EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, as amended and restated, is entered into this 20th day
of December, 2007 (the "Effective Date"), by and between CENTRAL COOPERATIVE
BANK, Somerville, Massachusetts (hereinafter referred to as the "Bank") and XXXX
X. XXXXXXX (hereafter referred to as the "Employee").
WHEREAS, the Employee has heretofore been employed by the Bank as
President and Chief Executive Officer; and
WHEREAS, the parties desire by this writing to set forth the continued
employment relationship of the Bank and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Employee is employed as the President and
Chief Executive Officer of the Bank. The Employee shall render administrative
and management services to the Bank such as are customarily performed by persons
situated in a similar executive capacity. He shall also promote, by
entertainment or otherwise, as and to the extent permitted by law, the business
of the Bank. The Employee's other duties shall be such as the Board of Directors
may from time to time reasonably direct, including normal duties as an officer
of the Bank.
2. BASE COMPENSATION. The Bank agrees to pay the Employee during
the term of this Agreement a salary at the rate of $400,003.76 per annum,
payable in cash not less frequently than monthly; provided, that the rate of
such salary shall be reviewed by the Board of Directors of the Bank not less
often than annually. Such rate of salary, or increased rate of salary, as the
case may be, may be further increased (but not decreased) from time to time in
such amounts as the Board of Directors in its discretion may decide.
3. DISCRETIONARY BONUSES. The Employee shall be entitled to
participate in an equitable manner with all other key management personnel of
the Bank in discretionary bonuses authorized and declared by the Board of
Directors of the Bank to its key management employees. No other compensation
provided for in this Agreement shall be deemed a substitute for the Employee's
right to participate in such discretionary bonuses when and as declared by the
Board of Directors.
4. (a) PARTICIPATION IN RETIREMENT AND MEDICAL PLANS. The
Employee shall be entitled to participate in any Plan of the Bank relating to
pension, profit-sharing, or other retirement benefits and medical coverage or
reimbursement plans that the Bank may adopt for the benefit of its employees.
(b) EMPLOYEE BENEFITS; EXPENSES. The Employee shall be
eligible to participate in any fringe benefits which may be or become applicable
to the Bank's executive employees including participation in any stock option or
incentive plans adopted by the Board of Directors, the use of an automobile,
club memberships, a reasonable expense account, and any other benefits which are
commensurate with the responsibilities and functions to be performed by the
Employee under this Agreement. The Bank shall reimburse Employee for all
out-of-pocket expenses which Employee shall incur in connection with his
services for the Bank.
5. TERM. The initial term of employment under this Agreement
shall be for the period commencing on the Effective Date, and ending and the
fifth anniversary of the Effective Date. Additionally, on each annual
anniversary date from the Effective Date the term of employment shall
automatically be extended for an additional one-year period beyond the then
effective expiration date unless written notice from the Bank or the Employee is
received prior to an anniversary date advising the other party that this
agreement shall not be further extended. Any such written notice shall not
effect any prior extensions of the term of employment hereunder.
6. LOYALTY; NONCOMPETITION.
(a) The Employee shall devote his full time to the performance
of his employment under this Agreement. During the term of Employee's employment
under this Agreement, the Employee shall not engage in any business or activity
contrary to the business affairs or interests of the Bank.
(b) Nothing contained in this Paragraph 6 shall be deemed to
prevent or limit the right of Employee to invest in the capital stock or other
securities of any business dissimilar from that of Employer, or, solely as a
passive or minority investor, in any business.
7. STANDARDS. The Employee shall perform his duties under this
Agreement in accordance with such reasonable standards expected of employees
with comparable positions in comparable organizations and as may be established
from time to time by the Bank's Board of Directors. The Bank will provide
Employee with the working facilities and staff customary for similar executives
and necessary for him to perform his duties.
8. VACATION AND SICK LEAVE. At such reasonable times as the Board
of Directors shall in its discretion permit, the Employee shall be entitled,
without loss of pay, to absent himself voluntarily from the performance of his
employment under this Agreement, all such voluntary absences to count as
vacation time; provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies as periodically established by the Board of
Directors for senior management officials of the Bank.
(b) The timing of vacations shall be scheduled in a reasonable
manner by the Board of Directors. The Employee shall not be entitled to receive
any additional compensation from the Bank on account of his failure to take a
vacation; nor shall he be entitled to accumulate unused vacation from one fiscal
year to the next except to the extent authorized by the Board of Directors for
senior management officials of the Bank.
(c) In addition to the aforesaid paid vacations, the Employee
shall be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Bank for such additional periods of time
and for such valid and legitimate reasons as the Board of Directors in its
discretion may determine. Further, the Board of Directors shall be entitled to
grant to the Employee a leave or leaves of absence with or without pay at such
time or times and upon such terms and conditions as the Board in its discretion
may determine.
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(d) In addition, the Employee shall be entitled to an annual
sick leave as established by the Board of Directors for senior management
officials of the Bank. In the event any sick leave time shall not have been used
during any year, such leave shall accrue to subsequent years only to the extent
authorized by the Board of Directors. Upon termination of his employment, the
Employee shall not be entitled to receive any additional compensation from the
Bank for unused sick leave.
9. TERMINATION AND TERMINATION PAY.
The Employee's employment under this Agreement shall be
terminated upon the following occurrences:
(a) The death of the Employee during the term of this
Agreement, in which event the Employee's estate shall be entitled to receive the
compensation due the Employee through the last day of the calendar month in
which his death shall have occurred.
(b) The Employee's employment under this Agreement may be
terminated at any time by a decision of the Board of Directors of the Bank for
conduct not constituting termination for Just Cause, or by the Employee upon
ninety (90) days written notice, to the Employee or Bank, as the case may be. In
the event the Employee's employment under this Agreement is terminated by the
Board of Directors without Just Cause, the Bank shall be obligated to continue
to pay the Employee his salary, up to the date of termination of the term
(including any renewal term) of this Agreement. In the event the Employee is a
"Specified Employee" (as defined herein) no payment shall be made to the
Employee under this Agreement prior to the first day of the seventh month
following his termination of employment in excess of the "permitted amount"
under Section 409A of the Code. For these purposes the "permitted amount" shall
be an amount that does not exceed two times the lesser of: (A) the sum of the
Employee's annualized compensation based upon the annual rate of pay for
services provided to the Bank for the calendar year preceding the year in which
the Employee terminates employment, or (B) the maximum amount that may be taken
into account under a tax-qualified plan pursuant to Section 401(a)(17) of the
Code for the calendar year in which occurs the termination of employment. The
payment of the "permitted amount" shall be made within sixty (60) days of the
occurrence of the termination of employment. Any payment in excess of the
permitted amount shall be made to the Employee on the first day of the seventh
month following the termination of employment. "Specified Employee" shall be
interpreted to comply with Section 409A of the Code and shall mean a key
employee within the meaning of Section 416(i) of the Code (without regard to
paragraph 5 thereof), but the Employee shall be a "Specified Employee" only if
the Bank is a publicly-traded institution or the subsidiary of a public-traded
holding company.
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(c) The Bank reserves the right to terminate this Agreement at
any time for Just Cause. Termination for "Just Cause" shall mean termination for
conviction of a felony involving a crime of moral turpitude, deliberate
dishonesty to the Bank involving personal profit, or gross and willful failure
to perform stated duties after written notice from the Board of Directors.
Subject to the provisions of Section 11 hereof, in the event this Agreement is
terminated for Just Cause, the Bank shall only be obligated to continue to pay
the Employee his salary up to the date of termination.
10. DISABILITY. If the Employee shall suffer a Disability, he
shall nevertheless continue to receive 100% of his compensation, inclusive of
any benefits which may be payable to Employee under the provisions of disability
insurance coverage in effect for Bank employees, under Paragraph 2 of this
Agreement for the first 12 months following the date of such disability. Upon
returning to active full-time employment, the Employee's full compensation as
set forth in this Agreement shall be reinstated. In the event that said Employee
returns to active employment on other than a full-time basis, then his
compensation (as set forth in Paragraph 2 of this Agreement) shall be reduced in
proportion to the time spent in said employment, or as shall otherwise be agreed
to by the parties. For purposes of this provision, "Disability" shall mean the
Employee is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months.
11. CHANGE IN CONTROL.
(a) Notwithstanding any provision herein to the contrary, if
the Employee's employment is terminated by the Bank, without the Employee's
prior written consent, in connection with or within three (3) years after any
change in control (as herein defined) of the Bank or Central Bancorp, Inc. (the
"Company"), the Employee shall be paid an amount equal to 2.99 times his "base
amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), and regulations promulgated thereunder. Said sum shall
be paid in one lump sum within ten (10) days after such termination. The term
"change in control" shall mean (1) the ownership, holding or power to vote more
than 25% of the voting stock of the Bank or the Company, (2) the control of the
election of a majority of the Bank's or the Company's directors, (3) the
exercise of a controlling influence over the management or policies of the Bank
or the Company by any person or by persons acting as a "group" (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934), or (4) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the Company (the
"Company Board") (the "Continuing Directors") cease for any reason to constitute
at least two-thirds thereof, provided that any individual whose election or
nomination for election as a member of the Company Board was approved by a vote
of at least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. The term "person" means an individual other
than the Employee, or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization or
any other form of entity not specifically listed herein.
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(b) Notwithstanding any other provision herein to the
contrary, the Employee may voluntarily terminate his employment under this
Agreement within three (3) years following a change in control of the Bank or
the Company, and the Employee shall thereupon be entitled to receive the payment
described in Section 11(a) of this Agreement, upon the occurrence of any of the
following events, or within ninety (90) days thereafter, which have not been
consented to in advance by the Employee in writing: (i) the requirement that the
Employee perform his principal executive functions, more than 35 miles from his
primary office as of the Effective Date of this Agreement; (ii) a material
reduction in the Employee's base compensation as in effect immediately prior to
the Change in Control; (iii) the failure by the Bank to continue to provide the
Employee with compensation and benefits substantially similar to those provided
to him at the time of the change in control under any of the employee benefit
plans in which the Employee becomes a participant, or the taking of any action
by the Bank which would directly or indirectly materially reduce any of such
benefits or deprive the Employee of any material fringe benefit enjoyed by him
at the time of the Change in Control; (iv) the assignment to the employee of
material duties and responsibilities other than those normally associated with
his position as referenced in the recitals above; or (v) a material diminution
or reduction in the Employee's responsibilities or authority (including
reporting responsibilities) in connection with his employment with the Bank.
Notwithstanding the foregoing, upon the occurrence of any event described in
this paragraph, the Employee shall have the right to elect to terminate his
employment under this Agreement by resignation upon sixty (60) days prior
written notice given within a reasonable period of time not to exceed ninety
(90) days after the initial event giving rise to said right to elect; provided,
however that the Bank shall have at least thirty (30) days to cure such
condition and provided that the Employee actually terminates employment within
two years after the initial occurrence of such event. Notwithstanding the
preceding sentence, in the event of a continuing breach of this Agreement by the
Bank, the Employee, after giving due notice within the prescribed time frame of
an initial event specified above, shall not waive any of his rights solely under
this Agreement by virtue of the fact that the Employee has submitted his
resignation but has remained in the employment of the Bank and is engaged in
good faith discussions to resolve any occurrence of an event described in this
paragraph.
(c) The parties to this Agreement intend for the payments
pursuant to this Section 11 to satisfy the short-term deferral exception under
Section 409A of the Code. However, notwithstanding anything to the contrary in
this Agreement, to the extent payments do not meet the short-term deferral
exception of Section 409A of the Code and, in the event the Employee is a
"Specified Employee" (as defined in Section 9(b) of this Agreement) no payment
shall be made to the Employee under this Agreement prior to the first day of the
seventh month following his termination of employment in excess of the
"permitted amount" under Section 409A of the Code. For these purposes the
"permitted amount" shall be an amount that does not exceed two times the lesser
of: (A) the sum of the Employee's annualized compensation based upon the annual
rate of pay for services provided to the Bank for the calendar year preceding
the year in which the Employee terminates employment, or (B) the maximum amount
that may be taken into account under a tax-qualified plan pursuant to Section
401(a)(17) of the Code for the calendar year in which occurs the termination of
employment. The payment of the "permitted amount" shall be made within sixty
(60) days of the occurrence of the termination of employment. Any payment in
excess of the permitted amount shall be made to the Employee on the first day of
the seventh month following the termination of employment.
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12. EXCISE TAXES.
(a) COVERED BENEFITS. "Covered Benefits" shall mean any
payment or benefit paid or provided to the Employee by the Bank or any affiliate
or any successor in interest to the Bank (whether pursuant to this Agreement or
otherwise) that will be (or in the opinion of Tax Counsel (as defined below)
might reasonably be expected to be) subject to any excise tax (the "Excise Tax")
imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"). In the event that at any time during or after the Term of Employment
the Employee shall receive any Covered Benefits, the Bank shall pay to the
Employee an additional amount (the "Gross-Up Payment") such that the net amount
retained by the Employee from the Gross-Up Payment, after deduction of any
federal, state and local income taxes, Excise Tax, and FICA and Medicare
withholding taxes on the Gross-Up Payment, shall be equal to the Excise Tax on
the Covered Benefits. For purposes of determining the amount of such Excise Tax
on the Covered Benefits, the amount of the Covered Benefits that shall be taken
into account in calculating the Excise Tax shall be equal to (i) the Covered
Benefits, less (ii) the amount of such Covered Benefits that, in the opinion of
tax counsel selected by the Bank and reasonably acceptable to the Employee ("Tax
Counsel"), are not parachute payments (within the meaning of Section 280G(b)(1)
of the Code).
(b) CERTAIN ASSUMPTIONS. For purposes of this Section 12, the
Employee shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Excise Tax is
payable and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Employee's residence on the effective
date of the Employee's termination, net of the reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. Except as
otherwise provided herein, all determinations required to be made under this
Section 12 shall be made by Tax Counsel, which determinations shall be
conclusive and binding on the Employee and the Bank, absent manifest error.
(c) TAX INDEMNIFICATION. The Bank shall indemnify and hold the
Employee harmless from any and all losses, costs and expenses (including without
limitation, reasonable attorney's fees, reasonable accountant's fees, interest,
fines and penalties of any kind) which the Employee incurs as a result of any
administrative or judicial review of the Employee's liability under Section 4999
of the Code by the Internal Revenue Service or any comparable state agency
through and including a final judicial determination or final administrative
settlement of any dispute arising out of the Employee's liability for the Excise
Tax or otherwise relating to the classification for purposes of Section 280G of
the Code of any of the Covered Benefits or other payment or benefit in the
nature of compensation made or provided to the Employee by the Bank or any
affiliate. The Employee shall promptly notify the Bank in writing whenever the
Employee receives notice of the commencement of any judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Agreement or otherwise
is being reviewed or is in dispute (including a notice of audit or other inquiry
concerning the reporting of the Employee's liability under Section 4999). The
Bank may assume control at its expense over all legal and accounting matters
pertaining to such federal or state tax treatment (except to the extent
necessary or appropriate for the Employee to resolve any such proceeding with
respect to any matter unrelated to the Covered Benefits or other payment or
benefit in the nature of compensation made or provided to the Employee by the
Bank) and the Employee shall cooperate fully with the Bank in any such
proceeding. The Employee shall not enter into any compromise or settlement or
otherwise prejudice any rights the Bank may have in connection therewith without
prior consent of the Bank. In the event that the Bank elects not to assume
control over such matters, the Bank shall promptly reimburse the Employee for
all expenses related thereto as and when incurred upon presentation of
appropriate documentation relating thereto.
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13. MISCELLANEOUS PROVISIONS.
(a) The Employee shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
(b) In the event that any dispute arises between the Employee
and the Bank as to the terms or interpretation of this Agreement, whether
instituted by formal legal proceedings or otherwise, including any action that
the Employee takes to enforce the terms of this Agreement or to defend against
any action taken by the Bank, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions. Such reimbursement shall be paid within ten (10) days
after the Employee furnishes to the Bank written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs or
expenses incurred by the Employee.
(c) Any payments made to the Employee under this Agreement are
subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k)
and any regulations promulgated thereunder.
(d) This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter,
including all prior employment agreements or other arrangements providing for
severance benefits upon termination of employment.
14. SUCCESSORS AND ASSIGNS.
(a) This Employment Agreement shall inure to the benefit of
and be binding upon any corporate or other successor of the Bank which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets of the Bank.
(b) Since the Bank is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Bank.
15. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
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16. APPLICABLE LAW. This Agreement shall be governed by all respects
whether as to validity, construction, capacity, performance or otherwise, by the
laws of Massachusetts.
17. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: CENTRAL COOPERATIVE BANK
/s/ Xxxxxx X. Xxxxxxx, Xx. By /s/ Xxxxxxx X. Xxxxxxx
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WITNESS: /s/ Xxxx X. Xxxxxxx
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EMPLOYEE
/s/ Xxxxx X. Xxxxxx
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