Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of this 31st day of March, 2004 by and
between First Ipswich Bancorp, a Massachusetts corporation having its principal
place of business in Ipswich, Massachusetts ("Company"), and Xxxxxx X. Xxxx of
Ipswich, Massachusetts (the "Executive").
WITNESSETH THAT:
WHEREAS, the Executive is currently employed by the Company and has been
employed by the Company since 1998; and
WHEREAS, the Executive is currently, as has been for approximately six
years, employed as president by The First National Bank of Ipswich, a
wholly-owned subsidiary of the Company (the "Bank");
WHEREAS, the services of the Executive, the Executive's experience and
knowledge of the affairs of the Bank and the Company and the Executive's
reputation and contacts in the banking industry are valuable to the Company and
its subsidiaries; and
WHEREAS the Company desires to employ the Executive in an executive
capacity in the conduct of its business; and
WHEREAS the Executive desires to be so employed;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Term. The period of employment of the Executive under this Agreement
shall be deemed to commence as of the date first above written and shall
continue in effect through March 31, 2007; provided, however that commencing on
March 31, 2005 and on each March 31 thereafter the term of this Agreement shall
automatically be extended for one additional year unless during the 90 day
period preceding such March 31, either party hereto notifies the other by
written notice of his or its intent not to extend the same. Notwithstanding the
foregoing provisions of this Section 1, this Agreement shall terminate in any
event upon the Executive's attainment of age sixty-five (65) or, if earlier, the
normal retirement age provided in the Bank's qualified retirement plan, and the
Executive may resign from the Company at any time upon ninety (90) days prior
written notice to the Company. In addition to the foregoing, the term of this
agreement may be extended as provided in the Severance Agreement between the
Executive and the Company of even date.
2. Capacity.
(a) At all times during the term hereof, the Company shall employ
the Executive as its President and Chief Executive Officer. In such capacity,
the Executive shall be assigned only such duties and tasks as are appropriate
for a person in the position of President and Chief Executive Officer, and he
shall be subject to the supervision of the Board of Directors of the Company.
The Company shall employ the Executive on full-time basis, and (subject to the
last sentence of this paragraph) the Executive shall devote his full time and
professional efforts to the performance of his duties as President of the
Company and any office he may hold in each of its subsidiaries. It is the
intention of the Company and the Executive that the Executive shall have full
discretionary authority to control the day to day operations of the Company and
each subsidiary of the Company and to incur such obligations on behalf of such
entities as may be required in the ordinary course of their business. The
Company encourages participation by the Executive on community boards and
committees and in activities generally considered to be in the public interest,
but the Company shall have the right to approve the Executive's participation on
such other boards and committees as may conflict with the Company's own business
or demands upon the Executive's time.
(b) During the period of his employment by the Company the Executive
agrees to serve as President and Chief Executive Officer of the Bank without
additional compensation, except for reimbursement for all reasonable
out-of-pocket expenses.
(c) The Company agrees to propose to its shareholders at each Annual
Meeting of Shareholders during the term hereof for which he is otherwise
eligible, the reelection of the Executive as a Director of the Company, to vote
for the reelection of the Executive as a Director of the Bank and to cause
Executive to be employed as the President and Chief Executive Officer of the
Company and the Bank.
3. Compensation and Benefits.
(a) Base Compensation. With respect to the period beginning on the
date hereof and ending on December 31, 2004 and each twelve (12) month period
beginning on January 1 thereafter during the term hereof, the Company shall pay
to the Executive in equal weekly installments a base annual salary (prorated for
the period from the date hereof to December 31, 2004) in
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the amount of Two Hundred Twenty-Five Thousand ($225,000) Dollars. Each January
1 the base annual salary of the Executive shall be increased by an amount not
less than 4% of the previous calendar year's base annual salary, whereupon such
increased amount shall thereafter constitute the Executive's base annual salary.
It is the intention of the Company to compensate the Executive at a level at
least comparable to the compensation of persons employed in the position of
President and Chief Executive Officer of companies engaged in New England in
activities substantially similar to those of the Company and having
approximately the same combined gross assets as the Company and its
subsidiaries.
(b) Fringe Benefits. At all times during the term of this Agreement,
the Company shall provide or cause to be provided to the Executive the fringe
benefits set forth on Exhibit A to this Agreement, together with such other
benefits as may from time to time be provided generally for executive officers
of the Company or the Bank. The Executive shall maintain adequate records of all
reimbursable expenses necessary to satisfy reporting requirements of the
Internal Revenue Code and applicable Treasury regulations.
4. Non-Competition. At all times during the term of this Agreement in
which the Executive is employed by the Company and for a period thereafter of
one (1) year (the "Non-Competition Term"), the Executive shall not, directly or
indirectly, as an Executive of any person or entity (whether or not engaged in
business for profit), individual proprietor, partner, stockholder, director,
officer, joint venturer, investor, lender or in any other capacity whatever
(otherwise than as holder of less than ten (10) percent of any securities
publicly traded in the market) compete with the Company and any subsidiary or
affiliate of the Company in any city or town in which the Company or such
subsidiary or affiliate operates at any time during the term of this Agreement,
and any contiguous city or town.
5. No Solicitation of Executives. At all times during the Non-Compete Term
(as defined in Section 4 hereof), the Executive shall not, directly or
indirectly, employ, attempt to employ, recruit or otherwise solicit, induce or
influence to leave his employment any Executive of the Company or its
subsidiaries.
6. No Disclosure of Information. The Executive shall not at any time
divulge, use, furnish, disclose or make accessible to anyone other than the
Company or any of its subsidiaries any knowledge of information with respect to
confidential or secret data, procedures or techniques of the Company or any of
its subsidiaries, provided, however, that nothing in this Section 6 shall
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prevent the disclosure by the Executive of any such information which at any
time comes in to the public domain other than as a result of the violation of
the terms of this Section 6 by the Executive or which is otherwise lawfully
acquired by the Executive.
7. Termination of Employment. The employment of the Executive shall
terminate on the earliest to occur of the following dates:
(a) The expiration of the term hereof, as from time to time
extended;
(b) The Executive's resignation from the Company or the death or
disability of the Executive (the Executive being deemed to be disabled if he has
been unable for one hundred eighty (180) consecutive days to render services
required to be rendered by him during the term hereof);
(c) At the election of the Company, for Cause, acting through its
Board of Directors, as hereinafter defined, after ten (10) business days' prior
written notice of the basis therefor to the Executive if during such period the
Executive shall not have cured the basis therefor. The Company shall give the
Executive written notice of the meeting at which his termination will be
considered, and the right to appear at such meeting, with his advisers. For
purposes of this Agreement, the Company shall be deemed to have "Cause" to
terminate the employment of the Executive under this Agreement only if:
(i) The Executive is convicted by a court of competent
jurisdiction of any criminal offense involving
dishonesty or breach of trust;
(ii) The Executive shall commit an act of fraud materially
evidencing bad faith toward the Company or any of its
subsidiaries, or shall engage in willful misconduct
which is demonstrably and materially injurious to the
Company, or any of its subsidiaries, monetarily or
otherwise;
(iii) The Executive willfully and continuously fails to
substantially perform the duties reasonably assigned to
him by the Board of Directors of the Company (other than
any such failure resulting from the Executive's
incapacity due to physical or mental illness) after a
demand for substantial performance is delivered to
Executive by the Board of Directors of the Company which
specifically identifies the manner
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in which the board believes that Executive has not
substantially performed such duties.
For purposes of this Section 7, no failure or action shall be considered
"willful" unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief that the action or omission was in the best interest
of the Company.
8. Payments Upon Termination of Employment.
(a) Payments Upon Death. If at any time while he is employed
hereunder the Executive shall die, in addition to all other benefits to which he
or his personal representatives may be entitled, the Company shall pay to his
designated beneficiary or, if no such beneficiary exists, to his estate, for a
period of three (3) months following the Executive's death, such amounts of base
annual salary as the Executive would have been entitled to receive during said
period (and at the times he would have been entitled to receive them) had he
remained alive.
(b) Payments Upon Disability. If at any time during the term of this
Agreement, in the opinion of a physician mutually agreeable to the Company and
the Executive, the Executive shall be determined to be unable to render services
hereunder due to physical or mental illness or accident, in addition to all
other benefits to which he or his personal representatives may be entitled, the
Executive shall be entitled to receive all benefits payable to him under the
Bank's long-term disability income plan. Upon termination due to disability as
provided in Section 7(b) hereof, Executive shall be entitled to benefits under
the Company's policy of disability insurance until Executive attains age 65 or,
if earlier, until he is no longer disabled, which benefits shall not be less
favorable then the benefits available under the policy in effect on the date of
this Agreement or the Company shall make up any shortfall. Executive shall also
be entitled to receive the health insurance benefits described on Exhibit A
during the period he is receiving disability payments.
(c) Payments Upon Expiration of Term Without Renewal. In the event
that the term of this Agreement shall expire without renewal, the Executive
shall be entitled to receive compensation through the date of expiration and
shall be entitled to purchase at Bank's book value any Bank-owned automobile
then being used by him.
(d) Payments Upon Termination for Cause. In the event that Executive
is terminated for Cause (as defined herein), the Executive shall be entitled to
receive compensation through the date of termination.
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(e) Payment Upon Other Involuntary Termination or Voluntary
Termination for Good Reason. If at any time during the term of this Agreement
the employment of the Executive is terminated involuntarily for any reason
without Cause, as heretofore defined, or voluntarily for Good Reason, as defined
below, then in such case:
(i) Within five days after such termination, the Company
shall pay to the Executive (or to his personal
representative in case of death), in addition to all
accrued and unpaid compensation through the date of such
termination, a lump sum amount equal to base annual
salary as in effect as of the date of such termination
for a period equal to the longer of the remaining term
of this Agreement or 12 months.
(ii) The Company shall maintain or cause to be maintained in
effect for the Executive for the period following such
termination provided in Section 8(e)(i), at the
Company's sole expense, all group insurance (including
life, health, accident and disability insurance) and all
other Executive benefit plans, programs or arrangements,
other than the Bank's qualified retirement plan, in
which the Executive was participating at any time during
the twelve (12) months preceding such termination.
(iii) The Executive shall be entitled to purchase at Bank's
book value any Bank-owned automobile then being used by
him.
(iv) The Executive, without further action by the Executive,
the Company or the Bank, shall automatically become
fully vested in any outstanding options held by him to
acquire shares of the Company or any subsidiary of the
Company and in all benefits accrued on his behalf under
any other benefit programs of the Company or the Bank.
(v) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 8(e)
by seeking employment or otherwise.
In the event that the Executive's participation in any of the foregoing
plans, programs or arrangements (including those contemplated by Subsections
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8(e)(ii) hereof) is barred by law or otherwise, or in the event that any such
plan, program or arrangement is discontinued or the benefits thereunder are
materially reduced during such period, the Company shall provide the Executive
with benefits substantially similar to those to which the Executive was entitled
immediately prior to the date of his termination of employment. Upon expiration
of the period of coverage provided hereunder, the Executive shall be provided
with the opportunity to have assigned to him at no cost and with no
apportionment of prepaid premiums any assignable insurance owned by the Company
or any of its subsidiaries and relating specifically to the Executive.
For purposes of this Agreement, voluntary termination for "Good Reason"
shall occur when Executive resigns after delivery of a notice of termination to
the Board terminating Executive's employment under this Agreement at any time
not earlier than ninety (90) days after the date of such notice for any of the
following reasons:
(i) Failure to elect or re-elect or appoint or re-appoint
Executive to the office of President and Chief Executive
Officer of the Bank other than in connection with the
death or disability of Executive, or the expiration of
the term of this Agreement.
(ii) A material change in the Executive's function, duties or
responsibilities, which change would cause Executive's
position with the Company to become of less
responsibility, importance or scope.
(iii) The relocation of the office where the Bank requires
Executive to be based to a location more than forty (40)
miles from its present headquarters in Ipswich,
Massachusetts, except for required travel on the
Company's business to an extent substantially consistent
with your present business travel obligations;
(iv) material breach of this Agreement by the Company, not
cured within 10 days of written notice thereof.
The notice of termination referred to above shall be delivered by
Executive within a reasonable period following the occurrence of an event
described in clauses (i) through (iv) above, which period shall not exceed four
(4) calendar months after the event or at any time during the continuation of a
continuing breach. Executive's continued employment shall not constitute consent
to, or a
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waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
9. Notices. Notices under this Agreement shall be in writing and shall be
mailed by registered or certified mail, effective upon receipt, addressed as
follows:
(a) To the Company:
First Ipswich Bancorp
00 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Chairman
(b) To the Executive:
Xx. Xxxxxx X. Xxxx
7 Xxxxxxx Commons, Xxx. 0
Xxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Either party may by notice in writing change the address to which notices to it
or him are to be addressed hereunder.
10. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Boston,
Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. Notwithstanding the pendency of any such dispute or
controversy, the Company will pay the Executive promptly an amount equal to his
full compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and shall provide or cause to be
provided to the Executive all compensation, benefits and insurance plans in
which he was participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved. Amounts paid under this Section 10 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. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that the Executive shall be entitled to seek specific performance of
his right to be paid as specified in this Section 10.
11. Miscellaneous.
(a) Indemnification. During the period of his employment
hereunder, the Company agrees to indemnify the Executive in his capacity as a
director and officer of the Bank, the Company, and, each subsidiary of either,
all to the maximum extent permitted under the laws of the Commonwealth of
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Massachusetts and applicable banking rules and regulations. The provisions of
the Section 11(a) shall survive expiration or termination of this Agreement for
any reason whatsoever.
(b) Legal Fees. The Company shall pay to the Executive all
reasonable legal fees and expenses incurred by him in contesting or disputing
any termination of this Agreement or in seeking to obtain or enforce any right
or benefit provided by this Agreement, provided that the final resolution of
such matter principally is in Executive's favor.
(c) Entire Agreement. This Agreement constitutes the entire
Agreement between the parties and may not be changed except by a writing duly
executed and delivered by the Company and the Executive in the same manner as
the Agreement.
(d) Governing Law. This Agreement is governed by and shall be
construed in accordance with the laws of the Commonwealth of Massachusetts.
Executive agrees that it supersedes in all respects any prior agreement between
the Company or the Bank and the Executive.
(e) Binding Effect; Non-Assignability. This Agreement shall be
binding upon the Company and inure to the benefit of the Company and its
successors. Neither this Agreement or any rights arising hereunder may be
assigned or pledged by the Executive during his lifetime. This Agreement shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
(f) Severability. If any portion or provision of this Agreement
shall to any extent be unenforceable as a result of either a declaration by a
court of competent jurisdiction or the operation of applicable laws and
regulations, then the remainder of the Agreement, or the application of such
portion or provisions in circumstances other than those as to which it is
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
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IN WITNESS WHEREOF, the parties hereto have executed the within instrument
as a sealed document as of the date first above written.
ATTEST FIRST IPSWICH BANCORP
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxx St. Xxxx Xxxxxxx
------------------------- -----------------------------------------
Xxxxx Xxxxxxxx, Clerk Its Chairman
/s/ Xxxxxx X. Xxxx
WITNESS --------------------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
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EXHIBIT A
to
Employment Agreement
between
First Ipswich Bancorp
and
Xxxxxx X. Xxxx
1. Car. The Bank will provide Executive with a new mid-priced, leased car
every three years.
2. Insurance. In addition to term insurance provided under the Bank's
existing program (currently two time salary), the Bank will reimburse Executive
for his annual cost to maintain his own $280,000 term insurance policy.
Executive shall designate the beneficiary of such insurance.
3. Benefit Programs. Executive will participate in all benefit programs
made available to senior management of the Bank, including health insurance
payments.
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