Exhibit 10.26

 

CHANGE IN CONTROL AGREEMENT

 

AGREEMENT made as of this                day of                           , 2010
by and among Danvers Bancorp, Inc., a Delaware company (the “Company”), and its
subsidiary, Danversbank, a Massachusetts savings bank with its main office in
Danvers, Massachusetts (the “Bank”) (the Bank and the Company shall be
hereinafter collectively referred to as the “Employers”), and Michael W. McCurdy
(the “Executive”).

 

1.             Purpose.  The Company considers it essential to the best
interests of its stockholders to promote and preserve the continuous employment
of key management personnel.  The Board of Directors of the Company (the
“Board”) recognizes that, as is the case with many corporations, the possibility
of a Change in Control (as defined in Section 2 hereof) exists and that such
possibility, and the uncertainty and questions that it may raise among
management, may result in the departure or distraction of key management
personnel to the detriment of the Company and its stockholders.  Therefore, the
Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Employers’
key management, including the Executive, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a Change in Control.  Nothing in this Agreement shall be
construed as creating an express or implied contract of employment and, except
as otherwise agreed in writing between the Executive and the Employers, the
Executive shall not have any right to be retained in the employ of the
Employers.

 

2.             Change in Control.  A “Change in Control” shall be deemed to have
occurred upon the occurrence of any one of the following events:

 

(a)           any “Person,” as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Act”) (other than the
Company, any of its subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan or trust of the
Company or any of its subsidiaries), together with all “affiliates” and
“associates” (as such terms are defined in Rule 12b-2 under the Act) of such
person, shall become the “beneficial owner” (as such term is defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing 25 percent or more of the combined voting power of the Company’s
then outstanding securities having the right to vote in an election of the
Company’s Board of Directors (“Voting Securities”) (in such case other than as a
result of an acquisition of securities directly from the Company); or

 

(b)           persons who, as of the date hereof, constitute the Board (the
“Incumbent Directors”) cease for any reason, including, without limitation, as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of the Company subsequent to the date hereof shall be considered an
Incumbent Director if such person’s election was approved by or such person was
nominated for election by either (A) a vote of at least a majority of the
Incumbent Directors or (B) a vote of at least a majority of the Incumbent
Directors who are members of a nominating committee comprised, in the majority,
of Incumbent Directors; but provided further, that any such person whose initial
assumption of office is in connection with an actual or threatened

 

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election contest relating to the election of members of the Board of Directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board, including by reason of agreement
intended to avoid or settle any such actual or threatened contest or
solicitation, shall not be considered an Incumbent Director; or

 

(c)           the consummation of (A) any consolidation or merger of the Company
where the stockholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger, beneficially
own (as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate more than 50 percent of the
voting shares of the Company issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any), or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of the Company; or

 

(d)           the approval by the Company’s stockholders of any plan or proposal
for the liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred for purposes of the foregoing clause (a) solely as the result of an
acquisition of securities by the Company that, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of shares
of Voting Securities beneficially owned by any person to 25 percent or more of
the combined voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in this sentence shall thereafter become
the beneficial owner of any additional shares of Voting Securities (other than
pursuant to a stock split, stock dividend, or similar transaction or as a result
of an acquisition of securities directly from the Company) and immediately
thereafter beneficially owns 25 percent or more of the combined voting power of
all then outstanding Voting Securities, then a “Change in Control” shall be
deemed to have occurred for purposes of the foregoing clause (a).

 

3.             Terminating Event.  A “Terminating Event” shall mean any of the
events provided in this Section 3:

 

(a)           Termination by the Employers.  Termination by the Employers of the
employment of the Executive with the Employers for any reason other than for
Cause, death or Disability.  For purposes of this Agreement, “Cause” shall mean:

 

(i)            conduct by the Executive constituting a material act of willful
misconduct in connection with the performance of his duties, including, without
limitation, misappropriation of funds or property of the Employers other than
the occasional, customary and de minimis use of Employers’ property for personal
purposes; or

 

(ii)           the commission by the Executive of any felony or a misdemeanor
involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the
Executive that would reasonably be expected to result in material injury to the
Employers if he were retained in his position; or

 

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(iii)          continued, willful and deliberate non-performance by the
Executive of his duties to the Employers (other than by reason of the
Executive’s physical or mental illness, incapacity or disability) which has
continued for more than 30 days following written notice of such non-performance
from the Chief Executive Officer; or

 

(iv)          a violation by the Executive of the Employers’ employment policies
which has continued following written notice of such violation from the Chief
Executive Officer; or

 

(v)           willful failure to cooperate with a bona fide internal
investigation or an investigation by regulatory or law enforcement authorities,
after being instructed by the Employers to cooperate, or the willful destruction
or failure to preserve documents or other materials known to be relevant to such
investigation or the willful inducement of others to fail to cooperate or to
produce documents or other materials; or

 

(vi)          removal or prohibition of the Executive from participating in the
conduct of the Employers’ affairs by order issued under applicable law and
regulations by a federal or state banking agency having authority over the
Employers.

 

A Terminating Event shall not be deemed to have occurred pursuant to this
Section 3(a) solely as a result of the Executive being an employee of any direct
or indirect successor to the business or assets of the Company, rather than
continuing as an employee of the Company following a Change in Control.  For
purposes of clauses (i), (iii) and (v) hereof, no act, or failure to act, on the
Executive’s part shall be deemed “willful” unless done, or omitted to be done,
by the Executive without reasonable belief that the Executive’s act, or failure
to act, was in the best interests of the Employers.  For purposes hereof, the
Executive will be considered “Disabled” if, as a result of the Executive’s
incapacity due to physical or mental illness, the Executive shall have been
absent from his duties to the Employers on a full-time basis for 180 calendar
days in the aggregate in any 12-month period.

 

(b)           Termination by the Executive for Good Reason.  Termination by the
Executive of the Executive’s employment with the Employers for Good Reason.  For
purposes of this Agreement, “Good Reason” shall mean that the Executive has
complied with the “Good Reason Process” (hereinafter defined) following the
occurrence of any of the following events:

 

(i)            a material diminution, not consented to by the Executive, in the
Executive’s responsibilities, authorities or duties, from the responsibilities,
authorities or duties exercised by the Executive immediately prior to the Change
in Control; or

 

(ii)           a material diminution in the Executive’s annual base salary as in
effect on the date hereof or as the same may be increased from time to time
hereafter except for across-the-board reductions similarly affecting all or
substantially all management employees; or

 

(iii)          the relocation of the Employers’ offices at which the Executive
is principally employed immediately prior to the date of a Change in Control
(the “Current Offices”) to any other location more than 50 miles from the
Current Offices, or the

 

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requirement by the Employers for the Executive to be based at a location more
than 50 miles from the Current Offices, except for required travel on the
Employers’ business to an extent substantially consistent with the Executive’s
business travel obligations immediately prior to the Change in Control; or

 

(iv)          the material breach of this Agreement by the Employers.

 

“Good Reason Process” shall mean that (i) the Executive reasonably determines in
good faith that a “Good Reason” condition has occurred; (ii) the Executive
notifies the Employers in writing of the first occurrence of the Good Reason
condition within 60 days of the first occurrence of such condition; (iii) the
Executive cooperates in good faith with the Employers’ efforts, for a period not
less than 30 days following such notice (the “Cure Period”), to remedy the
condition; (iv) notwithstanding such efforts, the Good Reason condition
continues to exist; and (v) the Executive terminates his employment within 60
days after the end of the Cure Period.  If the Employers cure the Good Reason
condition during the Cure Period, Good Reason shall be deemed not to have
occurred.

 

4.             Change in Control Payment.  In the event a Terminating Event
occurs within 12 months after a Change in Control, the following shall occur:

 

(a)           the Employers shall pay to the Executive an amount equal to three
times the sum of (i) the Executive’s annual base salary in effect immediately
prior to the Terminating Event (or the Executive’s annual base salary in effect
immediately prior to the Change in Control, if higher) and (ii) the greater of
Executive’s target cash bonus for the year of termination or the Executive’s
highest cash bonus earned in the three years preceding the Change in Control,
payable in one lump-sum payment no later than three days following the Date of
Termination; and

 

(b)           subject to the Executive’s copayment of premium amounts at the
active employees’ rate, the Executive shall continue to participate in the
Employers’ group health, dental and vision program for 36 months; provided,
however, that the continuation of health benefits under this Section shall
reduce and count against the Executive’s rights under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”).

 

(c)           Anything in this Agreement to the contrary notwithstanding, if at
the time of the Executive’s separation from service within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the
Executive is considered a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, and if any payment or benefit that the
Executive becomes entitled to under this Agreement is considered deferred
compensation subject to interest, penalties and additional tax imposed pursuant
to Section 409A(a) of the Code as a result of the application of
Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable or
benefit shall be provided prior to the date that is the earlier of (i) six
months and one day after the Executive’s separation from service, or (ii) the
Executive’s death.  The parties intend that this Agreement will be administered
in accordance with Section 409A of the Code.  The parties agree that this
Agreement may be amended, as reasonably requested by either party, and as may be
necessary to fully comply with Section 409A of the Code and all related
rules and regulations in order to preserve the payments and benefits

 

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provided hereunder without additional cost to either party.  Notwithstanding
anything in this Agreement to the contrary, to the extent that any payment or
benefit described in this Agreement constitutes “non-qualified deferred
compensation” under Section 409A of the Code, and to the extent that such
payment or benefit is payable upon the Executive’s termination of employment,
then such payments or benefits shall only be payable upon the Executive’s
“separation from service.”  The term “separation from service” shall mean the
Executive’s “separation from service” from the Bank or the Company, an affiliate
of the Bank or the Company or a successor entity within the meaning set forth in
Section 409A of the Code, determined in accordance with the presumptions set
forth in Treasury Regulation Section 1.409A-1(h).  The Employers make no
representation or warranty and shall have no liability to the Executive or any
other person if any provisions of this Agreement are determined to constitute
deferred compensation subject to Section 409A of the Code but do not satisfy an
exemption from, or the conditions of, such Section.

 

5.             Additional Limitation.   Anything in this Agreement to the
contrary notwithstanding, in the event that any compensation, payment or
distribution by the Employers to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (the “Severance Payments”), would be subject to the
excise tax imposed by Section 4999 of the Code, then the benefits payable under
this Agreement shall be reduced (but not below zero) to the extent necessary so
that the maximum Severance Payments shall not exceed the Threshold Amount.  To
the extent that there is more than one method of reducing the payments to bring
them within the Threshold Amount, the Severance Payments shall be reduced in the
following order:  (1) cash payments not subject to Section 409A of the Code;
(2) cash payments subject to Section 409A of the Code; (3) equity-based payments
and acceleration; and (4) non-cash forms of benefits.  To the extent any payment
is to be made over time (e.g., in installments, etc.), then the payments shall
be reduced in reverse chronological order.

 

For the purposes of this Section 5, “Threshold Amount” shall mean three times
the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the
Code and the regulations promulgated thereunder less one dollar ($1.00); and
“Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and
any interest or penalties incurred by the Executive with respect to such excise
tax.

 

6.             Term.  This Agreement shall take effect on the date first set
forth above and shall terminate upon the earliest of (a) the termination by the
Employers of the employment of the Executive for Cause or the failure by the
Executive to perform his full-time duties with the Employers by reason of his
death or Disability, (b) the resignation or termination of the Executive’s
employment for any reason prior to a Change in Control, (c) the termination of
the Executive’s employment with the Employers after a Change in Control for any
reason other than the occurrence of a Terminating Event, or (d) the date which
is 12 months after a Change in Control.

 

7.             Withholding.  All payments made by the Employers under this
Agreement shall be net of any tax or other amounts required to be withheld by
the Employers under applicable law.

 

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8.             Notice and Date of Termination.

 

(a)           Notice of Termination.  After a Change in Control and during the
term of this Agreement, any purported termination of the Executive’s employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
this Section 8.  For purposes of this Agreement, a “Notice of Termination” shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and the Date of Termination.

 

(b)           Date of Termination.  “Date of Termination,” with respect to any
purported termination of the Executive’s employment after a Change in Control
and during the term of this Agreement, shall mean the date specified in the
Notice of Termination.  In the case of a termination by the Employers other than
a termination for Cause (which may be effective immediately), the Date of
Termination shall not be less than 30 days after the Notice of Termination is
given.  In the case of a termination by the Executive, the Date of Termination
shall not be less than 30 days from the date such Notice of Termination is
given.  Notwithstanding the foregoing, in the event that the Executive gives a
Notice of Termination to the Employers, the Employers may unilaterally
accelerate the Date of Termination and such acceleration shall not result in a
termination by the Employers for purposes of this Agreement.

 

9.             No Mitigation.  The Employers agree that, if the Executive’s
employment by the Employers is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Employers pursuant to
Section 4 hereof.  Further, the amount of any payment provided for in this
Agreement shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Employers or
otherwise.

 

10.           Arbitration of Disputes.  Any controversy or claim arising out of
or relating to this Agreement or the breach thereof or otherwise arising out of
the Executive’s employment or the termination of that employment (including,
without limitation, any claims of unlawful employment discrimination whether
based on age or otherwise) shall, to the fullest extent permitted by law, be
settled by arbitration in any forum and form agreed upon by the parties or, in
the absence of such an agreement, under the auspices of the American Arbitration
Association (“AAA”) in Boston, Massachusetts in accordance with the Employment
Dispute Resolution Rules of the AAA, including, but not limited to, the
rules and procedures applicable to the selection of arbitrators.  In the event
that any person or entity other than the Executive or the Employers may be a
party with regard to any such controversy or claim, such controversy or claim
shall be submitted to arbitration subject to such other person or entity’s
agreement.  Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.  This Section 10 shall be specifically
enforceable. Notwithstanding the foregoing, this Section 10 shall not preclude
either party from pursuing a court action for the sole purpose of obtaining a
temporary restraining order or a preliminary injunction in circumstances in
which such relief is appropriate; provided that any other relief shall be
pursued through an arbitration proceeding pursuant to this Section 10.

 

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11.           Consent to Jurisdiction.  To the extent that any court action is
permitted consistent with or to enforce Section 10 of this Agreement, the
parties hereby consent to the jurisdiction of the Superior Court of the
Commonwealth of Massachusetts and the United States District Court for the
District of Massachusetts.  Accordingly, with respect to any such court action,
the Executive (a) submits to the personal jurisdiction of such courts;
(b) consents to service of process; and (c) waives any other requirement
(whether imposed by statute, rule of court, or otherwise) with respect to
personal jurisdiction or service of process.

 

12.           Integration.  This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes in
all respects all prior agreements between the parties concerning such subject
matter.

 

13.           Successor to the Executive.  This Agreement shall inure to the
benefit of and be enforceable by the Executive’s personal representatives,
executors, administrators, heirs, distributees, devisees and legatees.  In the
event of the Executive’s death after a Terminating Event but prior to the
completion by the Employers of all payments due him under Section 4 of this
Agreement, the Employers shall continue such payments to the Executive’s
beneficiary designated in writing to the Employers prior to his death (or to his
estate, if the Executive fails to make such designation).

 

14.           Enforceability.  If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

 

15.           Waiver.  No waiver of any provision hereof shall be effective
unless made in writing and signed by the waiving party.  The failure of any
party to require the performance of any term or obligation of this Agreement, or
the waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

 

16.           Notices.  Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers, or to the Employers at its main office, attention of the Board of
Directors.

 

17.           Amendment.  This Agreement may be amended or modified only by a
written instrument signed by the Executive and by duly authorized
representatives of the Employers.

 

18.           Effect on Other Plans.  An election by the Executive to resign
after a Change in Control under the provisions of this Agreement shall not be
deemed a voluntary termination of employment by the Executive for the purpose of
interpreting the provisions of any of the Employers’ benefit plans, programs or
policies.  Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Employers’ benefit plans, programs or policies except

 

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as otherwise provided in Section 5 hereof, and except that the Executive shall
have no rights to any severance benefits under any Company or Bank severance pay
plan.  In the event that the Executive is party to an employment agreement with
the Employers providing for change in control payments or benefits, the
Executive shall receive the benefits under only one agreement, which shall be
the agreement pursuant to which the Executive would receive the greatest
aggregate amount (calculated on an after-tax basis).

 

19.           Governing Law.  This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts, without giving effect to the conflict of laws principles of
such Commonwealth.  With respect to any disputes concerning federal law, such
disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.

 

20.           Successors to Company.  The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.  Failure of the Company to obtain an assumption of this Agreement
at or prior to the effectiveness of any succession shall be a breach of this
Agreement and shall constitute Good Reason if the Executive elects to terminate
employment.

 

21.           Gender Neutral.  Wherever used herein, a pronoun in the masculine
gender shall be considered as including the feminine gender unless the context
clearly indicates otherwise.

 

22.           Allocation of Obligations Between Employers.  The obligations of
the Employers under this Agreement are intended to be the joint and several
obligations of the Bank and the Company, and the Employers shall, as between
themselves, allocate these obligations in a manner agreed upon by them.

 

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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
the Company by its duly authorized officer, and by the Executive, as of the date
first above written.

 

 

DANVERS BANCORP, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DANVERSBANK

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

 

Michael W. McCurdy

 

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