Exhibit 10.1
EMPLOYMENT AND CONSULTING
AGREEMENT
(Interim Chief Executive
Officer)
THIS EMPLOYMENT AND CONSULTING
AGREEMENT (“ Agreement ”) is made and entered
into as of September 25, 2008 by and among Strata Bank, a bank
chartered under the laws of Massachusetts with its headquarters
located in Medway, Massachusetts (the “ Bank ”),
Service Bancorp, MHC, a mutual holding company chartered under the
laws of Massachusetts (the “ MHC ”), Service
Bancorp, Inc., a corporation chartered under the laws of
Massachusetts (the “ Company ” and together with
the MHC, the “ Holding Companies ” and together
with the MHC and the Bank, the “ Companies ”)
and Edward A. Hjerpe, III (the “ Executive
”).
In consideration of the mutual
promises, terms, provisions and conditions set forth in this
Agreement, the parties hereby agree as follows:
1. Engagement . Subject to
the terms and conditions set forth in this Agreement, the Companies
hereby engage the Executive to provide the services specified in
Section 3, and the Executive hereby accepts such engagement by
the Companies.
2. Term . The
Executive’s engagement to perform consulting services as
described in Section 3 shall commence effective
September 23, 2008 and shall terminate on the earlier to occur
of (a) the date the Executive’s employment by the
Companies hereunder becomes permissible under FDIC regulations and
(b) the date this Agreement is terminated pursuant to
Section 5. The Executive’s employment hereunder shall
commence on the date the Executive’s employment by the
Companies hereunder becomes permissible under FDIC regulations and
continue until the effective date of termination pursuant to
Section 5. The term of this Agreement (the “ Term
”) shall commence effective September 23, 2008 and
continue until the effective date of termination pursuant to
Section 5.
3. Services .
(a) Duties . During the
period in which the Executive is consulting to the Companies, the
Executive shall perform such strategic, management, financial and
other consulting services as the Boards of Directors of each of the
Companies (the “ Boards ”) shall determine;
provided, however, that the Executive shall not perform the duties
of a senior executive officer until such time as such service
becomes permissible under FDIC regulations. During the period in
which the Executive is employed by the Companies, the Executive
shall serve as a senior executive officer of the Companies,
initially with the title “Interim Chief Executive
Officer” of each Company. As Interim Chief Executive Officer,
the Executive shall have, subject to the authority of the Boards,
general charge and supervision of the business operations of the
Companies and in general shall perform all duties incident to the
office of chief executive officer, and other related and similar
services as the Boards or any of them may request from time to
time. Notwithstanding anything else in this Agreement, if, during
the Term, the Companies’ President and Chief Executive
Officer returns from leave and is fit for duty, then
Executive’s authority to act as Interim Chief Executive
Officer, if applicable, shall automatically cease, in which case
the Executive shall serve as Interim Chief Operating Officer of the
Companies and have such authority and responsibility as the Boards
shall designate.
(b) Other Clients and
Responsibilities . The Companies acknowledge and agree that the
Executive performs consulting services for two existing clients
(the “ Other Clients ”) and serves on the board
of directors of three companies (the “ Board Services
”), which Other Clients and Board Services are listed on
Exhibit A hereto. During the Term, without the prior written
consent of the Chairman of the Board of the Board of Directors of
the Company (the “ Board Chair ”), the Executive
agrees not to enter into or perform any other employment agreement,
or any consulting or similar arrangement except for this Agreement
and any agreement with the Other Clients. The Executive may
continue to perform the Board Services.
(c) Fulfillment of Duties .
The Executive hereby agrees (i) to perform all services
hereunder in a professional and workmanlike manner, and
(ii) to work from the Company’s executive office an
average of four days per week. Subject to the foregoing, the
Executive may also work from home as necessary or appropriate. The
Executive agrees to notify the Board Chair at least one business
day in advance if the Executive will be absent from the
Company’s offices for more than two consecutive business
days.
(d) Board Observation . The
Executive may be present at meetings of the Boards and shall
receive in such observer capacity a copy of all notices, minutes,
consents and other material that any of the Companies provides to
the Boards, subject to the provisions of Section 7 hereof. The
Executive acknowledges and agrees that the Executive shall not have
the right to vote on any matter at any meetings. Each of the
Companies, in its sole discretion, reserves the right to exclude
the Executive from all or part of any meeting of the Boards and to
limit access of the Executive to any information made available to
members of the Boards with respect to the Executive’s
performance hereunder or potential appointment as a permanent
executive, to maintain a legal privilege with respect to
information of any of the Companies, to preserve or protect the
exercise of any of the Board’s fiduciary duties or to avoid a
possible conflict of interest.
4. Compensation and Business
Expenses . As compensation for all services performed by the
Executive for the Companies during the Term, and subject to
performance of the Executive’s duties and obligations,
pursuant to this Agreement and otherwise, the Bank shall pay to the
Executive the following:
(a) Cash Compensation . For
each two-week payroll cycle (each, a “ Cycle ”),
$18,461.54, subject to reduction as hereinafter described, except
for the Executive’s first and last Cycles, payment for which
shall be based on the number of days the Executive performed
services under this Agreement during such Cycle multiplied by
$1,920. The Executive shall submit an invoice for each Cycle
indicating the number of Credits (as defined below) to be applied
for such Cycle. The Bank shall pay such invoice in accordance with
its standard payroll practice and procedure, which currently
provides that if the Executive submits the invoice on the last
business day of a Cycle, the Bank will pay such invoice on the
Wednesday thereafter. If the Executive works on the
Companies’ business, in his capacity hereunder on any
business day, for less than half of a standard eight-hour business
day because the Executive is working on Other Client matters, the
Executive shall credit the Companies $960 for each such half-day,
and if the Executive works a full standard business day on Other
Client matters, the Executive shall credit
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the Companies $1,920 for each such business day
(each, a “ Credit ”, all of which shall be
reflected on the invoice for such Cycle).
(b) Expenses . The Companies
shall pay or reimburse the Executive for all reasonable and
necessary business expenses, including mileage for traveling to and
from the Companies’ executive offices in Franklin according
to the Companies’ standard mileage reimbursement policies,
incurred or paid by the Executive in the performance of his duties
and responsibilities hereunder, subject to such reasonable
substantiation and documentation as may be specified by the
Companies from time to time.
(c) Long Term Stock Award .
The Company will grant to the Executive on the first day of the
Executive’s employment hereunder a Restricted Stock Award,
pursuant to the Company’s Amended and Restated 1999 Stock
Option Plan (the “ Plan ”) and subject to an
award agreement entered into by the Company and the Executive, of
10,000 shares of the Company’s common stock (the “
Long Term Award ”). The Long Term Award shall vest in
twenty-four monthly installments, the first twenty-three of which
shall be 415 shares each, and the final installment of which shall
be 455 shares, with the first installment vesting on the first day
of the month following the month in which Executive’s
employment shall commence and succeeding installments vesting on
the first day of each calendar month thereafter, subject to the
terms of the Long Term Award.
(d) Second Step Stock Award .
If the MHC files a plan of reorganization providing for the
conversion of the MHC from mutual to stock form, and in connection
therewith, the resulting entity files a registration statement with
respect to its common stock with the Securities and Exchange
Commission (“ Second Step SEC Filing ”), the
Company will grant to the Executive within 15 business days of the
Second Step SEC Filing a Restricted Stock Award, pursuant to the
Plan and subject to an award agreement entered into by the Company
and the Executive, of 2,000 shares of Company common stock (the
“ Second Step Stock Award ”). The Second Step
Stock Award shall vest in twenty-four monthly installments, the
first twenty-three of which shall be 83 shares each, and the final
installment of which shall be 91 shares, with the first installment
vesting on the first day of the first calendar month subsequent to
the grant of the Second Step Stock Award and succeeding
installments vesting on the first day of each calendar month
thereafter, subject to the terms of the Second Step Stock
Award.
(e) Exclusive Compensation .
The Executive’s compensation as described in the foregoing
sections (a) through (d) shall be the exclusive form of
compensation to which the Executive shall be entitled in
consideration of his services under this Agreement. Without
limiting the foregoing, the Executive shall not be entitled to
participate in any bonus or other incentive pay arrangement
maintained by the Companies. The Executive waives his rights, if
any, to participate in, and shall not participate or receive
benefits under, any qualified and non-qualified retirement,
pension, savings, deferred compensation and profit-sharing plans,
any group life, health (including hospitalization, medical and
major medical), dental, accident and long-term disability insurance
plans, vacation pay, severance pay, or any other employee benefit
and compensation plan as may from time to time be maintained by, or
cover employees of, the Companies (“ Benefit Plans
”) notwithstanding any terms and conditions of such Benefit
Plans to the contrary. Without limiting the foregoing, the
Executive hereby waives all rights to
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