EMPLOYMENT AGREEMENT
Exhibit 10.5.1
THIS AGREEMENT (the “Agreement”) made this 16th day of January, 2007, by and between HAMPDEN BANK, a Massachusetts-chartered savings bank, with its principal administrative office at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000 (the “Bank”), HAMPDEN BANCORP, INC., a corporation organized under the laws of the State of Delaware, the holding company for the Bank (the “Holding Company”), and XXXXXX X. XXXXXX (the “Executive”).
WHEREAS, Executive serves in a position of substantial responsibility; and
WHEREAS, the Bank wishes to assure Executive’s services for the term of this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Bank during the term of this Agreement.
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subsidiaries or affiliates, unfavorably affect the performance of the Executive’s duties pursuant to this Agreement, or violate any applicable statute or regulation.
(1) The Board shall review annually the rate of the Executive’s base salary based upon factors they deem relevant, and may maintain or increase his base salary, in its discretion. In addition, the Board may decrease the base salary in the event that the Board determines that financial exigencies require such decrease, provided that the compensation of all executives of the Bank is also reduced at the same time in a substantially commensurate manner.
(2) In the absence of action by the Board, the Executive shall continue to receive a base salary at the annual rate specified on the Effective Date or, if another rate has been established under the provisions of this Section 2, the rate last properly established by action of the Board under the provisions of this Section 2.
(f) EXPENSE PAYMENTS AND REIMBURSEMENTS. Executive shall be reimbursed for all reasonable out-of-pocket business expenses that Executive shall incur in connection with his
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services under this Agreement upon substantiation of such expenses in accordance with applicable policies of the Bank.
3. TERMINATION AND TERMINATION PAY.
Executive’s employment under this Agreement may be terminated in the following circumstances:
Upon any termination for disability, Executive will no longer be obligated to perform services under this Agreement. The Bank further will pay Executive, as Disability pay, an amount equal to one-hundred percent (100%) of Executive’s bi-weekly rate of base salary in effect as of the date of Executive’s termination of employment due to Disability. The Bank will make Disability payments on a monthly basis commencing on the first day of the month following the effective date of Executive’s termination of employment due to Disability and ending on the earlier of: (A) the date Executive returns to full-time employment in the same capacity as he was employed prior to Executive’s termination for Disability; (B) Executive’s death; (C) Executive’s attainment of age 65; or (D) the date this Agreement would have expired had Executive’s employment not terminated by reason of Disability. Such payments shall be reduced by the amount of any short- or long-term disability benefits payable to Executive under any other disability programs sponsored by the Bank or its affiliates. In addition, during any period of Executive’s Disability, the Bank will continue to provide Executive and his dependents, to the greatest extent possible, with continued coverage under all benefit plans (including, without limitation, retirement plans and medical, dental and life
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insurance plans) in which Executive and/or his dependents participated prior to Executive’s Disability on the same terms as if he remained actively employed by the Bank.
(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;
(3) Willful misconduct or action in bad faith;
(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.
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In the event of termination under this Section 3(f) (other than a termination without Cause or for Good Reason within two (2) years of a Change in Control (defined in Section 4(a)), in which event Section 4(c) shall apply), the Bank shall pay Executive:
(1) all Accrued Compensation;
(2) a severance payment equal to his base salary for the remaining term of the Agreement, paid periodically in accordance with the Bank’s customary payroll practices over the remaining term of the Agreement; and
(3) directly, or by reimbursing the Executive for, the monthly premium for continuation coverage under the Bank’s health and dental insurance plans, to the same extent that such insurance is provided to persons currently employed by the Bank, provided that the Executive 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 Executive becomes eligible for comparable coverage under another employer’s group coverage. The Executive 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.
In addition, Executive shall, for the remaining term of the Agreement, receive the benefits he would have received during the remaining term of the Agreement under any retirement programs (whether tax-qualified or non-qualified) in which Executive participated prior to his termination (with the amount of the benefits determined by reference to the benefits received by Executive or accrued on Executive’s behalf under such programs during the twelve (12) months preceding his termination) and continue to participate in any benefit plans of the Bank that provide life insurance, upon terms no less favorable than the most favorable terms provided to employees of the Bank during such period. In the event that the Bank is unable to provide such coverage by reason of Executive no longer being an employee, the Bank shall provide Executive with comparable coverage on an individual policy basis.
“Good Reason” shall exist if, without Executive’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 Executive’s responsibilities or authority in connection with his employment with the Bank or the Holding Company;
(2) Assignment to Executive of duties of a non-executive nature or duties for which he is not reasonably equipped by his skills and experience;
(3) Failure of Executive to be nominated or renominated to the Board to the extent Executive is a Board member prior to the Effective Date;
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(4) A material reduction in salary or benefits contrary to the terms of this Agreement, or, following a Change in Control (as defined in Section 4 of this Agreement), any material reduction in salary or benefits below the amounts Executive was entitled to receive before the Change in Control;
(5) A requirement that Executive 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 Executive of duties that would reasonably require such a relocation; or
(6) Liquidation or dissolution of the Bank or the Holding Company.
Notwithstanding the foregoing, a reduction or elimination of Executive’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 Executive (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 Executive is not entitled to participate.
4. 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.
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(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) In the event that, upon a change in ownership or control within the meaning of Section 409A(a)(2)(A)(v) of the Code, Executive is offered employment with the Bank or its successor that is comparable in terms of compensation and responsibilities, and Executive stays for six (6) months after the change in ownership or control is completed, Executive shall receive a lump sum payment in the amount of three (3) months base salary.
(1) all Accrued Compensation;
(2) one lump-sum cash payment equal to three (3) times Executive’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 Executive’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 Executive’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 Executive for such year; and
(3) directly, or by reimbursing the Executive for, the monthly premium for continuation coverage under the Bank’s health and dental insurance plans, to the same extent that such insurance is provided to persons currently
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employed by the Bank, provided that the Executive 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 Executive becomes eligible for comparable coverage under another employer’s group coverage. The Executive 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.
In addition, in such event, the Executive shall, for a thirty-six (36) month period following his termination of employment, receive the benefits he would have received over such period under any retirement programs (whether tax-qualified or nonqualified) in which the Executive participated prior to his termination (with the amount of the benefits determined by reference to the benefits received by the Executive or accrued on his behalf under such programs during the twelve (12) months preceding the Change in Control) and continue to participate in any benefit plans of the Bank that provide life insurance upon terms no less favorable than the most favorable terms provided to Executives of the Bank during such period. In the event that the Bank is unable to provide such coverage by reason of the Executive no longer being an Executive, the Bank shall provide the Executive with comparable coverage on an individual policy.
(d) The cash payments made under Section 4(c) shall be made in lieu of any payments also required under Section 3(f) of this Agreement because of Executive’s termination of employment.
5. CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION.
(1) “Confidential Information” is information however delivered, disclosed, or discovered during the term of Executive’s employment, which Executive 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 Executive 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
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documentation and information as is necessary in the conduct of the business of the Bank 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) Executive 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 Executive’s possession prior to the date of his initial employment with the Bank, provided that such information is not known by Executive 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 Executive on a non-confidential basis from a third party, provided that such third party is not known by Executive 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 Executive by a contractual, legal or fiduciary obligation; or (iv) Executive is required to disclose pursuant to applicable law or regulation (as to which information, Executive will provide the Bank with prior notice of such requirement and, if practicable, an opportunity to obtain an appropriate protective order).
(5) Executive 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 Executive’s obligations hereunder. Executive acknowledges and agrees that any Confidential Information obtained by Executive 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) Executive 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
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the Bank within two (2) business days of his separation from the Bank (regardless of the reason for the separation).
Executive further agrees that during the Non-Competition Period, he will not serve as an officer, director or employee of any bank holding company, bank, savings association, savings and loan holding company, mortgage company or other financial institution that offers products or services competing with those offered by the Bank or its subsidiaries or affiliates from any office within thirty-five (35) miles from the main office of the Bank or any branch of the Bank.
The foregoing shall not prohibit Executive from being a passive owner of not more than 5% of the outstanding stock of a corporation which is publicly traded, so long as Executive has no active participation in the business of the corporation.
(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 Executive was employed by the Bank and that were serviced by Executive, or prospective clients, customers or vendors with which Executive had written or oral communications while Executive was employed by the Bank.
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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 Executive may have relating to the protection of the Bank’s Confidential Information or its property. The terms of this section shall survive indefinitely Executive’s employment with the Bank, provided that the Confidential Information of the Bank remains confidential and is not a matter of public knowledge.
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(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 Executive 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 Executive otherwise agree in writing, any determination required under this Section 9 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 Executive 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 Executive 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 9.
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(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 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.
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17. CHOICE OF LAW; ENFORCEABILITY; WAIVER OF JURY TRIAL
(a) 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.
(b) ANY DISPUTE REGARDING THIS AGREEMENT WILL TAKE PLACE IN MASSACHUSETTS. The Parties agree that this Agreement shall be enforced by the Business Litigation 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.
19. HEADINGS. Headings contained in this Agreement are for convenience of reference only.
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including, without limitation, any non-competition or non-solicitation provision contained in any such agreement. Executive will indemnify and hold harmless the Bank and its officers, directors, security holders, partners, members, Executives, agents and representatives against loss, damage, liability or expense arising from any claim based upon circumstances alleged to be inconsistent with such representation and warranty.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on January 16, 2007.
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HAMPDEN BANK |
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/s/ Xxxxxx Xxxxx |
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By: |
/s/ Xxxxxx X. Xxxxxx |
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Corporate Secretary |
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For the Entire Board of Directors |
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ATTEST: |
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/s/ Xxxxxx Xxxxx |
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By: |
/s/ Xxxxxx X. Xxxxxx |
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Corporate Secretary |
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For the Entire Board of Directors |
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WITNESS: |
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EXECUTIVE: |
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/s/ Xxxxxx Xxxxx |
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/s/ Xxxxxx X. Xxxxxx |
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Corporate Secretary |
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Xxxxxx X. Xxxxxx |
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