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EXHIBIT 10.4
BOSTON FEDERAL SAVINGS BANK
CHANGE IN CONTROL AGREEMENT
This AGREEMENT originally entered into on March 28, 2000, is amended
and restated, effective as of December 31, 1999, by and between Boston Federal
Savings Bank (the "Bank"), a federally chartered savings institution, with its
principal administrative offices at 17 New England Executive Park, Burlington,
MA 01803, and BostonFed Bancorp, Inc. (the "Holding Company"), a corporation
organized under the laws of the State of Delaware and the holding company of the
Bank and Dennis J. Furey ("Executive").
WHEREAS, the Bank recognizes the substantial contribution Executive has
made to the Bank and wishes to continue to protect Executive's position with the
Bank for the period provided in this Agreement in the event of a Change in
Control (as defined in this Agreement); and
WHEREAS, Executive has agreed to continue serve in the employ of the
Bank.
NOW, THEREFORE, in consideration of the contribution and
responsibilities of Executive, and upon the other terms and conditions
hereinafter provided, the parties hereto agree as follows:
1. TERM OF AGREEMENT.
The period of this Agreement shall be deemed to have commenced as of
the date first above written and shall continue for a period of thirty (30) full
calendar months from the date of this Agreement, as amended and restated.
Commencing on the date of execution of this Agreement and at each anniversary
date thereafter, the Board of Directors of the Bank (the "Board") may extend the
term of this Agreement for an additional year so that the remaining term is a
full thirty (30) calendar months, unless Executive elects not to extend the term
of the Agreement by providing written notice to the Board in accordance with
Section 5 of the Agreement. The Board will review the Agreement and Executive's
performance annually for purposes of determining whether to extend the term of
the Agreement, and the results of such review shall be included in the minutes
of the Board's meeting.
2. CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control (as defined in paragraph
(b) of this Section 2), Executive shall be entitled to the payments and benefits
provided for in Section 3 of this Agreement upon Executive's termination of
employment on or after the date the Change in Control occurs due to: (i)
Executive's dismissal at any time during the term of this Agreement; (ii)
Executive's voluntary resignation for any reason within the thirty (30) day
period following the date that is one-year from the date the Change in Control
occurred, or (iii) Executive's resignation at any time during the term of this
Agreement following any demotion, or loss of title, office or significant
authority, or reduction in Executive's annual compensation or benefits, or
relocation of Executive's principal place of employment by more than 25 miles
from its location immediately prior to the
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Change in Control; provided, however, Executive may consent in writing to any
such demotion, loss, reduction or relocation. The effect of any written consent
of Executive under this Section 2(a) shall be strictly limited to the terms
specified in such written consent.
(b) For purposes of this Agreement, a "Change in Control" of the Bank
or Holding Company shall mean an event of a nature that: (i) 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 (the "Exchange Act"); or (ii) results in a Change in
Control of the Bank or the Holding Company within the meaning of the Home
Owners' Loan Act of 1933 and the Rules and Regulations promulgated by the Office
of Thrift Supervision ("OTS") (or its predecessor agency), as in effect on the
date hereof (provided, that in applying the definition of change in control or
presumptive change in control or acting in concert or presumptive acting in
concert as set forth under the Rules and Regulations of the OTS, ownership by a
person or group, including a presumptive group, of at least 15% of the voting
stock of the Bank or the Holding Company shall be required, and provided further
that ownership of stock by a tax qualified employee benefit plan of the Bank or
the Holding Company shall not be subject to presumptions of control or acting in
concert); or (iii) without limitation such a Change in Control shall be deemed
to have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank or the Holding Company representing 25% or
more of the Bank's or the Holding Company's outstanding securities except for
any securities of the Bank purchased by the Holding Company in connection with
the conversion of the Bank to the stock form and any securities purchased by any
employee benefit plan of the Bank or the Holding Company, or (B) individuals who
constitute the board of directors on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board (or members who were nominated by the Incumbent Board), or whose
nomination for election by the Holding Company's stockholders was approved by
the same Nominating Committee serving under an Incumbent Board (or members who
were nominated by the Incumbent Board), shall be, for purposes of this clause
(B), considered as though he were a member of the Incumbent Board, or (C) a plan
of reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Holding Company or similar transaction occurs in which
the Bank or Holding Company is not the resulting entity.
(c) Notwithstanding any other provision of this Agreement, Executive
shall not have the right to receive termination benefits under this Agreement
upon Executive's Termination for Cause. The term "Termination for Cause" shall
mean termination because of Executive's personal dishonesty, incompetence,
willful misconduct, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, regulation (other than traffic violations or similar offenses) or final
cease and desist order, or any material breach of this Agreement. In determining
incompetence, the acts or omissions shall be measured against standards of
professional competence generally prevailing for officers having comparable
positions in the savings institutions industry. Notwithstanding the foregoing,
Executive shall not be deemed to have been Terminated for Cause unless and until
there shall have been delivered to Executive a
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copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for Executive, together with counsel, to be heard before the Board and which
such meeting shall be held not more than 30 days from the date of notice during
which period Executive may be suspended with pay), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause except for compensation or benefits
already vested. Any stock options and related limited rights granted to
Executive under any stock option plan, or any unvested awards granted to
Executive under any restricted stock benefit plan of the Holding Company or its
subsidiaries, shall become null and void effective upon Executive's receipt of
Notice of Termination For Cause pursuant to Section 5 of this Agreement except
all benefits shall be deemed to have remained in effect if Executive is
reinstated, and shall not be exercisable by or delivered to Executive at any
time subsequent to such Termination For Cause.
3. TERMINATION BENEFITS.
(a) Upon the occurrence of a Change in Control, followed at any time by
the termination of Executive's employment in accordance with the provisions of
Section 2 of this Agreement, the Bank shall be obligated to pay Executive, or in
the event of Executive's subsequent death, Executive's beneficiary or
beneficiaries, or Executive's estate, as the case may be, a sum equal to two and
one-half (2-1/2) times the greater of (i) Executive's average annual
compensation (including compensation attributable to the exercise of stock
options) for the five most recently completed taxable years of Executive or (ii)
the highest annual compensation (excluding compensation attributable to the
exercise of stock options) for any of the five most recently completed taxable
years of Executive. Except as provided for in the preceding sentence, for
purposes of this Section 3(a), annual compensation shall include base salary and
any other taxable income, including but not limited to amounts related to the
granting, vesting or exercise of restricted stock or stock option awards,
commissions, bonuses, severance payments, retirement benefits, director or
committee fees and fringe benefits paid or to be paid to Executive or paid for
Executive's benefit during any such year, as well as pension, profit sharing,
employee stock ownership plan and other retirement contributions or benefits,
including to any tax-qualified or non-tax-qualified plan or agreement (whether
or not taxable) made or accrued on behalf of Executive for such year. In
addition, for purposes of determining his vested accrued benefit, Executive
shall be credited either under the defined benefit pension plan maintained by
the Bank or, if not permitted under such plan, under a separate arrangement,
with the additional "years of service" that he would have earned for vesting and
benefit accrual purposes for the remaining term of the Agreement had his
employment not terminated. At the election of Executive, which election is to be
made prior to or within thirty (30) days of the Date of Termination on or
following a Change in Control, such payment may be made in a lump sum (without
discount for early payment) on or immediately following the Date of Termination
(which may be the date a Change in Control occurs) or paid in equal monthly
installments during the thirty (30) months following Executive's termination. In
the event that no election is made, payment to Executive will be made on a
monthly basis during the remaining thirty (30) month term of the Agreement. Such
payments shall not be reduced in the event Executive
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obtains other employment following termination of employment. However, in the
event the Bank is not in compliance with its minimum capital requirements or if
such payments pursuant to this Section 3 would cause the Bank's capital to be
reduced below its minimum regulatory capital requirements, such payments shall
be deferred until such time as the Bank or successor thereto is in capital
compliance.
(b) Upon the occurrence of a Change in Control and Executive's
termination of employment in accordance with the provisions of Section 2 of this
Agreement, the Bank will cause to be continued any life, medical, health and
disability or dental insurance plan or arrangement in which Executive
participates (each being a "Welfare Benefit Plan") substantially identical to
the benefit coverage maintained by the Bank for Executive and any of his
dependents covered under such plans prior to the Change in Control. Such
coverage shall cease upon the expiration of thirty-six (36) full calendar months
following the Date of Termination. In the event Executive's or Executive's
covered dependent's participation in any such plan or program is barred, the
Holding Company shall arrange to provide Executive and his dependents with
benefits coverage substantially similar to those which Executive and his
dependents would otherwise have been entitled to receive under such plans and
programs by operation of this provision or provide their economic equivalent to
Executive and Executive's dependents.
4. CHANGE IN CONTROL RELATED PROVISIONS.
Notwithstanding the preceding paragraphs of Section 3, in no event
shall the aggregate payments or benefits to be made or afforded to Executive
under this Agreement (the "Termination Benefits") constitute an "excess
parachute payment" under Section 280G of the Code or any successor thereto, and
in order to avoid such a result the Termination Benefits will be reduced, if
necessary, to an amount (the "Non-Triggering Amount"), the value of which is one
dollar ($1.00) less than an amount equal to three (3) times Executive's "base
amount," as determined in accordance with said Section 280G. The allocation of
any reduction required with respect to the Termination Benefits shall be
determined by Executive.
5. NOTICE OF TERMINATION.
(a) Any purported termination by the Bank, or by Executive, shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice
of Termination (which, in the case of Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) 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 reasonable dispute exists concerning the
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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 judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall 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. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay Executive's base salary and continue to cover
Executive under each Welfare Benefit Plan in which Executive participated when
the notice giving rise to the dispute was given until the dispute is finally
resolved in accordance with this Agreement. Amounts paid under this Section 5(c)
are in addition to all other amounts due under this Agreement and shall not be
offset against or reduce any other amounts due under this Agreement.
6. SOURCE OF PAYMENTS.
The parties to this Agreement intend that all payments provided for in
this Agreement shall be paid in cash, check or other mutually agreed upon method
from the general funds of the Bank. Further, the Holding Company guarantees such
payment and provision of all amounts and benefits due hereunder to Executive
and, if such amounts and benefits due from the Bank are not timely paid or
provided by the Bank, such amounts and benefits shall be paid or provided by the
Holding Company.
7. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Bank and Executive, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of a kind elsewhere provided. No provision of
this Agreement shall be interpreted to mean that Executive is subject to
receiving fewer benefits than those available to Executive without reference to
this Agreement.
Nothing in this Agreement shall confer upon Executive the right to
continue in the employ of the Bank or shall impose on the Bank or its
subsidiaries any obligation to employ or retain Executive in its employ for any
period.
8. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Bank and their respective successors and assigns.
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9. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
10. REQUIRED REGULATORY PROVISIONS.
(a) The Board may terminate Executive's employment at any time, but any
termination by the board of directors, other than Termination for Cause, shall
not prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 2 of
this Agreement.
(b) If 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 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1818(e)(3) or (g)(1)), the Bank's obligations under this contract shall
be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay Executive all or part of the compensation withheld while
their contract obligations were suspended and (ii) reinstate (in whole or in
part) any of the benefit obligations which were suspended.
(c) If 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 Federal Deposit Insurance Act (12 U.S.C.
Section 1818(c)(4) or (g)(1)), all obligations of the Bank under this contract
shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, all obligations of the Bank under this contract
shall terminate as of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
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(e) All obligations under this contract shall be terminated, except to
the extent determined that continuation of the contract is necessary for the
continued operation of the institution: (i) by the Director of the Office of
Thrift Supervision (or his or her designee) at the time the Federal Deposit
Insurance Corporation or the Resolution Trust 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 of the Office of Thrift Supervision (or his or her 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 the Director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any rules and regulations promulgated thereunder.
11. REINSTATEMENT OF BENEFITS UNDER BANK AGREEMENT.
In the event Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice described in
Section 10(b) of this Agreement (the "Notice") during the term of this Agreement
and a Change in Control, as defined herein, occurs, the Bank will assume its
obligation to pay and Executive will be entitled to receive all of the
termination benefits provided for under Section 3 of this Agreement upon the
Bank's receipt of a dismissal of charges in the Notice of Termination.
12. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
13. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement. In addition, references herein to the
masculine shall apply to both the masculine and the feminine.
14. GOVERNING LAW.
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware.
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15. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Bank, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of Executive's 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.
16. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank if Executive is successful pursuant to a legal
judgment, arbitration or settlement.
17. INDEMNIFICATION.
The Bank shall provide Executive (including his or her legal
representatives, successors and assigns) with coverage under a standard
directors' and officers' liability insurance policy at its expense and shall
indemnify Executive (including his or her legal representatives, successors and
assigns) for reasonable costs and expenses incurred by Executive in defending or
settling any judicial or administrative proceeding, or threatened proceeding,
whether civil, criminal or otherwise, including any appeal or other proceeding
for review.
Indemnification by the Bank shall be made only upon the final judgment
on the merits in the favor of Executive, in case of settlement, in case of final
judgment against Executive or in the case of final judgment in favor of
Executive other than on the merits, if a majority of the disinterested directors
of the Bank determine Executive was acting in good faith within the scope of
Executive's employment or authority in accordance with 12 C.F.R. section
545.121(c)(iii).
Any such indemnification of Executive must conform with the notice
provisions of 12 C.F.R. Section 545.121(c)(iii) to indemnify Executive to the
fullest for such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements, such settlements to be approved by the Board, if such action is
brought against Executive in his or her capacity as a officer or director of the
Bank, however, shall not extend to matters as to which Executive is finally
adjudged to be liable for willful misconduct in the performance of his or her
duties.
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18. SUCCESSOR TO THE BANK.
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, Boston Federal Savings Bank and BostonFed Bancorp,
Inc. have caused this Agreement, as amended and restated to be executed by their
duly authorized officers, and Executive has signed this Agreement, as amended
and restated on March 28, 2000.
ATTEST: BOSTON FEDERAL SAVINGS BANK
By: /s/ David F. Holland
- -------------------------- -------------------------------
Secretary For the Entire Board of Directors
SEAL
ATTEST: BOSTONFED BANCORP, INC.
(Guarantor)
By: /s/ David F. Holland
- -------------------------- ------------------------------
Secretary For the Entire Board of Directors
SEAL
WITNESS: EXECUTIVE
/s/ Dennis J. Furey
- -------------------------- ---------------------------------
Dennis J. Furey
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BOSTONFED BANCORP, INC.
CHANGE IN CONTROL AGREEMENT
This AGREEMENT originally entered into on March 28, 2000, is amended
and restated, effective as of December 31, 1999, by and between BostonFed
Bancorp, Inc. (the "Holding Company"), a corporation organized under the laws of
the State of Delaware, with its office at 17 New England Executive Park,
Burlington, MA 01803, and Dennis J. Furey ("Executive"). Any reference to the
term "Bank" in this Agreement shall mean Boston Federal Savings Bank, a
wholly-owned subsidiary of the Holding Company, or any successor to Boston
Federal Savings Bank.
WHEREAS, the Holding Company recognizes the substantial contribution
Executive has made to the Holding Company and wishes to continue to protect
Executive's position with the Holding Company for the period provided in this
Agreement in the event of a Change in Control (as defined in this Agreement);
and
WHEREAS, Executive has agreed to continue serve in the employ of the
Holding Company.
NOW, THEREFORE, in consideration of the contribution and
responsibilities of Executive, and upon the other terms and conditions
hereinafter provided, the parties hereto agree as follows:
1. TERM OF AGREEMENT.
The period of this Agreement shall be deemed to have commenced as of
the date first above written and shall continue for a period of thirty (30) full
calendar months from the date of this Agreement, as amended and restated.
Commencing on the date of execution of this Agreement, the term of this
Agreement shall be extended for one day each day until such time as the Board of
Directors of the Holding Company (the "Board") or Executive elects not to extend
the term of the Agreement by giving written notice to the other party in
accordance with Section 5 of this Agreement, in which case the term of this
Agreement shall be fixed and shall end on the thirtieth- month anniversary of
the date of such written notice.
2. CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control (as defined in paragraph
(b) of this Section 2), Executive shall be entitled to the payments and benefits
provided for in Section 3 of this Agreement upon Executive's termination of
employment on or after the date the Change in Control occurs due to: (i)
Executive's dismissal at any time during the term of this Agreement; (ii)
Executive's voluntary resignation for any reason within the thirty (30) day
period following the date that is one-year from the date the Change in Control
occurred, or (iii) Executive's resignation at any time during the term of this
Agreement following any demotion, or loss of title, office or significant
authority, or reduction in Executive's annual compensation or benefits, or
relocation of Executive's principal place of employment by more than 25 miles
from its location immediately prior to the Change in Control; provided, however,
Executive may consent in writing to any such demotion, loss,
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reduction or relocation. The effect of any written consent of Executive under
this Section 2(a) shall be strictly limited to the terms specified in such
written consent.
(b) For purposes of this Agreement, a "Change in Control" of the
Holding Company or the Bank shall mean an event of a nature that; (i) would be
required to be reported in response to Item 1(a) 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 (the "Exchange Act"); or (ii) results in a
Change in Control of the Bank or the Holding Company within the meaning of the
Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance Act,
and the Rules and Regulations promulgated by the Office of Thrift Supervision
(or its predecessor agency), as in effect on the date hereof (provided, that in
applying the definition of change in control as set forth under the rules and
regulations of the OTS, the Board shall substitute its judgment for that of the
OTS); or (iii) without limitation such a Change in Control shall be deemed to
have occurred at such time as (A) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of voting
securities of the Bank or the Holding Company representing 20% or more of the
Bank's or the Holding Company's outstanding voting securities or right to
acquire such securities except for any voting securities of the Bank purchased
by the Holding Company and any voting securities purchased by any employee
benefit plan of the Holding Company or its Subsidiaries; or (B) individuals who
constitute the board of directors on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board (or members who were nominated by the Incumbent Board), or whose
nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members (or members who were nominated by the Incumbent Board), shall be, for
purposes of this clause (B), considered as though he were a member of the
Incumbent Board; or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Bank or the Holding Company or
similar transaction occurs or is effectuated in which the Bank or Holding
Company is not the resulting entity; provided, however, that such an event
listed above will be deemed to have occurred or to have been effectuated upon
the receipt of all required federal regulatory approvals not including the lapse
of any statutory waiting periods; or (D) a proxy statement has been distributed
soliciting proxies from stockholders of the Holding Company, by someone other
than the current management of the Holding Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Holding Company or
Bank with one or more corporations as a result of which the outstanding shares
of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Bank or the Holding Company shall be distributed; or (E) a tender offer is made
for 20% or more of the voting securities of the Bank or Holding Company then
outstanding.
(c) Notwithstanding any other provision of this Agreement, Executive
shall not have the right to receive termination benefits under this Agreement
upon Executive's Termination for Cause. The term "Termination for Cause" shall
mean termination because of Executive's personal dishonesty, incompetence,
willful misconduct, any breach of fiduciary duty involving personal
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profit, intentional failure to perform stated duties, willful violation of any
law, rule, regulation (other than traffic violations or similar offenses) or
final cease and desist order, or any material breach of this Agreement. In
determining incompetence, the acts or omissions shall be measured against
standards of professional competence generally prevailing for officers having
comparable positions in the savings institutions industry. Notwithstanding the
foregoing, Executive shall not be deemed to have been Terminated for Cause
unless and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-fourths
of the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for Executive,
together with counsel, to be heard before the Board and which such meeting shall
be held not more than 30 days from the date of notice during which period
Executive may be suspended with pay), finding that in the good faith opinion of
the Board, Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. Executive shall not have the right
to receive compensation or other benefits for any period after Termination for
Cause except for compensation or benefits already vested. Any stock options and
related limited rights granted to Executive under any stock option plan, or any
unvested awards granted to Executive under any restricted stock benefit plan of
the Holding Company or its subsidiaries, shall become null and void effective
upon Executive's receipt of Notice of Termination For Cause pursuant to Section
5 of this Agreement except all benefits shall be deemed to have remained in
effect if Executive is reinstated, and shall not be exercisable by or delivered
to Executive at any time subsequent to such Termination For Cause.
3. TERMINATION BENEFITS.
(a) Upon the occurrence of a Change in Control, followed at any time by
the termination of Executive's employment in accordance with the provisions of
Section 2 of this Agreement, the Holding Company shall be obligated to pay
Executive, or in the event of Executive's subsequent death, Executive's
beneficiary or beneficiaries, or Executive's estate, as the case may be, a sum
equal to two and one-half (2-1/2) times the greater of (i) Executive's average
annual compensation (including compensation attributable to the exercise of
stock options) for the five most recently completed taxable years of Executive
or (ii) the highest annual compensation (excluding compensation attributable to
the exercise of stock options) for any of the five most recently completed
taxable years of Executive. Except as provided for in the preceding sentence,
for purposes of this Section 3(a), annual compensation shall include base salary
and any other taxable income, including but not limited to amounts related to
the granting, vesting or exercise of restricted stock or stock option awards,
commissions, bonuses, severance payments, retirement benefits, director or
committee fees and fringe benefits paid or to be paid to Executive or paid for
Executive's benefit during any such year, as well as pension, profit sharing,
employee stock ownership plan and other retirement contributions or benefits,
including to any tax-qualified or non-tax-qualified plan or agreement (whether
or not taxable) made or accrued on behalf of Executive for such year. In
addition, for purposes of determining his vested accrued benefit, Executive
shall be credited either under the defined benefit pension plan maintained by
the Bank or, if not permitted under such plan, under a separate arrangement,
with the additional "years of service" that he would have earned for vesting and
benefit accrual purposes for the remaining term of the Agreement had his
employment not terminated. At the election of Executive, which election is to be
made prior to or within thirty
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(30) days of the Date of Termination on or following a Change in Control, such
payment may be made in a lump sum (without discount for early payment) on or
immediately following the Date of Termination (which may be the date a Change in
Control occurs) or paid in equal monthly installments during the thirty (30)
months following Executive's termination. In the event that no election is made,
payment to Executive will be made on a monthly basis during the remaining thirty
(30) month term of the Agreement. Such payments shall not be reduced in the
event Executive obtains other employment following termination of employment.
(b) Upon the occurrence of a Change in Control and Executive's
termination of employment in accordance with the provisions of Section 2 of this
Agreement, the Holding Company will cause to be continued any life, medical,
health and disability or dental insurance plan or arrangement in which Executive
participates (each being a "Welfare Benefit Plan") substantially identical to
the benefit coverage maintained by the Holding Company or its subsidiaries for
Executive and any of his dependents covered under such plans prior to the Change
in Control. Such coverage shall cease upon the expiration of thirty-six (36)
full calendar months following the Date of Termination. In the event Executive's
or Executive's covered dependent's participation in any such plan or program is
barred, the Holding Company shall arrange to provide Executive and his
dependents with benefits coverage substantially similar to those which Executive
and his dependents would otherwise have been entitled to receive under such
plans and programs by operation of this provision or provide their economic
equivalent to Executive and Executive's dependents.
4. CHANGE IN CONTROL RELATED PROVISIONS.
(a) Notwithstanding the preceding provisions of Section 3 of this
Agreement, for any taxable year in which Executive shall be liable, for the
payment of an excise tax under Section 4999 of the Internal Revenue Code (or any
successor provision thereto), with respect to any payment in the nature of the
compensation made by the Holding Company or its Subsidiaries to (or for the
benefit of) Executive pursuant to this Agreement or otherwise, the Holding
Company (or any successor thereto) shall pay to Executive an amount determined
under the following formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
---------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
and
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 4;
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FI = the highest marginal rate of federal income, employment,
and other taxes (other than taxes imposed under Section
4999 of the Code) applicable to Executive for the taxable
year in question with respect to such payment (including
any effective increase in Executive's tax rate attributable
to the resultant disallowance of any deduction or the
phase-out of any personal exemption or similar items);
SLI = the sum of the highest marginal rates of income and payroll
tax applicable to Executive under applicable state and
local laws for the taxable year in question (including any
effective increase in Executive's tax rate attributable to
the resultant disallowance of any deduction or the
phase-out of any personal exemption or similar items); and
M = highest marginal rate of Medicare tax.
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 Section 4 or otherwise and
on which an excise tax under Section 4999 of the Code may or will be assessed,
the payment determined under this Section 4 shall be made to Executive on the
earliest of (i) the date the Holding Company is required to withhold such tax,
(ii) the date the tax is required to be paid by Executive, or (iii) at the time
of termination resulting from the Change in Control. It is the intention of the
parties that the Holding Company provide Executive with a full tax gross-up
under the provisions of this Section 4, so that on a net after-tax basis, the
result to Executive shall be the same as if the excise tax under Section 4999
(or any successor provisions) of the Code had not been imposed. The tax gross-up
may be adjusted, as appropriate, if alternative minimum tax rules are applicable
to Executive.
(b) Notwithstanding the foregoing, if its is (i) initially determined
by the Holding Company's tax advisors that no excise tax under Section 4999 of
the Code is due with respect to any payment or benefit described in the first
paragraph of Section 4(a) and thereafter it is determined in a final judicial
determination or administrative settlement that the Section 4999 excise tax is
due with respect to such payments or benefits or subsequently determined in a
final judicial determination or a final administrative settlement to which
Executive is a party that the excise tax under Section 4999 of the Code is due
or that the excess parachute payment as defined in Section 4999 of the Code, is
more than the amount determined as "P", above (such revised determination under
(i) or (ii) above thereafter being referred to as the "Determinative Excess
Parachute Payment"), then the tax advisors of the Holding Company (or any
successor thereto) shall determine the amount (the "Adjustment Amount"), the
Holding Company (or any successor thereto) must pay to Executive, in order to
put Executive in the same position as Executive would have been if the amount
determined as "P" above had been equal to the Determinative Excess Parachute
Payment. In determining the Adjustment Amount, the tax advisors shall take into
account any and all taxes (including any penalties and interest) paid or payable
by Executive in connection with such final judicial determination or final
administrative settlement. As soon as practicable after the Adjustment Amount
has been so determined, the Holding Company shall pay the Adjustment Amount to
Executive.
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(c) The Holding Company (or its successor) shall indemnify and hold
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorney's fees, reasonable accountant's fees,
interest, fines and penalties of any kind) which Executive incurs as a result of
any administrative or judicial review of Executive's liability under Section
4999 of the Code by the Internal Revenue Service or any comparable state agency
through and including a final judicial determination or final administrative
settlement of any dispute arising out of Executive's liability for the Section
4999 excise tax or otherwise relating to the classification for purposes of
Section 280G of the Code of any payment or benefit in the nature of compensation
made or provided to Executive by the Holding Company or any successor thereto.
Executive shall promptly notify the Holding Company in writing whenever
Executive receives notice of the commencement of any judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Supplemental Agreement
is being reviewed or is in dispute (including a notice of audit or other inquiry
concerning the reporting of Executive's liability under Section 4999). The
Holding Company (or its successor) may assume control at its expense over all
legal and accounting matters pertaining to such federal or state tax treatment
(except to the extent necessary or appropriate for Executive to resolve any such
proceeding with respect to any matter unrelated to amounts paid or payable
pursuant to this contract) and Executive shall cooperate fully with the Holding
Company in any such proceeding. Executive shall not enter into any compromise or
settlement or otherwise prejudice any rights the Holding Company (or its
successor) may have in connection therewith without prior consent to the Holding
Company (or its successor). In the event that the Holding Company (or any
successor thereto) elects not to assume control over such matters, the Holding
Company (or any successor thereto) shall promptly reimburse Executive for all
expenses related thereto as and when incurred upon presentation of appropriate
documentation relating thereto.
(d) The preceding provisions of this Section 4 shall apply only in the
event Executive's "parachute payments" (as such term is used for purposes of
Section 280G of the Code) exceed the amount equal to three times Executive's
"base amount" (as such term is used for purposes of Section 280G of the Code) by
more than five percent. If the preceding provisions of this Section 4 shall not
apply by operation of the preceding sentence and if
(i) the aggregate payments or benefits to be made or
afforded to Executive, which are deemed to be
parachute payments (the "Termination Benefits") would
be deemed to include an "excess parachute payment"
under Section 280G of the Code; and
(ii) if such Termination Benefits were reduced to an
amount (the "Non-Triggering Amount"), the value of
which is one dollar ($1.00) less than an amount equal
to three (3) times Executive's "base amount," as
determined in accordance with said Section 280G of
the Code and the Non-Triggering Amount less the
product of the marginal rate of any applicable state
and federal income tax (P, FI, SLI, and M, as defined
in paragraph (a) of this Section 4) and the
Non-Triggering Amount would be greater than the
aggregate value of the Termination Benefits (without
such reduction) minus
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(i) the amount of tax required to be paid by the
Executive thereon by Section 4999 of the Code and
further minus (ii) the product of the Termination
Benefits and the marginal rate of any applicable
state and federal income tax (as determined above
including E, as defined in paragraph (a) of this
Section 4),
then the Termination Benefits shall be reduced to the Non-Triggering Amount and
the allocation of the reduction required hereby among the Termination Benefits
shall be determined by Executive.
5. NOTICE OF TERMINATION.
(a) Any purported termination by the Holding Company, or by Executive
shall be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice
of Termination (which, in the case of Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) 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 reasonable 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 judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and provided further that the Date of Termination shall 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.
Notwithstanding the pendency of any such dispute, the Holding Company will
continue to pay Executive's base salary and continue to cover Executive under
each Welfare Benefit Plan in which Executive participated when the notice giving
rise to the dispute was given until the dispute is finally resolved in
accordance with this Agreement. Amounts paid under this Section 5(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
6. SOURCE OF PAYMENTS.
(a) It is intended by the parties hereto that all payments provided in
this Agreement shall be paid in cash, check or other mutually agreed upon method
from the general funds of the Holding Company subject to Section 6(b) of this
Agreement.
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(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under a Change in Control Agreement in effect between
Executive and the Bank (the "Bank Agreement"), such payments and benefits paid
by the Bank under the Bank Agreement will be subtracted from any amount due
simultaneously to Executive under similar provisions of this Agreement.
7. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Holding Company and
Executive, except that this Agreement shall not affect or operate to reduce any
benefit or compensation inuring to Executive of a kind elsewhere provided. No
provision of this Agreement shall be interpreted to mean that Executive is
subject to receiving fewer benefits than those available to Executive without
reference to this Agreement.
Nothing in this Agreement shall confer upon Executive the right to
continue in the employ of the Holding Company or shall impose on the Holding
Company or its subsidiaries any obligation to employ or retain Executive in its
employ for any period.
8. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Holding Company and their respective successors and assigns.
9. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
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10. REINSTATEMENT OF BENEFITS UNDER BANK AGREEMENT.
In the event Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice described in the
Bank Agreement during the term of this Agreement and a Change in Control, as
defined herein, occurs, the Holding Company will assume its obligation to pay
and Executive will be entitled to receive all of the termination benefits
provided for under Section 3 of the Bank Agreement upon the notification of the
Holding Company of the Bank's receipt of a dismissal of charges in the Notice.
11. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
12. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement. In addition, references herein to the
masculine shall apply to both the masculine and the feminine.
13. GOVERNING LAW.
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware.
14. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Holding Company, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of
Executive's 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.
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15. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
16. INDEMNIFICATION.
The Holding Company shall provide Executive (including Executive's
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense, and shall indemnify
Executive (and Executive's heirs, executors and administrators) to the fullest
extent permitted under Delaware law and as provided in the Holding Company's
certificate of incorporation against all expenses and liabilities reasonably
incurred by Executive in connection with or arising out of any action, suit or
proceeding in which Executive may be involved by reason of Executive having been
a director or officer of the Holding Company or its subsidiaries (whether or not
Executive continues to be a director or officer at the time of incurring such
expenses or liabilities), such expenses and liabilities to include, but not be
limited to, judgments, court costs and attorneys' fees and the cost of
reasonable settlements.
17. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank or the Holding Company,
expressly and unconditionally to assume and agree to perform the Holding
Company's obligations under this Agreement, in the same manner and to the same
extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, BostonFed Bancorp, Inc. has caused this Agreement,
as amended and restated to be executed by its duly authorized officer, and
Executive has signed this Agreement, as amended and restated on March 28, 2000.
ATTEST: BOSTONFED BANCORP, INC.
By: /s/ David F. Holland
- -------------------------- --------------------------------
Secretary For the Entire Board of Directors
WITNESS: EXECUTIVE
/s/ Dennis J. Furey
--------------------------------
Dennis J. Furey
- --------------------------
Seal
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