Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of November 1, 2000 by and among Cambridgeport Bank, a savings bank
organized and operating under the laws of the Commonwealth of Massachusetts
and having an office at 0000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx
00000 (the "Bank"), Port Financial Corp., a business corporation organized
and existing under the laws of the Commonwealth of Massachusetts and having
an office at 0000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Company") and Xxxxxxx Xxxxxxx an individual residing at 0 Xxxxx Xxxx Xxx.
#000, Xxxxxxxxx, XX 00000 (the "Executive").
INTRODUCTORY STATEMENT
The Bank recently completed a reorganization through which the Bank
became the wholly owned subsidiary of the Company, a stock holding
company, and the Company sold its outstanding common stock to the public in
an initial public offering (the "Reorganization"). The Executive has
served the Bank as its Chief Financial Officer for approximately two years
and in this capacity had a key role in the successful completion of the
Reorganization.
The Board of Directors of the Bank and the Board of Directors of the
Company have concluded that it is in the best interests of the Bank, the
Company and their prospective shareholders to secure the Executive's
continued services as their Chief Financial Officer. They also consider it
desirable to establish a working environment for the Executive which
minimizes the personal distractions that might result from possible
business combinations in which the Company or the Bank might be involved.
For these reasons, the Board of Directors of the Bank and the Board of
Directors of the Company have decided to offer to enter into a contract
with the Executive for his future services. The Executive has accepted
this offer.
The terms and conditions which the Bank, the Company and the
Executive have agreed to are as follows.
AGREEMENT
Section 1. Employment.
The Company and the Bank hereby continue to employ the Executive, and
the Executive hereby accepts such continued employment, during the period
and upon the terms and conditions set forth in this Agreement.
Section 2. Employment Period; Remaining Unexpired Employment Period.
(a) The Company and the Bank shall employ the Executive during an
initial period of two (2) years beginning on November 1, 2000 (the
"Employment Commencement Date") and ending on the day before the second
(2nd) anniversary of the Employment Commencement Date, and during the
period of any additional extensions described in section 2(b) (the
"Employment Period").
(b) The Employment Period shall be subject to extension in the
following manner:
(i) For purposes of determining the rights and obligations of
the Executive and the Company with respect to each other, on the day
after the Employment Commencement Date and on each day thereafter,
the Employment Period shall be extended by one day, such that on any
date the Employment Period will expire on the day before the second
(2nd) anniversary of such date. These extensions shall continue in
perpetuity until discontinued by: (i) notice to the Executive given
by the Company that it has elected to discontinue the extensions;
(ii) notice by the Executive to the Company that he has elected to
discontinue the extensions; or (iii) termination of the Executive's
employment with the Company, whether by resignation, discharge or
otherwise. On the date on which such a notice is deemed given, or on
the effective date of a termination of the Executive's employment
with the Company, the Employment Period shall be converted to a fixed
period of two (2) years ending on the day before the second (2nd)
anniversary of such date.
(ii) For purposes of determining the rights and obligations of
the Executive and the Bank with respect to each other, the Board of
Directors of the Bank shall conduct an annual review of the
Executive's performance on or about each anniversary of the
Employment Commencement Date (each, an "Anniversary Date") and may,
on the basis of such review and by written notice to the Executive,
offer to extend the Employment Period through the day before the
second (2nd) anniversary of the relevant Anniversary Date. In such
event, the Employment Period shall be deemed extended in the absence
of objection from the Executive by written notice to Bank given
within ten (10) business days after his receipt of the Bank's offer
of extension.
(c) Except as otherwise expressly provided in this Agreement, any
reference in this Agreement to the term "Remaining Unexpired Employment
Period" as of any date shall mean (i) for purposes of determining the
rights and obligations of the Company and the Executive to each other, the
period beginning on such date and ending on the day before the second (2nd)
anniversary of the earliest of the date in question, any earlier date on
which the Executive or the Company is deemed to have given a notice to
discontinue extensions of the Employment Period, and any earlier date on
which the Executive's employment with the Company was terminated; and (ii)
for purposes of determining the rights and obligations of the Bank and the
Executive to each other, the period beginning on such date and ending on
the day before the second (2nd) anniversary of the Employment Commencement
Date or, if later, on the day before the second (2nd) anniversary of the
last Anniversary Date as of which the Employment Period was extended
pursuant to section 2(b)(ii).
(d) Nothing in this Agreement shall be deemed to prohibit the
Company or the Bank from terminating the Executive's employment before the
end of the Employment Period with or without notice for any reason. This
Agreement shall determine the relative rights and obligations of the Bank,
the Company and the Executive in the event of any such termination. In
addition, nothing in this Agreement shall require the termination of the
Executive's employment at the expiration of the Employment Period. Any
continuation of the Executive's employment beyond the expiration of the
Employment Period shall be on an "at-will" basis unless the Bank, the
Company and the Executive agree otherwise.
Section 3. Duties.
The Executive shall serve as Senior Vice President and Chief
Financial Officer of the Company and as Senior Vice President and Chief
Financial Officer of the Bank, having such power, authority and
responsibility and performing such duties as are prescribed by or under
their respective By-Laws and as are customarily associated with such
positions. Subject to section 7 of this Agreement, the Executive shall
devote his full business time and attention (other than during weekends,
holidays, approved vacation periods, and periods of illness or approved
leaves of absence) to the business and affairs of the Bank and the Company
and shall use his best efforts to advance their respective best interests.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Bank and the Company shall pay to him a salary at an initial
annual rate of One Hundred and Fifty Thousand Dollars ($150,000), payable
in approximately equal installments in accordance with their respective
customary payroll practices for senior officers. The Bank's and the
Company's respective Boards of Directors shall review the Executive's
annual rate of salary at such times during the Employment Period as they
deem appropriate, but not less frequently than once every twelve (12)
months, and may, in their discretion, approve a salary increase. In
addition to salary, the Executive may receive other cash compensation from
the Company or the Bank for services hereunder at such times, in such
amounts and on such terms and conditions as the Boards of Directors of the
Bank and the Company may determine. If the Executive is discharged or
suspended, or is subject to any regulatory prohibition or restriction with
respect to participation in the affairs of the Bank, he shall continue to
perform services for the Company in accordance with this Agreement but
shall not directly or indirectly provide services to or participate in the
affairs of the Bank in a manner inconsistent with the terms of such
discharge or suspension or any applicable regulatory order.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an
employee of the Company and the Bank and shall be entitled to participate
in and receive benefits under any and all qualified or non-qualified
retirement, pension, savings, profit-sharing or stock bonus plans, any and
all group life, health (including hospitalization, medical and major
medical), dental, accident and long-term disability insurance plans, and
any other employee benefit and compensation plans (including, but not
limited to, any incentive compensation plans or programs, stock option and
appreciation rights plans and restricted stock plans) as may from time to
time be maintained by, or cover employees of, the Company and the Bank, in
accordance with the terms and conditions of such employee benefit plans and
programs and compensation plans and programs and consistent with the
Company's and the Bank's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Company and the Bank shall cause the Executive to be
covered by and named as an insured under any policy or contract of
insurance obtained by them to insure their directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or the Bank or service in other
capacities at their request. The coverage provided to the Executive
pursuant to this section 6 shall be of the same scope and on the same terms
and conditions as the coverage (if any) provided to other officers or
directors of the Company and the Bank.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six years thereafter, the Company
and the Bank shall indemnify the Executive against and hold him harmless
from any costs, liabilities, losses and exposures to the fullest extent and
on the most favorable terms and conditions that similar indemnification is
offered to any director or officer of the Company and the Bank or any
subsidiary or affiliate thereof.
Section 7. Outside Activities.
The Executive may serve as a member of the boards of directors of
such business, community and charitable organizations as he may disclose to
and as may be approved by the Boards of Directors of the Company and the
Bank (which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with the
performance of his duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not
materially interfere with the performance of his duties hereunder;
provided, however, that such activities are not prohibited under any code
of conduct or investment or securities trading policy established by the
Company or the Bank and generally applicable to all similarly situated
executives.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the Bank's
executive offices at the address first above written, or at such other
location as the Bank, the Company and the Executive may mutually agree
upon. The Bank and the Company shall provide the Executive at his
principal place of employment with such support services and facilities as
are suitable to his positions with the Company and the Bank and necessary
or appropriate in connection with the performance of his assigned duties
under this Agreement. The Bank or the Company shall reimburse the
Executive for his ordinary and necessary business expenses, including,
without limitation, fees for memberships in such clubs and organizations as
the Executive, the Company and the Bank shall mutually agree are necessary
and appropriate for business purposes, and his travel and entertainment
expenses incurred in connection with the performance of his duties under
this Agreement, in each case upon presentation to the payer of an itemized
account of such expenses in such form as the payer may reasonably require.
Section 9. Termination Due to Death.
The Executive's employment with the Bank and the Company shall
terminate, automatically and without any further action on the part of any
party to this Agreement, on the date of the Executive's death. In such
event:
(a) The Bank and the Company shall pay to the Executive's
estate his earned but unpaid compensation (including, without
limitation, salary and all other items which constitute wages under
applicable law) as of the date of his termination of employment.
This payment shall be made at the time and in the manner prescribed
by law applicable to the payment of wages but in no event later than
thirty (30) days after the date of the Executive's termination of
employment.
(b) The Company and the Bank shall provide the benefits, if
any, due to the Executive's estate, surviving dependents or his
designated beneficiaries under the employee benefit plans and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Company and the Bank.
The time and manner of payment or other delivery of these benefits
and the recipients of such benefits shall be determined according to
the terms and conditions of the applicable plans and programs.
The payments and benefits described in sections 9(a) and (b) shall be
referred to in this Agreement as the "Standard Termination Entitlements."
Section 10. Termination Due to Disability.
The Bank and the Company may terminate the Executive's employment
upon a determination, by separate votes of a majority of the members of the
Boards of Directors of the Company and the Bank, acting in reliance on the
written advice of a medical professional acceptable to them, that the
Executive is suffering from a physical or mental impairment which, at the
date of the determination, has prevented the Executive from performing his
assigned duties on a substantially full-time basis for a period of at least
one hundred and eighty (180) days during the period of one (1) year ending
with the date of the determination or is likely to result in death or
prevent the Executive from performing his assigned duties on a
substantially full-time basis for a period of at least one hundred and
eighty (180) days during the period of one (1) year beginning with the date
of the determination. In such event:
(a) The Bank and the Company shall pay and deliver to the
Executive (or in the event of his death before payment, to his estate
and surviving dependents and beneficiaries, as applicable) the
Standard Termination Entitlements.
(b) In addition to the Standard Termination Entitlements, the
Bank and the Company shall continue to pay the Executive his base
salary, at the annual rate in effect for him immediately prior to the
termination of his employment, during a period ending on the earliest
of: (i) the expiration of one hundred and eighty (180) days after the
date of termination of his employment; (ii) the date on which long-
term disability insurance benefits are first payable to him under any
long-term disability insurance plan covering employees of the Bank or
the Company (the "LED Eligibility Date"); (iii) the date of his
death; and (iv) the expiration of the Remaining Unexpired Employment
Period (the "Initial Continuation Period"). If the end of the
Initial Continuation Period is neither the LED Eligibility Date nor
the date of his death, the Company and the Bank shall continue to pay
the Executive his base salary, at an annual rate equal to sixty
percent (60%) of the annual rate in effect for him immediately prior
to the termination of his employment, during an additional period
ending on the earliest of the LED Eligibility Date, the date of his
death and the expiration of the Remaining Unexpired Employment
Period.
A termination of employment due to disability under this section 10 shall
be effected by joint notice of termination given to the Executive by the
Company and the Bank and shall take effect on the later of the effective
date of termination specified in such notice or the date on which the
notice of termination is deemed given to the Executive.
Section 11. Discharge with Cause.
(a) The Bank and the Company may terminate the Executive's
employment during the Employment Period, and such termination shall be
deemed to have occurred with "Cause", only if:
(i) the Board of Directors of the Bank and the Board of
Directors of the Company, by separate majority votes of their entire
membership, determine that the Executive (A) has willfully and
intentionally failed to perform his assigned duties under this
Agreement in any material respect (including, for these purposes, the
Executive's inability to perform such duties as a result of drug or
alcohol dependency); (B) has willfully and intentionally engaged in
dishonest or illegal conduct in connection with his performance of
services for the Company or the Bank or has been convicted of a
felony; (C) has willfully violated, in any material respect, any law,
rule, regulation, written agreement or final cease-and-desist order
with respect to his performance of services for the Company or the
Bank; or (D) has willfully and intentionally breached the material
terms of this Agreement in any material respect; and
(ii) at least forty-five (45) days prior to the votes
contemplated by section 11(a)(i), the Bank and the Company have
provided the Executive with notice of their intent to discharge the
Executive for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause (the "Notice of
Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the votes contemplated by section 11(a)(i),
the Executive (together with his legal counsel, if he so desires) is
afforded a reasonable opportunity to make both written and oral
presentations before the Boards of Directors of the Company and the
Bank for the purpose of refuting the alleged grounds for Cause for
his discharge; and
(iv) after the votes contemplated by section 11(a)(i), the
Company and the Bank have furnished to the Executive a notice of
termination which shall specify the effective date of his termination
of employment (which shall in no event be earlier than the date on
which such notice is deemed given) and include a copy of a resolution
or resolutions adopted by the Board of Directors of the Bank and the
Board of Directors of the Company, certified by their corporate
secretaries and signed by each member of their respective Board of
Directors voting in favor of adoption of the resolution(s),
authorizing the termination of the Executive's employment with Cause
and stating with particularity the facts and circumstances found to
constitute Cause for his discharge (the "Final Discharge Notice").
For purposes of this section 11, no act or failure to act, on the part of
the Executive, shall be considered "willful" unless it is done, or omitted
to be done, by the Executive in bad faith or without reasonable belief that
the Executive's action or omission was in the best interests of the
Company and the Bank. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board and the Bank Board
or based upon the written advice of counsel for the Company or the Bank
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company and the
Bank.
(b) If the Executive is discharged during the Employment Period with
Cause, the Company and the Bank shall pay and provide to him (or, in the
event of his death, to his estate, his surviving beneficiaries and his
dependents) the Standard Termination Entitlements only. Following the
giving of a Notice of Intent to Discharge, the Bank and the Company may
temporarily suspend the Executive's duties and authority and, in such
event, may also suspend the payment of salary and other cash compensation,
but not the Executive's participation in retirement, insurance and other
employee benefit plans. If the Executive is not discharged, or is
discharged without Cause, within forty-five (45) days after the giving of a
Notice of Intent to Discharge, payments of salary and cash compensation
shall resume, and all payments withheld during the period of suspension
shall be promptly restored. If the Executive is discharged with Cause not
later than forty-five (45) days after the giving of the Notice of Intent to
Discharge, all payments withheld during the period of suspension shall be
deemed forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than forty-five
(45) days, but sooner than ninety (90) days, after the giving of the Notice
of Intent to Discharge, all payments made to the Executive during the
period beginning with the giving of the Notice of Intent to Discharge and
ending with the Executive's discharge with Cause shall be retained by the
Executive and shall not be applied to offset the Standard Termination
Entitlements. If the Bank and the Company do not give a Final Discharge
Notice to the Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall be deemed
withdrawn and any future action to discharge the Executive with Cause shall
require the giving of a new Notice of Intent to Discharge.
Section 12. Discharge without Cause.
The Bank and the Company may discharge the Executive at any time
during the Employment Period and, unless such discharge constitutes a
discharge with Cause:
(a) The Bank and the Company shall pay and deliver to the
Executive (or in the event of his death before payment, to his estate
and surviving dependents and beneficiaries, as applicable) the
Standard Termination Entitlements.
(b) In addition to the Standard Termination Entitlements:
(i) During the Remaining Unexpired Employment Period,
the Bank and the Company shall provide for the Executive and
his dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident
and long-term disability insurance benefits on substantially
the same terms and conditions (including any required premium-
sharing arrangements, co-payments and deductibles) in effect
for them immediately prior to the Executive's termination. The
coverage provided under this section 12(b)(i) may, at the
election of the Bank and the Company, be secondary to the
coverage provided as part of the Standard Termination
Entitlements and to any employer-paid coverage provided by a
subsequent employer or through Medicare, with the result that
benefits under the other coverages will offset the coverage
required by this section 12(b)(i).
(ii) The Bank and the Company shall make a lump sum
payment to the Executive (or, in the event of his death before
payment, to his estate), in an amount equal to the estimated
present value of the salary that the Executive would have
earned if he had continued working for the Company and the Bank
during the Remaining Unexpired Employment Period at the highest
annual rate of salary achieved during the period of three (3)
years ending immediately prior to the date of termination (the
"Salary Severance Payment"). The Salary Severance Payment
shall be computed using the following formula:
- n
SSP= \ (BS/PR)
/ [-----------------------------------]
- 1 [1 + (I / PR)]n
where "SSP" is the amount of the Salary Severance Payment
(before the deduction of applicable federal, state and local
withholding taxes); "BS" is the highest annual rate of salary
achieved by the Executive during the period of three (3) years
ending immediately prior to the date of termination; "PR" is
the number of payroll periods that occur during a year under
the Company's and the Bank's normal payroll practices; "I"
equals the applicable federal short term rate established under
section 1274 of the Internal Revenue Code of 1986 (the "Code")
for the month in which the Executive's termination of
employment occurs (the "Short Term AFR") and "n" equals the
product of the Remaining Unexpired Employment Period at the
Executive's termination of employment (expressed in years and
fractions of years) multiplied by the number of payroll periods
that occur during a year under the Company's and the Bank's
normal payroll practices. The Salary Severance Payment shall
be made within five (5) business days after the Executive's
termination of employment and shall be in lieu of any claim to
a continuation of base salary which the Executive might
otherwise have and in lieu of cash severance benefits under any
severance benefits program which may be in effect for officers
or employees of the Bank or the Company.
(iii) The Bank and the Company shall make a lump sum
payment to the Executive (or, in the event of his death before
payment, to his estate), in an amount equal to the estimated
present value of the annual bonuses that the Executive would
have earned if he had continued working for the Company and the
Bank during the Remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the period of
three (3) years ending immediately prior to the date of
termination (the "Bonus Severance Payment"). The Bonus
Severance Payment shall be computed using the following
formula:
BSP = SSP x (ABP / ASP)
where "BSP" is the amount of the Bonus Severance Payment
(before the deduction of applicable federal, state and local
withholding taxes); "SSP" is the amount of the Salary Severance
Payment (before the deduction of applicable federal, state and
local withholding taxes); "ABP" is the aggregate of the annual
bonuses paid or declared (whether or not paid) for the most
recent period of three (3) calendar years to end on or before
the Executive's termination of employment; and "ASP" is the
aggregate base salary actually paid to the Executive during
such period of three (3) calendar years (excluding any year for
which no bonus was declared or paid). The Bonus Severance
Payment shall be made within five (5) business days after the
Executive's termination of employment and shall be in lieu of
any claim to a continuation of participation in annual bonus
plans of the Bank or the Company which the Executive might
otherwise have.
(iv) The Bank and the Company shall make a lump sum
payment to the Executive (or, in the event of his death before
payment, to his estate), in an amount equal to the estimated
present value of the long-term incentive bonuses that the
Executive would have earned if he had continued working for the
Company and the Bank during the Remaining Unexpired Employment
Period (the "Incentive Severance Payment"). The Incentive
Severance Payment shall be computed using the following
formula:
ISP = (SSP / RUP) x (ALTIP / ALTSP) x Y
where "ISP" is the amount of the Incentive Severance Payment
(before the deduction of applicable federal, state and local
withholding taxes); "SSP" is the amount of the Salary
Severance Payment (before the deduction of applicable federal,
state and local withholding taxes); "ALTIP" is the aggregate of
the most recently paid or declared (whether or not paid) long-
term incentive compensation payments (but not more than three
(3) such payments) for performance periods that end on or
before the Executive's termination of employment; "ALTSP" is
the aggregate base salary actually paid to the Executive during
the performance periods covered by the payments included in
"ALTIP" and excluding base salary paid for any period for which
no long-term incentive compensation payment was declared or
paid; "RUP" is the Remaining Unexpired Employment Period,
expressed in years and fractions of years; and "Y" is the
aggregate (expressed in years and fractions of years) of the
Remaining Unexpired Employment Period plus the number of years
and fraction of years that have elapsed since the end of the
last performance period for which a long-term incentive payment
has been declared and paid. The Incentive Severance Payment
shall be made within five (5) business days after the
Executive's termination of employment and shall be in lieu of
any claim to a continuation of participation in long-term
incentive compensation plans of the Bank or the Company which
the Executive might otherwise have.
(v) The Company and the Bank shall pay to the Executive
(or in the event of his death before payment, to his estate), a
lump sum payment in an amount equal to the excess (if any) of:
(A) the present value of the aggregate benefits to which he
would be entitled under any and all tax-qualified and non-tax-
qualified defined benefit plans maintained by, or covering
employees of, the Company or the Bank (the "Pension Plans") if
he had continued working for the Company and the Bank during
the Remaining Unexpired Employment Period; over (B) the present
value of the benefits to which the Executive and his spouse
and/or designated beneficiaries are actually entitled under
such plans (the "Pension Severance Payment"). The Pension
Severance Payment shall be computed according to the following
formula:
PSP = PPB - APB
where "PSP" is the amount of the Pension Severance Payment
(before deductions for applicable federal, state and local
withholding taxes); "APB" is the aggregate lump sum present
value of the actual vested pension benefits payable under the
Pension Plans in the form of a straight life annuity beginning
at the earliest date permitted under the Pension Plans,
computed on the basis of the Executive's life expectancy at the
earliest date on which payments under the Pension Plans could
begin, determined by reference to Table VI of section 1.72-9 of
the Income Tax Regulations (the "Assumed Life Expectancy"), and
on the basis of an interest rate assumption equal to the
average bond-equivalent yield on United States Treasury
Securities with a Constant Maturity of 30 Years for the month
prior to the month in which the Executive's termination of
employment occurs (the "30-Year Treasury Rate"); and "PPB" is
the lump sum present value of the pension benefits (whether or
not vested) that would be payable under the Pension Plans in
the form of a straight life annuity beginning at the earliest
date permitted under the Pension Plans, computed on the basis
that the Executive's actual age at termination of employment is
his attained age as of his last birthday that would occur
during the Remaining Unexpired Employment Period, that his
service for benefit accrual purposes under the Pension Plans is
equal to the aggregate of his actual service plus the Remaining
Unexpired Employment Period, that his average compensation
figure used in determining his accrued benefit is equal to the
highest annual rate of salary achieved by the Executive during
the period of three (3) years ending immediately prior to the
date of termination, that the Executive's life expectancy at
the earliest date on which payments under the Pension Plans
could begin is the Assumed Life Expectancy and that the
interest rate assumption used is equal to the 30-Year Treasury
Rate. The Pension Severance Payment shall be made within five
(5) business days after the Executive's termination of
employment and shall be in lieu of any claim to any actual
increase in his accrued benefit in the Pension Plans in respect
of the Remaining Unexpired Employment Period.
(vi) The Company and the Bank shall pay to the
Executive (or in the event of his death, to his estate) a lump
sum payment in an amount equal to the present value of the
additional employer contributions that would have been credited
directly to his account(s) under any and all tax-qualified and
non-tax-qualified defined contribution plans maintained by, or
covering employees of, the Bank and the Company (the "Non-ESOP
DC Plans"), plus the fair market value of the additional shares
of employer securities or other property that would have been
allocated to his account as a result of employer contributions
or dividends under any tax-qualified leveraged employee stock
ownership plan and any related non-tax-qualified supplemental
plan, including but not limited to the ESOP Restoration Plan,
maintained by, or covering employees of, the Bank and the
Company (the "ESOP Plans") if he had continued in employment
during the Remaining Unexpired Employment Period (the "Defined
Contribution Severance Payment"). The Defined Contribution
Severance Payment shall be computed according to the following
formula:
DCSP = [SSP x (EC / BS)] + [(STK + PROP) x Y]
where: "DCSP" is the amount of the Defined Contribution
Severance Payment (before deductions for applicable federal,
state and local withholding taxes); "SSP" is the amount of the
Salary Severance Payment (before deductions for applicable
federal, state and local withholding taxes); "EC" is the amount
of employer contributions actually credited to the Executive's
accounts under the Non-ESOP Plans for the last plan year to end
before his termination of employment; "BS" is the Executive's
compensation taken into account in computing EC; "Y" is the
aggregate (expressed in years and fractions of years) of the
Remaining Unexpired Employment Period and the number of years
and fractions of years that have elapsed between the end of
plan year for which EC was computed and the date of the
Executive's termination of employment; "STK" is the fair market
value (determined on the basis of the mid-point of the highest
and lowest reported sales price for a share of stock of the
same class during the 30-day period ending on the day of the
Executive's termination of employment the ("Fair Market Value
of a Share")) of the employer securities actually allocated to
the Executive's accounts under the ESOP Plans in respect of
employer contributions and dividends applied to loan
amortization payments for the last plan year to end before his
termination of employment; and "PROP" is the fair market value
(determined as of the day before the Executive's termination of
employment using the same valuation methodology used to value
the assets of the ESOP Plans) of the property other than
employer securities actually allocated to the Executive's
accounts under the ESOP Plans in respect of employer
contributions and dividends applied to loan amortization
payments for the last plan year to end before his termination
of employment.
(vii) At the election of the Company made within 30
days following the Executive's termination of employment, upon
the surrender of options or appreciation rights issued to the
Executive under any stock option and appreciation rights plan
or program maintained by, or covering employees of, the Company
or the Bank, a lump sum payment in an amount equal to the
product of:
(A) the excess of (I) the Fair Market Value of a
Share, over (II) the exercise price per share for such
option or appreciation right, as specified in or under
the relevant plan or program; multiplied by
(B) the number of shares with respect to which
options or appreciation rights are being surrendered.
For the purpose of computing this payment, the Executive shall
be deemed fully vested in all options and appreciation rights
under any stock option or appreciation rights plan or program
maintained by, or covering employees of, the Company or the
Bank, even if he is not vested under such plan or program.
(viii) At the election of the Company made within 30
days following the Executive's termination of employment, upon
the surrender of any shares awarded to the Executive under any
restricted stock plan maintained by, or covering employees of,
the Company or the Bank, the Company and the Bank shall make a
lump sum payment in an amount equal to the product of:
(A) the Fair Market Value of a Share granted
under such plan; multiplied by
(B) the number of shares which are being
surrendered.
For purposes of computing this payment, the Executive shall be
deemed fully vested in all shares awarded under any restricted
stock plan maintained by, or covering employees of, the Company
or the Bank, even if he is not vested under such plan.
The payments and benefits described in section 12(b) are referred to in
this Agreement as the "Additional Termination Entitlements".
Section 13. Resignation.
(a) The Executive may resign from his employment with the Bank and
the Company at any time. A resignation under this section 13 shall be
effected by notice of resignation given by the Executive to the Company
and the Bank and shall take effect on the later of the effective date of
termination specified in such notice or the date on which the notice of
termination is deemed given by the Executive; provided, however, that in
the case of resignation other than for Good Reason (as defined below) the
effective date shall be no earlier than three (3) months after the giving
of the notice of termination, unless, at the Executive's request, the Bank
and the Company agree to an earlier date which agreement shall not be
unreasonably withheld. The Executive's resignation of any of the positions
within the Bank or the Company to which he has been assigned shall be
deemed a resignation from all such positions.
(b) The Executive's resignation shall be deemed to be for "Good
Reason" if the effective date of resignation occurs within ninety (90) days
after any of the following:
(i) the failure of the Company or the Bank (whether by act
or omission of their respective Boards of Directors, or otherwise)
to appoint or re-appoint or elect or re-elect the Executive to the
position(s) with the Company and the Bank, specified in section 3 of
this Agreement or to a more senior office;
(ii) if the Executive is or becomes a member of the Board of
Directors of the Company or the Bank, the failure of their respective
shareholders (whether in an election in which the Executive stands as
a nominee or in an election where the Executive is not a nominee) to
elect or re-elect the Executive to membership at the expiration of
his term of membership, unless such failure is a result of the
Executive's refusal to stand for election;
(iii) a material failure by the Company or the Bank, whether
by amendment of their respective certificates of incorporation or
organization, by-laws, action of their respective Boards of Directors
or otherwise, to vest in the Executive the functions, duties, or
responsibilities prescribed in section 3 of this Agreement; provided
that the Executive shall have given notice of such failure to the
Company and the Bank, and the Company or the Bank have not fully
cured such failure within thirty (30) days after such notice is
deemed given;
(iv) any reduction of the Executive's rate of base salary in
effect from time to time, whether or not material, or any failure
(other than due to reasonable administrative error that is cured
promptly upon notice) to pay any portion of the Executive's
compensation as and when due;
(v) any change in the terms and conditions of any
compensation or benefit program in which the Executive participates
which, either individually or together with other changes, has a
material adverse effect on the aggregate value of his total
compensation package; provided that the Executive shall have given
notice of such material adverse effect to the Company and the Bank,
and the Company or the Bank has not fully cured such failure within
thirty (30) days after such notice is deemed given;
(vi) any material breach by the Company or the Bank of any
material term, condition or covenant contained in this Agreement;
provided that the Executive shall have given notice of such material
adverse effect to the Company and the Bank, and the Company or the
Bank have not fully cured such failure within thirty (30) days after
such notice is deemed given; or
(vii) a change in the Executive's principal place of
employment to a place that is not the principal executive office of
the Bank, or a relocation of the Bank's principal executive office to
a location that is both more than twenty-five (25) miles away from
the Executive's principal residence and more than twenty-five (25)
miles away from the location of the Bank's principal executive office
on the date of this Agreement.
In all other cases, a resignation by the Executive shall be deemed to be
without Good Reason.
(c) In the event of the Executive's resignation before the
expiration of the Employment Period, the Company and the Bank shall pay and
deliver the Standard Termination Entitlements. In addition, if the
Executive's resignation is deemed to be a resignation with Good Reason, the
Company and the Bank shall also pay and deliver the Additional Termination
Entitlements.
Section 14. Terms and Conditions of the Additional Termination
Entitlements.
The Company, the Bank and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any termination of
employment are not capable of accurate measurement as of the date first
above written and that the Additional Termination Entitlements constitute
reasonable damages under the circumstances and shall be payable without any
requirement of proof of actual damage and without regard to the Executive's
efforts, if any, to mitigate damages. The Company, the Bank and the
Executive further agree that the Company and the Bank may condition the
payment and delivery of the Additional Termination Entitlements on the
receipt of the Executive's resignation from any and all positions which he
holds as an officer, director or committee member with respect to the
Company, the Bank or any subsidiary or affiliate of either of them.
Section 15. Termination Upon or Following a Change of Control.
(a) A "Change of Control" shall be deemed to have occurred upon
the happening of any of the following events:
(i) the consummation of a reorganization, merger or
consolidation of the Company with one or more other persons, other
than a transaction following which:
(A) at least 51% of the equity ownership interests of
the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"))
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the outstanding equity ownership
interests in the Company; and
(B) at least 51% of the securities entitled to vote
generally in the election of directors of the entity resulting
from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Company;
(ii) the acquisition of all or substantially all of the
assets of the Company or beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the
outstanding securities of the Company entitled to vote generally in
the election of directors by any person or by any persons acting in
concert;
(iii) a complete liquidation or dissolution of the Company;
(iv) the occurrence of any event if, immediately following
such event, at least 50% of the members of the Board of Directors of
the Company do not belong to any of the following groups:
(A) individuals who were members of the Board of
Directors of the Company on the date of this Agreement; or
(B) individuals who first became members of the Board
of Directors of the Company after the date of this Agreement
either:
(1) upon election to serve as a member of the
Board of Directors of the Company by affirmative vote of
three-quarters of the members of such board, or of a
nominating committee thereof, in office at the time of
such first election; or
(2) upon election by the shareholders of the
Board of Directors of the Company to serve as a member of
such board, but only if nominated for election by
affirmative vote of three-quarters of the members of the
Board of Directors of the Company, or of a nominating
committee thereof, in office at the time of such first
nomination;
provided, however, that such individual's election or
nomination did not result from an actual or threatened election
contest (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) other than by or on behalf of the Board of
Directors of the Company; or
(v) any event which would be described in section 15(a)(i),
(ii), (iii) or (iv) if the term "Bank" were substituted for the term
"Company" therein.
In no event, however, shall a Change of Control be deemed to have occurred
as a result of any acquisition of securities or assets of the Company, the
Bank, or a subsidiary of either of them, by the Company, the Bank, or any
subsidiary of either of them, or by any employee benefit plan maintained by
any of them. For purposes of this section 15(a), the term "person" shall
have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the
Exchange Act.
(b) For purposes of this Agreement, a "Pending Change of Control"
shall mean: (i) the signing of a definitive agreement for a transaction
which, if consummated, would result in a Change of Control; (ii) the
commencement of a tender offer which, if successful, would result in a
Change of Control; or (iii) the circulation of a proxy statement seeking
proxies in opposition to management in an election contest which, if
successful, would result in a Change of Control.
(c) Notwithstanding anything in this Agreement to the contrary, if
the Executive's employment with the Bank and the Company terminates due to
death or disability within one (1) year after the occurrence of a Pending
Change of Control and if a Change of Control occurs within two (2) years
after such termination of employment, he (or in the event of his death, his
estate) shall be entitled to receive the Standard Termination Entitlements
and the Additional Termination Entitlements that would have been payable if
a Change of Control had occurred on the date of his termination of
employment and he had resigned with Good Reason immediately thereafter;
provided, that payment shall be deferred without interest until, and shall
be payable immediately upon, the actual occurrence of a Change of Control.
(d) Notwithstanding anything in this Agreement to the contrary: (i)
in the event of the Executive's resignation within sixty (60) days after
the occurrence of a Change of Control, he shall be entitled to receive the
Standard Termination Entitlements and Additional Termination Entitlements
that would be payable if his resignation were a resignation for Good
Reason, without regard to the actual circumstances of his resignation; and
(ii) for a period of one (1) year after the occurrence of a Change of
Control, no discharge of the Executive shall be deemed a discharge with
Cause unless the votes contemplated by section 11(a) of this Agreement are
supported by at least two-thirds of the members of the Board of Directors
of the Company and the Bank at the time the vote is taken who were also
members of the Board of Directors of the Company and the Bank immediately
prior to the Change of Control.
(e) Notwithstanding anything in this Agreement to the contrary, for
purposes of computing the Additional Termination Entitlements due upon a
termination of employment that occurs, or is deemed to have occurred, after
a Change of Control, the Remaining Unexpired Employment Period shall be
deemed to be two (2) full years.
Section 16. Other Termination.
Upon the expiration of this Agreement other than on account of the
Executive's refusing to accept an extension offered by the Company and the
Bank or the Executive's giving of a notice of non-extension, unless the
Company and the Bank shall offer to the Executive continued service either:
(i) in the same position in effect immediately prior to the expiration of
this Agreement with cash compensation and pension and welfare benefits no
less favorable than those in effect immediately prior to the expiration of
this Agreement; or (ii) in another position acceptable to the Executive and
upon mutually and reasonably agreeable terms, the Executive shall be
entitled to receive for a period of twelve (12) months after the expiration
of the Agreement (in this event, the "Severance Period"), continuation of
base salary at the rate then in effect plus medical, dental, life-insurance
and disability coverage; provided, that the Executive's continued
participation is permissible or otherwise practicable under the general
terms and provisions of such plans. To the extent that continued
participation is neither permissible nor practicable, the Company and the
Bank shall take such actions as may be necessary to provide the Executive
with substantially comparable benefits (without additional cost to the
Executive) outside the scope of such plans. If the Executive engages in
regular employment after his termination of employment (whether as an
executive or as a self-employed person), any employee welfare benefits
received by the Executive during the Severance Period in consideration of
such employment which are similar in nature to the employee welfare
benefits provided by the Company and the Bank will relieve the Company and
the Bank of their obligations under this section 16 to provide comparable
benefits to the extent of the benefits so received. This section 16 shall
have no application if, prior to the expiration of this Agreement, the
Executive's employment has terminated in a termination to which section 9,
10, 11, 12, 13 or 15 applies or if, after the expiration of this Agreement,
the Executive's employment is terminated with Cause.
Section 17. Tax Indemnification.
(a) If the Executive's employment terminates under circumstances
entitling him (or in the event of his death, his estate) to the Additional
Termination Entitlements, the Company shall pay to the Executive (or in the
event of his death, his estate) an additional amount intended to indemnify
him against the financial effects of the excise tax imposed on excess
parachute payments under section 280G of the Code (the "Tax Indemnity
Payment"). The Tax Indemnity Payment shall be determined under the
following formula:
E x P
X = ---------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the percentage rate at which an excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is assessed,
determined without regard to this section 16;
FI = the highest marginal rate of income tax applicable to the
Executive under the Code for the taxable year in question;
SLI = the sum of the highest marginal rates of income tax applicable
to the Executive under all applicable state and local laws for
the taxable year in question; and
M = the highest marginal rate of Medicare tax applicable to the
Executive under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by an attorney
or a firm of independent certified public accountants selected by the
Executive and reasonably satisfactory to the Company (the "Tax Advisor")
and shall be based on the following assumptions: (i) that a change in
ownership, a change in effective ownership or control, or a change in the
ownership of a substantial portion of the assets, of the Bank or the
Company has occurred within the meaning of section 280G of the Code (a
"280G Change of Control"); (ii) that all direct or indirect payments made
to or benefits conferred upon the Executive on account of his termination
of employment are "parachute payments" within the meaning of section 280G
of the Code; and (iii) that no portion of such payments is reasonable
compensation for services rendered prior to the Executive's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 280G of the Code, the Tax Indemnity Payment
shall be made to the Executive on the earlier of the date the Company, the
Bank or any direct or indirect subsidiary or affiliate of the Company or
the Bank is required to withhold such tax or the date the tax is required
to be paid by the Executive, unless, prior to such date, the Company
delivers to the Executive the written opinion, in form and substance
reasonably satisfactory to the Executive, of the Tax Advisor or of an
attorney or firm of independent certified public accountants selected by
the Company and reasonably satisfactory to the Executive, to the effect
that the Executive has a reasonable basis on which to conclude that (i) no
280G Change in Control has occurred, or (ii) all or part of the payment or
benefit in question is not a parachute payment for purposes of section 280G
of the Code, or (iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the 280G Change of
Control, or (iv) for some other reason which shall be set forth in detail
in such letter, no excise tax is due under section 4999 of the Code with
respect to such payment or benefit (the "Opinion Letter"). If the Company
delivers an Opinion Letter, the Tax Advisor shall recompute, and the
Company shall make, the Tax Indemnity Payment in reliance on the
information contained in the Opinion Letter.
(c) In the event that the Executive's liability for the excise tax
under section 4999 of the Code for a taxable year is subsequently
determined to be different than the amount with respect to which the Tax
Indemnity Payment is made, the Executive or the Company, as the case may
be, shall pay to the other party at the time that the amount of such excise
tax is finally determined, an appropriate amount, plus interest, such that
the payment made under section 17(b), when increased by the amount of the
payment made to the Executive under this section 17(c), or when reduced by
the amount of the payment made to the Company under this section 17(c),
equals the amount that should have properly been paid to the Executive
under this section 17(c). The interest paid to the Company under this
section 17(c) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. The payment made to the Executive shall include
such amount of interest as is necessary to satisfy any interest assessment
made by the Internal Revenue Service and an additional amount equal to any
monetary penalties assessed by the Internal Revenue Service on account of
an underpayment of the excise tax. To confirm that the proper amount, if
any, was paid to the Executive under this section 17, the Executive shall
furnish to the Company a copy of each tax return which reflects a liability
for an excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in this
Agreement shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the Executive is a
party as a result of positions taken on his federal income tax return with
respect to his liability for excise taxes under section 4999 of the Code.
Section 18. Covenant Not To Compete.
The Executive hereby covenants and agrees that, in the event of his
termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Company or the Bank, he shall not,
without the written consent of the Company, become an officer, employee,
consultant, director or trustee of any savings bank, savings and loan
association, savings and loan holding company, bank or bank holding
company, any other entity engaged in the business of accepting deposits or
making loans, or any direct or indirect subsidiary or affiliate of any such
entity, that entails working within the Commonwealth of Massachusetts or
any other city or county in which the Company or the Bank maintains an
office; provided, however, that this section 18 shall not apply if the
Executive is entitled to the Additional Termination Entitlements.
Section 19. Confidentiality.
Unless he obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the
benefit of himself, or any person or entity other than the Company or any
entity which is a subsidiary of the Company or of which the Company is a
subsidiary, any material document or information obtained from the Company,
or from its parent or subsidiaries, in the course of his employment with
any of them concerning their properties, operations or business (unless
such document or information is readily ascertainable from public or
published information or trade sources or has otherwise been made available
to the public through no fault of his own) until the same ceases to be
material (or becomes so ascertainable or available); provided, however,
that nothing in this section 19 shall prevent the Executive, with or
without the Company's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation
or disclosure is required under applicable law.
Section 20. Solicitation.
The Executive hereby covenants and agrees that, for a period of one
year following his termination of employment with the Company or the Bank,
he shall not, without the written consent of the Company and the Bank,
either directly or indirectly:
(a) solicit, offer employment to, or take any other action
intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any officer or employee
of the Company, the Bank or any of their respective subsidiaries or
affiliates to terminate his or her employment and accept employment
or become affiliated with, or provide services for compensation in
any capacity whatsoever to, any savings bank, savings and loan
association, bank, bank holding company, savings and loan holding
company, or other institution engaged in the business of accepting
deposits, making loans or doing business within the counties
specified in section 18;
(b) provide any information, advice or recommendation with
respect to any such officer or employee of any savings bank, savings
and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of
accepting deposits, making loans or doing business within the
counties specified in section; that is intended, or that a reasonable
person acting in like circumstances would expect, to have the effect
of causing any officer or employee of the Company, the Bank, or any
of their respective subsidiaries or affiliates to terminate his
employment and accept employment or become affiliated with, or
provide services for compensation in any capacity whatsoever to, any
savings bank, savings and loan association, bank, bank holding
company, savings and loan holding company, or other institution
engaged in the business of accepting deposits, making loans or doing
business within the counties specified in section 18;
(c) solicit, provide any information, advice or
recommendation or take any other action intended, or that a
reasonable person acting in like circumstances would expect, to have
the effect of causing any customer of the Company to terminate an
existing business or commercial relationship with the Company.
Section 21. No Effect on Employee Benefit Plans or Programs.
The termination of the Executive's employment during the term of this
Agreement or thereafter, whether by the Company, by the Bank or by the
Executive, shall have no effect on the rights and obligations of the
parties hereto under the Company's or the Bank's qualified or non-qualified
retirement, pension, savings, thrift, profit-sharing or stock bonus plans,
group life, health (including hospitalization, medical and major medical),
dental, accident and long term disability insurance plans or such other
employee benefit plans or programs, or compensation plans or programs, as
may be maintained by, or cover employees of, the Company or the Bank from
time to time; provided, however, that nothing in this Agreement shall be
deemed to duplicate any compensation or benefits provided under any
agreement, plan or program covering the Executive to which the Company is a
party and any duplicative amount payable under any such agreement, plan or
program shall be applied as an offset to reduce the amounts otherwise
payable hereunder.
Section 22. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his legal representatives and testate or intestate distributees,
and the Company and the Bank and their respective successors and assigns,
including any successor by merger or consolidation or a statutory receiver
or any other person or firm or corporation to which all or substantially
all of the assets and business of the Company may be sold or otherwise
transferred. Failure of the Company to obtain from any successor its
express written assumption of the Company's obligations hereunder at least
sixty (60) days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement.
Section 23. Notices.
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed
to have been given at such time as it is delivered personally, or five days
after mailing if mailed, postage prepaid, by registered or certified mail,
return receipt requested, addressed to such party at the address listed
below or at such other address as one such party may by written notice
specify to the other party:
If to the Executive:
Xx. Xxxxxxx Xxxxxxx
0 Xxxxx Xxxx Xxx. #000
Xxxxxxxxx, XX 00000
If to the Company or the Bank:
Port Financial Corp.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chairman, Compensation Committee
of the Board of Directors
Section 24. Indemnification for Attorneys' Fees.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees and expenses,
incurred by him in connection with or arising out of any action, suit or
proceeding (including any tax controversy) in which he may be involved, as
a result of his efforts, in good faith, to defend or enforce the terms of
this Agreement. For purposes of this Agreement, any settlement agreement
which provides for payment of any amounts in settlement of the Company's or
the Bank's obligations hereunder shall be conclusive evidence of the
Executive's entitlement to indemnification hereunder, and any such
indemnification payments shall be in addition to amounts payable pursuant
to such settlement agreement, unless such settlement agreement expressly
provides otherwise.
(b) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and
such amounts shall not be reduced whether or not the Executive obtains
other employment. Unless it is determined that the Executive has acted
frivolously or in bad faith, the Company shall pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of or in connection with his consultation
with legal counsel or arising out of any action, suit, proceeding, tax
controversy or contest (regardless of the outcome thereof) by the Company,
the Executive or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus in each
case interest on any delayed payment at the applicable federal rate
provided for in section 7872(f)(2)(A) of the Code. This section 24(b)
shall apply whether such consultation, action, suit, proceeding or contest
arises before, on, after or as a result of a Change of Control.
(c) The Company shall pay, or reimburse the Executive for,
reasonable attorneys' fees and the disbursements of such attorneys incurred
by the Executive in connection with the negotiation and execution of this
Agreement.
Section 25. Severability.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
Section 26. Waiver.
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must
be made in writing, designated as a waiver, and signed by the party against
whom its enforcement is sought. Any waiver or relinquishment of any right
or power hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
Section 27. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
Section 28. Governing Law.
Except to the extent preempted by federal law, this Agreement shall
be governed by and construed and enforced in accordance with the laws of
the Commonwealth of Massachusetts applicable to contracts entered into and
to be performed entirely within the Commonwealth of Massachusetts.
Section 29. Headings and Construction.
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section.
Any reference to a section number shall refer to a section of this
Agreement, unless otherwise stated.
Section 30. Entire Agreement; Modifications.
This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all
prior agreements, understandings or representations relating to the subject
matter hereof, including but not limited to that certain Two-Year Change of
Control Agreement between the parties, dated May 3, 2000. No modifications
of this Agreement shall be valid unless made in writing and signed by the
parties hereto.
Section 31. Non-duplication.
In the event that the Executive shall perform services for the Bank
or any other direct or indirect subsidiary or affiliate of the Company or
the Bank, any compensation or benefits provided to the Executive by such
other employer shall be applied to offset the obligations of the Company
hereunder, it being intended that this Agreement set forth the aggregate
compensation and benefits payable to the Executive for all services to the
Company, the Bank and all of their respective direct or indirect
subsidiaries and affiliates.
Section 32. Relative Obligations of the Bank and the Company.
The Company shall, with respect to the Executive's services hereunder
and the compensation therefor and with respect to any termination of the
Executive's employment, have all of the obligations imposed on the Bank
under this Agreement to the same extent as though the name of the Company
were substituted for the name of the Bank herein and the Executive shall,
with respect to the services hereunder and the compensation therefor and
with respect to any termination of the Executive's employment, have all of
the rights, privileges and duties relative to the Company as though the
name of the Company were substituted for the name of the Bank herein. If
the Executive performs services for both the Bank and the Company, any
entitlement of the Executive to severance compensation and other
termination benefits under this Agreement shall be determined on the basis
of the aggregate compensation payable to the Executive by the Bank and the
Company, and liability therefor shall be apportioned between the Bank and
the Company in the same manner as compensation paid to the Executive for
services to each of them; provided, however, that the Company shall be
jointly and severally liable with the Bank for all obligations of the Bank
under this Agreement; and provided, further, that in no event shall the
Bank bear any liability for actions of, or obligations undertaken by, the
Company under this Agreement. It is the intent and purpose of this section
32 that the Executive have the same legal and economic rights that he would
have if all of his services were rendered to and all of his compensation
were paid by the Company. This section 32 shall be construed and enforced
to give effect to such intent and purpose.
Section 33. Dispute Resolution.
(a) The Executive acknowledges and agrees that upon any breach by
the Executive of his obligations under sections 18, 19, or 20 hereof, the
Company and Bank will have no adequate remedy at law, and accordingly will
be entitled, in addition to monetary damages, to specific performance and
other appropriate injunctive and equitable relief.
(b) Excluding only requests for equitable relief by the Company or
Bank under section 33(a) of this Agreement, in the event that there is any
claim or dispute arising out of or relating to this Agreement, or the
breach thereof, and the parties hereto shall not have resolved such claim
or dispute within 60 days after written notice from one party to the other
setting forth the nature of such claim or dispute, then such claim or
dispute shall be settled exclusively by binding arbitration in Boston,
Massachusetts in accordance with the Employment Arbitration Rules of the
American Arbitration Association by an arbitrator mutually agreed upon by
the parties hereto or, in the absence of such agreement, by an arbitrator
selected according to such Rules. Notwithstanding the foregoing, if either
the Company and Bank or the Executive shall request, such arbitration shall
be conducted by a panel of three arbitrators, one selected by the Company
and Bank, one selected by the Executive and the third selected by agreement
of the first two, or, in the absence of such agreement, in accordance with
such Rules. Judgment upon the award rendered by such arbitrator(s) shall
be entered in any court having jurisdiction thereof upon the application of
either party.
Section 34. Survival.
Any provision of this Agreement which, by its terms, contemplates
performance after the expiration of the Employment Period or other
termination of this Agreement shall be deemed to survive the expiration of
this Agreement.
Section 35. Required Regulatory Provisions.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company or the Bank, whether pursuant to
this Agreement or otherwise, are subject to and conditioned upon their
compliance with section 18(k) of the Federal Deposit Insurance Act, 12
U.S.C. Section 1828(k), and any regulations promulgated thereunder.
In Witness Whereof, the Bank and the Company have caused this
Agreement to be executed and the Executive has hereunto set his hand, all
as of the day and year first above written.
----------------------------------
Xxxxxxx Xxxxxxx
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Cambridgeport Bank
Attest:
By ------------------------- By ------------------------------
Name: Name: Xxxxx X. Xxxxxx
Title: Title: President and Chief
Executive Officer
[Seal]
Port Financial Corp.
Attest:
By ------------------------- By ------------------------------
Name: Name: Xxxxx X. Xxxxxx
Title: Title: Chairman and Chief
Executive Officer
[Seal]
