Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the
           day of
                      ,
2010, by and among Danvers Bancorp, Inc., a Delaware corporation (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 Donat A.
Fournier (the “Executive”).

 

Reference
is hereby made to the Employment Agreement (the “Employment Agreement”) dated
as of July 9, 2002, as amended January 25, 2005, August 16, 2005
and January 9, 2007 by and between Beverly National Corporation and the
Executive.

 

Reference
is also hereby made to the Change in Control Agreement (the “Change in Control
Agreement”) dated as of July 9, 2002 and as amended January 9, 2007
by and between Beverly National Corporation and the Executive.

 

Reference
is also hereby made to The Beverly National Bank Salary Continuation Agreement
(the “Salary Continuation Agreement”) dated as of August 11, 2003 and
amended as of December 19, 2006 by and between the Beverly National Bank
and the Executive.

 

The
Employers hereby advise the Executive to consult legal counsel of his choosing
before executing this Agreement.

 

WHEREAS,
the Employee has been employed by Beverly National Corporation and Beverly
National Bank pursuant to the Employment Agreement and Change in Control
Agreement referenced above;

 

WHEREAS,
Beverly National Corporation, the holding company of Beverly National Bank, has
been merged into the Company pursuant to the Agreement and Plan of Merger by
and between the Company and Beverly National Bank dated June 16, 2009 (the
“Merger”);

 

WHEREAS,
the Merger constitutes (i) a “Change in Control” for purposes of the
Executive’s Change in Control Agreement and (ii) a “Change in Control” for
purposes of the Executive’s Salary Continuation Agreement;

 

WHEREAS,
the Employers desires to continue to employ the Executive and the Executive
desires to continue to be employed by the Employers pursuant to the terms and
conditions contained herein; and

 

WHEREAS,
the Employers and the Executive intend that this Agreement shall amend,
integrate and supersede all prior agreements, including, but not limited to,
the Employment Agreement, the Change in Control Agreement and the Salary
Continuation Agreement, and shall contain the entire agreement between the
Employers and the Executive as to the Executive’s employment with the
Employers.

 

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.                                      EMPLOYMENT.

 

The
term of this Agreement shall extend from the date first written above (the “Commencement
Date”) until December 31, 2011 and during the period of any additional
extensions described below in this Section 1 (the “Term”). The term shall
be extended by increments of one year unless the Executive receives notice from
the Company at least six months prior to the expiration of the term then in
effect of the decision of both of the Employers not to renew the Term of this
Agreement. At least once in each calendar year, the Board of Directors of the
Company (the “Board”) will review this Agreement and the Executive’s
performance for purposes of determining whether to continue to extend the
Agreement. The Board shall give notice to the Executive reasonably promptly
after such review if it has decided to discontinue extending the Term.

 

2.                                      POSITION AND DUTIES.

 

During
the Term, the Executive shall serve as Executive Vice President of both the
Company and the Bank and shall have supervision and control over and
responsibility for the day-to-day business and affairs of the Employers and
shall have such other powers and duties as may from time to time reasonably be
prescribed by the Board, provided that such duties are consistent with the
Executive’s position or other positions that he may hold from time to time. The
Executive shall devote his full working time and efforts to the business and
affairs of the Employers. Notwithstanding the foregoing, the Executive may (i) serve
on other boards of directors or trustees or similar bodies, with the approval
of the Board, (ii) engage in religious, charitable or other community
activities as long as such services and activities are disclosed to the Board
(or have been engaged in by the Executive at any time during the twenty-four
month period ending on the Commencement Date) and do not materially interfere
with the Executive’s performance of his duties to the Employers as provided in
this Agreement, and (iii) invest the Executive’s assets in such form or
manner as shall not require any material services on the Executive’s part in
the operations or affairs of the entities in which such investments are made,
provided that the Executive may not own any interest in any entity that is a
Competing Business (as hereinafter defined), other than up to one percent of
the outstanding stock of a publicly held entity.

 

3.                                      COMPENSATION AND RELATED MATTERS.

 

(a)                                  Base
Salary.  The Executive’s
initial annual base salary shall be $260,000. The Executive’s base salary shall
be redetermined annually by the Compensation Committee of the Board (the “Compensation
Committee”). The base salary in effect at any given time is referred to herein
as “Base Salary.” The Base Salary may be increased but not decreased other than
in connection with across-the-board salary reductions based on the Employers’
financial performance similarly affecting all senior management personnel of
the Employers. The Base

 

 

Salary
shall be payable in periodic installments in accordance with the Bank’s usual
practice for its senior executives.

 

(b)                                 Incentive
Compensation.  The Executive shall be eligible to receive
cash incentive compensation as determined by the Compensation Committee from
time to time. The Executive’s target annual bonus shall be 35 percent of his
Base Salary.

 

(c)                                  Bonus.  The Executive shall be entitled to receive a
cash bonus of $100,000 if he is employed by either of the Employers on June 30,
2011, such bonus to be paid in a lump sum not later than July 31, 2011.

 

(d)                                 Expenses.  The Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by him in
performing services hereunder during the Term, in accordance with the policies
and procedures then in effect and established by the Bank (or, if applicable,
the Company) for its senior executive officers.

 

(e)                                  Club
Memberships.  The Employers shall pay the annual club or
other dues or membership fees of a club selected by the Executive, with the
concurrence of the Compensation Committee. To the extent such payments
constitute compensation to the Executive for tax treatment and reporting
purposes, the Employers shall deliver to the Executive not later than December 31
of the year with respect to which such payments are treated as compensation an
amount equal to the federal and state tax due with respect to both (i) such
payments and (ii) the amounts to be delivered pursuant to this sentence.

 

(f)                                    Stock-Based
Awards.  The Executive
shall be eligible to receive awards under stock option or other stock-based
incentive plans of the Company and the Bank as determined by the Compensation
Committee from time to time.

 

(g)                                 Other
Benefits.  During the Term, the
Executive shall be entitled to continue to participate in or receive benefits
under all of the Employers’ Employee Benefit Plans in effect on the
Commencement Date, or under plans or arrangements that provide the Executive
with benefits at least substantially equivalent to those provided under such
Employee Benefit Plans. As used herein, the term “Employee Benefit Plans”
includes, without limitation, each pension and retirement plan; deferred
compensation plan; savings and profit-sharing plan; employee stock ownership
plan; stock purchase plan; stock option plan; life insurance plan; medical
insurance plan; disability plan; and health and accident plan or arrangement established
and maintained by the Employers on the date hereof for employees of the same
status within the hierarchy of the Employers, not including any SERP negotiated
for such employees, if any. During the Term, the Executive shall be entitled to
participate in or receive benefits under any employee benefit plan or
arrangement which may, in the future, be made available by the Employers to
their executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plan
or arrangement.

 

(h)                                 Vacations.  The Executive shall be entitled
to 25 paid vacation days in each calendar year, which shall be accrued ratably
during the calendar year. The Executive shall also be entitled to all paid
holidays given by the Bank to its senior executive officers.

 

 

(i)                                  Salary
Continuation Benefit.  If the Executive is employed by either of the
Employers as of December 31, 2012, or, if earlier, immediately prior to
the expiration of the Term, the Executive’s interest in and entitlement under
the Salary Continuation Agreement to an annual benefit of $100,000 for twenty
(20) years shall be fully vested, such annual benefit to be paid by the
Employers to the Executive in 12 equal monthly installments commencing with the
month following the Executive’s attaining age 65.

 

4.                                      TERMINATION.

 

The
Executive’s employment hereunder may be terminated without any breach of this
Agreement under the following circumstances:

 

(a)                                  Death.  The Executive’s employment
hereunder shall terminate upon his death, provided, however, that for a period
of three months following the Executive’s death, the Employers shall pay to the
Executive’s designated beneficiary (or, if he fails to make such designation,
to his surviving spouse or, in the absence thereof, to his estate), an amount
equal to the Executive’s salary at the rate of his Base Salary in effect at the
time of his death, such payments to be made on the same periodic dates as
salary payments would have been made to the Executive had he not died.

 

(b)                                 Disability.  If the Executive shall be
disabled, as determined under the Employers’ long-term disability insurance
plan, during his employment under this Agreement and, in the reasonable opinion
of a physician selected by the Employers and reasonably acceptable to the
Executive, such disability is expected to last more than 12 months or
result in death within such twelve month period, the Board may remove the
Executive from any responsibilities and/or reassign the Executive to another position
with the Employers for the remainder of the Term or during the period of such
disability. Notwithstanding any such removal or reassignment, the Executive
shall continue to receive the Executive’s full Base Salary (less any disability
pay or sick pay benefits to which the Executive may be entitled under the
Employers’ policies, including the Employers’ short-term and long-term
disability insurance plans other than benefits attributable to premiums
deducted or contributed from the Executive’s compensation) and other
compensation and benefits under Section 3 of this Agreement (except to the
extent that the Executive may be ineligible for one or more such benefits under
applicable plan terms) until the expiration of the Term. Nothing in this Section 4(b) shall
be construed to waive the Executive’s rights, if any, under existing law
including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601 et seq. and the
Americans with Disabilities Act, 42 U.S.C. §12101 et seq.

 

(c)                                  Retirement.  The Executive may terminate his
employment hereunder due to Retirement. For purposes hereof, “Retirement” means
the termination of the Executive’s employment with the Employers for any reason
by the Executive at any time after the Executive attains age 65.

 

(d)                                 Termination
by Employers for Cause.  At any time during the Term,
the Employers may terminate the Executive’s employment hereunder for Cause if
at a meeting of the Board called and held for such purpose, a majority of the
Board determines in good faith that the 

 

 

Executive
is guilty of conduct that constitutes “Cause” as defined herein. For purposes
of this Agreement, “Cause” shall mean: (i) conduct by the Executive
constituting a material act of willful misconduct or deliberate dishonesty in connection
with the performance of his duties that would reasonably be expected to result
in material injury to the Employers if he were retained in his position; (ii) the
commission by the Executive of any felony or a misdemeanor involving moral
turpitude, deceit, dishonesty or fraud; (iii) continued, willful and
deliberate non-performance by the Executive of his duties hereunder (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 Board; (iv) a material breach by
the Executive of any of the provisions contained in Section 7 of this
Agreement; 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 at the
time of destruction to be relevant to such investigation or the willful
inducement of others to fail to cooperate or to produce documents or other
materials in connection with such investigation. For purposes of clauses (i), (iii) or
(v) hereof, no act, or failure to act, on the Executive’s part shall be
deemed “willful” or “deliberate” 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 interest of the Employers and their subsidiaries and
affiliates.

 

(e)                                  Termination
Without Cause.  At any time during the Term,
the Employers may terminate the Executive’s employment hereunder without Cause
if such termination is approved by a majority of the Board at a meeting of the
Board called and held for such purpose. Any termination by the Employers of the
Executive’s employment under this Agreement which does not constitute a
termination for Cause under Section 4(d) or result from the death or
disability of the Executive under Section 4(a) or (b) shall be
deemed a termination without Cause.

 

(f)                                    Termination
by the Executive.  At any time during the Term, the Executive
may terminate his employment hereunder for any reason, including but not
limited to Good Reason. If the Executive provides notice to the Employers under
Section 1 that he elects to discontinue the extensions, such action shall
be deemed a voluntary termination by the Executive and one without Good Reason.
For purposes of this Agreement, “Good Reason” shall mean the occurrence of any
of the following events: (i) a substantial diminution or other substantial
adverse change, not consented to by the Executive in writing, in the nature or
scope of the Executive’s responsibilities, authorities, powers, functions or
duties; (ii) any removal, during the Term, from the Executive of his title
as set forth in Section 2 that is not consented to in writing by the
Executive; (iii) an involuntary reduction in the Executive’s Base Salary
except for across-the-board salary reductions based on the Employers’ financial
performance similarly affecting all senior management personnel of the
Employers; (iv) a breach by the Employers of any of their material
obligations under this Agreement; (v) the involuntary relocation of the
Employers’ offices at which the Executive is principally employed or the
involuntary relocation of the offices of the Executive’s primary workgroup to a
location more than 25 miles from such offices; (vi) the failure of the
Company to obtain an effective agreement from any successor to the Company to
assume and agree to perform this Agreement, as required by Section 18; or (vii) a
Change in Control (as hereinafter defined), provided, however, that the
provisions of this 

 

 

clause (vii) shall
apply only if the Executive terminates his employment during the 30-day period
immediately following a Change in Control.

 

(g)                                 Notice
of Termination.  Except for termination as
specified in Section 4(a), any termination of the Executive’s employment
by the Employers or any such termination by the Executive shall be communicated
by written Notice of Termination to the other party hereto. 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.

 

(h)                                 Date
of Termination.  “Date of Termination” shall mean: (i) if
the Executive’s employment is terminated by his death, the date of his death; (ii) if
the Executive’s employment is terminated on account of disability under Section 4(b) or
by the Employers for Cause under Section 4(d), the date on which Notice of
Termination is given; (iii) if the Executive’s employment is terminated by
the Employers under Section 4(e), 30 days after the date on which a
Notice of Termination is given; and (iv) if the Executive’s employment is
terminated by the Executive under Section 4(c) or 4(f), 30 days
after the date on which a 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.

 

5.                                      COMPENSATION UPON TERMINATION.

 

(a)                                  Termination
Generally.  If the Executive’s
employment with the Company or the Bank is terminated for any reason during the
Term, the Employers shall pay or provide to the Executive (or to his authorized
representative or estate) any earned but unpaid Base Salary, incentive
compensation earned but not yet paid, unpaid expense reimbursements, accrued
but unused vacation and any vested benefits the Executive may have under any
employee benefit plan of the Employers (the “Accrued Benefit”).  In addition, except in the case of a
Termination for Cause or by the Executive without Good Reason and other than in
connection with Retirement, the Employers shall pay to the Executive (and in
the case of the Executive’s death, his surviving spouse, or estate if there is
no surviving spouse) a portion of the annual incentive compensation to which the
Executive would be entitled, but for the Executive’s separation, with respect
to the performance year in which the Executive’s employment terminates, equal
to the number of months during such year commenced prior to the Executive’s
separation from service, divided by 12.

 

(b)                                 Termination
by the Employers Without Cause or by the Executive with Good Reason.  If the Executive’s
employment is terminated by the Employers without Cause as provided in Section 4(d),
or the Executive terminates his employment for Good Reason as provided in Section 4(e),
then the Employers shall, through the Date of Termination, pay the Executive
his Accrued Benefit. In addition, subject to signing by the Executive of a
general release of claims in a form and manner reasonably satisfactory to the
Employers, upon the Date of Termination, all stock options and other
stock-based awards held by the Executive in which the Executive would have
vested if he had remained employed until the end of the Term shall vest and
become fully exercisable and nonforfeitable as of the Date of Termination;
provided, 

 

 

however,
if the acceleration of vesting is prohibited by the terms of the Company’s
stock incentive plan, the Employers shall pay the Executive a cash payment in
lieu thereof. With respect to each option, the cash payment shall be in an
amount equal to the excess of the fair market value of the Company’s common
stock on the Date of Termination over the exercise price of the option,
multiplied by the number of shares of the Company’s common stock underlying the
option that would have become exercisable if the Executive had remained employed
until the end of the Term. With respect to the shares of restricted stock, the
cash payment shall be in an amount equal to the fair market value of the Company’s
common stock on the Date of Termination multiplied by the number of shares of
restricted stock with respect to which the risks of forfeiture would have
lapsed if the Executive had remained employed until the end of the Term.

 

In
addition, and also subject to signing by the Executive of a general release of
claims in a form and manner reasonably satisfactory to the Employers, upon the
Date of Termination, the Executive’s interest in and entitlement to an annual
benefit of $100,000 for twenty (20) years under the Salary Continuation
Agreement shall be fully vested, such annual benefit to be paid by the
Employers to the Executive in 12 equal monthly installments commencing with the
month following the Executive’s attaining age 65.

 

Notwithstanding
anything in this Agreement to the contrary, if at the time of the Executive’s
termination of employment, the Executive is considered a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Internal
Revenue Code of 1986, as amended (the “Code”), and if any payment that the
Executive becomes entitled to under this Agreement is considered deferred
compensation subject to interest 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 prior to the date that is the
earlier of (A) six months after the Executive’s separation from service,
or (B) the Executive’s death, and the initial payment shall include a
catch-up amount covering amounts that would otherwise have been paid during the
first six-month period but for the application of this Section 5(b).

 

(c)                                  Termination
Prior to January 1, 2012.  If the Executive’s employment with the
Employers is terminated for any reason prior to January 1, 2012, including
voluntary resignation by the Executive, the Executive shall be entitled to
Change in Control Agreement Severance and Salary Continuation Agreement
Severance in addition to any other amounts otherwise payable under this Section 5.

 

(i)                                     Change
in Control Agreement Severance.  If the Executive’s employment with the
Employers is terminated for any reason, including voluntary resignation by the
Executive, prior to January 1, 2012, the Employers shall pay or provide to
the Executive within five days after the Date of Termination an amount equal to
$933,050; provided that if at the time of the Executive’s termination of
employment, the Executive is considered a “specified employee” within the
meaning of Section 409A(a)(2)(B)(i) of the Code, and the payment is
treated as being made on account of separation from service pursuant to Section 409A(a)(2)(A)(i) of
the Code, the lump sum amount shall be payable to the Executive pursuant to
this Section 5(c)(i) beginning on the first day of the seventh month
following on the date of such termination.

 

 

The
Executive shall not be required to mitigate the amount of any payment provided
for in this Section 5(c)(i) by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 5(c)(i) be
reduced by any compensation earned by the Executive as the result of employment
by another employer after the Date of Termination, or otherwise.

 

(ii)                                  Salary
Continuation Agreement Severance.  If the Executive’s employment with the
Employers is terminated for any reason prior to January 1, 2012, including
voluntary resignation by the Executive, the Employers shall pay to the
Executive annually for a 20 year period as hereinafter set forth, the Change of
Control annual Installment set forth on Schedule A of the Salary Continuation
Agreement for the Salary Continuation Agreement Plan Year ending immediately
prior to October 30, 2009, determined by vesting the Executive in the
Normal Retirement Benefit described in Section 2.1.1. of the Salary
Continuation Agreement.  The Employers
shall pay the annual benefit to the Executive in 12 equal monthly installments
commencing with the month following the Executive’s attaining age 65, paying
the annual benefit to the Executive for a period of 20 years; provided that if
the Executive is then a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code and the payment is treated as being made on account of separation from
service pursuant to Section 409A(a)(2)(A)(i) of the Code rather than
due to a change in ownership or control pursuant to Section 409A(a)(2)(A)(v) of
the Code, the aggregate amount of the first seven months of the Salary
Continuation Agreement Severance shall be paid to the Executive pursuant to
this Section commencing on the first day of the seventh month following
the date the Executive ceases to be employed by the Employers for any reason
other than by reason of a leave of absence approved by the Employers.
Notwithstanding the foregoing, to the extent that the entitlement to an
installment form of distribution provided under this Section is treated as
an entitlement to a single payment for purposes of Section 409A of the
Code, then in lieu of the installment form of distribution provided under the
preceding sentence, the Executive may elect, subject to the Employers’ consent,
to receive the benefit provided under this Section in the form of a lump
sum payment provided such election satisfies the requirements of Section 409A(a)(4)(C) of
the Code including, without limitation, that such election may not take effect
until at least 12 months after the date on which the election is made, and the
lump sum may not be paid earlier than 5 years from the date the installment
form of distribution would have commenced in the absence of the lump sum
election.

 

(iii)                               Excess
Parachute Payment. 
Notwithstanding any provision of this Agreement to the contrary, the
Employers will reduce any benefit under this Section 5(c) by an
amount necessary to avoid an excise tax under the excess parachute rules of
Section 280G of the Code by reason of the Merger with such reduction
applied as if all payments under this Section 5(c) were made on October 30,
2009.

 

6.                                      CHANGE IN CONTROL PAYMENT.

 

The
provisions of this Section 6 set forth certain terms of an agreement
reached between the Executive and the Employers regarding the Executive’s
rights and obligations upon the occurrence of a Change in Control of the
Company or the Bank. These provisions are intended to assure and encourage in
advance the Executive’s continued attention and dedication to his 

 

 

assigned
duties and his objectivity during the pendency and after the occurrence of any
such event. These provisions are in addition to the provisions of Section 5(b) regarding
severance pay and benefits upon a termination of employment.

 

(a)                                  Change
in Control.  Notwithstanding anything to the contrary in
any applicable option agreement or stock-based award agreement, upon a Change
in Control, all stock options and other stock-based awards granted to the
Executive by the Employers shall immediately accelerate and become fully
exercisable and nonforfeitable as of the effective date of such Change in
Control.

 

(b)                                 Definitions.  For purposes of this Section 6,
the following terms shall have the following meanings:

 

“Change
in Control” shall mean any of the following:

 

(i) 
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 or the
Bank representing 25 percent or more of the combined voting power of the
Company’s or the Bank’s then outstanding securities having the right to vote in
an election of the Company’s or the Bank’s Board (“Voting Securities”) (in such
case other than as a result of an acquisition of securities directly from the
Company); or

 

(ii) 
persons who, as of the date hereof, constitute the Company’s or the Bank’s
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 or the Bank 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 election contest relating to the
election of members of the Board 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

 

(iii) 
the consummation of (A) any consolidation or merger of the Company or the
Bank where the stockholders of the Company or the Bank, immediately prior to
the consolidation or merger, do 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 or the Bank 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 the Bank; or

 

(iv)  the
approval by the stockholders of the Company or the Bank of any plan or proposal
for the liquidation or dissolution of the Company or the Bank.

 

Notwithstanding
the foregoing, a “Change of Control” shall not be deemed to have occurred for
purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the proportionate number of
Voting Securities beneficially owned by any person to 25 percent or more
of the combined voting power of all of the 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 of the then outstanding Voting Securities,
then a “Change of Control” shall be deemed to have occurred for purposes of the
foregoing clause (i).

 

7.                                      CONFIDENTIAL INFORMATION, NONCOMPETITION AND
COOPERATION.

 

(a)                                  Confidential
Information.  As used in this Agreement, “Confidential
Information” means information belonging to the Employers which is of value to
the Employers in the course of conducting their businesses and the disclosure
of which could result in a competitive or other disadvantage to the Employers.
Confidential Information includes, without limitation, financial information,
reports, and forecasts; inventions, improvements and other intellectual
property; trade secrets; know-how; designs, processes or formulae; software;
market or sales information or plans; customer lists; and business plans,
prospects and opportunities (such as possible acquisitions or dispositions of
businesses or facilities) which have been discussed or considered by the
management of the Employers. Confidential Information includes information
developed by the Executive in the course of the Executive’s employment by the
Employers, as well as other information to which the Executive may have access
in connection with the Executive’s employment. Confidential Information also
includes the confidential information of others with which the Employers have a
business relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of the
Executive’s duties under Section 7(b).

 

(b)                                 Confidentiality.  The Executive understands
and agrees that the Executive’s employment creates a relationship of confidence
and trust between the Executive and the Employers with respect to all
Confidential Information. At all times, both during the Executive’s employment
with the Employers and after its termination, the Executive will keep in
confidence and trust all such Confidential Information, and will not use or
disclose any such Confidential Information without the written consent of the
Employers, except as may be necessary in the ordinary course of performing the
Executive’s duties to the Company.

 

 

(c)                                  Documents,
Records, etc.  All documents, records,
data, apparatus, equipment and other physical property, whether or not
pertaining to Confidential Information, which are furnished to the Executive by
the Employers or are produced by the Executive in connection with the Executive’s
employment will be and remain the sole property of the Employers. The Executive
will return to the Employers all such materials and property as and when
requested by the Employers. In any event, the Executive will return all such
materials and property immediately upon termination of the Executive’s
employment for any reason. The Executive will not retain with the Executive any
such material or property or any copies thereof after such termination.

 

(d)                                 Noncompetition
and Nonsolicitation.  During the period of the
Executive’s employment by the Employers and for 12 months (18 months
in the event of a termination of employment following a Change in Control
pursuant to Section 4(f)(vii)) thereafter, the Executive (i) will
not, directly or indirectly, whether as owner, partner, shareholder,
consultant, agent, employee, co-venturer or otherwise, engage, participate,
assist or invest in any Competing Business (as hereinafter defined); (ii) will
refrain from directly or indirectly employing, attempting to employ, recruiting
or otherwise soliciting, inducing or influencing any person to leave employment
with the Employers (other than terminations of employment of subordinate
employees undertaken in the course of the Executive’s employment with the
Employers); and (iii) will refrain from soliciting or encouraging any
customer or supplier to terminate or otherwise modify adversely its business
relationship with the Employers. The Executive understands that the
restrictions set forth in this Section 7(d) are intended to protect
the Employers’ interest in their Confidential Information and established
employee, customer and supplier relationships and goodwill, and agrees that
such restrictions are reasonable and appropriate for this purpose. For purposes
of this Agreement, the term “Competing Business” shall mean a business
conducted anywhere in any town in which the Bank has a branch or any town
contiguous thereto or within a 50-mile radius of the Employers’ headquarters
which is competitive with any business which the Employers or any of their
affiliates conducts or proposes to conduct at any time during the employment of
the Executive. Notwithstanding the foregoing, the Executive may own up to
1 percent of the outstanding stock of a publicly held corporation which
constitutes or is affiliated with a Competing Business.

 

(e)                                  Third-Party
Agreements and Rights.  The Executive hereby
confirms that the Executive is not bound by the terms of any agreement with any
previous employer or other party which restricts in any way the Executive’s use
or disclosure of information or the Executive’s engagement in any business. The
Executive represents to the Employers that the Executive’s execution of this
Agreement, the Executive’s employment with the Employers and the performance of
the Executive’s proposed duties for the Employers will not violate any
obligations the Executive may have to any such previous employer or other party.
In the Executive’s work for the Employers, the Executive will not disclose or
make use of any information in violation of any agreements with or rights of
any such previous employer or other party, and the Executive will not bring to
the premises of the Employers any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.

 

 

 

(f)                                    Litigation
and Regulatory Cooperation.  Subject to the Executive’s other business
commitments, during and after the Executive’s employment, the Executive shall
cooperate reasonably with the Employers in the defense or prosecution of any
claims or actions now in existence or which may be brought in the future
against or on behalf of the Employers which relate to events or occurrences
that transpired while the Executive was employed by the Employers. The
Executive’s reasonable cooperation in connection with such claims or actions
shall include, but not be limited to, being available to meet with counsel to
prepare for discovery or trial and to act as a witness on behalf of the
Employers at mutually convenient times. During and after the Executive’s employment,
the Executive also shall cooperate reasonably with the Employers in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while the Executive was employed by the Employers. The
Employers shall reimburse the Executive for any reasonable out-of-pocket
expenses incurred in connection with the Executive’s performance of obligations
pursuant to this Section 7(f).

 

(g)                                 Injunction.  The Executive agrees that it
would be difficult to measure any damages caused to the Employers which might
result from any breach by the Executive of the promises set forth in this Section 7,
and that in any event money damages would be an inadequate remedy for any such
breach. Accordingly, subject to Section 8 of this Agreement, the Executive
agrees that if the Executive breaches, or proposes to breach, any portion of
this Agreement, the Employers shall be entitled, in addition to all other
remedies that it may have, to an injunction or other appropriate equitable
relief to restrain any such breach without showing or proving any actual damage
to the Employers.

 

8.                                      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 Company 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 8 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 8 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 8.

 

 

9.                                      EXCISE TAX.

 

It
is the intent of the parties to this Agreement that no payments by the
Employers to the Executive or for the Executive’s benefit under this Agreement
shall be non-deductible to the Employers by reason of the operation of Section 280G
of the Code.  Accordingly,
notwithstanding any other provision hereof, if by reason of the operation of
said Section 280G, any such payments exceed the amount which can be
deducted by the Employers, the amount of such payments shall be reduced to the
maximum which can be deducted by the Employers. 
To the extent that payments in excess of the amount which can be
deducted by the Employers  have been made
to the Executive or for the Executive’s benefit, they shall be refunded with
interest at the applicable rate provided under Section 1274(d) of the
Code, or at such other rate as may be required in order that no such payment to
the Executive or for the Executive’s benefit shall be non-deductible pursuant
to Section 280G of the Code.  Any
payments made hereunder which are not deductible by the Employers as a result
of losses which have been carried forward by the Employers for Federal tax
purposes shall not be deemed a non-deductible amount for purposes of this
section.

 

10.                               CONSENT TO JURISDICTION.

 

To
the extent that any court action is permitted consistent with or to enforce Section 8
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 Employers and the Executive (a) submit to the
personal jurisdiction of such courts; (b) consent to service of process;
and (c) waive any other requirement (whether imposed by statute, rule of
court, or otherwise) with respect to personal jurisdiction or service of
process.

 

11.                               INTEGRATION.

 

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

 

12.                               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 his
termination of employment but prior to the completion by the Employers of all
payments due him under 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).

 

13.                               ENFORCEABILITY.

 

If
any portion or provision of this Agreement (including, without limitation, any
portion or provision of any section 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.

 

14.                               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.

 

15.                               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
a nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested, to the Executive at the last
address the Executive has filed in writing with the Employers or, in the case
of the Employers, at their main offices, attention of the Board.

 

16.                               AMENDMENT.

 

This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Company.

 

17.                               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.

 

18.                               COUNTERPARTS.

 

This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original; but such counterparts
shall together constitute one and the same document.

 

19.                               SUCCESSORS TO BANK AND/OR COMPANY.

 

The
Bank and the Company, jointly and severally, 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 Bank or Company,
as applicable, expressly to assume and agree to perform this Agreement to the
same extent that the Bank or Company, as applicable, would be 

 

 

required
to perform it if no succession had taken place. Failure of the Bank or Company,
as applicable, 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.

 

20.                               REDUCTIONS.

 

Notwithstanding
anything to the contrary contained in this Agreement, any and all payments and
benefits to be provided to the Executive hereunder are subject to reduction to
the extent required by applicable statutes, regulations, rules and
directives of federal, state and other governmental and regulatory bodies
having jurisdiction over the Bank or the Company. The Executive confirms that
the Executive is aware of the fact that the Federal Deposit Insurance
Corporation has the power to preclude the Bank from making payments to the
Executive under this Agreement under certain circumstances. The Executive
agrees that neither the Bank nor the Company shall be deemed to be in breach of
this Agreement if it is precluded from making a payment otherwise payable
hereunder by reason of regulatory requirements binding on the Bank or the
Company, as the case may be.

 

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.

 

23.                               NO MITIGATION.

 

The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise. No payment
provided for in this Agreement shall be reduced by any compensation earned by
the Executive as the result of employment by another employer, or the
Executive’s receipt of income from any other source, after the termination of
his employment with the Employers.

 

24.                               INDEMNIFICATION.

 

The
Executive shall be entitled at all times to be indemnified by the Employers to
the maximum extent permitted by law. For the avoidance of doubt, the Executive
shall have the right to indemnification, including reasonable attorneys fees,
for any actions arising from allegations against the Company or the Bank if the
Executive is also named as a defendant, or called or identified as a witness or
deponent, including without limitation a government investigation, and/or a right
to coverage under applicable insurance policies, if any, all also to the
maximum 

 

 

extent
permitted by law. The provisions of this Section 23 shall survive
termination of this Agreement.

 

25.                               LEGAL FEES.

 

The
Employers shall pay to the Executive all reasonable legal fees and expenses
incurred by the Executive in the preparation of this Agreement.

 

26.                               SPECIAL AMENDMENTS.

 

It
is the intention of the Employers and the Executive that this Agreement, and
all amounts payable to the Executive under this Agreement that are subject
thereto, shall meet the requirements of Section 409A of the Code, to the
extent applicable to the Agreement and such payments. The provisions of the
Agreement shall be interpreted in a manner consistent with such intent, and the
Employers and the Executive agree to cooperate in good faith in preparing and
executing, from time to time, such amendments to the Agreement as may be
reasonably necessary or appropriate in order to assure that the Agreement and
such payments meet the requirements of Section 409A, provided, however,
that no such amendment shall increase the cost to the Employers of providing
benefits pursuant to the Agreement.

 

[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

 

 

IN
WITNESS WHEREOF, the parties have executed this Agreement effective on the date
and year first above written.

 

	
   

  	
  DANVERS BANCORP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin T. Bottomley

  
	
   

  	
   

  	
  Chairman, President and
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  DANVERSBANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin T. Bottomley

  
	
   

  	
   

  	
  Chairman, President and
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Donat A. FournierExhibit 10.2

 

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 Paul E. Flynn
(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

 

 

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

 

2

 

(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 

 

3

 

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 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 12 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 provided hereunder
without additional cost to either party. 
Notwithstanding anything in this

 

4

 

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.

 

5

 

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.

 

6

 

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

 

7

 

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:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Paul E. Flynn

  

 

9

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