EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") is made as of September 19, 2001 (the
"Effective Date"), by and between Strata Bank, a bank chartered under the laws
of Massachusetts with its headquarters located in Medway, Massachusetts (the
"Employer"), Service Bancorp, MHC, a corporation chartered under the laws of
Massachusetts, and Service Bancorp, Inc., a corporation chartered under the laws
of Massachusetts (the "Holding Companies") and Xxxxxx X. Montpelier (the
"Executive"). In consideration of the mutual covenants contained in this
Agreement, the Employer, the Holding Companies and the Executive agree as
follows:
WITNESSETH
WHEREAS, the Executive is currently employed as President and Chief
Executive Officer of the Employer; and
WHEREAS, the Executive also serves as President and Chief Executive Officer
of the Holding Companies, both of which are parent companies of the Employer;
and
WHEREAS, the Employer and the Holding Companies desire to retain the
Executive in those positions, in accordance with the terms of a formal, written
Employment Agreement.
NOW, THEREFORE, the Employer, the Holding Companies and the Executive
hereby agree as follows:
1. Employment. The Employer agrees to employ the Executive and the
Executive agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.
2. Capacity. The Executive currently serves and shall continue to serve
during the Term (as defined below) the Employer as President and Chief Executive
Officer and Chairman of the Board of Directors of the Employer (the "Board of
Directors"). The Executive confirms that she also currently serves and shall
continue to serve during the Term both Holding Companies as President and Chief
Executive Officer. During the Term, the Executive shall also serve the Employer
and the Holding Companies in such other or additional senior executive offices
as the Executive may be requested to serve by the Board of Directors or the
respective Boards of Directors of the Holding Companies, provided that such
additional offices would not result in any condition described in Section
6(d)(i)-(iv) hereof. In such capacity or capacities, the Executive shall
perform such services and duties in connection with the business, affairs and
operations of the Employer and the Holding Companies as may be assigned or
delegated to the Executive from time to time by or under the authority of the
Board of Directors or the respective Boards of Directors of the Holding
Companies consistent with the terms of this Agreement.
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3. Term. Subject to the provisions of Section 6, the term of employment
pursuant to this Agreement (the "Term") shall be three (3) years from the
Effective Date and shall be extended automatically for periods of one (1) year
commencing at the second anniversary of the Effective Date and on each
subsequent anniversary thereafter, unless either the Executive or the Employer
gives written notice to the other not less than thirty (30) days prior to the
date of any such anniversary of such party's election not to extend the Term.
If the Employer gives such notice then, notwithstanding the preceding sentence,
the Executive shall be entitled at her option and upon ninety (90) days prior
written notice to the Employer to receive Termination Benefits (as defined in
Section 6(e)) as if the Executive's employment were being terminated pursuant to
Section 6(c) or 6(d) hereof.
4. Compensation and Benefits. The regular compensation and benefits
payable to the Executive under this Agreement shall be as follows:
(a) Salary. For all services rendered by the Executive under this
Agreement, the Employer shall initially pay the Executive a salary (the
"Salary") at the annual rate of One Hundred Sixty Thousand Dollars
($160,000). The Salary shall be reviewed annually by the Board of
Directors or the Compensation Committee of the Board of Directors (the
"Compensation Committee"). Based upon such review, the Salary shall be
increased by the greater of (i) the average percentage increase for all
employees of the Employer generally; or (ii) the amount necessary to
maintain the Salary within the range of salaries for Chief Executive
Officers of peer banks of the Employer, based upon a salary survey
performed by a reputable salary consultant experienced in the community
banking industry. The Salary shall be payable in periodic installments in
accordance with the Employer's usual practice for its senior executives.
(b) Bonus. The Executive shall be entitled to participate in any
incentive programs generally available to senior executives of the Employer
that may be established by the Board of Directors or the Compensation
Committee with such terms as may be established in the sole discretion of
the Board of Directors or Compensation Committee.
(c) Regular Benefits. The Executive shall also be entitled to
participate in any employee benefit plans, medical insurance plans, life
insurance plans, disability income plans, retirement plans, vacation plans,
expense reimbursement plans and other benefit plans which the Employer may
from time to time have in effect for all or most of its senior executives.
Such participation shall be subject to the terms of the applicable plan
documents, generally applicable policies of the Employer, applicable law
and the discretion of the Board of Directors, the Compensation Committee or
any administrative or other committee provided for in or contemplated by
any such plan. Nothing contained in this Agreement shall be construed to
create any obligation on the part of the Employer to establish any such
plan or to maintain the effectiveness of any such plan which may be in
effect from time to time.
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(d) Automobile. The Employer shall provide the Executive with an
automobile allowance each month during the Term, or equivalent arrangement
satisfactory to the Executive, in an amount sufficient to make an owned or
leased vehicle of a class appropriate and customary for chief executive
officers of comparable banks available for use by the Executive, and in
addition shall be responsible for and pay (directly or by reimbursing the
Executive) all associated costs and expenses including, without limitation,
insurance premiums, registration fees, taxes, and other costs and expenses
associated with operation and maintenance of the vehicle.
(e) Life Insurance. During the Term of this Agreement, the Executive
shall be entitled to purchase term life insurance on terms and in an amount
of her choice at the Employer's expense which shall not exceed $1,000
annually.
(f) Taxation of Payments and Benefits. The Employer shall undertake
to make deductions, withholdings and tax reports with respect to payments
and benefits under this Agreement to the extent that it reasonably and in
good faith believes that it is required to make such deductions,
withholdings and tax reports. Payments under this Agreement shall be in
amounts net of any such deductions or withholdings. Nothing in this
Agreement shall be construed to require the Employer to make any payments
to compensate the Executive for any adverse tax effect associated with any
payments or benefits or for any deduction or withholding from any payment
or benefit.
(g) Exclusivity of Salary and Benefits. The Executive shall not be
entitled to any payments or benefits in addition to those provided under
this Agreement unless otherwise determined by the Board of Directors.
5. Extent of Service. During the Executive's employment under this
Agreement, the Executive shall, subject to the direction and supervision of the
Board of Directors, devote the Executive's full business time, best efforts and
business judgment, skill and knowledge to the advancement of the Employer's and
the Holding Companies' interests and to the discharge of the Executive's duties
and responsibilities under this Agreement. The Executive shall not engage in
any other business activity, except as may be approved by the Board of
Directors; provided that nothing in this Agreement shall be construed as
preventing the Executive from:
(a) investing the Executive's assets in a manner not prohibited by
Section 7(d) and in such form or manner as shall not impair Executive's
performance of her duties and responsibilities under this Agreement; or
(b) engaging in religious, charitable or other community or non-profit
activities that do not impair the Executive's ability to fulfill the
Executive's duties and responsibilities under this Agreement.
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6. Termination and Termination Benefits. Notwithstanding the provisions
of Section 3, the Executive's employment under this Agreement shall terminate
under the following circumstances set forth in this Section 6.
(a) Termination by the Employer for Cause. The Executive's employment
under this Agreement may be terminated for cause without further liability
on the part of the Employer effective immediately upon a vote of the Board
of Directors and written notice to the Executive. Only the following shall
constitute "cause" for such termination:
(i) dishonest statements or acts of the Executive concerning
material matters relating to the Employer or any affiliate of the
Employer; including, but not limited to, the Holding Companies;
(ii) the commission by or indictment of the Executive for (A) a
felony or (B) any misdemeanor involving moral turpitude, deceit,
dishonesty or fraud ("indictment," for these purposes, meaning an
indictment, probable cause hearing or any other procedure pursuant to
which an initial determination of probable or reasonable cause with
respect to such offense is made);
(iii) failure to perform to the reasonable satisfaction of the
Board of Directors a substantial portion of the Executive's duties and
responsibilities assigned or delegated under this Agreement, which
failure continues, in the reasonable judgment of the Board of
Directors, after written notice given to the Executive by the Board of
Directors;
(iv) gross negligence, willful misconduct or insubordination of
the Executive with respect to the Employer or any affiliate of the
Employer, including, but not limited to, the Holding Companies; or
(v) material breach by the Executive of any of the Executive's
obligations under this Agreement.
(b) Termination by the Executive. The Executive's employment under
this Agreement may be terminated by the Executive by written notice to the
Board of Directors at least sixty (60) days prior to such termination.
(c) Termination by the Employer Without Cause. Subject to the payment
of Termination Benefits pursuant to Section 6(e), the Executive's
employment under this Agreement may be terminated by the Employer without
cause upon written notice to the Executive by a vote of the Board of
Directors.
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(d) Termination by the Executive for Good Reason. The Executive's
employment under this Agreement may be terminated by the Executive for a
"good reason." For purposes of this Section 6(d), the Executive shall be
deemed to have a "good reason" to voluntarily terminate his employment with
the Employer if one of the following conditions occurs without the
Executive's consent, the Executive notifies the Employer in writing of the
occurrence of one of these conditions within thirty (30) days of its onset,
and the Employer fails to remedy the condition within thirty (30) days
after its receipt of such written notice from the Executive, and the
Executive notifies the Employer in writing of the Executive's resignation
for failure to cure a good reason within ten (10) days after such thirty
(30) day cure period. Good reason shall mean:
(i) a reduction in the Executive's Salary (other than in
connection with a salary reduction applicable to senior executives of
the Employer generally); or
(ii) the Employer's material breach of this Agreement; or
(iii) the relocation of the offices at which the Executive is
principally employed as of the Change of Control to a location more
than fifty (50) miles from such offices, which relocation is not
approved by the Executive; or
(iv) a material and adverse change in the Executive's position,
responsibilities or duties.
(e) Certain Termination Benefits. Unless otherwise specifically
provided in this Agreement or otherwise required by law, all compensation
and benefits payable to the Executive under this Agreement shall terminate
on the date of termination of the Executive's employment under this
Agreement. Notwithstanding the foregoing, in the event of termination of
the Executive's employment with the Employer pursuant to Section 6(c) or
6(d) above, or in the event the Agreement is not extended by action of the
Employer as provided in Section 3 (and subject to the notice requirements
set forth in Section 3), the Employer shall provide to the Executive the
following termination benefits ("Termination Benefits"):
(i) continuation of the Executive's Salary at the rate then in
effect pursuant to Section 4(a); and
(ii) continuation of group health plan benefits to the extent
authorized by and consistent with 29 U.S.C. (S) 1161 et seq. (commonly
known as "COBRA"), with the cost of the regular premium for such
benefits paid in full by the Employer.
The Termination Benefits set forth in (i) above shall continue for a period
of two years from the date of the Executive's termination; provided that in
the event that the Executive
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commences any employment or self-employment in violation of Section 7(d)
during the period during which the Executive is entitled to receive
Termination Benefits (the "Termination Benefits Period"), the remaining
amount of Salary due pursuant to Section 6(e)(i) for the period from the
commencement of such employment or self-employment to the end of the
Termination Benefits Period shall be forfeited and the payments provided
under Section 6(e)(ii) shall cease effective as of the date of commencement
of such employment or self-employment. The Employer's liability for Salary
continuation pursuant to Section 6(e)(i) shall be reduced by the amount of
any severance pay due or otherwise paid to the Executive pursuant to any
severance pay plan or stay bonus plan of the Employer. Notwithstanding the
foregoing, nothing in this Section 6(e) shall be construed to affect the
Executive's right to receive COBRA continuation entirely at the Executive's
own cost to the extent that the Executive may continue to be entitled to
COBRA continuation after the Executive's right to continuation of benefits
under Section 6(e)(ii) ceases. The Executive shall be obligated to give
prompt notice of the date of commencement of any employment or self-
employment during the Termination Benefits Period and shall respond
promptly to any reasonable inquiries concerning any employment or self-
employment in which the Executive engages during the Termination Benefits
Period.
(f) Conditions of Eligibility for Certain Payments. Notwithstanding
anything to the contrary in this Agreement, the Executive shall not be
entitled to any Termination Benefit under this Agreement unless the
Executive first (i) enters into a valid and irrevocable release of all
claims against the Employer and any affiliate of the Employer, in a form
then reasonably acceptable to the Employer and (ii) resigns from any and
all positions, including, without implication of limitation, as a director,
and officer, that the Executive then holds with the Employer and any
affiliate of the Employer, provided however that the Executive shall not be
obligated to enter into the release referred to in (e) above in the event
that the Executive is not provided with a release by the Employer with
respect to claims as to which the Employer has actual knowledge.
(g) Disability. If the Executive shall be disabled so as to be unable
to perform the essential functions of the Executive's then existing
position or positions under this Agreement with or without reasonable
accommodation, the Board of Directors may remove the Executive from any
responsibilities and/or reassign the Executive to another position with the
Employer for the remainder of the Term or during the period of such
disability. Notwithstanding any such removal or reassignment, the
Executive shall continue to receive the Executive's full Salary (less any
disability pay or sick pay benefits to which the Executive may be entitled
under the Employer's policies) and benefits under Section 4 of this
Agreement (except to the extent that the Executive may be ineligible for
one or more such benefits under applicable plan terms) for a period of time
equal to the remainder of the Term. If any question shall arise as to
whether during any period the Executive is disabled so as to be unable to
perform the essential functions of the Executive's then existing position
or positions with or without reasonable accommodation, the Executive may,
and at the request of the Employer shall, submit to
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the Employer a certification in reasonable detail by a physician selected
by the Employer to whom the Executive or the Executive's guardian has no
reasonable objection as to whether the Executive is so disabled or how long
such disability is expected to continue, and such certification shall for
the purposes of this Agreement be conclusive of the issue. The Executive
shall cooperate with any reasonable request of the physician in connection
with such certification. If such question shall arise and the Executive
shall fail to submit such certification, the Employer's determination of
such issue shall be binding on the Executive. Nothing in this Section 6(f)
shall be construed to waive the Executive's rights, if any, under existing
law including, without limitation, the Family and Medical Leave Act of
1993, 29 U.S.C. (S)2601 et seq. and the Americans with Disabilities Act, 42
U.S.C. (S)12101 et seq.
(h) Termination Pursuant to a Change of Control. If there is a Change
of Control, as defined in Section 6(h)(i) below, during the Term, the
provisions of this Section 6(h) shall apply and shall continue to apply
throughout the remainder of the term of this Agreement. If, (1) within
eleven (11) months following a Change of Control, the Executive's
employment is terminated by the Employer or the Executive following the
occurrence of any of the events listed in Section 6(h)(ii) below or if the
Executive's employment is terminated without cause (in accordance with
Section 6(c) above); or (2) during the twelfth (12th) month following the
change of control the Executive chooses to resign from her employment, for
any reason, in lieu of any payments under Section 6(e) above, the Employer
shall pay to the Executive (or the Executive's estate, if applicable) a
lump sum amount equal to 2.99 times the Executive's "base amount" within
the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as
amended (the "Code").
(i) Change of Control shall mean the occurrence of one or more of
the following events:
(A) following any conversion of Service Bancorp, MHC from
mutual to stock form, any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) becomes a "beneficial
owner" (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act) (other than Service Bancorp, MHC, any trustee
or other fiduciary holding securities under an employee benefit
plan of the Employer, or any corporation owned, directly or
indirectly, by the stockholders of the Employer, in substantially
the same proportions as their ownership of stock of Service
Bancorp, MHC), directly or indirectly, of securities of Service
Bancorp, MHC, representing fifty percent (50%) or more of the
combined voting power of any of Service Bancorp, MHC's then
outstanding securities; or
(B) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) becomes a "beneficial owner" (as such term is
defined
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in Rule 13d-3 promulgated under the Exchange Act) (other than
Service Bancorp, MHC, Service Bancorp, Inc., any trustee or other
fiduciary holding securities under an employee benefit plan of
Service Bancorp, Inc. or the Employer, or any corporation owned,
directly or indirectly, by the stockholders of Service Bancorp,
Inc., in substantially the same proportions as their ownership of
stock of Service Bancorp, Inc.), directly or indirectly, of
securities of Service Bancorp, Inc. representing fifty percent
(50%) or more of the combined voting power of Service Bancorp,
Inc.'s then outstanding securities; or
(C) persons who, as of the Effective Date, constituted the
Employer's Board of Directors (the "Incumbent Board") cease for
any reason including, without limitation, as a result of a tender
offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board of Directors,
provided that any person becoming a director of the Employer
subsequent to the Effective Date whose election was approved by
at least a majority of the directors then comprising the
Incumbent Board shall, for purposes of this Section 6(h), be
considered a member of the Incumbent Board; or
(D) the stockholders of the Employer approve a merger or
consolidation of the Employer with any other corporation or other
entity, other than (1) a merger or consolidation which would
result in the voting securities of the Employer outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%)
of the combined voting power of the voting securities of the
Employer or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Employer (or
similar transaction) in which no "person" (as hereinabove
defined) acquires more than fifty percent (50%) of the combined
voting power of the Employer's then outstanding securities; or
(E) the stockholders of Service Bancorp, Inc. approve a
merger or consolidation of Service Bancorp, Inc. with any other
corporation or other entity, other than (1) a merger or
consolidation which would result in the voting securities of
Service Bancorp, Inc. outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power of the
voting securities of Service Bancorp, Inc. or such surviving
entity outstanding immediately after such merger or consolidation
or (2) a merger or consolidation effected to implement a
recapitalization of Service Bancorp, Inc. (or similar
transaction) in which no "person" (as hereinabove defined)
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other than Service Bancorp, MHC acquires more than fifty percent
(50%) of the combined voting power of Service Bancorp, Inc.'s
then outstanding securities; or
(F) following any conversion of Service Bancorp, MHC from
mutual to stock form, the stockholders of Service Bancorp, MHC
approve a merger or consolidation of Service Bancorp, MHC with
any other corporation or other entity, other than (1) a merger or
consolidation which would result in the voting securities of
Service Bancorp, MHC outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power of the
voting securities of Service Bancorp, MHC or such surviving
entity outstanding immediately after such merger or consolidation
or (2) a merger or consolidation effected to implement a
recapitalization of Service Bancorp, MHC (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than
fifty percent (50%) of the combined voting power of the
Employer's then outstanding securities; or
(G) the stockholders of the Employer approve a plan of
complete liquidation of the Employer or an agreement for the
sale or disposition by the Employer of all or substantially all
of the Employer's assets.
(ii) The events referred to in Section 6(h) above shall be as
follows:
(A) a reduction of the Executive's salary other than a
reduction that (1) is based on the Employer's financial
performance or (2) is similar to the reduction made to the
salaries provided to all or most other senior executives of the
Employer; or
(B) an adverse change in the Executive's responsibilities
and/or duties which constitutes, when compared to the Executive's
responsibilities and/or duties before the Change of Control, a
demotion; or
(C) a material loss of title or office; or
(D) the relocation of the offices at which the Executive is
principally employed as of the Change of Control to a location
more than fifty (50) miles from such offices, which relocation is
not approved by the Executive.
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(iii) The Executive shall provide the Employer with reasonable
notice and an opportunity to cure any of the events listed in Section
6(h)(ii) and shall not be entitled to compensation pursuant to this
Section 6(h) unless the Employer fails to cure within a reasonable
period; and
(iv) Additional Limitation.
(A) Anything in this Agreement to the contrary
notwithstanding, in the event that any compensation, payment or
distribution by the Employer or the Holding Companies to or for
the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise (the "Severance Payments"), would be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), the following
provisions shall apply:
(i) If the Severance Payments, reduced by the sum of (1) the
Excise Tax and (2) the total of the Federal, state, and local income
and employment taxes payable by the Executive on the amount of the
Severance Payments which are in excess of the Threshold Amount, are
greater than or equal to the Threshold Amount, the Executive shall be
entitled to the full benefits payable under this Agreement.
(ii) If the Threshold Amount is less than (x) the Severance
Payments, but greater than (y) the Severance Payments reduced by the
sum of (1) the Excise Tax and (2) the total of the Federal, state, and
local income and employment taxes on the amount of the Severance
Payments which are in excess of the Threshold Amount, then the
benefits payable under this Agreement shall be reduced (but not below
zero) to the extent necessary so that the maximum Severance Payments
shall not exceed the Threshold Amount. To the extent that there is
more than one method of reducing the payments to bring them within the
Threshold Amount, the Executive shall determine which method shall be
followed; provided that if the Executive fails to make such
determination within 45 days after the Employer or the Holding
Companies have sent the Executive written notice of the need for such
reduction, the Employer or the Holding Companies may determine the
amount of such reduction in their sole discretion.
For the purposes of this Section 6(h)(iv), "Threshold Amount" shall mean
three times the Executive's "base amount" within the meaning of Section
280G(b)(3) of the Code and the regulations promulgated thereunder less one
dollar ($1.00); and "Excise Tax" shall mean the excise tax imposed by
Section 4999 of the Code, or any interest or penalties incurred by the
Executive with respect to such excise tax.
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(B) The determination as to which of the alternative
provisions of Section 6(h)(iv) shall apply to the Executive shall
be made by an independent accounting firm designated by the
Employer to which the Executive has no reasonable objection (the
"Accounting Firm"), which shall provide detailed supporting
calculations both to the Employers and the Holding Companies and
the Executive within 15 business days of the Date of Termination,
if applicable, or at such earlier time as is reasonably requested
by the Employer and the Holding Companies or the Executive. For
purposes of determining which of the alternative provisions of
Section 6(h)(iv) shall apply, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal
income taxation applicable to individuals for the calendar year
in which the determination is to be made, and state and local
income taxes at the highest marginal rates of individual taxation
in the state and locality of the Executive's residence on the
Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes. Any determination by the Accounting Firm shall
be binding upon the Employer and the Holding Companies and the
Executive.
7. Confidential Information, Noncompetition and Cooperation.
(a) Confidential Information. As used in this Agreement,
"Confidential Information" means information belonging to the Employer or
the Holding Companies which is of value to the Employer or the Holding
Companies in the course of conducting their business and the disclosure of
which could result in a competitive or other disadvantage to any of them.
Confidential Information includes, without limitation, financial
information, reports, and forecasts; inventions, improvements and other
intellectual property; trade secrets; know-how; designs, processes or
formulae; software; market or sales information or plans; customer lists;
and business plans, prospects and opportunities (such as possible
acquisitions or dispositions of businesses or facilities) which have been
discussed or considered by the management of the Employer or the Holding
Companies. Confidential Information includes information developed by the
Executive in the course of the Executive's employment by the Employer, as
well as other information to which the Executive may have access in
connection with the Executive's employment. Confidential Information also
includes the confidential information of others with which the Employer has
a business relationship. Notwithstanding the foregoing, Confidential
Information does not include information in the public domain, unless due
to breach of the Executive's duties under Section 7(b).
(b) Confidentiality. The Executive understands and agrees that the
Executive's employment creates a relationship of confidence and trust
between the Executive and the Employer and the Holding Companies with
respect to all Confidential Information. At all times, both during the
Executive's employment under this Agreement
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and after its termination, the Executive will keep in confidence and trust
all such Confidential Information, and will not use or disclose any such
Confidential Information without the written consent of the Employer or the
Holding Companies (whichever is appropriate), except as may be necessary in
the ordinary course of performing the Executive's duties to the Employer or
the Holding Companies.
(c) Documents, Records, Etc. All documents, records, data, apparatus,
equipment and other physical property, whether or not pertaining to
Confidential Information, which are furnished to the Executive by the
Employer or the Holding Companies or are produced by the Executive in
connection with the Executive's employment will be and remain the sole
property of the Employer or the Holding Companies. The Executive will
return to the Employer or the Holding Companies all such materials and
property as and when requested by either of them. In any event, the
Executive will return all such materials and property immediately upon
termination of the Executive's employment for any reason. The Executive
will not retain with the Executive any such material or property or any
copies thereof after such termination.
(d) Noncompetition and Nonsolicitation. During the Term and for one
(1) year thereafter (or during the Termination Benefits Period, if longer),
the Executive (i) will not, directly or indirectly, whether as owner,
partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business
(as hereinafter defined); (ii) will refrain from directly or indirectly
recruiting or otherwise actively soliciting, inducing or influencing any
person to leave employment with the Employer (other than terminations of
employment of subordinate employees undertaken in the course of the
Executive's employment with the Employer); and (iii) will refrain from
actively soliciting or encouraging any customer or supplier to terminate or
otherwise modify adversely its business relationship with the Employer
other than actions taken by the Executive in good faith in the ordinary
course of business during the Term. Notwithstanding the foregoing, nothing
in this Section 7(d) shall restrict the Executive from advertising
employment opportunities to the general public or from hiring individuals
who have not been directly or indirectly actively solicited, induced or
influenced by the Executive to leave employment with the Employer. The
Executive understands that the restrictions set forth in this Section 7(d)
are intended to protect the Employer's interest in its Confidential
Information and established employee, customer and supplier relationships
and goodwill, and agrees that such restrictions are reasonable and
appropriate for this purpose. For purposes of this Agreement, the term
"Competing Business" shall mean a business that both (i) has one or more
offices or branches located anywhere in any municipality that contains
within its borders an office or branch of the Employer or any municipality
which is contiguous with a municipality that contains within its borders an
office or branch of the Employer and (ii) which is engaged in any business
which the Employer or any of its affiliates conducts or plans (as described
to the Board of Directors) to conduct at any time during the employment of
the Executive. Notwithstanding the foregoing, the Executive may own up to
4.9% of the
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outstanding stock of a publicly held corporation which constitutes or is
affiliated with a Competing Business.
(e) Third-Party Agreements and Rights. The Executive hereby confirms
that the Executive is not bound by the terms of any agreement with any
previous employer or other party which restricts in any way the Executive's
use or disclosure of information or the Executive's engagement in any
business. The Executive represents to the Employer that the Executive's
execution of this Agreement, the Executive's employment with the Employer
and the performance of the Executive's proposed duties for the Employer
will not violate any obligations the Executive may have to any such
previous employer or other party. In the Executive's work for the
Employer, the Executive will not disclose or make use of any information in
violation of any agreements with or rights of any such previous employer or
other party, and the Executive will not bring to the premises of the
Employer any copies or other tangible embodiments of non-public information
belonging to or obtained from any such previous employment or other party.
(f) Litigation and Regulatory Cooperation. During and after the
Executive's employment, the Executive shall cooperate fully with the
Employer in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the
Employer which relate to events or occurrences that transpired while the
Executive was employed by the Employer. The Executive's full cooperation
in connection with such claims or actions shall include, but not be limited
to, being available to meet with counsel to prepare for discovery or trial
and to act as a witness on behalf of the Employer at mutually convenient
times. During and after the Executive's employment, the Executive also
shall cooperate fully with the Employer in connection with any
investigation or review of any federal, state or local regulatory authority
as any such investigation or review relates to events or occurrences that
transpired while the Executive was employed by the Employer. The Employer
shall reimburse the Executive at a daily rate of $500 and for any
reasonable out-of-pocket expenses incurred in connection with the
Executive's performance of obligations pursuant to this Section 7(f).
(g) Injunction. The parties agree that it would be difficult to
measure any damages caused to either of them which might result from any
breach by the other of the promises set forth in this Section 7, and that
in any event money damages would be an inadequate remedy for any such
breach. Accordingly, subject to Section 8 of this Agreement, the parties
agree that if either of them breaches, or proposes to breach, any portion
of this Agreement, the other shall be entitled, in addition to all other
remedies that it may have, to an injunction or other appropriate equitable
relief to restrain any such breach without showing or proving any actual
damage to such party.
8. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or
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the termination of that employment (including, without limitation, any claims of
unlawful employment discrimination whether based on age or otherwise) shall, to
the fullest extent permitted by law, be settled by arbitration in any forum and
form agreed upon by the parties or, in the absence of such an agreement, under
the auspices of the American Arbitration Association ("AAA") in Boston,
Massachusetts in accordance with the Employment Dispute Resolution Rules of the
AAA, including, but not limited to, the rules and procedures applicable to the
selection of arbitrators provided that the Employer and the Executive shall
evenly split the costs of such arbitration, unless the Executive prevails in the
arbitration, as determined by the arbitrator, in which case the Employer shall
pay for all arbitration fees and costs, including attorneys' fees. Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. This Section 8 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 8 shall not preclude either party
from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or a preliminary injunction in circumstances in which such
relief is appropriate; provided that any other relief shall be pursued through
an arbitration proceeding pursuant to this Section 8.
9. Consent to Jurisdiction. To the extent that any court action is
permitted consistent with or to enforce Section 8 of this Agreement, the parties
hereby consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts. Accordingly, with respect to any such court action, the
Executive (a) submits to the personal jurisdiction of such courts; (b) consents
to service of process; and (c) waives any other requirement (whether imposed by
statute, rule of court, or otherwise) with respect to personal jurisdiction or
service of process.
10. Integration. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter.
11. Assignment; Successors and Assigns, Etc. Neither the Employer nor the
Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided that the Employer may assign its rights under this Agreement
without the consent of the Executive in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
12. Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion
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and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
13. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of the
Chief Executive Officer, and shall be effective on the date of delivery in
person or by courier or three (3) days after the date mailed.
15. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Employer.
16. Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts, without giving effect to the conflict of laws principles of
such Commonwealth. With respect to any disputes concerning federal law, such
disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
18. Guarantee by the Holding Companies. By the signatures of their
authorized officer representatives below, the Holding Companies hereby jointly
and severally guarantee the obligations of the Employer to the Executive set
forth in this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Employer, the Holding Companies, by their respective duly authorized
officers, and by the Executive, as of the Effective Date.
STRATA BANK
/s/ Xxxxxxx X. Xxxxx
--------------------
By: Xxxxxxx X. Xxxxx
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SERVICE BANCORP, INC.
/s/ Xxxxxxx X. Xxxxx
--------------------
By: Xxxxxxx X. Xxxxx, Chairman of the Board
SERVICE BANCORP, MHC
/s/ Xxxxxxx X. Xxxxx
--------------------
By: Xxxxxxx X. Xxxxx, Chairman of the Board
EXECUTIVE
/s/ Xxxxxx X. Montpelier
------------------------
Xxxxxx X. Montpelier
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