Exhibit 10.11
SPECIAL TERMINATION AGREEMENT
Agreement made as of the _____ day of _______________, 199__ by and
among First Essex Bancorp, Inc., a Delaware corporation (the"Company") and its
subsidiary, First Essex Bank, FSB, a federal savings bank with its main office
in Lawrence, Massachusetts (the "Bank") (the Bank and the Company shall be
hereinafter collectively referred to as the "Employers") and Xxxxx X.
Xxxxxxxx of Amherst, Massachusetts (the "Executive").
1. Purpose. In order to allow the Executive to consider the prospect of
a Change in Control (as defined in Section 2) in an objective manner and in
consideration of the execution of an Employment Agreement between the Executive
and the Employers on the date hereon (the "Employment Agreement"), the services
to be rendered by the Executive to the Bank and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the Employers, the Employers are willing to provide, subject to the terms of
this Agreement, certain severance benefits to protect the Executive from
consequences of a Terminating Event (as defined in Section 3) occurring
subsequent to a Change in Control (as defined in Section 2).
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in either of the following events:
(i) if there has occurred a change in control which the
Company would be required to report in response to Item 1 of Form 8-K
promulgated under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or, if such regulation is no longer in effect, any
regulations promulgated by the Securities and Exchange Commission
pursuant to the 1934 Act which are intended to serve similar purposes;
(ii) when any "person" (as such term is used in Section
13(d) and 14(d)(2) of the 0000 Xxx) becomes a "beneficial owner" (as
such term is defined in Rule 13d-3 promulgated under the 1934 Act),
directly or indirectly, of securities of the Company or the Bank
representing twenty-five percent (25%) or more of the total number of
votes that may be cast for the election of directors of the Company or
the Bank, as the case may be;
(iii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company, and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (ii), (iv) or (v)
of this Section) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at lease a majority of the Board of Directors of
the Company;
(iv) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (a)
a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto
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continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 80%
of the combined voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or
(b) a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as
hereinabove defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or
(v) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean
(a) termination by either of the Employers of the employment of the
Executive with either of the Employers for any reason other than (i) death, (ii)
for Cause (as defined in the Employment Agreement), or (iii) by Operation of Law
(as defined in the Employment Agreement), or
(b) resignation of the Executive from the employ of either of the
Employers, while the Executive is not receiving payments or benefits from either
of the Employers by reason of the Executive's disability, subsequent to the
occurrence of any of the following events:
(i) a significant change in the nature or scope of the
Executive's responsibilities, authorities, powers, functions or duties
from the responsibilities, authorities, powers, functions or duties
exercised by the Executive immediately prior to the Change in Control;
or
(ii) a determination by the Executive that, as a result of a
Change in Control, he is unable to exercise the responsibilities,
authorities, powers, functions or duties exercised by the Executive
immediately prior to such Change in Control; or
(iii) a reduction in the Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time except for across-the-board salary reductions similarly affecting
all management personnel of the Bank and all management personnel of
any person in control of the Bank; or
(iv) the relocation of the Employers' offices at which the
Executive is principally employed immediately prior to the date of the
Change in Control to a location more than 25 miles from Andover,
Massachusetts, or the Employers' requiring the Executive to be based
anywhere other than the Employers' offices at such location; or
(v) the failure by the Employers to pay to the Executive any
portion of his current compensation or to pay to the Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Employers within seven (7) days of the date
such compensation is due; or
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(vi) the failure by the Employers to continue in effect any
material compensation, incentive, bonus or benefit plan in which the
Executive participates immediately prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Employers to continue the Executive's participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Change in Control; or
(vii) the failure by the Employers to continue to provide the
Executive with benefits substantially similar to those available to the
Executive under any of the Employers' life insurance, medical, health
and accident, or disability plans or any other material benefit plans
in which the Executive was participating at the time of the Change in
Control, the taking of any action by the Employers which would directly
or indirectly materially reduce any of such benefits, or the failure by
the Employers to provide the Executive with the number of paid vacation
days to which the Executive is entitled on the basis of years of
service with the Employers in accordance with the Employers' normal
vacation policy in effect at the time of the Change in Control; or
(viii) the failure of the Employers to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement.
4. Severance Payment. In the event a Terminating Event occurs within
three (3) years after a Change in Control, the Employers shall pay to the
Executive an aggregate amount equal to (x) three times the "base amount" (as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(the "Code")) applicable to the Executive, less (y) One Dollar ($1.00), payable
in one lump-sum payment on the date of termination; provided, however, if such a
Terminating Event occurs prior to the Employers' having determined the amount,
if any, to be paid to the Executive as an annual performance bonus for the year
ending on December 31, 1997, then the Executive shall be paid, prior to the date
of termination, a bonus for such year or portion thereof equal to the product of
$50,000 and a fraction the numerator of which is the number of calendar days
from and including January 1, 1997 through and including the date on which such
termination occurs (which numerator may not in any case be greater than 365) and
the denominator of which shall be 365, and the payment of such bonus shall be
included in the "base amount" applicable to the Executive for purposes of
calculating the amount to be paid to the Executive under this Section 4.
5. Employment Status. This Agreement is not an agreement for the
employment of the Executive and shall confer no rights on the Executive except
as herein expressly provided.
6. Term. This Agreement shall take effect on and as of the date hereof
and shall terminate upon the earlier of (a) termination by the Bank of the
employment of the Executive pursuant to Section 3(a) of this Agreement, (b) the
resignation or termination of the Executive for any reason prior to a Change in
Control, or (c) the resignation of the Executive after a Change in Control for
any reason other than the occurrence of any events enumerated in Section
3(b)(i)-(viii) of this Agreement.
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7. Withholding. All payments made by the Employers under this Agreement
shall be net of any tax or other amounts required to be withheld by the
Employers under applicable law.
8. Arbitration Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the fist two arbitrators. If the fist two arbitrators
cannot agree on the appointment of a third arbitrator, then the third arbitrator
shall be appointed by the American Arbitration Association in the City of
Boston. Such arbitration shall be conducted in the City of Boston in accordance
with the rules of the American Arbitration Association, except with respect to
the selection of arbitrators which shall be as provided in this Section 8.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. In the event that it shall be necessary or
desirable for the Executive to retain legal counsel and/or incur other costs and
expenses in connection with the enforcement of any or all of Executive's rights
under this Agreement, the Employers shall pay (or the Executive shall be
entitled to recover from the Employers, as the case may be) the Executive's
reasonable attorneys' fees and other reasonable costs and expenses in connection
with the enforcement of said rights (including the enforcement of any
arbitration award in court) regardless of the final outcome, unless and to the
extent the arbitrators shall determine that under the circumstances recovery by
the Executive of all or part of any such fees and costs and expenses would be
unjust.
9. Assignment. Neither the Employers nor the Executive may make any
assignment of this Agreement of any interest herein, by operation of law or
otherwise, without the prior written consent of the other party and without such
consent any attempted transfer shall be null and void and of no effect. This
Agreement shall inure to the benefit of and be binding upon the Employers and
the Executive, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of the Executive's death prior to the completion
by the Employers of all payments due him under this Agreement, the Employers
shall continue such payments to the Executive's beneficiary designated in
writing to the Employers prior to his death (or to his estate, if he fails to
make such designation).
10. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
11. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any terms or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such terms or obligation or be deemed a waiver of any
subsequent breach.
12. Prior Agreements. This Agreement, together with that certain
Employment Agreement of even date herewith by and among the Company, the Bank
and the Executive (the "Employment Agreement"), contains the entire agreement
and understanding of the parties with respect to its subject matter and
supersedes the Employment Agreement dated October 1, 1995 by
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and among Finest Financial Corp. ("Finest"), Pelham Bank and Trust Company
("Pelham") (the predecessors through merger to the Company and the Bank,
respectively) and the Executive and any provisions contained in the Agreement
and Plan of Reorganization dated as of August 5, 1996, as amended, by and among
the Company, Finest and Pelham, including without limitation Schedule 5.12
thereto, other than those provisions contained in Section 5.12(a) of said
Agreement and Plan of Reorganization referred to in Section 4(b) of the
Employment Agreement, which prior agreement and provisions shall be of no
further force or effect as of the date hereof.
13. Notices. Any notices, requests, demands and other communication
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Employers, at their executive offices,
attention of the Board of Directors.
14. Election of Remedies. An election by the Executive to resign after
a Change in Control under the provisions of this Agreement shall not constitute
a breach by the Executive of any employment agreement between the Employers and
the Executive and shall not be deemed a voluntary termination of employment by
the Executive for the purpose of interpreting the provisions of any of the
Employers' benefit plans, programs or policies. Nothing in this Agreement shall
be construed to limit the rights of the Executive under any employment agreement
he may then have with the Employers, provided, however, that if there is a
Terminating Event under Section 3 hereof, the Executive may elect either to
receive the severance payment provided under Section 4 or such termination
benefits as he may have under any such employment agreement, but may not elect
to receive both.
15. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by duly authorized
representatives of each of the Employers.
16. Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respect by the laws of the Commonwealth
of Massachusetts.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employers, by their duly authorized officers, and by the
Executive, as of the date first above written.
ATTEST: FIRST ESSEX BANCORP, INC.
_________________________ By:_______________________________
Secretary President and Chief Executive Officer
ATTEST: FIRST ESSEX BANK, FSB
_________________________ By:_______________________________
Secretary President and Chief Executive Officer
WITNESS: EXECUTIVE
________________________ __________________________________
Xxxxx X. Xxxxxxxx
