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SPECIAL TERMINATION AGREEMENT
THIS
AGREEMENT, dated as of May 10, 2007 (the "Agreement"), is by and
among
LSB CORPORATION, a Massachusetts corporation (the "Company") and
its wholly
owned subsidiary, RIVER BANK, a Massachusetts savings bank with its
executive
offices in North Andover, Massachusetts (the "Bank") (the Bank and
the Company
shall be hereinafter collectively referred to as the "Employers"),
and Teresa K.
Flynn, (the "Executive"), an individual presently employed by the
Company and
the Bank in the capacity of Senior Vice President.
1.
Purpose. In order to allow the Executive to consider the prospect
of a
Change in Control (as defined in Section 2) in an objective manner
and in
consideration of the services rendered and to be rendered by the
Executive to
the Employers and other good and valuable consideration, the
receipt and
sufficiency of which is hereby acknowledged by the Executive and
the Employers,
the Employers are willing to provide, subject to the terms of this
Agreement,
certain severance benefits to protect the Executive from the
consequences of a
Terminating Event (as defined in Section 3) occurring subsequent to
a Change in
Control.
2.
Change in Control. A "Change in Control" shall be deemed to
have
occurred upon the occurrence of any of the following events:
(i)
any circumstance that
the Company or the Bank would be required to
report as a change in control under Item 5.01 of the Current Report
on
Form 8-K as prescribed by applicable regulations promulgated under
the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or
any
successor provision; or
(ii)
any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of
the
1934 Act) becomes a "beneficial owner" (as such term is defined
in
Rule 13d-3 promulgated under the 1934 Act), directly or indirectly,
of
securities of the Company or the Bank representing twenty-five
percent
(25%) or more of the total number of votes that may be cast for
the
election of directors of the Company or the Bank (other than in
the
case of the Bank, for the Company's ownership of the capital stock
of
the Bank), and the Board of Directors of the Company or the Bank,
as
the case may be, has not consented to such event by a two-thirds
(2/3)
vote of all of the members of the Board of Directors adopted
either
prior to such event or within sixty (60) days thereafter,
provided
that if at the time such a consent vote is adopted after such
event,
the persons who were directors of the Company or the Bank, as the
case
may be, immediately prior to such event do not constitute a
majority
of the Board of Directors of the Company or the Bank, respectively,
or
of any successor institution, such vote shall not be deemed to
constitute consent for the purposes of this provision; or
(iii) any tender or exchange offer for the ordinary voting stock of
the
Company or the Bank, or any merger, consolidation, or other
business
combination involving the Company or the Bank, or any sale or
other
disposition of assets of the Company or the Bank constituting all
or
substantially all of the Company's assets
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(considered a consolidated basis), or any combination of the
foregoing
transactions has occurred, and as the result of, or in
connection
with, such
transaction(s) (A) the individuals who were directors of
the Company or the Bank immediately before the commencement of
such
transaction(s) cease to constitute a majority of the Board of
Directors of the Company or the Bank, respectively, or of any
successor institution or (B) persons, who, immediately prior to
the
commencement of such transaction(s), were the beneficial owners
of
ordinary voting stock of the Company or the Bank, beneficially
own
(within the meaning of Rule 13d-3), directly or indirectly, less
than
forty percent (40%) of the then outstanding shares of ordinary
voting
stock of the entity resulting from such transaction(s),
including,
without
limitation, an entity which as a result of such transaction(s)
owns the Company or the Bank or all or substantially all of the
assets
of the Company or the Bank either directly or through one or
more
subsidiaries; or
(iv)
during any period of two consecutive years, individuals who
constitute
the Board of Directors of the Company at the beginning of the
two-year
period cease for any reason to constitute at least a majority of
the
Company's directors; provided, however, that for purposes of
this
clause, an individual shall be deemed to have also been a director
at
the beginning of such period if such individual was elected by
the
Company's Board of Directors (or nominated by the Company's Board
of
Directors of the Company for election by the stockholders) by a
vote
of at least two-thirds (2/3) of the directors who either were
directors at the beginning of the two-year period or who were
so
elected or nominated by such directors.
3.
Terminating Event; Cause; Good Reason; Disability.
a. As used in this Agreement, the phrase "Terminating Event"
shall
mean the occurrence, after a Change in Control, of (a) termination
by either of
the Employers of the employment of the Executive with either of the
Employers
for any reason other than (i) death, (ii) Disability (as defined in
this
Section), or (iii) Cause (as defined in this Section), or (b)
resignation of the
Executive from the employ of either of the Employers for Good
Reason (as defined
in this Section), while the Executive is not receiving disability
payments or
benefits from the Employers.
b. As used in this Agreement, the term "Cause" shall mean the
Executive, after the date of this Agreement,
(i)
has been convicted by
a court of competent jurisdiction of any
criminal offense involving dishonesty, breach of trust or
misappropriation, or has entered a plea of nolo contendere to such
an
offense; or
(ii)
has committed an act of fraud, embezzlement, theft, or has
committed
any other act which has resulted in the termination of coverage
under
either Employer's Blanket Bond as to the Executive (as
distinguished
from termination of coverage as to the Employer as a whole); or
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(iii) has committed a willful violation of the Bank's Code of
Conduct or
any law, rule or regulation governing the operation of the Company
or
the Bank or any of its affiliates or the insurance of deposits held
by
the Bank (A) which is a felony or misdemeanor, or (B) which the
Board
of Directors of either of the Employers determines in good faith,
by
the affirmative vote of at least two-thirds (2/3) of the then
current
directors, has had or will likely have a material adverse effect
on
the business, interests or reputation of the Employers or any of
their
affiliates; or
(iv)
has committed any act which the Board of Directors of either of
the
Employers determines in good faith, by the affirmative vote of
at
least two-thirds (2/3) of the then current directors, constitutes
(A)
a willful or reckless breach of fiduciary duty to the Company or
the
Bank or any of their affiliates involving personal profit to
the
Executive or any of the Executive's family members, associates
or
affiliates and (B) that such breach, together with all
consequences
related thereto, has had or will likely have a material adverse
effect
on the business, interests or reputation of the Employers or any
of
their affiliates or on the Executive's ability to perform the
duties
reasonably assigned to the Executive; or
(v)
has been convicted of
any crime, or has entered a plea of nolo
contendere to such an offense, or has committed any other act, in
each
case which the Board of Directors of either of the Employers
determines in good faith, by the affirmative vote of at least
two-thirds (2/3) of the then current directors, is (A) abhorrent
to
the community and (B) will likely have a material adverse effect
on
the business, interests or reputation of the Employers or the
Executive's ability to perform the duties reasonably assigned to
the
Executive; or
(vi)
has committed a willful and unauthorized disclosure of material
confidential information regarding the Employers or any of
their
affiliates, which disclosure the Board of Directors of either of
the
Employers determines in good faith, by the affirmative vote of
at
least two-thirds (2/3) of the then current directors, has had or
will
likely have a material adverse effect on the business, interests
or
reputation of the Employers or any of their affiliates; or
(vii) has been found by the Board of Directors of either of the
Employers,
acting in good faith by the affirmative vote of at least
two-thirds
(2/3) of the then current directors, after reasonable written
notice
to the Executive and an opportunity to cure, to have a dependency
on
alcohol or other drugs that substantially interferes with the
Executive's performance of duties reasonably assigned to the
Executive.
c. As used in this Agreement, the term "Good Reason" shall mean
(i)
A significant and,
from the Executive's perspective, adverse change in
the nature or scope of the Executive's responsibilities,
authorities,
powers, functions or duties from the responsibilities,
authorities,
powers, functions or duties exercised by the Executive
immediately
prior to the Change in Control (or at the Executive's election,
prior
to the earlier commencement of the Proposed Business Combination
that
results in such Change in Control); or
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(ii)
A reasonable determination by the Executive that, as a result of
a
Change in Control, the Executive is unable to exercise the
responsibilities, authorities, powers, functions or duties
exercised
by the Executive immediately prior to such Change in Control (or
at
the Executive's election, prior to the earlier commencement of
the
Proposed Business Combination that results in such Change in
Control);
or
(iii) Any decrease in the Executive's base salary or any decrease
of five
percent (5%) or more in the total annual compensation payable by
the
Employers to the Executive as compared to the Executive's base
salary
or total annual compensation target immediately prior to the Change
in
Control (or at the Executive's election, prior to the earlier
commencement of the Proposed Business Combination that results in
such
Change in Control); provided, however, that a decrease in base
salary
or total compensation payable to the Executive and to all other
executive officers of the Employers on a comparable basis as a
result
of the Employers' financial performance shall not constitute
Good
Reason; or
(iv)
The failure by the Employers to continue the Executive's
participation
in any material compensation, incentive, bonus or benefit plan,
including life, medical and disability coverage, in which the
Executive participates immediately prior to the Change in Control
(or
at the Executive's election, prior to the earlier commencement of
the
Proposed Business Combination that results in such Change in
Control),
or in any successor plan, or the taking of any action by the
Employers
that would reduce, directly or indirectly, in any material respect
any
of such benefits or deprive the Executive of any material
fringe
benefit enjoyed by the Executive under such plan at the time of
the
Change in Control (or at the Executive's election, prior to the
earlier commencement of the Proposed Business Combination that
results
in such Change in Control), or any successor plan (except to
the
extent any benefits or coverage under such plans may be changed in
its
application to all of the employees of the Employers (or
successors-in-interest) on a nondiscriminatory basis), or the
failure
of a successor-in-interest to make available its benefits plans to
the
Executive on a basis that is not substantially less favorable than
the
successor generally affords to its other employees holding
similar
positions; or
(v)
The relocation of the
Employers' offices at which the Executive is
principally employed immediately prior to the Change in Control, or
at
the Executive's election, the earlier commencement of the
Proposed
Business Combination that results in such Change in Control, to
a
location more than 25 miles from such office or from North
Andover,
Massachusetts, or either of the Employers requiring the Executive
to
be based anywhere other than the Employers' executive offices,
except
for required travel on the Employers' business to an extent
substantially consistent with customary business travel
obligations;
or
(vi)
The failure of either of the Employers to obtain a satisfactory
agreement from any successor to assume and agree to perform
this
Agreement as required by Section
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16 hereof, after written notice from the Executive that makes
reference to this provision and provides a reasonable opportunity
to
cure.
For
purposes of this Agreement, the term "Business Combination" shall
mean
any tender or exchange offer for the ordinary voting stock of the
Company or the
Bank, or any merger, consolidation, or other
