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Exhibit 10.12
EXECUTION COPY
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("the Agreement") is
made
and entered into as of October 23, 2007 (the "Effective Date") by
and between
WESTFIELD FINANCIAL, INC., a business corporation organized and
existing under
the laws of the Commonwealth of Massachusetts and having an office
at 141 Elm
Street, Westfield, Massachusetts 01085 (the "Company") and JAMES C.
HAGAN (the
"Executive").
W I T N E S S E T H :
WHEREAS,
the Executive currently serves as President and Chief Operating
Officer of the Company, the holding company for Westfield Bank (the
"Bank");
WHEREAS,
the Company desires to assure for itself the continued
availability of the Executive's services as provided in this
Agreement and the
ability of the Executive to perform such services with a minimum of
personal
distraction in the event of a pending or threatened Change of
Control (as
hereinafter defined); and
WHEREAS,
the Executive is willing to continue to serve the Company on
the
terms and conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants
and conditions hereinafter set forth, the Company and the Executive
hereby
agree as follows:
Section 1.
Employment.
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The
Company agrees to continue to employ the Executive, and the
Executive
hereby agrees to such continued employment, during the period and
upon the
terms and conditions set forth in this Agreement.
Section 2.
Employment Period; Remaining Unexpired Employment Period.
--------------------------------------------------------
(a) The
terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this
section 2
("Employment Period"). The Employment Period shall be for an
initial term of
three (3) years beginning on the Effective Date and ending on the
third
anniversary date of this Agreement, plus such extensions, if any,
as are
provided pursuant to section 2(b).
(b) The
Board of Directors of the Company (the "Board") shall conduct
an
annual review of the Executive's performance on or about each
anniversary of
the Effective Date (each, an "Anniversary Date") and may, on the
basis of such
review and by written notice to the Executive, offer to extend the
Employment
Period for an additional one (1)-year period. In such event, the
Employment
Period shall be deemed extended in the absence of objection from
the Executive
by written notice to the Company given within ten (10) business
days after his
receipt of the Company's offer of extension. Except as otherwise
expressly
provided in this Agreement, any reference in this Agreement to the
term
"Remaining Unexpired Employment Period" as of any date shall mean
the period
beginning on such date and ending on the day of the third (3rd)
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anniversary of the last Anniversary Date as of which the Employment
Period was
extended pursuant to this section 2(b).
(c)
Nothing in this Agreement shall be deemed to prohibit the Company
at
any time from terminating the Executive's employment during the
Employment
Period with or without notice for any reason; provided, however,
that the
relative rights and obligations of the Company and the Executive in
the event
of any such termination shall be determined under this
Agreement.
Section 3.
Duties.
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The
Executive shall serve as President and Chief Operating Officer of
the
Company, having such power, authority and responsibility and
performing such
duties as are prescribed by or under the By-Laws of the Company and
as are
customarily associated with such position. Subject to Section 7 of
this
Agreement, the Executive shall devote his full business time and
attention
(other than during weekends, holidays, approved vacation periods,
and periods
of illness or approved leaves of absence) to the business and
affairs of the
Company and shall use his best efforts to advance the interests of
the Company.
Section 4.
Cash Compensation.
-----------------
In
consideration for the services to be rendered by the Executive
hereunder, the Company shall continue to pay to him a salary at an
annual rate
of $221,780, payable in approximately equal installments in
accordance
with the Company's customary payroll practices for senior officers.
The Board
of Directors of the Company shall review the Executive's annual
rate of salary
at such times during the Employment Period as it deems appropriate,
but not
less frequently than once every twelve (12) months, and may, in its
discretion,
approve an increase therein. In addition to salary, the Executive
may receive
other cash compensation from the Company for services hereunder at
such times,
in such amounts and on such terms and conditions as the Board may
determine
from time to time.
Section 5.
Employee Benefit Plans and Programs.
-----------------------------------
During the
Employment Period, the Executive shall be treated as an
employee of the Company and shall be entitled to participate in and
receive
benefits under any and all qualified or non-qualified retirement,
pension,
savings, profit-sharing or stock bonus plans, any and all group
life, health
(including hospitalization, medical and major medical), dental,
accident and
long term disability insurance plans, and any other employee
benefit and
compensation plans (including, but not limited to, any incentive
compensation
plans or programs, stock option and appreciation rights plans and
restricted
stock plans) as may from time to time be maintained by, or cover
employees of,
the Company in accordance with the terms and conditions of such
employee
benefit plans and programs and compensation plans and programs and
consistent
with the Company's customary practices.
Section 6.
Indemnification and Insurance.
-----------------------------
(a) During
the Employment Period and for a period of six (6) years
thereafter, the Company shall cause the Executive to be covered by
and named as
an insured under any
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policy or contract of insurance obtained by it to insure its
directors and
officers against personal liability for acts or omissions in
connection with
service as an officer or director of the Company or service in
other capacities
at the request of the Company. The coverage provided to the
Executive pursuant
to this section 6 shall be of the same scope and on the same terms
and
conditions as the coverage (if any) provided to other officers or
directors of
the Company.
(b) To the
maximum extent permitted under applicable law, during the
Employment Period and for a period of six (6) years thereafter, the
Company
shall indemnify the Executive against and hold him harmless from
any costs,
damages, losses and exposures arising out of a bona fide action,
suit or
proceeding in which he may be involved by reason of his having been
a director
or officer of the Company to the fullest extent and on the most
favorable terms
and conditions that similar indemnification is offered to any
director or
officer of the Company or any subsidiary or affiliate thereof.
(c) The
Executive, the Company and the Bank agree that the termination
benefits described in this Section 6 are intended to be exempt from
Section
409A of the Internal Revenue Code ("Section 409A") pursuant to
Treasury
Regulation Section 1.409A-1(b)(10) as certain indemnification and
liability
insurance plans.
Section 7.
Outside Activities.
------------------
The
Executive may serve as a member of the boards of directors of
such
business, community and charitable organizations as he may disclose
to and as
may be approved by the Board (which approval shall not be
unreasonably
withheld); provided, however, that such service shall not
materially interfere
with the performance of his duties under this Agreement. The
Executive may also
engage in personal business and investment activities which do not
materially
interfere with the performance of his duties hereunder; provided,
however, that
such activities are not prohibited under any code of conduct or
investment or
securities trading policy established by the Company and generally
applicable
to all similarly situated executives. The Executive may also serve
as an
officer or director of the Bank on such terms and conditions as the
Company and
the Bank may mutually agree upon, and such service shall not be
deemed to
materially interfere with the Executive's performance of his duties
hereunder
or otherwise result in a material breach of this Agreement. If the
Executive is
discharged or suspended, or is subject to any regulatory
prohibition or
restriction with respect to participation in the affairs of the
Bank, he shall
continue to perform services for the Company in accordance with
this Agreement
but shall not directly or indirectly provide services to or
participate in the
affairs of the Bank in a manner inconsistent with the terms of such
discharge
or suspension or any applicable regulatory order.
Section 8.
Working Facilities and Expenses.
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The
Executive's principal place of employment shall be at the
Company's
executive offices at the address first above written or at such
other location
as the Company and the executive may mutually agree upon. The
Company shall
provide the Executive at his principal place of employment with a
private
office, secretarial services and other support services and
facilities suitable
to his position with the Company and necessary or appropriate in
connection
with the performance of his assigned duties under this Agreement.
The Company
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shall provide to the Executive for his exclusive use an automobile
owned or
leased by the Company and appropriate to his position, to be used
in the
performance of his duties hereunder, including commuting to and
from his
personal residence. The Company shall reimburse the Executive for
his ordinary
and necessary business expenses, including, without limitation, all
expenses
associated with his business use of the aforementioned automobile,
fees for
memberships in such clubs and organizations as the Executive and
the Company
shall mutually agree are necessary and appropriate for business
purposes, and
his travel and entertainment expenses incurred in connection with
the
performance of his duties under this Agreement, in each case upon
presentation
to the Company of an itemized account of such expenses in such form
as the
Company may reasonably require.
Section 9.
Termination of Employment with Severance Benefits.
-------------------------------------------------
(a) The
Executive shall be entitled to the severance benefits described
in section 9(b) in the event that:
(i) his employment with the Company terminates during the
Employment
Period as a result of the Executive's voluntary resignation
within
ninety (90) days following:
(A) the failure of the Board to appoint or re-appoint or
elect or re-elect the Executive to the position with the
Company
stated in section 3 of this Agreement;
(B) if the Executive is a member of the Board, the failure of
the shareholders of the Company to elect or re-elect the
Executive
to the Board or the failure of the Board (or the nominating
committee thereof) to nominate the Executive for such election
or
re-election;
(C) the expiration of a thirty (30)-day period following the
date on which the Executive gives written notice to the Company
of
its material failure, whether by amendment of the Company's
Certificate of Incorporation, the Company's By-Laws, action of
the
Board or the Company's shareholders or otherwise, to vest in
the
Executive the functions, duties, or responsibilities prescribed
in
section 3 of this Agreement, unless, during such thirty
(30)-day
period, the Company cures such failure;
(D) the expiration of a thirty (30)-day period following the
date on which the Executive gives written notice to the Company
of
its material breach of any term, condition or covenant contained
in
this Agreement (including, without limitation any reduction of
the
Executive's rate of base salary in effect from time to time and
any
change in the terms and conditions of any compensation or
benefit
program in which the Executive participates which, either
individually or together with other changes, has a material
adverse
effect on the aggregate value of his total compensation
package),
unless, during such thirty (30)-day period, the Company cures
such
failure;
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(E) a change in the Executive's principal place of employment
to a place that is not the principal executive office of the
Bank,
or a relocation of the Bank's principal executive office to a
location that is both more than twenty-five (25) miles away
from
the Executive's principal residence and more than twenty-five
(25)
miles away from the location of the Bank's principal executive
office on the date of this Agreement; or
(F) any material breach by the Company of any material term,
condition or covenant contained in this Agreement; provided,
however, that the Executive shall have given notice of such
materials adverse effect to the Company, and the Company has
not
fully cured such failure within thirty (30) days after such
notice
is deemed given; or
(ii) the Executive's employment with the Company is terminated
by
the
Company for any reason other than for "cause" as provided in
section
11(a).
(b) Upon
the occurrence of any of the events described in section 9(a)
of
this Agreement, the Company shall pay and provide to the Executive
(or, in the
event of his death thereafter and prior to payment, to his
estate):
(i) his earned but unpaid salary (including, without
limitation,
all items
which constitute wages under applicable law and the payment of
which is
not otherwise provided for in this section 9(b)) as of the date
of the
termination of his employment with the Company and the Bank,
such
payment to
be made at the time and in the manner prescribed by law
applicable
to the payment of wages but in no event later than thirty (30)
days after
termination of employment as defined in Treasury Regulation
Section
1.409A-1(h)(1)(ii);
(ii) the benefits, if any, to which he is entitled as a former
employee
under the employee benefit plans and programs and compensation
plans and
programs maintained for the benefit of the Company's and the
Bank's
officers and employees;
(iii) continued group life, health (including hospitalization,
medical
and major medical), dental, accident and long-term disability
insurance
benefits on substantially the same terms and conditions
(including
any required premium-sharing arrangements, co-payments and
deductibles) in effect for them immediately prior to the
Executive's
termination for the Remaining Unexpired Employment Period for
the
Executive
and his dependents. The coverage provided under this section
9(b)(iii)
may, at the election of the Company, be secondary to the
coverage
provided pursuant to section 9(b)(ii) and to any employer-paid
coverage
provided by a subsequent employer or through Medicare, with the
result
that benefits under the other coverages will offset the
coverage
required
by this section 9(b)(iii). The Executive, the Company and the
Bank agree
that the termination benefits described in this Section
9(b)(iii)
are intended to be exempt from Section 409A pursuant to
Treasury
Regulation Section 1.409A-1(b)(1) as non-taxable benefits;
(iv) a lump sum payment in an amount equal to the estimated
present
value of
the salary that the Executive would have earned if he had
continued
working for the
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Company
and the Bank during the Remaining Unexpired Employment Period
at
the
highest annual rate of salary achieved during the period of three
(3)
years
ending immediately prior to the date of termination (the
"Salary
Severance
Payment"). The Salary Severance Payment shall be computed using
the
following formula:
n
(BS/PR)
SSP=3
[-------------------------------]
1
n
[1 + (I / PR)]
where
"SSP" is the amount of the Salary Severance Payment (before the
deduction
of applicable federal, state and local withholding taxes); "BS"
is the
highest annual rate of salary achieved by the Executive during
the
period of
three (3) years ending immediately prior to the date of
termination; "PR" is the number of payroll periods that occur
during a
year under
the Company's normal payroll practices; "I" equals the
applicable
federal short term rate established under section 1274 of the
Internal
Revenue Code of 1986 (the "Code") for the month in which the
Executive's termination of employment occurs (the "Short Term AFR")
and
"n" equals
the product of the Remaining Unexpired Employment Period at
the
Executive's termination of employment (expressed in years and
fractions
of years) multiplied by the number of payroll periods that
occur
during a year under the Company's and the Bank's normal payroll
practices.
The Salary Severance Payment shall be made within five (5)
business days after
the Executive's termination of employment and shall
be in lieu
of any claim to a continuation of base salary which the
Executive
might otherwise have and in lieu of cash severance benefits
under any
severance benefits program which may be in effect for officers
or
employees of the Bank or the Company;
(v) a lump sum payment in an amount equal to the estimated
present
value of
the annual bonuses that the Executive would have earned if he
had
continued working for the Company and the Bank during the
Remaining
Unexpired
Employment Period at the highest annual rate of salary achieved
during the
period of three (3) years ending immediately prior to the date
of
termination (the "Bonus Severance Payment"). The Bonus
Severance
Payment
shall be computed using the following formula:
BSP = SSP x (ABP / ASP)
where
"BSP" is the amount of the Bonus Severance Payment (before the
deduction
of applicable federal, state and local withholding taxes);
"SSP" is
the amount of the Salary Severance Payment (before the
deduction
of
applicable federal, state and local withholding taxes); "BP" is
the
aggregate
of the annual bonuses paid or declared (whether or not paid)
for the
most recent period of three (3) calendar years to end on or
before the
Executive's termination of employment; and "SP" is the
aggregate
base salary actually paid to the Executive during such period
of three
(3) calendar years (excluding any year for which no bonus was
declared
or paid). The Bonus Severance Payment shall be made within five
(5)
business days after the Executive's termination of employment
and
shall be
in lieu of any claim to a continuation of participation in
annual
bonus plans of the Bank or the Company which the Executive
might
otherwise
have;
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(vi) a lump sum payment in an amount equal to the estimated
present
value of
the long-term incentive bonuses that the Executive would have
earned if
he had continued working for the Company and the Bank during
the
Remaining Unexpired Employment Period (the "Incentive Severance
Payment").
The Incentive Severance Payment shall be computed using the
following
formula:
ISP = (SSP / RUP) x (ALTIP / ALTSP) x Y
where
"ISP" is the amount of the Incentive Severance Payment (before
the
deduction
of applicable federal, state and local withholding taxes);
"SSP" is
the amount of the Salary Severance Payment (before the
deduction
of
applicable federal, state and local withholding taxes); "ALTIP" is
the
aggregate
of the most recently paid or declared (whether or not paid)
long-term
incentive compensation payments (but not more than three (3)
such
payments) for performance periods that end on or before the
Executive's termination of employment; "ALTSP" is the aggregate
base
salary
actually paid to the Executive during the performance periods
covered by
the payments included in "ALTIP" and excluding base salary
paid for
any period for which no long-term incentive compensation
payment
was
declared or paid; "RUP" is the Remaining Unexpired Employment
Period,
expressed
in years and fractions of years; and "Y" is the aggregate
(expressed
in years and fractions of years) of the Remaining Unexpired
Employment
Period plus the number of years and fraction of years that
have
elapsed since the end of the last performance period for which
a
long-term
incentive payment has been declared and paid. In the event that
the
Executive's employment terminates prior to the payment date under
any
long-term
incentive compensation plan, then for purposes of computing the
Incentive
Severance Payment, the "ALTIP" shall be deemed to be the
average of
the target and maximum award level under such plan and the
"ALTSP"
shall be deemed to be the Executive's annual base salary as in
effect on
the Executive's termination of employment. The Incentive
Severance
Payment shall be made within five (5) business days after the
Executive's termination of employment and shall be in lieu of any
claim
to a
continuation of participation in cash long-term incentive
compensation plans of the Bank or the Company which the Executive
might
otherwise
have;
(vii) a lump sum payment in an amount equal to the excess (if
any)
of: (A)
the present value of the aggregate benefits to which he would
be
entitled
under any and all tax-qualified and non-tax-qualified defined
benefit
plans maintained by, or covering employees of, the Company or
the
Bank (the
"Pension Plans") if he had continued working for the Company
and the
Bank during the Remaining Unexpired Employment Period; over (B)
the
present value of the benefits to which the Executive and his
spouse
and/or
designated beneficiaries are actually entitled under such plans
(the
"Pension Severance Payment"). The Pension Severance Payment shall
be
computed
according to the following formula:
PSP = PPB - APB
where
"PSP" is the amount of the Pension Severance Payment (before
deductions
for applicable federal, state and local withholding taxes);
"APB" is
the aggregate lump sum present value of the actual vested
pension
benefits payable under the Pension Plans in the
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form of a
straight life annuity beginning at the earliest date permitted
under the
Pension Plans, computed on the basis of the Executive's life
expectancy
at the earliest date on which payments under the Pension Plans
could
begin, determined by reference to Table VI of section 1.72-9 of
the
Income Tax
Regulations (the "Assumed Life Expectancy"), and on the basis
of an
interest rate assumption equal to the average bond-equivalent
yield
on United
States Treasury Securities with a Constant Maturity of thirty
(30) Years
for the month prior to the month in which the Executive's
termination of employment occurs (the "30-Year Treasury Rate"); and
"PPB"
is the
lump sum present value of the pension benefits (whether or not
vested)
that would be payable under the Pension Plans in the form of a
straight
life annuity beginning at the earliest date permitted under the
Pension
Plans, computed on the basis that the Executive's actual age at
termination of employment is his attained age as of his last
birthday
that would
occur during the Remaining Unexpired Employment Period, that
his
service for benefit accrual purposes under the Pension Plans is
equal
to the
aggregate of his actual service plus the Remaining Unexpired
Employment
Period, that his average compensation figure used in
determining his accrued benefit is equal to the highest annual rate
of
salary
achieved by the Executive during the period of three (3) years
ending
immediately prior to the date of termination, that the
Executive's
life
expectancy at the earliest date on which payments under the
Pension
Plans
could begin is the Assumed Life Expectancy and that the
interest
rate
assumption used is equal to the 30-Year Treasury Rate. The
Pension
Severance
Payment shall be made within five (5) business days after the
Executive's termination of employment and shall be in lieu of any
claim
to any
actual increase in his accrued benefit in the Pension Plans in
respect of
the Remaining Unexpired Employment Period;
(viii) a lump sum payment in an amount equal to the present
value
of the
additional employer contributions that would have been credited
directly
to his account(s) under any and all tax-qualified and
non-tax-qualified defined contribution plans maintained by, or
covering
employees
of, the Bank and the Company (the "Non-ESOP DC Plans"), plus
the fair
market value of the additional shares of employer securities or
other
property that would have been allocated to his account as a
result
of
employer contributions or dividends under any tax-qualified
leveraged
employee
stock ownership plan and any related non-tax-qualified
supplemental plan maintained by, or covering employees of, the Bank
and
the
Company (the "ESOP Plans") if he had continued in employment
during
the Remaining
Unexpired Employment Period (the "Defined Contribution
Severance
Payment"). The Defined Contribution Severance Payment shall be
computed
according to the following formula:
DCSP = [SSP x (EC / BS)] + [(STK + PROP) x Y]
where:
"DCSP" is the amount of the Defined Contribution Severance
Payment
(before
deductions for applicable federal, state and local withholding
taxes);
"SSP" is the amount of the Salary Severance Payment (before
deductions
for applicable federal, state and local withholding taxes);
"EC" is
the amount of employer contributions actually credited to the
Executive's accounts under the Non-ESOP Plans for the last plan
year to
end before
his termination of employment; "BS" is the Executive's
compensation taken into account in computing EC; "Y" is the
aggregate
(expressed
in years and fractions of years) of the Remaining Unexpired
Employment
Period and the number of years and fractions of years
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that have
elapsed between the end of plan year for which EC was computed
and the
date of the Executive's termination of employment; "STK" is the
fair
market value (determined on the basis of the mid-point of the
highest
and lowest reported sales price for a share of stock of the
same
class
during the thirty (30)-day period ending on the day of the
Executive's termination of employment (the "Fair Market Value of
a
Share"))
of the employer securities actually allocated to the
Executive's
accounts
under the ESOP Plans in respect of employer contributions and
dividends
applied to loan amortization payments for the last plan year to
end before
his termination of employment; and "PROP" is the fair market
value
(determined as of the day before the Executive's termination of
employment
using the same valuation methodology used to value the assets
of the
ESOP Plans) of the property other than employer securities
actually
allocated to the Executive's accounts under the ESOP Plans in
respect of
emp
