Exhibit 10.6
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (the "Agreement") is made and entered into
by and between ____________ (the "Employee"), HAMPDEN BANK, a
Massachusetts-chartered savings bank, with its principal administrative office
at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000 (the "Bank"), and HAMPDEN BANCORP,
INC., a corporation organized under the laws of the State of Delaware, the
holding company for the Bank (the "Holding Company"), effective as of the latest
date set forth by the signatures of the parties hereto below (the "Effective
Date").
WHEREAS, it is expected that the Bank and/or the Holding Company from time
to time will consider the possibility of an acquisition by another company or
other change in control. The Board of Directors of the Bank (the "Board")
recognizes that such consideration can be a distraction to the Employee and can
cause the Employee to consider alternative employment opportunities. The Board
has determined that it is in the best interests of the Bank and its shareholders
to assure that the Bank will have the continued dedication and objectivity of
the Employee, notwithstanding the possibility, threat or occurrence of a Change
in Control (as defined below) of the Bank or the Holding Company.
WHEREAS, the Board believes that it is in the best interests of the Bank
and its shareholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Bank upon a
Change in Control for the benefit of its shareholders.
WHEREAS, the Board believes that it is imperative to provide the Employee
with certain severance benefits upon Employee's termination of employment
following a Change in Control that provides the Employee with enhanced financial
security and provides incentive and encouragement to the Employee to remain with
the Bank notwithstanding the possibility of a Change in Control.
NOW, THEREFORE, in consideration of the mutual promises, terms, provisions,
and conditions contained in this Agreement, the parties hereby agree as follows:
1. TERM OF AGREEMENT. The initial term of this Agreement shall
commence as of the Effective Date and shall continue for two (2) years. The
Board may extend the term of this Agreement for a successive one (1) year term
at the end of the initial term, in its discretion.
2. AT-WILL EMPLOYMENT. The Bank and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
Massachusetts law at the time of the execution of this Agreement. If the
Employee's employment terminates (a) for any reason before a Change in Control
(defined below), (b) for Cause (defined below) following a Change in Control,
(c) without Good Reason (defined below) following a Change in Control, or (d) as
a result of the Employee's Death or Disability (defined below), the Employee
shall not be entitled to any payments, benefits, damages, awards or compensation
other than as provided by this Agreement or as may otherwise be available in
accordance with the Bank's established employee plans and practices or pursuant
to other agreements with the Bank.
3. PAYMENTS IN CONNECTION WITH A CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" shall mean
any of the following events:
(1) MERGER. The Bank or the Holding Company merges into or
consolidates with another entity, or merges another corporation into
the Bank or Holding Company, and as a result, less than a majority
of the combined voting power of the resulting corporation
immediately after the merger or consolidation is held by persons who
were stockholders of the Bank or the Holding Company immediately
before the merger or consolidation;
(2) ACQUISITION OF SIGNIFICANT SHARE OWNERSHIP. There is filed, or
is required to be filed, a report on Schedule 13D or another form or
schedule (other than Schedule 13G) required under Sections 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended, if the
schedule discloses that the filing person or persons acting in
concert has or have become the beneficial owner of 25% or more of a
class of the Bank or the Holding Company's voting securities, but
this clause (ii) shall not apply to beneficial ownership of Bank or
Holding Company voting shares held in a fiduciary capacity by an
entity of which the Bank or the Holding Company directly or
indirectly beneficially owns 50% or more of its outstanding voting
securities.
(3) CHANGE IN BOARD COMPOSITION. During any period of two
consecutive years, individuals who constitute the Bank's or the
Holding Company's Board of Directors at the beginning of the
two-year period cease for any reason to constitute at least a
majority of the Bank's or the Holding Company's Board of Directors;
provided, however, that for purposes of this clause (iii), each
director who is first elected by the board (or first nominated by
the board for election by the members) by a vote of at least
two-thirds (2/3) of the directors who were directors at the
beginning of the two-year period shall be deemed to have also been a
director at the beginning of such period; or
(4) SALE OF ASSETS. The Bank or the Holding Company sells to a third
party all or substantially all of its assets.
(5) TENDER OFFER. A tender offer is made for 25% or more of the
voting securities of the Bank or the Holding Company.
(b) For purposes of this Agreement, "Termination for Cause" shall mean
termination because of, in the good faith determination of the Board,
Employee's:
(1) Act of dishonesty, falsification of Bank or Holding Company
documents, or other intentional misrepresentation related to business matters of
the Bank or the Holding Company;
(2) Incompetence;
(3) Willful misconduct or action in bad faith;
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(4) Breach of fiduciary duty;
(5) Failure to substantially perform his stated duties and
obligations to the Bank, including, but not limited to, one or more
acts of gross negligence;
(6) Willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses) that reflects adversely on
the reputation of the Bank or the Holding Company, any felony
conviction, any violation of law involving moral turpitude, or any
violation of a final cease-and-desist order;
(7) Commission of any tortious act, unlawful act or malfeasance that
causes or reasonably could cause harm to the Bank or the Holding
Company;
(8) Material breach of any provision of this Agreement, or the
written policies of the Bank and/or Holding Company (including, but
not limited to the Hampden Bank Code of Ethics and Conflict of
Interest Policy); and/or
(9) Violation of the Securities Act of 1933 or the Securities
Exchange Act of 1934.
(c) For purposes of this Agreement, "Good Reason" shall exist if,
without Employee's express written consent, the Bank or the Holding Company
materially breaches any of its obligations under this Agreement. Such a material
breach shall be deemed to occur upon any of the following:
(1) A material reduction in Employee's responsibilities or authority
in connection with his employment with the Bank or the Holding
Company;
(2) Following a Change in Control, any material reduction in salary
or benefits below the amounts Employee was entitled to receive
before the Change in Control; or
(3) A requirement that Employee relocate his principal business
office or his principal place of residence outside of the area
consisting of a thirty-five (35) mile radius from the current main
office of the Bank and any branch of the Bank, or the assignment to
Employee of duties that would reasonably require such a relocation.
Notwithstanding the foregoing, a reduction or elimination of Employee's
benefits under one or more benefit plans maintained as part of a good faith,
overall reduction or elimination of such plans or benefits, applicable to all
participants in a manner that does not discriminate against Employee (except as
such discrimination may be necessary to comply with law), will not constitute an
event of Good Reason or a material breach of this Agreement, provided that
benefits of the same type or to the same general extent as those offered under
such plans before the reduction or elimination are not available to other
officers of the Bank or any affiliate under a plan or plans in or under which
Employee is not entitled to participate.
(d) For purposes of this Agreement, "Disability" shall have the same
meaning given to such term under the Bank's Long-Term Disability plan as in
effect from time to time, or, if no such plan is then in effect, the meaning
described in Section 22(c)(3) of the Internal Revenue Code (the "Code").
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(e) In the event that, upon a change in ownership or control within the
meaning of Section 409A(a)(2)(A)(v) of the Code, Employee is offered employment
with the Bank or its successor that is comparable in terms of compensation and
responsibilities, and Employee stays for six (6) months after the change in
ownership or control is completed, Employee shall receive a lump sum payment in
the amount of three (3) months base salary.
(f) TERMINATION. If within the period ending two (2) years after a
Change in Control, (i) the Bank or the Holding Company terminates Employee's
employment Without Cause (defined in Section 3(b)), or (ii) Employee voluntarily
terminates his employment With Good Reason (defined in Section 3(c)), the Bank
will pay Employee, not later than ten (10) calendar days after the date of
termination of Employee's employment:
(1) Employee's base salary through the effective date of
termination, and payment for any accrued but unpaid compensation;
(2) one lump-sum cash payment equal to one (1) times Employee's
average "Annual Compensation" over the five (5) most recently
completed calendar years, ending with the year immediately preceding
the effective date of the Change in Control. In determining
Employee's average "Annual Compensation", "Annual Compensation" will
include base salary and any other taxable income including, but not
limited to, amounts related to the granting, vesting or exercise of
restricted stock or stock option awards, commissions, bonuses,
retirement benefits, director or committee fees and fringe benefits
paid or accrued for Employee's benefit. Annual compensation will
also include profit sharing, Employee stock ownership plan and other
retirement contributions or benefits, including to any tax-qualified
plan or arrangement (whether or not taxable) made or accrued on
behalf of Employee for such year; and
(3) directly, or by reimbursing the Employee for, the monthly
premium for continuation coverage under the Bank's health, dental
and disability insurance plans, to the same extent that such
insurance is provided to persons currently employed by the Bank,
provided that the Employee makes a timely election for such
continuation coverage under the Consolidate Omnibus Budget
Reconciliation Act of 1985 ("COBRA"). The "qualifying event" under
COBRA shall be deemed to have occurred on the termination date. The
Bank's obligation under this paragraph shall end 18 months after the
termination date or at such earlier date as the Employee becomes
eligible for comparable coverage under another employer's group
coverage. The Employee agrees to notify the Bank promptly and in
writing of any new employment and to make full disclosure to the
Bank of the health and dental insurance coverage available to him
through such new employment.
(g) VOLUNTARY RESIGNATION; TERMINATION FOR CAUSE. If the Employee's
employment terminates by reason of the Employee's voluntary resignation (and is
not for Good Reason), or if the Employee is terminated for Cause, then the
Employee shall not be entitled to receive severance or other benefits except for
those (if any) as may then be established under the Bank's then existing
severance and benefits plans and practices or pursuant to other written
agreements with the Bank.
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(h) DISABILITY; DEATH. If the Bank terminates the Employee's employment
as a result of the Employee's Disability, or such Employee's employment is
terminated due to the death of the Employee, then the Employee shall not be
entitled to receive severance or other benefits except for those (if any) as may
then be established under the Bank's then existing severance and benefits plans
and practices or pursuant to other written agreements with the Bank.
4. LIMITATION ON PAYMENTS. In the event that the severance and other
benefits provided for in this Agreement or otherwise payable to the Employee (i)
constitute "parachute payments" within the meaning of Section 280G of the Code
and (ii) but for this Section 4, would be subject to the excise tax imposed by
Section 4999 of the Code, then the Employee's severance benefits shall be
either:
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to excise tax under Section
4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal.
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Employee on an after-tax basis, of the greatest amount of
severance benefits, notwithstanding that all or some portion of such severance
benefits may be taxable under Section 4999 of the Code. Unless the Bank and the
Employee otherwise agree in writing, any determination required under this
Section 4 shall be made in writing by the Bank's independent public accountants
immediately prior to Change in Control (the "Accountants"), whose determination
shall be conclusive and binding upon the Employee and the Bank for all purposes.
For purposes of making the calculations required by this Section 1, the
accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Bank and
the Employee shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this Section. The Bank shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this Section 4.
5. CONFIDENTIALITY AND NON-SOLICITATION.
(a) CONFIDENTIALITY.
(1) "Confidential Information" is information however delivered,
disclosed, or discovered during the term of Employee's employment,
which Employee has, or in the exercise of ordinary prudence should
have, reason to believe is confidential, or which the Bank
designates as confidential including, but not limited to:
(i) BANK INFORMATION: Bank or Holding Company proprietary
information, technical data, trade secrets or know-how,
including, but not limited to: research, processes, pricing
strategies, communication strategies, sales strategies, sales
literature, sales contracts, product plans, products,
inventions, methods, services, computer codes or instructions,
software and software documentation, equipment, costs,
customer lists, business studies, business procedures,
finances and other business information disclosed to Employee
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by the Bank or the Holding Company, either directly or
indirectly in writing, orally or by drawings or observation of
parts or equipment and such other documentation and
information as is necessary in the conduct of the business of
the Bank and/or the Holding Company; and
(ii) THIRD PARTY INFORMATION: confidential or proprietary
information received by the Bank or the Holding Company from
third parties.
(2) The Bank's failure to xxxx any of the Confidential Information
as confidential or proprietary will not affect its status as
Confidential Information.
(3) Employee also agrees that the terms, conditions and subject
matter of this Agreement are considered Confidential Information.
(4) Confidential Information does not include information that has
ceased to be confidential by reason of any of the following: (i) was
in Employee's possession prior to the date of his or her initial
employment with the Bank, provided that such information is not
known by Employee to be subject to another confidentiality agreement
with, or other obligation of secrecy to, the Bank, the Holding
Company, or another party; (ii) is generally available to the public
and became generally available to the public other than as a result
of a disclosure in violation of this Agreement; (iii) became
available to Employee on a non-confidential basis from a third
party, provided that such third party is not known by Employee to be
bound by a confidentiality agreement with, or other obligation of
secrecy to, the Bank, the Holding Company, or another party or is
otherwise prohibited from providing such information to Employee by
a contractual, legal or fiduciary obligation; or (iv) Employee is
required to disclose pursuant to applicable law or regulation (as to
which information, Employee will provide the Bank with prior notice
of such requirement and, if practicable, an opportunity to obtain an
appropriate protective order).
(5) Employee shall not, either during or after the termination of
his or her employment with the Bank, communicate or disclose to any
third party the substance or content of any Confidential Information
(defined above), or use such Confidential Information for any
purpose other than the performance of Employee's obligations
hereunder. Employee acknowledges and agrees that any Confidential
Information obtained by Employee during the performance of his or
her employment concerning the business or affairs of the Bank, or
any subsidiary, affiliate or joint venture of the Bank is the
property of the Bank, or such subsidiary, affiliate or joint venture
of the Bank, as the case may be.
(6) Employee agrees to return all Confidential Information,
including all copies and versions of such Confidential Information
(including, but not limited to, information maintained on paper,
disk, CD-ROM, network server, or any other retention device
whatsoever) and other property of the Bank, to the Bank within two
(2) business days of his or her separation from the Bank (regardless
of the reason for the separation).
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(7) RECOGNITION OF GOOD WILL. Employee further recognizes and
acknowledges that in the course of employment he is and will be
introduced to customers and others with important relationships to
the Bank. Employee acknowledges and agrees that any and all
"goodwill" associated with any existing or prospective customer,
account or business partner belongs exclusively to the Bank
including, but not limited to, any goodwill created as a result of
direct or indirect contacts or relationships between Employee and
any existing or prospective customers, accounts, business partners
and other key relationships of the Bank.
(b) NON-SOLICITATION. In view of the covenants above, and as a material
inducement to the Bank to enter into this Agreement and to pay to Employee the
compensation stated in Section 3, Employee agrees that during his employment and
for a period of six (6) months thereafter (the "Non-Solicitation Period"),
Employee shall not, either individually or on behalf of or through any third
party, directly or indirectly, engage in the following activities:
(1) CUSTOMER, CLIENT AND VENDOR NON-SOLICITATION. Solicit, divert,
appropriate or take away, or attempt to solicit, divert, appropriate
or take away, the business or patronage of any of the clients,
customers or vendors of the Bank that were clients, customers or
vendors of the Bank while Employee was employed by the Bank and that
were serviced by Employee, or prospective clients, customers or
vendors with which Employee had written or oral communications while
Employee was employed by the Bank.
(2) EMPLOYEE NON-SOLICITATION. Hire, retain, recruit, entice,
induce, solicit or encourage any employee or consultant to terminate
their employment with, or otherwise cease their relationship with,
the Bank or its parent, subsidiaries or affiliates. This section
5(c)(2) shall prohibit the aforesaid actions by Employee with
respect to any person both while such person is a current employee
or consultant of the Bank or such related entities, and for the
ninety (90) day period after such person's employment or consultancy
with the Bank terminates.
The terms of this Section 5 of the Agreement are in addition to, and not in
lieu of, any other contractual, statutory or common law obligations that
Employee may have relating to the protection of the Bank's Confidential
Information or its property. The terms of this section shall survive
indefinitely Employee's employment with the Bank, provided that the Confidential
Information of the Bank remains confidential and is not a matter of public
knowledge.
6. POST-TERMINATION OBLIGATIONS. Any and all payments and benefits due
to Employee under this Agreement are subject to his compliance with Section 5 of
this Agreement. Upon a good faith finding by the Board that Employee breached
Section 5 of this Agreement, the Bank shall be excused from making any and all
payments under this Agreement and Employee shall return to the Bank all previous
payments made to him under this Agreement.
7. SUCCESSORS.
(a) SUCCESSOR TO BANK. The Bank shall require any successor or
assignee, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all of the business or assets of the Bank or
the Holding Company, expressly and unconditionally to assume
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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.
(b) SUCCESSOR TO THE EMPLOYEE. Neither this Agreement nor any right
or interest hereunder will be assignable or transferable by the Employee, his
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement will inure to the benefit of and be enforceable
by the Employee's legal personal representative.
8. NOTICES.
All notices, requests, demands and other communications in connection with
this Agreement shall be made in writing and shall be deemed to have been given
when delivered by hand or 48 hours after mailing at any general or branch United
States Post Office, by registered or certified mail, postage prepaid, addressed
to the Bank at its principal business offices and to Employee at his home
address as maintained in the records of the Bank.
9. SOURCE OF PAYMENTS. All payments provided in this Agreement shall
be paid in from the general funds of the Bank. In the event, however, that the
Bank is unable to make such payments to the Employee, such amounts shall be paid
or provided by the Holding Company.
10. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
other source.
(b) WAIVER. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer of the Bank
(other than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time. Further, the Bank's waiver of its right
to enforce similar conditions or provisions in another employee's agreement
(employment or other) shall not operate as a waiver of its right to enforce any
of the conditions or provisions in this Agreement.
(c) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto and supersedes in their entirety all prior
undertakings and agreements of the parties.
(d) CHOICE OF LAW; ENFORCEABILITY; WAIVER OF JURY TRIAL.
(1) THE LAW OF MASSACHUSETTS APPLIES TO THIS AGREEMENT.
This Agreement and all transactions contemplated by this Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the Commonwealth of Massachusetts, without regard to principles of conflicts of
law.
(2) ANY DISPUTE REGARDING THIS AGREEMENT WILL TAKE PLACE
IN MASSACHUSETTS. The Parties agree that this Agreement shall be enforced by the
Business Litigation
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Session of the Massachusetts Superior Court located in Suffolk County, which
retains exclusive jurisdiction and venue for any actions or proceedings, demand,
claim or counterclaim relating to, or arising under, the terms and provisions of
this Agreement, or to its breach. The Parties further acknowledge that material
witnesses and documents would be located in Massachusetts.
(e) SEVERABILITY. If a court of competent jurisdiction determines
that any portion of this Agreement is illegal, invalid or unenforceable, then
that portion shall be considered to be removed from the Agreement and it shall
not affect the legality, validity or enforceability of the remainder of the
Agreement and the remainder of the Agreement shall continue in full force and
effect. Similarly, if the scope of any restriction or covenant contained herein
should be or become too broad or extensive to permit enforcement thereof to its
full extent, then the court is specifically authorized by the parties to enforce
any such restriction or covenant to the maximum extent permitted by law, and
Employee hereby consents and agrees that the scope of any such restriction or
covenant may be modified accordingly in any judicial proceeding brought to
enforce such restriction or covenant.
(f) WITHHOLDING. All payments made pursuant to this Agreement will
be subject to withholding of applicable income and employment taxes.
(g) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
___________, 2006.
ATTEST: HAMPDEN BANK
By:
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Corporate Secretary For the Entire Board of Directors
ATTEST: HAMPDEN BANCORP, INC.
By:
---------------------------- -----------------------------
Corporate Secretary For the Entire Board of Directors
WITNESS: EMPLOYEE:
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Corporate Secretary
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