EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of March 27, 1996, by and
between FALMOUTH CO-OPERATIVE BANK (the "Bank"), and XXXXXX X. XXXXX, III (the
"Executive").
WHEREAS, the Bank wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and upon the other terms and conditions hereinafter provided,
the parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive
agrees to serve as Treasurer of the Bank. During said period, Executive also
agrees to serve, if elected, as a director of the Bank and/or as an officer and
director of any subsidiary or affiliate of the Bank.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have
commenced as of the date first above written and shall continue for a period of
twenty-four (24) full calendar months thereafter. Commencing on the first
anniversary date, and continuing at each anniversary date thereafter, the Board
of Directors of the Bank (the "Board") may extend the Agreement for an
additional year. Prior to the extension of the Agreement as provided herein, the
Board of Directors of the Bank will conduct a formal performance evaluation of
the Executive for purposes of determining whether to extend the Agreement, and
the results thereof shall be included in the minutes of the Board's meeting.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder including activities and services related to the organization,
operation and management of the Bank; provided, however, that, with the approval
of the Board, as evidenced by a resolution of such Board, from time to time,
Executive may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations which, in
such Board's judgment, will not present any conflict of interest with the Bank,
or materially affect the performance of Executive's duties pursuant to this
Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Sections 1
and 2. The Bank shall pay Executive as compensation a salary of $57,000 per year
("Base Salary"). Such Base Salary shall be payable weekly. During the period of
this Agreement, Executive's Base Salary shall be reviewed at least annually; the
first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board. Executive's salary may be increased annually as of the first payroll
period ending in ____________________ of each year during the term of this
Agreement by such additional amount as may be determined by the Board. The
Employee shall not be entitled to receive fees for serving as a director of the
Bank or any subsidiary of the Bank, or for serving as a member of any committee
of the Board of Directors of the Bank or of any subsidiary of the Bank. In
addition to the Base Salary provided in this Section 3(a), Executive shall be
entitled to participate in an equitable manner with all other executive officers
in discretionary bonuses as may be authorized, declared and paid by the Board to
executive officers during the term of this Agreement. The Bank shall also
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to permanent full-time employees of the Bank.
(b) The Bank will provide Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Bank will not, without
Executive's prior written consent, make any changes in such plans, arrangements
or perquisites which would adversely affect Executive's rights or benefits
thereunder. Without limiting the generality of the foregoing provisions of this
Subsection (b), Executive will be entitled to participate in or receive benefits
under any employee benefit plans including, but not limited to, retirement
plans, supplemental retirement plans, pension plans, profit-sharing plans,
health and accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Bank in the future to its senior executives
and key management employees, subject to, and on a basis consistent with, the
terms, conditions and overall administration of such plans and arrangements.
Executive will be entitled to incentive compensation and bonuses as provided in
any plan, or pursuant to any arrangement of the Bank, in which Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement, except as provided under Section
5(e).
(c) In addition to the Base Salary provided for by paragraph
(a) of this Section 3, the Bank shall pay or reimburse Executive for all
reasonable travel and other obligations under this Agreement and may provide
such additional compensation in such form and such amounts as the Board may from
time to time determine.
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4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank of Executive's full-time employment hereunder for any
reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; retirement, as defined in
Section 7 hereof; or for Cause, as defined in Section 8 hereof; (ii) Executive's
resignation from the Bank's employ, upon (A) unless consented to by the
Executive, a material change in Executive's function, duties, or
responsibilities, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Sections 1 and 2, above (any such material change shall be
deemed a continuing breach of this Agreement), (B) a relocation of Executive's
principal place of employment by more than 35 miles from its location at the
effective date of this Agreement, or a material reduction in the benefits and
perquisites to the Executive from those being provided as of the effective date
of this Agreement, (C) the liquidation or dissolution of the Bank, or (D) any
breach of this Agreement by the Bank. Upon the occurrence of any event described
in clauses (A), (B), (C), or (D), above, Executive shall have the right to elect
to terminate his employment under this Agreement by resignation upon not less
than sixty (60) days prior written notice given within a reasonable period of
time not to exceed, except in case of a continuing breach, four calendar months
after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, the Bank
shall pay Executive or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due to the Executive for the
remaining term of the Agreement, including Base Salary, bonuses, and any other
cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Bank as of the Date of Termination), to the Executive for the
term of the Agreement provided, however, that if the Bank is not in compliance
with its minimum capital requirements or if such payments would cause the Bank's
capital to be reduced below its minimum capital requirements, such payments
shall be deferred until such time as the Bank is in capital compliance. All
payments made pursuant to this Section 4(b) shall be paid in substantially equal
monthly installments over the remaining term of this Agreement following the
Executive's termination; provided, however, that if the remaining term of the
Agreement is less than one (1) year (determined as of the Executive's Date of
Termination), such payments and benefits shall be paid to the Executive in a
lump sum within 30 days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination, the Bank
will cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Bank for Executive
prior to his termination. Such coverage shall cease upon the expiration of the
remaining term of this Agreement.
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5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have occurred a Change in Control of the Bank, as set forth below.
For purposes of this Agreement, a "Change in Control" of the Bank shall mean an
event of a nature that: (i) it would be required to be reported in response to
Item l(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx"); or (ii) it results in a Change in Control of the Bank within
the meaning of the Change in Bank Control Act and the Rules and Regulations
promulgated by the Federal Deposit Insurance Agency ("FDIC") or the
Massachusetts Division of Banks, as in effect on the date hereof (provided that
in applying the definition of change in control as set forth in the rules and
regulations of the FDIC, the Board of the Bank shall substitute its judgment for
that of the FDIC); or (iii) without limitation, such a Change in Control shall
be deemed to have occurred at such time as (a) any "person" (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank representing 20% or more of the Bank's
outstanding securities except for any securities purchased by the Bank's
employee stock ownership plan and trust; or (b) individuals who constitute the
Board of the Bank on the date hereof (the "Incumbent Board") cease for any
reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election was approved by
a vote of at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Bank's stockholders was approved
by the same Nominating Committee serving under an Incumbent Board, shall be, for
purposes of this clause (b), considered as though he were a member of the
Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Bank or similar transaction in which
the Bank is not the resulting entity occurs. Notwithstanding the foregoing, a
"Change of Control" shall not include the formation by the Bank of a holding
company at any time subsequent to the effective date of this Agreement.
(b) If any of the events described in Section 5(a) hereof
constituting a Change in Control have occurred or the Board of the Bank has
determined that a Change in Control has occurred, Executive shall be entitled to
the benefits provided in paragraphs (c), (d) and (e) of this Section 5 upon his
subsequent termination of employment at any time during the term of this
Agreement (regardless of whether such termination results from his dismissal or
his resignation at any time during the term of this Agreement), unless such
termination is because of his death, retirement as provided in Section 7,
termination for Cause, or termination for Disability.
(c) Upon the occurrence of a Change in Control followed by the
Executive's termination of employment, the Bank shall pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay or liquidated damages, or both, a sum equal
to two times the Executive's "base amount," within the meaning of s. 280G(b)(3)
of the Internal Revenue Code of 1986. Such payment shall be made in a lump sum
paid within ten (10) days of the Executive's Date of Termination.
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(d) Upon the occurrence of a Change in Control followed by the
Executive's termination of employment, the Bank will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Bank for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer contributions that
would have been made on the Executive's behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the Bank as of the
Date of Termination. Such coverage and payments shall cease upon the expiration
of twenty-four (24) months.
(e) Upon the occurrence of a Change in Control, the Executive
shall be entitled to receive benefits due him under, or contributed by the Bank
on his behalf, pursuant to any retirement, incentive, profit sharing, bonus,
performance, disability or other employee benefit plan maintained by the Bank on
the Executive's behalf to the extent that such benefits are not otherwise paid
to the Executive upon a Change in Control.
6. TERMINATION FOR DISABILITY.
(a) If, as a result of Executive's incapacity due to physical
or mental illness, he shall have been absent from his duties with the Bank on a
full-time basis for six (6) consecutive months, and within thirty (30) days
after written notice of potential termination is given, he shall not have
returned to the full-time performance of his duties, the Bank may terminate
Executive's employment for "Disability."
(b) The Bank will pay Executive, as disability pay, a payment
equal to three-quarters (3/4) of Executive's weekly rate of Base Salary on the
effective date of such termination. These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Bank in the same
capacity as he was employed prior to his termination for Disability and pursuant
to an employment agreement between Executive and the Bank; (ii) Executive's
full-time employment by another employer; (iii) Executive attaining the age of
65; (iv) Executive's death; or (v) the expiration of the term of this Agreement.
The disability pay shall be reduced by the amount, if any, paid to the Executive
under any plan of the Bank providing disability benefits to the Executive.
(c) The Bank will cause to be continued life, medical, dental
and disability coverage substantially identical to the coverage maintained by
the Bank for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date Executive returns to
the full-time employment of the Bank, in the same capacity as he was employed
prior to his termination for Disability and pursuant to an employment agreement
between Executive and the Bank; (ii) Executive's full-time employment by another
employer; (iii) Executive's attaining the age of 65; (iv) the Executive's death;
or (v) the expiration of the term of this Agreement.
(d) Notwithstanding the foregoing, there will be no reduction
in the
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compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF THE EXECUTIVE.
Termination by the Bank of the Executive based on "Retirement"
shall mean retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Bank and other plans to which Executive is a party. Upon
the death of the Executive during the term of this Agreement, the Bank shall pay
to the Executive's estate the compensation due to the Executive through the last
day of the calendar month in which his death occurred.
8. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination upon
intentional failure to perform stated duties, personal dishonesty which results
in loss to the Bank or one of its affiliates, willful violation of any law,
rule, regulation (other than traffic violations or similar offenses), or final
cease and desist order concerning conduct which results in substantial loss to
the Bank or one of its affiliates, or any material breach of this Agreement. For
purposes of this Section, no act, or the failure to act, on Executive's part
shall be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interest
of the Bank or its affiliates. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than three-fourths of the members of the Board at a
meeting of the Board called and held for that purpose (after reasonable notice
to Executive and an opportunity for him, together with counsel, to be heard
before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying termination for Cause and specifying
the reasons thereof. The Executive shall not have the right to receive
compensation or other benefits for any period after termination for Cause. Any
stock options granted to Executive within the twelve months prior to termination
for Cause under any stock option plan or any unvested awards granted under any
other stock benefit plan of the Bank, shall become null and void effective upon
Executive's receipt of Notice of Termination for Cause pursuant to Section 9
hereof, and shall not be exercisable by Executive at any time subsequent to such
Termination for Cause.
9. REQUIRED PROVISIONS.
(a) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 8
herein.
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(b) If the Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Bank's affairs by a notice
served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act
("FDIA") (12 U.S.C. 1818(e)(3) and (g)(1)), the Bank's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
may, in its discretion, (i) pay the Executive all or part of the compensation
withheld while its contract obligations were suspended and (ii) reinstate (in
whole or in part) any of its obligations that were suspended.
(c) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)), all
obligations of the Bank under the Agreement shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall not be
affected.
(d) If the Bank is in default (as defined in Section 3(x)(1)
of the FDIA), all obligations under this Agreement shall terminate as of the
date of default, but this paragraph shall not affect any vested rights of the
parties.
(e) All obligations under this Agreement may be terminated:
(i) by the Commissioner of Banks (the "Commissioner") or his or her designee at
the time the Federal Deposit Insurance Corporation enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of the FDIA and (ii) by the Commissioner, or his or her designee
at the time the Director or such designee approves a supervisory merger to
resolve problems related to operation of the Bank or when the Bank is determined
by the Commissioner or the FDIC to be in an unsafe or unsound condition. Any
rights of the parties that have already vested, however, shall not be affected
by such action.
(f) Any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon compliance with 12
U.S.C. s.1828 (k) and any regulations promulgated thereunder.
10. NOTICE.
(a) Any purported termination by the Bank or by Executive
shall be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean (A) if Executive's
employment is terminated for Disability, thirty (30) days after a Notice of
Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such thirty
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(30) days period), and (B) if his employment is terminated for any other reason,
the date specified in the Notice of Termination (which, in the case of a
Termination for Cause, shall not be less than thirty (30) days from the date
such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, except upon
the occurrence of a Change in Control and voluntary termination by the Executive
in which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
11. CONFIDENTIALITY.
Executive recognizes and acknowledges that the knowledge of
the business activities and plans for business activities of the Bank and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Bank. Executive will not, during or
after the term of his employment, disclose any knowledge of the past, present,
planned or considered business activities of the Bank or affiliates thereof to
any person, firm, corporation, or other entity for any reason or purpose
whatsoever. Notwithstanding the foregoing, Executive may disclose any knowledge
of banking, financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Bank. In the event of a breach or threatened breach by the Executive of the
provisions of this Section, the Bank will be entitled to an injunction
restraining Executive from disclosing, in whole or in part, the knowledge of the
past, present, planned or considered business activities of the Bank or
affiliates thereof, or from rendering any services to any person, firm,
corporation, other entity to whom such knowledge, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein will be construed as
prohibiting the Bank from pursuing any other remedies available to the Bank for
such breach or threatened breach, including the recovery of damages from
Executive.
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12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to the Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
14. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation, or to
execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to affect any such action shall
be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the
benefit of, Executive and, the Bank and their respective successors and assigns.
15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there by any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
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17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
18. GOVERNING LAW.
This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts, unless otherwise specified herein.
19. INDEMNIFICATION.
The Bank shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense, or in lieu thereof, shall
indemnify Executive (and his heirs, executors and administrators) to the fullest
extent permitted under law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Bank (whether or not he continues to be a director or officer
at the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgment, court costs and
attorneys' fees and the cost of reasonable settlements.
20. SUCCESSORS TO THE BANK.
The Bank shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
21. GENERAL PROVISIONS.
The parties hereto acknowledge that this Agreement was drafted
by the law firm of Xxxxxxxx & Xxxxxxxx which at various times has served a
special counsel to the Bank. Executive acknowledges that he is sophisticated in
business matters (including, but not limited to, employment agreements) and that
he has had the opportunity to seek independent legal advice. Executive
specifically waives any actual or apparent conflict of interest of Xxxxxxxx &
Xxxxxxxx in connection with the preparation and negotiation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and their seal to be affixed hereunto by its duly
authorized officers and directors, and Executive has signed this Agreement, on
the 27th day of March, 1996.
ATTEST: FALMOUTH CO-OPERATIVE BANK
BY: /s/ Xxxxx X. Xxxxxxxxxxx
-----------------------------
[SEAL]
WITNESS:
/s/ Xxxx X. XxXxxxx /s/ Xxxxxx X. Xxxxx, III
----------------------------- -----------------------------
XXXXXX X. XXXXX, III
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