AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This Amended and
Restated Employment Agreement (the “Agreement”) is made
effective as of the 20 th day of November, 2008 (the “Effective
Date”), by and between Legacy Bancorp, Inc., a Delaware
corporation with its principal offices at Pittsfield,
Massachusetts, (the “Company”), and its wholly-owned
subsidiary, Legacy Banks, a Massachusetts-chartered stock savings
bank (the “Bank”) with its principal offices at
Pittsfield, Massachusetts (the Company and the Bank shall
hereinafter collectively be referred to as the
“Employer”), and J. Williar Dunlaevy
(“Executive”).
WHEREAS ,
Executive is currently employed as the Chief Executive Officer and
Chairman of the Board of the Bank and the Company, pursuant to
separate contemporaneous employment agreements entered into with
the Company and the Bank on October 26, 2005 (the
“Original Agreements”); and
WHEREAS ,
the Employer desires to consolidate the Original Agreements, such
that the terms and conditions of the Original Agreements will be
provided solely under this Agreement.
NOW,
THEREFORE , in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter
provided, the parties hereby agree as follows:
1. POSITION
AND RESPONSIBILITIES
During the term of
this Agreement Executive agrees to serve as Chief Executive Officer
and Chairman of the Board of the Employer (the “Executive
Position”), and will perform all duties and will have all
powers associated with such position as set forth in any job
description and title provided to Executive by the Employer and as
may be set forth in the Bylaws of the Company or the Bank. In
addition, Executive shall be responsible for establishing the
business objectives, policies and strategic plans of the Employer,
in conjunction with the Boards of Directors of the Company and the
Bank (each, a “Board,” provided that unless
specifically designated otherwise, “Board” shall refer
to the disinterested members of both Boards). During the term of
the Agreement, Executive also agrees to serve, if elected, as an
officer and/or director of any subsidiary or affiliate of the
Employer and in such capacity carry out such duties and
responsibilities reasonably appropriate to that office.
2. TERM AND
ANNUAL REVIEW
(a)
Term . The term of this Agreement will begin as of the
Effective Date and will continue for thirty-six (36) full
calendar months thereafter. Commencing on the first anniversary of
the Effective Date (the “Anniversary Date”) and
continuing on each Anniversary Date thereafter, the term of this
Agreement shall extend for one year, unless the Boards (or one of
the Boards) elects no earlier than sixty (60) and no later
than thirty (30) days prior to the Anniversary Date not to
extend the term of this Agreement by giving written notice to the
other
party of
non-renewal (“Non-Renewal Notice”), in which case the
remaining term of this Agreement shall be twenty-four
(24) months following such Anniversary Date.
(b)
Annual Review . On an annual basis, the disinterested
members of the Board will conduct a comprehensive performance
evaluation and review of Executive’s performance, and the
results thereof will be included in the minutes of the
Board’s meeting.
(c)
Continued Employment Following Expiration of Term .
Nothing in this Agreement shall mandate or prohibit a continuation
of Executive’s employment following the expiration of the
term of this Agreement, upon such terms and conditions as the
Employer and Executive may mutually agree.
During the period
of his employment hereunder, except for reasonable periods of
absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive will devote all of his
business time, attention, skill and efforts to the faithful
performance of his duties under this Agreement, including
activities and duties directed by the Board. Notwithstanding the
preceding sentence, subject to the approval of the Board, Executive
may serve as a member of the board of directors of business,
community and charitable organizations, provided that in each case
such service shall not materially interfere with the performance of
his duties under this Agreement, adversely affect the reputation of
the Employer or any other affiliates of the Employer, or present
any conflict of interest. Executive will present annually to the
Board for its review and approval, a list of organizations in which
Executive is participating or proposes to participate. Such service
to and participation in outside organizations will be presumed for
these purposes to be for the benefit of the Employer, and the
Employer will reimburse Executive his reasonable expenses
associated therewith, to the extent Executive’s expenses are
not reimbursed by such organizations.
4.
COMPENSATION AND REIMBURSEMENT
(a)
Base Salary . In consideration of Executive’s
performance of the responsibilities and duties set forth in
Section 1, the Employer will provide Executive the
compensation specified in this Agreement. The Employer will pay
Executive a salary of not less than $365,000 per year (“Base
Salary”). Such Base Salary will be payable in accordance with
the customary payroll practices of the Employer. The Company and
the Bank shall apportion between them the Base Salary, based upon
the services rendered by Executive to the Company and the Bank.
During the period of this Agreement, Executive’s Base Salary
shall be reviewed at least annually. Such review may be conducted
by the compensation committee (the “Committee”)
designated by the Board, and the Board may increase, but not
decrease Executive’s Base Salary (except for a decrease that
is not in excess of any decrease that is generally applicable to
all employees of the Employer). Any increase in Base Salary will
become the “Base Salary” for purposes of this
Agreement.
(b)
Bonus and Incentive Compensation . Executive will be
entitled to participate in any incentive compensation and bonus
plans or arrangements of the Employer. Such incentive compensation
will be paid in cash in accordance with the terms of such plans or
arrangements, or
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on a
discretionary basis by the Committee. Nothing paid to Executive
under any such plans or arrangements will be deemed to be in lieu
of other compensation to which Executive is entitled under this
Agreement.
(c)
Benefit Plans . Executive will be entitled to
participate in all employee benefit plans, arrangements and
perquisites offered to employees and executive officers of the
Employer. Without limiting the generality of the foregoing
provisions of this Section 4(c), Executive also will be
entitled to participate in any employee benefit plans including but
not limited to, stock benefit plans, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans,
health-and-accident plans, or any other employee benefit plan or
arrangement made available by the Employer in the future to its
senior executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Executive shall also
be entitled to the benefits provided under the Supplemental
Executive Retirement Agreement between the Bank and the Employee as
of January 1, 2004, or any successor thereto.
(d)
Health, Dental, Life and Disability Coverage . The Bank
shall provide Executive with life, medical, dental and disability
coverage made available by the Bank to its senior executives and
key management employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such coverage.
In addition, during the term of this Agreement, the Bank shall
reimburse the Executive for the premiums on the Savings Bank Life
Insurance Company of Massachusetts Policy Number 377283261 covering
the life of Executive with a death benefit of $1,500,000 (the
“Premium Reimbursement”), and the Bank shall pay to the
Executive, on or prior to the date on which the Executive must pay
income taxes on the Premium Reimbursement, an additional amount
(the “Gross-Up Payment”) such that the net amount
retained by the Executive, after deduction of any Federal, state
and local income and employment taxes upon the Premium
Reimbursement and the Gross-Up Payment, shall be equal to the
Premium Reimbursement.
(e)
Vacation and Leave . Executive will be entitled to paid
vacation time each year during the term of this Agreement measured
on a fiscal or calendar year basis, in accordance with the
Bank’s customary practices, as well as sick leave, holidays
and other paid absences in accordance with the Bank’s
policies and procedures for senior executives. Any unused paid time
off during an annual period will be treated in accordance with the
Bank’s personnel policies as in effect from time to
time.
(f)
Expense Reimbursements . The Employer will reimburse
Executive for all reasonable travel, entertainment and other
reasonable expenses incurred by Executive during the course of
performing his obligations under this Agreement, including, without
limitation, fees for memberships in such organizations as Executive
and the Board mutually agree are necessary and appropriate in
connection with the performance of his duties under this Agreement,
upon substantiation of such expenses in accordance with applicable
policies and procedures of the Employer. Executive shall be
provided with an appropriate automobile owned or leased and insured
by the Employer for his business use. In addition, the
Executive’s annual dues and reasonable business expenses
related to the Employer’s business at the Country Club of
Pittsfield shall also be reimbursed by the Employer. All
reimbursements pursuant to this Section shall be
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paid promptly
by the Employer and in any event no later than March 15 of the
year immediately following the year in which the expense was
incurred.
Executive’s
principal place of employment will be at the Company’s and
the Bank’s principal executive offices. The Bank will provide
Executive at his principal place of employment with a private
office, secretarial and other support services and facilities
suitable to his position with the Bank and necessary or appropriate
in connection with the performance of his duties under this
Agreement.
6.
TERMINATION AND TERMINATION PAY
Subject to
Section 7 of this Agreement which governs the occurrence of a
Change in Control, Executive’s employment under this
Agreement may be terminated in the following
circumstances:
(a)
Death . Executive’s employment under this
Agreement will terminate upon his death during the term of this
Agreement, in which event Executive’s estate or beneficiary
will receive the compensation due to Executive through the last day
of the calendar month in which his death occurred, and the Bank
will continue to provide to Executive’s family for one
(1) year after Executive’s death, medical and dental
coverage substantially comparable (and on substantially the same
terms and conditions) to the coverage maintained by the Bank for
Executive and his family immediately prior to Executive’s
death. The Executive’s family’s health care
continuation rights available under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) shall commence
following the termination of the coverage provided by this
Section 6(a).
(b)
Retirement . This Agreement will terminate upon
Executive’s “Retirement” under the retirement
benefit plan or plans of the Employer in which he participates.
Executive will not be entitled to the termination benefits
specified in Section 6 or 7 hereof in the event of termination
due to Retirement. For purposes of this Agreement, termination of
Executive’s employment based on Retirement shall include
termination of Executive’s employment by the Board for any
reason after Executive has reached age sixty-five (65) or in
accordance with any retirement arrangement established by the Board
with Executive’s consent. Notwithstanding anything herein
contained to the contrary, in the event of either (i) the
announcement of an event that would constitute a Change in Control
prior to Executive’s Retirement or (ii) a Change in
Control prior to Executive’s Retirement, the preceding
sentence shall be inoperative.
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(i)
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Termination of Executive’s
employment based on “Disability” shall mean termination
because of any permanent and total physical or mental impairment
that restricts Executive from performing all the essential
functions of normal employment. A determination as to whether
Executive has suffered a Disability shall be made by the Board with
objective medical input, provided, however, that any termination by
the Board due to Disability shall not occur prior to the date on
which
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Executive first becomes eligible for
Disability benefits under the Bank’s long-term disability
program. In the event of termination due to Disability, Executive
will be entitled to disability benefits, if any, provided under a
long term disability plan sponsored by the Bank, if any.
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(ii)
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In
the event the Board determines that Executive is Disabled,
Executive will no longer be obligated to perform services under
this Agreement. Upon Executive’s termination due to
Disability, the Bank will continue to provide to Executive life
insurance and non-taxable medical and dental coverage substantially
comparable (and on substantially the same terms and conditions), to
the coverage maintained by the Bank for Executive immediately prior
to his termination for Disability. This coverage shall cease upon
the earlier of (i) three (3) years from the date of
termination, or (ii) the date Executive becomes eligible for
Medicare coverage; provided further that if Executive is covered by
family coverage or coverage for self and spouse, then
Executive’s family or spouse shall continue to be covered for
the remainder of the three (3) year period, or in the case of
the spouse, until the spouse becomes eligible for Medicare coverage
or obtains health care coverage elsewhere, whichever period is
less. The Executive health care continuation rights available under
COBRA shall commence following the termination of the coverage
provided by this Section 6(c)(ii).
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(d)
Termination for Cause.
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(i)
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The
Board may by written notice to Executive in the form and manner
specified in this paragraph, immediately terminate his employment
at any time for “Cause.” Executive shall have no right
to receive compensation or other benefits for any period after
termination for Cause, except for already vested benefits.
Termination for Cause shall mean termination because of, in the
good faith determination of the Board,
Executive’s:
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(1)
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material act of dishonesty in
performing Executive’s duties on behalf of the Employer or a
material breach of the Employer’s Code of Conduct or the
Employer’s Sexual and Other Non-Harassment
Policy];
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(2)
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willful misconduct that in the
judgment of the Board will likely cause economic damage to the
Employer or injury to the business reputation of the
Employer;
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(3)
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incompetence (in determining
incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions
industry);
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(4)
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breach of fiduciary duty involving
personal profit;
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(5)
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intentional failure to perform
stated duties under this Agreement after written notice thereof
from the Board;
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(6)
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willful violation of any law, rule
or regulation (other than minor or routine traffic violations or
similar offenses) that reflect adversely on the reputation of the
Employer, any felony conviction, any violation of law involving
moral turpitude, or any violation of a final cease-and-desist
order; or
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(7)
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material breach by Executive of any
provision of this Agreement.
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(ii)
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Notwithstanding the foregoing,
Executive’s termination for Cause will not become effective
unless the Employer has delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the disinterested members of the Board, at a
meeting of the Board called and held for the purpose of finding
that, in the good faith opinion of the Board (after reasonable
notice to Executive and an opportunity for Executive to be heard
before the Board), Executive was guilty of the conduct described
above and specifying the particulars of such conduct.
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(e)
Voluntary Termination by Executive . In addition to his
other rights to terminate his employment under this Agreement,
Executive may voluntarily terminate employment during the term of
this Agreement upon at least sixty (60) days prior written
notice to the Board. Upon Executive’s voluntary termination,
he will receive only his compensation and vested rights and
benefits to the date of his termination. Following his voluntary
termination of employment under this Section 6(e), Executive
will be subject to the restrictions set forth in Sections 9(a) and
9(b) of this Agreement.
(f)
Termination Without Cause or With Good Reason
.
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(i)
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The
Board may, by written notice to Executive, immediately terminate
his employment at any time for a reason other than Cause (a
termination “Without Cause”), and Executive may, by
written notice to the Board, terminate this Agreement at any time
within ninety (90) days following an event constituting
“Good Reason,” as defined below (a termination
“With Good Reason”); provided, however, that the
Employer shall have thirty (30) days to cure the “Good
Reason” condition, but the Employer may waive its right to
cure. Any termination of Executive’s employment, other than
Termination for Cause shall have no effect on or prejudice the
vested rights of Executive under the Employer’s qualified or
non-qualified retirement, pension, savings, thrift, profit-sharing
or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and
long term disability insurance plans or other employee benefit
plans or programs, or compensation plans or programs in which
Executive was a participant.
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(ii)
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In
the event of termination under this Sectio
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