UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 10, 2006
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FIRST FEDERAL BANC OF THE SOUTHWEST, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 000-51243 85-0453611
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(State or Other Jurisdiction) (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
300 North Pennsylvania Avenue, Roswell, New Mexico 88201
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (505) 622-6201
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[X] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
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On October 10, 2006, First Federal Banc of the Southwest, Inc. (the
"Company"), the holding company of First Federal Bank (the "Bank"), a federal
savings bank headquartered in Roswell, New Mexico, and Washington Federal, Inc.
("Washington Federal"), the holding company for Washington Federal Savings,
entered into an Agreement and Plan of Reorganization (the "Merger Agreement").
Pursuant to the Merger Agreement, and subject to the terms and conditions set
forth therein, the Company will merge with and into Washington Federal, with
Washington Federal being the surviving corporation of such merger. Under the
terms of the Merger Agreement, stockholders of the Company will receive $24.14
for each of their shares of Company common stock. The transaction has a total
indicated value of approximately $99 million.
Subject to regulatory and the Company stockholder approvals, the
transaction is expected to close in the first quarter of 2007.
Revised Employment Agreement
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On October 10, 2006, the Company amended the employment agreement (the
"Agreement") with Aubrey L. Dunn, Jr., President, Chief Executive Officer and
director of the Company and the Bank, which was originally adopted on May 18,
2006. The First Amendment to the Agreement (the "Amendment") is attached as
Exhibit 10.1 to this Current Report on Form 8-K. The Amendment provides an
extension of the time for continuation of benefits from twenty to thirty-six
months, following the date of termination. In addition, the Amendment adds
procedures for handling an excess parachute payment (as defined in Section 4999
of the Code) in the event of a Change of Control of the Company or the Bank.
2006 Retention Pay Plan
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On October 10, 2006, the Board of Directors adopted the Company's 2006
Retention Pay Plan for the benefit of certain executive officers and other key
employees of the Bank and the Company (the "Retention Plan"). If a participant
continues employment with the Bank and Company, or any successor thereto, for
the full Bonus Employment Period (as defined in the Retention Plan), and
performs his or her assigned duties in a professional and satisfactory manner,
the participant will be eligible for a retention bonus in an amount as set forth
in the Retention Plan. In the event of termination of the participant, other
than for Cause, on the effective date of, or following a Change in Control (as
defined in the Retention Plan) but prior to the end of the Bonus Employment
Period, the acquiror shall pay the retention bonus to the participant on the
participant's last day of employment
The foregoing summary is qualified in its entirety by reference to the text
of the Retention Plan, a copy of which is filed as Exhibit 10.2 to this Report.
Severance Plan
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On October 10, 2006, the Board of Directors adopted the Company's Severance
Plan (the "Severance Plan"). Participants in the Severance Plan will include
certain executive officers and other key employees of the Bank and the Company.
The Severance Plan divides plan participants
into three tiers. A participant whose employment is terminated under
circumstances constituting an Involuntary Severance (as defined in the Severance
Plan) and whose termination occurs upon or within twelve (12) months following a
Change in Control shall be entitled to the following benefits:
o a Tier One Employee shall receive as severance pay under the Severance
Plan a lump sum payment representing one hundred percent (100%) of Base
Salary;
o a Tier Two Employee shall receive as severance pay under the Severance
Plan a lump sum payment representing fifty percent (50%) of Base Salary;
and
o a Tier Three Employee shall receive as severance pay under the Severance
Plan a lump sum payment representing twenty-five percent (25%) of Base
Salary.
Except as provided in the Severance Plan, the lump sum shall be due and
payable on the date of the participant's Involuntary Severance.
A copy of the Merger Agreement is filed as Exhibit 2.1 to this Report. A
copy of the press release relating to the merger is filed as Exhibit 99.1 to
this Report. A copy of the Amendment, the Retention Plan and the Severance Plan
are attached as Exhibits 10.1, 10.2 and 10.3, respectively, to this Report. The
foregoing descriptions are qualified in their entirety by reference to the full
text of such exhibits.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired: None
(b) Pro Forma Financial Information: None
(c) Shell company transactions: None
(d) Exhibits:
Exhibit 2.1: Agreement and Plan of Reorganization dated as of
October 10, 2006 among Washington Federal, Inc.,
Washington Federal Acquisition, Inc. and First
Federal Banc of the Southwest, Inc.
Exhibit 10.1: First Amendment to the Employment Agreement of
Aubrey L. Dunn, Jr.
Exhibit 10.2: First Federal Banc of the Southwest, Inc. 2006
Retention Pay Plan
Exhibit 10.3: First Federal Banc of the Southwest, Inc.
Severance Plan
Exhibit 99.1: Press Release dated October 10, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST FEDERAL BANC OF THE SOUTHWEST, INC.
Date:October 16, 2006 By:/s/ George A. Rosenbaum, Jr.
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George A. Rosenbaum, Jr.
Executive Vice President and Chief Financial Officer
(Duly Authorized Representative)