EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
______________, 1997, by and between MYSTIC FINANCIAL, INC., a publicly-held
business corporation organized and operating under the laws of the State of
Delaware and having an office at 00 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000
("Company") and XXXXXX X. XXXXXXXX, an individual residing at 00 Xxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Executive"). Any reference to "Bank" herein
shall mean Medford Co-Operative Bank, a wholly-owned subsidiary of the Company,
or any successor thereto.
W I T N E S S E T H :
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WHEREAS, Executive currently serves the Company in the capacity of
President and Chief Executive Officer and also serves as President and Chief
Executive Officer of the Bank; and
WHEREAS, Executive also currently serves as a member of the Board of
Directors of the Company ("Board") and as a member of the Board of Directors of
the Bank ("Bank Board"); and
WHEREAS, effective as of the date of this Agreement, the Bank has
converted from a state-chartered mutual cooperative bank to a state chartered
capital stock cooperative bank and has become the wholly-owned subsidiary of the
Company; and
WHEREAS, the Company desires to assure for itself and for the Bank the
continued availability of Executive's services and the ability of Executive to
perform such services with a minimum of personal distraction in the event of a
pending or threatened Change of Control (as hereinafter defined); and
WHEREAS, Executive is willing to continue to serve the Company and the
Bank on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Company and Executive hereby
agree as follows:
SECTION 1. EMPLOYMENT.
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The Company agrees to continue to employ Executive, and Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT
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PERIOD.
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(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of
three (3) years beginning on the date of this Agreement and ending on the third
(3rd) anniversary date of this Agreement (each, an "Anniversary Date"), plus
such extensions, if any, as are provided pursuant to section 2(b).
(b) Except as provided in section 2(c), beginning on the date of this
Agreement, the Employment Period shall automatically be extended for one (1)
additional day each day, unless either the Company or Executive elects not to
extend the Agreement further by giving written notice to the other party, in
which case the Employment Period shall end on the third (3rd) anniversary of the
date on which such written notice is given. For all purposes of this Agreement,
the term "Remaining Unexpired Employment Period" as of any date shall mean the
period beginning on such date and ending on: (i) if a notice of non-extension
has been given in accordance with this section 2(b), the third (3rd) anniversary
of the date on which such notice is given; and (ii) in all other cases, the
third (3rd) anniversary of the date as of which the Remaining Unexpired
Employment Period is being determined. Upon termination of Executive's
employment with the Company for any reason whatsoever, any daily extensions
provided pursuant to this section 2(b), if not previously discontinued, shall
automatically cease.
(c) Nothing in this Agreement shall be deemed to prohibit the Company
at any time from terminating Executive's employment during the Employment Period
with or without notice for any reason; provided, however, that the relative
rights and obligations of the Company and Executive in the event of any such
termination shall be determined under this Agreement.
(d) Nothing in this Agreement shall be deemed to prohibit the
Executive at any time from terminating his employment during the Employment
Period with or without notice for any reason; provided, however, that the
relative rights and obligations of the Company and Executive in the event of any
such termination shall be determined under this Agreement.
SECTION 3. DUTIES.
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Executive shall serve as President and Chief Executive Officer of the
Company and as President and Chief Executive Officer of the Bank, having such
power, authority and responsibility and performing such duties as are prescribed
by or under the By-Laws of the Company and the Bank and as are customarily
associated with such positions. Executive shall devote his full business time
and attention (other than during weekends, holidays, approved vacation periods,
and periods of illness or approved leaves of absence) to the business and
affairs of the Company and the Bank and shall use his best efforts to advance
the interests of the Company and the Bank.
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SECTION 4. CASH COMPENSATION.
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In consideration for the services to be rendered by Executive
hereunder, the Company shall pay (or shall cause the Bank to pay) to him a
salary at an initial annual rate of ONE HUNDRED AND FIFTY-THREE THOUSAND, THREE
HUNDRED AND SIXTY-THREE DOLLARS ($153,363.00), payable in approximately equal
installments in accordance with the Company's or Bank's customary payroll
practices for senior officers. The Board shall review Executive's annual rate
of salary at such times during the Employment Period as it deems appropriate,
but not less frequently than once every twelve months, and may, in its
discretion, approve an increase in the Executive's annual rate of salary. In
addition to salary, Executive may receive other cash compensation from the
Company or the Bank for services hereunder at such times, in such amounts and on
such terms and conditions as the Board, or the Bank Board, as applicable, may
determine from time to time.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
-----------------------------------
During the Employment Period, Executive shall be treated as an
employee of the Company and the Bank and shall be entitled to participate in and
receive benefits under any and all qualified or non-qualified retirement,
pension, savings, profit-sharing or stock bonus plans, any and all group life,
health (including hospitalization, medical and major medical), dental, accident
and long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Company or the Bank, in accordance with the terms and conditions of such
employee benefit plans and programs and compensation plans and programs and
consistent with the Company's and Bank's customary practices. 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.
SECTION 6. INDEMNIFICATION AND INSURANCE.
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(a) During the Employment Period and for a period of six (6) years
thereafter, the Company shall cause Executive to be covered by and named as an
insured under any policy or contract of insurance obtained by it or the Bank to
insure its directors and officers against personal liability for acts or
omissions in connection with service as an officer or director of the Company or
the Bank or service in other capacities at the request of the Company or the
Bank. The coverage provided to Executive pursuant to this section 6 shall be of
the same scope and on the same terms and conditions as the coverage (if any)
provided to other officers or directors of the Company and the Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six (6) years thereafter, the Company
shall indemnify Executive against and hold him harmless from any costs,
liabilities, losses and exposures to the fullest extent and on the most
favorable terms and conditions that similar indemnification is offered to any
director or officer of the Company, the Bank, or any subsidiary or affiliate
thereof.
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SECTION 7. OUTSIDE ACTIVITIES.
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Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as he may disclose to and as
may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of his duties under this Agreement. Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of his duties hereunder; provided, however, that
such activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Company and generally applicable to
all similarly situated executives. Executive may also serve as an officer or
director of the Bank on such terms and conditions as the Company and the Bank
may mutually agree upon, and such service shall not be deemed to materially
interfere with Executive's performance of his duties hereunder or otherwise
result in a material breach of this Agreement. If Executive is discharged or
suspended, or is subject to any regulatory prohibition or restriction including
but not limited to those set forth in section 26(b)(iii) hereof, with respect to
participation in the affairs of the Bank, he shall continue to perform services
for the Company in accordance with this Agreement but shall not directly or
indirectly provide services to or participate in the affairs of the Bank in a
manner inconsistent with the terms of such discharge or suspension or any
applicable regulatory order.
SECTION 8. WORKING FACILITIES AND EXPENSES.
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Executive's principal place of employment shall be at the Company's
executive offices at the address first above written, or at such other location
within Middlesex County at which the Company shall maintain its principal
executive offices, or at such other location as the Company and Executive may
mutually agree upon. The Company shall provide or cause the Bank to provide the
Executive at his principal place of employment with a private office,
secretarial services, and other support services and facilities suitable to his
position with the Company and necessary or appropriate in connection with the
performance of his assigned duties under this Agreement. The Company shall
reimburse Executive for his ordinary and necessary business expenses, including,
without limitation, all expenses associated with his business use of an
automobile, fees for memberships in such clubs and organizations as Executive
and the Company shall mutually agree are necessary and appropriate for business
purposes, and his travel and entertainment expenses incurred in connection with
the performance of his duties under this Agreement, in each case upon
presentation to the Company of an itemized account of such expenses in such form
as the Company may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH SEVERANCE BENEFITS.
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(a) Executive shall be entitled to the severance benefits described in
section 9(b) herein in the event that his employment with the Company or the
Bank terminates during the Employment Period under any of the following
circumstances:
(i) Executive's voluntary resignation from employment with the Company
within ninety (90) days following:
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(A) the failure of the Board to appoint or re-appoint or elect or
re-elect Executive to the position stated in section 3 of this
Agreement (or a more senior office of the Company) or the failure of
the Bank Board to appoint or re-appoint or elect or re-elect Executive
to the position stated in section 3 of this Agreement (or a more
senior position of the Bank);
(B) if the Executive is a member of the Board as of the date of
this Agreement, the failure of the stockholders of the Company or the
Bank to elect or re-elect Executive to the Board or a member of the
Bank Board, or the failure of the Board or the Bank Board (or the
nominating committee thereof) to nominate Executive for such election
or re-election;
(C) the expiration of a thirty (30) day period following the date
on which Executive gives written notice to the Company or the Bank, as
the case may be, of its material failure, whether by amendment of the
Company's organization certificate or By-Laws, or the Bank's state
charter or By-Laws, action of the Board, Bank Board or the Company's
stockholders or otherwise, to vest in Executive the functions, duties,
or responsibilities prescribed in section 3 of this Agreement, unless,
during such thirty (30) day period, such failure is cured in a manner
determined by Executive, in his discretion, to be satisfactory; or
(D) the expiration of a thirty (30) day period following the date
on which Executive gives written notice to the Company or the Bank, as
the case may be, of its material breach of any term, condition or
covenant contained in this Agreement (including, without limitation
any reduction of Executive's rate of base salary in effect from time
to time and any change in the terms and conditions of any compensation
or benefit program in which Executive participates which, either
individually or together with other changes, has a material adverse
effect on the aggregate value of his total compensation package),
unless, during such thirty (30) day period, such failure is cured in a
manner determined by Executive, in his discretion, to be satisfactory;
or
(ii) subject to the provisions of section 10, the termination of
Executive's employment with the Company for any other reason not described
in section 9(a) other than a termination of the Executive's employment for
"cause";
then, the Company shall provide (or cause the Bank or pay and provide) the
benefits and pay to Executive the amounts described in section 9(b).
(b) Upon the termination of Executive's employment with the Company
under circumstances described in section 9(a) of this Agreement, the Company
shall pay and provide (or cause the Bank to pay and provide) to Executive (or,
in the event of his death, to his estate):
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(i) the portion, if any, of the compensation earned by the Executive
through the date of the termination of his employment with the Company
which remains unpaid as of such date, such payment to be made at the time
and in the manner prescribed by law applicable to the payment of wages but
in no event later than thirty (30) days after the Executive's termination
of employment;
(ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and programs maintained by the Company and the Bank for their
officers and employees;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accident and long-term disability
insurance benefits, in addition to that provided pursuant to section
9(b)(ii), and after taking into account the coverage provided by any
subsequent employer, if and to the extent necessary to provide for
Executive, for the Remaining Unexpired Employment Period, coverage
equivalent to the coverage to which he would have been entitled under such
plans (as in effect on the date of his termination of employment, or, if
his termination of employment occurs after a Change of Control, on the date
of such Change of Control, whichever benefits are greater), if he had
continued working for the Company during the Remaining Unexpired Employment
Period at the highest annual rate of compensation achieved during that
portion of the Employment Period which is prior to Executive's
termination of employment with the Company;
(iv) within thirty (30) days following his termination of employment
with the Company, a lump sum payment, in an amount equal to the present
value of the salary that Executive would have earned if he had continued
working for the Company during the Remaining Unexpired Employment Period at
the highest annual rate of salary achieved during that portion of the
Employment Period which is prior to Executive's termination of employment
with the Company, where such present value is to be determined using a
discount rate equal to the applicable short-term federal rate prescribed
under section 1274(d) of the Internal Revenue Code of 1986 ("Code"),
compounded using the compounding period corresponding to the Company's
regular payroll periods for its officers, such lump sum to be paid in lieu
of all other payments of salary provided for under this Agreement in
respect of the period following any such termination;
(v) within thirty (30) days following his termination of employment
with the Company, a lump sum payment in an amount equal to the excess, if
any, of:
(A) the present value of the aggregate benefits to which he would
be entitled under any and all qualified and non-qualified defined
benefit pension plans maintained by, or covering employees of, the
Company or the Bank, if he were 100% vested thereunder and had
continued working for the Company and the Bank during the Remaining
Unexpired
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Employment Period, such benefits to be determined as of the date of
termination of employment by adding to the service actually recognized
under such plans an additional period equal to the Remaining Unexpired
Employment Period and by adding to the compensation recognized under
such plans for the year in which termination of employment occurs all
amounts payable under sections 9(b)(i), (iv), (vii), (viii) and (ix);
over
(B) the present value of the benefits to which he is actually
entitled under such defined benefit pension plans as of the date of
his termination;
where such present values are to be determined using the mortality tables
prescribed under section 415(b)(2)(E)(v) of the Code and a discount rate,
compounded monthly equal to the annualized rate of interest prescribed by
the Pension Benefit Guaranty Corporation for the valuation of immediate
annuities payable under terminating single-employer defined benefit plans
for the month in which Executive's termination of employment occurs
("Applicable PBGC Rate");
(vi) within thirty (30) days following his termination of employment
with the Company, a lump sum payment in an amount equal to the present
value of the additional employer contributions (or if greater in the case
of a leveraged employee stock ownership plan or similar arrangement, the
additional assets allocable to him through debt service, based on the fair
market value of such assets at termination of employment) to which he would
have been entitled under any and all qualified and non-qualified defined
contribution plans maintained by, or covering employees of, the Company or
the Bank, as if he were 100% vested thereunder and had continued working
for the Company and the Bank during the Remaining Unexpired Employment
Period at the highest annual rate of compensation achieved during that
portion of the Employment Period which is prior to the Executive's
termination of employment with the Company, and making the maximum amount
of employee contributions, if any, required under such plan or plans, such
present value to be determined on the basis of a discount rate, compounded
using the compounding period that corresponds to the frequency with which
employer contributions are made to the relevant plan, equal to the
Applicable PBGC Rate;
(vii) within thirty (30) days following his termination of employment
with the Company, the payments that would have been made to Executive under
any cash bonus or long-term or short-term cash incentive compensation plan
maintained by, or covering employees of, the Company or the Bank if he had
continued working for the Company and the Bank during the Remaining
Unexpired Employment Period and had earned the maximum bonus or incentive
award in each calendar year that ends during the Remaining Unexpired
Employment Period, such payments to be equal to the product of:
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(A) the maximum percentage rate at which an award was ever
available to Executive under such incentive compensation plan;
multiplied by
(B) the salary that would have been paid to Executive during each
such calendar year at the highest annual rate of salary achieved
during that portion of the Employment Period which is prior to
Executive's termination of employment with the Company;
(viii) at the election of the Executive made within thirty (30) days
following his termination of employment with the Company, upon the
surrender of options or appreciation rights issued to Executive under any
stock option and appreciation rights plan or program maintained by, or
covering employees of, the Company or the Bank, a lump sum payment in an
amount equal to the product of:
(A) the excess of (I) the fair market value of a share of stock
of the same class as the stock subject to the option or appreciation
right, determined as of the date of termination of employment, over
(II) the exercise price per share for such option or appreciation
right, as specified in or under the relevant plan or program;
multiplied by
(B) the number of shares with respect to which options or
appreciation rights are being surrendered.
For purposes of this section 9(b)(viii), Executive shall be deemed fully
vested in all options and appreciation rights under any stock option or
appreciation rights plan or program maintained by, or covering employees
of, the Company or the Bank, even if he is not vested under such plan or
program; and
(ix) at the election of the Executive made within thirty (30) days
fol lowing Executive's termination of employment with the Company, upon the
surrender of any shares awarded to Executive under any restricted stock
plan maintained by, or covering employees of, the Company or the Bank, a
lump sum payment in an amount equal to the product of:
(A) the fair market value of a share of stock of the same class
of stock granted under such plan, determined as of the date of
Executive's termination of employment; multiplied by
(B) the number of shares which are being surrendered.
For purposes of this section 9(b)(ix), Executive shall be deemed fully
vested in all shares awarded under any restricted stock plan maintained by,
or covering employees of, the Company or the Bank, even if he is not vested
under such plan.
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The Company and Executive hereby stipulate that the damages which may be
incurred by Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to Executive's efforts, if any, to
mitigate damages. The Company and Executive further agree that the Company may
condition the payments and benefits (if any) due under sections 9(b)(iii), (iv),
(v), (vi) and (vii) on the receipt of Executive's resignation from any and all
positions which he holds as an officer, director or committee member with
respect to the Company, the Bank or any subsidiary or affiliate of either of
them.
SECTION 10. TERMINATION WITHOUT ADDITIONAL COMPANY LIABILITY.
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In the event that Executive's employment with the Company shall
terminate during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes of
this Agreement shall mean personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease and desist order, or any material breach of this Agreement, in each
case as measured against standards generally prevailing at the relevant
time in the savings and community banking industry;
(b) Executive's voluntary resignation from employment with the Company
for reasons other than those specified in section 9(a);
(c) Executive's death; or
(d) a determination that Executive is eligible for long-term
disability benefits under the Company's or Bank's long-term disability
insurance program or, if there is no such program, under the federal Social
Security Act;
then the Company shall have no further obligations under this Agreement, other
than the payment to Executive (or, in the event of his death, to his estate) of
the portion, if any, of the salary earned by the Executive through the date of
his termination of employment with the Company which remains unpaid as of such
date and the provision of such other benefits, if any, to which he is entitled
as a former employee under the employee benefit plans and programs and
compensation plans and programs maintained by, or covering employees of, the
Company or the Bank.
(e) For purposes of section 10(a), no act or failure to act, on the
part of Executive, shall be considered "willful" unless it is done, or omitted
to be done, by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the Company and its
affiliates. Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board or based upon the written advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by Executive in good
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faith and in the best interests of the Company. The cessation of employment of
Executive shall not be deemed to be for "cause" within the meaning of section
10(a) unless and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of three-fourths of the non-
employee members of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to Executive and Executive is given
an opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, Executive is guilty of the conduct
described in section 10(a) above, and specifying the particulars thereof in
detail.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE OF CONTROL.
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(a) A Change of Control of the Company ("Change of Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the stockholders of the Company of a transaction that
would result in the reorganization, merger or consolidation of the Company,
respectively, with one or more other persons, other than a transaction
following which:
(A) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended "Exchange Act") in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Company; and
(B) at least 51% of the securities entitled to vote generally in
the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Company;
(ii) the acquisition of all or substantially all of the assets of the
Company or beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of the outstanding
securities of the Company entitled to vote generally in the election of
directors by any person or by any persons acting in concert, or approval by
the stockholders of the Company of any transaction which would result in
such an acquisition;
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(iii) a complete liquidation or dissolution of the Company, or
approval by the stockholders of the Company of a plan for such liquidation
or dissolution;
(iv) the occurrence of any event if, immediately following such event,
at least 50% of the members of the Board of the Company do not belong to
any of the following groups:
(A) individuals who were members of the Board of the Company on
the date of this Agreement; or
(B) individuals who first became members of the Board of the
Company after the date of this Agreement either:
(I) upon election to serve as a member of the Board of the
Company by affirmative vote of three-quarters of the members of
such Board, or of a nominating committee thereof, in office at
the time of such first election; or
(II) upon election by the stockholders of the Company to
serve as a member of the Board of the Company, but only if
nominated for election by affirmative vote of three-quarters of
the members of the Board of the Company, or of a nominating
committee thereof, in office at the time of such first
nomination;
provided, however, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf of the
Board of the Company; or
(v) any event which would be described in section 11(a)(i), (ii),
(iii) or (iv) if the term "Bank" were substituted for the term "Company"
therein or any event that results in a "Change of 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 of the date hereof.
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or a subsidiary of
either of them, or by any employee benefit plan maintained by any of them. For
purposes of this section 11(a), the term "person" shall have the meaning
assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
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(b) In the event of a Change of Control, Executive shall be entitled
to the payments and benefits contemplated by section 9(b) in the event of his
termination employment with the Company under any of the circumstances described
in section 9(a) of this Agreement or under any of the following circumstances:
(i) resignation, voluntary or otherwise, by Executive at any time
during the Employment Period following his demotion, loss of title, office
or significant authority or responsibility, or following any reduction in
any element of his package of compensation and benefits;
(ii) resignation, voluntary or otherwise, by Executive at any time
during the Employment Period following any relocation of his principal
place of employment or any change in working conditions at such principal
place of employment which Executive, in his reasonable discretion,
determines to be embarrassing, derogatory or otherwise adverse;
(iii) resignation, voluntary or otherwise, by Executive at any time
during the Employment Period following the failure of any successor to the
Company in the Change of Control to include Executive in any compensation
or benefit program maintained by it or covering any of its executive
officers, unless Executive is already covered by a substantially similar
plan of the Company which is at least as favorable to him; or
(iv) resignation, voluntary or otherwise, for any reason whatsoever
following the effective date of the Change of Control.
SECTION 12. TAX INDEMNIFICATION.
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(a) This section 12 shall apply if Executive's employment is
terminated upon or following (i) a Change of Control (as defined in section 11
of this Agreement); or (ii) a change "in the ownership or effective control" of
the Company or the Bank or "in the ownership of a substantial portion of the
assets" of the Company or the Bank within the meaning of section 280G of the
Code. If this section 12 applies, then, if for any taxable year, Executive
shall be liable for the payment of an excise tax under section 4999 of the Code
with respect to any payment in the nature of compensation made by the Company,
the Bank or any direct or indirect subsidiary or affiliate of the Company or the
Bank to (or for the benefit of) Executive, it shall be the sole obligation and
responsibility of the Company to pay to Executive an amount equal to X, deter-
mined under the following formula:
E x P
X = ------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
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where
E = the rate at which the excise tax is assessed under section 4999
of the Code;
P = the amount with respect to which such excise tax is assessed,
determined without regard to this section 12;
FI = the highest marginal rate of income tax applicable to Executive
under the Code for the taxable year in question;
SLI = the sum of the highest marginal rates of income tax applicable
to Executive under all applicable state and local laws for the
taxable year in question; and
M = the highest marginal rate of Medicare tax applicable to
Executive under the Code for the taxable year in question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement, or otherwise,
and on which an excise tax under section 4999 of the Code will be assessed,
the payment determined under this section 12(a) shall be made to Executive on
the earlier of (i) the date the Company, the Bank or any direct or indirect
subsidiary or affiliate of the Company or the Bank is required to withhold such
tax, or (ii) the date the tax is required to be paid by Executive.
(b) Notwithstanding anything in this section 12 to the contrary, in
the event that Executive's liability for the excise tax under section 4999 of
the Code for a taxable year is subsequently determined to be different than
the amount determined by the formula (X + P) x E, where X, P and E have the
meanings provided in section 12(a), Executive or the Company, as the case may
be, shall pay to the other party at the time that the amount of such excise tax
is finally determined, an appropriate amount, plus interest, such that the
payment made under section 12(a), when increased by the amount of the payment
made to Executive under this section 12(b) by the Company, or when reduced by
the amount of the payment made to the Company under this section 12(b) by
Executive, equals the amount that should have properly been paid to Executive
under section 12(a). The interest paid under this section 12(b) shall be
determined at the rate provided under section 1274(b)(2)(B) of the Code. To
confirm that the proper amount, if any, was paid to Executive under this section
12, Executive shall furnish to the Company a copy of each tax return which
reflects a liability for an excise tax payment made by the Company, at least 20
days before the date on which such return is required to be filed with the
Internal Revenue Service.
SECTION 13. CONFIDENTIALITY.
---------------
Unless he obtains the prior written consent of the Company, Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Company or any entity which is a
subsidiary of the Company or of which the Company
Page 13 of 20
is a subsidiary, any material document or information obtained from the Company,
or from its parent or subsidiaries, in the course of his employment with any of
them concerning their properties, operations or business (unless such document
or information is readily ascertainable from public or published information or
trade sources or has otherwise been made available to the public through no
fault of his own) until the same ceases to be material (or becomes so
ascertainable or available); provided, however, that nothing in this section 13
shall prevent Executive, with or without the Company's consent, from
participating in or disclosing documents or information in connection with any
judicial or administrative investigation, inquiry or proceeding to the extent
that such participation or disclosure is required under applicable law.
SECTION 14. SOLICITATION.
------------
Executive hereby covenants and agrees that, for a period of one (1)
year following his termination of employment with the Company, he shall not,
without the written consent of the Company, either directly or indirectly:
(a) solicit, offer employment to, or take any other action intended,
or that a reasonable person acting in like circumstances would expect, to
have the effect of causing any officer or employee of the Company, the Bank
or any affiliate, as of the date of this Agreement, of either of them, to
terminate his or her employment and accept employment or become affiliated
with, or provide services for compensation in any capacity whatsoever to,
any savings bank, cooperative bank, credit union, savings and loan
association, bank, bank company, savings and loan company, or other
institution engaged in the business of accepting deposits and making loans,
having its principal place of business in Middlesex County, as of the date
of this Agreement;
(b) provide any information, advice or recommendation with respect to
any such officer or employee of any savings bank, cooperative bank, credit
union, savings and loan association, bank, bank company, savings and loan
company, or other institution engaged in the business of accepting deposits
and making loans, having its principal place of business in Middlesex
County, as of the date of this Agreement, that is intended, or that a
reasonable person acting in like circumstan ces would expect, to have the
effect of causing any officer or employee of the Company, the Bank, or any
affiliate, as of the date of this Agreement, of either of them, to
terminate his employment and accept employment or become affiliated with,
or provide services for compensation in any capacity whatsoever to, any
savings bank, cooperative bank, credit union, savings and loan association,
bank, bank company, savings and loan company, or other institution
engaged in the business of accepting deposits and making loans, having its
principal place of business in Middlesex County, as of the date of this
Agreement; or
(c) solicit, provide any information, advice or recommendation or take
any other action intended, or that a reasonable person acting in like
circumstances
Page 14 of 20
would expect, to have the effect of causing any customer of the Company to
terminate an existing business or commercial relationship with the Company.
SECTION 15. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
-----------------------------------------------
The termination of Executive's employment during the term of this
Agreement or thereafter, whether by the Company or by Executive, shall have no
effect on the rights and obligations of the parties hereto under the Company's
or Bank's qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long-term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Company or the Bank from time to time.
SECTION 16. SUCCESSORS AND ASSIGNS.
----------------------
This Agreement will inure to the benefit of and be binding upon
Executive, his legal representatives and testate or intestate distributees, and
the Company and its successors and assigns, including any successor by merger
or consolidation or a statutory receiver or any other person or firm or
corporation to which all or substantially all of the assets and business of the
Company may be sold or otherwise transferred. Failure of the Company to obtain
from any successor its express written assumption of the Company's obligations
hereunder at least sixty (60) days in advance of the scheduled effective date of
any such succession shall be deemed a material breach of this Agreement.
SECTION 17. NOTICES.
-------
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to Executive:
Xx. Xxxxxx X. Xxxxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Page 15 of 20
If to the Company:
Mystic Financial, Inc.
00 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Board of Directors -- Non-Employee Directors
--------------------------------------------
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
------------------------
SECTION 18. INDEMNIFICATION FOR ATTORNEYS' FEES.
-----------------------------------
The Company shall indemnify, hold harmless and defend Executive
against reasonable costs, including legal fees, incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; provided, however, that Executive shall have
substantially prevailed on the merits pursuant to a judgment, decree or order of
a court of competent jurisdiction or of an arbitrator in an arbitration
proceeding, or in a settlement. For purposes of this Agreement, any settlement
agreement which provides for payment of any amounts in settlement of the
Company's obligations hereunder shall be conclusive evidence of Executive's
entitlement to indemnification hereunder, and any such indemnification payments
shall be in addition to amounts payable pursuant to such settlement agreement,
unless such settlement agreement expressly provides otherwise.
SECTION 19. SEVERABILITY.
------------
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 20. WAIVER.
------
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be
made in writing, designated as a waiver, and signed by the party against whom
its enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
Page 16 of 20
SECTION 21. COUNTERPARTS.
------------
This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same Agreement.
SECTION 22. GOVERNING LAW.
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts entered into and to be performed entirely
within the Commonwealth of Massachusetts.
SECTION 23. HEADINGS AND CONSTRUCTION.
-------------------------
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.
SECTION 24. ENTIRE AGREEMENT; MODIFICATIONS.
-------------------------------
This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or rep resentations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
SECTION 25. NON-DUPLICATION.
---------------
In the event that Executive shall perform services for the Bank or any
other direct or indirect subsidiary of the Company, any compensation or benefits
provided to Executive by such other employee shall be applied to offset the
obligations of the Company hereunder, it being intended that this Agreement set
forth the aggregate compensation and benefits payable to Executive for all
services to the Company and all of its direct or indirect subsidiaries,
including the Bank.
SECTION 26. REQUIRED REGULATORY PROVISIONS.
------------------------------
(a) Notwithstanding anything herein contained to the contrary, any
payments to Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. (S)1828(k), and any
regulations promulgated thereunder.
(b) Notwithstanding anything herein to the contrary, any payments to
the Executive by the Bank, whether pursuant to this Agreement or otherwise, are
subject to and conditioned upon their compliance with the following laws, rules
and regulations applicable to the Bank:
Page 17 of 20
(i) In no event shall the aggregate amount of compensation payable by
the Bank to the Executive under section 9(b) hereof (exclusive of amounts
described in section 9(b)(i), (viii) and (ix)) exceed 2.99 times the
Executive's average annual total compensation for the last five consecutive
calendar years to end prior to his termination of employment with the
Company and the Bank (or for his entire period of employment with the
Company and the Bank if less than five calendar years).
(ii) All payments to the Executive by the Bank, whether pursuant to
this Agreement or otherwise, are subject to and conditioned upon their
compliance with section 18(k) of the Federal Deposit Insurance Act ("FDI
Act"), 12 U.S.C. (S)1828(k), and any regulations promulgated thereunder.
(iii) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a
notice served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C.
(S)1818(e)(3) or 1818(g)(1), the Bank's obligations under this Agreement
shall be suspended as of the date of service of such notice, unless stayed
by appropriate proceedings. If the charges in such notice are dismissed,
the Bank, in its discretion, may (A) pay to the Executive all or part of
the compensation withheld while the Bank's obligations hereunder were
suspended and (B) reinstate, in whole or in part, any of the obligations
which were suspended.
(iv) Notwithstanding anything herein contained to the contrary, 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 8(g)(1) of the FDI Act, 12 U.S.C. (S)1818(e)(4) or (g)(1), all
prospective obligations of the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights and obligations of
the Bank and the Executive shall not be affected.
(v) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI Act,
12 U.S.C. (S)1813(x)(1), all prospective obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and the Executive shall not be affected.
(vi) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except
to the extent that a continuation of this Agreement is necessary for the
continued operation of the Bank: (A) by the Commissioner of the
Massachusetts Division of Banks or his designee or the FDIC, at the time
the FDIC enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in section 13(c) of the FDI Act, 12
U.S.C. (S)1823(c); (B) by the Commissioner of the Massachusetts Division of
Banks or his designee at the time the Commissioner or his designee approves
a supervisory merger to resolve problems related to the
Page 18 of 20
operation of the Bank or when the Bank is determined by the Commissioner to
be in an unsafe or unsound condition. The vested rights and obligations of
the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement. If, and
to the extent, the Bank is unable to satisfy payments due under this Agreement
as the result of compliance with any of the foregoing laws, rules and
regulations, the Company shall be responsible for satisfying all such
obligations.
SECTION 27. COMPANY AND AFFILIATES.
----------------------
The Company may satisfy its obligations under this Agreement either
directly or indirectly through one or more direct or indirect subsidiaries or
affiliates. The Executive agrees that this Agreement requires that the
Executive make his services available to the Company, the Bank and their
respective direct or indirect subsidiaries or affiliates as determined by the
respective Boards of Directors of the Company and the Bank within the terms and
conditions set forth in this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and Executive has hereunto set his hand, all as of the day and year
first above written.
-------------------------------------------
XXXXXX X. XXXXXXXX
ATTEST: MYSTIC FINANCIAL, INC.
By
---------------------------
Secretary By
-----------------------------------------
Name:
Title:
[Seal]
Page 19 of 20
COMMONWEALTH OF MASSACHUSETTS )
: SS.:
COUNTY OF MIDDLESEX )
On this ________ day of ____________________, 1997, before me
personally came XXXXXX X. XXXXXXXX, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth in said instrument,
and that he signed his name to the foregoing instrument.
-------------------------------------
Notary Public
COMMONWEALTH OF MASSACHUSETTS )
: SS.:
COUNTY OF MIDDLESEX )
On this ________ day of ____________________, 1997, before me
personally came _____________________________, to me known, who, being by me
duly sworn, did depose and say that he resides at
_____________________________________________________, that he is a member of
the Board of Directors of MYSTIC FINANCIAL, INC., the Delaware corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such seal; that
it was so affixed by order of the Board of Directors of said corporation; and
that he signed his name thereto by like order.
-------------------------------------
Notary Public
Page 20 of 20
