exv10w4






Exhibit 10.4




SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT




FOR J. WILLIAR DUNLAEVY




AMENDED AND RESTATED AS OF NOVEMBER 20, 2008





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	1.

	 	Definitions
	 	 	1	 
	 
	2.

	 	Payments to Executive
	 	 	6	 
	 
	3.

	 	Death of the Executive
	 	 	8	 
	 
	4.

	 	Disability Benefits
	 	 	8	 
	 
	5.

	 	Termination not for Cause or for Good Reason
	 	 	8	 
	 
	6.

	 	Re-employment
	 	 	9	 
	 
	7.

	 	Claims Procedure
	 	 	9	 
	 
	8.

	 	Provision for Incapacity
	 	 	12	 
	 
	9.

	 	Violation of Agreement
	 	 	12	 
	 
	10.

	 	Nonassignable Rights
	 	 	12	 
	 
	11.

	 	Independence of Agreement
	 	 	12	 
	 
	12.

	 	General Obligation of the Company
	 	 	13	 
	 
	13.

	 	Establishment of Trust
	 	 	13	 
	 
	14.

	 	Governing Law
	 	 	14	 
	 
	15.

	 	Notice
	 	 	14	 
	 
	16.

	 	Board Authority; Indemnification
	 	 	14	 
	 







 









 








SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT




FOR J. WILLIAR DUNLAEVY




AMENDED AND RESTATED AS OF NOVEMBER 20, 2008




     This Supplemental Executive Retirement Agreement (the “Agreement”) originally dated as
of the 1st day of January, 2004 and amended and restated in its entirety as of November 20,
2008, by and among Legacy Bancorp, Inc. (the “Holding Company”), a Delaware
corporation, and Legacy Banks (the “Bank”), a Massachusetts-chartered savings bank with its
headquarters in Pittsfield, Massachusetts (the Holding Company and the Bank are referred to
collectively herein as the “Company”) and J. Williar Dunlaevy (the “Executive”). The provisions
of this Agreement specifically required by Code Section 409A shall be deemed effective from January
1, 2005.



     In consideration of the mutual covenants herein contained and implied, the sufficiency of
which is acknowledged by each party, the Company and the Executive agree as follows:



1.  Definitions.





	 	(a)	 	“Actuarial Equivalent” means a benefit of equivalent value using the
applicable interest rate under Section 417(e)(3) of the Code, as determined for the
month of November of the preceding year and the applicable mortality table under
Section 417(e)(3) of the Code.
	 
	 	(b)	 	“Annual Annuity Equivalent” shall be equal to the annual benefit payable from a
single life annuity on the Executive’s life from a provider of annuity products holding
at least an AA rating from Moody’s, Standard & Poor’s, or an equivalent rating service.
For purposes of this section, the amount available to invest in said




 









 






	 	 	 	annuity shall be the balance attributable to the Company’s matching contributions in
the Executive’s account in the SBERA Defined Contribution Plan.
	 
	 	(c)	 	“Board” means the Board of Director of the Holding Company [or
the Board of Directors of the Bank, as applicable].
	 
	 	(d)	 	“Cause” means the termination of employment of the Executive because of
his:






	 	(i)	 	material act of dishonesty in performing Executive’s duties on
behalf of the Company or a material breach of the Company’s Code of Conduct or
the Company’s Sexual and Other Non-Harassment Policy,
	 
	 	(ii)	 	willful misconduct that in the judgment of the Board will
likely cause economic damage to the Company or injury to the business
reputation of the Bank or Holding Company,
	 
	 	(iii)	 	incompetence,
	 
	 	(iv)	 	breach of any fiduciary duty involving personal profit,
	 
	 	(v)	 	intentional failure to perform stated duties after
written notice thereof from the Board,
	 
	 	(vi)	 	willful violation of any law, rule or regulation (other than
minor or routine traffic violations or similar offenses) that reflect adversely
on the reputation of the Company, any felony conviction, any violation of law
involving moral turpitude, or any violation of a final cease-and-desist
order,
	 
	 	(vii)	 	or material breach of any provision of this Agreement.






	 	 	 	In determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry. The




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	 	 	 	determination of whether the Executive’s employment terminated for Cause shall be
made by the Board in its reasonable judgment, notice of such determination having
been provided to the Executive setting forth in reasonable detail the nature of such
Cause.
	 
	 	(e)	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time.
	 
	 	(f)	 	“Disability” has the meaning set forth in Code Section 409A(a)(2)(C) and
the final Treasury Regulations or subsequent guidance issued thereunder.
	 
	 	(g)	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
	 
	 	(h)	 	“Final Average Compensation” means the average of the Executive’s annual base
salary and annual bonuses payable pursuant to the Company’s Performance
Incentive Plan (prior to any salary reduction contributions to any Section 401(k),
125 or 132 plan) for the three (3) calendar years during the Executive’s employment
with the Company for which the Executive’s combined annual base salary and bonus were
the highest.
	 
	 	(i)	 	“Good Reason” means the following:






	 	(i)	 	a failure to elect or reelect or to appoint or reappoint Executive to
the Executive Position (provided, however, that a change in the Executive
Position (as defined in Executive’s employment agreement) consented to in
writing by Executive in connection with succession planning of the Bank or
Holding Company, shall not be deemed a Good Reason);
	 
	 	(ii)	 	a material change in Executive’s position to become one of lesser
responsibility, importance, or scope from the position and attributes




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	 	 	 	described in Executive’s employment agreement (provided, however, that a
reduction in duties and responsibilities consented to in writing by
Executive in connection with succession planning or the Company, shall not
be deemed a Good Reason);
	 
	 	(iii)	 	a liquidation or dissolution of the Holding Company or the Bank other
than liquidations or dissolutions that are caused by reorganizations that do
not affect the status of Executive;
	 
	 	(iv)	 	a material reduction in Executive’s base salary or benefits
(other than a reduction or elimination of Executive’s benefits under one or
more benefit plans maintained by the Bank as part of a good faith, overall
reduction or elimination of such plans or benefits applicable to all
participants in a manner that does not discriminate against Executive (except
as such discrimination may be necessary to comply with applicable law));
	 
	 	(v)	 	a relocation of Executive’s principal place of employment by
more than twenty-five (25) miles from its location as of the date of this
Agreement; or
	 
	 	(vi)	 	a material breach of this Agreement by the Company.

	 
	 	
The determination of whether the Executive’s employment terminated for Good Reason
shall be made by the Executive in accordance with the requirements of Executive’s
employment agreement, notice of such determination having been provided to the Board
setting forth in reasonable detail the nature of such Good Reason.





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	 	(j)	 	“Normal Form” means a lump sum payment which is the actuarial equivalent of
an annuity payable monthly for twenty (20) years certain beginning at the
Normal Retirement Date.
	 
	 	(k)	 	“Normal Retirement Date” means the first day of the month coinciding with or
next following the date on which the Executive attains age sixty-five (65).
	 
	 	(l)	 	“SBERA Defined Benefit Plan” means the Savings Bank Employees Retirement
Association Pension Plan as adopted by the Bank. The SBERA Defined Benefit Plan
was terminated, effective October 31, 2005, and all benefits payable to the Executive
under the SBERA Defined Benefit Plan were distributed.
	 
	 	(m)	 	“Separation from Service” means means the Executive’s retirement or other
termination of employment with the Company within the meaning of Code Section 409A. No
Separation from Service shall be deemed to occur due to military leave, sick leave or
other bona fide leave of absence if the period of such leave does not exceed six months
or, if longer, so long as the Executive’s right to reemployment is provided by law or
contract. If the leave exceeds six months and the Executive’s right to reemployment is
not provided by law or by contract, then the Executive shall have a Separation from
Service on the first date immediately following such six-month period.
	 
	 	 	 	Whether a Separation from Service has occurred is determined based on whether the
facts and circumstances indicate that the Company and the Executive reasonably
anticipated that no further services would be performed after a certain date or that
the level of bona fide services the Executive would perform after such date (whether
as an employee or as an independent contractor) would




5









 






	 	 	 	permanently decrease to an amount less than 50% of the average level of bona fide
services performed over the immediately preceding 36 months. The determination of
whether an Executive has had a Separation from Service shall be made by applying the
presumptions set forth in the Treasury Regulations under Code Section 409A.
	 
	 	(n)	 	“Specified Employee” means a “key employee” of a publicly traded company,
within the meaning of Code Section 409A and the Treasury regulations issued thereunder.
	 
	 	(o)	 	“SBERA Defined Contribution Plan” means the Savings Bank Employees Retirement
Association 401(k) Plan as adopted by Legacy Banks.
	 
	 	(p)	 	“Vested Accrued Benefit” means the amount to which the Executive would be
entitled under subsection 2(b) commencing at the Normal Retirement Date.





2.  Payments to Executive.





	 	(a)	 	If the Executive remains continuously employed by the Company from the date of
his employment until his termination of employment on or after he attains age
fifty-eight (58), the Company will pay the Vested Accrued Benefit to the Executive in
the Normal Form within thirty (30) days of the date of termination of employment,
subject to Section 2(d) hereof.
	 
	 	(b)	 	The Vested Accrued Benefit shall be determined pursuant to this subsection
2(b).






	 	(i)	 	The Executive’s Final Average Compensation shall be calculated.
	 
	 	(ii)	 	The Executive’s Final Average Compensation shall be multiplied
by seventy percent (70%) (the “Target Benefit”).




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	 	(iii)	 	The Target Benefit shall be reduced by: (1) one-half of the
Executive’s actual Primary Social Security retirement benefit payable at age
sixty-five (65), if available, otherwise as determined by the Company, (2) an
amount equal to the annual amount of benefits that would have been
payable to the Executive at age sixty-five (65) on a life annuity basis
from the employer account portion of the SBERA Defined Benefit Planhad such
Plan not been terminated, and (3) the Annual Annuity Equivalent, as defined
herein, from the employer account portion of the SBERA Defined Contribution
Plan (the “Accrued Benefit”).
	 
	 	(iv)	 	The Accrued Benefit shall be multiplied by the applicable
non-forfeitable percentage from the table below based on Executive’s age at his
termination of employment (the “Vested Accrued Benefit”).





	 	 	 	 	 
	Age at	 	Non-
	Termination of	 	Forfeitable
	Employment	 	Percentage
	Less than 58
	 	 	0	%
	58 but less than 59
	 	 	80	%
	59 but less than 60
	 	 	85	%
	60 but less than 61
	 	 	90	%
	61 but less than 62
	 	 	95	%
	62 or more
	 	 	100	%







	 	(c)	 	Notwithstanding anything to the contrary herein contained or implied, in no
event shall the Executive be entitled to receive any benefits under this Agreement if
he is terminated by the Company for Cause. If it is later determined that the
Executive could have been terminated by the Company for Cause, any benefits payable
under this Agreement shall cease and the Executive shall repay to the Company any
amounts received under the terms of this Agreement.




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	 	(d)	 	Notwithstanding anything herein to the contrary, no payments shall be made to
Executive under this Section 2 unless and until Executive has a Separation from
Service. Further, if Executive is a Specified Employee, no payments shall be made to
Executive under this Section 2 until the first day of the seventh (7th)
month following such Separation from Service.





3. Death of the Executive.




     If the Executive dies while employed by the Company, the Company will pay to the Executive’s
surviving spouse, or his estate in the event that he does not leave a surviving spouse, the
Executive’s Vested Accrued Benefit determined as if the Executive had retired the day before his
death after attaining age sixty-five (65). Such benefit shall be paid in the Normal Form
commencing within thirty (30) days of the Executive’s death.



4. Disability Benefits.




     In the event that the Executive terminates employment on account of Disability, the
Executive shall be entitled to receive the Vested Accrued Benefit that would be payable to the
Executive pursuant to Section 2 above determined as if the Executive had terminated his employment
after having attained age 65. Such Disability benefit shall be paid in the Normal Form commencing
within thirty (30) days of the Disablility determination.



5. Termination not for Cause or for Good Reason.




     If the Executive is terminated by the Company other than for Cause or terminates his
employment involuntarily for Good Reason, the Executive shall be entitled to receive his Vested
Accrued Benefit payable pursuant to Section 2 above as if the Executive had terminated his
employment after having attained age 65.



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6. Re-employment.




     If the Executive is rehired by the Company (other than on a basis which is less than 50% of
the average level of bona fide services performed over the last 36 months in which Executive
performed Services as an employee of the Company) after he has begun receiving payments hereunder
but before he has received all payments due hereunder, such payments shall be discontinued until
the Executive’s subsequent retirement, whereupon the amount of the Executive’s benefit shall be
recalculated as of that termination of employment.



7. Claims Procedure.





	 	(a)	 	The Company shall make all decisions and determinations respecting the right of
any person to a payment under this Agreement, subject to the requirements of Code
Section 409A, to the extent applicable.
	 
	 	(b)	 	The following procedure shall be followed with respect to claims under this
Agreement:






	 	(i)	 	Any claimant who believes he or she is entitled to a benefit
under this Agreement shall submit a claim for such benefit in writing to the
Board.
	 
	 	(ii)	 	Any decision by the Board denying a claim in whole or in part
shall be stated in writing by the Board and delivered or the mailed to the
claimant within ninety (90) days after receipt of the claim by the Board unless
special circumstances require an extension of time for processing, but in any
event within one hundred eighty (180) days after such receipt. If such an
extension of time is taken, the Board shall inform the claimant of the delay in
writing before the expiration of the initial ninety (90) day period, including
the reasons therefor and the date by which the Board expects to




9









 






	 	 	 	render a decision. Any decision denying a claim shall be in writing and set
forth the specific reasons for the denial with specific references to the
Agreement provisions on which the denial is based, a description of any
additional material or information necessary to perfect the claim and the
reasons therefor, and an explanation of the Agreement’s claim review
procedure, all written in a manner calculated to be understood by the
claimant.
	 
	 	(iii)	 	If a claim is denied in whole or in part, the claimant or a
duly authorized representative may request a review by the Board of the
decision upon written application to the Board within sixty (60) days after
notification of the decision. The claimant or a duly authorized representative
may review pertinent documents and submit issues and comments in writing. The
Board shall make its decision on review not later than sixty (60) days after
receipt of the request for review unless special circumstances require an
extension of time for processing, in which case its decision shall be rendered
as soon as possible, but not later than one hundred twenty (120) days after
receipt of the request for review. If such an extension of time is taken, the
Board shall inform the claimant of the delay in writing before the expiration
of the initial sixty (60) day period. The decision on review shall be in
writing and shall set forth the specific reasons for the decision, shall make
specific references to the pertinent Agreement provisions on which the decision
is based, and shall be written in a manner calculated to be understood by the
claimant.




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	 	(c)	 	The Board may adopt such rules as it deems necessary, desirable, or appropriate
to carry out its duties under this Section 7. Any action or determination or decision
whatsoever taken or made by the Board under this Section 7 shall be final, conclusive,
and binding upon all persons concerned.
	 
	 	(d)	 	The procedure provided for in this Section 7 shall be the sole, exclusive and
mandatory procedure for resolving any dispute under this Agreement; provided, however,
that if the Executive wishes to make a valid legal challenge to the Board’s
determination and he has entered into an agreement with the Board to arbitrate disputes
arising from his employment with the Company, such legal challenge shall be resolved
pursuant to the arbitration procedures in that agreement and the Executive’s burden of
proof in any arbitration shall be the same as if the dispute were tried in a court
proceeding.
	 
	 	(e)	 	In any arbitration or litigation to enforce rights and obligations hereunder,
except as required by law or separate contract between the parties, the unsuccessful
party shall pay the successful party an amount equal to all reasonable out-of-pocket
expenses (including reasonable legal expenses and court costs) incurred by the
successful party.
	 
	 	(f)	 	In the event of the death of the Executive or any beneficiary, the Board need
not make any payment provided for by this Agreement until it shall have received proof
satisfactory to it of such death and of the identity, existence and location of the
party thereafter entitled to receive payments under this Agreement.
	 
	 	(g)	 	In making any payment or taking any action under this Agreement the Board shall
be absolutely protected in relying upon any finding or statement of facts believed




11









 






	 	 	 	to be true, and on any written instrument believed to have been signed by the proper
party.





8. Provision for Incapacity.




     If the Board reasonably deems the Executive incapable of receiving his benefits by reason of
illness, infirmity or incapacity of any kind, the Board may, in its sole discretion, apply such
payment directly for the comfort, support and maintenance of the Executive, or reimburse any person
for such support supplied to the Executive.



9. Violation of Agreement.




     In the event of the violation of any material terms of the Agreement by the Executive, the
Company, in addition to any other rights which it may have, shall be relieved of the liability to
make any further payments under the Agreement to, or on behalf of, the Executive so long as such
violation continues and shall have the right to specific enforcement of the Agreement by
proceedings in equity.



10. Nonassignable Rights.




     Except as otherwise provided by the Agreement, neither the Executive, nor his surviving
spouse, nor his estate shall have any right to commute, sell, assign, transfer or otherwise convey
the right to receive any payments hereunder, which payments and the right thereto are expressly
declared to be nonassignable and nontransferable.



11. Independence of Agreement.




     The benefits payable under the Agreement shall be independent of, and in addition to, any
other employment agreement that may exist from time to time between the parties hereto, or any
other compensation payable by the Company to the Executive, whether as salary, bonus or otherwise.
The Agreement shall not be deemed to constitute a contract of employment between



12









 







the parties hereto, and no provision hereof shall restrict the right of the Company to
discharge the Executive with or without Cause or restrict the right of the Executive to terminate
his employment.



12. General Obligation of the Company.




     The benefits provided under the Agreement constitute a mere promise by the Company to make
payments in the future, and the rights of the Executive hereunder shall be those of a general
unsecured creditor of the Company. Nothing contained herein shall be construed to create a trust
of any kind or to render the Company a fiduciary with respect to the Executive. The Company shall
not be required to maintain any fund or segregate any amount or in any other way currently fund the
future payment of any benefit provided under the Agreement, and nothing contained herein shall be
construed to give the Executive or any other person any right to any specific assets of the Company
or of any other person. This Agreement is intended to be, and shall in all events be construed and
treated as, a deferred compensation arrangement for a “select group of management and highly
compensated employees”, within the meaning of Title I of ERISA.



13. Establishment of Trust.




     The provisions of Section 12 notwithstanding, the Company may, in its sole and absolute
discretion, establish a trust to which funds earmarked for payment under this Agreement may be
transferred and from which benefits arising hereunder, and subject to the provisions and
limitations hereof, may be paid. Any such trust would contain provisions making it irrevocable by
the Company unless and until all benefits hereunder which are funded through such trust have been
paid or provided for, except in the case of bankruptcy or insolvency of the Company, in



13









 







which event benefit payments from the trust would cease and assets thereof would revert to the
Company or be paid to its creditors.



14. Governing Law.




     The Agreement shall be construed under and governed by the laws of the Commonwealth of
Massachusetts, except to the extent preempted by ERISA.



15. Notice.




     Any notice or communication required of either party with respect to this Agreement shall be
made in writing and may either be delivered personally or sent by First Class mail or via any
national courier service, as the case may be:


To the Company:



Attn: General Counsel

Legacy Banks

99 North Street

Pittsfield, MA 01201



To the Executive:



J. Williar Dunlaevy

196 Hubbard St.

Lenox, MA 01240




     Each party shall have the right by written notice to change the place to which any notice may
be addressed.



16. Board Authority; Indemnification.





	 	(a)	 	The Board shall administer this Agreement in accordance with its terms and
shall have the power and discretion to construe the terms of the Agreement, decide any
issues of fact or law, and to determine all questions arising in connection with the
administration, interpretation, and application of the Agreement. Any such




14









 






	 	 	 	determination by the Board shall be conclusive and binding upon all persons. The
Board may establish procedures, correct any defect, supply any information, or
reconcile any inconsistency in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purposes of this Agreement.
	 
	 	(b)	 	Neither the Board nor any member of the Board or any delegate thereof, shall be
liable for any act, omission, interpretation, construction or determination made in
good faith in connection with the Agreement, and the members of the Board (and any
delegate thereof) shall be entitled in all cases to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense (including, without
limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest
extent permitted by law or under any directors’ and officers’ liability insurance
coverage which may be in effect from time to time.




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     EXECUTED under seal as of the day and year first above written, and in the case of the Company
by its duly authorized representatives.



	 	 	 	 	 
	EXECUTIVE	 	LEGACY BANCORP, INC.	 	 
	 
	 	 	 	 
	/s/ J. Williar Dunlaevy

	 	/s/ David L. Klausmeyer
	 	 
	 

	 	 	 	 
	J. WILLIAR DUNLAEVY

	 	For the Compensation Committee	 	 
	 
	 	 	 	 
	 

	 	LEGACY BANKS	 	 
	 
	 	 	 	 
	 

	 	/s/ David L. Klausmeyer	 	 
	 

	 	 	 	 
	 

	 	For the Compensation Committee	 	 







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