executive’s estate shall receive any unpaid Base Salary
and commission due to Executive through the last day of the calendar month in which his death
occurred, paid in accordance with regular payroll practices.

          b. Retirement. This Agreement shall terminate upon Executive’s retirement
under the retirement benefit plan or plans in which he participates pursuant to Section 6 of
this Agreement or otherwise, in which case Executive shall receive any unpaid Base Salary and
commission due to him through the Termination Date, paid in accordance with regular payroll
practices.

          c. Disability.

          i. The Board or Executive may terminate Executive’s employment after having
determined Executive has suffered a Disability. For purposes of this Agreement,
“Disability” or “Disabled” 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 Exchange (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. Exchange will make Disability payments, each in an amount
equal to sixty percent (60%) of Executive’s monthly rate of Base Salary in effect as of the
date of his termination of employment due to Disability and average monthly commissions
(based on the twelve-month period ending on the date of Disability). Exchange will make
Disability payments on a monthly basis commencing

- 4 -

 

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 with Exchange 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 then-current term of
the Agreement would have expired had Executive’s employment not terminated by reason of
Disability. Executive 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 Exchange or by the Bank; provided, that any such benefits
received after Executive’s right to receive Disability payments under this Agreement shall have
terminated shall be the property of Executive, and, if received by Exchange, shall be promptly
paid over to Executive. In addition, during any period of Executive’s Disability, Exchange 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 Exchange.

     d. Termination for Cause.

          i. The Board, by written notice to Executive in the form and manner specified in Section
10(d)(ii), 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 Exchange has delivered to Executive a copy of a resolution duly adopted by the affirmative
vote of a majority of the disinterested membership of the Board, at a meeting of the Board called
and held for the purpose of

- 5 -

 

finding that, in the good faith opinion of the Board (after sixty (60) days’ notice to
Executive and 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 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 Base Salary,
commissions earned, vested rights and employee benefits due to him through the Termination
Date, paid in accordance with regular payroll practices.

          f. Without Cause.

          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: benefits under Section 6 hereof; his Base
Salary at the rate in effect at his Termination Date; and average monthly commissions
(based on the twelve-month period ending on the Termination Date) for the then-remaining
term of the Agreement, paid in accordance with regular payroll practices.

          g.
Change in Control. In the event that the employment of the Executive is
involuntarily terminated within one (1) year of a Change in Control (as defined in Section
10(i) below) Executive shall be entitled to the following benefit:

          i. a lump sum payment equal to three (3) times Executive’s Base Salary and average
yearly commission as of the date of the Change in Control; and

          ii. continuation at Exchange’s expense of health and dental coverage for Executive and
his dependents for a period not to exceed the earlier of (i) thirty-six (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 Agreement, a
“Change in Control” means any of the following events:

          i. Merger. The Company merges into or 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.

          ii.
Acquisition of Significant Share Ownership. 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

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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 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 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 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 Exchange or an affiliate of Exchange, would
constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986,
as amended (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 Exchange or an affiliate of Exchange pursuant to Section 280G of the Code 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) Exchange 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 Exchange or an affiliate of Exchange 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 Internal Revenue
Service (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, filed and paid for 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, Exchange 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

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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.

          a. Indemnification. Exchange agrees to 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
hereunder (whether or not Executive continues to serve as such 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 or board
member of Exchange or any of its affiliates. 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, Exchange 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.

          b. Insurance. During the period in which Exchange must indemnify
Executive, Exchange, at its expense, will arrange for Executive’s (and his heirs, executors,
and administrators) coverage under a directors’ and officers’ liability policy at least equivalent
to the insurance coverage provided to directors and other senior executives of Exchange.

     12. Reimbursement
of Executive’s Expenses to Enforce this Agreement. Exchange will reimburse Executive for all out-of-pocket expenses, including, without limitation,
reasonable attorneys’ fees that Executive incurs in connection with his successful enforcement of
Exchange’s or the Company’s obligations under this Agreement. Successful enforcement shall mean the
grant of an award of money or the requirement that Exchange or the Company take some action
specified by this Agreement: as a result of court order; or otherwise following an initial failure
by Exchange or the Company to pay such money or take such action promptly following receipt of a
written demand from Executive stating the reason that Exchange or the Company must make payment or
take action under this Agreement.

     13. Injunctive Relief. Upon a breach or threatened breach of the prohibitions upon
disclosure contained in Section 9 of this Agreement, the parties agree that there is
no adequate remedy at law for such breach, and Exchange 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 Exchange’s obligations
under this Agreement.

     14. Source of Payments. All payments provided for in this Agreement shall be
timely paid in cash or check from the general funds of Exchange. The Company, however,
unconditionally guarantees payment and provision of all amounts and benefits due under this
Agreement. In the event Exchange does not pay such amounts or provide such benefits, they
shall be paid or provided by the Company.

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     15. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of Exchange and the Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or otherwise,
all or substantially all of the assets of Exchange and the Company. Since Exchange has 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 Exchange.

     16. No Mitigation. Executive shall not be required to mitigate the 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 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 Exchange at its principal
business office and to Executive at his home address as maintained in the records of Exchange.

     18. No Plan Created by this Agreement. Executive, Exchange and the 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 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, 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 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 convenience of
reference only.

     23. Prior Agreements. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof, other than written
agreements with respect to specific plans, programs or arrangements
described in Sections 5 and 6, and
that certain employment agreement by and between Executive and the Bank dated May 29, 2002, and
supersedes and replaces in its entirety the agreement between the Executive and Exchange dated
June 1, 2002.

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     24. Service
on the Boards of Directors. The Executive serves as a member of the board of directors of Exchange, the Company and the Bank. The board of directors of each of the
Company, Exchange and the Bank shall undertake every lawful effort to ensure that the Executive
continues throughout the term of his employment to be elected or reelected as a director of
Exchange, the Company and the Bank. Notwithstanding anything in this Agreement to the contrary, the
Executive shall be deemed to have resigned as a director of each of the Company, Exchange and the
Bank effective immediately after termination of the Executive’s employment under Article 10
of this Agreement, regardless of whether the Executive submits a formal, written resignation as
director.

     25. Required Provisions. In the event any of the foregoing provisions of this
Agreement are in conflict with the terms of this Section 25, this Section 25
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 (except for already vested 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 service
is stayed by appropriate proceedings. If the charges in 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)(l), 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.

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          f. Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and
conditioned upon compliance with 12 U.S.C. Section 1828(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:	 	 	 	EXCHANGE UNDERWRITERS, INC.	 	 
	 	 	 	 	 	 	 	 	 
	/s/ John G. Robinson
 

	 	 
	 	By:
	 	/s/ Patrick G. O’Brien
 

	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	EXECUTIVE	 	 
	 	 	 	 	 	 	 	 	 
	/s/ Maria Walther	 	 	 	/s/ Richard B. Boyer	 	 
	 	 	 	 	   	 	 
	Witness	 	 	 	Richard B. Boyer	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	FEDFIRST FINANCIAL CORPORATION

(as guarantor)	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ John G. Robinson	 	 
	 

	 	 	 	 	 	 	 	 

- 12 -

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