LEGACY BANCORP, INC. AND LEGACY BANKS ONE-YEAR CHANGE IN CONTROL AGREEMENT FORM
Exhibit 10.3
ONE-YEAR CHANGE IN CONTROL AGREEMENT FORM
This Change in Control Agreement (the “Agreement”) is made effective as of the 26th
day of October, 2008 (the “Effective Date”), by and between Legacy Bancorp, Inc., a Delaware
corporation (the “Company”), Legacy Banks (the “Bank”), a Massachusetts-chartered savings bank (the
“Bank”) with its principal administrative office at Pittsfield, Massachusetts, and [ ]
(“Executive”). The Bank is a wholly-owned subsidiary of the Company.
WHEREAS, the Company and the Bank recognize the substantial contributions the Executive has
made to the Company and the Bank and wishes to protect Executive’s position with the Bank for the
period provided in this Agreement.
NOW, THEREFORE, in consideration of the contributions of Executive and upon the other terms
and conditions hereinafter provided, the parties hereto agree as follows:
1. TERM OF AGREEMENT
The term of this Agreement shall be the earlier of twelve (12) full calendar months from the
effective date of this Agreement set forth above (the “Initial Term”), or until the employment
relationship is terminated. Upon the expiration of the Initial Term and so long as this Agreement
remains in effect, upon the expiration of each successive twelve-month period (each a “Renewal
Term”), this Agreement will be renewed automatically for a successive twelve-month period, unless
the Board of Directors of each of the Bank and the Company (each a “Board,” provided that any
reference to “Board” herein shall refer to the Bank’s Board unless specifically noted otherwise) or
the Executive elects not to extend the term of this Agreement at the conclusion of the Initial Term
or any subsequent Renewal Term by giving written notice to the other party prior to the last day
of the Initial Term or any such Renewal Term as the case may be (a “Non-Renewal Notice”).
Notwithstanding anything to the contrary in this Section 1, this Agreement shall remain in effect
upon the public announcement of an event that, if consummated, would result in a Change in Control,
as defined in Section 2 hereof, and for a period of twelve (12) months after the closing or
completion of the Change in Control.
2. CHANGE IN CONTROL DEFINED
For purposes of this Agreement, a “Change in Control” means any of the following events:
(a) Merger: The Company merges into, or consolidates with, another corporation, or
merges another corporation into the Company, and as a result less than a majority of the combined
voting power of the resulting corporation immediately after the merger or
consolidation is held by persons who were stockholders of the Company immediately before the merger
or consolidation.
(b) Acquisition of Significant Share Ownership: There is filed, or required to be
filed, a report on Schedule 13D or 13G or another form or schedule required under Sections 13(d),
13(g) or 14(d) of the Securities Exchange Act of 1934, which schedule discloses that the filing
person or persons acting in concert has, or have become, the beneficial owner of 25% or more of a
class of the Company’s voting securities.
(c) Change in Board Composition: During any period of two consecutive years,
individuals who constitute the Company’s Board at the beginning of the two-year period cease for
any reason to constitute at least a majority of the Company’s Board; provided, however, that for
purposes of this clause, each director who is first elected by the board (or first nominated by the
board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who
were directors at the beginning of the two-year period shall be deemed to have also been a director
at the beginning of such period; or
(d) Sale of Assets: The Company sells to a third party all, or substantially all, of
its assets.
3. TERMINATION FOR GOOD REASON UPON A CHANGE IN CONTROL
Upon the occurrence of a Change in Control, Executive shall have the right during the
remaining term of this Agreement to voluntarily terminate his employment upon the occurrence of any
of the following events, each of which shall constitute “Good Reason,” unless such event has been
consented to by Executive: (a) a material change in Executive’s position to become one of lesser
responsibility, importance or scope from the position Executive held immediately prior to the
Change in Control; (b) a material reduction in Executive’s base salary or benefits; (c) a
relocation of Executive’s principal place of employment by more than thirty (30) miles from its
location immediately prior to the Change in Control; or (d) any other action or inaction that
constitutes a material breach of this Agreement by the Company or the Bank.
Notwithstanding the foregoing, termination for Good Reason shall not be effective under this
Section 3 unless Executive gives the Company and/or the Bank prior written notice of the events
giving rise to Executive’s right to elect to terminate for Good Reason. Such prior written notice
shall be given no later than ninety (90) days after the date of the event giving rise to the right
to terminate for Good Reason, and the Company and/or the Bank shall have thirty (30) days to remedy
such condition before Executive terminates employment, provided, however, that the Bank can waive
said 30 day period.
4. TERMINATION FOR CAUSE
Executive shall not have the right to receive termination benefits pursuant to Section 5
hereof upon termination for Cause. As used herein, “Cause shall mean termination because of
Executive’s: (1) material act of dishonesty in performing Executive’s duties on behalf of the
Company and the Bank or a material breach of the Bank’s Code of Conduct or Sexual and Other
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Non-Harassment Policy; (2) willful misconduct that in the judgment of the Board or the Bank
Chief Executive Officer will likely cause economic damage to the Company and the Bank or injury to
the business reputation of the Company and the Bank; (3) incompetence, (4) breach of fiduciary duty
involving personal profit; (5) intentional failure to perform stated duties after written notice
thereof from the Board; or (6) willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) that reflect adversely on the reputation of the Company and the
Bank, any felony conviction, any violation of law involving moral turpitude, or any violation of a
final cease-and-desist order.
Notwithstanding the foregoing, prior to a Change in Control, Executive’s termination for Cause
will not become effective unless the Chief Executive Officer of the Bank has delivered to Executive
a copy of a Notice of Termination, in accordance with Section 6 hereof. Following a Change in
Control, Executive shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to him a Notice of Termination which shall include a copy of a resolution
duly adopted by the affirmative vote of not less than a majority 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 him, together with counsel, to be heard before the Board), 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.
5. SEVERANCE BENEFITS UPON TERMINATION AFTER CHANGE IN CONTROL
(a) Upon the occurrence of a Change in Control, followed by (i) Executive’s voluntary
termination for Good Reason or (ii) involuntary termination of Executive’s employment other than
for Cause, the Bank shall pay Executive, or in the event of Executive’s subsequent death,
Executive’s beneficiary or beneficiaries or estate, as the case may be, as severance pay, a cash
lump sum payment equal to one (1) times the sum of (i) his Base Salary and (ii) the highest rate of
bonus paid to Executive during the two (2) years prior to termination, subject to applicable
withholding taxes. In addition, the Bank will continue to provide Executive with life insurance
coverage, 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 prior to
Executive’s severance. Such coverage shall cease upon expiration of twelve (12) months. The period
for group health care continuation coverage rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) shall not begin until the expiration of such twelve (12) month
period.
(b) Upon the occurrence of a Change in Control, Executive will have such rights as specified
in any other employee benefit plan with respect to options and such other rights as may have been
granted to Executive under such plans.
(c) Any cash severance payments shall be made in a lump sum with the next regularly scheduled
payroll following Executive’s termination of employment. Such payments shall not be reduced in the
event Executive obtains other employment following termination of employment with the Bank.
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(d) Notwithstanding anything in this Agreement to the contrary, in no event shall the
aggregate payments or benefits to be made or afforded to Executive under this Section 5 constitute
an “excess parachute payment” under Code Section 280G or any successor thereto, and in order to
avoid such a result, Executive’s benefits hereunder shall be reduced, if necessary, to an 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 Code Section 280G. The allocation of the reduction
required hereby shall be determined by Executive, provided, however, that if it is determined that
such election by Executive shall be in violation of Code Section 409A, the allocation of the
required reduction shall be pro-rata.
6. NOTICE OF TERMINATION
Any purported termination by the Bank or Company or by Executive in connection with or
following a Change in Control 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 Date of Termination and, in the event of termination by Executive, the specific
termination provision in this Agreement relied upon. “Date of Termination” shall mean the date
specified in the Notice of Termination (which, in the case of a termination for Cause, shall be
immediate). In no event shall the Date of Termination exceed thirty (30) days from the date Notice
of Termination is given.
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 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 in connection with a Change in Control, in the event the Executive is
terminated for reasons other than termination for Cause, the Bank will continue to pay Executive
his full compensation in effect when the notice giving rise to the dispute was given (including but
not limited to his annual salary) and continue him as a participant in all compensation, benefit
and insurance plans in which he was participating when the notice of dispute was given, until the
earlier to occur of : (i) the expiration of the remaining term of this Agreement as determined as
of the Date of Termination and (ii) final resolution of the dispute in accordance with this
Agreement. Amounts paid under this Section 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,
except in the event that Employer prevails in the dispute, in which case all amounts paid hereunder
shall be offset against any other amount due under this Agreement.
7. SOURCE OF PAYMENTS
All payments provided in this Agreement shall be timely paid in cash or check from the general
funds of the Bank. The Company, however, guarantees payment and provision of all amounts and
benefits due hereunder to Executive and, if such amounts and benefits due from the
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Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or
provided by the Company.
8. REQUIRED REGULATORY PROVISIONS
(a) Notwithstanding anything herein contained to the contrary, any payments to Executive by
the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon
their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section
1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.
(b) Notwithstanding anything else in this Agreement, Executive’s employment shall not be
deemed to have been terminated unless and until the Executive has a Separation from Service within
the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). For
purposes of this Agreement, a “Separation from Service” shall have occurred if the Bank and
Executive reasonably anticipate that either no further services will be performed by the Executive
after the date of the termination (whether as an employee or as an independent contractor) or the
level of further services performed will not exceed 49% of the average level of bona fide services
in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder,
the definition of Separation from Service shall be interpreted consistent with Treasury Regulation
Section 1.409A-1(h)(ii).
9. NO ATTACHMENT
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 effect any such action shall be null, void, and
of no effect.
10. ENTIRE AGREEMENT; MODIFICATION AND WAIVER
(a) This Agreement contains the entire understanding between the parties hereto and supersedes
any prior agreement between the Bank and Executive or the 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 him without reference to
this Agreement. This Agreement is not a contract of employment between Executive and the Bank or
the Company.
(b) This Agreement may not be modified or amended except by an instrument in writing signed by
the parties hereto.
(c) 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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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.
13. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Delaware but only to the extent
not superseded by federal law.
14. ARBITRATION
Any dispute or controversy arising under or in connection with this Agreement shall be settled
exclusively by binding arbitration, as an alternative to civil litigation and without any trial by
jury to resolve such claims, conducted by a single arbitrator who is certified by the American
Arbitration Association and is mutually acceptable to the Bank and Executive sitting in a location
selected by the Bank within fifty (50) miles from the main office of the Bank, in accordance with
the rules of the American Arbitration Association’s National Rules for the Resolution of Employment
Disputes then in effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction.
15. PAYMENT OF LEGAL FEES
To the extent that such payment(s) may be made without triggering penalty under Code Section
409A, 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 or Company,
provided (i) that the dispute or interpretation has been settled by Executive and the Bank and
Company or resolved in Executive’s favor, (ii) Executive has provided prior written notice to the
Bank of his intention to retain counsel and the name of such counsel, and (iii) such reimbursement
shall occur no later than sixty (60) days after the end of the year in which the dispute is settled
or resolved in Executive’s favor.
16. OBLIGATIONS OF BANK
The termination of Executive’s employment, other than following a Change in Control, shall not
result in any obligation of the Bank or the Company under this Agreement.
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17. SUCCESSORS AND ASSIGNS
The Bank and the 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 and/or the Company, expressly and unconditionally to assume and agree to perform the
Bank’s or Company’s obligations under this Agreement, in the same manner and to the same extent
that the Bank or Company would be required to perform if no such succession or assignment had taken
place.
[Signature Page Follows]
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SIGNATURES
IN WITNESS WHEREOF, the Company and the Bank have each caused this Agreement to be executed
its duly authorized officer, and Executive has signed this Agreement, on the dates set forth below.
| LEGACY BANKS | ||||||
| By: | ||||||
| For the Entire Board of Directors | ||||||
| LEGACY BANCORP, INC. | ||||||
| By: | ||||||
| For the Entire Board of Directors | ||||||
| EXECUTIVE | ||||||
| By: | ||||||
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