SEVERANCE AGREEMENT
THIS AGREEMENT entered into this 17th day of March, 2005 ("Effective
Date"), by and between Central Co-operative Bank (the "Bank") and Xxxxx X.
Xxxxxxxxx (the "Employee").
WHEREAS, the Employee has heretofore been employed by the Bank as
Senior Vice President - Retail Banking; and
WHEREAS, the Bank deems it to be in its best interest to enter into
this Agreement as additional incentive to the Employee to continue as an
executive employee of the Bank; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event of
termination of Employee's employment under the circumstances set forth in this
Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Payment in the Event of Change in Control.
(a) If the Employee's employment is terminated by the
Bank, without the Employee's prior written consent, in connection with or within
twelve (12) months 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 two (2) times the Employee's annual base salary amount at the rate in
effect immediately prior to the date of the change in control. In no event,
however, shall such amount exceed the difference between (i) the product of 2.99
times the Employee's "base amount" as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code") and regulations
promulgated thereunder, and (ii) the sum of any other parachute payments (as
defined under Section 280G(b)(2) of the Code) that the Employee receives on
account of the change in control. 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.
(b) The Employee may voluntarily terminate his employment
under this Agreement within twelve (12) months 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 1(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
reduction in the Employee's base annual salary 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 reduce in any material respect
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.
(c) 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.
2. Term.
This Agreement shall remain in effect for the period
commencing on the Effective Date and ending on the earlier of (i) the date
thirty-six months after the Effective Date, and (ii) the date on which the
Employee terminates employment with the Bank; provided that the Employee's
rights hereunder shall continue following the termination of his employment with
the Bank under any of the circumstances described in Paragraphs 1(a) or (b)
hereof. Additionally, prior to each annual anniversary date from the Effective
Date, the term of this Agreement shall be automatically extended for a 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 affect any prior extensions of the term of this Agreement.
3. Expense Reimbursement.
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, provided that the Employee shall obtain a final non-appealable judgment
by a court of competent jurisdiction in favor of the Employee. 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.
4. Regulatory Requirements.
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.
5. Successors and Assigns.
This 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 or stock of the Bank.
6. Amendments.
No amendments or additions to this Agreement shall be binding
unless made in writing and signed by all of the parties, except as herein
otherwise specifically provided.
7. Applicable Law.
The laws of the Commonwealth of Massachusetts shall govern
this Agreement in all respects, whether as to its validity, construction,
capacity, performance or otherwise.
8. 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.
9. Entire Agreement.
This Agreement, together with any understanding or
modifications hereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto; provided however that nothing
herein shall be deemed alter or amend the rights or obligations of the Bank and
the Employee pursuant to any employee benefit or other plan, program or policy,
including, without limitation, the rights and obligations under any retirement,
insurance, group benefit, stock option, incentive bonus or other plan in which
the Employee is, or may become, a participant.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: CENTRAL CO-OPERATIVE BANK
By:
/s/ Xxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxx
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Clerk Xxxx X. Xxxxxxx
President and Chief Executive Officer
WITNESS: EMPLOYEE:
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
