Exhibit 10.13
EXECUTION COPY
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AMENDED AND RESTATED ONE-YEAR CHANGE OF CONTROL AGREEMENT
This AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT (the "Agreement")
is made and entered into as of ______________________ by and among Westfield
Bank, a savings bank organized and operating under the laws of the Commonwealth
of Massachusetts having an office at 000 Xxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx
00000 (the "Bank"), WESTFIELD FINANCIAL, INC., a business corporation organized
and existing under the laws of the Commonwealth of Massachusetts and having an
office at 000 Xxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company") and
__________________ (the "Officer").
INTRODUCTORY STATEMENT
The Board of Directors of the Bank has concluded that it is in the best
interests of the Bank, the Company and their prospective shareholders to
establish a working environment for the Officer which minimizes the personal
distractions that might result from possible business combinations in which the
Company or the Bank might be involved. To this end, the Bank has decided to
provide the Officer with assurance that his compensation will be continued for
a minimum period of one (1) year following termination of employment as defined
in Treasury Regulation Section 1.409A-1(h)(1)(ii) (the "Assurance Period") if
his employment terminates under specified circumstances related to a business
combination. The Board of Directors of the Bank has decided to formalize this
assurance by entering into this Change of Control Agreement with the Officer.
The Board of Directors of the Company has authorized the Company to guarantee
the Bank's obligations under this Agreement.
The terms and conditions which the Bank, the Company and the Officer have
agreed to are as follows.
AGREEMENT
Section 1. Effective Date; Term; Change of Control and Pending Change of
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Control Defined.
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(a) This Agreement shall take effect as of the date written above (the
"Effective Date") and shall be in effect during the period (the "Term")
beginning on the Effective Date and ending on the first anniversary of the date
on which the Bank notifies the Officer of its intent to discontinue the
Agreement (the "Initial Expiration Date") or, if later, the first anniversary
of the latest Change of Control or Pending Change of Control, as defined below,
that occurs after the Effective Date and before the Initial Expiration Date.
(b) For all purposes of this Agreement, 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 (1) 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
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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; provided,
however, that this section 1(b)(iv) shall only apply if the Company
is not majority owned by Westfield Mutual Holding Company; or
(v) any event which would be described in section 1(b)(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 (i) 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 or
(ii) the conversion of Westfield Mutual Holding Company to a stock form company
and the issuance of additional shares of the Company in connection therewith.
For purposes of this section 1(b), the term "person" shall have the meaning
assigned to it under Sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) 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; provided, however, that the Change of Control contemplated
does, in fact, occur.
Section 2. Discharge Prior to a Pending Change of Control.
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The Bank may discharge the Officer at any time prior to the occurrence of
a Pending Change of Control for any reason or for no reason. In such event:
(a) The Bank shall pay to the Officer (or, in the event of his
death, his 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 Officer's termination of employment.
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(b) The Bank shall provide the benefits, if any, due to the Officer
(or, in the event of his death, his 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 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; provided, however, that such benefits
shall be paid within 2 1/2 months following the end of the taxable year
of the Officer, Bank or the Company, whichever is longer, in which the
termination event occurs.
The payments and benefits described in sections 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements." In addition,
the Officer, the Company and the Bank agree that the termination benefits
described in this sections 2(a) and (b) are intended to be exempt from Section
409A ("Section 409A") of the Internal Revenue Code of 1986 (the "Code")
pursuant to Treasury Regulation Section 1.409A-1(b)(4) as short-term deferrals.
Section 3. Termination of Employment Due to Death.
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The Officer's employment with the Bank shall terminate, automatically and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and deliver to
his estate and surviving dependents and beneficiaries, as applicable, the
Standard Termination Entitlements.
Section 4. Termination Due to Disability after Change of Control or
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Pending Change of Control.
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The Bank may terminate the Officer's employment during the Term and after
the occurrence of a Change of Control or a Pending Change of Control upon a
determination, by a majority vote of the members of the Board of Directors of
the Bank, acting in reliance on the written advice of a medical professional
acceptable to it, that the Officer is suffering from a physical or mental
impairment which, at the date of the determination, has prevented the Officer
from performing his assigned duties on a substantially full-time basis for a
period of at least ninety (90) 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 Officer from performing his assigned duties on a substantially full-time
basis for a period of at least ninety (90) days during the period of one (1)
year beginning with the date of the determination. In such event:
(a) The Bank shall pay and deliver to the Officer (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
shall continue to pay the Officer 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 ninety
(90) 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 (the "LTD Eligibility Date"); (iii) the date of his
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death; (iv) the expiration of the Assurance Period (the "Initial
Continuation Period"); and (v) within 2 1/2 months following the end of
the taxable year of the Officer, Bank or the Company, whichever is
longer, in which the termination event occurs. If the end of the Initial
Continuation Period is neither the LTD Eligibility Date nor the date of
his death, the Bank shall continue to pay the Officer 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 LTD Eligibility Date, the
date of his death and the expiration of the Assurance Period.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by 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
Officer.
The Officer, the Company and the Bank agree that the termination benefits
described in section 4(b) are intended to be exempt from Section 409A pursuant
to Treasury Regulation Section 1.409A-1(b)(4) as short-term deferrals.
Section 5. Discharge with Cause after Change of Control or Pending Change
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of Control.
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(a) The Bank may terminate the Officer's employment with "Cause" during
the Term and after the occurrence of a Change of Control or Pending Change of
Control, but a 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 Officer should be discharged because of personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease and desist order, or any
material breach of this Agreement; and
(ii) at least forty-five (45) days prior to the vote contemplated
by section 1(b)(i), the Bank has provided the Officer with notice of its
intent to discharge the Officer 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 vote contemplated by section 5(a)(i), the
Officer (together with his legal counsel, if he so desires) is afforded a
reasonable opportunity to make both written and oral presentations before
the Board of Directors of the Bank for the purpose of refuting the
alleged grounds for Cause for his discharge; and
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(iv) after the vote contemplated by section 5(a)(i), the Bank has
furnished to the Officer 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, certified by its corporate secretary and signed by
each member of the Board of Directors voting in favor of adoption of the
resolution(s), authorizing the termination of the Officer's employment
with Cause and stating with particularity the facts and circumstances
found to constitute Cause for his discharge (the "Final Discharge
Notice").
(b) If the Officer is discharged with Cause during the Term and after a
Change of Control or Pending Change of Control, 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 may
temporarily suspend the Officer's duties and authority and, in such event, may
also suspend the payment of salary and other cash compensation, but not the
Officer's participation in retirement, insurance and other employee benefit
plans. If the Officer 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
Officer 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 Officer during
the period beginning with the giving of the Notice of Intent to Discharge and
ending with the Officer's discharge with Cause shall be retained by the Officer
and shall not be applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the Officer 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
Officer with Cause shall require the giving of a new Notice of Intent to
Discharge.
Section 6. Discharge without Cause.
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The Bank may discharge the Officer without Cause at any time after the
occurrence of a Change of Control or Pending Change of Control, and in such
event:
(a) The Bank shall pay and deliver to the Officer (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 Assurance Period, the Bank shall provide for
the Officer and his dependents continued group life, health
(including hospitalization, medical and major medical), dental,
accident and long-
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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 Officer's resignation. The coverage
provided under this section 6(b)(i) may, at the election of the
Bank, 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 6(b)(i). The Officer, the Company and the
Bank agree that the termination benefits described in this section
6(b)(i) are intended to be exempt from Section 409A pursuant to
Treasury Regulation Section 1.409A-1(b)(1) as non-taxable benefits.
(ii) The Bank shall make a lump sum payment to the Officer
(or, in the event of his death before payment, to his estate)
within thirty (30) days following the Officer's termination of
employment with the Bank, in an amount equal to the estimated
present value of the salary that Officer would have earned if he
had continued working for the Bank during the Assurance Period at
the highest annual rate of salary achieved during that portion of
the employment period which is prior to Officer's termination of
employment with the Bank, where such present value is to be
determined using a discount rate equal to the applicable short-term
federal rate prescribed under Section 1274(d) of the Code,
compounded using the compounding period corresponding to the Bank's
regular payroll periods for its officers. Such lump sum shall be
paid in lieu of all other payments of salary provided for under
this Agreement in respect of the period following any such
termination.
(iii) The Bank shall make a lump sum payment to the Officer
(or, in the event of his death before payment, to his estate), in
an amount equal to the payments that would have been made to
Officer under any cash bonus or long-term or short-term cash
incentive compensation plan maintained by, or covering employees
of, the Bank if he had continued working for the Bank during the
Assurance Period and had earned the maximum bonus or incentive
award in each calendar year that ends during the Assurance Period,
such payment to be equal to the product of:
(A) the maximum percentage rate at which an award was
ever available to Officer under such incentive compensation
plan; multiplied by
(B) the salary that would have been paid to Officer
during each such calendar year at the highest annual rate of
salary achieved during that portion of the employment period
which is prior to Officer's termination of employment with
the Bank.
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Such payment shall be made (without discounting for early payment) within
thirty (30) days following the Officer's termination of employment.
The payments and benefits described in section 6(b) are referred to in this
Agreement as the "Additional Change of Control Entitlements." In addition, the
Officer, the Company and the Bank agree that the termination benefits described
in sections 6(b)(ii) and (iii) are intended to be exempt from Section 409A
pursuant to Treasury Regulation Section 1.409A-1(b)(4) as short-term deferrals.
Section 7. Resignation.
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(a) The Officer may resign from his employment with the Bank at any time.
A resignation under this section 7 shall be effected by notice of resignation
given by the Officer to 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 Officer. The Officer'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 Officer's resignation shall be deemed to be for "Good Reason" if
the effective date of resignation occurs during the Term, but on or after the
effective date of a Change of Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint or re-appoint or elect or
re-elect the Officer to the position with Bank that he held immediately
prior to the Change of Control (the "Assigned Office") or to a more
senior office;
(ii) a material failure by the Bank, whether by amendment of the
certificate of incorporation or organization, by-laws, action of the
Board of Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated with the
Assigned Office; provided that the Officer shall have given notice of
such failure to the Bank, and the Bank has not fully cured such failure
within thirty (30) days after such notice is deemed given;
(iii) any reduction of the Officer'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 Officer's compensation as and when due;
(iv) any change in the terms and conditions of any compensation or
benefit program in which the Officer 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 Officer shall have given notice of such material adverse effect
to the Bank, and the Bank has not fully cured such material adverse
effect within thirty (30) days after such notice is deemed given;
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(v) any material breach by the Bank of any material term, condition
or covenant contained in this Agreement; provided that the Officer shall
have given notice of such material adverse effect to the Bank, and the
Bank has not fully cured such material adverse effect within thirty (30)
days after such notice is deemed given; or
(vi) a change in the Officer'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 Officer's principal
residence and more than twenty-five (25) miles away from the location of
the Bank's principal executive office on the day before the occurrence of
the Change of Control.
In all other cases, a resignation by the Officer shall be deemed to be without
Good Reason. In the event of resignation, the Officer shall state in his notice
of resignation whether he considers his resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the grounds which
constitute Good Reason. The Officer's determination of the existence of Good
Reason shall be conclusive in the absence of fraud, bad faith or manifest
error.
(c) In the event of the Officer's resignation for any reason, the Bank
shall pay and deliver the Standard Termination Entitlements. In the event of
the Officer's resignation with Good Reason, the Bank shall also pay and deliver
the Additional Termination Entitlements.
Section 8. Terms and Conditions of the Additional Termination
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Entitlements.
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The Bank and the Officer hereby stipulate that the damages which may be
incurred by the Officer 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 Officer's efforts, if any, to mitigate
damages. The Bank and the Officer further agree that the Bank may condition the
payment and delivery of the Additional Termination Entitlements on the receipt
of: (a) the Officer's resignation from any and all positions which he holds as
an officer, director or committee member with respect to the Bank or the
Company or any subsidiary or affiliate of either of them; and (b) a release of
the Bank and its officers, directors, shareholders, subsidiaries and
affiliates, in form and substance satisfactory to the Bank, of any liability to
the Officer, whether for compensation or damages, in connection with his
employment with the Bank and the termination of such employment except for the
Standard Termination Entitlements and the Additional Termination Entitlements.
Section 9. No Effect on Employee Benefit Plans or Programs.
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The termination of the Officer's employment during the Assurance Period
or thereafter, whether by the Bank or by the Officer, shall have no effect on
the rights and obligations of the parties hereto under the Bank's qualified or
non-qualified retirement, pension,
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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 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 Officer to which the
Bank or 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 10. Successors and Assigns.
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This Agreement will inure to the benefit of and be binding upon the
Officer, 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 or the Bank may be sold or otherwise transferred.
Failure of the Bank to obtain from any successor its express written assumption
of the Company's or Bank's obligations hereunder at least sixty (60) days in
advance of the scheduled effective date of any such succession shall, if such
succession constitutes a Change of Control, constitute Good Reason for the
Officer's resignation on or at any time during the Term following the
occurrence of such succession.
Section 11. Notices.
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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 (5) 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 (1) such party may by written notice specify to the other party:
If to the Officer:
[----------------]
[----------------]
[----------------]
If to the Company or the Bank:
Westfield Financial, Inc.
000 Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chairman, Compensation Committee of the Board of Directors
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Section 12. Indemnification for Attorneys' Fees.
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The Bank shall indemnify, hold harmless and defend the Officer against
reasonable costs, including legal fees, incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved, as a
result of his efforts, in good faith, to defend or enforce the terms of this
Agreement; provided, however, that the Officer shall have substantially
prevailed on the merits pursuant to a judgment, decree or order of a court of
competent jurisdiction or of an arbitrator in an arbitration proceeding. The
determination whether the Officer shall have substantially prevailed on the
merits and is therefore entitled to such indemnification, shall be made by the
court or arbitrator, as applicable. In the event of a settlement pursuant to a
settlement agreement, any indemnification payment under this section 12 shall
be made only after a determination by the members of the Board (other than the
Officer and any other member of the Board to which the Officer is related by
blood or marriage) that the Officer has acted in good faith and that such
indemnification payment is in the best interests of the Bank.
Section 13. Severability.
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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 14. Waiver.
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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
(1) or more times shall not be deemed a waiver or relinquishment of such right
or power at any other time or times.
Section 15. Counterparts.
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This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and
the same Agreement.
Section 16. Governing Law.
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This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, 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 17. Headings and Construction.
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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.
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Section 18. Entire Agreement; Modifications.
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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. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto. Notwithstanding the preceding
sentence, this Agreement shall be construed and administered in such manner as
shall be necessary to effect compliance with Section 409A and shall be subject
to amendment in the future, in such manner as the Company and the Bank may deem
necessary or appropriate to effect such compliance; provided that any such
amendment shall preserve for the Officer the benefit originally afforded
pursuant to this Agreement.
Section 19. Required Regulatory Provisions.
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The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in
no event shall the aggregate amount of compensation payable to the
Officer hereunder exceed three (3) times the Officer's average annual
compensation (within the meaning of OTS Regulatory Bulletin 27a or any
successor thereto) for the last five (5) consecutive calendar years to
end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five (5) calendar
years). The compensation payable to the Officer hereunder shall be
further reduced (but not below zero) if such reduction would avoid the
assessment of excise taxes on excess parachute payments (within the
meaning of Section 280G of the Code).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Officer by 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 ("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Officer is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a
notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this Agreement
shall be suspended as of the date of service of such notice, unless
stayed by appropriate proceedings. If the charges in such notice are
dismissed, the Bank, in its discretion, may (i) pay to the Officer all or
part of the compensation withheld while the Bank's obligations hereunder
were suspended and (ii) reinstate, in whole or in part, any of the
obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if
the Officer is removed and/or permanently prohibited from participating
in the conduct of the Bank's affairs by an order issued under Section
8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all
prospective obligations of the Bank under this Agreement shall terminate
as of the effective date of the order, but vested rights and obligations
of the Bank and the Officer shall not be affected.
12
(e) Notwithstanding anything herein contained to the contrary, if
the Bank is in default (within the meaning of Section 3(x)(1) of the FDI
Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the Bank
under this Agreement shall terminate as of the date of default, but
vested rights and obligations of the Bank and the Officer shall not be
affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except
to the extent that a continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of the OTS or his
designee or the Federal Deposit Insurance Corporation ("FDIC"), at the
time the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the
FDI Act, 12 U.S.C. ss.1823(c); (ii) by the Director of the OTS or his
designee at the time such Director or designee approves a supervisory
merger to resolve problems related to the operation of the Bank or when
the Bank is determined by such Director to be in an unsafe or unsound
condition. The vested rights and obligations of the parties shall not be
affected.
If and to the extent that any of the foregoing provisions shall cease to
be required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 20. Guaranty.
--------
The Company hereby irrevocably and unconditionally guarantees to the
Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement
as and when due without any requirement of presentment, demand of payment,
protest or notice of dishonor or nonpayment.
Section 21. Payments to Key Employees.
-------------------------
Notwithstanding anything in this Agreement to the contrary, to the extent
required under Section 409A, no payment to be made to a key employee (within
the meaning of Section 409A) shall be made sooner than six (6) months after
such termination of employment; provided, however, that to the extent such six
(6)-month delay is imposed by Section 409A as a result of a Change of Control
as defined in section 1(b), the payment shall be paid into a rabbi trust for
the benefit of the Officer as if the six (6)-month delay was not imposed with
such amounts then being distributed to the Officer as soon as permissible under
Section 409A.
Section 22. Involuntary Termination Payments to Employees (Safe Harbor).
-----------------------------------------------------------
In the event a payment is made to an employee upon an involuntary
termination of employment, as deemed pursuant to this Agreement, such payment
will not be subject to Section 409A provided that such payment does not exceed
two (2) times the lesser of (i) the sum of the Officer's annualized
compensation based on the taxable year immediately preceding the year in which
termination of employment occurs or (ii) the maximum amount that may be taken
into account under a qualified plan pursuant to Section 401(a)(17) of the Code
for the year in which the Officer terminates service (the "Safe Harbor
Amount"). However, if such payment exceeds the Safe Harbor Amount, only the
amount in excess of the Safe Harbor Amount will be subject to Section 409A. In
addition, if such Officer is considered a key employee, such
13
payment in excess of the Safe Harbor Amount will have its timing delayed and
will be subject to the six (6)-month wait-period imposed by Section 409A as
provided in section 21 of this Agreement. The Officer, the Company and the Bank
agree that the termination benefits described in this section 22 are intended
to be exempt from Section 409A pursuant to Treasury Regulation Section
1.409A-1(b)(9)(iii) as the safe harbor for separation pay due to involuntary
separation from service.
14
EXECUTION COPY
--------------
IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement
to be executed and the Officer has hereunto set his hand, all as of the day and
year first above written.
---------------------------------------
WESTFIELD BANK
Attest:
By By
------------------------------- ------------------------------------
Name: Name:
Title: Title:
[Seal]
WESTFIELD FINANCIAL, INC.
Attest:
By By
------------------------------- ------------------------------------
Name: Name:
Title: Title:
[Seal]
