Exhibit 10.7
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This Supplemental Executive Retirement Agreement (the "Agreement") is
dated as of the 29th day of December, 2005, by and between THE WESTBOROUGH
BANK, a bank organized and existing under the laws of the Commonwealth of
Massachusetts with its headquarters at 100 East Main Street, Westborough,
Massachusetts 01581 (the "Bank") and _______________ residing at
__________________________, ______________________ (the "Executive"). For
purposes of this Agreement, any reference to Company herein shall mean
Westborough Financial Services, Inc.
In consideration of the mutual covenants herein contained and
implied, the sufficiency of which is acknowledged by each party, the Bank
and the Executive agree as follows:
1. Definitions.
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(a) "Accrued Benefit" means ________ percent (__%) of the
Executive's Final Average Compensation.
(b) "Actuarial Equivalent" means a benefit of equivalent value when
computed on the basis of an interest rate of 6.5% and the 1994 Group
Annuity Reserving Table; provided, however, that for purposes of
determining the value of a lump sum distribution, the following assumptions
will be used:
Interest: Applicable interest rate under Section 417(e)(3) of
the Code, as determined for the month of November
of the preceding year.
Mortality: Applicable mortality table under Section 417(e)(3)
of the Code.
(c) "Cause" means the following:
(i) the commission by, and conviction of, the Executive for
any felony involving deceit, dishonesty or fraud with regard to the
Bank or its business, or moral turpitude of such a nature as would
adversely affect the reputation of the Bank;
(ii) the commission by the Executive of a material act or acts
of dishonesty in connection with the performance of the Executive's
duties to the Bank including, without limitation, material
misappropriation of funds or property;
(iii) an act or acts of gross misconduct including sexual
harassment by the Executive;
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(iv) continued, willful and deliberate non-performance by the
Executive of duties (other than by reason of illness or disability)
which has continued for more than thirty (30) days following written
notice of non-performance from the Board of Directors (or Executive
Committee); or
(v) the entry of a final cease and desist order with respect
to safety and soundness violations by any federal or state regulatory
agency having jurisdiction over the Bank, or the suspension or
termination of the employment of the Executive pursuant to an order
by any federal or state regulatory agency having jurisdiction over
the Bank.
The determination of whether the Executive's service shall be
terminated for Cause shall be made at a meeting of the Board of Directors
called and held such purpose, at which the Board of Directors makes a
finding that in the good faith opinion of the Board of Directors an event
set forth in subclauses (i) through (v) has occurred and specifying the
particulars thereof in detail.
(d) "Change of Control" means the occurrence of any of the
following events.
with respect to the Executive:
(i) a change in ownership of the Executive's Service
Recipient;
(ii) a change in effective control of the Executive's Service
Recipient; or
(iii) a change in the ownership of a substantial portion of the
assets of the Executive's Service Recipient.
The existence of a Change in Control Event shall be determined by the Bank
in accordance with section 409A of the Code and the regulations thereunder.
In no event, however, shall a Change of Control be deemed to have occurred
as a result of: (i) 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; or (ii) the conversion of Westborough MHC to a stock form
company and the issuance of additional shares of the Company in connection
therewith.
(e) "100% Non-Forfeitable Benefit" means the entire Accrued
Benefit.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Final Average Compensation" means the average of the
Executive's annual base salary (prior to any salary reduction contributions
to any Section 401(k), 125 or 132 plan) and bonuses for the final three (3)
calendar years during the Executive's employment with the Bank.
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(h) "Hour of Service" shall mean, each hour for which the Executive
is paid or entitled to be paid for the performance of duties for the Bank
or for non-performance of duties (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness, incapacity,
jury duty, military duty or approved paid leave of absence.
(i) "Normal Form" means an annual annuity payable for life with
fifteen (15) years certain.
(j) "Service Recipient" means with respect to the Executive on any
date: (i) the corporation for which the Executive is performing services on
such date; (ii) all corporations that are liable to the Executive for the
benefits due to him under this Agreement; (iii) a corporation that is a
majority shareholder of a corporation described in Paragraph 1(j)(i) or
(ii); or (iv) any corporation in a chain of corporations each of which is a
majority shareholder of another corporation in the chain, ending in a
corporation described in Paragraph 1(j)(i) or (ii).
(k) "Year of Service" means each period of twelve (12) consecutive
months commencing with the Executive's initial date of hire by the Bank and
each anniversary thereof during which the Executive is credited with at
least 1,000 Hours of Service, including all such 12-month periods prior to
the effective date of this Agreement. The Executive shall accrue a Year of
Service for all purposes hereunder if, in the Executive's final year of
employment with the Bank, the Executive is credited with at least 1,000
Hours of Service.
2. Payments to Executive.
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(a) The Bank will pay annually to the Executive an amount equal to
_______ percent (__%) of the Executive's Final Average Compensation. Absent
an election by the Executive to the contrary, said benefit will be payable
in the Normal Form in equal monthly installments commencing on the first
day of the month next following the termination of the Executive's service.
(b) The Executive's benefits under the Agreement are 100% vested
and the Executive is entitled to the 100% Non-Forfeitable Benefit.
(c) If the Executive retires from the employ of the Bank and
terminates service before age 65, his benefit will be payable in the Normal
Form in equal monthly installments commencing on the first day of the month
next following the termination of the Executive's service; provided,
however, that if the Accrued Benefit is payable before the Executive's 65th
birthday, the Accrued Benefit (payable at age 65) shall be reduced by 3.0%
for each year benefits commence before the Executive's 65th birthday. The
foregoing 3.0% reduction shall be pro-rated for a partial year.
(d) Within thirty (30) days of the execution of this Agreement the
Executive shall submit his request, if any, for payment other than in the
Normal Form which request shall be subject to approval by the Board of
Directors of the Bank. In lieu of the Normal Form provided by the foregoing
provisions of this Paragraph 2, with the written consent of the Board of
Directors of the Bank, the Executive may also elect at least twelve (12)
months prior to the date on which payments are to commence an optional form
of payment which is the Actuarial
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Equivalent of the Normal Form to which the Executive is entitled, which
optional form of payment may be any optional form, including a lump sum;
provided, however, that the first payment to be made pursuant to such
election shall not occur until at least five (5) years later than such
payment would otherwise have been made.
(e) Notwithstanding anything in the Agreement to the contrary, to
the extent required under section 409A of the Code, no payment to be made
to a key employee (within the meaning of section 409A of the Code) on or
after the date of his termination of service shall be made sooner than six
(6) months after such termination of service.
(f) Notwithstanding anything to the contrary herein contained or
implied, in no event shall the Executive be entitled to receive any
benefits under this Agreement if he is terminated by the Bank for Cause.
3. Death of the Executive.
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(a) If the Executive dies while employed by the Bank, the Bank will
pay to the Executive's surviving spouse the Executive's Accrued Benefit
assuming that the Executive had retired the day before his death with a
100% Non-Forfeitable Benefit (i.e., the payments shall begin on the first
day of the month next following the death of the Executive). The surviving
spouse shall receive the death benefit in the form of benefit payment in
effect at the time of death. If the Executive leaves no surviving spouse,
his estate shall receive the present value of the Executive's Accrued
Benefit in a lump sum as soon as practicable after the Executive's death.
(b) If the Executive dies following the commencement of the payment
of benefits under this Agreement, death benefits, if any, will be
determined pursuant to the form of benefit payment in effect at the time of
death.
4. Disability Benefits.
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If the Executive shall be disabled, for not less than one hundred
twenty (120) days so as to be unable to perform the essential functions of
the Executive's then existing position or positions as determined by a
physician or psychiatrist, as applicable, as mutually agreed upon by the
Bank and the Executive, while in the employ of the Bank and prior to the
commencement of payments under Paragraph 2 above, the Executive shall be
entitled to receive the Accrued Benefit that would be payable to the
Executive pursuant to Paragraph 2 above as if the Executive had terminated
his employment on the date of his disability with a 100% Non-Forfeitable
Benefit (i.e., the payments shall begin on the first day of the month next
following the disability of the Executive). In the event either the Bank or
the Executive wishes to challenge such physician's or psychiatrist's
determination, the Executive or Bank may chose to submit an evaluation by
an independent physician or psychiatrist; the Executive agrees to cooperate
with such independent physician or psychiatrist so such evaluation may be
produced. If the two (2) determinations differ, the parties shall jointly
and in good faith further choose a third physician or psychiatrist to
evaluate the Executive, and that expert evaluation shall be final and
binding on the parties.
5. Termination not for Cause.
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If the Executive is terminated not for Cause, the Executive shall be
entitled to receive his Accrued Benefit payable pursuant to Paragraph 2
above as if the Executive had terminated his employment with a 100% Non-
Forfeitable Benefit.
6. Termination After Change of Control.
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If the Executive terminates service following a Change of Control
(voluntarily or involuntarily), then the Executive shall be entitled to his
Accrued Benefit payable in a lump sum assuming the Executive had retired
the day before with a 100% Non-Forfeitable Benefit computed as if the
Executive had continued working until age 65 with a 5% increase in base
salary and bonus in each calendar year until the attainment of age 65.
7. Re-employment.
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If the Executive is rehired by the Bank as an employee after he has
begun receiving payments hereunder but before he has received all payments
due hereunder, such payments shall be discontinued until the Executive's
subsequent retirement, whereupon the amount of the Executive's benefit
shall be recalculated as of that time.
8. Claims Procedure.
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(a) In the event the Executive or his beneficiary in the case of
the Executive's death or their authorized representative (hereinafter, the
"Claimant") asserts a right to a benefit under this Agreement which has not
been received, in whole or in part, the Claimant must file with the Bank a
claim for such benefit on forms provided by the Bank. The Bank shall render
its decision on the claim within 90 days after receipt of the claim. If
special circumstances apply, the 90-day period may be extended by an
additional 90 days, provided written notice of the extension is given to
the Claimant during the initial 90-day period and such notice indicates the
special circumstances requiring an extension of time and the date by which
the Bank expects to render its decision on the claim. If the Bank wholly or
partially denies the claim, the Bank shall provide written notice to the
Claimant within the time limitations of this Paragraph. Such notice shall
set forth:
(i) the specific reasons for the denial of the claim;
(ii) specific reference to pertinent provisions of the
Agreement on which the denial is based;
(iii) a description of any additional material or information
necessary to perfect the claim and an explanation of why such
material or information is necessary;
(iv) a description of the Agreement's claims procedures, and
the time limitations applicable to such procedures; and
(v) a statement of the Claimant's right to bring a civil
action under Section 502(a) of the Employee Retirement Income
Security Act of 1974, as amended
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("ERISA") if the claim denial is appealed to the Bank and the Bank
fully or partially denies the claim pursuant to Paragraph 8(c).
(b) A Claimant whose application for benefits is denied in whole or
in part may request a full and fair review of the decision denying the
claim by filing, in accordance with such procedures as the Bank may
reasonably establish, a written appeal which sets forth the documents,
records and other information relating to the claim within 60 days after
receipt of the notice of the denial by the Bank. In connection with such
appeal and upon request by the Claimant, a Claimant may review (or receive
free copies of) all documents, records or other information relevant to the
Claimant's claim for benefit, all in accordance with such procedures as the
Bank may reasonably establish. If a Claimant fails to file an appeal within
such 60-day period, he shall have no further right to appeal.
(c) A decision on the appeal by the Bank shall include a review by
the Bank that takes into account all comments, documents, records and other
information submitted by the Claimant relating to the claim, without regard
to whether such information was submitted or considered in the initial
claim determination. The Bank shall, render its decision on the appeal no
later than 60 days after the receipt by the Bank of the appeal. If special
circumstances apply, the 60-day period may be extended by an additional 60
days, provided written notice of the extension is given to the Claimant
during the initial 60-day period and such notice indicates the special
circumstances requiring an extension of time and the date by which the Bank
expects to render its decision on the claim on appeal. If the Bank wholly
or partly denies the claim on appeal, the Bank shall provide written notice
to the Claimant within the time limitations of this Paragraph. Such notice
shall set forth:
(i) the specific reasons for the denial of the claim;
(ii) specific reference to pertinent provisions of the
Agreement on which the denial is based;
(iii) a statement of the Claimant's right to receive, upon
request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to the Claimant's
claim for benefits; and
(iv) a Statement of the Claimant's right to bring a civil
action under Section 502(a) of ERISA,
9. Provision for Incapacity. If the Board of Directors (or
Executive Committee) reasonably deems the Executive incapable of receiving
his benefits by reason of illness, infirmity or incapacity of any kind, the
Bank may make payments to any one or more persons or representatives as
provided in a written direction received from the Executive while competent
and, in the absence of any such written direction, to the following persons
and representatives in the order set forth, i.e., first to the Executive's
spouse if she survives him, then to his children if they survive him, and
then to his estate. The making of any such payment shall fully discharge
the Bank from any liability with respect to such payment.
10. Violation of Agreement.
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In the event of any material violation of any material terms of the
Agreement by the Executive, the Bank, in addition to any other rights which
it may have, shall be relieved of the liability to make any further
payments under the Agreement to, or on behalf of, the Executive so long as
such violation continues and shall have the right to specific enforcement
at the Agreement by proceedings in equity.
11. Nonassignable Rights.
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Except as otherwise provided by the Agreement, neither the Executive
nor his surviving spouse shall have any right to commute, sell, assign,
transfer or otherwise convey the right to receive any payments hereunder,
which payments and the right thereto are expressly declared to be
nonassignable and nontransferable.
12. Independence of Agreement.
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The benefits payable under the Agreement shall be independent of, and
in addition to, any employment agreement that may exist from time to time
between the parties hereto, or any other compensation payable by the Bank
to the Executive, whether as salary, bonus or otherwise. The Agreement
shall not be deemed to constitute a contract of employment between the
parties hereto, and no provision hereof shall restrict the right of the
Bank to discharge the Executive with or without Cause, or restrict the
right of the Executive to terminate his employment.
13. General Obligation of the Bank.
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The benefits provided under the Agreement constitute a mere promise
by the Bank to make payments in the future, and the rights of the Executive
hereunder shall be those of a general unsecured creditor of the Bank.
Nothing contained herein shall be construed to create a trust of any kind
or to render the Bank a fiduciary with respect to the Executive. The Bank
shall not be required to maintain any fund or segregate any amount or in
any other way currently fund the future payment of any benefit provided
under the Agreement, and nothing contained herein shall be construed to
give the Executive or any other person any right to any specific assets of
the Bank or of any other person. This Agreement is intended to be, and
shall in all events be construed and treated as, a deferred compensation
arrangement for a "select group of management and highly compensated
employees," within the meaning of Title I of ERISA. This Agreement is
intended to be a non-qualified deferred compensation plan described in
section 409A of the Code. This Agreement shall be operated, administered
and construed to give effect to such intent. In addition the Agreement
shall be subject to amendment, with or without advance notice to the
Executive and other interested parties, and on a prospective or retroactive
basis, including but not limited amendment in a manner that adversely
affects the rights of participants and other interested parties, to the
extent necessary to effect such compliance.
14. Establishment of Trust; Cooperation of Executive.
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(a) The provisions of Paragraph 13 notwithstanding, the Bank may,
in its sole and absolute discretion, establish a trust to which funds
earmarked for payment under this Agreement may be transferred and from
which benefits arising hereunder, and subject to the provisions and
limitations hereof, may be paid. Any such trust would contain provisions
making
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it irrevocable by the Bank unless and until all benefits hereunder which
are funded through such trust have been paid or provided for, except in the
case of bankruptcy or insolvency of the Bank, in which event benefit
payments from the trust would cease and assets thereof would revert to the
Bank or be paid to its creditors.
(b) The Bank may, for its corporate purposes, choose to obtain a
policy or policies of life insurance on the Executive. The Executive agrees
to fully cooperate in connection with the securing of any such policy or
policies or the election of any options thereunder which the Bank may wish
and that he will make himself available for medical examinations if
necessary.
15. Required Regulatory Provisions.
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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:
(a) 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. [SECTION]1828(k), and any regulations promulgated
thereunder.
(b) 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.
[SECTION]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 (i) pay to the Executive all or
part of the compensation withheld while the Bank's obligations hereunder
were suspended and (ii) reinstate, in whole or in part, any of the
obligations which were suspended.
(c) 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. [SECTION]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.
(d) 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. [SECTION]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.
(e) 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: (i) by the Commissioner of
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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. [SECTION]1823(c); or (ii) 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 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.
16. Governing Law.
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The Agreement shall be construed under and governed by the laws of
the Commonwealth of Massachusetts except to the extent preempted by ERISA.
EXECUTED under seal as of the day and year first above written, and
in the case of the Bank by its duly authorized representative.
THE WESTBOROUGH BANK
CHAIRMAN, COMPENSATION COMMITTEE
ATTEST: ___________________________ By: ________________________________
Clerk (duly authorized)
EXECUTIVE
ATTEST ____________________________ By: ________________________________
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