EXHIBIT 10.3
Employment Agreement
This Employment Agreement (the "Agreement") is made and entered into
as of November 1 , 1999 by and among Cambridgeport Bank, a savings bank
organized and operating under the laws of the Commonwealth of Massachusetts and
having an office at 000 Xxxxxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000
(the "Bank"), Port Financial Corp., a business corporation organized and
existing under the laws of the Commonwealth of Massachusetts and having an
office at 000 Xxxxxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Company") and Xxxxx X. Xxxxxx an individual residing at 00 Xxxxxxxxx Xxxx,
Xxxxxx, XX 00000 (the "Executive").
Introductory Statement
The Bank is undergoing a reorganization through which the Bank will
become the wholly owned subsidiary of the Company, and the Company will sell
its outstanding common stock to the public in an initial public offering (the
"Reorganization"). The Executive has served the Bank in an executive capacity
for many years and is familiar with the Bank's operations.
The Board of Directors of the Bank and the Board of Directors of the
Company have concluded that it is in the best interests of the Bank, the Company
and their prospective shareholders to secure a continuity in management
following the Reorganization. They also consider it desirable to establish a
working environment for the Executive which minimizes the personal distractions
that might result from possible business combinations in which the Company or
the Bank might be involved. For these reasons, the Board of Directors of the
Bank and the Board of Directors of the Company have decided to offer to enter
into a contract with the Executive for his future services. The Executive has
accepted this offer.
The terms and conditions which the Bank, the Company and the Executive
have agreed to are as follows.
Agreement
Section 1. Employment.
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The Company and the Bank hereby continue to employ the Executive, and
the Executive hereby accepts such continued employment, during the period and
upon the terms and conditions set forth in this Agreement.
Section 2. Employment Period; Remaining Unexpired Employment
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Period.
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(a) The Company and the Bank shall employ the Executive during an
initial period of three (3) years beginning on November 1, 1999 (the "Employment
Commencement Date") and ending on the day before the third (3/rd/) anniversary
of the Employment Commencement Date, and during the period of any additional
extensions described in section 2(b) (the "Employment Period").
(b) The Employment Period shall be subject to extension in the
following manner:
(i) For purposes of determining the rights and obligations of the
Executive and the Company with respect to each other, on the day after the
Employment Commencement Date and on each day thereafter, the Employment
Period shall be extended by one day, such that on any date the Employment
Period will expire on the day before the third (3/rd/) anniversary of such
date. These extensions shall continue in perpetuity until discontinued by:
(i) notice to the Executive given by the Company that it has elected to
discontinue the extensions; (ii) notice by the Executive to the Company
that he has elected to discontinue the extensions; or (iii) termination of
the Executive's employment with the Company, whether by resignation,
discharge or otherwise. On the date on which such a notice is deemed
given, or on the effective date of a termination of the Executive's
employment with the Company, the Employment Period shall be converted to a
fixed period of three (3) years ending on the day before the third (3/rd/)
anniversary of such date.
(ii) For purposes of determining the rights and obligations of the
Executive and the Bank with respect to each other, the Board of Directors
of the Bank shall conduct an annual review of the Executive's performance
on or about each anniversary of the Employment Commencement Date (each, an
"Anniversary Date") and may, on the basis of such review and by written
notice to the Executive, offer to extend the Employment Period through the
day before the third (3/rd/) anniversary of the relevant Anniversary Date.
In such event, the Employment Period shall be deemed extended in the
absence of objection from the Executive by written notice to Bank given
within ten (10) business days after his receipt of the Bank's offer of
extension.
(c) Except as otherwise expressly provided in this Agreement, any
reference in this Agreement to the term "Remaining Unexpired Employment Period"
as of any date shall mean (i) for purposes of determining the rights and
obligations of the Company and the Executive to each other, the period beginning
on such date and ending on the day before the third (3/rd/) anniversary of the
earliest of the date in question, any earlier date on which the Executive or the
Company is deemed to have given a notice to discontinue extensions of the
Employment Period, and any earlier date on which the Executive's employment with
the Company was terminated; and (ii) for purposes of determining the rights and
obligations of the Bank and the Executive to each other, the period beginning on
such date and ending on the day before the third (3/rd/) anniversary of the
Employment Commencement Date or, if later, on the day before the third (3/rd/)
anniversary of the last Anniversary Date as of which the Employment Period was
extended pursuant to section 2(b)(ii).
(d) Nothing in this Agreement shall be deemed to prohibit the Company
or the Bank from terminating the Executive's employment before the end of the
Employment Period with or without notice for any reason. This Agreement shall
determine the relative rights and obligations of the Bank, the Company and the
Executive in the event of any such termination. In addition, nothing in this
Agreement shall require the termination of the Executive's employment at the
expiration of the Employment Period. Any continuation of the Executive's
employment beyond the expiration of the Employment Period shall be on an "at-
will" basis unless the Bank, the Company and the Executive agree otherwise.
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Section 3. Duties.
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The Executive shall serve as Chief Executive Officer and President of
the Company and as Chief Executive Officer and President of the Bank, having
such power, authority and responsibility and performing such duties as are
prescribed by or under their respective By-Laws and as are customarily
associated with such positions. Subject to section 7 of this Agreement, the
Executive shall devote his full business time and attention (other than during
weekends, holidays, approved vacation periods, and periods of illness or
approved leaves of absence) to the business and affairs of the Bank and the
Company and shall use his best efforts to advance their respective best
interests.
Section 4. Cash Compensation.
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In consideration for the services to be rendered by the Executive
hereunder, the Bank and the Company shall pay to him a salary at an initial
annual rate of Three Hundred and Seventy-five Thousand Dollars ($375,000),
payable in approximately equal installments in accordance with their respective
customary payroll practices for senior officers. The Bank's and the Company's
respective Boards of Directors shall review the Executive's annual rate of
salary at such times during the Employment Period as they deem appropriate, but
not less frequently than once every twelve (12) months, and may, in their
discretion, approve a salary increase. In addition to salary, the Executive may
receive other cash compensation from the Company or the Bank for services
hereunder at such times, in such amounts and on such terms and conditions as the
Boards of Directors of the Bank and the Company may determine. If the Executive
is discharged or suspended, or is subject to any regulatory prohibition or
restriction with respect to participation in the affairs of the Bank, he shall
continue to perform services for the Company in accordance with this Agreement
but shall not directly or indirectly provide services to or participate in the
affairs of the Bank in a manner inconsistent with the terms of such discharge or
suspension or any applicable regulatory order.
Section 5. Employee Benefit Plans and Programs.
-----------------------------------
During the Employment Period, the Executive shall be treated as an
employee of the Company and the Bank and shall be entitled to participate in and
receive benefits under any and all qualified or non-qualified retirement,
pension, savings, profit-sharing or stock bonus plans, any and all group life,
health (including hospitalization, medical and major medical), dental, accident
and long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Company and the Bank, in accordance with the terms and conditions of such
employee benefit plans and programs and compensation plans and programs and
consistent with the Company's and the Bank's customary practices. Such plans
shall include, but not be limited to, the 1999 Non-Qualified Pension Plan for
Executive Officers.
Section 6. Indemnification and Insurance.
-----------------------------
(a) During the Employment Period and for a period of six years
thereafter, the Company and the Bank shall cause the Executive to be covered by
and named as an insured under any
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policy or contract of insurance obtained by them to insure their directors and
officers against personal liability for acts or omissions in connection with
service as an officer or director of the Company or the Bank or service in other
capacities at their request. The coverage provided to the Executive pursuant to
this section 6 shall be of the same scope and on the same terms and conditions
as the coverage (if any) provided to other officers or directors of the Company
and the Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Company and the
Bank shall indemnify the Executive against and hold him harmless from any costs,
liabilities, losses and exposures to the fullest extent and on the most
favorable terms and conditions that similar indemnification is offered to any
director or officer of the Company and the Bank or any subsidiary or affiliate
thereof.
Section 7. Outside Activities.
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The Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as he may disclose to and as
may be approved by the Boards of Directors of the Company and the Bank (which
approval shall not be unreasonably withheld); provided, however, that such
service shall not materially interfere with the performance of his duties under
this Agreement. The Executive may also engage in personal business and
investment activities which do not materially interfere with the performance of
his duties hereunder; provided, however, that such activities are not prohibited
under any code of conduct or investment or securities trading policy established
by the Company or the Bank and generally applicable to all similarly situated
executives .
Section 8. Working Facilities and Expenses.
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The Executive's principal place of employment shall be at the Bank's
executive offices at the address first above written, or at such other location
as the Bank, the Company and the Executive may mutually agree upon. The Bank and
the Company shall provide the Executive at his principal place of employment
with a private office, secretarial services and other support services and
facilities suitable to his positions with the Company and the Bank and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company shall provide to the Executive for his exclusive use
an automobile owned or leased by the Company and appropriate to his position, to
be used in the performance of his duties hereunder, including commuting to and
from his personal residence. The Bank or the Company shall reimburse the
Executive for his ordinary and necessary business expenses, including, without
limitation, all expenses associated with his business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive, the Company and the Bank shall mutually agree are necessary and
appropriate for business purposes, and his travel and entertainment expenses
incurred in connection with the performance of his duties under this Agreement,
in each case upon presentation to the payer of an itemized account of such
expenses in such form as the payer may reasonably require.
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Section 9. Termination Due to Death.
------------------------
The Executive's employment with the Bank and the Company shall
terminate, automatically and without any further action on the part of any party
to this Agreement, on the date of the Executive's death. In such event:
(a) The Bank and the Company shall pay to the Executive's estate his
earned but unpaid compensation (including, without limitation, salary and
all other items which constitute wages under applicable law) as of the date
of his termination of employment. This payment shall be made at the time
and in the manner prescribed by law applicable to the payment of wages but
in no event later than thirty (30) days after the date of the Executive's
termination of employment.
(b) The Company and the Bank shall provide the benefits, if any, due
to the Executive's estate, surviving dependents or his designated
beneficiaries under the employee benefit plans and programs and
compensation plans and programs maintained for the benefit of the officers
and employees of the Company and the Bank. The time and manner of payment
or other delivery of these benefits and the recipients of such benefits
shall be determined according to the terms and conditions of the applicable
plans and programs.
The payments and benefits described in sections 9(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
Section 10. Termination Due to Disability.
-----------------------------
The Bank and the Company may terminate the Executive's employment upon
a determination, by separate votes of a majority of the members of the Boards of
Directors of the Company and the Bank, acting in reliance on the written advice
of a medical professional acceptable to them, that the Executive is suffering
from a physical or mental impairment which, at the date of the determination,
has prevented the Executive from performing his assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Executive from
performing his assigned duties on a substantially full-time basis for a period
of at least one hundred and eighty (180) days during the period of one (1) year
beginning with the date of the determination. In such event:
(a) The Bank and the Company shall pay and deliver to the Executive
(or in the event of his death before payment, to his estate and surviving
dependents and beneficiaries, as applicable) the Standard Termination
Entitlements.
(b) In addition to the Standard Termination Entitlements, the Bank and
the Company shall continue to pay the Executive his base salary, at the
annual rate in effect for him immediately prior to the termination of his
employment, during a period ending on the earliest of: (i) the expiration
of one hundred and eighty (180) days after the date of termination of his
employment; (ii) the date on which long-term disability
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insurance benefits are first payable to him under any long-term disability
insurance plan covering employees of the Bank or the Company (the "LTD
Eligibility Date"); (iii) the date of his death; and (iv) the expiration of
the Remaining Unexpired Employment Period (the "Initial Continuation
Period"). If the end of the Initial Continuation Period is neither the LTD
Eligibility Date nor the date of his death, the Company and the Bank shall
continue to pay the Executive his base salary, at an annual rate equal to
sixty percent (60%) of the annual rate in effect for him immediately prior
to the termination of his employment, during an additional period ending on
the earliest of the LTD Eligibility Date, the date of his death and the
expiration of the Remaining Unexpired Employment Period.
A termination of employment due to disability under this section 10 shall be
effected by joint notice of termination given to the Executive by the Company
and the Bank and shall take effect on the later of the effective date of
termination specified in such notice or the date on which the notice of
termination is deemed given to the Executive.
Section 11. Discharge with Cause.
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(a) The Bank and the Company may terminate the Executive's
employment during the Employment Period, and such termination shall be deemed to
have occurred with "Cause", only if:
(i) the Board of Directors of the Bank and the Board of Directors
of the Company, by separate majority votes of their entire membership,
determine that the Executive (A) has willfully and intentionally failed to
perform his assigned duties under this Agreement in any material respect
(including, for these purposes, the Executive's inability to perform such
duties as a result of drug or alcohol dependency); (B) has willfully and
intentionally engaged in dishonest or illegal conduct in connection with
his performance of services for the Company or the Bank or has been
convicted of a felony; (C) has willfully violated, in any material respect,
any law, rule, regulation, written agreement or final cease-and-desist
order with respect to his performance of services for the Company or the
Bank; or (D) has willfully and intentionally breached the material terms of
this Agreement in any material respect; and
(ii) at least forty-five (45) days prior to the votes contemplated
by section 11(a)(i), the Bank and the Company have provided the Executive
with notice of their intent to discharge the Executive for Cause, detailing
with particularity the facts and circumstances which are alleged to
constitute Cause (the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge and
before the taking of the votes contemplated by section 11(a)(i), the
Executive (together with his legal counsel, if he so desires) is afforded a
reasonable opportunity to make both written and oral presentations before
the Boards of Directors of the Company and the Bank for the purpose of
refuting the alleged grounds for Cause for his discharge; and
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(iv) after the votes contemplated by section 11(a)(i), the Company
and the Bank have furnished to the Executive a notice of termination which
shall specify the effective date of his termination of employment (which
shall in no event be earlier than the date on which such notice is deemed
given) and include a copy of a resolution or resolutions adopted by the
Board of Directors of the Bank and the Board of Directors of the Company,
certified by their corporate secretaries and signed by each member of their
respective Board of Directors voting in favor of adoption of the
resolution(s), authorizing the termination of the Executive's employment
with Cause and stating with particularity the facts and circumstances found
to constitute Cause for his discharge (the "Final Discharge Notice").
For purposes of this section 11, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Bank. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board and the Bank Board or based upon the
written advice of counsel for the Company or the Bank shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company and the Bank.
(b) If the Executive is discharged during the Employment Period with
Cause, the Company and the Bank shall pay and provide to him (or, in the event
of his death, to his estate, his surviving beneficiaries and his dependents) the
Standard Termination Entitlements only. Following the giving of a Notice of
Intent to Discharge, the Bank and the Company may temporarily suspend the
Executive's duties and authority and, in such event, may also suspend the
payment of salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee benefit plans. If the
Executive is not discharged, or is discharged without Cause, within forty-five
(45) days after the giving of a Notice of Intent to Discharge, payments of
salary and cash compensation shall resume, and all payments withheld during the
period of suspension shall be promptly restored. If the Executive is discharged
with Cause not later than forty-five (45) days after the giving of the Notice of
Intent to Discharge, all payments withheld during the period of suspension shall
be deemed forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than forty-five (45)
days, but sooner than ninety (90) days, after the giving of the Notice of Intent
to Discharge, all payments made to the Executive during the period beginning
with the giving of the Notice of Intent to Discharge and ending with the
Executive's discharge with Cause shall be retained by the Executive and shall
not be applied to offset the Standard Termination Entitlements. If the Bank and
the Company do not give a Final Discharge Notice to the Executive within ninety
(90) days after giving a Notice of Intent to Discharge, the Notice of Intent to
Discharge shall be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice of Intent to
Discharge.
Section 12. Discharge without Cause.
-----------------------
The Bank and the Company may discharge the Executive at any time
during the Employment Period and, unless such discharge constitutes a discharge
with Cause:
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(a) The Bank and the Company shall pay and deliver to the Executive
(or in the event of his death before payment, to his estate and surviving
dependents and beneficiaries, as applicable) the Standard Termination
Entitlements.
(b) In addition to the Standard Termination Entitlements:
(i) During the Remaining Unexpired Employment Period, the Bank
and the Company shall provide for the Executive and his dependents
continued group life, health (including hospitalization, medical and
major medical), dental, accident and long-term disability insurance
benefits on substantially the same terms and conditions (including any
required premium-sharing arrangements, co-payments and deductibles) in
effect for them immediately prior to the Executive's termination. The
coverage provided under this section 12(b)(i) may, at the election of
the Bank and the Company, be secondary to the coverage provided as
part of the Standard Termination Entitlements and to any employer-paid
coverage provided by a subsequent employer or through Medicare, with
the result that benefits under the other coverages will offset the
coverage required by this section 12(b)(i).
(ii) The Bank and the Company shall make a lump sum payment to
the Executive (or, in the event of his death before payment, to his
estate), in an amount equal to the estimated present value of the
salary that the Executive would have earned if he had continued
working for the Company and the Bank during the Remaining Unexpired
Employment Period at the highest annual rate of salary achieved during
the period of three (3) years ending immediately prior to the date of
termination (the "Salary Severance Payment"). The Salary Severance
Payment shall be computed using the following formula:
(BS/PR)
SSP=(the sum of) /n/ [-------------------------]
\\1\\ [1 + (I/PR)]/n/
where "SSP" is the amount of the Salary Severance Payment (before the
deduction of applicable federal, state and local withholding taxes);
"BS" is the highest annual rate of salary achieved by the Executive
during the period of three (3) years ending immediately prior to the
date of termination; "PR" is the number of payroll periods that occur
during a year under the Company's and the Bank's normal payroll
practices; "I" equals the applicable federal short term rate
established under section 1274 of the Internal Revenue Code of 1986
(the "Code") for the month in which the Executive's termination of
employment occurs (the "Short Term AFR") and "n" equals the product of
the Remaining Unexpired Employment Period at the Executive's
termination of employment (expressed in years and fractions of years)
multiplied by the number of payroll periods that occur during a year
under the Company's and
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the Bank's normal payroll practices. The Salary Severance Payment
shall be made within five (5) business days after the Executive's
termination of employment and shall be in lieu of any claim to a
continuation of base salary which the Executive might otherwise have
and in lieu of cash severance benefits under any severance benefits
program which may be in effect for officers or employees of the Bank
or the Company.
(iii) The Bank and the Company shall make a lump sum payment to
the Executive (or, in the event of his death before payment, to his
estate), in an amount equal to the estimated present value of the
annual bonuses that the Executive would have earned if he had
continued working for the Company and the Bank during the Remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the period of three (3) years ending immediately prior
to the date of termination (the "Bonus Severance Payment"). The Bonus
Severance Payment shall be computed using the following formula:
BSP = SSP x (ABP / ASP)
where "BSP" is the amount of the Bonus Severance Payment (before the
deduction of applicable federal, state and local withholding taxes);
"SSP" is the amount of the Salary Severance Payment (before the
deduction of applicable federal, state and local withholding taxes);
"ABP" is the aggregate of the annual bonuses paid or declared (whether
or not paid) for the most recent period of three (3) calendar years to
end on or before the Executive's termination of employment; and "ASP"
is the aggregate base salary actually paid to the Executive during
such period of three (3) calendar years (excluding any year for which
no bonus was declared or paid). The Bonus Severance Payment shall be
made within five (5) business days after the Executive's termination
of employment and shall be in lieu of any claim to a continuation of
participation in annual bonus plans of the Bank or the Company which
the Executive might otherwise have.
(iv) The Bank and the Company shall make a lump sum payment to
the Executive (or, in the event of his death before payment, to his
estate), in an amount equal to the estimated present value of the
long-term incentive bonuses that the Executive would have earned if he
had continued working for the Company and the Bank during the
Remaining Unexpired Employment
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Period (the "Incentive Severance Payment"). The Incentive Severance
Payment shall be computed using the following formula:
ISP = (SSP / RUP) x (ALTIP / ALTSP) x Y
where "ISP" is the amount of the Incentive Severance Payment (before
the deduction of applicable federal, state and local withholding
taxes); "SSP" is the amount of the Salary Severance Payment (before
the deduction of applicable federal, state and local withholding
taxes); "ALTIP" is the aggregate of the most recently paid or declared
(whether or not paid) long-term incentive compensation payments (but
not more than three (3) such payments) for performance periods that
end on or before the Executive's termination of employment; "ALTSP" is
the aggregate base salary actually paid to the Executive during the
performance periods covered by the payments included in "ALTIP" and
excluding base salary paid for any period for which no long-term
incentive compensation payment was declared or paid; "RUP" is the
Remaining Unexpired Employment Period, expressed in years and
fractions of years; and "Y" is the aggregate (expressed in years and
fractions of years) of the Remaining Unexpired Employment Period plus
the number of years and fraction of years that have elapsed since the
end of the last performance period for which a long-term incentive
payment has been declared and paid. The Incentive Severance Payment
shall be made within five (5) business days after the Executive's
termination of employment and shall be in lieu of any claim to a
continuation of participation in cash long-term incentive compensation
plans of the Bank or the Company which the Executive might otherwise
have.
(v) The Company and the Bank shall pay to the Executive (or in
the event of his death before payment, to his estate), a lump sum
payment in an amount equal to the excess (if any) of: (A) the present
value of the aggregate benefits to which he would be entitled under
any and all tax-qualified and non-tax-qualified defined benefit plans,
including but not limited to the 1999 Non-Qualified Pension Plan for
Executive Officers, maintained by, or covering employees of, the
Company or the Bank (the "Pension Plans") if he had continued working
for the Company and the Bank during the Remaining Unexpired Employment
Period; over (B) the present value of the benefits to which the
Executive and his spouse and/or designated beneficiaries
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are actually entitled under such plans (the "Pension Severance
Payment"). The Pension Severance Payment shall be computed according
to the following formula:
PSP = PPB - APB
where "PSP" is the amount of the Pension Severance Payment (before
deductions for applicable federal, state and local withholding taxes);
"APB" is the aggregate lump sum present value of the actual vested
pension benefits payable under the Pension Plans in the form of a
straight life annuity beginning at the earliest date permitted under
the Pension Plans, computed on the basis of the Executive's life
expectancy at the earliest date on which payments under the Pension
Plans could begin, determined by reference to Table VI of section
1.72-9 of the Income Tax Regulations (the "Assumed Life Expectancy"),
and on the basis of an interest rate assumption equal to the average
bond-equivalent yield on United States Treasury Securities with a
Constant Maturity of 30 Years for the month prior to the month in
which the Executive's termination of employment occurs (the "30-Year
Treasury Rate"); and "PPB" is the lump sum present value of the
pension benefits (whether or not vested) that would be payable under
the Pension Plans in the form of a straight life annuity beginning at
the earliest date permitted under the Pension Plans, computed on the
basis that the Executive's actual age at termination of employment is
his attained age as of his last birthday that would occur during the
Remaining Unexpired Employment Period, that his service for benefit
accrual purposes under the Pension Plans is equal to the aggregate of
his actual service plus the Remaining Unexpired Employment Period,
that his average compensation figure used in determining his accrued
benefit is equal to the highest annual rate of salary achieved by the
Executive during the period of three (3) years ending immediately
prior to the date of termination, that the Executive's life expectancy
at the earliest date on which payments under the Pension Plans could
begin is the Assumed Life Expectancy and that the interest rate
assumption used is equal to the 30-Year Treasury Rate. The Pension
Severance Payment shall be made within five (5) business days after
the Executive's termination of employment and shall be in lieu of any
claim to any actual increase in his accrued benefit in the Pension
Plans in respect of the Remaining Unexpired Employment Period.
(vi) The Company and the Bank shall pay to the Executive (or in
the event of his death, to his estate) a lump sum payment in an amount
equal to the present value of the additional employer contributions
that would have been credited directly to his account(s) under any and
all tax-qualified and non-tax-qualified defined contribution plans,
including but not limited to the Officers' Deferred Compensation Plan,
maintained by, or covering employees of, the Bank and the Company (the
"Non-ESOP DC Plans"), plus the fair market value of the additional
shares of employer securities or other property
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that would have been allocated to his account as a result of employer
contributions or dividends under any tax-qualified leveraged employee
stock ownership plan and any related non-tax-qualified supplemental
plan, including but not limited to the ESOP Restoration Plan,
maintained by, or covering employees of, the Bank and the Company (the
"ESOP Plans") if he had continued in employment during the Remaining
Unexpired Employment Period (the "Defined Contribution Severance
Payment"). The Defined Contribution Severance Payment shall be
computed according to the following formula:
DCSP = [SSP x (EC / BS)] + [(STK + PROP) x Y]
where: "DCSP" is the amount of the Defined Contribution Severance
Payment (before deductions for applicable federal, state and local
withholding taxes); "SSP" is the amount of the Salary Severance
Payment (before deductions for applicable federal, state and local
withholding taxes); "EC" is the amount of employer contributions
actually credited to the Executive's accounts under the Non-ESOP Plans
for the last plan year to end before his termination of employment;
"BS" is the Executive's compensation taken into account in computing
EC; "Y" is the aggregate (expressed in years and fractions of years)
of the Remaining Unexpired Employment Period and the number of years
and fractions of years that have elapsed between the end of plan year
for which EC was computed and the date of the Executive's termination
of employment; "STK" is the fair market value (determined on the basis
of the mid-point of the highest and lowest reported sales price for a
share of stock of the same class during the 30-day period ending on
the day of the Executive's termination of employment (the "Fair Market
Value of a Share")) of the employer securities actually allocated to
the Executive's accounts under the ESOP Plans in respect of employer
contributions and dividends applied to loan amortization payments for
the last plan year to end before his termination of employment; and
"PROP" is the fair market value (determined as of the day before the
Executive's termination of employment using the same valuation
methodology used to value the assets of the ESOP Plans) of the
property other than employer securities actually allocated to the
Executive's accounts under the ESOP Plans in respect of employer
contributions and dividends applied to loan amortization payments for
the last plan year to end before his termination of employment.
(vii) At the election of the Company made within 30 days
following the Executive's termination of employment, upon the
surrender of options or appreciation rights issued to the Executive
under any stock option and appreciation rights plan or program
maintained by, or covering employees of, the Company or the Bank, a
lump sum payment in an amount equal to the product of:
-12-
(A) the excess of (I) the Fair Market Value of a Share, over
(II) the exercise price per share for such option or appreciation
right, as specified in or under the relevant plan or program;
multiplied by
(B) the number of shares with respect to which options or
appreciation rights are being surrendered.
For the purpose of computing this payment, the Executive shall be
deemed fully vested in all options and appreciation rights under any
stock option or appreciation rights plan or program maintained by, or
covering employees of, the Company or the Bank, even if he is not
vested under such plan or program.
(viii) At the election of the Company made within 30 days
following the Executive's termination of employment, upon the
surrender of any shares awarded to the Executive under any restricted
stock plan maintained by, or covering employees of, the Company or the
Bank, the Company and the Bank shall make a lump sum payment in an
amount equal to the product of:
(A) the Fair Market Value of a Share granted under such
plan; multiplied by
(B) the number of shares which are being surrendered.
For purposes of computing this payment, the Executive shall be deemed
fully vested in all shares awarded under any restricted stock plan
maintained by, or covering employees of, the Company or the Bank, even
if he is not vested under such plan.
(ix) Within the 60-day period following Executive's
termination of employment, Executive shall have the right to purchase,
in cash, the automobile provided to Executive by the Company or the
Bank for use during Executive's employment at a price equal to the
wholesale value of such automobile as reported in the most recently
published version of the Xxxxxx Blue Book or such similar publication
as mutually agreed to by Executive and the Bank or Company. In the
event that the automobile used by Executive is leased by the Company
or the Bank and Executive elects to purchase the automobile under this
provision, the Bank or the Company shall arrange to purchase the
automobile from the lessor for immediate resale to Executive at a like
price.
The payments and benefits described in section 12(b) are referred to in this
Agreement as the "Additional Termination Entitlements".
-13-
Section 13. Resignation.
-----------
(a) The Executive may resign from his employment with the Bank and the
Company at any time. A resignation under this section 13 shall be effected by
notice of resignation given by the Executive to the Company and the Bank and
shall take effect on the later of the effective date of termination specified in
such notice or the date on which the notice of termination is deemed given by
the Executive; provided, however, that in the case of resignation other than for
Good Reason (as defined below) the effective date shall be no earlier than six
months after the giving of the notice of termination, unless the Executive, the
Bank and the Company agree otherwise. The Executive's resignation of any of the
positions within the Bank or the Company to which he has been assigned shall be
deemed a resignation from all such positions.
(b) The Executive's resignation shall be deemed to be for "Good
Reason" if the effective date of resignation occurs within ninety (90) days
after any of the following:
(i) the failure of the Company or the Bank (whether by act or
omission of their respective Boards of Directors, or otherwise) to appoint
or re-appoint or elect or re-elect the Executive to the position(s) with
the Company and the Bank, specified in section 3 of this Agreement or to a
more senior office;
(ii) if the Executive is or becomes a member of the Board of
Directors of the Company or the Bank, the failure of their respective
shareholders (whether in an election in which the Executive stands as a
nominee or in an election where the Executive is not a nominee) to elect or
re-elect the Executive to membership at the expiration of his term of
membership, unless such failure is a result of the Executive's refusal to
stand for election;
(iii) a material failure by the Company or the Bank, whether by
amendment of their respective certificates of incorporation or
organization, by-laws, action of their respective Boards of Directors or
otherwise, to vest in the Executive the functions, duties, or
responsibilities prescribed in section 3 of this Agreement; provided that
the Executive shall have given notice of such failure to the Company and
the Bank, and the Company or the Bank have not fully cured such failure
within thirty (30) days after such notice is deemed given;
(iv) any reduction of the Executive's rate of base salary in effect
from time to time, whether or not material, or any failure (other than due
to reasonable administrative error that is cured promptly upon notice) to
pay any portion of the Executive's compensation as and when due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Executive participates which, either
individually or together with other changes, has a material adverse effect
on the aggregate value of his total compensation package; provided that the
Executive shall have given notice of such material adverse effect to the
Company and the Bank, and the Company or the Bank
-14-
has not fully cured such failure within thirty (30) days after such notice
is deemed given;
(vi) any material breach by the Company or the Bank of any material
term, condition or covenant contained in this Agreement; provided that the
Executive shall have given notice of such material adverse effect to the
Company and the Bank, and the Company or the Bank have not fully cured such
failure within thirty (30) days after such notice is deemed given; or
(vii) a change in the Executive's principal place of employment to a
place that is not the principal executive office of the Bank, or a
relocation of the Bank's principal executive office to a location that is
both more than twenty-five (25) miles away from the Executive's principal
residence and more than twenty-five (25) miles away from the location of
the Bank's principal executive office on the date of this Agreement.
In all other cases, a resignation by the Executive shall be deemed to be without
Good Reason.
(c) In the event of the Executive's resignation before the
expiration of the Employment Period, the Company and the Bank shall pay and
deliver the Standard Termination Entitlements. In addition, if the Executive's
resignation is deemed to be a resignation with Good Reason, the Company and the
Bank shall also pay and deliver the Additional Termination Entitlements.
Section 14. Terms and Conditions of the Additional Termination
Entitlements.
--------------------------------------------------
The Company, the Bank and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any termination of
employment are not capable of accurate measurement as of the date first above
written and that the Additional Termination Entitlements constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to the Executive's efforts, if any, to
mitigate damages. The Company, the Bank and the Executive further agree that
the Company and the Bank may condition the payment and delivery of the
Additional Termination Entitlements on the receipt of the Executive's
resignation from any and all positions which he holds as an officer, director or
committee member with respect to the Company, the Bank or any subsidiary or
affiliate of either of them.
Section 15. Termination Upon or Following a Change of Control.
-------------------------------------------------
(a) A "Change of Control" shall be deemed to have occurred upon the
happening of any of the following events:
(i) the consummation of a reorganization, merger or consolidation
of the Company with one or more other persons, other than a transaction
following which:
-15-
(A) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended ("Exchange Act")) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Company; and
(B) at least 51% of the securities entitled to vote generally in
the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Company;
(ii) the acquisition of all or substantially all of the assets of the
Company or beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of the outstanding
securities of the Company entitled to vote generally in the election of
directors by any person or by any persons acting in concert;
(iii) a complete liquidation or dissolution of the Company;
(iv) the occurrence of any event if, immediately following such
event, at least 50% of the members of the Board of Directors of the Company
do not belong to any of the following groups:
(A) individuals who were members of the Board of Directors of the
Company on the date of this Agreement; or
(B) individuals who first became members of the Board of
Directors of the Company after the date of this Agreement either:
(1) upon election to serve as a member of the Board of
Directors of the Company by affirmative vote of three-quarters of
the members of such board, or of a nominating committee thereof,
in office at the time of such first election; or
(2) upon election by the shareholders of the Board of
Directors of the Company to serve as a member of such board, but
only if nominated for election by affirmative vote of three-
quarters of the members of the Board of Directors of the Company,
or of a nominating committee thereof, in office at the time of
such first nomination;
-16-
provided, however, that such individual's election or nomination
did not result from an actual or threatened election contest
(within the meaning of Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents (within the meaning of Rule
14a-11 of Regulation 14A promulgated under the Exchange Act)
other than by or on behalf of the Board of Directors of the
Company; or
(v) any event which would be described in section 15(a)(i), (ii),
(iii) or (iv) if the term "Bank" were substituted for the term
"Company" therein.
In no event, however, shall a Change of Control be deemed to have occurred
as a result of any acquisition of securities or assets of the Company, the
Bank, or a subsidiary of either of them, by the Company, the Bank, or any
subsidiary of either of them, or by any employee benefit plan maintained by
any of them. For purposes of this section 15(a), the term "person" shall
have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the
Exchange Act.
(b) For purposes of this Agreement, a "Pending Change of Control"
shall mean: (i) the signing of a definitive agreement for a transaction
which, if consummated, would result in a Change of Control; (ii) the
commencement of a tender offer which, if successful, would result in a
Change of Control; or (iii) the circulation of a proxy statement seeking
proxies in opposition to management in an election contest which, if
successful, would result in a Change of Control.
(c) Notwithstanding anything in this Agreement to the contrary,
if the Executive's employment with the Bank and the Company terminates due
to death or disability within one (1) year after the occurrence of a
Pending Change of Control and if a Change of Control occurs within two (2)
years after such termination of employment, he (or in the event of his
death, his estate) shall be entitled to receive the Standard Termination
Entitlements and the Additional Termination Entitlements that would have
been payable if a Change of Control had occurred on the date of his
termination of employment and he had resigned with Good Reason immediately
thereafter; provided, that payment shall be deferred without interest
until, and shall be payable immediately upon, the actual occurrence of a
Change of Control.
(d) Notwithstanding anything in this Agreement to the contrary:
(i) in the event of the Executive's resignation within sixty (60) days
after the occurrence of a Change of Control, he shall be entitled to
receive the Standard Termination Entitlements and Additional Termination
Entitlements that would be payable if his resignation were a resignation
for Good Reason, without regard to the actual circumstances of his
resignation; and (ii) for a period of one (1) year after the occurrence of
a Change of Control, no discharge of the Executive shall be deemed a
discharge with Cause unless the votes contemplated by section 11(a) of this
Agreement are supported by at least two-thirds of the members of the Board
of Directors of the Company and the Bank at the time the vote is taken who
were also members of the Board of Directors of the Company and the Bank
immediately prior to the Change of Control.
-17-
(e) Notwithstanding anything in this Agreement to the contrary,
for purposes of computing the Additional Termination Entitlements due upon
a termination of employment that occurs, or is deemed to have occurred,
after a Change of Control, the Remaining Unexpired Employment Period shall
be deemed to be three (3) full years.
Section 16. Other Termination.
-----------------
If the Executive's employment with the Bank or the Company
continues beyond the expiration of the Employment Period, neither the
Company nor the Bank shall, following the expiration of the Employment
Period, discharge the Executive for any reason other than Cause without
giving the Executive, at the option of the Company or the Bank, either: (a)
at least one year's advance notice of such termination; (b) a severance
payment equal to one year's base salary at the annual rate in effective
immediately prior to the giving of such notice, or (c) a combination of
advance notice and a pro-rated severance payment for a period totaling at
least one year.
Section 17. Tax Indemnification.
-------------------
(a) If the Executive's employment terminates under circumstances
entitling him (or in the event of his death, his estate) to the Additional
Termination Entitlements, the Company shall pay to the Executive (or in the
event of his death, his estate) an additional amount intended to indemnify
him against the financial effects of the excise tax imposed on excess
parachute payments under section 280G of the Code (the "Tax Indemnity
Payment"). The Tax Indemnity Payment shall be determined under the
following formula:
X = E x P
--------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the percentage rate at which an excise tax is assessed
under section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this section 16;
FI = the highest marginal rate of income tax applicable to the
Executive under the Code for the taxable year in question;
SLI = the sum of the highest marginal rates of income tax
applicable to the Executive under all applicable state and
local laws for the taxable year in question; and
M = the highest marginal rate of Medicare tax applicable to the
Executive under the Code for the taxable year in question.
-18-
Such computation shall be made at the expense of the Company by an attorney
or a firm of independent certified public accountants selected by the
Executive and reasonably satisfactory to the Company (the "Tax Advisor")
and shall be based on the following assumptions: (i) that a change in
ownership, a change in effective ownership or control, or a change in the
ownership of a substantial portion of the assets, of the Bank or the
Company has occurred within the meaning of section 280G of the Code (a
"280G Change of Control"); (ii) that all direct or indirect payments made
to or benefits conferred upon the Executive on account of his termination
of employment are "parachute payments" within the meaning of section 280G
of the Code; and (iii) that no portion of such payments is reasonable
compensation for services rendered prior to the Executive's termination of
employment.
(b) With respect to any payment that is presumed to be a
parachute payment for purposes of section 280G of the Code, the Tax
Indemnity Payment shall be made to the Executive on the earlier of the date
the Company, the Bank or any direct or indirect subsidiary or affiliate of
the Company or the Bank is required to withhold such tax or the date the
tax is required to be paid by the Executive, unless, prior to such date,
the Company delivers to the Executive the written opinion, in form and
substance reasonably satisfactory to the Executive, of the Tax Advisor or
of an attorney or firm of independent certified public accountants selected
by the Company and reasonably satisfactory to the Executive, to the effect
that the Executive has a reasonable basis on which to conclude that (i) no
280G Change in Control has occurred, or (ii) all or part of the payment or
benefit in question is not a parachute payment for purposes of section 280G
of the Code, or (iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the 280G Change of
Control, or (iv) for some other reason which shall be set forth in detail
in such letter, no excise tax is due under section 4999 of the Code with
respect to such payment or benefit (the "Opinion Letter"). If the Company
delivers an Opinion Letter, the Tax Advisor shall recompute, and the
Company shall make, the Tax Indemnity Payment in reliance on the
information contained in the Opinion Letter.
(c) In the event that the Executive's liability for the excise
tax under section 4999 of the Code for a taxable year is subsequently
determined to be different than the amount with respect to which the Tax
Indemnity Payment is made, the Executive or the Company, as the case may
be, shall pay to the other party at the time that the amount of such excise
tax is finally determined, an appropriate amount, plus interest, such that
the payment made under section 17(b), when increased by the amount of the
payment made to the Executive under this section 17(c), or when reduced by
the amount of the payment made to the Company under this section 17(c),
equals the amount that should have properly been paid to the Executive
under this section 17(c). The interest paid to the Company under this
section 17(c) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. The payment made to the Executive shall include
such amount of interest as is necessary to satisfy any interest assessment
made by the Internal Revenue Service and an additional amount equal to any
monetary penalties assessed by the Internal Revenue Service on account of
an underpayment of the excise tax. To confirm that the proper amount, if
any, was paid to the Executive under this section 17, the Executive shall
furnish to the Company a copy of each tax return which reflects a liability
for an excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in this
Agreement shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the Executive is a
party as a result of positions taken on his federal income tax return with
respect to his liability for excise taxes under section 4999 of the Code.
-19-
Section 18. Covenant Not To Compete.
-----------------------
The Executive hereby covenants and agrees that, in the event of
his termination of employment with the Company prior to the expiration of
the Employment Period, for a period of one year following the date of his
termination of employment with the Company or the Bank, he shall not,
without the written consent of the Company, become an officer, employee,
consultant, director or trustee of any savings bank, savings and loan
association, savings and loan holding company, bank or bank holding
company, any other entity engaged in the business of accepting deposits or
making loans or any direct or indirect subsidiary or affiliate of any such
entity, that entails working within the Commonwealth of Massachusetts or
any other city or county in which the Company or the Bank maintains an
office; provided, however, that this section 18 shall not apply if the
Executive is entitled to the Additional Termination Entitlements.
Section 19. Confidentiality.
---------------
Unless he obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the
benefit of himself, or any person or entity other than the Company or any
entity which is a subsidiary of the Company or of which the Company is a
subsidiary, any material document or information obtained from the Company,
or from its parent or subsidiaries, in the course of his employment with
any of them concerning their properties, operations or business (unless
such document or information is readily ascertainable from public or
published information or trade sources or has otherwise been made available
to the public through no fault of his own) until the same ceases to be
material (or becomes so ascertainable or available); provided, however,
that nothing in this section 19 shall prevent the Executive, with or
without the Company's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation
or disclosure is required under applicable law.
Section 20. Solicitation.
------------
The Executive hereby covenants and agrees that, for a period of
one year following his termination of employment with the Company or the
Bank, he shall not, without the written consent of the Company and the
Bank, either directly or indirectly:
(a) solicit, offer employment to, or take any other action
intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any officer or employee of
the Company, the Bank or any of their respective subsidiaries or
affiliates to terminate his or her employment and accept employment or
become affiliated with, or provide services for compensation in any
capacity what soever to, any savings bank, savings and loan
association, bank, bank holding company, savings and loan holding
company, or other institution engaged in the business of accepting
deposits, making loans or doing business within the counties specified
in section 18;
(b) provide any information, advice or recommendation with
respect to any such officer or employee of any savings bank, savings
and loan association, bank,
-20-
bank holding company, savings and loan holding company, or other
institution engaged in the business of accepting deposits, making
loans or doing business within the counties specified in section 18;
that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any officer
or employee of the Company, the Bank, or any of their respective
subsidiaries or affiliates to terminate his employment and accept
employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any savings bank, savings
and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of
accepting deposits, making loans or doing business within the counties
specified in section 18;
(c) solicit, provide any information, advice or recommendation or
take any other action intended, or that a reasonable person acting in
like circumstances would expect, to have the effect of causing any
customer of the Company to terminate an existing business or
commercial relationship with the Company.
Section 21. No Effect on Employee Benefit Plans or Programs.
-----------------------------------------------
The termination of the Executive's employment during the term of
this Agreement or thereafter, whether by the Company, by the Bank or by the
Executive, shall have no effect on the rights and obligations of the
parties hereto under the Company's or the Bank's qualified or non-qualified
retirement, pension, savings, thrift, profit-sharing or stock bonus plans,
group life, health (including hospitalization, medical and major medical),
dental, accident and long term disability in surance plans or such other
employee benefit plans or programs, or compensation plans or programs, as
may be maintained by, or cover employees of, the Company or the Bank from
time to time; provided, however, that nothing in this Agreement shall be
deemed to duplicate any compensation or benefits provided under any
agreement, plan or program covering the Executive to which the Company is a
party and any duplicative amount payable under any such agreement, plan or
program shall be applied as an offset to reduce the amounts otherwise
payable hereunder.
Section 22. Successors and Assigns.
----------------------
This Agreement will inure to the benefit of and be binding upon
the Executive, his legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective successors
and assigns, including any successor by merger or consolidation or a
statutory receiver or any other person or firm or corporation to which all
or substantially all of the assets and business of the Company may be sold
or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's obligations
hereunder at least sixty (60) days in advance of the scheduled effective
date of any such succession shall be deemed a material breach of this
Agreement.
Section 23. Notices.
-------
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed
to have been given at such time as it is delivered personally, or five (5)
days after
-21-
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or
at such other address as one such party may by written notice specify to
the other party:
If to the Executive:
Xxxxx X. Xxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
with a copy to:
Xxxxxx, Hall & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to the Company or the Bank:
Port Financial Corp.
000 Xxxxxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chairman, Compensation Committee of the Board of
Directors
with a copy to:
Section 24. Indemnification for Attorneys' Fees.
-----------------------------------
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees and expenses,
incurred by him in connection with or arising out of any action, suit or
proceeding (including any tax controversy) in which he may be involved, as
a result of his efforts, in good faith, to defend or enforce the terms of
this Agreement. For purposes of this Agreement, any settlement agreement
which provides for payment of any amounts in settlement of the Company's or
the Bank's obligations hereunder shall be conclusive evidence of the
Executive's entitlement to indemnification hereunder, and any such
indemnification payments shall be in addition to amounts payable pursuant
to such settlement agreement, unless such settlement agreement expressly
provides otherwise.
-22-
(b) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and
such amounts shall not be reduced whether or not the Executive obtains
other employment. Unless it is determined that the Executive has acted
frivolously or in bad faith, the Company shall pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of or in connection with his consultation
with legal counsel or arising out of any action, suit, proceeding, tax
controversy or contest (regardless of the outcome thereof) by the Company,
the Executive or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus in each
case interest on any delayed payment at the applicable federal rate
provided for in section 7872(f)(2)(A) of the Code. This section 23(b) shall
apply whether such consultation, action, suit, proceeding or contest arises
before, on, after or as a result of a Change of Control.
(c) The Company shall pay, or reimburse the Executive for,
reasonable attorneys' fees and the disbursements of such attorneys incurred
by the Executive in connection with the negotiation and execution of this
Agreement.
Section 25. Severability.
------------
A determination that any provision of this Agreement is invalid
or unenforceable shall not affect the validity or enforceability of any
other provision hereof.
Section 26. Waiver.
------
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be
made in writing, designated as a waiver, and signed by the party against
whom its enforcement is sought. Any waiver or relinquishment of any right
or power hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
Section 27. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
Section 28. Governing Law.
-------------
Except to the extent preempted by federal law, this Agreement
shall be governed by and construed and enforced in accordance with the laws
of the Commonwealth of Massachusetts
-23-
applicable to contracts entered into and to be performed entirely within
the Commonwealth of Massachusetts.
Section 29. Headings and Construction.
-------------------------
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section.
Any reference to a section number shall refer to a section of this
Agreement, unless otherwise stated.
Section 30. Entire Agreement; Modifications.
-------------------------------
This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any
and all prior agreements, understandings or representations relating to the
subject matter hereof. No modifications of this Agreement shall be valid
unless made in writing and signed by the parties hereto.
Section 31. Non-duplication.
---------------
In the event that the Executive shall perform services for the
Bank or any other direct or indirect subsidiary or affiliate of the Company
or the Bank, any compensation or benefits provided to the Executive by such
other employer shall be applied to offset the obligations of the Company
hereunder, it being intended that this Agreement set forth the aggregate
compensation and benefits payable to the Executive for all services to the
Company, the Bank and all of their respective direct or indirect
subsidiaries and affiliates.
Section 32. Relative Obligations of the Bank and the Company.
------------------------------------------------
The Company shall, with respect to the Executive's services
hereunder and the compensation therefor and with respect to any termination
of the Executive's employment, have all of the obligations imposed on the
Bank under this Agreement to the same extent as though the name of the
Company were substituted for the name of the Bank herein and the Executive
shall, with respect to the services hereunder and the compensation therefor
and with respect to any termination of the Executive's employment, have all
of the rights, privileges and duties relative to the Company as though the
name of the Company were substituted for the name of the Bank herein. If
the Executive performs services for both the Bank and the Company, any
entitlement of the Executive to severance compensation and other
termination benefits under this Agreement shall be determined on the basis
of the aggregate compensation payable to the Executive by the Bank and the
Company, and liability therefor shall be apportioned between the Bank and
the Company in the same manner as compensation paid to the Executive for
services to each of them; provided, however, that the Company shall be
jointly and severally liable with the Bank for all obligations of the Bank
under this Agreement; and provided, further, that in no event shall the
Bank bear any liability for actions of, or obligations undertaken by, the
Company under this Agreement. It is the intent and purpose of this section
32 that the Executive have the same legal and economic rights that he would
have if all of his services were rendered to and all of his compensation
were paid by the Company. This section 32 shall be construed and enforced
to give effect to such intent and purpose.
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Section 33. Dispute Resolution.
------------------
[To be provided by Xxxxxx, Xxxx & Xxxxxxx]
Section 34. Survival.
--------
Any provision of this Agreement which, by its terms, contemplates
performance after the expiration of the Employment Period or other
termination of this Agreement shall be deemed to survive the expiration of
this Agreement.
Section 35. Required Regulatory Provisions.
------------------------------
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company or the Bank, whether pursuant to
this Agreement or otherwise, are subject to and conditioned upon their
compliance with section 18(k) of the Federal Deposit Insurance Act, 12
U.S.C. (S)1828(k), and any regulations promulgated thereunder.
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In Witness Whereof, the Bank and the Company have caused this
Agreement to be executed and the Executive has hereunto set his hand, all
as of the day and year first above written.
________________________________
Xxxxx X. Xxxxxx
Cambridgeport Bank
Attest:
By _________________________ By _____________________________
Name: Name:
Title: Title:
[Seal]
Port Financial Corp.
Attest:
By _________________________ By _____________________________
Name: Name:
Title: Title:
[Seal]
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