EXHIBIT 10.7
EXECUTIVE SALARY CONTINUATION AGREEMENT THAT
SUPERCEDES AND REPLACES THE EXECUTIVE
SUPPLEMENTAL RETIREMENT PLAN AGREEMENT DATED
JANUARY 1, 2004
THIS AGREEMENT, made and entered into this 11th day of May, 2004, by and
between Hampden Savings Bank a bank organized and existing under the laws of the
Commonwealth of Massachusetts (hereinafter referred to as the "Bank"), and
Xxxxxx X. Xxxxxx an Executive of the Bank (hereinafter referred to as the
"Executive").
WITNESSETH:
WHEREAS, the Bank and the Executive are parties to the Executive Salary
Continuation Agreement dated the 1st day of January, 2004 between Hampden
Savings Bank and Xxxxxx X. Xxxxxx that provides for the payment of certain
benefits. This Executive Supplemental Retirement Plan Agreement and the benefits
provided hereunder shall supercede and replace the existing Executive
Supplemental Retirement Plan Agreement and the benefits provided thereby;
WHEREAS, the Executive has been and continues to be a valued Executive of
the Bank, and is now serving the Bank as its President;
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Executive's services to the Bank in the
past have been of exceptional merit and have constituted an invaluable
contribution to the general welfare of the Bank in bringing the Bank to its
present status of operating efficiency and present position in its field of
activity;
WHEREAS, the Executive's experience, knowledge of the affairs of the
Bank, reputation, and contacts in the industry are so valuable that assurance of
the Executive's continued services is essential for the future growth and
profits of the Bank and it is in the best interests of the Bank to arrange terms
of continued employment for the Executive so as to reasonably assure the
Executive remains in the Bank's employ during the Executive's lifetime or until
the age of retirement;
WHEREAS, it is the desire of the Bank that the Executive's services be
retained as herein provided;
WHEREAS, the Executive is willing to continue in the employ of the Bank
provided the Bank agrees to pay the Executive or the Executive's
beneficiary(ies), certain benefits in accordance with the terms and conditions
hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Executive to enter into
this Agreement under which the Bank will agree to make certain payments to the
Executive at retirement or the Executive's beneficiary(ies) in the event of the
Executive's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Executive
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Executive, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Executive is fully advised of
the Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
The Bank agrees to employ the Executive in such capacity as the Bank may
from time to time determine. The Executive will continue in the employ of
the Bank in such capacity and with such duties and responsibilities as
may be assigned to him, and with such compensation as may be determined
from time to time by the Board of Directors of the Bank.
II. FRINGE BENEFITS
The Salary continuation benefits provided by this Agreement are granted
by the Bank as a fringe benefit to the Executive and are not part of any
Salary reduction plan or an arrangement deferring a bonus or a Salary
increase. The Executive has no option to take any current payment or
bonus in lieu of these Salary continuation benefits except as set forth
hereinafter.
III. RETIREMENT DATE AND NORMAL RETIREMENT AGE
A. RETIREMENT DATE:
If the Executive remains in the continuous employ of the Bank, the
Executive shall retire from active employment with the Bank on the
Executive's sixty-fifth (65th) birthday, unless by action of the
Board of Directors this period of active employment shall be
shortened or extended.
B. NORMAL RETIREMENT AGE:
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
IV. RETIREMENT BENEFIT AND POST-RETIREMENT DEATH BENEFIT
Upon said retirement, the Bank, commencing with the first day of the
month following the date of such retirement, shall pay the Executive an
annual benefit equal to 75% of Final Compensation (Subparagraph XI [O])
at retirement, less 50% of the Social Security Benefit (Subparagraph XI
[P]), the Single Life Annuitized Value (Subparagraph XI [N]) of the
Executive's account balances derived from employer provided contributions
under
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the qualified defined contribution plan, the benefit available from the
pension plan assuming the Single Life Annuitized Value option, and the
benefit from the Collateral Assignment Split Dollar Plan (Subparagraph XI
[Q]) maintained by the Bank. Said benefit shall be paid in equal monthly
installments (1/12th of the annual benefit) until the death of the
Executive.
V. DEATH BENEFIT PRIOR TO RETIREMENT
In the event the Executive should die while actively employed by the Bank
at any time after the date of this Agreement but prior to the Executive
attaining the age of sixty-five (65) years (or such later date as may be
agreed upon), the Bank will pay an annual benefit equal to the accrued
balance, on the date of death, of the Executive's accrued liability
retirement account, to such individual or individuals as the Executive
may have designated in writing and filed with the Bank. In the absence of
any effective beneficiary designation, any such amounts becoming due and
payable upon the death of the Executive shall be payable to the duly
qualified executor or administrator of the Executive's estate. Said
payment due hereunder shall be made the first day of the second month
following the decease of the Executive.
VI. DISABILITY BENEFIT
In the event the Executive becomes Disabled (Subparagraph XI [M]) prior
to any Termination of Service, and the Executive's employment is
terminated because of such Disability, he shall immediately begin
receiving the benefits in Subparagraph IV above. Such benefit shall begin
without regard to the Executive's Normal Retirement Age and the Executive
shall be one hundred percent (100%) vested in the entire benefit amount.
If there is a dispute regarding whether the Executive is Disabled, such
dispute shall be resolved by a physician selected by the Bank and such
resolution shall be binding upon all parties to this Agreement.
VII. BENEFIT ACCOUNTING
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Executive into
which appropriate reserves shall be accrued.
VIII. TERMINATION OF EMPLOYMENT
Subject to Subparagraph VIII (i) hereinbelow, in the event that the
employment of the Executive shall terminate prior to Normal Retirement
Age, as provided in Paragraph III, by the Executive's voluntary action,
or by the Executive's discharge by the Bank without cause, then this
Agreement shall terminate upon the date of such termination of
employment. The Bank shall pay to the Executive as severance compensation
an amount of money equal to the accrued balance, on the date of
termination, of the Executive's liability reserve account multiplied by
fifty percent (50%) plus ten percent (10%) times the number of full years
of employment with the Bank from the Effective Date of this Agreement (to
a maximum of 100%). This severance compensation shall be paid in one
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hundred eighty (180) equal monthly installments with interest equal to
the one-year Treasury xxxx as of the date of termination or paid in a
lump sum.
In the event the Executive's death should occur after such severance but
prior to the completion of the monthly payments provided for in this
Paragraph VIII, the remaining installments, or a lump sum, at the
discretion of the Bank, shall be paid to such individual or individuals
as the Executive may have designated in writing and filed with the Bank.
In the absence of any effective beneficiary designation, any such amounts
shall be payable to the duly qualified executor or administrator of the
Executive's estate. Said payments due hereunder shall begin the first day
of the second month following the decease of the Executive.
(i) DISCHARGE FOR CAUSE: In the event the Executive shall be
discharged for cause at any time, all benefits provided
herein shall be forfeited. The term "for cause" shall mean
any of the following that result in an adverse effect on
the Bank: (i) gross negligence or gross neglect; (ii) the
commission of a felony or gross misdemeanor involving fraud
or dishonesty; (iii) the willful violation of any law,
rule, or regulation (other than a traffic violation or
similar offense); (iv) an intentional failure to perform
stated duties; or (v) a breach of fiduciary duty involving
personal profit. If a dispute arises as to discharge "for
cause," such dispute shall be resolved by arbitration as
set forth in this Executive Plan.
IX. MUTUAL TO STOCK CONVERSION OR CHANGE OF CONTROL
Upon a Mutual to Stock Conversion or a Change of Control (as defined in
Subparagraph XI (L) herein), if the Executive's employment is
subsequently terminated, except for cause, then the Executive shall
receive the benefits promised in this Agreement upon attaining Normal
Retirement Age, as if the Executive had been continuously employed by the
Bank until said Normal Retirement Age. The Executive will also remain
eligible for all promised death benefits in this Agreement. In addition,
no sale, merger, consolidation or conversion of the Bank shall take place
unless the new or surviving entity expressly acknowledges the obligations
under this Agreement and agrees to abide by its terms.
X. RESTRICTIONS ON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Executive
Plan. The Executive, their beneficiary(ies), or any successor in interest
shall be and remain simply a general creditor of the Bank in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to either
fund the obligations undertaken by this Executive Plan or to refrain from
funding the same and to determine the extent, nature and method of such
funding. Should the Bank elect to fund this Executive Plan, in whole or
in part, through the purchase of life insurance, mutual funds,
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disability policies or annuities, the Bank reserves the absolute right,
in its sole discretion, to terminate such funding at any time, in whole
or in part. At no time shall any Executive be deemed to have any lien,
right, title or interest in any specific funding investment or assets of
the Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy on the life of the Executive, then the Executive shall assist the
Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or annuities.
XI. MISCELLANEOUS
A. ALIENABILITY AND ASSIGNMENT PROHIBITION:
Neither the Executive, nor the Executive's surviving spouse, nor
any other beneficiary(ies) under this Executive Plan shall have
any power or right to transfer, assign, anticipate, hypothecate,
mortgage, commute, modify or otherwise encumber in advance any of
the benefits payable hereunder nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments,
alimony or separate maintenance owed by the Executive or the
Executive's beneficiary(ies), nor be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise. In the
event the Executive or any beneficiary attempts assignment,
commutation, hypothecation, transfer or disposal of the benefits
hereunder, the Bank's liabilities shall forthwith cease and
terminate.
B. BINDING OBLIGATION OF THE BANK AND ANY SUCCESSOR IN INTEREST:
The Bank shall not merge or consolidate into or with another bank
or sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of the
Bank under this Executive Plan. This Executive Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
C. AMENDMENT OR REVOCATION:
Subject to Paragraph XIII, it is agreed by and between the parties
hereto that, during the lifetime of the Executive, this Executive
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Executive and the
Bank.
D. GENDER:
Whenever in this Executive Plan words are used in the masculine or
neuter gender, they shall be read and construed as in the
masculine, feminine or neuter gender, whenever they should so
apply.
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E. EFFECT ON OTHER BANK BENEFIT PLANS:
Nothing contained in this Executive Plan shall affect the right of
the Executive to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a
part of the Bank's existing or future compensation structure.
F. HEADINGS:
Headings and subheadings in this Executive Plan are inserted for
reference and convenience only and shall not be deemed a part of
this Executive Plan.
G. APPLICABLE LAW:
The validity and interpretation of this Agreement shall be
governed by the laws of the Commonwealth of Massachusetts.
H. 12 U.S.C. Section 1828(k):
Any payments made to the Executive pursuant to this Executive
Plan, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. Section 1828(k) or any regulations
promulgated thereunder.
I. PARTIAL INVALIDITY:
If any term, provision, covenant, or condition of this Executive
Plan is determined by an arbitrator or a court, as the case may
be, to be invalid, void, or unenforceable, such determination
shall not render any other term, provision, covenant, or condition
invalid, void, or unenforceable, and the Executive Plan shall
remain in full force and effect notwithstanding such partial
invalidity.
J. NOT A CONTRACT OF EMPLOYMENT:
This Agreement shall not be deemed to constitute a contract of
employment between the parties hereto, nor shall any provision
hereof restrict the right of the Bank to discharge the Executive,
or restrict the right of the Executive to terminate employment.
K. PRESENT VALUE:
All present value calculations under this Agreement shall be based
on the following discount rate:
Discount Rate: The discount rate as used in the FASB 87
calculations for the Executive Plan.
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L. MUTUAL TO STOCK CONVERSION OR A CHANGE OF CONTROL:
Mutual to Stock Conversion shall mean the conversion of the Bank
from a mutual savings bank to an entity that issues stock and is
owned by its shareholders. Such Mutual to Stock Conversion shall
be deemed to be a Change of Control for purposes of this
Agreement. For the purposes of this Agreement, transfers on
account of deaths or gifts, transfers between family members or
transfers to a qualified retirement plan maintained by the Bank
shall not be considered in determining whether there has been a
Change of Control. The formation of a mutual holding company, for
the purposes of this Agreement, is not a change of control.
M. DISABILITY AND DISABLED:
Disability and Disabled shall mean because of injury or sickness:
1. You cannot perform each of the material duties of your
regular occupation; or
2. You, while unable to perform all of the material duties of
your regular occupation on a full-time basis, are:
a. performing at least one of the material duties of
your regular occupation or another occupation on a
part-time or full-time basis; and
b. earning currently at least twenty percent (20%) less
per month than your indexed per-disability earnings
due to the same sickness or injury.
N. SINGLE LIFE ANNUITIZED VALUE:
Single Life Annuitized Value means the annual benefit, payable in
the form of a single life annuity, that is actuarially equivalent
in value to a specified lump sum amount where actuarial
equivalence is determined on the basis of the 1983 Group Annuity
Mortality Table (sex distinct) at the time of the determination
and an interest rate equal to the Xxxxxx Brothers Bond Index, as
published for the most recent calendar month to end at least
ninety (90) days prior to the date of determination. If such
mortality table and/or interest rate assumption are not available
at the time of the determination, then the Bank shall in good
faith select another mortality table that purports to reflect
current mortality trends and/or another interest rate that
purports to reflect prevailing market rates.
O. FINAL COMPENSATION:
Final Compensation means as of any date the Executive's annual
base salary actually paid during the period of twelve (12)
consecutive calendar months in
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which the Executive's base salary was at the highest annual rate
achieved during or prior to such date.
P. SOCIAL SECURITY BENEFIT:
Social Security Benefit means the Executive's primary old-age
insurance benefit payable to the Executive beginning at the age at
which such benefit may be paid without reduction for early payment
or increase for late payment. If it shall be necessary to
determine the Executive's Social Security Benefit before the
Executive has attained the age at which such benefit may be paid
without reduction, the Executive's Social Security Benefit shall
be deemed to be equal to the highest primary old-age insurance
benefit payable to any person who reaches the age at which such
benefit may be paid on an unreduced basis in the year in which the
determination is being made.
Q. COLLATERAL ASSIGNMENT SPLIT DOLLAR PLAN BENEFIT:
Collateral Assignment Split Dollar Plan Benefit means the maximum
loan available for fifteen (15) years at Normal Retirement Age.
R. SUPERSEDE AND REPLACE ENTIRE AGREEMENT:
This Agreement shall supersede the Executive Supplemental
Retirement Plan Agreement dated January 1, 2004, and shall replace
the entire Agreement of the parties pertaining to this particular
Executive Salary Continuation Agreement.
XII. ERISA PROVISION
A. NAMED FIDUCIARY AND PLAN ADMINISTRATOR:
The "Named Fiduciary and Plan Administrator" of this Executive
Plan shall be Hampden Savings Bank until its resignation or
removal by the Board. As Named Fiduciary and Plan Administrator,
the Bank shall be responsible for the management, control and
administration of the Executive Plan. The Named Fiduciary may
delegate to others certain aspects of the management and operation
responsibilities of the Executive Plan including the employment of
advisors and the delegation of ministerial duties to qualified
individuals.
B. CLAIMS PROCEDURE AND ARBITRATION:
In the event a dispute arises over benefits under this Executive
Plan and benefits are not paid to the Executive (or to the
Executive's beneficiary(ies) in the case of the Executive's death)
and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named Fiduciary
and Plan Administrator named above within sixty (60) days from the
date payments are refused. The Named Fiduciary and Plan
Administrator shall review the written claim and if the claim is
denied, in whole or in part, they shall provide in writing within
sixty (60) days of receipt of such claim the specific reasons for
such denial,
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reference to the provisions of this Executive Plan upon which the
denial is based and any additional material or information
necessary to perfect the claim. Such written notice shall further
indicate the additional steps to be taken by claimants if a
further review of the claim denial is desired. A claim shall be
deemed denied if the Named Fiduciary and Plan Administrator fail
to take any action within the aforesaid sixty-day period.
If claimants desire a second review they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days
of the first claim denial. Claimants may review this Executive
Plan or any documents relating thereto and submit any written
issues and comments they may feel appropriate. In their sole
discretion, the Named Fiduciary and Plan Administrator shall then
review the second claim and provide a written decision within
sixty (60) days of receipt of such claim. This decision shall
likewise state the specific reasons for the decision and shall
include reference to specific provisions of the Plan Agreement
upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Executive Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree that
they and their heirs, personal representatives, successors and
assigns shall be bound by the decision of such arbitrator with
respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Executive
"for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
XIII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW,
RULES OR REGULATIONS
The Bank is entering into this Agreement upon the assumption that certain
existing tax laws, rules and regulations will continue in effect in their
current form. If any said assumptions should change and said change has a
detrimental effect on this Executive Plan, then the Bank reserves the
right to terminate or modify this Agreement accordingly. Upon a Change of
Control (Paragraph IX), this paragraph shall become null and void
effective immediately upon said Change of Control.
XIV. EFFECTIVE DATE
The Effective Date of the Executive Plan shall be January 1, 2004.
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IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the first day
set forth hereinabove, and that, upon execution, each has received a conforming
copy.
HAMPDEN SAVINGS BANK
Springfield, MA
/s/ Xxx Xxxxxxxxx By:/s/ Xxxxxx X. Xxxxxx (Senior Vice President and Treasurer)
---------------------------- -----------------------------------------------------------
Witness (Bank Officer other than Executive) Title
/s/ Xxx Xxxxxxxxx /s/ Xxxxxx X. Xxxxxx
---------------------------- ---------------------------------------------
Witness Xxxxxx X. Xxxxxx
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