Exhibit 10.11
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
effective as of May 26, 2004, by and between XXXXX'X FERRY BANCORP, a
Massachusetts corporation ("Company") and XXXX XXXX X. XXXX ("Executive"). Any
reference to "Bank" herein shall mean Xxxxx'x Ferry Bank, a wholly-owned
subsidiary of the Company, or any successor thereto.
W I T N E S S E T H :
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WHEREAS, Executive has been elected to serve the Company in the capacity
of President and Chief Executive Officer and also has been elected to serve
as President and Chief Executive Officer of the Bank;
WHEREAS, the Company desires to assure for itself and for the Bank the
availability of Executive's services and the ability of Executive to
perform such services with a minimum of personal distraction in the event
of a pending or threatened Change of Control (as hereinafter defined);
WHEREAS, Executive is willing to serve the Company and the Bank on the
terms and conditions hereinafter set forth; and
WHEREAS, this Agreement is intended to supercede any and all prior
change of control, employment and confidentiality and non-solicitation
agreements between the Executive and the Company or the Executive and the
Bank;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, the Company and Executive hereby
agree as follows:
Section 1. Employment.
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The Company agrees to continue to employ Executive, and Executive
hereby agrees to such continued employment, during the period and upon the
terms and conditions set forth in this Agreement.
Section 2. Employment Period; Remaining Unexpired Employment Period.
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(a) The terms and conditions of this Agreement shall be and remain
in effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term
of three (3) years beginning on the date of this Agreement and ending on
the third (3rd) annual anniversary date of this Agreement. Upon the first
(1st) annual anniversary date of this Agreement and each anniversary date
thereafter, the Board of Directors of the Company ("Board") shall review
the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve
an extension of the Employment Agreement to a new three year term. The
Executive shall be notified by the Board of any renewal or non-renewal of
this Agreement by the Board within thirty (30) days following any such
action. The "Remaining Unexpired
Employment Period" shall be the remaining period of the Employment Period
subject to such extensions as the Board may determine pursuant to this
paragraph unless modified by this Agreement.
(b) Nothing in this Agreement shall be deemed to prohibit the
Company at any time from terminating Executive's employment during the
Employment Period with or without notice for any reason; provided, however,
that the relative rights and obligations of the Company and Executive in
the event of any such termination shall be determined under this Agreement.
(c) Nothing in this Agreement shall be deemed to prohibit the
Executive at any time from terminating her employment during the Employment
Period with or without notice for any reason; provided, however, that the
relative rights and obligations of the Company and Executive in the event
of any such termination shall be determined under this Agreement.
Section 3. Duties.
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Executive shall serve as President and Chief Executive Officer of the
Company and the Bank, and having such power, authority and responsibility
and performing such duties as are prescribed by or under the By-Laws of the
Company and the Bank and as are customarily associated with such positions.
Executive shall devote her full business time and attention (other than
during weekends, holidays, approved vacation periods, periods of illness or
approved leaves of absence and the activities covered by section 7 of this
Agreement) to the business and affairs of the Company and the Bank and
shall use her best efforts to advance the interests of the Company and the
Bank.
Section 4. Cash Compensation.
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In consideration for the services to be rendered by Executive
hereunder, the Company shall pay to her a salary at an initial annual rate
of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000), payable in approximately
equal installments in accordance with the Company's or Bank's customary
payroll practices for senior officers. The Board shall review Executive's
annual rate of salary at such times during the Employment Period as it
deems appropriate, but not less frequently than once every twelve months,
and may, in its discretion, approve an increase in the Executive's annual
rate of salary. In addition to salary, Executive may receive other cash
compensation from the Company or the Bank for services hereunder at such
times, in such amounts and on such terms and conditions as the Board, as
applicable, may determine from time to time.
Section 5. Employee Benefit Plans and Programs.
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During the Employment Period, Executive shall be treated as an
employee of the Company and the Bank and shall be entitled to participate
in and receive benefits under any and all qualified or non-qualified
retirement, pension, savings, profit-sharing or stock bonus plans, any and
all group life, health (including hospitalization, medical and major
medical), dental, accident and long-term disability insurance plans, and
any other employee benefit and compensation plans (including, but not
limited to, any incentive compensation plans or programs, stock option and
appreciation rights plans and restricted stock plans) as may from time
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to time be maintained by, or cover employees of, the Company or the Bank,
in accordance with the terms and conditions of such employee benefit plans
and programs and compensation plans and programs and consistent with the
Company's and Bank's customary practices. Nothing paid to the Executive
under any such plan or arrangement will be deemed to be in lieu of other
compensation to which the Executive is entitled under this Agreement.
Section 6. Indemnification and Insurance.
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(a) During the Employment Period and for so long as the Executive
is subject for suit on claims related to her performance of the duties
described in section 3 of this Agreement, the Company shall cause Executive
to be covered by and named as an insured under any policy or contract of
insurance obtained by it or the Bank to insure its directors and officers
against personal liability for acts or omissions in connection with service
as an officer or director of the Company or the Bank or service in other
capacities at the request of the Company or the Bank. The coverage provided
to Executive pursuant to this section 6 shall be of the same scope and on
the same terms and conditions as the coverage (if any) provided to other
officers or directors of the Company and the Bank.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for so long as the Executive is subject for suit
on claims related to her performance of the duties described in section 3
of this Agreement, the Company shall indemnify Executive against and hold
her harmless from any costs, liabilities, losses and exposures to the
fullest extent and on the most favorable terms and conditions that similar
indemnification is offered to any director or officer of the Company, the
Bank, or any subsidiary or affiliate thereof.
Section 7. Outside Activities.
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Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as she may disclose to and
as may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially
interfere with the performance of her duties under this Agreement.
Executive may also engage in personal business and investment activities
which do not materially interfere with the performance of her duties
hereunder; provided, however, that such activities are not prohibited under
any code of conduct or investment or securities trading policy established
by the Company and generally applicable to all similarly situated
executives. Executive may also serve as an officer or director of the Bank
on such terms and conditions as the Company and the Bank may mutually agree
upon, and such service shall not be deemed to materially interfere with
Executive's performance of her duties hereunder or otherwise result in a
material breach of this Agreement. If Executive is discharged or suspended,
or is subject to any regulatory prohibition or restriction, with respect to
participation in the affairs of the Bank, she shall continue to perform
services for the Company in accordance with this Agreement but shall not
directly or indirectly provide services to or participate in the affairs of
the Bank in a manner inconsistent with the terms of such discharge or
suspension or any applicable regulatory order.
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Section 8. Working Facilities and Expenses.
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Executive's principal place of employment shall be at the Company's
executive offices at the address first above written, or at such other
location within Bristol County at which the Company shall maintain its
principal executive offices, or at such other location as the Company and
Executive may mutually agree upon. The Company shall provide or cause the
Bank to provide the Executive at her principal place of employment with a
private office, secretarial services, and other support services and
facilities suitable to her position with the Company and necessary or
appropriate in connection with the performance of her assigned duties under
this Agreement. The Company shall provide to the Executive for her
exclusive use an automobile owned or leased by the Company and appropriate
to her position, to be used in the performance of her duties hereunder,
including commuting to and from her personal residence. The Company shall
reimburse Executive for her ordinary and necessary business expenses,
including, without limitation, all expenses associated with her business
use of the aforementioned automobile, fees for memberships in such clubs
and organizations as Executive and the Company shall mutually agree are
necessary and appropriate for business purposes, and her travel and
entertainment expenses incurred in connection with the performance of her
duties under this Agreement, in each case upon presentation to the Company
of an itemized account of such expenses in such form as the Company may
reasonably require.
Section 9. Termination of Employment with Severance Benefits.
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(a) Executive shall be entitled to the severance benefits described
in section 9(b) herein in the event that her employment with the Company or
the Bank terminates during the Employment Period under any of the following
circumstances:
(i) Executive's resignation for Good Reason from employment
with the Company within one hundred eighty (180) days following:
(A) the failure of the Board to appoint or re-appoint
or elect or re-elect Executive to the position stated in
section 3 of this Agreement (or a more senior office of the
Company) or the failure of the Board of Directors of the Bank
("Bank Board") to appoint or re-appoint or elect or re-elect
Executive to the position stated in section 3 of this Agreement
(or a more senior position of the Bank);
(B) the failure of the stockholders of the Company or
the Bank to elect or re-elect Executive to the Board or a
member of the Bank Board, or the failure of the Board or the
Bank Board (or the nominating committee thereof) to nominate
Executive for such election or re-election;
(C) the expiration of a thirty (30) day period
following the date on which Executive gives written notice to
the Company or the Bank, as the case may be, of its material
failure, whether by amendment of the Company's organization
certificate or By-Laws, or the Bank's state charter or By-Laws,
action of the Board, Bank Board or the Company's stockholders
or otherwise, to vest in Executive, or continue to allow the
Executive to perform, without material
change or diminution, the functions, duties, or
responsibilities prescribed in section 3 of this Agreement,
unless, during such thirty (30) day period, such failure is
cured in a manner determined by Executive, in her discretion,
to be satisfactory; or
(D) the expiration of a thirty (30) day period
following the date on which Executive gives written notice to
the Company or the Bank, as the case may be, of its material
breach of any term, condition or covenant contained in this
Agreement (including, without limitation any reduction of
Executive's rate of base salary in effect from time to time and
any change in the terms and conditions of any compensation or
benefit program in which Executive participates which, either
individually or together with other changes, has a material
adverse effect on the aggregate value of her total compensation
package), unless, during such thirty (30) day period, such
failure is cured in a manner determined by Executive, in her
discretion, to be satisfactory;
(E) the relocation of the Company or the Bank's offices
at which the Executive is principally employed to a location
more than 50 miles from such offices;
(F) any purported termination of the Executive's
employment in a manner inconsistent with section 10 of this
Agreement;
(G) the failure of the Company and/or the Bank to
obtain an effective agreement from any successor to assume and
agree to perform this Agreement, as required by section 15 of
this Agreement; or
(ii) subject to the provisions of section 10, the termination
of Executive's employment with the Company for any other reason not
described in section 9(a) other than a termination of the Executive's
employment for "cause";
then, the Company shall provide (or cause the Bank to pay and provide) the
benefits and pay to Executive the amounts described in section 9(b).
(b) Upon the termination of Executive's employment with the Company
under circumstances described in section 9(a) of this Agreement, the
Company shall pay and provide (or cause the Bank to pay and provide) to
Executive (or, in the event of her death, to her estate):
(i) the portion, if any, of the compensation earned by the
Executive through the date of the termination of her employment with
the Company which remains unpaid as of such date, such payment to 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 Executive's termination of employment;
(ii) the benefits, if any, to which she is entitled as a
former employee under the employee benefit plans and programs and
compensation plans and programs maintained by the Company and the
Bank for their officers and employees;
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(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accident and long-term disability
coverage plans under the plans and programs maintained by the Bank
for similarly situated employees until the earlier to occur of:
(A) the date the Executive first becomes eligible for
such benefit coverage plans under the plans or programs
maintained by a subsequent employer; or
(B) the date the Remaining Unexpired Employment Period
terminates;
(iv) within thirty (30) days following her termination of
employment with the Company, a lump sum payment, in an amount equal
to the present value of the salary that Executive would have earned
if she had continued working for the Company during the Remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during that portion of the Employment Period which is prior
to Executive's termination of employment with the Company, 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 Internal Revenue Code of 1986 ("Code"), compounded using the
compounding period corresponding to the Company's regular payroll
periods for its officers, such lump sum (the "Salary Severance
Payment") to be paid in lieu of all other payments of salary provided
for under this Agreement in respect of the period following any such
termination;
(v) within thirty (30) days following her termination of
employment with the Company and the Bank, a lump sum payment in an
amount equal to the estimated present value of the annual bonuses
that the Executive would have earned if she had continued working for
the Company during the Remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the period of three (3)
years ending immediately prior to the date of termination (the "Bonus
Severance Payment"). The Bonus Severance Payment shall be computed
using the following formula:
BSP = SSP x (ABP / ASP)
where "BSP" is the amount of the Bonus Severance Payment (before the
deduction of applicable federal, state and local withholding taxes);
"SSP" is the amount of the Salary Severance Payment (before the
deduction of applicable federal, state and local withholding taxes);
"ABP" is the aggregate of the annual bonuses paid or declared
(whether or not paid) for the most recent period of three (3)
calendar years to end on or before the Executive's termination of
employment; and "ASP" is the aggregate base salary actually paid to
the Executive during such period of three (3) calendar years
(excluding any year for which no bonus was declared or paid). The
Bonus Severance Payment shall be in lieu of any claim to a
continuation of participation in annual bonus plans of the Bank or
the Company which the Executive might otherwise have;
(vi) within thirty (30) days following her termination of
employment with the Company, a lump sum payment, in an amount equal
to the value of the additional
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employer contributions that would have been credited directly to the
Executive's accounts under the tax-qualified plans and non-tax-
qualified plans maintained by the Company and/or the Bank if she had
continued working for the Company during the Remaining Unexpired
Employment Period, where such amounts are calculated by multiplying
the last annual amount credited to the Executive's account under each
of these plans by the Remaining Unexpired Employment Period
irrespective of the Executive's vested status;
(vii) within thirty (30) days following her termination of
employment with the Company, a transfer to the Executive of full
unencumbered ownership of the Company provided automobile then
provided to the Executive; and
(viii) the Executive shall be 100% vested in any benefits
provided in any agreement related to life insurance that she has
entered into with the Company or the Bank including, but not limited
to, any split dollar life insurance plan or any Supplemental
Executive Retirement Benefit Plan or Arrangement with the payments
thereunder to be otherwise made pursuant to the terms and conditions
of such arrangement.
The Company and Executive hereby stipulate that the damages which may be
incurred by Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that
the payments and benefits contemplated by this section 9(b) constitute
reasonable damages under the circumstances and shall be payable without any
requirement of proof of actual damage and without regard to Executive's
efforts, if any, to mitigate damages. The Remaining Unexpired Employment
Period for purposes of this section 9(b) shall be computed so that the
Remaining Unexpired Employment Period is never less than twelve (12)
months. The Company and Executive further agree that the Company may
condition the payments and benefits (if any) due under sections 9(b)(iii),
9(b)(iv), 9(b)(v), 9(b)(vi), 9(b)(vii) and 9(b)(viii) on the receipt of (i)
Executive's resignation from any and all positions which she holds as an
officer, director or committee member with respect to the Company, the Bank
or any subsidiary or affiliate of either of them and (ii) a release of
claims in favor of the Company and the Bank in a form substantially similar
to that attached hereto as Appendix A.
Section 10. Termination without Additional Company Liability.
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In the event that Executive's employment with the Company shall
terminate during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes
of this Agreement shall mean 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, in each case as measured against
standards generally prevailing at the relevant time in the savings and
community banking industry;
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(b) Executive's voluntary resignation from employment with the
Company for reasons other than those specified in section 9(a);
(c) Executive's death; or
(d) a determination that the Executive is eligible for long-term
disability benefits under the Bank's long-term disability insurance program
or, if there is no such program, under the federal Social Security Act;
then the Company shall have no further obligations under this Agreement,
other than the payment to Executive (or, in the event of her death, to her
estate) of the portion, if any, of the salary earned by the Executive
through the date of her termination of employment with the Company which
remains unpaid as of such date and the provision of such other benefits, if
any, to which she is entitled as a former employee under the employee
benefit plans and programs and compensation plans and programs maintained
by, or covering employees of, the Company or the Bank.
For purposes of section 10(a), no act or failure to act, on the part
of Executive, shall be considered "willful" unless it is done, or omitted
to be done, by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the Company and
its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the
written advice of counsel for the Company shall be conclusively presumed to
be done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. The cessation of employment of Executive shall
not be deemed to be for "cause" within the meaning of section 10(a) unless
and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of three-fourths of the
non-employee members of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to Executive and
Executive is given an opportunity, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of the conduct described in section 10(a) above, and
specifying the particulars thereof in detail.
Section 11. Termination Upon or Following a Change of Control.
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(a) A Change of Control of the Company ("Change of Control") shall
be deemed to have occurred upon the happening of any of the following
events:
(i) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(D)(2) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock");
provided, however, that any acquisition by the Company or its
subsidiaries of 20% or more of Outstanding Company Common Stock shall
not constitute a Change of Control; and provided, further, that any
acquisition by a corporation with respect to which, following such
acquisition, more than 50% of the then outstanding shares of common
stock of such corporation, is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals
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and entities who were the beneficial owners of the Outstanding
Company Common Stock immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock,
shall not constitute a Change of Control; or
(ii) Individuals who, as of the date of this Agreement,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date of this
Agreement whose election, or nomination or election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office is in connection with either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; or
(iii) Consummation by the Company of
(A) a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all the
individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 40% of the then outstanding
shares of common stock of the corporation resulting from such a
reorganization, merger or consolidation;
(B) a reorganization, merger or consolidation, in each
case,
(a) with respect to which all or substantially
all of the individuals and entities who were
the beneficial owners of the Outstanding
Company Common Stock immediately prior to
such reorganization, merger or consolidation,
following such reorganization, merger or
consolidation, beneficially own, directly or
indirectly, more than 40% but less than 50%
of the then outstanding shares of common
stock of the corporation resulting from such
a reorganization, merger or consolidation,
(b) at least a majority of the directors then
constituting the Incumbent Board do not
approve the transaction and do not designate
the transaction as not constituting a Change
of Control, and
(c) following the transaction members of the then
Incumbent Board do not continue to comprise
at least a majority of the Board; or
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(C) he sale or other disposition of all substantially
or substantially all of the assets of the Company, excluding a
sale or other disposition of assets to a subsidiary of the
Company; or
(iv) Consummation by the Bank of (i) a reorganization, merger
or consolidation, in each case, with respect to which, following such
reorganization, merger or consolidation, the Company does not
beneficially own, directly or indirectly, more than 50% of the then
outstanding shares of common stock of the corporation or bank
resulting from such a reorganization, merger or consolidation or (ii)
the stockholders of the Company approve a plan the sale or other
disposition of all or substantially all of the assets of the Bank,
excluding a sale or other disposition of assets to the Company or a
subsidiary of the Company.
In no event, however, shall a Change of Control be deemed to have occurred
as a result of any acquisition of securities or assets of the Company, the
Bank, or a subsidiary of either of them, by the Company, the Bank, or a
subsidiary of either of them, or by any employee benefit plan maintained by
any of them. For purposes of this section 11(a), the term "person" shall
have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the
Exchange Act.
(b) Notwithstanding section 9, in the event that the Executive
terminates employment with the Company for any reason or no reason within
ninety (90) days following the effective date of a Change of Control or due
to a termination not for Cause, Executive shall be entitled to the payments
and benefits contemplated by section 9(b); provided, however, that the
benefit owed under section 9(b) shall be calculated as if the Remaining
Unexpired Employment Period was a fixed term of three (3) years and any
payments under a Supplemental Executive Retirement Benefit Plan or
Arrangement shall be made in a lump sum as if the Executive had attained
normal retirement age under such arrangement.
(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; (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; (iv) the Company or any
person publicly announces an intention to take or to consider taking
action, which, if consummated, would constitute a Change of Control; (v)
any person (other than the Company, the Bank or an employee benefit plan of
either) is or becomes the beneficial owner, directly or indirectly, (or
discloses directly or indirectly to the Company or the public a plan to
become the beneficial owner) of securities of the Company representing 20%
of more of the combined voting power of the Company's then outstanding
securities; or (vi) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Pending Change of Control has occurred. For
purposes of this paragraph, if a termination of the Executive's employment
occurs prior to a Change of Control, but following a Pending Change of
Control, such termination shall be deemed to have followed a Change of
Control and to have been (i) by the Company without Cause, if the
Executive's employment is terminated without Cause with the encouragement
of, or at the direction of, a third party, or (ii) by the Executive with
Good Reason, if the Executive terminates the Executive's employment with
Good Reason and the act
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(or failure to act) which constitutes Good Reason occurs following such
Potential Change of Control and with the encouragement of, or at the
direction of, a third party.
Section 12. Tax Indemnification.
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(a) If the Executive's employment terminates following a Change of
Control (as defined in Section 11) and is entitled to the benefits
described in section 11(b), the Company shall pay to the Executive (or in
the event of her death, her estate) an additional amount intended to
indemnify her against the financial effects of the excise tax imposed on
excess parachute payments under section 280G of the Code (the "Tax
Indemnity Payment"). The Tax Indemnity Payment shall be determined under
the following formula:
X = E x P
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1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the percentage rate at which an excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is assessed,
determined without regard to this section 12;
FI = the highest marginal rate of income tax applicable to the
Executive under the Code for the taxable year in question;
SLI = the sum of the highest marginal rates of income tax applicable
to the Executive under all applicable state and local laws for
the taxable year in question; and
M = the highest marginal rate of Medicare tax applicable to the
Executive under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by an attorney
or a firm of independent certified public accountants selected by the
Executive and reasonably satisfactory to the Company (the "Tax Advisor")
and shall be based on the following assumptions: (i) that a change in
ownership, a change in effective ownership or control, or a change in the
ownership of a substantial portion of the assets, of the Bank or the
Company has occurred within the meaning of section 280G of the Code (a
"280G Change of Control"); (ii) that all direct or indirect payments made
to or benefits conferred upon the Executive on account of her termination
of employment are "parachute payments" within the meaning of section 280G
of the Code; and (iii) that no portion of such payments is reasonable
compensation for services rendered prior to the Executive's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 280G of the Code, the Tax Indemnity Payment
shall be made to the Executive on the earlier of the date the Company, the
Bank or any direct or indirect subsidiary or affiliate of the Company or
the Bank is required to withhold such tax or the date the tax is required
to be paid by the Executive, unless, prior to such date, the Company
delivers to the
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Executive the written opinion, in form and substance reasonably
satisfactory to the Executive, of the Tax Advisor or of an attorney or firm
of independent certified public accountants selected by the Company and
reasonably satisfactory to the Executive, to the effect that the Executive
has a reasonable basis on which to conclude that (i) no 280G Change in
Control has occurred, or (ii) all or part of the payment or benefit in
question is not a parachute payment for purposes of section 280G of the
Code, or (iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the 280G Change of
Control, or (iv) for some other reason which shall be set forth in detail
in such letter, no excise tax is due under section 4999 of the Code with
respect to such payment or benefit (the "Opinion Letter"). If the Company
delivers an Opinion Letter, the Tax Advisor shall recompute, and the
Company shall make, the Tax Indemnity Payment in reliance on the
information contained in the Opinion Letter.
(c) In the event that the Executive's liability for the excise tax
under section 4999 of the Code for a taxable year is subsequently
determined to be different than the amount with respect to which the Tax
Indemnity Payment is made, the Executive or the Company, as the case may
be, shall pay to the other party at the time that the amount of such excise
tax is finally determined, an appropriate amount, plus interest, such that
the payment made under section 12(b), when increased by the amount of the
payment made to the Executive under this section 12(c), or when reduced by
the amount of the payment made to the Company under this section 12(c),
equals the amount that should have properly been paid to the Executive
under this section 12(c). The interest paid to the Company under this
section 12(c) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. The payment made to the Executive shall include
such amount of interest as is necessary to satisfy any interest assessment
made by the Internal Revenue Service and an additional amount equal to any
monetary penalties assessed by the Internal Revenue Service on account of
an underpayment of the excise tax. To confirm that the proper amount, if
any, was paid to the Executive under this section 12, the Executive shall
furnish to the Company a copy of each tax return which reflects a liability
for an excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in this
Agreement shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the Executive is a
party as a result of positions taken on his federal income tax return with
respect to her liability for excise taxes under section 4999 of the Code.
Section 13. Protective Covenants
--------------------
(a) Non-Competition. The Executive hereby covenants and agrees
that, in the event of her termination of employment with the Company prior
to the expiration of the Employment Period, for a period of two years
following the date of her termination of employment with the Company or the
Bank, she shall not, without the written consent of the Company, become an
officer, employee, or consultant of any savings bank, savings and loan
association, savings and loan holding company, bank or bank holding
company, any other entity engaged in the business of accepting deposits or
making loans, or any direct or indirect subsidiary or affiliate of any such
entity having its principal office located within Bristol County,
Massachusetts, Plymouth County, Massachusetts or the State of Rhode Island;
provided, however, that this section 13(a) shall not apply if the Executive
is entitled to the benefits described in section 11 hereof.
12
(b) Confidentiality. Unless she obtains the prior written consent
of the Company, the Executive shall keep confidential and shall refrain
from using for the benefit of herself, or any person or entity other than
the Company or any entity which is a subsidiary of the Company or of which
the Company is a subsidiary, any material document or information obtained
from the Company, or from its parent or subsidiaries, in the course of her
employment with any of them concerning their properties, operations or
business (unless such document or information is readily ascertainable from
public or published information or trade sources or has otherwise been made
available to the public through no fault of her own) until the same ceases
to be material (or becomes so ascertainable or available); provided,
however, that nothing in this section 13(b) shall prevent the Executive,
with or without the Company's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation
or disclosure is required under applicable law.
(c) Solicitation. The Executive hereby covenants and agrees that,
for a period of two years following her termination of employment with the
Company or the Bank, she shall not, without the written consent of the
Company and the Bank, 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
Company, the Bank or any of their respective subsidiaries or affiliates to
terminate his or her employment and accept employment or become affiliated
with, or provide services for compensation in any capacity whatsoever to,
any savings bank, savings and loan association, bank, bank holding company,
savings and loan holding company, or other institution engaged in the
business of accepting deposits, making loans or doing business and having
its principal office located in Bristol County, Massachusetts, Plymouth
County, Massachusetts or the State of Rhode Island;
(ii) provide any information, advice or recommendation with respect
to any such officer or employee of any savings bank, savings and loan
association, bank, bank holding company, savings and loan holding company,
or other institution engaged in the business of accepting deposits, making
loans or doing business within the counties specified in section 13(a);
that is intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any officer or employee of the
Company, the Bank, or any of their respective subsidiaries or affiliates to
terminate his or her employment and accept employment or become affiliated
with, or provide services for compensation in any capacity whatsoever to,
any savings bank, savings and loan association, bank, bank holding company,
savings and loan holding company, or other institution engaged in the
business of accepting deposits, making loans or doing business and having
its principal office located in Bristol County, Massachusetts, Plymouth
County, Massachusetts or the State of Rhode Island;
(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 Company to terminate an existing business or commercial relationship
with the Company.
13
(d) Survival of the Section 13 Provisions. The provisions of this
section 13 shall survive the termination or expiration of this Agreement,
and the existence of any claim or cause of action of the Executive against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of such covenant.
Section 14. No Effect on Employee Benefit Plans or Programs.
------------------------------------------------
The termination of Executive's employment during the term of this
Agreement or thereafter, whether by the Company or by Executive, shall have
no effect on the rights and obligations of the parties hereto under the
Company's or Bank's qualified or non-qualified retirement, pension,
savings, thrift, profit-sharing or stock bonus plans, group life, health
(including hospitalization, medical and major medical), dental, accident
and long-term disability insurance plans or such other employee benefit
plans or programs, or compensation plans or programs, as may be maintained
by, or cover employees of, the Company or the Bank from time to time.
Except as otherwise provided under this Agreement, the Executive's rights
under such plans and programs shall be determined under the governing
documents of such plans and programs.
Section 15. Successors and Assigns.
-----------------------
This Agreement will inure to the benefit of and be binding upon
Executive, her legal representatives and testate or intestate distributees,
and the Company and its successors and assigns, including any successor by
merger or consolidation or a statutory receiver or any other person or firm
or corporation to which all or substantially all of the assets and business
of the Company may be sold or otherwise transferred. The Company and/or the
Bank shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company and/or the Bank to expressly assume and
agree to perform this Agreement in the same manner and to the same extent
that the Company and/or the Bank would be required to perform if no such
succession had taken place. Failure of the Company to obtain such
assumption of this Agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the Executive
were to terminate the Executive's employment after a Change of Control,
except that, for purposes of implementing the foregoing, the date on which
any such succession becomes effective shall be deemed the date of
termination.
Section 16. Notices.
--------
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed
to have been given at such time as it is delivered personally, or five (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 such party may by written
notice specify to the other party:
14
If to Executive:
Xxxx Xxxx X. Xxxx
000 Xxxxx Xxxxxx #000
Xxxxxx, XX 00000
If to the Company:
Xxxxx'x Ferry Bancorp
000 Xxxxx'x Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Board of Directors - Personnel Committee
----------------------------------------
with a copy to:
Xxxxxxx Xxxxxxxx & Wood LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
-------------------------
Section 17. Indemnification for Attorneys' Fees.
------------------------------------
The Company shall indemnify, hold harmless and defend Executive
against reasonable attorneys' fees and expenses incurred by her in
connection with or arising out of any mediation, action, suit or proceeding
in which he may be involved, as a result of her efforts, in good faith, to
defend or enforce the terms of this Agreement; provided, however, that
Executive 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, or of a mediator in a mediation
proceeding, or in a settlement. For purposes of this Agreement, any
settlement agreement which provides for payment of any amounts in
settlement of the Company's obligations hereunder shall be conclusive
evidence of Executive's entitlement to indemnification hereunder, and any
such indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement agreement
expressly provides otherwise.
Section 18. Severability.
-------------
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
Section 19. Waiver.
-------
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be
made in writing, designated as a waiver, and signed
15
by the party against whom its enforcement is sought. Any waiver or
relinquishment of any right or power hereunder at any one or more times
shall not be deemed a waiver or relinquishment of such right or power at
any other time or times.
Section 20. Counterparts.
-------------
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 21. Governing Law.
--------------
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 internal laws of
the Commonwealth of Massachusetts applicable to contracts entered into
among parties all of whom are citizens and residents of the Commonwealth of
Massachusetts and to be performed entirely within the Commonwealth of
Massachusetts, irrespective of the actual citizenship or residency of the
parties.
Section 22. Headings and Construction.
--------------------------
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section.
Any reference to a section number shall refer to a section of this
Agreement, unless otherwise stated.
Section 23. Entire Agreement; Modifications.
--------------------------------
This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all
prior agreements, understandings or representations relating to the subject
matter hereof. No modifications of this Agreement shall be valid unless
made in writing and signed by the parties hereto.
Section 24. Non-duplication.
----------------
In the event that Executive shall perform services for the Bank or
any other direct or indirect subsidiary of the Company, any compensation or
benefits provided to Executive by such other employer shall be applied to
offset the obligations of the Company hereunder, it being intended that
this Agreement set forth the aggregate compensation and benefits payable to
Executive for all services to the Company and all of its direct or indirect
subsidiaries, including the Bank.
Section 25. Required Regulatory Provisions.
-------------------------------
Notwithstanding anything herein contained to the contrary, any
payments to Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with
section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C.
[SECTION]1828(k), and any regulations promulgated thereunder.
16
Section 26. Company and Affiliates.
-----------------------
The Company may satisfy its obligations under this Agreement either
directly or indirectly through one or more direct or indirect subsidiaries
or affiliates. The Executive agrees that this Agreement requires that the
Executive make her services available to the Company, the Bank and their
respective direct or indirect subsidiaries or affiliates as determined by
the respective Boards of Directors of the Company and the Bank within the
terms and conditions set forth in this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and Executive has hereunto set her hand, all as of the day and year first
above written.
_ /s/ Xxxx Xxxx D. Lenz__________
------------------------------------
Xxxx Xxxx X. Xxxx
ATTEST: Xxxxx'x Ferry Bancorp
By /s/ Xxxxx X Xxxxxx By /s/ Xxxxxxx X. Xxxxxxxx Xx.___
--------------------- ---------------------------------
Asst. Clerk/Secretary Name: Xxxxxxx X. Xxxxxxxx Xx.
Title: Chairman of the Board
[Seal]
17
