AMENDED AND RESTATED SPECIAL TERMINATION AGREEMENT
AMENDED AND RESTATED AGREEMENT this twenty-sixth day of November, 1997 by
and between Medford Savings Bank (the "Bank") a savings bank with its main
office in Medford, Massachusetts, which Bank will be a wholly-owned subsidiary
of Medford Bancorp, Inc. (the "Company") a Massachusetts corporation, and Xxxx
X. Xxxx of North Andover, Massachusetts (the "Executive").
1. Purpose. In order to allow the Executive to consider the prospect of a
Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services to be rendered by the Executive to the Bank and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Bank, the Bank is willing to provide, subject to the
terms of this Agreement, certain severance benefits to protect the Executive
from the consequences of a Terminating Event (as defined in Section 3) occurring
subsequent to a Change in Control.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(i) if there has occurred a change in control of either the Company
or the Bank which the Company would be required to report in response to
Item 1 (or, in the case of the Bank, Item 2) of Form 8-K promulgated under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if
such regulation is no longer in effect, any regulations promulgated by the
Securities and Exchange Commission, pursuant to the 1934 Act, which are
intended to serve similar purposes;
(ii) when any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the 0000 Xxx) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the 1934 Act), directly or
indirectly, of securities of the Company or the Bank representing
twenty-five percent (25%) or more of the total number of votes that may be
cast for the election of directors of the Company or the Bank, as the case
may be;
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who are
Continuing Directors (as hereinafter defined) cease for any reason to
constitute at least a majority of the Board of Directors of the Company or
the Bank. For this purpose, a "Continuing Director" shall mean (a) an
individual who was a director of the Company or the Bank at the beginning
of such period or (b) any new director (other than a director designated by
a person who has entered into an agreement with the Company or the Bank to
effect a transaction described in clause (ii), (iv) or (v) of this Section
2) whose election by the Board or nomination for election by the Company's
or the Bank's stockholders was approved by a
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vote of at least two-thirds (2/3) of the directors of the Company or the
Bank, as appropriate, then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved;
(iv) the stockholders of the Company approve a merger or
consolidation of the Company or the Bank with any other corporation or
bank, other than (a) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 80% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation
or (b) a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as
hereinabove defined) acquires more than 30% of the combined voting power of
the Company's then outstanding securities; or
(v) the stockholders of the Company or the Bank approve a plan of
complete liquidation of the Company or the Bank or an agreement for the
sale or disposition by the Company or the Bank of all or substantially all
of the Company's or the Bank's assets.
(vi) Notwithstanding the foregoing, no Change in Control shall be
deemed to occur by virtue of the Bank becoming a subsidiary of the Company.
3. Terminating Event. A "Terminating Event" shall mean
(a) termination by the Bank of the employment of the Executive with the
Bank for any reason other than (i) death, (ii) deliberate dishonesty of the
Executive with respect to the Bank or the Company or any subsidiary or affiliate
of either, or (iii) conviction of the Executive of a crime involving moral
turpitude, or
(b) resignation of the Executive from the employ of the Bank, while the
Executive is not receiving payments or benefits from the Bank by reason of the
Executive's disability, subsequent to the occurrence of any of the following
events:
(i) a significant change in the nature or scope of the Executive's
responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised by the
Executive immediately prior to the Change in Control; or
(ii) a determination by the Executive that, as a result of a Change
in Control, he is unable to exercise the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to
such Change in Control; or
(iii) a reduction in the Executive's annual base salary as in effect
on the date
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hereof or as the same may be increased from time to time except for
across-the-board salary reductions similarly affecting all management
personnel of the Bank and the Company and all management personnel of any
person in control of the Bank and the Company; or
(iv) the failure by the Bank or the Company to pay to the Executive
any portion of his current compensation or to pay to the Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Bank or the Company within seven (7) days of
the date such compensation is due; or
(v) the failure by the Bank or the Company to continue in effect
any material compensation, incentive, bonus or benefit plan in which the
Executive participates immediately prior to the Change in Control, unless
an equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure by the Bank
or the Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable, in terms of both the amount of benefits provided and the level
of the Executive's participation relative to other participants, as existed
at the time of the Change in Control; or
(vi) the failure by the Bank or the Company to continue to provide
the Executive with benefits substantially similar to those available to the
Executive under any of the life insurance, medical, health and accident, or
disability plans or any other material benefit plans in which the Executive
was participating at the time of the Change in Control, or the taking of
any action by the Bank or the Company which would directly or indirectly
materially reduce any of such benefits, or the failure by the Bank to
provide the Executive with the number of paid vacation days to which the
Executive is entitled on the basis of years of service with the Bank in
accordance with the Bank's normal vacation policy in effect at the time of
the Change in Control; or
(vii) the failure of the Bank to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement.
4. Severance Payment. In the event a Terminating Event occurs within three
(3) years after a Change in Control, the Bank shall pay to the Executive an
aggregate amount equal to (x) two times the "base amount" (as defined in Section
280 G(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"))
applicable to the Executive, less (y) One Dollar ($1.00), payable in one
lump-sum payment on the date of termination.
5. Limitation on Benefits.
(a) It is the intention of the Executive and of the Bank that no payments
by the Bank to or for the benefit of the Executive under this Agreement or any
other agreement or plan pursuant to which he is entitled to receive payments or
benefits shall be non-deductible to the
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Bank by reason of the operation of Section 280G of the Code relating to
parachute payments. Accordingly, and notwithstanding any other provision of this
Agreement or any such agreement or plan, if by reason of the operation of said
Section 280G, any such payments exceed the amount which can be deducted by the
Bank, such payments shall be reduced to the maximum amount which can be deducted
by the Bank. To the extent that payments exceeding such maximum deductible
amount have been made to or for the benefit of the Executive, such excess
payments shall be refunded to the Bank with interest thereon at the applicable
Federal Rate determined under Section 1274(d) of the Code, compounded annually,
or at such other rate as may be required in order that no such payments shall be
non-deductible to the Bank by reason of the operation of said Section 280G. To
the extent that there is more than one method of reducing the payments to bring
them within the limitations of said Section 280G, the Executive shall determine
which method shall be followed, provided that if the Executive fails to make
such determination within forty-five days after the Bank has sent him written
notice of the need for such reduction, the Bank may determine the method of such
reduction in its sole discretion.
(b) If any dispute between the Bank and the Executive as to any of the
amounts to be determined under this Section 5, or the method of calculating such
amounts, cannot be resolved by the Bank and the Executive, either the Bank or
the Executive after giving three days written notice to the other, may refer the
dispute to a partner in the Boston office of a firm of independent certified
public accountants selected jointly by the Bank and the Executive. The
determination of such partner as to the amount to be determined under Section
5(a) and the method of calculating such amounts shall be final and binding on
both the Bank and the Executive. The Bank shall bear the costs of any such
determination.
6. Employment Status. This Agreement is not an agreement for the employment
of the Executive and shall confer no rights on the Executive except as herein
expressly provided.
7. Term. This Agreement shall take effect on as of the date hereof and
shall terminate upon the earlier of (a) the termination by the Bank of the
employment of the Executive because of death, deliberate dishonesty of the
Executive with respect to the Bank or the Company or any subsidiary or affiliate
of either, or conviction of the Executive of a crime involving moral turpitude,
(b) the resignation or termination of the Executive for any reason prior to a
Change in Control, or (c) the resignation of the Executive after a Change in
Control for any reason other than the occurrence of any of the events enumerated
in Section 3(b)(i)-(vii) of this Agreement.
8. Withholding. All payments made by the Bank under this Agreement shall be
net of any tax or other amounts required to be withheld by the Bank under
applicable law.
9. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Bank, one by the Executive
and the third by the first two arbitrators. If the first two
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arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall be conducted in the City of Boston in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section 9. Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other costs
and expenses in connection with the enforcement of any or all of the Executive's
rights under this Agreement, the Bank shall pay (or the Executive shall be
entitled to recover from the Bank, as the case may be) the Executive's
reasonable attorneys' fees and other reasonable costs and expenses in connection
with the enforcement of said rights (including the enforcement of any
arbitration award in court) regardless of the final outcome, unless and to the
extent the arbitrators shall determine that under the circumstances recovery by
the Executive of all or a part of any such fees and costs and expenses would be
unjust. This provision shall not apply to Section 5(b), except in the event that
the Bank and the Executive cannot agree on the selection of the accounting
partner described in said Section.
10. Assignment; Prior Agreements. Neither the Bank nor the Executive may make
any assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party and without such
consent any attempted transfer shall be null and void and of no effect. This
Agreement shall inure to the benefit of and be binding upon the Bank and the
Executive, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of the Executive's death prior to the completion
by the Bank of all payments due him under this Agreement, the Bank shall
continue such payments to the Executive's beneficiary designated in writing to
the Bank prior to his death (or to his estate, if he fails to make such
designation). This Agreement supersedes any prior agreement covering the subject
matter hereof.
11. Enforceability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless made
in writing and signed by the waiving party. The failure of any party to require
the performance of any term or obligation of this Agreement, or the waiver by
any party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
13. Notices. Any notices, requests, demands and other communications provided
for by this Agreement shall be sufficient if in writing and delivered in person
or sent by registered
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or certified mail, postage prepaid, to the Executive at the last address the
Executive has filed in writing with the Bank or, in the case of the Bank, at the
Bank's main office, attention of the Board of Directors.
14. Election of Remedies. An election by the Executive to resign after a
Change in Control under the provisions of this Agreement shall not constitute a
breach by the Executive of any employment agreement between the Bank and the
Executive and shall not be deemed a voluntary termination of employment by the
Executive for the purpose of interpreting the provisions of any of the Bank's
benefit plans, programs or policies. Nothing in this Agreement shall be
construed to limit the rights of the Executive under any employment agreement he
may then have with the Bank; provided, however, that if there is a Terminating
Event under Section 3 hereof, the Executive may elect either to receive the
severance payment provided under Section 4 or such termination benefits as he
may have under any such employment agreement, but may not elect to receive both.
15. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Bank.
16. Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Bank, by its duly authorized officer, and by the Executive, as of the
date first above written.
WITNESS:
/s/ Xxxxxxx X. Xxxx /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
ATTEST: MEDFORD SAVINGS BANK
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
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Clerk Title: Chairman, President and Chief
Executive Officer
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[Seal]
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