EMPLOYMENT AGREEMENT FOR PATRICK J. SULLIVAN
Exhibit 10.1
This Employment Agreement (the “Agreement”) is made effective as of the 1st day of
April, 2010 (the “Effective Date”), by and between Legacy Bancorp, Inc., a Delaware corporation
with its principal offices located in Pittsfield, Massachusetts, Legacy Banks, a
Massachusetts-chartered stock savings bank (the “Bank”) with its principal offices located in
Pittsfield, Massachusetts (the Company and the Bank shall hereinafter collectively be referred to
as the “Employer”), and Xxxxxxx X. Xxxxxxxx (“Executive”).
WHEREAS, the Company and Bank desire to employ Executive as President of the Company and
President and Chief Executive Officer of the Bank for the period set forth herein, and desire to
evidence their commitment to Executive by the terms of this Agreement;
WHEREAS, Executive desires to be employed by the Employer for the period set forth in this
Agreement, subject to the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other
terms and conditions hereinafter provided, the parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES
During the term of this Agreement Executive agrees to serve as President of the Company and
President and Chief Executive Officer of the Bank (the “Executive Position”), and will perform all
duties and will have all powers associated with such position as set forth in any job description
and title provided to Executive by the Employer and as may be set forth in the Bylaws of the
Company and the Bank. In addition, in the event of the retirement of the Chief Executive Officer of
the Company, Executive agrees to assume such position for the additional remuneration set forth in
Section 4 hereof.
Executive shall be responsible for establishing the business objectives, policies and
strategic plans of the Employer, in conjunction with the Boards of Directors of the Company and the
Bank (each a “Board,” provided that unless specifically designated otherwise, “Board” shall refer
to the disinterested members of both Boards) and with respect to the Company, such responsibility
shall be shared with the Chief Executive Officer of the Company. During the term of the Agreement,
Executive also agrees to serve as a director of the Company and the Bank and, if elected, as an
officer and/or director of any subsidiary or affiliate of the Company and/or the Employer and in
such capacity carry out such duties and responsibilities reasonably appropriate to that office.
2. TERM AND ANNUAL REVIEW
(a) Term. The initial term of this Agreement will begin as of the Effective Date and
will continue for thirty-six (36) full calendar months thereafter. Commencing on the second
anniversary of the Effective Date (the “Anniversary Date”) and continuing on each Anniversary Date
thereafter, the term of this Agreement shall extend for one year, unless the Boards (or one of the
Boards) elects no earlier than ninety (90) and no later than ten (10) days prior to the Anniversary
Date not to extend the term of this Agreement by giving written notice of non-renewal (“Non-Renewal
Notice”) to Executive, in which case the remaining term of this Agreement shall be twelve (12)
months following such Anniversary Date.
(b) Annual Review. On an annual basis, the disinterested members of the Boards will
conduct a comprehensive performance evaluation and review of Executive’s performance, and the
results thereof will be included in the minutes of the Boards’ meeting.
(c) Continued Employment Following Expiration of Term. Nothing in this Agreement shall
mandate or prohibit a continuation of Executive’s employment following the expiration of the term
of this Agreement, upon such terms and conditions as the Employer and Executive may mutually agree.
3. PERFORMANCE OF DUTIES
During the period of his employment hereunder, except for reasonable periods of absence
occasioned by illness, reasonable vacation periods, and reasonable leaves of absence, Executive
will devote all of his business time, attention, skill and efforts to the faithful performance of
his duties under this Agreement, including activities and duties directed by the Boards.
Notwithstanding the preceding sentence, subject to the approval of the Boards, Executive may serve
as a member of the board of directors of business, community and charitable organizations, provided
that in each case such service shall not materially interfere with the performance of his duties
under this Agreement, adversely affect the reputation of the Employer or any other affiliates of
the Employer, or present any conflict of interest. Executive will present annually to the Boards
for their review and approval, a list of organizations in which Executive is participating or
proposes to participate. Such service to and participation in outside organizations will be
presumed for these purposes to be for the benefit of the Employer, and the Employer will reimburse
Executive his reasonable expenses associated therewith, to the extent Executive’s expenses are not
reimbursed by such organizations.
4. COMPENSATION AND REIMBURSEMENT
(a) Base Salary. In consideration of Executive’s performance of the responsibilities
and duties set forth in Section 1, the Employer will provide Executive the compensation specified
in this Agreement. The Employer will pay Executive a salary of not less than $375,000 per year
(“Base Salary”). Such Base Salary will be payable in accordance with the customary payroll
practices of the Employer. The Company and the Bank shall apportion between them the Base Salary,
based upon the services rendered by Executive to the Company and the Bank. In the event Executive
is assigned additional duties at the Company during the term of the Agreement, the Company agrees
to increase the Base Salary paid by the Company by $50,000, such that Executive’s total Base Salary
shall increase to $425,000 (or to $50,000 greater than such amount then in effect). During the
period of this Agreement, Executive’s Base Salary shall be reviewed at least annually. Such review
may be conducted by the compensation committee
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(the “Committee”) designated by the Boards, and the Boards may increase, but not decrease
Executive’s Base Salary (except for a decrease that is not in excess of any decrease that is
generally applicable to all employees of the Employer). Any increase in Base Salary will become the
“Base Salary” for purposes of this Agreement.
(b) Bonus and Incentive Compensation. Executive will be entitled to participate in any
incentive compensation and bonus plans or arrangements of the Employer, with a maximum potential
award equal to 50% of Base Salary and a target potential award equal to 40% of Base Salary. Such
incentive compensation will be paid in cash in accordance with the terms of such plans or
arrangements. Nothing paid to Executive under any such plans or arrangements will be deemed to be
in lieu of other compensation to which Executive is entitled under this Agreement.
(c) Benefit Plans. Executive will be entitled to participate in all employee benefit
plans, arrangements and perquisites offered to employees and executive officers of the Employer.
Without limiting the generality of the foregoing provisions of this Section 4(c), Executive also
will be entitled to participate in any employee benefit plans including but not limited to, stock
benefit plans, retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, health-and-accident plans, or any other employee benefit plan or arrangement made available
by the Employer in the future to its senior executives and key management employees, subject to and
on a basis consistent with the terms, conditions and overall administration of such plans and
arrangements.
(d) Stock and Option Grants. On the Effective Date of this Agreement and as an
inducement to accepting employment hereunder, Executive shall receive a grant of 25,000
non-qualified stock options (“Stock Options”) and 10,000 shares of restricted stock (“Restricted
Stock”). The Stock Options and Restricted Stock shall each vest at the rate of 20% per year over a
five (5) year period, commencing one year from the Effective Date of this Agreement, unless
otherwise provided for in this Agreement (including, without limitation, the Change of Control
provisions contained in Section 7, infra). In addition, and as a further inducement to accept
employment hereunder, Executive shall receive a grant of up to 40,000 shares of performance-based
Restricted Stock (“Performance Shares”), subject to the terms and conditions of the 2010 CEO
Inducement Plan Performance Shares Award Agreement, including without limitation, the vesting
provisions contained therein.
(e) Health, Dental, Life and Disability Coverage. The Bank shall provide Executive
with life, medical, dental and disability coverage made available by the Bank to its senior
executives and key management employees. As of the Effective Date of this Agreement, Executive
shall be immediately eligible for health, dental and vision coverage, subject to the co-pay
percentage in effect at the time of coverage, and shall be eligible for life, accidental death and
dismemberment and long-term care insurance after a three-month waiting period and short-term
disability coverage after a six month waiting period. Benefits available to Executive hereunder
are subject to change by the Employer at any point, on a basis consistent with the terms,
conditions and overall administration of such coverage.
(f) Paid Time Off. Executive will be entitled to paid time off, after three months of
employment, equal to thirty days per year during the term of this Agreement (pro-rated for the
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first year of employment), measured on a fiscal or calendar year basis. Such paid time off
shall be all-inclusive and shall include time for vacation, sick and personal time off. Any unused
paid time off during an annual period will be treated in accordance with the Bank’s personnel
policies as in effect from time to time. In addition, Executive shall be entitled to ten (10)
paid holidays annually (measured on a calendar year basis), in accordance with the Employer’s
practices and policies. The benefits provided by this Section 4(f) are also subject to change by
the Employer at any point, on a basis consistent with the terms, conditions and overall
administration of such coverage.
(g) Relocation, Legal and Related Expenses. In connection with Executive’s relocation
of his family and residence to Berkshire County to assume the Executive Position, and in
consideration of Executive’s attorney’s fees and other expenses associated with entering into this
Agreement, the Bank will provide Executive with an expense allowance of $50,000, which may be drawn
upon for direct payment or reimbursement of actual expenses incurred. Six months following the
Effective Date of this Agreement and Executive’s permanent location of his residence to Berkshire
County, any amount of the $50,000 which is remaining shall be distributed to the Executive.
(h) Expense Reimbursements. The Employer will reimburse Executive for all other
reasonable travel, entertainment and other reasonable expenses incurred by Executive during the
course of performing his obligations under this Agreement, including, without limitation, fees for
memberships in such organizations as Executive and the Board mutually agree are necessary and
appropriate in connection with the performance of his duties under this Agreement, upon
substantiation of such expenses in accordance with applicable policies and procedures of the
Employer. Executive shall be provided with an appropriate automobile owned or leased and insured
by the Employer for his business use and the Employer shall reimburse Executive for the expense of
fuel, maintenance, and insurance on said automobile, as well as tolls and parking fees associated
with the business use of said vehicle. In addition, the Employer shall reimburse or pay Executive
for the initiation fee and annual membership dues at the Country Club of Pittsfield, and the
Employer shall reimburse Executive for reasonable business expenses related to the Employer’s
business at such country club. All reimbursements pursuant to this Section shall be paid promptly
by the Employer and in any event no later than March 15 of the year immediately following the year
in which the expense was incurred.
5. WORKING FACILITIES
Executive’s principal place of employment will be at the Company’s and the Bank’s principal
executive offices. The Bank will provide Executive at his principal place of employment with a
private office, secretarial and other support services and facilities suitable to his position with
the Bank and necessary or appropriate in connection with the performance of his duties under this
Agreement.
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6. TERMINATION AND TERMINATION PAY
Subject to Section 7 of this Agreement which governs the occurrence of a Change in Control,
Executive’s employment under this Agreement may be terminated in the following circumstances:
(a) Death. Executive’s employment under this Agreement will terminate upon his death
during the term of this Agreement, in which event Executive’s estate or beneficiary will receive
the compensation due to Executive through the last day of the calendar month in which his death
occurred, and the Bank will continue to provide to Executive’s family for one (1) year after
Executive’s death, medical and dental coverage substantially comparable (and on substantially the
same terms and conditions) to the coverage maintained by the Bank for Executive and his family
immediately prior to Executive’s death. The Executive’s family’s health care continuation rights
available under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) shall run
commence following the termination of the coverage provided by this Section 6(a).
(b) Retirement. This Agreement will terminate upon Executive’s “Retirement” under the
retirement benefit plan or plans of the Employer in which he participates. Executive will not be
entitled to the termination benefits specified in Section 6 or 7 hereof in the event of termination
due to Retirement. For purposes of this Agreement, termination of Executive’s employment based on
Retirement shall include termination of Executive’s employment by the Board for any reason after
Executive has reached age sixty-five (65) or in accordance with any retirement arrangement
established by the Board with Executive’s consent.
(c) Disability.
| (i) | Termination of Executive’s employment based on “Disability” shall mean termination because of any permanent and total physical or mental impairment that restricts Executive from performing all the essential functions of normal employment. A determination as to whether Executive has suffered a Disability shall be made by the Board with objective medical input, provided, however, that any termination by the Board due to Disability shall not occur prior to the date on which Executive first becomes eligible for Disability benefits under the Bank’s long-term disability program. In the event of termination due to Disability, Executive will be entitled to disability benefits, if any, provided under any long term disability plan sponsored by the Bank. |
| (ii) | In the event the Board determines the Executive is Disabled, Executive will no longer be obligated to perform services under this Agreement. Upon Executive’s termination due to Disability, the Bank will continue to provide to Executive life insurance and non-taxable medical and dental coverage substantially comparable (and on substantially the same terms and conditions), to the coverage maintained by the Bank for Executive immediately prior to his termination for Disability. This coverage shall |
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| cease upon the earlier of (i) three (3) years from the date of termination, or (ii) the date Executive becomes eligible for Medicare coverage; provided further that if Executive is covered by family coverage or coverage for self and spouse, then Executive’s family or spouse shall continue to be covered for the remainder of the three (3) year period, or in the case of the spouse, until the spouse becomes eligible for Medicare coverage or obtains health care coverage elsewhere, whichever period is less. The Executive health care continuation rights available under COBRA shall commence following the termination of the coverage provided by this Section 6(c)(ii). |
(d) Termination for Cause.
| (i) | The Board(s) may by written notice to Executive in the form and manner specified in this paragraph, immediately terminate his employment at any time for “Cause.” Executive shall have no right to receive compensation or other benefits for any period after termination for Cause, except for already vested benefits. Termination for Cause shall mean termination because of, in the good faith determination of the Board(s), Executive’s: |
| 1. | material act of dishonesty in performing Executive’s duties on behalf of the Employer or a material breach of the Employer’s Code of Conduct or the Employer’s Sexual and Other Non-Harassment Policy; |
| 2. | willful misconduct that in the judgment of the Board(s) will likely cause economic damage to the Employer or injury to the business reputation of the Employer; |
| 3. | incompetence (in determining incompetence, the acts or omissions shall be measured against standards generally prevailing in the savings institutions industry); |
| 4. | breach of fiduciary duty involving personal profit; |
| 5. | intentional failure to perform stated duties under this Agreement after written notice thereof from the Board(s); |
| 6. | willful violation of any law, rule or regulation (other than minor or routine traffic violations or similar offenses) that reflect adversely on the reputation of the Employer, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; or |
| 7. | material breach by Executive of any provision of this Agreement. |
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| (ii) | Notwithstanding the foregoing, Executive’s termination for Cause will not become effective unless the Employer has delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the disinterested members of the Board(s) terminating Executive for Cause for any of the reasons set forth in Section 6(d)(i) hereof. |
(e) Voluntary Termination by Executive. In addition to his other rights to terminate
his employment under this Agreement, Executive may voluntarily terminate employment during the term
of this Agreement (for other than “Good Reason,” as defined below) upon at least sixty (60) days
prior written notice to the Board or Boards. Upon Executive’s voluntary termination, he will
receive only his compensation and vested rights and benefits to the date of his termination.
Following his voluntary termination of employment under this Section 6(e), Executive will be
subject to the restrictions set forth in Sections 9(a) and 9(b) of this Agreement.
(f) Termination Without Cause or With Good Reason.
| (i) | The Board(s) may, by written notice to Executive, immediately terminate his employment at any time for a reason other than Cause (a termination “Without Cause”), and Executive may, by written notice to the Board(s), terminate this Agreement at any time within ninety (90) days following an event constituting “Good Reason,” as defined below (a termination “With Good Reason”); provided, however, that the Employer shall have thirty (30) days to cure the “Good Reason” condition, but the Employer may waive its right to cure. Any termination of Executive’s employment, other than Termination for Cause shall have no effect on or prejudice the vested rights of Executive under the Employer’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 other employee benefit plans or programs, or compensation plans or programs in which Executive was a participant. |
| (ii) | In the event of termination under this Section 6(f), during the first year of this Agreement (disregarding renewals hereof), the Employer shall pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or estate, as the case may be, as severance pay a cash lump sum payment equal to three (3) times the sum of (i) his Base Salary and (ii) any bonus paid to Executive, subject to applicable withholding taxes. Following the first year of this Agreement, in the event of termination under this Section 6(f) the severance payable to Executive hereunder shall be two (rather than three) times the sum of Executive’s (i) Base Salary and (ii) the average of the highest rate of bonus paid by the Employer to Executive during the three years (or such lesser years as Executive has been employed by the Employer) of the five (5) years prior (or such lesser years as Executive has been employed by the Employer) prior to |
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| Executive’s termination, subject to applicable withholding. Such payment shall be payable within thirty (30) calendar days following his termination. |
| (iii) | In addition, the Employer will continue to provide to Executive, life insurance coverage and non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Employer for Executive immediately prior to his termination. Such life insurance coverage and non-taxable medical and dental insurance coverage shall cease upon the earlier of (i) the date which is three (3) years from the date of termination (two (2) years if such termination occurs after the initial year of this Agreement), or (ii) the date on which such coverage is made available to the Executive through subsequent employment. The Executive’s health care continuation rights available under COBRA shall commence following the termination of the coverage provided by this Section 6(f). |
| (iv) | “Good Reason” exists if, without Executive’s express written consent, any of the following occurs: |
| (1) | a failure to elect or reelect or to appoint or reappoint Executive to the Executive Position; |
| (2) | a material change in Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Section 1 above (provided, however, that a reduction in duties and responsibilities consented to in writing by Executive shall not be deemed a Good Reason); |
| (3) | a liquidation or dissolution of the Company or the Bank other than liquidations or dissolutions that are caused by reorganizations that do not affect the status of Executive; |
| (4) | a material reduction in Executive’s Base Salary or benefits required to be provided hereunder (other than a reduction authorized under Section 4(a), hereof or a reduction or elimination of Executive’s benefits under one or more benefit plans maintained by the Bank as part of a good faith, overall reduction or elimination of such plans or benefits applicable to all participants in a manner that does not discriminate against Executive (except as such discrimination may be necessary to comply with applicable law)); |
| (5) | a relocation of Executive’s principal place of employment by more than twenty-five (25) miles from its location as of the Effective Date of this Agreement; or |
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| (6) | a material breach of this Agreement by the Employer. |
(g) Termination and Board Membership. To the extent Executive is a member of the board
of directors of the Company, the Bank or any of their affiliates, including the Company, on the
date of termination of employment with the Employer (other than a termination due to Retirement),
Executive’s termination of employment with the Bank shall also constitute Executive’s resignation
from all of such boards of directors effective upon termination of employment with the Employer.
Executive further agrees to tender this resignation in writing immediately regardless of the method
or manner of termination (other than termination due to Retirement), and such resignation will not
be conditioned upon any event or payment.
7. CHANGE IN CONTROL
(a) Change in Control Defined. For purposes of this Agreement, a “Change in Control”
means any of the following events:
| (i) | Merger: The Company merges into, or consolidates with, another corporation, or merges another corporation into the Company, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation. |
| (ii) | Acquisition of Significant Share Ownership: There is filed, or required to be filed, a report on Schedule 13D or 13G another form or schedule (other than Schedule 13G) required under Sections 13(d), 13(g) or 14(d) of the Securities Exchange Act of 1934, which schedule discloses that the filing person or persons acting in concert has, or have become, the beneficial owner of 25% or more of a class of the Company’s voting securities. |
| (iii) | Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause, each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or |
| (iv) | Sale of Assets: The Company sells to a third party all, or substantially all, of its assets or sells to a third party all, or substantially all, of the Bank’s assets. |
(b) Change in Control Benefits. Upon the occurrence of a Change in Control followed
by the termination of Executive’s employment by the Employer without Cause, or
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Executive’s termination of employment with Good Reason, the Employer shall pay the Executive,
or in the event of his subsequent death, Executive’s beneficiary or estate, at no cost to
Executive, the amounts and benefits provided for in Section 6(f)(ii) and (iii) hereof. In
addition, any Stock Options and/or Restricted Stock previously granted to Executive that are not
yet vested in Executive (other than the Performance Shares) shall become fully vested upon a Change
in Control event defined in Section 7(a), above. In addition, with respect to the Performance
Shares, in the event that there is a Change of Control, the Performance Shares shall vest in
accordance with the formulas contained in the 2010 CEO Inducement Plan Performance Shares Award
Agreement for the Change of Control event.
(c) Survival. The provisions of this Section 7 and Sections 9 through 20, including
the defined terms used in such sections, shall continue in effect until the later of the expiration
of this Agreement or one year following a Change in Control.
8. NOTICE
(a) Notice of Termination. A “notice of termination” shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon as a basis for
termination of Executive’s employment.
(b) Date of Termination. “Date of termination” shall mean (i) if Executive’s
employment is terminated for Disability, thirty (30) days after a notice of termination is given
(provided that he shall not have returned to the performance of his duties on a full-time basis
during such thirty (30) day period), (ii) if Executive terminates employment With Good Reason,
thirty (30) days after a notice of termination is given, or (iii) if Executive’s employment is
terminated for any other reason, the date specified in the notice of termination.
(c) Good Faith Resolution. If the party receiving a notice of termination desires to
dispute or contest the basis or reasons for termination, the party receiving the notice of
termination must notify the other party within thirty (30) days after receiving the notice of
termination that such a dispute exists, and shall pursue the resolution of such dispute in good
faith and with reasonable diligence pursuant to Section 17 of this Agreement. During the pendency
of any such dispute (other than following a termination for Cause), the Employer shall pay
Executive his full compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, Base Salary) and continue him as a participant in all compensation,
benefit and insurance plans in which he was participating when the notice of dispute was given,
until the earlier to occur of (i) the expiration of the remaining term of this Agreement had
Executive’s termination hereunder not occurred, and (ii) final resolution of the dispute in
accordance with this Agreement. Amounts paid under this Section are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement, except in the event that Employer prevails in the dispute, in which case all
amounts paid hereunder shall be offset against any other amount due under this Agreement.
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9. POST-TERMINATION OBLIGATIONS/NON-COMPETE
(a) Non-Solicitation/Non-Compete. Executive hereby covenants and agrees that, for a
period of one (1) year following his termination of employment with the Employer for any reason
(other than a Change in Control), he shall not, without the written consent of the Employer, either
directly or indirectly:
| (i) | 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 Employer or any of its 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 business whatsoever that competes with the business of the Employer, or any of their direct or indirect subsidiaries or affiliates, that has headquarters or offices within twenty-five (25) miles of any location(s) in which the Employer has business operations or has filed an application for regulatory approval to establish an office; |
| (ii) | become an officer, employee, consultant, director, independent contractor, agent, joint venturer, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity that competes with the business of the Employer or any of their direct or indirect subsidiaries or affiliates, that: (i) has a headquarters within twenty-five (25) miles of any location(s) in which the Employer has business operations or has filed an application for regulatory approval to establish an office (the “Restricted Territory”) or (ii) has one or more offices, but is not headquartered, within the Restricted Territory, but in the latter case, only if Executive would be employed, conduct business or have other responsibilities or duties within the Restricted Territory; or |
| (iii) | 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 Employer to terminate an existing business or commercial relationship with the Employer. |
(b) Confidentiality. Executive recognizes and acknowledges that the knowledge of the
business activities, plans for business activities, and all other proprietary information of the
Employer, as it may exist from time to time, are valuable, special and unique assets of the
business of the Employer. Executive will not, during or after the term of his employment, disclose
any knowledge of the past, present, planned or considered business activities or any other similar
proprietary information of the Employer to any person, firm, corporation, or other entity for any
reason or purpose whatsoever unless expressly authorized by the Boards or
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required by law. Notwithstanding the foregoing, Executive may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas which are not solely and exclusively
derived from the business plans and activities of the Employer. Further, Executive may disclose
information regarding the business activities of the Employer to any bank regulator having
regulatory jurisdiction over the activities of the Employer pursuant to a formal regulatory
request. In the event of a breach or threatened breach by Executive of the provisions of this
Section, the Employer will be entitled to an injunction restraining Executive from disclosing, in
whole or in part, the knowledge of the past, present, planned or considered business activities of
the Employer or any other similar proprietary information, or from rendering any services to any
person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the
Employer from pursuing any other remedies available to the Employer for such breach or threatened
breach, including the recovery of damages from Executive.
(c) Information/Cooperation. Executive shall, upon reasonable notice, furnish such
information and assistance to the Employer as may be reasonably required by the Employer, in
connection with any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party; provided, however, that Executive shall not be required to provide information or
assistance with respect to any litigation between Executive and the Employer or any other
subsidiaries or affiliates. The Employer agrees to reimburse the Executive for any reasonable,
out-of-pocket travel, hotel and meal expenses incurred in connection with the Executive’s
performance of obligations pursuant to this Section 9(c). The Employer will also provide Executive
with legal counsel at the Employer’s expense to the extent reasonably necessary to assist Executive
in connection with any cooperation, which counsel shall be separate from the Employer’s counsel to
the extent required by applicable ethical rules, or as otherwise agreed by the Employer and the
Executive.
(d) Reliance. All payments and benefits to Executive under this Agreement shall be
subject to Executive’s compliance with this Section 9, to the extent applicable. The parties
hereto, recognizing that irreparable injury will result to the Employer, its business and property
in the event of Executive’s breach of this Section 9, agree that, in the event of any such breach
by Executive, the Employer will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive and all persons acting
for or with Executive. Executive represents and admits that Executive’s experience and capabilities
are such that Executive can obtain employment in a business engaged in other lines of business than
the Employer, and that the enforcement of a remedy by way of injunction will not prevent Executive
from earning a livelihood. Nothing herein will be construed as prohibiting the Employer from
pursuing any other remedies available to them for such breach or threatened breach, including the
recovery of damages from Executive.
10. SOURCE OF PAYMENTS/RELEASE
(a) All payments provided in this Agreement shall be timely paid in cash or check from the
general funds of the Company or the Bank, as appropriate.
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(b) Notwithstanding any provision herein to the contrary, to the extent that payments and
benefits required by this Agreement are paid or received by Executive from the Company, such
compensation and benefits paid by the Company will be subtracted from any amount due simultaneously
to Executive from the Bank under this Agreement. There is not intended to be a duplication of
payments and benefits under this Agreement. Payments required to be made to Executive pursuant to
this Agreement shall be allocated in proportion to the level of activity and the time expended on
such activities by Executive as determined by the Company and the Bank.
(c) Notwithstanding anything to the contrary in this Agreement, Executive shall not be
entitled to any payments or benefits under Section 6 of this Agreement unless and until Executive
executes an unconditional release of any claims against the Employer and their affiliates,
including their officers, directors, successors and assigns, releasing said persons from any and
all claims, rights, demands, causes of action, suits, arbitrations or grievances relating to the
employment relationship other than claims for benefits under tax-qualified plans or other benefit
plans identified in Section 4(c) in which Executive has a vested benefit (and then, only to the
extent of the vested benefit), claims for benefits required by applicable law or claims that cannot
be released under applicable law or claims with respect to obligations set forth in this Agreement
that survive the termination of this Agreement.
11. REQUIRED REGULATORY PROVISIONS
(a) Notwithstanding anything herein contained to the contrary, any payments to Executive by
the Employer 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 the regulations promulgated thereunder in 12 C.F.R. Part 359.
(b) Notwithstanding anything else in this Agreement, Executive’s employment shall not be
deemed to have been terminated unless and until Executive has a Separation from Service within the
meaning of Code Section 409A. For purposes of this Agreement, a “Separation from Service” shall
have occurred if the Employer and Executive reasonably anticipate that either no further services
will be performed by Executive after the date of the termination (whether as an employee or as an
independent contractor) or the level of further services performed will not exceed 49% of the
average level of bona fide services in the thirty-six (36) months immediately preceding the
termination. For all purposes hereunder, the definition of Separation from Service shall be
interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).
12. NO ATTACHMENT
Except as required by law, no right to receive payments under this Agreement shall be subject
to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and
of no effect.
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13. ENTIRE AGREEMENT; MODIFICATION AND WAIVER
(a) This Agreement 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, except that the parties acknowledge that
this Agreement shall not affect any of the rights and obligations of the parties under any
agreement or plan entered into with or by the Employer pursuant to which Executive may receive
compensation or benefits except as set forth in Section 6(d) hereof.
(b) This Agreement may not be modified or amended except by an instrument in writing signed by
each of the parties hereto.
(c) No term or condition of this Agreement shall be deemed to have been waived, nor shall
there be any estoppel against the enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate
only as to the specific term or condition waived and shall not constitute a waiver of such term or
condition for the future as to any act other than that specifically waived.
14. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any provision, is held
invalid, such invalidity shall not affect any other provision of this Agreement or any part of such
provision not held so invalid, and each such other provision and part thereof shall to the full
extent consistent with law continue in full force and effect.
15. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for convenience of
reference and shall not control the meaning or interpretation of any of the provisions of this
Agreement.
16. GOVERNING LAW
This Agreement shall be governed by the laws of the Commonwealth of Massachusetts, but only to
the extent not pre-empted by federal law.
17. ARBITRATION
Any dispute or controversy arising under or in connection with this Agreement shall be settled
exclusively by binding arbitration, as an alternative to civil litigation and without any trial by
jury to resolve such claims, conducted by a single arbitrator who is certified by the American
Arbitration Association and is mutually acceptable to the Employer and Executive, sitting in a
location selected by the Employer within fifty (50) miles from the main office of the Employer, in
accordance with the rules of the American Arbitration Association’s National Rules for the
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Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator’s award
in any court having jurisdiction.
18. PAYMENT OF LEGAL FEES
To the extent that such payment(s) may be made without triggering a penalty under Code Section
409A, all reasonable legal fees paid or incurred by Executive pursuant to any dispute or question
of interpretation relating to this Agreement shall be paid or reimbursed by the Employer, provided
(i) that the dispute or interpretation has been settled by Executive and the Employer or resolved
in Executive’s favor, (ii) Executive has provided prior written notice to the Employer of his
intention to retain counsel and the name of such counsel, and (iii) such reimbursement shall occur
as soon as practicable but no later than sixty (60) days after the end of the year in which the
dispute is settled or resolved in Executive’s favor.
19. INDEMNIFICATION
(a) Indemnification. The Employer agrees to indemnify Executive (and his heirs,
executors, and administrators), and to advance expenses related to this indemnification, to the
fullest extent permitted under applicable law and regulations against any and all expenses and
liabilities that Executive reasonably incurs in connection with or arising out of any action, suit,
or proceeding in which he may be involved by reason of his service as a director or officer of the
Employer or any other affiliates (whether or not he continues to be a director or officer at the
time of incurring any such expenses or liabilities). Covered expenses and liabilities include, but
are not limited to, judgments, court and/or administrative costs and other expenses, and attorneys’
fees, and the costs of reasonable settlements approved by the Board, if the action is brought
against Executive in his capacity as an officer or director of the Employer (whether or not the
claim is asserted in court, arbitration, mediation, or any regulatory and/or administrative
proceeding). Indemnification for expenses will not extend to matters related to Executive’s
termination for Cause, except where the Employer’s termination for Cause has not been upheld.
Notwithstanding anything in this Section 19 to the contrary, the Employer will not be required to
provide indemnification prohibited by applicable law or regulation. The obligations of this Section
19 will survive the term of this Agreement for a period of six (6) years.
(b) Insurance. During the period for which the Employer must indemnify Executive, the
Employer will provide Executive with coverage under a directors’ and officers’ liability policy at
the Employer’s expense, that is at least equivalent to the coverage provided to directors and
senior executives of the Employer.
20. SUCCESSORS AND ASSIGNS
The Employer shall require any successor or assignee, whether direct or indirect, by purchase,
merger, consolidation or otherwise, to all or substantially all the business or assets of the
Employer, expressly and unconditionally to assume and agree to perform the Employer’s obligations
under this Agreement, in the same manner and to the same extent that the Employer would be required
to perform if no such succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized
officers, and Executive has signed this Agreement, on this 26th day of February, 2010.
| ATTEST: | LEGACY BANKS | |||||||
/s/ Xxxxxxxx X. Xxxxxxx
|
By: | /s/ X. Xxxxxxx Dunlaevy | ||||||
| For the Compensation Committee | ||||||||
| ATTEST: | LEGACY BANCORP, INC. | |||||||
/s/ Xxxxxxxx X. Xxxxxxx
|
By: | /s/ X. Xxxxxxx Dunlaevy | ||||||
| For the Compensation Committee | ||||||||
| WITNESS: | EXECUTIVE | |||||||
/s/ Xxxxx X. Xxxxx
|
By: | /s/ Xxxxxxx X. Xxxxxxxx | ||||||
| Xxxxxxx X. Xxxxxxxx | ||||||||
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