EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of
August 23, 1994, is made by and among Springfield Institution for Savings, a
state savings bank organized under the laws of the Commonwealth of
Massachusetts, having its principal offices at 1441 Main Street, P.O. Box 30,
Springfield, Massachusetts 02102- 3034 (the "Bank"), and F. William Marshall,
Jr., residing at 10 Crescent Hill, Springfield, Massachusetts 01155 (the
"Executive") and shall be effective as of the above date (the "Effective Date").
Recitals
1. The Bank desires to employ the Executive as President and
Chief Executive Officer of the Bank, and to enter into an employment agreement
embodying the terms of such relationship.
2. The Executive is willing to be employed as
President and Chief Executive Officer of the Bank on the terms
set forth herein.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and for other good and valuable consideration, the
Bank and the Executive hereby agree as follows.
1. Definitions.
1.1 "Affiliate" means any person or entity of any kind
effectively controlling, effectively controlled by or effectively
under common control with the Bank.
1.2 "Board" means the board of trustees of the Bank, if the
Bank is a mutual savings bank, and the board of directors of the Bank, if the
Bank is a stock savings bank.
1.3 "Cause" means termination due to the Executive's (a)
personal dishonesty, (b) incompetence, (c) willful misconduct, (d) breach of
fiduciary duty involving personal profit, (e) intentional failure to perform
stated duties, (f) willful violation of any law, rule or regulation (other than
traffic violations or similar offenses), or final cease-and- desist order, or
(g) material breach of any provision of this Agreement.
1.4 "Change in Control" means, after the date of this
Agreement, (a) a change in control of the Bank of a nature that would be
required to be reported in response to Item 1 of the current report on Form 8-K,
as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than any change in control directly
related to or in connection with the conversion of the Bank from a state
chartered mutual savings bank to a state chartered stock savings bank; (b) a
change in control of the Bank within the meaning of 12 U.S.C. ss. 1817(i), the
change in Bank Control Act, and 12 C.F.R. ss. 574.4 of the Acquisition of
Control of Savings Association regulations of the Office of Thrift Supervision,
other than any change in control directly related to or in connection with the
conversion of the Bank from a state chartered mutual savings bank to a state
chartered stock savings bank; (c) individuals who constitute the Board as of the
date of this Agreement (the "Incumbent Board") cease for any reason, including
in connection with the conversion of the Bank from a state chartered mutual
savings bank to a state chartered stock savings bank, to constitute at least a
majority thereof, provided that any person becoming a director or a trustee, as
the case may be, subsequent to the date of this Agreement whose election was
approved by a vote of at least three-quarters of the directors or the trustees,
as the case may be, then comprising the Incumbent Board, or whose nomination for
election by the Bank's depositors or shareholders, as the case may be, was
approved by the Bank's nominating committee then serving under the Board, shall
be, for purposes of this clause (c), considered as though he or she was a member
of the Incumbent Board (but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents; (d) approval by the depositors or
shareholders of the Bank, as the case may be, of a reorganization, merger or
consolidation, or the consummation of any such reorganization, merger or
consolidation, other than, in any case (i) any such transaction occurring in
connection with or directly related to the conversion of the Bank from a state
chartered mutual savings bank to a state chartered stock savings bank, or (ii) a
reorganization, merger or consolidation with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners, immediately prior to such reorganization, merger or consolidation, of
the Voting Interest in the Bank beneficially own, directly or indirectly,
immediately after such reorganization, merger or consolidation more than 80
percent of the Voting Interest of the corporation or other entity resulting from
such reorganization, merger or consolidation in substantially the same
proportions as their respective ownership, immediately prior to such
reorganization, merger or consolidation, of the Voting Interest in the Bank; (e)
approval by the depositors or shareholders of the Bank, as the case may be, of
(i) a complete liquidation or dissolution of the Bank, or (ii) the sale or other
disposition of all or substantially all of the assets of the Bank, or the
occurrence of any such liquidation, dissolution, sale or other disposition,
other than, in any case, to a Subsidiary, directly or indirectly, of the Bank,
or any Affiliate, or in connection with or directly related to any conversion of
the Bank from a state chartered mutual savings bank to a state chartered stock
savings bank;
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and/or (f) the solicitation of proxies from depositors or shareholders of the
Bank, by someone other than the current management of the Bank and without the
approval of the Board, seeking depositor or shareholder approval of a plan of
reorganization, merger or consolidation of the Bank with one or more
corporations as a result of which the depositors' or shareholders' interests in
the Bank are actually exchanged for or converted into securities not issued by
the Bank. No failure on the part of the Executive to exercise any rights upon
the occurrence of a Change in Control shall be deemed a waiver of any subsequent
events or circumstances constituting a Change in Control.
1.5 "Code" means the Internal Revenue Code of 1986, as
amended, as in effect from time to time, and/or any successor code thereto.
1.6 "Date of Termination" means the date specified in the
Notice of Termination (as defined in Section 6.8 of this Agreement); provided,
however, that if, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgement, order or decree of a court of competent jurisdiction, including all
appeals, unless the time for appeal therefrom has expired and no appeal has been
perfected; provided, further, however, that the Date of Termination shall (a) in
no case be later than the date on which the Term of Employment expires, and (b)
be extended by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such dispute with
reasonable diligence.
1.7 "Excise Tax" means any excise tax imposed under Section
4999 of the Code and/or any successor section thereto.
1.8 "Good Reason" means, and shall be deemed to exist if,
without the written consent of the Executive, (a) the Bank (or any Parent for
the balance of this Section 1.8) fails to appoint or reappoint the Executive as
President and Chief Executive Officer of the Bank, (b) there occurs any
reduction of Base Salary or material reduction in other benefits or any material
change by the Bank to the Executive's function, duties, or responsibilities in
effect on the date hereof and/or as set forth in Section 4.1 of this Agreement,
which change would cause the Executive's position with the Bank to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof in effect on the date hereof and/or as set forth in Section 4.1 of this
Agreement (and any such material change shall be deemed a continuing breach of
this Agreement), (c) there occurs any material breach of this Agreement by the
Bank, (d) a Change in Control occurs, or (e) the Bank, if and after a Suspension
for Disability (as defined in Section 6.2(a))
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occurs and after a Change in Control occurs, fills the Executive's position (in
the manner set forth in Section 6.2(b) of this Agreement).
1.9 "Parent" means any corporation which has a direct or
indirect legal or beneficial ownership interest in the Bank, but only if any
such corporation owns or controls, directly or indirectly, securities possessing
at least 50% of the total combined voting power of all classes of securities of
the Bank.
1.10 "Subsidiary" means any corporation (other than the Bank)
in which the Bank or any Parent has a direct or indirect legal or beneficial
ownership interest, but only if the Bank or the Parent, as the case may be, owns
or controls, directly or indirectly, securities possessing at least 50% of the
total combined voting power of all classes of securities in any such
corporation.
1.11 "Retirement" means the termination of the Executive's
employment with the Bank for any reason by the Executive at any time after the
Executive attains age 65.
1.12 "Voting Interest" means securities of any class or
classes or other ownership interests having general voting power under ordinary
circumstances to elect members of a board of directors or trustees of any
entity.
2. Employment.
2.1 General. Subject to the terms and provisions set forth in
this Agreement, the Bank, during the Term of Employment, agrees to continue to
employ Executive as President and Chief Executive Officer of the Bank and the
Executive hereby accepts such continued employment.
2.2 FDIC Suspension. If the Executive is suspended from office
and/or temporarily prohibited from participating in the conduct of the Bank's
affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act (12 U.S.C. ss.ss. 1818(e)(3) and (g)(1)), the Bank's
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Bank shall (i) pay the Executive all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.
3. Term of Employment.
3.1 Term. The term of employment under this Agreement shall
commence as of the Effective Date and, unless extended as provided below or
earlier terminated by the Bank or the Executive under Section 6 of this
Agreement, shall continue until the third anniversary of the Effective Date (the
"Term of Employment"). As of each anniversary of the date of this Agreement, a
one year
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extension of the then Term of Employment shall automatically be effected, unless
either the Bank or the Executive shall give written notice to the other party,
not less than four months prior to the anniversary of the date of this Agreement
of the intent of such party to terminate at the expiration of the Term of
Employment.
3.2 FDIC Removal. Notwithstanding anything to the contrary in
this Agreement, 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 (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss.ss.
1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but vested rights of the Bank
and/or the Executive, if any, shall not be affected.
4. Positions, Responsibilities and Duties.
4.1 Positions and Duties. During the Term of Employment, the
Executive shall be employed and shall serve as President and Chief Executive
Officer of the Bank. In such position(s), the Executive shall have the duties,
responsibilities and authorities and authority as determined and designated from
time to time by the Board, including, without limitation, complete management
authority with respect to, and total responsibility for, the overall operations
and day-to-day business and affairs of the Bank. The Executive shall serve under
the direction and supervision of, and report only to, the Board. Notwithstanding
the above, the Executive shall not be required to perform any duties and
responsibilities (a) which would result in a noncompliance with or violation of
any applicable law, regulation, regulatory bulletin, and/or any other regulatory
requirement or (b) on a regular basis in any locations outside the counties of
Berkshire, Franklin, Hampden or Hampshire, unless agreed upon by the Executive.
4.2 Attention to Duties and Responsibilities. During the Term
of Employment, the Executive shall, except for periods of absence occasioned by
illness, vacation in accordance with Section 5.6, and reasonable leaves of
absence in accordance with the practices of the Bank as of the date of this
Agreement, devote substantially all of his business time to the business and
affairs of the Bank and the Executive shall use his best efforts, business
skills, ability and fidelity to perform faithfully and efficiently the duties
and responsibilities contemplated by this Agreement; provided, however, that the
Executive shall be allowed, to the extent such activities do not present a
conflict or substantially interfere with the performance by the Executive of his
duties and responsibilities hereunder, (a) to manage the Executive's personal
affairs, and (b)(i) to serve on boards or committees of civic or charitable
organizations or trade associations, and (ii) after obtaining the consent of the
Board, as evidenced by a written resolution of the Board and under the terms and
conditions specified in any such resolution, to serve
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on the boards of directors or trustees of companies or other organizations and
associations; provided, further, however, that all offices or positions which
the Executive currently holds or has held prior to the date of this Agreement
and those set forth on Exhibit "A", annexed hereto are designated as currently
consented to positions.
5. Compensation and Other Benefits.
5.1 Base Salary. During the Term of Employment, the Executive
shall receive a base salary of $325,000 per annum ("Base Salary") payable in
accordance with the Bank's normal payroll practices. Such Base Salary shall be
reviewed annually by the Board for increase in the Board's sole discretion. Such
Base Salary as so increased shall then constitute the Executive's "Base Salary"
for purposes of this Agreement. Notwithstanding the foregoing, after a Change in
Control occurring during the Term of Employment, the Base Salary of the
Executive shall be increased not less than often than once every twelve calendar
months during the Term of Employment in an amount not less than the average
increase the Executive had received in the prior three (3) years or for the
length of the Executive's employment.
5.2 Annual Bonus. During the Term of Employment, the Executive
shall be entitled to participate in an equitable manner with other executive
officers of the Bank in such discretionary bonus payment or awards as may be
authorized, declared, and paid by the Board to the Bank's executive employees.
No other compensation or additional benefits provided for in this Agreement
shall be deemed a substitute for the Executive's right, if any, to receive such
bonuses if, when and as declared by the Board.
5.3 Incentive, Retirement, and Savings Plan. During the Term
of Employment, the Executive shall participate in all incentive, pension,
retirement, supplemental retirement, savings, stock option and other stock grant
plans, as well as other employee benefit plans and programs, if any, maintained
from time to time by the Bank for the benefit of senior executives and/or other
employees of the Bank.
5.4 Welfare Benefit Plans. During the Term of Employment, the
Executive, the Executive's spouse, if any, and their eligible dependents, if
any, shall participate in and be covered by all the welfare benefit plans and
programs, if any, maintained by the Bank for the benefit of senior executives
and/or other employees of the Bank.
5.5 Expense Reimbursement. During the Term of Employment, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses, including reasonable business travel expenses, incurred by the
Executive in performing his duties and responsibilities hereunder in accordance
with the policies and procedure of the Bank as in effect at the time the expense
was incurred, as the same may be changed from time to time.
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5.6 Vacation and Fringe Benefits. During the Term of
Employment, the Executive shall be entitled to five (5) weeks paid vacation each
calendar year at such times which do not materially interfere with the
performance of the Executive's duties hereunder. In addition, during the Term of
Employment, the Executive shall be eligible to benefit from such fringe benefits
and prerequisites, if any, in accordance with the policies of the Bank and as in
effect and provided from time to time to senior executives of the Bank.
Notwithstanding the above, the Executive, during the Term of Employment, shall
retain, pursuant to current policy and practice of the Bank, all privileges, if
any, including club memberships and automobile usage of a bank-owned vehicle, to
which he is entitled on the date of this Agreement.
6. Termination.
6.1 Termination Due to Death. In the event of the Executive's
death during the Term of Employment, the Term of Employment shall thereupon end
and his estate or other legal representative, as the case may be, shall, subject
to Sections 2.2, 3.2, 6.9, 6.11 and 6.12 of this Agreement, only be entitled to:
(a)(i)(A) Base Salary continuation at the rate in effect (as
provided in Section 5.1 of this Agreement) on the Date of Termination
for a six month period commencing on such Date of Termination, or (B),
if the Board so determines in its sole discretion and in lieu of such
one year salary continuation described above in (A), a lump sum payment
equal in amount to the present value of such Base Salary continuation
(reasonably determined using a discount rate equal to the most recent
quote available for the one year United States Treasury Bill rate on
the Date of Termination) payable within thirty business days after the
Date of Termination, and (ii) a pro-rata annual bonus for the fiscal
year in which such termination occurs, such pro-rata bonus amount to be
(I) pro-rated based on a minimum of six months service during the
fiscal year of the Bank (prior to the Date of Termination), (II)
determined in good faith by the Board (but in its sole discretion), and
(III) if any such bonus is payable, paid on or about the same date that
the annual bonus amounts payable in respect of such fiscal year, if
any, to the senior executives of the Bank are actually paid to them;
(b)any Base Salary accrued, but not less than for a period of
six months to the Date of Termination or any bonus actually awarded,
but not yet paid as of the Date of Termination;
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(c)reimbursement for all expenses (under Section 5.5 incurred
as of the Date of Termination, but not yet paid as of the Date of
Termination;
(d)payment of the per diem of any unused vacation days
accruing during the Term of Employment and the unused, unaccrued
portion of any vacation days available through the end (but not beyond)
of the calendar year of the Bank in which such termination occurs;
(e)any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans and
programs, if any, of the Bank or any Subsidiary; and
(f)continuation of the welfare benefits of the Executive and
Executive's dependents, or any of the same, at the level in effect (as
provided for by Section 5.4 of this Agreement) on, and at the same
out-of-pocket cost to the Executive as of, the Date Termination for a
six (6) month period commencing on the Date of Termination (or, if such
continuation is not permitted by applicable law or if the Board so
determines in its sole discretion, the Bank shall provide the economic
equivalent in lieu thereof);
(g)any rights to indemnification in accordance with Section 11
of this Agreement.
6.2 Suspension for Disability.
(a)If, during the Term of Employment, the Executive shall have
been absent from his duties with the Bank on a full-time basis due to
physical or mental illness for six (6) consecutive months, the Bank may
give thirty (30) days written notice of potential suspension. If the
Executive shall not have returned to the full-time performance of his
duties within such 30-day period, the Bank may suspend the Executive's
employment for "Disability" (a "Suspension for Disability").
(b)If a Suspension for Disability occurs during the Term of
Employment, the Bank will pay the Executive a bi-weekly payment equal
to two-thirds (2/3) of the Executive's bi-weekly rate of Base Salary on
the effective date of the Suspension for Disability. These payments
shall commence on the effective date of the Executive's Suspension for
Disability and will end on the earlier of (i) the date the Executive
returns to the full-time employment of the Bank; (ii) the Executive's
equivalent full-time employment by another employer; (iii) the
Executive's retirement; (iv) the Executive's death; or (v) the Term of
Employment. After a Suspension for Disability occurs, the Bank shall be
free to fill the Executive's position, but such action by the Bank,
shall constitute Good Reason if it occurs after a Change in Control.
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Upon the Executive being able to return to full-time employment before
the expiration of the Term of Employment, the Executive shall be
offered an equivalent available position and otherwise be subject to
the provisions of this Agreement. The disability payments hereunder
will be in addition to any benefit payable from any qualified or
nonqualified retirement plans or programs maintained by the Bank but
will be reduced by payments received by the Executive on account of
such disability under any long-term disability plan maintained for the
Bank's employees or maintained by the Executive. The Executive shall
maintain any such disability insurance during the Term of Employment.
(c)During the Term of Employment, the Bank will cause to be
continued life and health coverage and such other benefits
substantially identical to the coverage and benefits maintained by the
Bank for the Executive prior to the occurrence of any Suspension for
Disability.
(d)Notwithstanding the foregoing, there will be no reduction
in the compensation (except as otherwise provided in Section 6.2(b)
above, accrued benefits or pension granted or accruing to the Executive
during the Term of Suspension. Nothing in this Section 6.2 shall
abrogate or limit other provisions of this Agreement granting rights to
the Executive or the Executive's spouse or the Executive's estate
following death, retirement or termination, if applicable.
(e)continuation of the welfare benefits of the Executive and
the Executive's dependents, or any of the same, at the level in effect
(as provided for by Section 5.4 of this Agreement) on, and at the same
out-of-pocket cost to the Executive as of, the Date of Termination for
the three-year period commencing on the Date of Termination (or, if
such continuation is not permitted by applicable law or if the Board so
determines in its sole discretion, the Bank shall provide the economic
equivalent in lieu thereof);
6.3 Termination by the Board for Cause. The Board may
terminate the Executive's employment hereunder for Cause, as provided below. If
the Board terminates the Executive's employment hereunder for Cause, the Term of
Employment (if not already expired) shall thereupon end as set forth below and
the Executive shall, subject to Sections 2.2, 3.2, 6.9, 6.11, and 6.12 of this
Agreement, only be entitled to:
(a)Base Salary up to and including the Date of Termination;
(b)any bonus actually awarded, but not yet paid as of the Date
of Termination;
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(c)reimbursement for all expenses (under Section 5.5) incurred
as of the Date of Termination, but not yet paid as of the Date of
Termination;
(d)payment of the per diem value of any unused vacation days
accruing during the Term of Employment and, to the extent not
prohibited by applicable law, regulation, regulatory bulletin, and/or
any other regulatory requirement, as the same exists or may hereafter
be promulgated or amended the unused, unaccrued portion of any vacation
days available through the end and (but not beyond) of the calendar
year of the Bank in which such termination occurs;
(e)to the extent not prohibited by applicable law, regulation,
regulatory bulletin, and/or any other regulatory requirement, as the
same exists or may hereafter be promulgated or amended, any other
compensation and benefits as may be provided in accordance with the
terms and provisions of any applicable plans and programs, if any, of
the Bank or any Subsidiary; and
(f)any rights to indemnification in accordance with Section 11
of this Agreement.
In each case, in determining Cause the alleged acts or omissions of the
Executive shall be measured against standards generally prevailing in the
banking industry generally and the ultimate existence of Cause must be confirmed
by not less than 51% of the Incumbent Board (as constituted in accordance with
Section 1.4(c) of this Agreement) as a meeting prior to any termination
therefor; provided, however, that it shall be the Bank's burden to prove the
alleged facts and omissions and the prevailing nature of the standards the Bank
shall have alleged are violated by such acts and/or omissions of the Executive.
In the event of such a confirmation by 51% or more of the Board, the Bank shall
notify the Executive that the Bank intends to terminate the Executive's
employment for Cause under this Section 6.3 (the "Confirmation Notice"). The
Confirmation Notice shall specify the act, or acts, upon the basis of which the
Board has confirmed the existence of Cause and must be delivered to the
Executive within ninety (90) days after a majority of the Board (excluding, if
applicable, the Executive) has actual knowledge of the events giving rise to
such purported termination. If the Executive notifies the Bank in writing (the
"Opportunity Notice") within thirty (30) days after the Executive has received
the Confirmation Notice, the Executive (together with counsel) shall be provided
one opportunity to meet with the Board (or a sufficient quorum thereof) to
discuss such act or acts. Such opportunity to meet with the Board shall be fixed
and shall occur on a date selected by the Board (such date being not less than
ten (10) nor more than forty-five (45) days after the Bank receives the
Opportunity Notice from the Executive). Such meeting shall take place at the
principal offices of the Bank or such other location as agreed to by the
Executive and the Bank. During the period commencing on the date the Bank
receives the Opportunity Notice and ending on the date next succeeding the date
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on which such meeting between the Board (or a sufficient quorum thereof) and the
Executive is scheduled to occur and not withstanding anything to the contrary in
this Agreement, the Executive shall be suspended from employment with the Bank
(with pay to the extent not prohibited by applicable law, regulation, regulatory
bulletin, and/or any other regulatory requirement, as the same exists or may
hereafter be promulgated or amended) and the Board may, during such suspension
period, reasonably limit the Executive's access to the principal offices of the
Bank or any of its assets. If the Board properly sets the date of such meeting
and if the Board (or a sufficient quorum thereof) attends such meeting and in
good faith does not rescind its confirmation of Cause at such meeting or if the
Executive fails to attend such meeting for any reason, the Executive's
employment by the Bank shall, immediately upon the closing for such meeting and
the delivery to the Executive of the Notice of Termination, be terminated for
Cause under this Section 6.3. If the Executive does not respond in writing to
the Confirmation Notice in the manner and within the time period specified in
this Section 6.3, the Executive's employment with the Bank shall, on the
thirty-first day after the receipt by the Executive of the Confirmation Notice,
be terminated for Cause under this Section 6.3. In the event of any dispute
hereunder, Executive shall be entitled, to the extent not prohibited by
applicable law, regulation, regulatory bulletin, and/or any other regulatory
requirement, as the same exists or may hereafter be promulgated or amended,
until the earlier to occur of (i) the Date of Termination, (ii) the expiration
of the current state Term of Employment, or (iii) the resolution of such dispute
to (A) be paid bi-weekly his then Base Salary, and (b) continue to receive all
other benefits; and there shall be no reduction whatsoever of any amounts
subsequently paid to the Executive upon resolution of such dispute as a result
of, or in respect to, such interim payments or coverage. The procedure set forth
in this Section 6.3 to determine the existence of Cause shall at all times be
subject to the requirements of applicable law, regulation, regulatory bulletin
or other regulatory requirements.
6.4 Terminate Without Cause or for Good Reason. The Bank may
terminate the Executive's employment hereunder at any time without Cause. The
Executive may terminate his employment hereunder for Good Reason at any time by
delivery or written notice to the Bank within the six-month period commencing
after the occurrence of the Good Reason effective forty-five (45) days after
such written notice is delivered. If the Bank terminates the Executive's
employment hereunder without Cause (other than due to Retirement, death,
Disability or the normal expiration of the full Term of Employment), or if the
Executive terminates his employment hereunder for Good Reason, the Term of
Employment shall thereupon end (if not already expired) and the Executive shall,
subject to Sections 2.2, 3.2, 6.9, 6.11, and 6.12 of this Agreement, only be
entitled to:
(a)as liquidated damages, a cash lump sum equal to two (2)
times the Executive's "Highest Annual Compensation" (as herein
defined), provided that if the Executive terminates for Good Reason
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following a Change in Control, the cash lump sum shall be equal to
three (3) times the Executive's "Highest Annual Compensation". For
purposes of this Agreement, "Highest Annual Compensation" shall mean
the sum of (i) the highest per annum rate of Base Salary, and (ii) the
aggregate bonus amounts paid to the Executive (or which would have been
paid but for an election to defer payment to a later period), in
respect of any fiscal year of the Bank at any time during the Term of
Employment;
(b)any Base Salary accrued to the Date of Termination or any
bonus actually awarded, but not yet paid as of the Date of Termination;
(c)reimbursement for all expenses (under Section 5.5) incurred
as of the Date of Termination, but not yet paid as of the Date of
Termination;
(d)payment of the per diem value of any unused vacation days
accruing during the Term of Employment and the unused, unaccrued
portion of any vacation days available through the end (but not beyond)
of the calendar year of the Bank in which such termination occurs;
(e)continuation of the welfare benefits of the Executive and
dependents, or any of the same, at the level in effect (as provided for
by Section 5.4 of this Agreement) on, and at the same out-of-pocket
cost to the Executive as of, the Date of Termination for the three-year
period commencing on the Date of Termination (or, if such continuation
is not permitted by applicable law or if the Board so determines in its
sole discretion, the Bank shall provide the economic equivalent in lieu
thereof);
(f)any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans or
programs, if any, of the Bank or any Subsidiary; and
(g)any rights to indemnification in accordance with Section 11
of this Agreement.
In the event of any dispute hereunder, the Executive shall be entitled until the
earlier to occur of (i) the Date of Termination, (ii) the expiration of the
current stated Term of Employment, or (iii) the resolution of such dispute to
(A) be paid bi-weekly his then Base Salary, and (B) continue to receive all
other benefits; and there shall be no reduction whatsoever of any amounts
subsequently paid to the Executive upon resolution of such dispute as a result
of, or in respect to, such interim payments or coverage.
6.5 Voluntary Termination. During the Term of Employment, the
Executive may effect, upon sixty (60) days prior written notice to the Bank, a
Voluntary Termination of his employment hereunder and thereupon the Term
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of Employment (if not already expired) shall end. A "Voluntary Termination"
shall mean a termination of employment by the Executive on his own initiative
other than (a) a termination due to death or Disability, (b) a termination for
Good Reason, (c) a termination due to Retirement, or (d) a termination as a
result of the normal expiration of the full Term of Employment. A Voluntary
Termination shall, subject to Sections 2.2, 3.2, 6.9, 6.11, and 6.12 of this
Agreement, entitled the Executive only to all of the payments and benefits which
the Executive would be entitled to in the event of a termination of his
employment by the Bank for Cause.
6.6 Termination Due to Retirement. The Executive may terminate
the Executive's employment hereunder due to Retirement upon thirty (30) days
prior written notice to the Bank. If, during the Term of Employment, the
Executive's employment is so terminated due to Retirement, the Term of
Employment shall thereupon and the Executive shall, subject to Sections 2.2,
3.2, 6.9, 6.11, and 6.12 of this Agreement, only be entitled to:
(a)Base Salary up to and including the Date of Termination;
(b)any bonus actually awarded, but not yet paid as of the Date
of Termination;
(c)reimbursement for all expenses (under Section 5.5) incurred
as of the Date of Termination, but not yet paid as of the Date of
Termination;
(d)(i) continuation of the Executive's welfare benefits (as
described in Sections 5.4 of this Agreement) at the level in effect on
the Date of Termination for the one-year period following the
termination of the Executive's employment due to Retirement (or, if
such continuation is not permitted by applicable law or if the Board so
determines in its sole discretion, the Bank shall provide the economic
equivalent in lieu thereof), and (ii) any other compensation and
benefits as may be provided in accordance with the terms and provisions
of any applicable plans and programs, if any, of the Bank or any
Subsidiary;
(e)payment of the per diem value of any unused vacation days
accruing during the Term of Employment and the unused, unaccrued
portion of any vacation days available through the end (but not beyond)
of the calendar year of the Bank in which such termination occurs; and
(f)any rights to indemnification in accordance with Section 11
of this Agreement.
6.7 No Mitigation; No Offset. In the event of any termination
of employment under this Section 6, the Executive shall be under no obligation
to seek other employment or to mitigate damages and there shall be no offset
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against any amounts due the Executive under this Agreement for any reason,
including, without limitation, on account of any remuneration attributable to
any subsequent employment that the Executive may obtain. Any amounts due under
this Section 6 are in the nature of severance payments, or liquidated damages,
or both, and are not in the nature of a penalty.
6.8 Notice of Termination. Any termination of the Executive's
employment under this Section 6 requiring advance written notice shall be
communicated by a notice of termination to the other party hereto given in
accordance with Section 12.3 of this Agreement (the "Notice of Termination").
The Notice of Termination, in the case of a termination by the Bank for Cause,
or a termination by the Executive for Good Reason, shall (a) indicate the
specific termination provision in this Agreement relied upon, and (b) set forth
in reasonable detail the dates, facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.
6.9 Code Section 280G Reduction.
6.9.1 Notwithstanding any other provisions of this Agreement
or of any other agreement, contract, understanding, plan or program entered in
to or maintained by the Bank, if any payment or benefit received or to be
received by the Executive in connection with the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with (a) the Bank or any Affiliate, Parent or
Subsidiary of the Bank, or (b) any person affiliated with the Bank or any such
person) (all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to an Excise Tax, and if such Total
Payments less the Excise Tax is less than the maximum amount of Total Payments
which would otherwise be payable to the Executive without imposition of an
Excise Tax, then, to the extent necessary to eliminate the imposition of an
Excise Tax (and after taking into account any reduction in the Total payments
provided by reason of Section 280G of the Code in such other plan, arrangement
or agreement), (i) the cash and non-cash payments and benefits payable under
this Agreement shall first be reduced (but not below zero),and (ii) all other
cash and non-cash payments and benefits shall next be reduced (but not below
zero); but only if, by reason of any such reduction, the Total Payments with any
such reduction shall exceed the Total Payments without any such reduction. For
purposes of this Section 6.9, (A) no portion of the Total Payments the receipt
or enjoyment of which the Executive shall have effectively waived in writing
prior to the Date of Termination shall be taken into account, (B) no portion of
the Total Payments shall be taken into account which in the opinion of tax
counsel selected in good faith by the Bank does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
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(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C) the
payments and/or benefits under this Agreement shall be reduced only to the
extent necessary as that the Total Payments (other than those referred to in
clauses (A) and (B) above) in their entirety constitute reasonable compensation
for services actually rendered within the meaning of Section 280G(b)(4)(B)of the
Code or are otherwise not subject to disallowance as deductions, in the opinion
of the tax counsel referred to above in clause (B), and (D) the value of any
non-cash payment or benefit or any deferred payment or benefit included in the
Total Payments shall be determined by the Bank's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
Except as otherwise provided above, the foregoing calculations and
determinations shall be made in good faith by the Bank and the Executive. If no
agreement on the calculations is reached, then the Executive and the Bank will
agree to the selection of an accounting firm to make the calculations. If no
agreement can be reached regarding the selection of an accounting firm the Bank
will select a prominent national accounting firm which has no current or recent
business relationship with the Bank. The Bank shall pay all costs and expenses
incurred in connection with any such calculations or determinations. Any
calculations or determinations made in accordance with this Section 6.9 shall be
conclusive and binding on all parties.
6.9.2 Notwithstanding any other provisions of this Agreement
or of any other agreement, contract, understanding, plan or program entered into
or maintained by the Bank, if any payment or benefit received or to be received
by the Executive in connection with the termination of the Executive's
employment (pursuant to a Change in Control, any amount payable under this
Agreement or any other payments to which Executive is entitled under any benefit
plan, option or stock grant plan, incentive plan or other agreement with the
Bank constitute "excess parachute payments" (as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code")), the Bank shall pay to
the Executive an additional sum equal to: (i) the excise tax imposed by Section
4999 of the Code on the excess parachute payments (including any payments made
pursuant to this sentence), and (ii) the Executive's federal, state and local
income and payroll taxes imposed upon the payments made pursuant to this
sentence.
6.10 Payment. Except as otherwise provided in this Agreement,
any payments to which the Executive shall be entitled to under this Section 6,
including, without limitation, any economic equivalent of any benefit, shall be
made, to the extent practicable, within five (5) business days following the
Date of Termination.
6.11 Bank Regulatory Limitations.
6.11.1 Any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. ss. 1828(k) and any regulations promulgated thereunder.
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6.11.2 To the extent required by applicable law, regulation,
regulatory bulletin, and/or any other regulatory requirement, the aggregate
amount and/or value of the Compensation paid as a result of any termination of
the Executive's employment with the Bank, regardless of the reason for any such
termination of employment, shall not exceed the limit prescribed by applicable
law, rule or regulation.
6.12 Other Required Provisions.
6.12.1 If the Bank is in default (as defined in Section
3(x)(1) of the Federal Deposit Insurance Act), all obligations under this
Agreement shall terminate as of the date of default, but this Section 6.12.1
shall not affect the vested rights of the Bank and/or the Executive, if any.
6.12.2 All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of this Agreement
is necessary for the continued operation of the Bank, (i) by the director, or
his or her designee, at the time the Federal Deposit Insurance Corporation
enters into an agreement to provide assistance to or on behalf of the Bank under
the authority contained in Section 13(c) of the Federal Deposit Insurance Act;
or (ii) by the director, or his designee, at the time the director, or his or
her designee, approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by such director to be in
an unsafe or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by any such actions.
6.13 Post-Termination Obligations. During the Term of
Employment and for one (1) full year after the expiration or termination
thereof, or subject to ordinary court process, the Executive shall, upon
reasonable notice, use his reasonable best efforts to cooperate with the Bank by
providing such information and assistance to the Bank as may reasonably be
required by the Bank at the Bank's expense in connection with any litigation not
commenced by or involving the Executive in which the Bank or any of its
Subsidiaries or Affiliates is, or may become, a party.
7. Non-exclusivity of Rights; Non-extension Severance.
7.1 Other Benefits. Except as is otherwise specifically
provided in this Agreement, the Executive's continuing or future participation
in any benefit, bonus, incentive or other plan or program provided or maintained
by the bank, and for which the Executive may be eligible and qualify, shall not
be prevented or limited, and the Executive's rights under any future agreements
with the Bank and/or any Affiliate, including, without limitation, any stock
option agreements shall not be limited or prejudiced. Subject to Section 7.2
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below, this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to the Executive of a kind elsewhere provided. Except as
otherwise specifically provided in this Agreement, no provision of this
Agreement shall be interpreted to mean or result in the Executive receiving
fewer benefits than those available to him without reference to this Agreement.
7.2 Non-extension Severance. If (a)(i) the Executive's
employment hereunder is not terminated or suspended under Sections 6.1, 6.2,
6.3, 6.4, 6.5 or 6.6 of this Agreement prior to the expiration of the Term of
Employment, or (ii) any such termination or suspension of the Executive's
employment is not initiated prior to the expiration of the Term of Employment,
(b) the Term of Employment is not extended by the Bank, and (c) the Executive's
employment with the Bank terminates after the expiration of the Term of
Employment (other than for Cause), the Executive shall be entitled to receive,
in lieu of any severance payments or severance benefits under any other plan or
program maintained by the Bank or any Affiliate, (1) Base Salary continuation at
the rate in effect (as provided in Section 5.1 of this Agreement) as of the
expiration of the Term of Employment, and (2) welfare benefit continuation, at
the level in effect (as provided for by Section 5.4 of this Agreement) on, and
at the same out-of-pocket cost to the Executive as of, the expiration of the
Term of Employment, in each case (1) and (2), for the greater of (A) the period
ending six (6) months after the Executive's employment terminates, or (B) the
period commencing on the date the Executive's employment terminates and ending
as of the Term of Employment. Notwithstanding the above, if the Board determines
in its sole discretion and in lieu only of such Base Salary continuation in (1),
a lump sum payment, equal to the present value of such Base Salary continuation
(reasonably determined using the discount rate specified in Section 6.1(a)(1)),
shall be paid to the Executive within thirty (30) days after the date the
Executive's employment terminates. Notwithstanding anything to the contrary in
this Section 7.2, if (x) there occurs a Change in Control during the Term of
Employment, (y) the Term of Employment is not extended by the Bank up to and/or
through the Term of Employment, and (z) the Executive's employment with the Bank
is subsequently terminated (other than for Cause), the Executive, in lieu of the
Base Salary and welfare benefits continuation under this Section 7.2, shall be
entitled to receive the payments and benefits set forth in Section 6.4 of this
Agreement.
8. Resolution of Dispute. With the exception of proceedings for
equitable relief brought pursuant to this Section or Section 9.2 of this
Agreement, any dispute or controversy arising under or in connection with this
Agreement may, at either the Bank's or the Executive option, be settled
exclusively by arbitration in Springfield, Massachusetts in accordance with the
rules of the American Arbitration Association then in effect and at the Bank's
expense. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
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specific performance in court of his right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement. If a claim for any payments or benefits under
this Agreement or any other provision of this Agreement is disputed by the Bank
and the Executive, the Executive shall, to the extent and at such time or times
as is not prohibited by applicable law, regulation, regulatory bulletin, and/or
any other regulatory requirement, as the same exists or may be hereafter
promulgated or amended, if the Executive is successful in his claim, be
reimbursed for all reasonable attorney's fees and expenses incurred by the
Executive in pursuing such claim.
9. Confidential Information.
9.1 Confidentiality. The Executive will not, during or after
the Term of Employment, disclose any confidential information relating to the
business activities of the Bank or any Affiliate thereof which has not been
previously disclosed by any person to any person, firm corporation, bank or
other entity for any reason or purpose whatsoever. Notwithstanding the
foregoing, the Executive may disclose any knowledge or other information
relating to banking, financing and/or economic principles, concepts or ideas
which are based on experience and which are not derived from the business plans
and activities of the Bank, and may disclose such confidential information in
connection with legal and/or regulatory proceedings.
9.2 Injunctive Relief. The Executive acknowledges and agrees
that the Bank will have no adequate remedy at law, and would be irreparably
harmed, if the Executive breaches or threatens to breach any of the provisions
of this Section 9 of this Agreement. The Executive agrees that the Bank shall be
entitled to equitable and/or injunctive relief to prevent any breach or
threatened breach of this Section 9, and to specific performance of each of the
terms of such Section in addition to any other legal or equitable remedies that
the Bank may have. The Executive further agrees that he shall not, in any equity
proceeding relating to the enforcement of the terms of this Section 9, raise the
defense that the Bank has an adequate remedy at law.
9.3 Special Severability. The terms and provisions of this
Section 9 are intended to be separate and divisible provisions and if, for any
reason, any one or more of them is held to be invalid or unenforceable, neither
the validity nor the enforceability of any other provision of this Agreement
shall thereby be affected.
10. Successors.
10.1 The Executive. This Agreement is personal to the Executive
and, without the prior express written consent of the Bank, shall not be
assignable by the Executive, except that the Executive's rights to receive any
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compensation or benefits under this Agreement may be transferred or disposed of
pursuant to testamentary disposition, intestate succession or pursuant to a
qualified domestic relations order. This Agreement shall inure to the benefit of
and be enforceable by the Executive's heirs, beneficiaries and/or legal
representatives.
10.2 The Bank. This Agreement shall inure to the benefit of
and be binding upon the Bank and its successors and assigns; provided, however,
that no assignment of this Agreement may be made without written consent of the
Executive.
11. Indemnification. The Executive (and his heirs, executors and
administrators) shall be indemnified and held harmless by the Bank to the
fullest extent permitted by applicable law, regulations, regulatory bulletin,
and/or any other regulatory requirement, as the same exists or may hereafter be
promulgated or amended, against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines, excise taxes or penalties
and amounts paid or to be paid in settlement) reasonable incurred or suffered by
the Executive as a consequence of the Executive being or having been made a
party to, or being or having been involved, in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that the Executive is or was a trustee,
director or officer of the Bank or is or was serving at the request of the Bank
as a trustee, director or officer or of another corporation (including, but not
limited to, a subsidiary or an Affiliate of the Bank), and such indemnification
shall continue after the Executive shall cease to be an officer, director or
trustee. The right to indemnification conferred hereby shall be a contract right
and shall also include, to the extent permitted by applicable regulation, the
right to be paid by the Bank the expenses incurred in defending any such
proceeding in advance of the final disposition upon receipt by the Bank of an
undertaking by or on behalf of the Executive to repay such amounts or a portion
thereof, if it shall ultimately be determined that the Executive is not entitled
to be indemnified by the Bank pursuant hereto or as otherwise authorized by law
but such repayment by the Executive shall only be in an amount ultimately
determined to exceed the amount to which the Executive was entitled to be
indemnified.
12. Miscellaneous.
12.1 Applicable Law. This Agreement shall, to the extent not
superseded by federal law, be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts, without regard to principles of
conflict of laws.
12.2 Amendments/Waiver. This Agreement may not be amended,
waived, or modified otherwise than by a written agreement executed by the
parties to this Agreement or their respective successors and legal
representatives. No waiver by any party to this Agreement of any breach of any
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term, provision or condition of this Agreement by the other party shall be
deemed a waiver of a similar or dissimilar condition or provision at the same
time, or any prior or subsequent time.
12.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when received by hand-delivery to
the other party, by facsimile transmission, by overnight courier, or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
with a copy to:
If to the Bank:
with a copy to:
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
12.4 Withholdings. The Bank may withhold from any amounts
payable under this Agreement such taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
12.5 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
12.6 Captions. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
12.7 Entire Agreement. This Agreement contains the entire
agreement between the parties to this Agreement concerning the subject matter
hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the parties with
respect thereto.
12.8 Representation. The Executive represents and warrants
that the performance of the Executive's duties and obligations under this
Agreement will not violate any agreement between the Executive and any other
person, firm, partnership, corporation, or organization.
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12.9 Survivorship. The respective rights and obligations of
the parties to this Agreement, including, without limitation, any rights of the
Executive and the Bank under Section 11 of this Agreement, shall survive any
termination of this Agreement or the Executive's employment hereunder for any
reason to the extent necessary to the intended preservation of such rights and
obligations.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and the Bank has caused this Agreement to be executed in its
name on its behalf, and its corporate seal to be hereunto affixed and attested
by its Secretary, all as of the Effective Date.
SPRINGFIELD INSTITUTION FOR SAVINGS
By: /s/ Albert E. Steiger, Jr.
Name:
Title: Chairman
/s/ F. William Marshall, Jr.
F. William Marshall, Jr.
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