EXHIBIT 10.2
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SPECIAL TERMINATION AGREEMENT
AGREEMENT made as of the 30th day of December, 1986 by and between
GLOUCESTER BANK & TRUST COMPANY, a Massachusetts trust company with its
main office in Gloucester, Massachusetts (the "Bank"), and Xxxxx X.
Xxxxx, an individual presently employed by the Bank in the capacity of
President and Chief Executive Officer (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 services rendered and 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 Bank, the Bank is willing to provide, subject to the
terms of this Agreement, certain severance benefits to protect the
Executive from the consequences of a Terminating Event (as defined in
Section 3) occurring subsequent to a Change in Control.
2. Chance 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 Bank would be required to report
in response to Item 5(f) of the Form for Proxy Statement (Form F-5)
prescribed by 12 CFR Part 335.212 promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act") (if the Bank were
assumed to be subject to the registration or reporting requirements of
the 1934 Act), or, if such regulation is no longer in effect, any regu-
lations promulgated by the Federal Deposit Insurance Corporation or by
the Securities and Exchange Commission pursuant to the 1934 Act which
are intended to serve similar purposes; or (ii) when any "person" (as
such term is used in Sections 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 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
Bank and, in the case of either (i) or (ii) above, the Bank's Board of
Directors has not consented to such event by a two-thirds vote of all of
the members of the Board of Directors adopted either prior to such event
or within ninety (90) days thereafter, except that if at the time such a
consent vote is adopted after such event, the persons who were directors
of the Bank immediately prior to such event do not constitute a majority
of the Board of Directors of the Bank or of any successor institution,
such vote shall not be deemed to constitute consent for the purposes of
this Agreement. In addition, a Change in Control shall be deemed to
have occurred if, as the result of, or in connection with, any tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions,
the persons who were directors of the Bank before such transaction shall
cease to constitute a majority of the Board of Directors of the Bank or
of any successor institution.
3. Terminating Event. A "Terminating Event" shall mean (a)
termination by the Bank of the employment of the Executive with the Bank
for any reason other than (i)
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death, (ii) deliberate dishonesty of the Executive with respect to the Bank
or any subsidiary or affiliate thereof, or (iii) conviction of the Executive
of a crime involving moral turpitude, or (b) resignation of the Executive
from the employ of the Bank, while the Executive is not receiving payments or
benefits from the Bank 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 reasonable 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
A decrease in the total annual compensation payable by the Bank to
the Executive.
4. Severance Payment. In the event a Terminating Event occurs
within three (3) years after a Change in Control, the Bank shall pay to
the Executive an amount equal to (x) three times the "base amount" (as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as
the same may be amended from time to time (the "Code")) applicable to
the Executive, less (y) One Dollar ($1.00), payable in one lump-sum
payment on the date of termination.
5. Limitation on Benefits.
(a) It is the intention of the Executive and of the Bank that no
payments by the Bank to or for the benefit of the Executive under this
Agreement or any other agreement or plan pursuant to which he is
entitled to receive payments or benefits shall be non-deductible to the
Bank by reason of the operation of Section 280G of the Code relating to
parachute payments. Accordingly, and notwithstanding any other
provision of this Agreement or any such agreement or plan, if by reason
of the operation of said Section 280G, any such payments exceed the
amount which can be deducted by the Bank, such payments shall be reduced
to the maximum amount which can be deducted by the Bank. To the extent
that payments exceeding such maximum deductible amount have been made to
or for the benefit of the Executive, such excess payments shall be
refunded to the Bank with interest thereon at the applicable Federal
Rate determined under Section 1274(d) of the Code, compounded annually,
or at such other rate as may be required in order that no such payments
shall be non-deductible to the Bank by reason of the operation of said
Section 280G. To the extent that there is more than one method of
reducing the payments to bring them within the limitations of said
Section 280G, the Executive shall determine which method shall be
followed, provided that if the Executive fails to make such
determination within forty-five days after the Bank has sent him written
notice of the need for such reduction, the Bank may determine the method
of such reduction in its sole discretion.
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(b) If any dispute between the Bank and the Executive as to any of
the amounts to be determined under this Section 5, or the method of
calculating such amounts, cannot be resolved by the Bank and the
Executive, either party after giving three days written notice to the
other, may refer the dispute to a partner in the Boston office of a firm
of independent certified public accountants selected jointly by the Bank
and the Executive. The determination of such partner as to the amount
to be determined under Section 5(a) and the method of calculating such
amounts shall be final and binding on both the Bank and the Executive.
The Bank shall bear the costs of any such determination.
6. 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.
7. Term. This Agreement shall take effect on the effective date
of an employment agreement between the Executive and the Bank, and shall
terminate upon the earlier of (a) the termination by the Bank of the
employment of the Executive because of death, deliberate dishonesty of
the Executive with respect to the Bank or any subsidiary or affiliate
thereof, or conviction of the Executive of a crime involving moral
turpitude, (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 of the events enumerated in Section 3(b)(i)-(iii) of
this Agreement.
8. Withholding. All payments made by the Bank under this
Agreement shall be net of any tax or other amounts required to be
withheld by the Bank under applicable law.
9. Arbitration of Disputes. Any controversy or claim arising
out of or relating to this Agreement or the breach thereof 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 Bank, one by the Executive and the third by the first two
arbitrators. If the first 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 9. 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 the Executive's rights under this Agree-
ment, the Bank shall pay (or the Executive shall be entitled to recover
from the Bank, 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 a part of any such fees and costs
and expenses would be unjust. This
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provision shall not apply to Section 5(b), except in the event that the Bank
and the Executive cannot agree on the selection of the accounting partner
described in said Section.
10. Assignment. Neither the Bank nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law
or otherwise, without the prior written consent of the other party.
This Agreement shall inure to the benefit of and be binding upon the
Bank 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 Bank of all payments
due him under this Agreement, the Bank shall continue such payments to
the Executive's beneficiary designated in writing to the Bank prior to
his death (or to his estate, if he fails to make such designation).
11. 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.
12. Waiver. No waiver of any provision hereof shall be
effective unless made in writing and signed by the waiving party. The
failure of either party to require the performance of any term or
obligation of this Agreement, or the waiver by either party of any
breach of this Agreement, shall not prevent any subsequent enforcement
of such term or obligation or be deemed a waiver of any subsequent
breach.
13. Notices. Any notices, requests, demands and other
communications 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 Bank or, in the case of the Bank, at its main
office, attention of the Clerk.
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 Bank 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 Bank's 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 Bank, 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 a duly authorized
representative of
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the Bank.
16. Governing Law. This is a Massachusetts contract and shall
be construed under and be governed in all respects by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Bank, by its duly authorized officer or Director, and
by the Executive, as of the date first written above.
WITNESS:
/s/ Xxxxxx X. Xxxx, Xx. /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
ATTEST:
/s/ Xxxxx X. Ericsson /s/ Xxxxx X. Xxxxx
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Assistant Clerk By: Xxxxx X. Xxxxx
Title: Pres.
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