-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G++TZ1jHbZHxh7+oxei+R64fivkoTj410JjqxR0TOdJ/uSlL+2JkKQnJ8dtPabLF AAgNBsN9vT0bRKxJPXTelQ== 0000914317-99-000456.txt : 19990816 0000914317-99-000456.hdr.sgml : 19990816 ACCESSION NUMBER: 0000914317-99-000456 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IPSWICH BANCSHARES INC CENTRAL INDEX KEY: 0001089857 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 043459169 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26663 FILM NUMBER: 99687276 BUSINESS ADDRESS: STREET 1: 23 MARKET STREET CITY: IPSWICH STATE: MA ZIP: 01938 BUSINESS PHONE: 9783567777 MAIL ADDRESS: STREET 1: 23 MARKET STREET CITY: IPSWICH STATE: MA ZIP: 01938 10-Q 1 Form 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 { X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the Quarterly Period Ended June 30, 1999. OR { } TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission File Number: 0-26663 IPSWICH BANCSHARES, INC. (Exact name of Registrant as specified in its charter) Massachusetts 04-3459169 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 23 Market Street, Ipswich, Massachusetts 01938 (Address of principal executive offices) (Zip Code) (978) 356-7777 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes ( X ) No ( ) The number of shares outstanding of the Registrant's common stock as of August 2, 1999 is: Common stock, par value $.10 per share 2,524,902 - -------------------------------------------------------------------------------- (Class) (Outstanding) IPSWICH BANCSHARES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands, except per share data)
June 30, December 31, 1999 1998 ---- ---- Assets (unaudited) (unaudited) Cash and due from banks $6,418 $7,079 Interest-bearing deposits and federal funds sold 5,626 5,016 Investment securities available for sale 29,917 29,085 Investment securities held to maturity 19,336 10,196 Loans held for sale 6,588 24,000 Loans: Residential 165,898 161,840 Home equity 21,056 19,772 Commercial 5,047 6,191 Consumer 1,102 1,188 ------------- ------------- Total gross loans 193,103 188,991 Allowance for possible loan losses -1,830 -1,742 ------------- ------------- Net loans 191,273 187,249 ------------- ------------- Stock in FHLB of Boston 3,977 2,905 Savings Bank Life Insurance Company stock 253 253 Banking premises and equipment, net 3,245 3,298 Other real estate owned, net 718 718 Accrued interest receivable 1,254 1,053 Deferred premium on loans sold/mortgage servicing rights, net 922 229 Other assets 230 247 ------------- ------------- Total assets $269,757 $271,328 ============= ============= Liabilities and Stockholders' Equity ------------------------------------ Liabilities: Deposits: Non-interest-bearing checking accounts $16,502 $18,656 Interest-bearing checking accounts 28,661 22,954 Savings accounts 36,038 37,768 Money market accounts 56,961 55,418 Certificates of deposit 64,047 64,961 ------------- ------------- Total deposits 202,209 199,757 Borrowed funds 48,000 53,000 Mortgagors' escrow accounts 977 1,043 Deferred income tax liability, accrued expenses and other liabilities 2,986 3,305 ------------- ------------- Total liabilities 254,172 257,105 ------------- ------------- Equity capital 15,393 14,038 Unrealized gain on investment securities available for sale, net 192 185 ------------- ------------- Total stockholders' equity 15,585 14,223 ------------- ------------- Total liabilities and stockholders' equity $269,757 $271,328 ============= ============= Shares outstanding 2,524,902 2,392,286
IPSWICH BANCSHARES, INC. AND SUBSIDIARIES Consolidated Statements of Income (Dollars in thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, 1999 1998 1999 1998 ------------- -------------- -------------- ------------- (unaudited) (unaudited) (unaudited) (unaudited) Interest and dividend income: Loans $3,417 $3,508 $7,229 $6,903 Investment securities available for sale 524 207 1,073 415 Investment securities held to maturity 291 360 459 827 Interest-bearing deposits and federal funds sold 57 31 72 46 ------------- -------------- -------------- ------------- Total interest and dividend income 4,289 4,106 8,833 8,191 ------------- -------------- -------------- ------------- Interest expense: Deposits 1,576 1,509 3,221 3,055 Borrowed funds 666 716 1,448 1,368 ------------- -------------- -------------- ------------- Total interest expense 2,242 2,225 4,669 4,423 ------------- -------------- -------------- ------------- Net interest and dividend income 2,047 1,881 4,164 3,768 Provision for possible loan losses 45 45 90 90 ------------- -------------- -------------- ------------- Net interest and dividend income after provision for possible loan losses 2,002 1,836 4,074 3,678 ------------- -------------- -------------- ------------- Non-interest income: Mortgage banking revenues, net 267 317 762 682 Retail banking fees 385 295 723 543 Net gain on sales of securities 16 0 65 16 Other -2 3 7 4 ------------- -------------- -------------- ------------- Total non-interest income 666 615 1,557 1,245 ------------- -------------- -------------- ------------- Net interest, dividend and non-interest income 2,668 2,451 5,631 4,923 ------------- -------------- -------------- ------------- Non-interest expenses: Salaries and employee benefits 790 662 1,562 1,269 Occupancy and equipment expenses 229 162 450 302 Data processing services 187 136 359 266 Marketing expense 124 189 266 290 Professsional fees 95 86 160 140 Office expense 95 101 194 180 Other 158 158 329 263 ------------- -------------- -------------- ------------- Total non-interest expenses 1,678 1,494 3,320 2,710 ------------- -------------- -------------- ------------- Expenses from Holding Company & REIT formation 0 0 380 0 Income before income taxes 990 957 1,931 2,213 Income tax expense 297 345 579 797 ------------- -------------- -------------- ------------- Net income $693 $612 $1,352 $1,416 ============= ============== ============== ============= Weighted average common shares outstanding (basic) 2,462,742 2,389,648 2,427,708 2,388,734 Weighted average common shares outstanding (diluted) 2,544,482 2,470,235 2,533,987 2,563,822 Basic earnings per share $0.28 $0.26 $0.56 $0.59 Diluted earnings per share $0.27 $0.24 $0.53 $0.55
IPSWICH BANCSHARES, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Six Months Ended June 30, 1999 and 1998 (Dollars in thousands, except for share data) (unaudited)
Accumulated Additional Other Total Shares Common paid-in Retained comprehensive stockholders' outstanding stock capital earnings income equity --------- --------- --------- --------- --------- --------- Balance at December 31, 1997 2,385,076 $ 239 $ 1,969 $ 9,559 $ 66 $ 11,833 Comprehensive income: Net income 0 0 0 1,416 0 1,416 Change in net unrealized gain/ (loss) on investment securities available for sale 0 0 0 0 -38 -38 --------- --------- --------- --------- --------- --------- Total comprehensive income 0 0 0 1,416 -38 1,378 Cash dividends ($.08 per share) 0 0 0 -191 0 -191 Stock options exercised 4,660 0 13 0 0 13 Issuance of stock rights 0 0 11 0 0 11 --------- --------- --------- --------- --------- --------- Balance at June 30, 1998 2,389,736 239 1,993 10,784 28 13,044 Comprehensive income: Net income 0 0 0 1,222 0 1,222 Change in net unrealized gain/ (loss) on investment securities available for sale 0 0 0 0 157 157 --------- --------- --------- --------- --------- --------- Total comprehensive income 0 0 0 1,222 157 1,379 Cash dividends ($.09 per share) 0 0 0 -216 0 -216 Stock options exercised 2,550 0 5 0 0 5 Issuance of stock rights 0 0 11 0 0 11 --------- --------- --------- --------- --------- --------- Balance at December 31, 1998 2,392,286 239 2,009 11,790 185 14,223 Comprehensive income: Net income 0 0 0 1,352 0 1,352 Change in net unrealized gain/ (loss) on investment securities available for sale 0 0 0 0 7 7 --------- --------- --------- --------- --------- --------- Total comprehensive income 0 0 0 1,352 7 1,359 Cash dividends ($.10 per share) 0 0 0 -246 0 -246 Stock options exercised 132,616 13 224 0 0 237 Issuance of stock rights 0 0 12 0 0 12 --------- --------- --------- --------- --------- --------- Balance June 30, 1999 2,524,902 $ 252 $ 2,245 $ 12,896 $ 192 $ 15,585 ========= ========= ========= ========= ========= =========
IPSWICH BANCSHARES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Six Months Ended June 30, 1999 and 1998
(Dollars in thousands) (unaudited) 1999 1998 ------------------ ------------------ Net cash flows from operating activities: Net income $1,352 $1,416 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for possible loan losses 90 90 Depreciation expense 167 102 Amortization of premiums on investment securities, net 80 37 (Gain) on sale of loans, net -762 -857 (Gain) on sale of real estate acquired by foreclosure 0 -80 (Gain) on investment securities available for sale, net -65 -16 Origination of loans held for sale -47,609 -77,266 Proceeds from sale of loans 7,981 12,340 Proceeds from sale of securitized loans 57,802 56,939 (Increase) decrease in loan origination fees -206 107 (Decrease) in loan discounts -1 0 (Increase) in deferred premium on loans sold and mortgage servicing rights -693 -574 (Increase) in accrued interest receivable -201 -41 Increase (decrease) in other assets, net 17 -4 (Decrease) in accrued expenses and other liabilities -324 -649 ------------------ ------------------ Net cash provided (used) by operating activities 17,628 -8,456 Net cash flows from investing activities: Purchase of investment securities available for sale -13,380 -5,696 Principal paydowns on investment securities available for sale 7,680 3,379 Proceeds from the sale of investment securities available for sale 4,860 1,474 Purchase of investment securities held to maturity -9,579 0 Principal paydowns on investment securities held to maturity 444 2,442 Principal from the call of investment securities held to maturity 0 5,000 Purchases of stock in FHLB of Boston -1,072 -861 Net (increase) in loans -3,907 -3,238 Proceeds from sale of real estate acquired by foreclosure 0 90 Purchases of equipment, net -114 -248 ------------------ ------------------ Net cash (used) provided by investing activities -15,068 2,342 Cash flows from financing activities: Net proceeds from the issuance of common stock 249 25 Cash dividends -246 -192 Net increase in deposits 2,452 4,532 Proceeds from Federal Home Loan Bank advances 156,100 95,213 Repayment of Federal Home Loan Bank advances -161,100 -94,005 (Decrease) increase in mortgagors' escrow accounts -66 116 ------------------ ------------------ Net cash (used) provided by financing activities -2,611 5,689 ------------------ ------------------ Net (decrease) in cash and cash equivalents -51 -425 Cash and cash equivalents at beginning of year 12,095 6,798 ------------------ ------------------ Cash and cash equivalents at end of year $12,044 $6,373 ================== ================== Supplemental disclosure of cash flow information: Cash paid for: Interest on deposit accounts $3,221 $3,056 Interest on borrowed funds 1,448 1,368 Income tax expense, net 417 797
IPSWICH BANCSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) June 30, 1999 and 1998 Basis of Presentation The consolidated financial statements include the accounts of Ipswich Bancshares, Inc. and its wholly owned subsidiary, Ipswich Savings Bank (the "Bank") and the Bank's wholly owned subsidiaries, Ipswich Preferred Capital Corporation, Ipswich Securities Corporation, Historic Ipswich, Inc., North Shore Financial Services, Inc. and Rowley Investment Corporation (Ipswich Bancshares, Inc. and its subsidiaries are sometimes collectively referred to as the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. Ipswich Preferred Capital Corporation was formed as a mortgage real estate investment trust to hold residential mortgages as a subsidiary of the Bank. Ipswich Securities Corporation was formed to exclusively transact in securities on its own behalf as a wholly-owned subsidiary of the Bank. Historic Ipswich, Inc. and North Shore Financial Services, Inc. were incorporated for the purpose of holding direct investments in real estate and foreclosed real estate, respectively. Rowley Investment Corporation was incorporated to facilitate the holding and permitting of certain bank-owned real estate. The consolidated financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for possible loan losses, the valuation of real estate acquired by foreclosure, the valuation of the deferred premium on loans sold and the valuation of originated mortgage servicing rights. A substantial portion of the Company's loans are secured by real estate in Essex County in Massachusetts. In addition, other real estate owned is located in that market. Accordingly, the ultimate collectibility of a substantial portion of the Company's loan portfolio and the recovery of the carrying amount of other real estate owned are susceptible to changes in market conditions in its geographic area. Earnings Per Share The computation of basic earnings per share is based on the weighted average number of shares of common stock outstanding during each period. The computation of diluted earnings per share is based on the weighted average number of shares of common stock outstanding and dilutive potential common stock equivalents outstanding during each period. Stock option grants are included only in periods when the results are dilutive. Components of Accumulated Other Comprehensive Income Accumulated other comprehensive income consists solely of unrealized appreciation on investment securities available for sale, net of taxes. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements in this Form 10-Q constitute "forward looking statements", as that term is defined under the Private Securities Litigation Reform Act of 1995. The words "believe", "expect", "anticipate", "intend", "plan", "assume", and other similar expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward looking statements. Reliance should not be placed on forward looking statements because they involve known and unknown risks, uncertainties and other factors, which are in some cases beyond the control of the Company and may cause the actual results, performance, or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward looking statements. Certain factors that may cause such differences include, but are not limited to the following: interest rates may increase, adversely affecting the ability of borrowers to repay adjustable rate loans and the Company's earnings and income which derive in significant part from loans to borrowers; unemployment in the Company's market area may increase, adversely affecting the ability of individual borrowers to re-pay loans; property values may decline, adversely affecting the ability of borrowers to re-pay loans and the value of real estate securing repayment of loans; general economic and market conditions in the Company's market area may decline, adversely affecting the ability of borrowers to re-pay loans, the value of real estate securing payment of loans and the Company's ability to make profitable loans; adverse legislation or regulatory requirements may be adopted; competitive pressure among depository institutions may increase; and the impact of the Year 2000 issue may be more significant than currently anticipated. Any of the above may also result in lower interest income, increased loan losses, additional charge-offs and write-downs and higher operating expenses. The Company disclaims any intent or obligation to update publicly any of the forward looking statements herein, whether in response to new information, future events or otherwise. GENERAL Ipswich Bancshares, Inc. (the "Company") is a Massachusetts corporation whose primary business is serving as the holding company for Ipswich Savings Bank (the "Bank"). On July 1, 1999, in connection with the formation of the Company as the holding company for the Bank, each share of the Bank's common stock previously outstanding was converted automatically into one share of common stock of the Company, and the Bank became a wholly owned subsidiary of the Company. The reorganization had no impact on the consolidated financial statements. The Company's operating results for the three and six months ended June 30, 1999 reflect the operations of the Company and its direct and indirect subsidiaries, Ipswich Savings Bank, Ipswich Preferred Capital Corporation ("IPCC"), Ipswich Securities Corporation, North Shore Financial Services, Rowley Investment Corporation and Historic Ipswich, Inc. The Company is in the business of making residential mortgage loans, while attracting deposits from the general public to fund those loans. The Company operates out of its main office located at 23 Market Street, Ipswich, Essex County, Massachusetts, and its seven full-service retail branch offices, located in Beverly, Essex, Marblehead, North Andover, Rowley, Reading and Salem, Massachusetts. The Company operates Automatic Teller Machines at its Main Office and each of its full-service retail branch offices. As a bank holding company, the Company is subject to regulation, supervision and examination by the Board of Governors of the Federal Reserve (Federal Reserve) and the Bank is subject to regulation, supervision and examination by the Federal Deposit Insurance Corporation (the FDIC) and the Massachusetts Commissioner of Banks (the Commissioner). ASSET / LIABILITY MANAGEMENT A primary objective of the Asset/Liability Management Policy is to manage interest rate risk over time to achieve a prudent level of net interest income in changing interest rate environments. Management's strategies are intended to be responsive to changes in interest rates and to recognize market demands for particular types of deposit and loan products. The strategies are overseen by an internal Asset/Liability Management Committee. Assets and liabilities are classified as interest rate sensitive if they have a remaining term to maturity of 0-12 months, or are subject to interest rate adjustment in those time periods. Adjustable rate loans and mortgage backed securities are shown as if the entire balance came due on the repricing date. Estimates of fixed rate loan amortization prepayments are included with rate sensitive assets. Because regular savings, demand deposits, money market accounts and NOW accounts may be withdrawn at any time and are subject to interest rate adjustments at any time, they are presented based upon assumed maturity structures. As a results of this analysis, the static GAP position in the 0 to 12 months range is a negative $21.7 million at April 30, 1999, the latest assessment period. Interest rate sensitivity statistics are static measures that do not necessarily take into consideration external factors which may affect the sensitivity of assets and liabilities, and consequently can not be used alone to predict the operating results of a financial institution in a changing environment. However, these measurements do reflect major trends and thus the Company's sensitivity to interest rate changes over time. LIQUIDITY The Company seeks to ensure that sufficient liquidity is available to meet cash requirements while earning a return on liquid assets. The Company uses its liquidity primarily to fund loans and investment commitments, to supplement deposit flows and to meet operating expenses. The primary sources of liquidity are interest and amortization from loans, mortgage backed securities and investments, sales and maturities of investments, loan sales, deposits, and Federal Home Loan Bank of Boston (FHLBB) advances, which includes a $3.2 million overnight line of credit. The Company also uses longer term borrowed facilities within its total available credit line with the FHLBB. Advances from the FHLBB were $48.0 million at June 30, 1999. During 1999 the primary sources of liquidity were $65.8 million in loan sales, principal amortization from mortgage backed securities of $8.1 million and the sale of a fixed rate mortgage backed security of $4.9 million. The primary uses of funds were $73.1 million in residential mortgage loan originations and $23 million in investment purchases. CAPITAL ADEQUACY Total stockholders' equity at June 30, 1999 was $15.6 million, an increase of $1.4 million from $14.2 million at the end of 1998. Included in stockholders' equity at June 30, 1999 is an unrealized gain on marketable securities available for sale, net of taxes, of $192,000, an increase of $7,000 as compared to $185,000 at December 31, 1998. At June 30, 1999, neither the Federal Reserve Board nor the FDIC permitted the unrealized gain or loss to be used in the calculation of the Tier 1 leverage capital (see below). Future interest rate increases could reduce the market value of these securities and reduce stockholders' equity. As a percentage of total assets, stockholders equity was 5.78% at June 30, 1999, compared to 5.24% at December 31, 1998. The Federal Reserve's and the FDIC's capital guidelines require the Company and the Bank, respectively, generally to maintain a minimum Tier 1 leverage capital ratio of at least 4% (5% for a bank to be classified as "well-capitalized"). At June 30, 1999, the Bank's Tier 1 leverage capital ratio was 5.90% (compared to 5.55% at December 31, 1998). The Federal Reserve and the FDIC have also imposed risk-based capital requirements on the Company and the Bank, respectively, which give different risk weightings to assets and to off balance sheet assets, such as loan commitments. The Federal Reserve's and the FDIC's risk-based capital guidelines require the Company and the Bank, respectively, to maintain a minimum total risk-based capital ratio of 8% (10% to be classified as "well-capitalized") and a Tier 1 risk-based capital ratio of 4% (6% to be classified as "well-capitalized"). At June 30, 1999, the Bank's total and Tier 1 risk-based capital ratios were 12.96% and 11.70% (compared to 11.70% and 10.45% at December 31, 1998). As of June 30, 1999, the Bank was considered "well-capitalized" under applicable regulatory capital guidelines. YEAR 2000 The Year 2000 issue (commonly referred to as "Y2K"), is the result of computer programs being written using two digits, rather than four digits, to define the applicable year. The Y2K issue, which is common to most corporations, including banks, concerns the inability of information systems, primarily (but not exclusively) computer software programs, to properly recognize and process date-sensitive information as the Year 2000 approaches. The following constitutes the Company's Y2K readiness disclosure under the Year 2000 Information and Readiness Disclosure Act. Since the Company's information systems functions are either outsourced to service bureaus or processed in-house using programs developed by third-party vendors, the direct effort to correct Y2K issues will be undertaken largely by third parties and will therefore not be within the company's direct control. The Company expects to bring its mission critical operating systems into compliance with Y2K requirements through installation of updated or replacement programs developed by third parties. Bank regulators have recently issued additional guidance under which they are assessing Year 2000 readiness. The failure of a financial institution, such as the Company, to address deficiencies in the Year 2000 management process could result in (I) enforcement actions that could have a material adverse effect on the institution; (ii) the imposition of civil money penalties; or (iii) the delay of receipt of regulatory approval for certain activities or acquisitions. Awareness Phase This phase consists of defining the Y2K problem; developing the resources necessary to perform compliance work, establishing a Y2K program committee and developing an overall strategy that encompasses in-house systems, service bureaus for systems that are outsourced, vendors, auditors, customers, and suppliers (including correspondents). Currently all of the Company's major computer processing functions are outsourced to third party vendors. This phase has been completed by the Company's Y2K committee (see below). Assessment Phase The Company has organized a Y2K committee, comprised of senior officers, staff employees and a consultant, to research, develop and implement a plan that will correct the issue within the time lines established by the Company's regulators. The committee has substantially completed an assessment, identified mission critical systems, and created a formal tracking system identifying all third party vendors and their Y2K compliant version of systems. Mission critical systems include hardware, software, program interfaces, operating systems as well as other mechanical systems. Based upon the results of the assessment, the Company has established internal time frames to upgrade or replace its existing hardware and software systems. During 1998, the Company replaced its teller system hardware and software in its retail branch network. The assessment phase has been materially completed but is considered an ongoing phase for the Company. The Company is in the process of developing its contingency plan. The Company has currently estimated the total costs associated with the Y2K issues to be $140,000. As of June 30, 1999, the Company has incurred approximately $60,000 of Y2K expenses. The Company continues to evaluate the estimated costs associated with achieving Y2K readiness based upon its experience to date. However, no assurances can be given that the Company or the third party vendors to whom the Company outsources it information systems will solve all the issues in a successful and timely fashion or that the costs of such efforts will not exceed current estimates. Renovation Phase This phase includes hardware and software upgrades, system replacements, vendor certification, and other associated changes. Work has been prioritized based on information gathered during the assessment phase. The Company relies on outside servicers for its data processing and third party vendors for certain in-house processing functions. Each servicer and vendor has been contacted and has or will provide information to the Company concerning their efforts to comply with the Y2K issue. Validation Phase Testing is a multifaceted process that is critical to the Y2K project and inherent in each phase of the project management plan. This process includes the testing of incremental changes to hardware and software components. In addition to testing upgraded components, connections with other systems must be verified, and all changes should be accepted by internal and external users. Management will work with its service bureau and third-party software vendors to establish controls to assure the effective and timely completion of all hardware and software testing prior to final implementation. As with the renovation phase, the Company will be in ongoing discussions with its vendors on the success of their validation efforts. Implementation Phase In this phase, systems should be validated as Y2K compliant and be accepted by the Company. For any system failing certification, the business effect must be assessed clearly and the organization's Y2K contingency plans should be implemented. Any potentially noncompliant mission-critical system should be brought to the attention of executive management immediately for resolution. In addition, this phase must ensure that any new systems or subsequent changes to verified systems are compliant with Y2K requirements. In summary, the Company recognizes Y2K as a global issue with potentially catastrophic results if not addressed. The Company has and will continue to undertake all the necessary steps to protect itself and its customers concerning the Y2K issue. If the Company does not solve such issues, or does not do so in a timely manner, the Y2K issue could have a material adverse impact on the Company's business, future operating results and financial condition. FINANCIAL CONDITION The Company's total assets decreased to $269.8 million at June 30, 1999 from $271.3 million at December 31, 1998. The decrease was principally due to the securitization and delivery of loans held for sale which were originated in the fourth quarter of 1998 and the first quarter of 1999. The Company also incurred a small run-off in its portfolio of certificates of deposit which declined to $64.0 million at June 30, 1999 from $65 million at year-end 1998. This run-off was principally in high rate CDs. Investment and Mortgage-Backed Securities Investments and mortgage backed securities available for sale increased by $832,000 to $29.9 million at June 30, 1999 primarily as a result of the purchase of $13.4 million of mortgage-backed securities, offset by the sale of $4.9 million of securities and amortization of $7.7 million. The portfolio of investment and mortgage-backed securities held to maturity increased to $19.3 million, an increase of $9.1 million, as a result of the purchase of $9.6 million of mortgage-backed securities. Future increases in interest rates could reduce the value of these investments. Loans and Loans Held for Sale Loans held for sale decreased by $17.4 million during the first half of 1999, as a result of the decrease in fixed rate loan production during the first half of 1999. Total mortgage loan production for the first six months of 1999 totaled $73.1 million. The permanent loan portfolio increased by $4.1 million to $193.1 million at June 30, 1999. The increase was primarily in residential first mortgage loans. CREDIT QUALITY Non-Performing Loans Non-accrual loans were $249,000 at June 30, 1999. Accrual of interest on loans is discontinued either when a reasonable doubt exists as to the full, timely collection of principal and interest or when a loan becomes contractually past due by ninety (90) days or more, unless the loan is adequately secured and is in the process of collection. When a loan is placed on non-accrual status, all interest previously accrued, but not collected is reversed against current period interest income. Income on such loans is recognized to the extent that cash is received and the ultimate collection of principal and interest is probable. Following collection procedures the Company generally institutes appropriate action to foreclose the property. Real Estate Acquired by Foreclosure Real estate acquired by foreclosure totaled $718,000 at June 30, 1999, the same as at December 31, 1998. Real estate acquired by foreclosure is reflected at the lower of the net carrying value or fair value of the property less estimated costs of disposition. These properties consist mainly of land and single family and multi-family dwellings. The Company currently has one piece of property totaling $650,000, which is a 98 acre parcel of land in Rowley, Massachusetts, which has been permitted to create a 40-lot detached single family residential subdivision and 10 commercial building lots. There remains outstanding a title claim to a portion of the property. The claim is being defended by the Company's title insurance company on behalf of Historic Ipswich, Inc., the owner. The Company anticipates that the title issue will be resolved in Land Court during 1999; however, the ultimate resolution cannot be predicted. The residential and commercial portions of the property are currently under agreement to purchase for more than the book value of the entire parcels. One of the stipulations in the purchase agreement on the residential side is favorable resolution of the title issue. Allowance for Loan Loss The allowance for loan loss was $1.8 million at June 30, 1999 and $1.7 million at December 31, 1998. The entire allowance for loan losses is available to absorb charge-offs in any category of loans. Loan losses are charged against the allowance when management believes that the collectibility of the loan principal is unlikely. The allowance for possible loan losses is established by management to absorb future charge-offs of loans deemed uncollectible. This allowance is increased by provisions charged to operating expense and by recoveries on loans previously charged off. In evaluating current information and events regarding borrowers' ability to repay their obligations, management considers commercial loans over $200,000 to be impaired when it is probable that the Company will be unable to collect all amount due according to the contractual terms of the note agreement; other loans are evaluated collectively for impairment. When a loan is considered to be impaired, the amount of the impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of collateral, if the loan is collateral-dependent. Impairment losses are included in the allowance for loan losses through a charge to the provision for loan losses. Management believes that the allowance for possible loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary. Liabilities Deposits increased by $2.5 million to $202.2 million at June 30, 1999 from $199.8 million at December 31, 1998. The increase took place primarily in interest-bearing checking accounts as a result of the Company's continuing program to attract transaction account balances. Federal Home Loan Bank of Boston advances decreased by $5.0 million to $48.0 million at June 30, 1999 from $53.0 million at December 31, 1998 as a function of cash and liquidity management. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1998 General The Company reported net income of $693,000 or $.27 per fully diluted share for the second quarter of 1999. This compares with $612,000 or $.24 per fully diluted share for the second quarter of 1998. This represents a 13% increase in net income compared to the same period last year. The second quarter return on equity was 18.18% which compared to 19.03% in the second quarter of 1998. The second quarter return on assets was 1.05% which compares to 1.03% for the same period in 1998. Net Interest and Dividend Income Compared to the second quarter of 1998, net interest income grew $166,000 or 9% as a result of $24.7 million growth in earning assets. For the second quarter of 1999, net interest margin was 3.19% compared to 3.25% for the second quarter of 1998. Non-interest Income The second quarter non-interest income of $666,000 is an increase of $51,000, or 8% from the second quarter of 1998. This increase is principally due to the growth in retail banking fees as a result of the Company's effort to attract transaction accounts. This growth was realized as a result of the opening of two new Bank branches in the second half of 1998 and the corresponding deposit balances generated from those openings. Net mortgage banking revenues declined by $50,000 in the second quarter of 1999 versus the same quarter of 1998. The level of mortgage loan production declined $11.8 million from $47.8 million in 1998 to $36 million in 1999. The decline in loan volume translates into lower mortgage banking fees and gains on sale of loans. Non-interest Expense Total non-interest expenses were $1.7 million for the second quarter of 1999 versus $1.5 million for the same quarter in 1998. This represents a 12% increase in expenses. The increase is principally the result of the addition of two new branches in the second half of 1998 which resulted in a higher level of salary and benefit costs and occupancy and equipment costs. Additionally, the Company added support level operational staff in the second half of 1998 as a means to support potential future expansion. Income Tax Expense The second quarter effective tax rate was 30% compared to 36% for the second quarter of 1998. A lower tax rate for 1999 was due primarily to the formation of a residential mortgage REIT which resulted in the Company realizing a lower state tax expense. RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1998 General The Company reported net income for the six months ended June 30, 1999 of $1.4 million, or $.53 per fully diluted share compared to $1.4 million, or $.55 per fully diluted share for the same period last year. Return on equity was 18.13% and 22.6% for the six months ended June 30, 1999 and 1998, respectively. Return on average assets was 1.00% and 1.21% for the six months ended June 30, 1999 and 1998, respectively. Net Interest and Dividend Income Total net interest and dividend income was $4.1 million for the six months ended June 30, 1999 versus $3.7 million for the same time frame in 1998. This reflects the Company's growth in its average earning assets of $33.9 million for the first half of 1999 versus the same time frame in 1998. The 1999 net interest margin was 3.23% compared to 3.37% for the same time frame in 1998. This reflects the declining interest rate environment experienced in the second half of 1998 and the interest rates on loans placed in the portfolio during that time frame. Additionally, the Company experienced significant amortization and pre-payment in its investment portfolio, which is primarily comprised of mortgage-backed securities. The pre-payments resulted in the Company realizing a decline for the interest rate earned on those investments. Non-Interest Income Non-interest income for the first half of 1999 was $1.6 million, versus $1.2 million for the same time frame in 1998. The Company continued to realize strong growth in its retail banking fees, which increased by 33% in 1999 versus 1998. This was a result of the Company's continuing efforts to generated transaction accounts and corresponding fees generated from those accounts. Mortgage banking revenues increased by $80,000, or 12% in 1999 versus 1998. In the first half of 1998, the Company created a reserve for a write-down on its mortgage servicing rights of $140,000 as a result of declining interest rates. The Company created a reserve of $153,000 in the first half of 1999. Non-Interest Expenses Non-interest expenses for the first six months of 1999 excluding the one-time charge for the holding company and REIT formations, was $3.3 million versus $2.7 million for the first six months of 1998. The increase in expenses reflects the addition of two new branches which were added in the second half of 1998. The line items affected by these branches were salary and benefits, occupancy and data processing costs. Additionally, the Company realized an increase in operating expenses as a result of the addition of support staff to manage potential future expansion. Income Tax Expense The six-month 1999 effective tax rate was 30% compared to 36% for the six-month time frame ended June 30, 1998. The lower rate for 1999 was due primarily to the establishment of the REIT, which will allow the Company to realize a lower state tax expense. ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. The Company's primary market risk exposure is interest rate risk. The ongoing monitoring and management of this risk is an important component of the Company's asset/liability management process which is governed by policies of the Asset/Liability Committees (ALCO). In this capacity ALCO develops guidelines and strategies impacting the Company's asset/liability management related activities based upon estimated market risk sensitivity, policy limits and overall market interest rate levels/trends. Interest Rate Risk Interest rate risk represents the sensitivity of earnings to changes in market interest rates. As interest rates change, the interest income and expense streams associated with the Company's financial instruments also change thereby impacting net interest income (NII), the primary component of the Company's earnings. ALCO utilizes the results of a simulation model and static GAP reports to quantify the estimated exposure of NII to sustained interest rate changes. ALCO monitors simulated NII sensitivity over a rolling two-year horizon to gauge its interest rate risk. The simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all assets and liabilities reflected on the Company's balance sheet. A parallel and pro forma shift in rates of 200 basis points (bp) upward and downward on a static balance sheet over a 12 month period is assumed. The following reflects the Company's NII sensitivity analysis as of the most recently reviewed time frame, April 30, 1999 versus December 31, 1998. Rate Change Estimated NII Sensitivity 1999 1998 ------------------ +200pb (5.60%) (13.3%) -200pb 5.59% 8.5% The preceding sensitivity analysis does not represent the Company's forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels including yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, investment/ replacement of asset and liability cash-flows, and others. While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change. Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to: prepayment/refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes, and other internal/external variables. Furthermore, the sensitivity analysis does not reflect actions that ALCO might take in responding to or anticipating changes in interest rates. IPSWICH BANCSHARES, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders a. The Bank's Annual Meeting of Stockholders was held on April 28, 1999. b. The following is a brief description of the matters voted upon at the Annual Meeting, including the tabulation of votes: 1. Approval of the reorganization of Ipswich Savings Bank into the holding company form of ownership by approving a Plan of Reorganization and Acquisition pursuant to which Ipswich Savings Bank has become a wholly owned subsidiary of the Company and each outstanding share of common stock of the Bank was exchanged for one share of the common stock of the Company. Votes For Votes Against Abstentions Broker Non-Votes ----------------------------------------------------------- 1,805,069 35,302 7,170 400,808 2. Approval of the Ipswich Savings Bank 1998 Stock Incentive Plan. Votes For Votes Against Abstentions Broker Non-Votes 2,017,135 202,914 28,300 3. Election of two Directors, each for a three-year term Votes For Votes Withheld William E. George 2,104,505 143,844 Lawrence J. Pszenny 2,109,755 138,594 4. Election of the Clerk of the Bank for a one-year term Votes For Votes Withheld Abstentions Mariell Lyons 2,103,051 134,000 10,632 Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a. Exhibits b. Reports on Form 8-K 1. The Company filed a Current Report on Form 8-K (Item 5) on July 9, 1999.
c. Exhibits 2.1 Plan of Reorganization and Acquisition dated as of February 17, 1999 between the Company and Ipswich Savings Bank incorporated by reference to the Company's Form 8-K filed on July 9, 1999. 3.1 Articles of Organization of the Company. 3.2 By-laws of the Company. 4.1 Specimen stock certificate for the Company's Common Stock 10.1 Lease dated August 10, 1992 for premises located at Route 133 and Route 1, Rowley, Massachusetts. 10.2 Lease dated April 25, 1994 for premises located at 451 Andover Street, North Andover, Massachusetts. 10.3 Lease dated March 4, 1996 for premises located at 588 Cabot Street, Beverly, Massachusetts. 10.4 Lease dated July 27, 1997 for premises located at 600 Loring Avenue, Salem, Massachusetts. 10.5 Lease dated February 27, 1998 for premises located at 89 Pleasant Street, Marblehead, Massachusetts 10.6 Lease dated June 12, 1998 for premises located at 470 Main Street, Reading, Massachusetts. 10.7* Incentive Compensation Plan for Senior Management and certain other officers dated September 15, 1995. 10.8* Director Recognition and Retirement Plan adopted as of May 18, 1999. 10.9* Merger and Severance Benefits Program dated February 18, 1998. 1010* Amended and Restated Employment and Severance Agreement dated May 18, 1999 between Ipswich Savings Bank and David L. Grey. 10.11* Amended and Restated Employment and Severance Agreement dated May 18, 1999 between Ipswich Savings Bank and Francis Kenney 10.12* Amended and Restated Severance Agreement dated May 18, 1999 between Ipswich Savings Bank and Thomas R. Girard 10.13* Employment Agreement dated June 18, 1998 between Ipswich Savings Bank and Richard P. Duffett. 10.14(a)* Amended and Restated Split Dollar Agreement dated May 18, 1999 among Ipswich Savings Bank, Eastern Bank and David L. Grey. 10.14(b)* Amended and Restated Ipswich Irrevocable Insurance Trust dated as of May 18, 1999 by and between Ipswich Savings Bank and Eastern Bank. 10.15 Contract with Bank's data processor dated February 14, 1997. 10.16* 1992 Incentive and Non-qualified Stock Option Plan incorporated by reference to the Company's Registration Statement on Form S-8 filed on July 22, 1999. 10.17* 1996 Stock Incentive Plan incorporated by reference to the Company's Registration Statement on Form S-8 filed on July 22, 1999. 10.18* 1998 Stock Incentive Plan incorporated by reference to the Company's Registration Statement on Form S-8 filed on July 22, 1999. 10.19* Deferred Stock Compensation Plan for Directors incorporated by reference to the Company's Form S-8 filed on July 22, 1999. 10.20* Savings Bank Employees Retirement Associations 401 (k) Plan as adopted by Ipswich Savings Bank incorporated by the Company's Registration Statement on Form S-8 filed on July 22, 1999. 11. A statement regarding the computation of earnings per share is included in the Notes to Consolidated Financial Statements. 12. Not applicable. 27. Financial Data Schedule. * Denotes Management Contract or Compensation Plan.
SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IPSWICH BANCSHARES, INC. By: /s/ David L. Grey Date: August 12, 1999 ------------------------------------- ----- David L. Grey President and Chief Executive Officer By: /s/ Francis Kenney Date: August 12, 1999 ------------------------------------- ----- Francis Kenney Treasurer (Principal Financial Officer and Principal Accounting Officer) EX-2.1 2 Exhibit 2.1 PLAN OF REORGANIZATION AND ACQUISITION Pursuant to Section 26B of Chapter 172 of the General Laws of Massachusetts This Plan of Reorganization and Acquisition (the "Plan") is dated as of February 17, 1999 and made between Ipswich Savings Bank, a Massachusetts savings bank (the "Bank"), and Ipswich Bancshares, Inc., a Massachusetts corporation (the "Holding Company"). The Bank is a stock savings bank, duly organized and validly existing under the laws of The Commonwealth of Massachusetts, with its principal office at 23 Market Street, Ipswich, Massachusetts 01938. The authorized capital stock of the Bank consists of (i) 12,000,000 shares of common stock, par value $.10 per share (the "Bank Common Stock"), of which 2,392,286 shares are issued and outstanding as of the date hereof, and (ii) 1,000,000 shares of preferred stock, par value $.10 per share, none of which are issued and outstanding as of the date hereof. The Holding Company is a corporation, duly organized and validly existing under the laws of Massachusetts, with its principal office at 23 Market Street, Ipswich, Massachusetts 01938. The authorized capital stock of the Holding Company consists of 12,000,000 shares of common stock, par value $.10 per share (the "Holding Company Common Stock"), of which 100 shares are issued and outstanding as of the date hereof, all of which are held by the Bank, and 1,000,000 shares of preferred stock, par value $.10 per share, none of which are issued and outstanding as of the date hereof. The Bank and the Holding Company have agreed that the Holding Company will acquire all of the issued and outstanding shares of Bank Common Stock in exchange for shares of Holding Company Common Stock pursuant to the provisions of Section 26B of Chapter 172 of the General Laws of Massachusetts and of this Plan. This Plan has been adopted and approved by a vote of a majority of all of the members of the Board of Directors of the Bank, and by a vote of a majority of all the members of the Board of Directors of the Holding Company. The officers of the Bank and of the Holding Company whose respective signatures appear below have been duly authorized to execute and deliver this Plan. NOW, THEREFORE, in consideration of the premises, the Bank and the Holding Company agree as follows: SECTION 1. Approval and Filing of Plan 1.1. The Plan shall be submitted for approval by the holders of Bank Common Stock at a meeting to be called and held in accordance with the applicable provisions of law. Notice of such meeting shall be published at least once a week for two successive weeks in a newspaper of general circulation in the County of Essex, The Commonwealth of Massachusetts. Both of said publications of notice of such meeting shall be at least fifteen days prior to the date of the meeting. 1.2. Upon approval of the Plan by vote of the holders of two-thirds of the outstanding shares of Bank Common Stock as required by law, the Bank and the Holding Company shall submit the Plan to the Commissioner of Banks of The Commonwealth of Massachusetts (the "Bank Commissioner") for his approval and filing in accordance with the provisions of Section 26B of Chapter 172 of the General Laws of Massachusetts. The Plan shall be accompanied by such certificates of the respective officers of the Bank and the Holding Company as may be required by law. SECTION 2. Definition of Effective Time 2.1. The Plan shall become effective at 12:01 a.m. on the date specified in the written notice filed by the Bank and the Holding Company with the Bank Commissioner stating (i) that all the conditions precedent to the Plan becoming effective specified in Section 4 have been satisfied and (ii) that the Plan has not been abandoned by the Bank or the Holding Company in accordance with the provisions of Section 5. Such time is hereafter called the "Effective Time". SECTION 3. Actions at the Effective Time 3.1. At the Effective Time, the Holding Company shall, without any further action on its part or on the part of the holders of Bank Common Stock, automatically and by operation of law acquire and become the owner for all purposes of all of the then issued and outstanding shares of Bank Common Stock and shall be entitled to have issued to it by the Bank a certificate or certificates representing such shares. Thereafter, the Holding Company shall have full and exclusive power to vote such shares of Bank Common Stock, to receive dividends thereon and to exercise all rights of an owner thereof. 3.2. At the Effective Time, the shares of Holding Company stock which are outstanding will be cancelled. 3.3. At the Effective Time, the holders of the then issued and outstanding shares of Bank Common Stock shall, without any further action on their part or on the part of the Holding Company, automatically and by operation of law cease to own such shares and shall instead become owners of one share of Holding Company Common Stock for each share of Bank Common Stock held by them immediately prior to the Effective Time. Thereafter, such persons shall have full and exclusive power to vote such shares of Holding Company Common Stock, to receive dividends thereon, except as provided herein, and to exercise all rights of an owner thereof. 3.4. At the Effective Time, all previously issued and outstanding certificates representing shares of Bank Common Stock (the "Old Certificates") shall automatically and by operation of law cease to represent shares of Bank Common Stock or any interest therein and each Old Certificate shall instead represent the ownership by the holder thereof of an equal number of shares of Holding Company Common Stock. No holder of an Old Certificate shall be entitled to vote the shares of Bank Common Stock formerly represented by such certificate, or to receive dividends thereon, or to exercise any other rights of ownership in respect thereof. 3.5. Notwithstanding any of the foregoing, any dissenting stockholder, as defined in Subsection 7.1, shall have such rights as are provided by Subsection 7.2 and by the laws of The Commonwealth of Massachusetts. SECTION 4. Conditions Precedent The Plan shall not become effective unless all of the following first shall have occurred: 4.1. The Plan shall have been approved by a vote of two-thirds of the outstanding Bank Common Stock at a meeting of the holders of the Bank Common Stock held for such purpose. 4.2. The Plan shall have been approved by the Bank Commissioner and a copy of the Plan with his approval endorsed thereon shall have been filed in his office, all as provided in Section 26B of Chapter 172 of the General Laws of Massachusetts. 4.3. The acquisition of the Bank by the Holding Company shall have been reviewed without objection by any appropriate federal agency. 4.4. The Bank shall have received a favorable opinion from its counsel, satisfactory in form and substance to the Bank, with respect to the federal income tax consequences of the Plan and the acquisition contemplated thereby. 4.5. The Bank shall have received a favorable letter from its independent public accountants, satisfactory in form and substance to the Bank, with respect to the accounting treatment of the transaction. 4.6. The shares of Holding Company Common Stock to be issued to the holders of Bank Common Stock pursuant to the Plan shall have been registered or shall be exempt from registration under the Securities Act of 1933, as amended, and all applicable state securities laws. 4.7. The Bank and the Holding Company shall have obtained all other consents, permissions, opinions and approvals and taken all actions required by law or agreement, or deemed necessary by the Bank or the Holding Company, to enable the Holding Company to have and exercise all rights of ownership with respect to all of the outstanding shares of Bank Common Stock acquired by it under the Plan. SECTION 5. Abandonment of Plan 5.1. The Plan may be abandoned by either the Bank or the Holding Company at any time before the Effective Time in the event that: (a) The number of shares of Bank Common Stock owned by Dissenting Stockholders, as defined in Section 7.1, shall make consummation of the acquisition contemplated by the Plan inadvisable in the opinion of the Bank or the Holding Company; (b) Any action, suit, proceeding or claim has been instituted, made or threatened relating to the Plan which shall make consummation of the acquisition contemplated by the Plan inadvisable in the opinion of the Bank or the Holding Company; or (c) For any other reason consummation of the acquisition contemplated by the Plan is inadvisable in the opinion of the Bank or the Holding Company. Such abandonment shall be effected by written notice by either the Bank or the Holding Company to the other of them, and shall be authorized or approved by the Board of Directors of the party giving such notice. Upon the giving of such notice, the Plan shall be terminated and there shall be no liability hereunder or on account of such termination on the party of the Bank or the Holding Company or the Directors, officers, employees, agents or stockholders of either of them. In the event of abandonment of the Plan, the Bank shall pay the fees and expenses incurred by itself and the Holding Company in connection with the Plan and the proposed acquisition. If either party hereto gives written notice of termination to the other party pursuant to this section, the party giving such written notice shall simultaneously furnish a copy thereof to the Bank Commissioner. SECTION 6. Amendment of Plan 6.1. The Plan may be amended or modified at any time by written agreement approved by the Boards of Directors of the Holding Company and the Bank (i) prior to the approval hereof by the stockholders of the Bank, in any respect, and (ii) subsequent to such approval, in any respect, provided that the Bank Commissioner shall approve of such amendment or modification. SECTION 7. Rights of Dissenting Stockholders 7.1. "Dissenting Stockholders" shall mean those holders of Bank Common Stock who file with the Bank before the taking of the vote on the Plan written objection to the Plan, pursuant to Chapter 156B of the General Laws of Massachusetts, stating that they intend to demand payment for their shares of Bank Common Stock if the Plan is consummated and whose shares are not voted in favor of the Plan. 7.2. Dissenting Stockholders who comply with the provisions of Sections 86 to 98, inclusive, of Chapter 156B of the General Laws of Massachusetts and all other applicable provisions of law shall be entitled to receive from the Bank payment of the fair value of their shares of Bank Common Stock upon surrender by such holders of the certificates which previously represented shares of Bank Common Stock. Certificates so obtained by the Bank, upon payment of the fair value of such shares of provided by law, shall be cancelled. Shares of Holding Company Common Stock to which Dissenting Stockholders would have been entitled had they not dissented shall be deemed to constitute authorized but unissued shares of Holding Company Common Stock and may be sold or otherwise disposed of by the Holding Company at the discretion of, and on such terms as may be fixed by, its Board of Directors. SECTION 8. Stock Option Plans By consummation of the acquisition contemplated by the Plan, the Holding Company shall have approved its adoption of the Bank's existing 1996 Stock Incentive Plan and 1992 Incentive and Nonqualified Stock Option Plan and, if adopted by the Bank's stockholders, of the 1998 Stock Incentive Plan (collectively, the "Stock Option Plans") as the Stock Option Plans of the Holding Company and shall have agreed to issue Holding Company Common Stock in lieu of Bank Common Stock pursuant to options currently outstanding under the existing Stock Option Plans of the Bank. As of the Effective Time, the unexercised portion of the options outstanding under the existing Stock Option Plans of the Bank shall be assumed by the Holding Company and thereafter shall be exercisable only for shares of Holding Company Common Stock, with each such option being exercisable for a number of shares of Holding Company Common Stock equal to the number of shares of Bank Common Stock that were available thereunder immediately prior to the Effective Time, and with no change in the option exercise price or any other term or condition of such option. The Holding Company and the Bank shall make appropriate amendments to the existing Stock Option Plans to reflect the adoption of the Stock Option Plans as the Stock Option Plans of the Holding Company without adverse effect upon the options outstanding under the existing Stock Option Plans of the Bank. SECTION 9. Directors' Deferred Compensation Plan By consummation of the acquisition contemplated by the Plan, the Holding Company shall have approved its adoption of the existing Deferred Compensation Plan for Directors of Ipswich Savings Bank and shall have agreed to issue Holding Company Stock in lieu of Bank Common Stock in payment of stock units allocated to a Director's account pursuant to the Deferred Compensation Plan (each such stock unit, as allocated, a "Stock Unit). At the Effective Time, each Stock Unit shall represent one share of Holding Company Stock. SECTION 10. Governing Law The Plan shall take effect as a sealed instrument and shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. SECTION 11. Counterparts The Plan may be executed in several identical counterparts, each of which when executed and delivered by the parties hereto shall be an original, but all of which together shall constitute a single instrument. In making proof of the Plan, it shall not be necessary to produce or account for more than one such counterpart. IN WITNESS WHEREOF, the parties hereto have caused this Plan of Reorganization and Acquisition to be duly executed as of the date first set forth above and their corporate seals to be hereunto affixed. [SEAL] IPSWICH SAVINGS BANK Attest: /s/ Mariell Lyons By: /s/ David L. Grey - -------------------------------- -------------------------------- Mariell Lyons, Clerk David L. Grey, President and Chief Executive Officer [SEAL] IPSWICH BANCSHARES, INC. Attest: /s/ Mariell Lyons By: /s/ David L. Grey - -------------------------------- -------------------------------- Mariell Lyons, Clerk David L. Grey, President and Chief Executive Officer EX-3.1 3 | Exhibit 3.1 | | The Commonwealth of Massachusetts - ----------| William Francis Galvin Examiner | Secretary of the Commonwealth | One Ashburton Place, Boston, Massachusetts 02108-1512 | | ARTICLES OF ORGANIZATION | (General Laws, Chapter 156B) | - ----------| Name | ARTICLE I Approved | The exact name of the corporation is: | | Ipswich Bancshares, Inc. | | ARTICLE II | | The purpose of the corporation is to engage | in the following business activities: | | To buy, sell, deal in, or hold securities of | every kind and description; and in general to carry on | any business permitted to corporations organized under | Chapter 156B of the Massachusetts General Laws as now in | force or hereafter amended. | | | | | | | | Note: If the space provided under any article or item on | this form is insufficient, additions shall be set forth | on one side only of separate 8 1/2 x 11 sheets of paper | with a left margin of at least 1 inch. Additions to more | than one article may be made on a single sheet so long | as each article requiring each addition is clearly | indicated. | | ARTICLE III State the total number of shares and par value, if any, of each class of stock which the corporation is authorized to issue:
- ---------------------------------------------------------------------------------------- | WITHOUT PAR VALUE | WITH PAR VALUE | |-------------|--------------------|--------------|----------------------|-------------| | TYPE | NUMBER OF SHARES | TYPE | NUMBER OF SHARES | PAR VALUE | |Common: | | Common: | 12,000,000 | $.10 | |-------------|--------------------|--------------|----------------------|-------------| | | | | | | |-------------|--------------------|--------------|----------------------|-------------| |Preferred | | Preferred: | 1,000,000 | $.10 | |-------------|--------------------|--------------|----------------------|-------------| | | | | | | - ----------------------------------------------------------------------------------------
ARTICLE IV If more than one class of stock is authorized, state a distinguishing designation for each class. Prior to the issuance of any shares of a class, if shares of another class are outstanding, the corporation must provide a description of the preferences, voting powers, qualifications, and special or relative rights or privileges of that class and of each other class of which shares are outstanding and of each series then established within any class. See Exhibit A. ARTICLE V The restrictions, if any, imposed by the Articles of Organization upon the transfer of shares of stock of any class are: None. ARTICLE VI Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders: See Exhibit B. ***If there are no provisions state "None" Note: The preceding six (6) articals are considered to be permanent and may ONLY be changed by filing appropriate Articals of Amendment. EXHIBITS TO THE ARTICLES OF ORGANIZATION OF IPSWICH BANCSHARES, INC. - ------------------------------------------------------------------------------ Exhibit A Article IV. Capital Stock The total number of shares of all classes of capital stock which the Corporation is authorized to issue is 13 million (13,000,000) shares, of which 12 million (12,000,000) shares shall be common stock, $0.10 par value per share, and one million (1,000,000) shares shall be preferred stock, $0.10 par value per share. Upon payment of lawful consideration, such shares shall be deemed to be fully paid and nonassessable. In the case of a stock dividend, that part of the surplus of the Corporation which is transferred to stated capital upon the issuance of shares as a stock dividend shall be deemed to be the consideration for their issuance. A description of the different classes and series of the Corporation's capital stock and a statement of the designations and the relative rights, preferences and limitations of the shares of each class and series of capital stock are as follows: A. Common Stock. Except as provided by law or in this Article IV (or in any supplementary sections hereto or in any certificate of establishment of any series of preferred stock), the holders of the common stock shall exclusively possess all voting power. Each holder of shares of common stock shall be entitled to one vote on all matters for each share held by such holder. There shall be no cumulative voting rights in the election of Directors. Whenever there shall have been paid, or declared and set aside for payment, to the holders of the outstanding shares of any class of stock having preference over the common stock as to the payment of dividends, the full amount of dividends and of a sinking fund or a retirement fund or other retirement payments, if any, to which such holders are respectively entitled in preference to the common stock, then dividends may be paid on the common stock and on any class or series of stock entitled to participate therewith as to dividends, out of any assets legally available for the payment of dividends; but only when and as declared by the Board of Directors. In the event of any liquidation, dissolution or winding up of the Corporation, after there shall have been paid to or set aside for the holders of any class having preference over the common stock in the event of liquidation, dissolution or winding up of the Corporation the full preferential amounts to which they are respectively entitled, the holders of the common stock, and of any class or series of stock entitled to participate in whole or in part therewith as to distribution of assets, shall be entitled, after payment or provision for payment of all debts and liabilities of the Corporation, to receive the remaining assets of the Corporation available for distribution, in cash or in kind, in proportion to their holdings. B. Preferred Stock. Subject to any limitations prescribed by law, the Board of Directors of the Corporation is authorized by vote or votes, from time to time adopted, to provide for the issuance of preferred stock in one or more series and to fix and state the voting powers, designations, preferences and relative participating, optional or other special rights of the shares of each series and the qualifications, limitations and restrictions thereof, including, but not limited to, determination of one or more of the following: (1) The distinctive serial designation and the number of shares constituting such series; (2) The dividend rates or the amount of dividends to be paid on the shares of such series, whether dividends shall be cumulative and, if so, from which date or dates, the payment date or dates for dividends and the participating or other special rights, if any, with respect to dividends; (3) The voting powers, if any, of shares of such series; (4) Whether the shares of such series shall be redeemable and, if so, the price or prices at which, and the terms and conditions on which, such shares may be redeemed; (5) The amount or amounts payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation; (6) Whether the shares of such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the amount of such fund and the manner of its application, including the price or prices at which such shares may be redeemed or purchased through the application of such fund; (7) Whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation, and if so convertible or exchangeable, the conversion price or prices, or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; (8) The price or other consideration for which the shares of such series shall be issued; (9) Whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of preferred stock and whether such shares may be reissued as shares of the same or any other series of stock; and (10) Such other powers, preferences, rights, qualifications, limitations and restrictions thereof as are permitted by law and as the Board of Directors of the Corporation may deem advisable. Any such vote shall become effective when the Corporation files with the Secretary of State of The Commonwealth of Massachusetts a certificate of establishment of one or more series of preferred stock signed by the President or any Vice President and by the Clerk or Assistant Clerk of the Corporation, setting forth a copy of the vote of the Board of Directors establishing and designating the series and fixing and determining the relative rights and preferences thereof, the date of adoption of such vote and a certification that such vote was duly adopted by the Board of Directors. Exhibit B Article VI. Other Lawful Provisions. Section 1. Certain Business Combinations. A. Required Vote for Certain Business Combinations. In addition to any affirmative vote required by the Massachusetts General Laws or by these Articles, and except as otherwise expressly provided in Section 2 of this Article VI: (1) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation or entity (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Stockholder; (2) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value (as hereinafter defined) of $1,000,000 or more; (3) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $1,000,000 or more; (4) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of any Interested Stockholder or any Affiliate of any Interested Stockholder; or (5) any reclassification of securities (including any reverse stock split), any recapitalization of the Corporation, any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving any Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportion of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder; shall require (subject to Section 2 of this Article VI) the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the "Voting Stock"), voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required or that a lesser percentage may be specified by law. B. Definition of "Business Combination." The term "Business Combination" as used in this Article VI shall mean any transaction which is referred to in any one or more of clauses (1) through (5) of Paragraph A of this Section 1. Section 2. When Higher Vote Is Not Required. The provisions of Section 1 of this Article VI shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law and any other provision of these Articles, if all of the conditions specified in either of the following paragraphs A or B are met: A. Approval by Continuing Directors. The Business Combination shall have been approved or ratified by a majority of the Continuing Directors (as hereinafter defined) then in office; or B. Price and Procedure Requirements. All of the following conditions shall have been met: (1) The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination (the "Consummation Date") of any consideration other than cash to be received per share by holders of common stock in such Business Combination shall be at least equal to the highest of the following: (a) if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder for any shares of common stock acquired by it (i) within the two-year period immediately prior to and including the first public announcement of the proposal of the Business Combination (the "Announcement Date") or (ii) in the transaction in which it became an Interested Stockholder, whichever is higher; (b) the highest Fair Market Value per share of common stock on any date during the one-year period prior to and including the Announcement Date; and (c) if applicable) the price per share equal to the product of (i) the Fair Market Value per share of common stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (such later date is referred to in this Article VI as the "Determination Date"), whichever is higher, multiplied by (ii) a fraction, (x) the numerator of which is the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder for any shares of common stock acquired by it within the two-year period immediately prior to and including the Announcement Date, and (y) the denominator of which is the Fair Market value per share of common stock on the first day in such two-year period upon which the Interested Stockholder acquired any shares of common stock. (2) The aggregate amount of the cash and the Fair Market Value as of the Consummation Date of the Business Combination of consideration other than cash to be received per share by holders of shares of any other class of outstanding Voting Stock shall be at least equal to the highest of the following (it being intended that the requirements of this paragraph B(2) shall be required to be met with respect to every other class of outstanding Voting Stock, whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock): (a) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it (i) within the two-year period immediately prior to and including the Announcement Date or (ii) in the transaction in which it became an Interested Stockholder, whichever is higher; (b) (if applicable) the highest preferential amount per share which the holders of shares of such class of Voting Stock are entitled to receive from the Corporation in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; (c) the highest Fair Market Value per share of such class of Voting Stock on any date during the one-year period prior to and including the Announcement Date; and (d) (if applicable) the price per share equal to the product of (i) the Fair Market Value per share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher, multiplied by (ii) a fraction, (x) the numerator of which is the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it within the two-year period immediately prior to and including the Announcement Date, and (y) the denominator of which is the Fair Market Value per share of such class of Voting Stock on the first day in such two-year period upon which the Interested Stockholder acquired any shares of such class of Voting Stock. (3) The consideration to be received by holders of a particular class of outstanding Voting Stock (including common stock) shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class of Voting Stock. If the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by it. (4) After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of any such Business Combination: (a) there shall have been (i) no failure to declare and pay at regular dates therefor the full amount of any dividends (whether or not cumulative) payable on any class or series having a preference over the common stock of the Corporation as to dividends or upon liquidation, except as approved by a majority of the Continuing Directors; (ii) no reduction in the annual rate of dividends paid on the common stock (except as necessary to reflect any subdivision of the common stock), except as approved by a majority of the Continuing Directors; and (iii) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the common stock, unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (b) such Interested Stockholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder's becoming an Interested Stockholder. (5) After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation or in connection with such Business Combination or otherwise, unless such transaction shall have been approved or ratified by a majority of the Continuing Directors after such Person shall have become an Interested Stockholder. (6) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public stockholders of the Corporation at least 20 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). Section 3. Certain Definitions. For the purposes of these Articles: A. A "Person" shall mean an individual, a group acting in concert, a corporation, a partnership, a joint venture, an association, a joint stock company, a trust, a business trust, a government or political subdivision, any unincorporated organization and any other similar association or entity. B. "Interested Stockholder" shall mean any Person (other than the Corporation or any Subsidiary) who or which: (1) is the beneficial owner, directly or indirectly, of more than ten percent (10%) of the voting power of the then outstanding shares of Voting Stock; (2) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to and including the date in question was the beneficial owner, directly or indirectly, of more than ten percent (10%) of the voting power of the then outstanding shares of Voting Stock; or (3) is an assignee of or has otherwise succeeded to the beneficial ownership of any shares of Voting Stock which were at any time within the two-year period immediately prior to and including the date in question beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933 and such assignment or succession was not approved by a majority of the Continuing Directors. C. A Person shall be a "Beneficial Owner" of any shares of Voting Stock: (1) which such Person or any of its Affiliates or Associates, directly or indirectly, has or shares with respect to Voting Stock (a) the right to acquire or direct acquisition of (whether such right is exercisable immediately or only after the passage of time or in the satisfaction of any conditions or both), pursuant to any agreement, arrangement or understanding or upon the exercise of any conversion rights, warrants, or options or otherwise; (b) the right to vote, or direct the voting of, pursuant to any agreement, arrangement or understanding or otherwise; or (c) the right to dispose of or transfer or direct the disposition or transfer of pursuant to any agreement, arrangement, understanding or otherwise; or (2) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. D. For the purposes of determining whether a Person is an Interested Stockholder pursuant to Paragraph B of this Section 3, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned by such Person through application of paragraph C of this Section 3 but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options or otherwise. E. "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. F. "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in Paragraph B of this Section 3, the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. G. "Continuing Director" means any member of the Board of Directors of the Corporation (the "Board") who is not an Affiliate or Associate of the Interested Stockholder and was a member of the Board prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor of a Continuing Director who is not an Affiliate or Associate or the Interested Stockholder and is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board. H. "Fair Market Value" means: (1) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers Automated Quotation System or any comparable system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by at least a majority of the Continuing Directors of the Board in good faith; and (2) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by at least a majority of the Continuing Directors of the Board in good faith. I. "Group Acting In Concert" means (a) knowing participation by Persons in a joint activity or interdependent conscious parallel action by Persons towards a common goal, whether or not pursuant to an express agreement; (b) a combination or pooling of voting or other interests in the securities of an issuer by Persons for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise; (c) a Person or company which acts in concert with another Person or company ("Other Party") shall also be deemed to be Acting in Concert with any Person or company who is also Acting in concert with that Other Party; or (d) a group who would be deemed to be acting as a group or syndicate within the meaning of Section 13(d) of the Securities Exchange Act of 1934. In addition, any Persons who are beneficial owners of the same securities are deemed to be members of a "Group Acting In Concert." When Persons act together for any such purpose, the group of which they are members is deemed to have acquired their stock. J. In the event of any Business Combination in which the Corporation survives, the phrase "other consideration to be received" as used in Paragraphs B(l) and (2) of Section 2 of this Article VI shall include the shares of common stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares. Section 4. Powers of the Board of Directors. A majority of the Directors of the Corporation (or, if there is an Interested Stockholder, a majority of the Continuing Directors then in office) shall have the power to determine for the purposes of this Article VI, on the basis of information known to them after reasonable inquiry, (A) whether a Person is an Interested Stockholder, (B) the number or percentage of any class of securities beneficially owned by any Person, (C) whether a Person is an Affiliate or Associate of or is affiliated or associated with another, (D) whether the requirements of Section 2 of this Article VI have been met with respect to any Business Combination, (E) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $1,000,000 or more, and (F) any other matters of interpretation arising under this Article VI. The good faith determination of a majority of the Directors (or, if there is an Interested Stockholder, a majority of the Continuing Directors then in office) on such matters shall be conclusive and binding for all purposes of this Article VI. Section 5. No Effect on Fiduciary Obligations of Interested Stockholders Nothing contained in this Article VI shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. Section 6. Standards for Board of Directors' Evaluation of Offers. The Board of Directors of the Corporation, when evaluating any offer of another Person (as defined in Article VI hereof) to (A) make a tender or exchange offer for any equity security of the Corporation, (B) merge or consolidate the Corporation with another institution or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation, may, in connection with the exercise of its judgment in determining what is in the best interests of the Corporation and its stockholders, consider the interests of the Corporation's employees, suppliers, creditors and customers, the economy of the state, region and nation, community and societal considerations, and the long-term and short-term interests of the Corporation and its stockholders, including the possibility that these interests may be best served by the continued independence of the Corporation. Section 7. Pre-emptive Rights. Holders of the capital stock of the Corporation shall not be entitled to preemptive rights with respect to any shares of the capital stock of the Corporation which may be issued. Section 8. Directors. An increase in the number of Directors shall require the affirmative vote of two-thirds of the members of the Board of Directors then in office, unless at the time of such increase there shall be an Interested Stockholder, in which case the affirmative vote of not less than a majority of the Continuing Directors then in office shall instead be required. The Directors, other than those who may be elected by the holders of any series of preferred stock of the Corporation, shall be classified, with respect to the term for which they severally hold office, into three classes, as nearly equal in number as possible, with one class to be elected annually. The initial Directors of the Corporation shall hold office as follows: the first class of Directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 2000, the second class of Directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 2001, and the third class of Directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 2002. At each succeeding annual meeting of stockholders, the successors of the class of Directors whose term expires at that meeting shall be elected by a plurality vote of all votes cast at such meeting to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Members of each class shall hold office until their successors are duly elected and qualified or until their earlier resignation or removal. Any Director (including Persons elected by Directors to fill vacancies in the Board of Directors) may be removed from office, with or without cause, by an affirmative vote of not less than (i) two-thirds of the total votes eligible to be cast by stockholders at a duly constituted meeting of stockholders called expressly for such purpose, or (ii) two-thirds of the members of the Board of Directors then in office, unless at the time of such removal there shall be an Interested Stockholder, in which case the affirmative vote of not less than a majority of the Continuing Directors then in office shall instead be required for removal by vote of the Board of Directors. At least thirty days prior to such meeting of the stockholders, written notice shall be sent to the Director whose removal will be considered at the meeting. If removal is for cause, the Director will be provided an opportunity to be heard before the stockholders or the Board of Directors, as the case may be. No Director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director notwithstanding any provision of law imposing such liability; provided, however, that this Article shall not eliminate or limit any liability of a Director (i) for any breach of the Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Sections 61 or 62 of Chapter 156B of the General Laws of The Commonwealth of Massachusetts, or (iv) with respect to any transaction from which the Director derived an improper personal benefit. No amendment or repeal of this Article shall adversely affect the rights and protection afforded to a Director of this Corporation under this Article for acts or omissions occurring prior to such amendment or repeal. If the Massachusetts Business Corporation Law is hereafter amended to further eliminate or limit the personal liability of Directors or to authorize corporate action to further eliminate or limit such liability, then the liability of the Directors of this Corporation shall be eliminated or limited to the fullest extent permitted by the Massachusetts Business Corporation Law as so amended. Section 9. Transactions with Interested Persons. Unless entered into in bad faith or in violation of any provision of these Articles, no contract or transaction by the Corporation shall be void, voidable or in any way affected by reason of the fact that it is with an Interested Person. For the purposes of this Section 9, "Interested Person" means any Person in any way interested in the Corporation whether as a director, officer, stockholder, employee or otherwise, and any other entity in which any such Person is in any way interested. Unless such contract or transaction was entered into in bad faith or in violation of any provision of these Articles, no Interested Person, because of such interest, shall be liable to the Corporation or to any other Person for any loss or expense incurred by reason of such contract or transaction or shall be accountable for any gain or profit realized from such contract or transaction. The provisions of this Section 9 shall be operative notwithstanding the fact that the presence of an Interested Person was necessary to constitute a quorum at a meeting of Directors or stockholders of the Corporation at which such contract or transaction was authorized or that the vote of an Interested Person was necessary for the authorization of such contract or transaction. Section 10. Acting as a Partner. The Corporation may be a partner in any business enterprise which it would have power to conduct by itself. Section 11. Stockholders Meetings. Meetings of stockholders may be held at such place in the Commonwealth of Massachusetts or, if permitted by applicable law, elsewhere in the United States as the Board of Directors may determine. Section 12. Call of Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the President, and if not by the President by the Chairman of the Board, if one is elected, or by the affirmative vote of a majority of the Directors then in office or, if there is an Interested Stockholder, by the affirmative vote of a majority of the Continuing Directors then in office. Special meetings shall be called by the Clerk or in the case of the death, absence, incapacity or refusal of the Clerk, by any other officer, upon written application of one or more stockholders who hold at least (i) 66-2/3% in interest of the capital stock entitled to vote at such meeting or (ii) such lesser percentage, if any, (but not less than 40%) as shall be determined to be the maximum percentage which the Corporation is permitted by applicable law to establish for the call of such a meeting. Application to a court pursuant to Section 34(b) of Chapter 156B of the General Laws of The Commonwealth of Massachusetts requesting the call of a special meeting of stockholders because none of the officers is able and willing to call such a meeting may be made only by stockholders who hold at least (i) 66-2/3% in interest of the capital stock entitled to vote at such meeting or (ii) such lesser percentage, if any, (but not less than 40%) as shall be determined to be the maximum percentage which the Corporation is permitted by applicable law to establish for the call of such a meeting. The hour, date and place of any special meeting and the record date for determining the stockholders having the right to notice of and to vote at such meeting shall be determined by the Board of Directors or the President. Only those matters set forth in the call of the special meeting may be considered or acted upon at such special meeting, unless otherwise provided by law. Section 13. Amendment of By-Laws. The By-Laws of the Corporation may be adopted, altered, amended, changed or repealed by the Board of Directors or the stockholders of the Corporation. Such action by the Board of Directors shall require the affirmative vote of at least two-thirds of the Directors then in office at a duly constituted meeting of the Board of Directors, unless at the time of such action there shall be an Interested Stockholder, in which case such action shall also require the affirmative vote of at least a majority of the Continuing Directors then in office, at such a meeting. Such action by the stockholders shall require (i) approval by the affirmative vote of a majority of the Board of Directors of the Corporation then in office at a duly constituted meeting of the Board of Directors, unless at the time of such action there shall be an Interested Stockholder, in which case such action shall also require the affirmative vote of at least a majority of the Continuing Directors then in office, at such meeting, (ii) unless waived by the affirmative vote of the Board of Directors (and, if applicable, Continuing Directors) specified in the preceding sentence, the submission by the stockholders of written proposals for adopting, altering, amending, changing or repealing the By-Laws at least sixty days prior to the meeting at which they are to be considered and (iii) the affirmative vote of at least two-thirds of the total votes eligible to be cast by stockholders at a duly constituted meeting of stockholders called expressly for such purpose, provided, however, that provisions that provide for a greater than two-thirds vote of the stockholders may only be amended by such greater vote. Section 14. Amendment of Articles of Organization. No amendment, addition, alteration, change or repeal of these Articles shall be made, unless the same is first approved by the affirmative vote of a majority of the Board of Directors of the Corporation then in office, and thereafter approved by the stockholders by not less than two-thirds of the total votes eligible to be cast at a duly constituted meeting, or, in the case of Articles I, II and III of these Articles, by not less than a majority of the total votes eligible to be cast at a duly constituted meeting; provided, however, that if, at any time within the sixty-day period immediately preceding the meeting at which the stockholder vote is to be taken, there is an Interested Stockholder, such amendment, addition, alteration, change or repeal shall also require the affirmative vote of not less than a majority of the Continuing Directors then in office prior to approval by the stockholders, and further provided that provisions that provide for a greater than two-thirds vote of the stockholders may only be amended by such greater vote. Unless otherwise provided by law, any amendment, addition, alteration, change or repeal so acted upon shall be effective on the date it is filed with the Secretary of State of The Commonwealth of Massachusetts or on such other date as specified in such amendment, addition, alteration, change or repeal or as the Secretary of State may specify. Exhibit C
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS President: David L. Grey Treasurer: Francis Kenney Clerk: Mariell Lyons Directors: William M. Craft [Address Deliberately Omitted] Thomas A. Ellsworth William E. George David L. Grey Mark L. Klaman John H. Morrow Lawrence J. Pszenny William J. Tinti
ARTICLE VII The effective date of organization of the corporation shall be the date approved and filed by the Secretary of the Commonwealth. If a later effective date is desired, specify such date which shall not be more than thirty days after the date of filing. ARTICLE VIII The information contained in Article VIII is not a permanent part of the Articles of Organization. a. The street address (post office boxes are not acceptable) of the principal office of the corporation in Massachusetts is: 23 Market Street, Ipswich, Massachusetts 01938 b. The name, residential address and post office address of each director and officer of the corporation is as follows:
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS President: Treasurer: See Exhibit C. Clerk: Directors:
c. The fiscal year (i.e., tax year) of the corporation shall end on the last day of the month of: October d. The name and business address of the resident agent, if any, of the corporation is: None ARTICLE IX By-laws of the corporation have been duly adopted and the president, treasurer, clerk and directors whose names are set forth above, have been duly elected. In witness whereof and under the pains and penalties of perjury, I/we, whose signature(s) appear below as incorporator(s) and whose name(s) and business or residential address(es) are clearly typed or printed beneath each signature do hereby associate with the intention of forming this corporation under the provisions of General Laws, Chapter 156B and do hereby sign these Articles of Organization as incorporator(s) this 12 day of February , 1999 - -------------------------------------------------------------------------------- Deborah Drosnin, Esq. - -------------------------------------------------------------------------------- c/o Foley, Hoag & Eliot llp - -------------------------------------------------------------------------------- One Post Office Square, Boston, MA 02109-2170 - -------------------------------------------------------------------------------- Note: If an existing corporation is acting as incorporator, type in the exact name of the corporation, the state or other jurisdiction where it was incorporated, the name of the person signing on behalf of said corporation and the title he/she holds or other authority by which such action is taken. THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF ORGANIZATION (General Laws, Chapter 156B) ================================================ I hereby certify that, upon examination of these Articles of Organization, duly submitted to me, it appears that the provisions of the General Laws relative to the organization of corporations have been complied with, and I hereby approve said articles; and the filing fee in the amount of $13,000 having been paid, said articles are deemed to have been filed with me this 12th day of February 1999. Effective date: --------------------------------- WILLIAM FRANCIS GALVIN Secretary of the Commonwealth FILING FEE: One tenth of one percent of the total authorized capital stock, but not less than $200.00. For the purpose of filing, shares of stock with a par value less than $1.00, or no par stock, shall be deemed to have a par value of $1.00 per share. TO BE FILLED IN BY CORPORATION Photocopy of document to be sent to: Deborah Drosnin ------------------------------------------------ Foley, Hoag & Eliot llp ------------------------------------------------ One Post Office Square, Boston, MA 02109 ------------------------------------------------ Telephone: (617) 832-1000 ------------------------------------------------ EX-3.2 4 Exhibit 3.2 BY-LAWS of IPSWICH BANCSHARES, INC. ARTICLE I Organization The name of this Corporation shall be "Ipswich Bancshares". The Corporation shall have and may exercise all the powers, privileges and authority, express, implied and incidental, now or hereafter conferred by applicable law and the Corporation's Articles of Organization. ARTICLE II Stockholders SECTION 1. Annual Meeting. The annual meeting of stockholders shall be held on the last Wednesday in April at 4:00 p.m. (or if that be a legal holiday in the place where the meeting is to be held, on the next succeeding full business day) at the main office of the Corporation in Massachusetts, unless a different hour, date or place within the United States is fixed by the Board of Directors, the Chief Executive Officer, the President, or, in the President's absence, the Chairman of the Board, if one is elected. If no annual meeting has been held on the date fixed above, a special meeting in lieu thereof may be held, and such special meeting shall have for the purposes of these By-Laws or otherwise all the force and effect of an annual meeting. SECTION 2. Matters to be Considered at Annual Meeting. At an annual meeting of stockholders, only such new business shall be conducted, and only such proposals shall be acted upon as shall have been brought before the annual meeting (a) by, or at the direction of, the Board of Directors (unless there is an Interested Stockholder, in which case the affirmative vote of a majority of the Continuing Directors then in office shall also be required) or (b) by any stockholder of the Corporation who complies with the notice procedures set forth in this Section 2. For a proposal to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Clerk of the Corporation. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than 60 days nor more than 150 days prior to the scheduled annual meeting, regardless of any postponements, deferrals or adjournments of that meeting to a later date; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the scheduled annual meeting is given or made, notice by the stockholder to be timely must be so delivered or received not later than the close of business on the tenth day following the earlier of the day on which such notice of the date of the scheduled annual meeting was mailed or the day on which public disclosure was made. A stockholder's notice to the Clerk shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business and any other stockholders known by such stockholder to be supporting such proposal, (c) the class and number of shares of the Corporation's capital stock which are beneficially owned by the stockholder on the date of such stockholder notice and by any other stockholders known by such stockholder to be supporting such proposal on the date of such stockholder notice and (d) any financial interest of the stockholder in such proposal. The Board of Directors may reject any stockholder proposal not timely made in accordance with the terms of this Section 2. If the Board of Directors, or a designated committee thereof, determines that the information provided in a stockholder's notice does not satisfy the informational requirements of this Section 2 in any material respect, the Clerk of the Corporation shall promptly notify such stockholder of the deficiency in the notice. The stockholder shall have an opportunity to cure the deficiency by providing additional information to the Clerk within such period of time, not to exceed five days from the date such deficiency notice is given to the stockholder, as the Board of Directors or such committee shall reasonably determine. If the deficiency is not cured within such period, or if the Board of Directors or such committee determines that the additional information provided by the stockholder, together with information previously provided, does not satisfy the requirements of this Section 2 in any material respect, then the Board of Directors may reject such stockholder's proposal. The Clerk of the Corporation shall notify a stockholder in writing whether his proposal has been made in accordance with the time and informational requirements of this Section 2. Notwithstanding the procedure set forth in this paragraph, if neither the Board of Directors nor such committee makes a determination as to the validity of any stockholder proposal, the presiding officer of the annual meeting shall determine and declare at the annual meeting whether the stockholder proposal was made in accordance with the terms of this Section 2. If the presiding officer determines that a stockholder proposal was made in accordance with the terms of this Section 2, he shall so declare at the annual meeting and ballots shall be provided for use at the annual meeting with respect to any such proposal. If the presiding officer determines that a stockholder proposal was not made in accordance with the terms of this Section 2, he shall so declare at the annual meeting and any such proposal shall not be acted upon at the annual meeting. If there is an Interested Stockholder, any determinations to be made by the Board of Directors or a designated committee thereof pursuant to the provisions of the paragraph shall also require the concurrence of a majority of the Continuing Directors then in office. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, Directors and committees of the Board of Directors, but in connection with such reports, no new business shall be acted upon at such annual meeting unless stated, filed and received as herein provided. As used in these By-Laws, the terms "Interested Stockholder" and "Continuing Director" shall have the same respective meanings assigned to them in the Articles of Organization. Any determination of beneficial ownership of securities under these By Laws shall be made in the manner specified in the Articles of Organization. Notwithstanding the provisions of this Section 2, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations thereunder with respect to the matters set forth in this Section 2. Nothing contained in this Section 2 shall require proxy materials distributed by the management of the Corporation to include any information with respect to stockholder proposals. SECTION 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the Chief Executive Officer, the President, the Chairman of the Board, if one is elected, or by the affirmative vote of a majority of the Directors then in office; provided, however, that if there is an Interested Stockholder, any such call shall also require the affirmative vote of a majority of the Continuing Directors then in office. Only those matters set forth in the call of the special meeting may be considered or acted upon at such special meeting, unless otherwise provided by law. Special meetings of the holders of any one or more series of outstanding preferred stock may be called in the manner and for the purposes provided in the resolutions of the Board of Directors providing for the issuance of such series of such stock. Special meetings shall be called by the Clerk or in the case of the death, absence, incapacity or refusal of the Clerk, by any other officer, upon written application of one or more stockholders who hold at least (i) 66-2/3% in interest of the capital stock entitled to vote at such meeting or (ii) such lesser percentage, if any (but not less than 40%), as shall be determined to be the maximum percentage which the Corporation is permitted by applicable law to establish for the call of such a meeting. Application to a court pursuant to Section 34(b) of Chapter 156B of the General Laws of the Commonwealth of Massachusetts requesting the call of a special meeting of stockholders because none of the officers is able and willing to call such a meeting may be made only by stockholders who hold at least (i) 66-2/3% in interest of the capital stock entitled to vote at such meeting or (ii) such lesser percentage, if any (but not less than 40%), as shall be determined to be the maximum percentage which the Corporation is permitted by applicable law to establish for the call of such a meeting. Any written application for a special meeting by one or more stockholders shall set forth as to each matter proposed to be brought before the special meeting (a) a brief description of the proposal desired to be brought before the special meeting and the reasons for conducting such business at the special meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business and any other stockholders known by such stockholder to be supporting such proposal, (c) the class and number of shares of the Corporation's capital stock which are beneficially owned by the stockholder on the date of such stockholder application and by any other stockholders known by such stockholder to be supporting such proposal on the date of such stockholder application, and (d) any financial interest of the stockholder in such proposal. SECTION 4. Notice of Meetings; Adjournment. A written notice of all annual and special meetings of stockholders stating the hour, date, place and purposes of such meetings shall be given by the Clerk or an Assistant Clerk (or other person authorized by these By-Laws or by law) at least seven days before the meeting to each stockholder entitled to vote thereat or to each stockholder who, under the Articles of Organization or under these By-Laws, is entitled to such notice, by mailing such notice to such stockholder at such stockholder's address as it appears on the stock transfer books of the Corporation. Notice shall also be given to the Chief Executive Officer, to the President, to each of the Directors and to the Chairman of the Board, if one is elected. Such notice shall be deemed to be delivered when deposited in the mail so addressed, with postage prepaid. When any stockholders' meeting, either annual or special, is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the hour, date or place of any meeting adjourned for less than thirty days or of the business to be transacted thereat, other than an announcement at the meeting at which such adjournment is taken of the hour, date and place to which the meeting is adjourned. A written waiver of notice, executed before or after a meeting by a stockholder or by an authorized attorney of a stockholder and filed with the records of the meeting, shall be deemed equivalent to notice of the meeting. The Chief Executive Officer, or in the Chief Executive Officer's absence, the President or the Chairman of the Board, if one is elected, shall preside at all stockholders' meetings and shall have the power, among other things, to adjourn such meeting at any time and from time to time, subject to Section 5 of this Article II. The order of business and all other matters of procedure including, without limitation, the rules for conducting the meeting at any meeting of the stockholders shall be determined by the presiding officer. SECTION 5. Quorum. The holders of a majority in interest in all stock issued, outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders; but if less than a quorum is present at a meeting, a majority in interest of the stockholders present or the presiding officer may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 4 of this Article II. At such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally noticed. The stockholders present at a duly constituted meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. SECTION 6. Voting and Proxies. Stockholders shall have one vote for each share of stock entitled to vote owned by them of record according to the books of the Corporation and a proportionate vote for a fractional share, unless otherwise provided by law or by the Articles of Organization. Stockholders may vote either in person or by written proxy dated not more than six months before the meeting named therein. Proxies shall be filed with the Clerk of the meeting, or of any adjournment thereof, before being voted. Except as otherwise limited therein, proxies shall entitle the persons authorized thereby to vote at any adjournment of such meeting, but they shall not be valid after final adjournment of such meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by or on behalf of any one of them unless at or prior to the exercise of the proxy the Corporation receives a specific written notice to the contrary from any one of them. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such stock and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority does not agree. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. SECTION 7. Action at Meeting. When a quorum is present, any matter before the meeting shall be decided by vote of the holders of a majority of the shares of stock voting on such matter, except where a larger vote is required by law, by the Articles of Organization or by these By-Laws. Any election by stockholders shall be determined by a plurality of the votes cast, except where a larger vote is required by law, by the Articles of Organization or by these By-Laws. The Corporation shall not directly or indirectly vote any share of its own stock; provided however, that no provision of these By-Laws shall be construed to limit the voting rights and powers relating to shares of stock held pursuant to a plan which is intended to be an "employee stock ownership plan" as defined in the Internal Revenue Code, as now or hereafter in effect. ARTICLE III Directors SECTION 1. Powers. The business and affairs of the Corporation shall be managed by a Board of Directors. SECTION 2. Composition and Term. The Board of Directors shall be composed of: (a) those persons elected by the incorporator(s) of the Corporation to serve as the initial Directors of the Corporation in accordance with Section 12 of Chapter 156B of the Massachusetts General Laws, such persons to serve as Directors until the respective expiration dates of their terms established by the incorporator(s) and until their successors are elected and qualified and (b) as such terms expire, those persons who are elected as Directors from time to time as provided herein. Subject to the rights of the holders of any series of preferred stock, the Board of Directors may from time to time fix the number of Directors and their respective classifications; provided, however, that if at the time of such action there is an Interested Stockholder, such action shall in addition require a majority vote of the Continuing Directors then in office. Up to two additional Directors may be elected by vote of a majority of the Directors then in office. The Directors, other than those who may be elected by the holders of any series of preferred stock of the Corporation, shall be classified, with respect to the term for which they severally hold office, into three classes, labelled Group A, Group B and Group C, respectively, such classes to be as nearly equal in number as possible. The initial Directors of the Corporation shall hold office as follows: the first class of Directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 2000, the second class of Directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 2001, and the third class of Directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 2002. At each succeeding annual meeting of stockholders, the successors of the class of Directors whose term expires at that meeting shall be elected by a plurality vote of all votes cast at such meeting to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Members of each class shall hold office until their successors are duly elected and qualified or until their earlier resignation or removal. SECTION 3. Director Nominations. Nominations of candidates for election as Directors at any annual meeting of stockholders may be made (a) by, or at the direction of, a majority of the Board of Directors (unless there is an Interested Stockholder, in which case the affirmative vote of a majority of the Continuing Directors shall also be required) or (b) by any stockholder entitled to vote at such annual meeting. Only persons nominated in accordance with the procedures set forth in this Section 3 shall be eligible for election as Directors at an annual meeting. Nominations, other than those made by, or at the direction of, the Board of Directors (or by the Continuing Directors, if required), shall be made pursuant to timely notice in writing to the Clerk of the Corporation as set forth in this Section 3. To be timely, a stockholder's notice shall be delivered to, or mailed and received, at the principal executive offices of the Corporation not less than 60 days nor more than 150 days prior to the date of the scheduled annual meeting, regardless of postponements, deferrals or adjournments of that meeting to a later date; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the scheduled annual meeting is given or made, notice by the stockholder to be timely must be so delivered or received not later than the close of business on the tenth day following the earlier of the day on which such notice of the date of the scheduled annual meeting was mailed or the day on which such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a Director and as to the stockholder giving the notice (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Corporation's capital stock which are beneficially owned by such person on the date of such stockholder notice and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies with respect to nominees for election as Directors, pursuant to the Exchange Act, and the rules and regulations promulgated thereunder, including, but not limited to, the written consent of such person to serve as a Director if elected; and the rules and regulations promulgated thereunder, including, but not limited to, the written consent of such person to serve as a Director if elected; and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such stockholder and any other stockholders known by such stockholder to be supporting such nominees and (ii) the class and number of shares of the Corporation's capital stock which are beneficially owned by such stockholder on the date of such stockholder notice and by any other stockholders known by such stockholder to be supporting such nominees on the date of such stockholder notice. At the request of the Board of Directors, any person nominated by, or at the direction of, the Board of Directors for election as a Director at an annual meeting shall furnish to the Clerk of the Corporation that information required to be set forth in the stockholder's notice of nomination which pertains to the nominee. Nothing contained in this Section 3 shall require proxy materials distributed by the management of the Corporation to include any information with respect to nominations by stockholders. No person shall be elected as a Director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3. Ballots bearing the names of all the persons who have been nominated for election as Directors at an annual meeting in accordance with the procedures set forth in this Section 3 shall be provided for use at the annual meeting. The Board of Directors may reject any nomination by a stockholder not timely made in accordance with the requirements of this Section 3. If the Board of Directors, or a designated committee thereof, determines that the information provided in a stockholder's notice does not satisfy the informational requirements of this Section 3 in any material respect, the Clerk of the Corporation shall promptly notify such stockholder of the deficiency in the notice. The stockholder shall have an opportunity to cure the deficiency by providing additional information to the Clerk within such period of time, not to exceed five days from the date such deficiency notice is given to the stockholder, as the Board of Directors or such committee shall reasonably determine. If the deficiency is not cured within such period, or such committee reasonably determines that the additional information provided by the stockholder, together with information previously provided, does nor satisfy the requirements of this Section 3 in any material respect, then the Board of Directors may reject such stockholder's nomination. The Clerk of the Corporation shall notify a stockholder in writing whether his nomination has been made in accordance with the time and informational requirements of this Section 3. Notwithstanding the procedure set forth in this paragraph, if neither the Board of Directors nor such committee makes a determination as to the validity of any nominations by a stockholder, the presiding officer of the annual meeting shall determine and declare at the annual meeting whether a nomination was made in accordance with the terms of this Section 3. If the presiding officer determines that a nomination was made in accordance with the terms of this Section 3, he shall so declare at the annual meeting and ballots shall be provided for use at the meeting with respect to such nominee. If the presiding officer determines that a nomination was not made in accordance with the terms of this Section 3, he shall so declare at the annual meeting and the defective nomination shall be disregarded. If there is an Interested Stockholder, any determinations to be made by the Board of Directors or a designated committee thereof pursuant to the provisions of this paragraph shall also require the concurrence of a majority of the Continuing Directors then in office. SECTION 4. Qualification. Each Director shall have such qualifications as are required by applicable law. Unless waived by a vote of the Board of Directors, no individual may serve as a Director of the Corporation if he had reached the age of 75 years at the time of election. SECTION 5. Resignation. Any Director may resign at any time by written notice to the Chief Executive Officer. A resignation shall be effective upon receipt, unless the resignation otherwise provides. SECTION 6. Removal. Any Director may be removed from office as provided in the Articles of Organization. SECTION 7. Vacancies. Any vacancy occurring on the Board of Directors as a result of resignation, removal, death or other cause, and newly created directorships resulting from any increase in the authorized number of directors may be filled by vote of a majority of the remaining Directors though less than a quorum of the number constituting the full board as fixed by the Board of Directors, unless there is an Interested Stockholder in which case such vacancy may only be filled by vote of a majority of the Continuing Directors then in office. A Director elected to fill such a vacancy shall be elected to serve for the full term of the Class of Directors in which the vacancy occurred or the new directorship was created and until such Director's successor has been elected and qualified, or until such Director's earlier resignation or removal. SECTION 8. Compensation. The members of the Board of Directors and the members of either standing or special committees shall receive such compensation as the Board of Directors may determine. SECTION 9. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this By-law on the same date and at the same place as the annual meeting of stockholders following such meeting of stockholders. The Board of Directors may provide the hour, date and place for the holding of regular meetings by resolution without other notice than such resolution, a copy of which resolution shall be provided to the Chief Executive Officer, the President and the Chairman of the Board, if one is elected. The Board of Directors shall hold regular meetings at a place or places fixed from time to time by the Board of Directors, the Chief Executive Officer, the President, or the Chairman of the Board, if one is elected. SECTION 10. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of a majority of the Directors, the President, or the Chairman of the Board, if one is elected, unless there is an Interested Stockholder who is also a Director in which case at least a majority of the Continuing Directors is required to call a special meeting of directors. The person or persons authorized to call special meetings of the Board of Directors may fix the hour, date, and place for holding a special meeting. SECTION 11. Notice of Special Meetings. Notice of the hour, date, and place of all special meetings of the Board of Directors shall be given to each Director, the President, and the Chairman of the Board, if one is elected, by the Secretary or Assistant Secretary, or if there be no Secretary or Assistant Secretary, by the Clerk or Assistant Clerk, or in the case of the death, absence, incapacity or refusal of such persons, by the officer or one of the Directors calling the meeting. Notice of any special meeting of the Board of Directors shall be given to each Director in person or by telephone or sent to his business or home address by telecommunication at least twenty four (24) hours in advance of the meeting or by written notice mailed to his business or home address as shown in the Corporation's records at least forty eight (48) hours in advance of such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the mail so addressed, with postage thereon prepaid. When any Board of Directors meeting, either regular or special, is adjourned for thirty days or more, notice of the hour, date and place of the reconvened meeting shall be sent to all persons entitled to, and in the manner of, the notice of the original, adjourned meeting. It shall not be necessary to give any notice of the hour, date or place of any meeting adjourned for less than thirty days or of the business to be transacted at such meeting, other than an announcement at the meeting at which such adjournment is taken of the hour, date and place to which the meeting is adjourned. A written waiver of notice executed before or after a meeting by the Director and filed with the records of the meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business because such meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. SECTION 12. Quorum. A majority of the number of Directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than a quorum is present at a meeting, a majority of the Directors present may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 11 of this Article III. Any business which might have been transacted at the meeting as originally noticed may be transacted at such adjourned meeting at which a quorum is present. SECTION 13. Action at a Meeting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless otherwise prescribed by law, by the Articles of Organization or by these By-Laws. SECTION 14. Action by Consent. Any action required or permitted to be taken by the Board of Directors at any meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors. Such written consents shall be filed with the records of the meetings of the Board of Directors and shall be treated for all purposes as a vote at a meeting of the Board of Directors. SECTION 15. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any Corporation matter is taken shall be presumed to have assented to the action taken unless his dissent or abstention shall be entered in the minutes of the meeting or unless he shall file a written dissent to such action with the person acting as the Clerk of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Clerk of the Corporation within five days after the date a copy of the minutes of the meeting is received. Such right to dissent shall not apply to a Director who voted in favor of such action. SECTION 16. Committees. The Board of Directors shall elect from its number not fewer than three members to serve as an Executive Committee and not fewer than three non-employee directors to serve as an audit committee, and may elect other committees from its number. The Board of Directors may also elect individuals to serve as an Advisory Board of Directors. It may delegate to the Executive Committee or such other committees some or all of its powers except those which by law, by the Articles of Organization or by these By-Laws may not be delegated. Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Board of Directors or in such rules, its business shall be conducted so far as possible in the same manner as is provided by these By-Laws for the Board of Directors. All members of such committees shall hold such offices at the pleasure of the Board of Directors. The Board of Directors may abolish any such committee at any time, subject to applicable law. Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and shall report its action to the Board of Directors. The Board of Directors shall have power to rescind any action of any committee, but no such rescission shall have retroactive effect. With the approval of the Board of Directors, the Chief Executive Officer may appoint such other committees consisting of such Directors as the Chief Executive Officer shall select. Any recommendations of such committees appointed by the Chief Executive Officer shall be submitted to the Board of Directors. SECTION 17. Manner of Participation. Members of the Board of Directors or of committees elected by the Board pursuant to Section 16 of this Article III may participate in meetings of the Board by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Such participation shall constitute presence in person but shall not constitute attendance for the purpose of compensation pursuant to Section 8 of this Article III, unless the Board of Directors by resolution so provides. ARTICLE IV Officers SECTION 1. Enumeration. The officers of the Corporation shall consist of a President, a Treasurer, a Clerk and such other officers, including, without limitation, a Chairman of the Board, a Secretary, and one or more Vice Presidents and Assistant Treasurers as the Board of Directors may determine to be necessary for the management of the Corporation. SECTION 2. Election. The President, the Treasurer and the Clerk shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers shall be elected by the Board of Directors at such first meeting of the Board of Directors or at any other meeting. SECTION 3. Qualification. Any two or more offices may be held by any person. The President shall be a Director. Any officer may be required by the Board of Directors to give bond for the faithful performance of his duties in such amount and with such sureties as the Board of Directors may determine. SECTION 4. Tenure. Except as otherwise provided by law, by the Articles of Organization, or by these By-Laws, the President, Treasurer and Clerk shall hold office until the first meeting of the Board of Directors following the next annual meeting of the stockholders and until their respective successors are chosen and qualified. All other officers shall hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders, or for such shorter term as the Board of Directors may fix at the time such officers are chosen. The Chief Executive Officer may resign at any time by written notice to the Board of Directors or the Clerk. Any other officer may resign at any time by written notice to the Chief Executive Officer. Such resignation shall be effective upon receipt unless the resignation otherwise provides. Election or appointment of an officer, employee or agent shall not of itself create contract rights. The Board of Directors may, however, authorize the Corporation to enter into an employment contract with any officer in accordance with law, but no such contract right shall impair the right of the Board of Directors to remove any officer at any time in accordance with Section 5 of this Article IV. SECTION 5. Removal. Except as otherwise provided by law, the Board of Directors may remove any officer with or without cause by the affirmative vote of a majority of the entire number of Directors then in office; provided, however, that if at the time of such removal there is an Interested Stockholder, the affirmative vote of a majority of the Continuing Directors then in office shall instead be required. Any such removal, other than for cause, shall be without prejudice to the contract rights, if any, of the persons involved. Any officer may be removed for cause only after reasonable notice and opportunity to be heard by the Board of Directors. SECTION 6. Absence or Disability. In the event of the absence or disability of any officer, the Board of Directors may designate another officer to act temporarily in place of such absent or disabled officer. SECTION 7. Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors. SECTION 8. Chief Executive Officer. The President shall be the Chief Executive Officer, unless the Board of Directors shall designate another officer enumerated in Section 1 of this Article IV to be the Chief Executive Officer. The Chief Executive Officer shall, subject to the direction of the Board of Directors, have general supervision and control of the Corporation's business, and shall preside at all meetings of the stockholders and Board of Directors. SECTION 9. President. If the President is not the Chief Executive Officer, he shall have such power and perform such duties as the Board of Directors and the Chief Executive Officer may from time to time designate. If the Chief Executive Officer is absent, the President shall preside at all meetings of the stockholders and Board of Directors. SECTION 10. Chairman of the Board. In the absence of the Chief Executive Officer or the President, the Chairman of the Board shall preside, when present, at all meetings of the Board of Directors and stockholders. The Chairman of the Board shall have such powers and shall perform such duties as the Board of Directors may from time to time designate. SECTION 11. Treasurer and Other Officers. Any Vice President, the Treasurer and any other Officers whose powers and duties are not otherwise specifically provided for herein shall have such powers and shall perform such duties as the Chief Executive Officer may from time to time designate. SECTION 12. Clerk and Assistant Clerks. The Clerk shall keep a record of the meetings of stockholders. If a Secretary is not elected or is absent, the Clerk will keep a record of the meetings of the Board of Directors. In the absence of the Clerk, an Assistant Clerk, if one is elected, shall perform the Clerk's duties. Otherwise a Temporary Clerk designated by the person presiding at the meeting shall perform the Clerk's duties. SECTION 13. Secretary and Assistant Secretary. The Secretary, if one is elected, shall keep a record of the meetings of the Board of Directors. In the absence of the Secretary, any Assistant Secretary, the Clerk and any Assistant Clerk, a Temporary Secretary designated by the person presiding at such meeting shall perform the Secretary's duties. ARTICLE V Capital Stock SECTION 1. Certificates of Stock. Unless otherwise provided by the Board of Directors, each stockholder shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer. Such signatures may be facsimile if the certificate is signed by a transfer agent or by a registrar, other than a Director, officer or employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law. SECTION 2. Transfers. Subject to any restrictions on transfer and unless otherwise provided by the Board of Directors, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require. SECTION 3. Record Holders. Except as otherwise required by law, by the Articles of Organization or by these By-Laws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-Laws. It shall be the duty of each stockholder to notify the Corporation of his address and any changes thereto. SECTION 4. Record Date. The Board of Directors may fix in advance a time of not more than sixty days before the date of any meeting of the stockholders, the date for the payment of any dividend or the making of any distribution to stockholders or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting, and any adjournment thereof, or the right to receive such dividend or distribution or the right to give such consent or dissent. In such case, only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the Corporation after the record date. Without fixing such record date, the Board of Directors may for any of such purposes close the transfer books for all or any part of such period. If no record date if fixed and the transfer books are not closed, (a) the record date for determining stockholders having the right to notice of or to vote at a meeting of stockholders shall be the close of business on the day next preceding the day on which notice is given, and (b) the record date for determining stockholders for any other purpose shall be the close of business on the date on which the Board of Directors acts with respect thereto. SECTION 5. Replacement of Certificates. In case of the alleged loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms as the Board of Directors may prescribe. SECTION 6. Issuance of Capital Stock. Except as provided by law, the Board of Directors shall have the authority to issue or reserve for issue from time to time the whole or any part of the capital stock of the Corporation which may be authorized from time to time, to such persons or organizations, for such consideration, whether cash, property, services or expenses and on such terms as the Board of Directors may determine, including, without limitation, the granting of options, warrants or conversion or other rights to subscribe to said capital stock. SECTION 7. Dividends. Subject to applicable law, the Articles of Organization and these By-Laws, the Board of Directors may from time to time declare, and the Corporation may pay, dividends on outstanding shares of its capital stock. ARTICLE VI Indemnification SECTION 1. Definitions. For purposes of this Article: (a) "Officer" means any person who serves or has served (A) as Director of the Corporation, (B) in any other office filled by election or appointment by the Board of Directors or (C) at the direction of the Corporation, as a Director or officer of any of the Corporation's wholly owned subsidiaries, and, in each case, any heirs or personal representatives of such person; (b) "Non-Officer Employee" means any person who serves or has served as an employee of the Corporation, but who is not or was not an Officer, and any heirs or personal representatives of such person; (c) "Indemnitee" means each Officer, and each Non-Officer Employee whom the Board of Directors has determined to indemnify pursuant to Section 3 of this Article VI; (d) "Proceeding" means any action, suit or proceeding, civil or criminal, brought or threatened in or before any court, tribunal, administrative or legislative body or agency and any claim which could be the subject of a Proceeding; and (e) "Expenses" means any liability fixed by a judgment, order, decree or award in a Proceeding, any amount reasonably paid in settlement of a Proceeding and any professional fees or other disbursements reasonably incurred in a Proceeding. SECTION 2. Officers. To the extent permitted by law and except as provided in Sections 4 and 5 of this Article VI, each Officer of the Corporation shall be indemnified by the Corporation against all Expenses incurred by such Officer in connection with any Proceedings in which such Officer is involved as a result of serving or having served (a) as an Officer or employee of the Corporation; (b) as a director, officer or employee of any wholly-owned subsidiary of the Corporation; or (c) in any capacity with any other corporation, organization, partnership, joint venture, trust, employee benefit plan or other entity at the request or direction of the Corporation. SECTION 3. Non-Officer Employees. To the extent permitted by law and except as provided in Sections 4 and 5 of this Article VI, each Non-Officer Employee of the Corporation may, in the discretion of the Board of Directors be indemnified against any or all Expenses incurred by such Non-Officer Employee in connection with any Proceeding which such Non-Officer Employee is involved as a result of serving or having served (a) as a Non-Officer Employee of the Corporation; (b) a director, officer or employee of any wholly-owned subsidiary of the Corporation; or (c) in any capacity with any other corporation, organization, partnership, joint venture, trust, employee benefit plan or other entity at the request or direction of the Corporation. SECTION 4. Service at the Request or Direction of the Corporation. No indemnification shall be provided to an Officer or Non-Officer Employee with respect to serving or having served in any of the capacities described in Section 2(c) or 3(c) above unless the following two conditions are met: (a) such service was requested or directed in each specific case by vote of the Board of Directors prior to the occurrence of the event to which the indemnification relates, and (b) the Corporation maintains insurance coverage for the type of indemnification under Section 2(c) or 3(c) above for any amount in excess of the proceeds of insurance received with respect to such coverage as the Corporation in its discretion may elect to carry. The Corporation may but shall not be required to maintain insurance coverage with respect to indemnification under Section 2(c) or 3(c) above. Notwithstanding any other provision of this Section 4, but subject to Section 5 of this Article VI, the Board of Directors may provide an Officer or Non-Officer Employee with indemnification under Section 2(c) or 3(c) above as to a specific Proceeding even if one or both of the two conditions specified in this Section 4 have not been met and even if the amount of the indemnification exceeds the amount of the proceeds of any insurance which the Corporation may have elected to carry; provided that the Board of Directors in its discretion determines it to be in the best interests of the Corporation to do so. SECTION 5. Good Faith. No indemnification shall be provided to an Officer or to a Non-Officer Employee with respect to a matter as to which such person shall have been adjudicated in any Proceeding not to have acted in good faith in the reasonable belief that the action of such person was in the best interest of the Corporation. In the event that a Proceeding is compromised or settled so as to impose any liability or obligation upon an Officer or Non-Officer Employee, no indemnification shall be provided to said Officer or Non-Officer Employee with respect to a matter if there is a determination that with respect to such matter such person did not act in good faith in the reasonable belief that the action of such person was in the best interests of the Corporation. The determination shall be made by a majority of those Directors who are not involved in such Proceeding. However, if more than half of the Directors are involved in such Proceeding, the determination shall be made by a majority vote of a committee of three disinterested Directors chosen by the disinterested Directors at a regular or special meeting. If there are fewer than three disinterested Directors, the determination shall be based upon the opinion of the Corporation's regular outside counsel. SECTION 6. Prior to Final Disposition. In the event that the Corporation does not assume the defense, or until the Corporation assumes the defense pursuant to Section 7 of this Article VI of any Proceeding of which the Corporation receives notice under this Article VI, unless otherwise provided by the Board of Directors, or by the committee pursuant to the procedure specified in Section 5 of this Article VI the Corporation shall pay any Expenses incurred by an Indemnitee in defending a Proceeding in advance of the final disposition of such Proceeding upon receipt of an undertaking by the Indemnitee seeking indemnification to repay such payment if such Indemnitee shall be adjudicated or determined to be not entitled to indemnification under this Article VI. SECTION 7. Notification and Defense of Claim. As a condition precedent to his or her right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving him or her or with respect to which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After the Corporation notifies the Indemnitee of its election so to assume such defense, the Corporation shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Section. The Indemnitee shall have the right to employ his or her own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and the Indemnitee in the conduct of the defense of such action, or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action. In each such case, the fees and expenses of Indemnitee's counsel reasonably acceptable to the Corporation shall be at the expense of the Corporation, except as otherwise expressly provided by this Article VI. The Corporation shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. SECTION 8. Insurance. The Corporation may purchase and maintain insurance to protect itself and any Indemnitee against any liability of any character asserted against or incurred by the Corporation or any such Indemnitee, or arising out of any such status, whether or not the Corporation would have the power to indemnify such person against such liability by law or under the provisions of this Article VI or under Chapter 156B of the Massachusetts General Laws. SECTION 9. Other Indemnification Rights. Nothing in this Article VI shall limit any lawful rights to indemnification existing independently of this Article VI. ARTICLE VII Miscellaneous Provisions SECTION 1. Amendment of By-Laws. These By-Laws may be adopted, altered, amended, changed or repealed as provided in the Articles of Organization. SECTION 2. Fiscal Year. Except as otherwise determined by the Board of Directors, the fiscal year of the Corporation shall be the twelve months ending December 31 or on such other date as may be required by law. SECTION 3. Seal. The Board of Directors shall have power to adopt and alter the seal of the Corporation. SECTION 4. Execution of Instruments. All deeds, leases, transfers, contracts, bonds, notes, mortgage discharges and other obligations to be entered into by the Corporation in the ordinary course of its business without Board of Directors action may be executed on behalf of the Corporation by the Chief Executive Officer, the President, the Chairman of the Board if one is elected, the Treasurer, any Vice President or any Assistant Vice President or any other officer, employee or agent of the Corporation as the Board of Directors may authorize. SECTION 5. Voting of Securities. Unless provided by the Board of Directors, the Chief Executive Officer, the President, the Chairman of the Board, if one is elected, or the Treasurer may waive notice of and act on behalf of the Corporation, or appoint another person or persons to act as proxy or attorney in fact for the Corporation with or without discretionary power or power of substitution, at any meeting of stockholders or shareholders of any other organization, any of whose securities are held by the Corporation. SECTION 6. Articles of Organization. All references in these By-laws to the Articles of Organization shall be deemed to refer to the Articles of Organization of the Corporation, as amended and in effect from time to time. EX-4.1 5 NUMBER SHARES IB COMMON STOCK CUSIP 462633 10 8 SEE REVERSE FOR CERTAIN DEFINITIONS IPSWICH BANCSHARES, INC. INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS THIS CERTIFIES THAT is the owner of FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.10 PAR VALUE PER SHARE, OF Ipswich Bancshares, Inc., transferable on the books of Ipswich Banshares, Inc. in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares of Common Stock represented hereby are issued and shall be held subject to the laws of the Commonwealth of Massachusetts and the Charter and By-Laws of Ipswich Bancshares, Inc. as now or hereafter amended. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. WITNESS the facsimile seal of the company and the facsimile signatures of its duly authorized officers. Dated: COUNTERSIGNED AND REGISTERED: REGISTRAR AND TRANSFER COMPANY TRANSFER AGENT AND REGISTRAR AUTHORIZED SIGNATURE Ipswich Bancshares, Inc. /s/ Francis Kenney INCORPORATED /s/ David L. Grey - ------------------ ----------------- Francis Kenney 1999 David L. Grey Treasurer President and Chief MASSACHUSETTS Executive Officer IPSWICH BANCSHARES, INC. The Corporation is authorized to issue more than one class or series of stock. A copy of the preferences, powers qualifications and rights of each class and series will be furnished by the Corporation without charge to any shareholder upon written request. The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian --------- --------- (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors JT TEN - as joint tenants with right ACT of survivorship and not as -------------------------- tenants in common (State)
Additional abreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer unto ----------------------- PLEASE INSERT SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE =================================== | | ===================================--------------------------------------------- - -------------------------------------------------------------------------------- PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------SHARES represented by the within certificate, and do hereby irrevocably constitute and appoint - -------------------------------------------------------------------------------- Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises Dated, ----------------------------- ----------------------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the Certificate in every particular, without alteration or enlargement, or any change whatever. EX-10.1 6 TABLE OF CONTENTS TO LEASE BETWEEN THE FIVE JAYS REALTY TRUST AND IPSWICH SAVINGS BANK Page ARTICLE I - GRANT AND TERM Section 1.01 - Leased Premises 1 Section 1.02 - Use of Additional Areas 1 Section 1.03 - Commencement and Ending Date of Term 1 Section 1.04 - Lease Year Defined 1 Section 1.05 - Excuse of Owner's Performance 2 ARTICLE II - RENT Section 2.01 - Minimum Rent 2 Section 2.02 - Taxes 2 Section 2.03 - Additional Rent 3 Section 2.04 - Past Due Rent and Additional Rent 3 ARTICLE III - CONSTRUCTION, ALTERATION, RELOCATION AND FINANCING OF IMPROVEMENTS AND ADDITIONS THERETO Section 3.01 - Parking Facilities 3 Section 3.02 - Changes and Additions to Buildings 3 ARTICLE IV - CONDUCT OF BUSINESS BY TENANT Section 4.01 - Use of Premises 4 ARTICLE V - PARKING AND COMMON USE AREAS AND FACILITIES Section 5.01 - Control of Common Areas by Owner 4 ARTICLE VI - COST OF MAINTENANCE OF COMMON AREAS Section 6.01 - 5 Section 6.02 - 5 ARTICLE VII - SIGNS, AWNINGS, CANOPIES, FIXTURES, ALTERATIONS Section 7.01 - Installation by Tenant 6 Section 7.02 - Removal and Restoration 6 Section 7.03 - Tenant Shall Discharge All Liens 6
Section 7.04 - Signs, Awnings and Canopies 6 ARTICLE VIII - MAINTENANCE 0F LEASED PREMISES Section 8.01 - Maintenance by Tenant 6 Section 8.02 - Maintenance by Owner 7 Section 8.03 - Surrender of Premises 7 ARTICLE IX - INSURANCE AND INDEMNITY Section 9.01 - Public Liability, Property Damage, Plate Glass Insurance Section 9.02 - Insurance of Tenant's Fixtures 7 Section 9.03 - Hold Harmless 8 Section 9.04 - Fire and Extended Coverage Insurance 8 ARTICLE X - UTILITIES 8 Section 10.01 - Utility Charges 9 ARTICLE XI - OFFSET STATEMENT, ATTORNMENT, SUBORDINATION 9 Section 11.01 - Offset Statement 9 Section 11.02 - Attornment 10 Section 11.03 - Subordination 10 Section 11.04 - Attorney-In-Fact 10 ARTICLE XII - ASSIGNMENT AND SUBLETTING Section 12.01 - 10 ARTICLE XIII - WASTE, GOVERNMENTAL REGULATIONS Section 13.01 - Waste or Nuisance 11 Section 13.02 - Governmental Regulations 11 ARTICLE XIV - ADVERTISING, MERCHANTS ASSOCIATION Section 14.01 - Solicitation of Business 11 ARTICLE XV - EMINENT DOMAIN Section 15.01 - Total Condemnation of Premises 11 Section 15.02 - Partial Condemnation 11 Section 15.03 - Total Condemnation of Parking Area 12 Section 15.04 - Partial Condemnation of Parking Areas 12 Section 15.05 - Owner's Damages 12 Section 15.06 - Tenant's Damages 12 Section 15.07 - Condemnation of Less Than a Fee 13 ARTICLE XVI - DEFAULT OF THE TENANT Section 16.01 - Right to Re-Enter 13 Section 16.02 - Right to Re-Let 13 Section 16.03 - Legal Expenses 14 Section 16.04 - Waiver of Jury Trial and Counterclaim 14 Section 16.05 - Waiver of Rights and Redemption 14 ARTICLE XVII - TENANT'S PROPERTY Section 17.01 - Taxes on Leasehold 15 Section 17.02 - Loss and Damage 15 Section 17.03 - Notice by Tenant 15 ARTICLE XVIII - HOLDING OVER, SUCCESSORS Section 18.01 - Holding Over 15 Section 18.02 - Successors 15 ARTICLE XIX - QUIET ENJOYMENT Section 19.01 - Owner's Covenant 16 ARTICLE XX - MISCELLANEOUS Section 20.01 - Waiver 16 Section 2O.02 - Accord and Satisfaction 16 Section 2O.03 - Entire Agreement 16 Section 20.04 - No Partnership 16 Section 20.05 - Force Majeur 16 Section 20.06 - Notices 17
Section 20.07 - Captions and Section Numbers 17 Section 20.08 - Tenant Defined, Use of Pronouns 17 Section 20.09 - Broker's Commission 17 Section 20.10 - Partial Invalidity 17 Section 20.11 - Condominium Conversion - Right of First Refusal 17 Section 20.12 - Recording 17 Section 20.13 - Outstanding Mortgage Loan on Shopping Center - Covenant of Quiet Enjoyment in the Event of Financing 18
THIS INDENTURE OF LEASE, made on the 31st day of July, 1992 by LOUIS J. GALANIS, TRUSTEE OF FIVE JAYS REALTY TRUST, under declaration of Trust dated January 9, 1985, recorded at Essex South District Registry of Deeds, Book 7635, Page 293, herein called "Owner", and the IPSWICH SAVINGS BANK, a Massachusetts banking corporation, having a regular and usual place of business at 23 Market Street, Ipswich, Essex County, Massachusetts, herein called "Tenant." WITNESSETH: ARTICLE I GRANT AND TERM SECTION 1.01. LEASED PREMISES In consideration of the rents, covenants and agreements hereinafter reserved and contained on the part of Tenant to be observed and performed, the Owner demises and leases to the Tenant, and Tenant rents from Owner, those certain premises, now or hereafter to be erected in the Rowley Mini Mall Shopping Center (herein called the "Shopping Center") in Rowley, Essex County, Massachusetts, which premises consist of a store and basement, each containing an area of approximately 1,650 square feet, herein called the "leased premises". The boundaries and location of the leased premises are designated "Unit #2." Owner agrees not to obstruct or interfere with Tenant's usage of the drive-in lanes and the canopy attached to the leased premises. SECTION 1.02. USE OF ADDITIONAL AREAS The use and occupation by the Tenant of the leased premises shall include the use in common with others entitled thereto of the common areas, employees' parking areas, service roads, loading facilities, sidewalks and customer car parking areas, and other facilities as may be designated from time to time by the Owner, subject however to the terms and conditions of this agreement and to reasonable rules and regulations for the use thereof as prescribed from time to time by the Owner. SECTION 1.03. COMMENCEMENT AND ENDING DATE OF TERM The term of this lease and Tenant's obligation to pay rent hereunder shall commence on August 1, 1992. The term of this lease shall end on the last day of the eight (8th) consecutive full lease year as said term "lease year" is hereinafter defined. Tenant shall have the option to renew the within lease for three five-year terms, each at the then fair market rental value of the Leased Premises commencing at the end of the term and at the end of each renewal period. In the event that the Owner and the Tenant can not agree on the "then fair market rental value" at the end of any term, the following procedure shall be utilized: the Owner shall select one qualified real estate appraiser; the Tenant shall select one qualified real estate appraiser, the two appraisers shall select a third qualified real estate appraiser; the three appraisers so selected shall, by majority vote, determine the then fair market rental value of the Leased Premises in accordance with the application of the economic provisions of this Lease. The Owner and the Tenant shall be bound by the determination of the appraisers for the duration of the renewal term then commenced. SECTION 1.04. LEASE YEAR DEFINED The term "lease year" as used herein shall mean a period of twelve (12) consecutive full calendar months. The first lease year shall begin on the date of commencement of the term hereof if the date of commencement of the term hereof shall occur on the first day of a calendar month; if not, then the first lease year shall commence upon the first day of the calendar month next following the date of commencement of the term hereof. Each succeeding lease year shall commence upon the anniversary date of the first lease year. SECTION 1.05. EXCUSE OF OWNER'S PERFORMANCE Anything 1n this agreement to the contrary notwithstanding, providing such cause is not due to the willful act or neglect of the Owner, the Owner shall not be deemed in default with respect to the performance of any of the terms, covenants, and conditions of this lease if same shall be due to any strike, lockout, civil commotion, war-like operation, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, inability to obtain any material, service or financing, through Act of God or other cause beyond the control of the Owner. ARTICLE II RENT SECTION 2.01. MINIMUM RENT Tenant agrees to pay to Owner at the office of Owner, or at such other place designated by Owner, without any prior demand therefor and without any deduction or set-off whatsoever, and as fixed minimum rent: (a) The sum of $1,900.00 in advance upon the first day of each calendar month for the first four years of the lease and will then increase to $2,200 per month for the remaining four years of the lease. If the term shall commence upon a day other than the first day of a calendar month, then Tenant shall pay, upon the commencement date of the term, a pro-rata portion of the fixed monthly rent described in the foregoing clause (a) prorated on a per diem basis with respect to the fractional calendar month preceding the commencement of the first lease year hereof. SECTION 2.02. TAXES (A) For each municipal fiscal year, commencing with Fiscal Year 1993, included within the term, or renewals, of this Lease, Tenant shall pay Owner as additional rent the Tenants' actual assessment per the annual tax bill assessed upon the Leased Premises (as described in Section 1.01) are located, within thirty (30) days of notice from Owner. The expression "real estate taxes" shall include betterments, assessments, taxes upon gross rents, and any other taxes which upon assessment or failure of payment become a lien upon the real estate with respect to which they are assessed. In the event that any interest and/or penalties are chargeable to Owner by any taxing authority for failure to pay, or late payment, by Owner, Tenant shall pay Owner the same amounts to Owner if Tenant does not pay Owner such additional rents before Owner must pay the applicable taxes to the applicable taxing authority. (B) The real estate taxes upon the Shopping Center for any tax year shall mean such amounts as shall be finally determined to be the real estate taxes payable with respect to the Shopping Center for said tax year, that is, the real estate taxes assessed against the Shopping Center for said tax year less any abatements, refunds or rebates made thereof. For the purpose of determining payments due from Tenant to Owner in accordance with the provisions of this Article (i) the real estate taxes upon the Shopping Center for any tax year shall be deemed to be the real estate taxes assessed for said year until such time as an abatement, refund or rebate shall be made thereof; and (ii) if any abatement, refund or rebate shall be made for any tax year, an appropriate adjustment shall be made in the amount payable from or paid by Tenant to Owner on account of real estate taxes. (C) Tenant shall pay all taxes allocable to its leasehold interests and its signs and other property in or upon the demised premises. Tenant shall also pay all taxes allocable to any improvements made by Tenant to the demised premises. For the purpose of this Article, such taxes shall not be included within real estate taxes upon the Shopping Center. SECTION 2.03. ADDITIONAL RENT The Tenant shall pay as additional rent any money required to be paid pursuant to Sections 2.02, 6.02, 8.01, 8.02, 9.03, 9.04 and 10.01, and all other sums of money or charges required to be paid by Tenant under this lease, whether or not the same be designated "additional rent". If such amounts are not paid at the time provided in this lease, they shall nevertheless, if not paid when due, be collectible as additional rent with the next installment of rent thereafter falling due hereunder, but nothing herein contained shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due and payable hereunder, or limit any other remedy of the Owner. SECTION 2.04. PAST DUE RENT AND ADDITIONAL RENT If Tenant shall fail to pay, when the same is due and payable, any rent or any additional rent, or amounts or charges of the character described in Section 2.03 hereof, and if such amounts remain unpaid for a fifteen-day period, such unpaid amounts shall bear interest from the due date thereof to the date of payment at the rate of eighteen (18%) percent per annum, subject to the provisions of Section 16.01, and the time periods set forth herein. ARTICLE III CONSTUCTION, ALTERATION, RELOCATION, AND FINANCING OF IMPROVEMENTS AND ADDITIONS THERETO SECTION 3.01. PARKING FACILITIES The Owner has constructed upon the Shopping Center site at its own cost access roads, sidewalks, parking lots, and other facilities. Owner has striped the parking lot and identified the access roads to the Tenant's drive-in window. Tenant shall have equal rights with all other tenants of the Shopping Center to use all of the parking spaces. In the event that Owner exercises its rights under Section 3.0Z to alter and/or enlarge the Shopping Center, Owner agrees to continue to provide to Tenant approximately nineteen (19) parking spaces within the same approximate radium of the Leased Premises as are presently located the nineteen (19) parking spaces closest to the Leased Premises. SECTION 3.02. CHANGES AND ADDITIONS TO BUILDINGS Owner hereby reserves the right at any time to make alterations or additions or and to build additional stories on the building in which the premises are contained and to build adjoining the same. Owner also reserves the right to construct other buildings or improvements in the Shopping Center from time to time and to make alterations thereof or additions thereto and to build additional stories on any such building or buildings and to build adjoining the same and to construct double-deck or elevated parking facilities. In the event Owner makes such additions to the Shopping Center, Owner agrees that Tenant shall have the right to reasonably adequate parking facilities, as determined by Tenant's existing parking facilities. ARTICLE IV CONDUCT OF BUSINESS BY TENANT SECTION 4.01. USE OF PREMISES Tenant shall use the leased premises solely for the purpose of conducting the business of retail banking, financing, and related operations and functions, including, but not limited to, the sale of real estate, securities, data processing, insurance, general business services, mortgage brokering and provision of mortgages, and real estate brokerage. Tenant shall occupy the leased premises within thirty (30) days after the date of the notice provided for in Section 1.03 hereof, and shall conduct continuously in the leased premises the business above stated. Tenant will not use or permit, or suffer the use of, the leased premises for any other business or purpose. Tenant shall not conduct catalogue sales in or from the leased premises except of merchandise which Tenant is permitted to sell "over the counter" in or at the leased premises pursuant to the provisions of this Section 4.01. ARTICLE V PARKING AND COMMON USE AREAS AND FACILITIES SECTION 5.01. CONTROL OF COMMON AREAS BY OWNER All automobile parking areas, driveways, entrances and exits thereto, and other facilities furnished by Owner in or near the Shopping Center, including employee parking areas, the truck way or ways, loading docks, package pick-up stations, pedestrian sidewalks and ramps, landscaped areas, exterior stairways, first-aid stations, comfort stations and other areas and improvements provided by Owner for the general use, in common, of tenants, their officers, agents, employees and customers, shall at all times be subject to the exclusive control and management of Owner, and Owner shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to all facilities and areas mentioned in this Article. Owner shall have the right to construct, maintain and operate lighting facilities on all said areas and improvements; to police the same; from time to time to change the area, level, location and arrangement of parking areas and other facilities hereinabove referred to; to restrict parking by tenants, their officers, agents and employees to employee parking areas; to close all or any portion of said areas or facilities to such extent as may, in the opinion of Owner's counsel, be legally sufficient to prevent a dedication thereof or the accrual of any rights to any person or to the public therein; to discourage non-customer parking and to do and perform such other acts in and to said areas and improvements as, in the use of good business judgment, the Owner shall determine to be advisable with a view to the improvement of the convenience and use thereof by Tenants, their officers, agents, employees and customers. Owner will operate and maintain the common facilities referred to above in such manner as Owner, in its sole discretion, shall determine from time to time. Without limiting the scope of such discretion, Owner shall have the full right and authority to employ all personnel and to make all rules and regulations pertaining to and necessary for the proper operation and maintenance of the common areas and facilities. ARTICLE VI COST OF MAINTENANCE OF COMMON AREAS SECTION 6.01 Owner agrees to hard-surface, mark, properly drain, adequately light, and landscape the parking areas, together with the necessary access roads, within the limits of the property. Owner agrees to operate, manage, and maintain during the term of this Lease all parking areas, roads, and accommodation areas within the Center. The manner in which such areas and facilities shall be maintained. and the expenditures therefor, shall be at the sole discretion of owner, and the use of such areas and facilities shall be subject to such reasonable regulations as Owner shall make from time to time. SECTION 6.02 Commencing on August 1, 1992, Tenant agrees to pay, upon demand, but not more often than once a year, in addition to the Minimum Rent (as set forth in Section 2.01) Sixteen and 6/10 (16.6) Percentum of any increase in the costs and expenses of Owner of maintaining and operating the parking areas, accommodations areas, delivery systems, and all other common areas, in excess of such costs and expenses for the immediately preceding twelve (12) month period (i.e., August 1, 1991 to July 31, 1992, the first lease year). Such operating and maintenance costs shall include all reasonable costs and expenses of operating and maintaining such areas and facilities in such manner as Owner may, from time to time, deem appropriate and for the best interests of the Tenants of the Shopping Center, including without limitation, providing private police protection, security patrol, or night watchmen for the Shopping Center, labor, compensation insurance, payroll taxes, materials, supplies, and all other costs of operating, repairing, lighting, heating, air conditioning, cleaning, sweeping, painting, removing of rubbish or debris, policing, inspecting, and all casualty and such other insurance in such amounts and covering hazards deemed appropriate by Owner, and all costs other than those which are properly charged to capital account under generally accepted accounting principles, of replacement of paving, curbs, walkways remarking, directional or other signs, landscaping, drainage, and lighting facilities, and the cost to Owner of obtaining supervisory services for and maintaining the fire sprinkler system(s). There shall be excluded the cost of construction of improvements to such common areas which are properly charged to capital account and depreciation of the original costs of construction of such common areas. In the event that the Shopping Center is expanded, appropriate adjustments shall be made in common area charges to include the expanded area(s). Tenant's share of such costs and expenses of maintaining and operating such common areas may be estimated by Owner subject to adjustment in future billing to Tenant. Such operating and maintenance costs shall be computed on an accrual basis under generally accepted accounting principles. On or before September 1st of each year, Owner shall determine (and furnish to Tenant a statement showing in reasonable detail) the costs and expenses of maintaining such areas referred to in this Section during the preceding year, ending July 31st. To the extent Tenant's proportionate share of the increase over the preceding year of such costs and expenses is greater or less than the sum actually billed to and paid by Tenant therefor, as the case may be, during said year, the difference shall be billed or refunded to Tenant, as the case may be. ARTICLE VII SIGNS, AWNINGS, CANOPIES, FIXTURES, ALTERATIONS SECTION 7.01. INSTALLATION BY TENANT All fixtures installed by Tenant shall be new or completely reconditioned. Tenant shall not make or cause to be made any alterations, additions or improvements or install or cause to be installed any trade fixtures, exterior signs, floor covering, interior or exterior lighting, plumbing fixtures, shades or awnings or make any changes to the store front without first obtaining Owner's written approval and consent. Tenant shall present to the Owner plans and specifications for such work at the time approval is sought. Such approval and consent shall not be unreasonably withheld by Owner. SECTION 7.02. REMOVAL AND RESTORATION BY TENANT All alterations, decorations, additions and improvements made by the Tenant, or made by the Owner on the Tenant's behalf by agreement under this lease, shall remain the property of the Tenant for the term of this lease, or any extension or renewal thereof. Such alterations, decorations, additions and improvements shall not be removed from the premises prior to the end of the term hereof without prior consent in writing from the Owner. Upon expiration of this lease, or any renewal term thereof, the Tenant shall remove all such alterations, decorations, additions and improvements and restore the leased premises as provided in Section 8.03 hereof. If the Tenant fails to remove such alterations, decorations, additions and improvements and restore the leased premises, then upon the expiration of this lease, or any renewal thereof, and upon the Tenant's removal from the premises, all such alterations, decorations, additions and improvements shall become the property of the Owner. SECTION 7.03. TENANT SHALL DISCHARGE ALL LIENS Tenant shall promptly pay all contractors and materialmen, so as to minimize the possibility of a lien attaching to the leased premises, and should any such lien be made or filed, Tenant shall bond against or discharge the same within ten (10) days after written request by Owner. SECTION 7.04. SIGNS, AWNINGS AND CANOPIES Tenant will not place or suffer to be placed or maintained on any exterior door, wall or window of the leased premises any sign, awning or canopy, or advertising matter or other thing of any kind, and will not place or maintain any decoration, lettering or advertising matter on the glass of any window or door of the leased premises without first obtaining Owner's written approval and consent. Tenant further agrees to maintain such sign, awning, canopy, decoration, lettering, advertising matter or other thing as may be approved in good condition and repair at all times. Such approval and consent shall not be unreasonably withheld by Owner. ARTICLE VIII MAINTENANCE OF LEASED PREMISES SECTION 8.01. MAINTENANCE BY TENANT Tenant shall, at all times, maintain the demised premises (including all exterior entrances and the inside and outside of all glass in the doors and windows and show window moldings) and all partitions, doors and window frames, fixtures, equipment and appurtenances thereto (including, but not limited to, all electrical plumbing fixtures, heating, air-conditioning and other mechanical installations therein) in good order, condition, and normal repair at its own expense. In the event that the heating or air conditioning installation on the Leased premises require major repairs or entire replacement, the costs of such repair or replacements shall be paid by the Owner. The Owner shall be responsible for the plowing of snow and contorl of ice in the parking lot; the Tenant shll be responsible for the removal of snow and the control of ice on the sidewalks abutting the Leased Premises. SECTION 8.02. MAINTENANCE BY OWNER If Tenant refuses or neglects to repair property as required hereunder and to the reasonable satisfaction of Owner as soon as reasonably possible after written demand, Owner may make such repairs without liability to Tenant for any loss or damage that may accrue to Tenant's merchandise, fixtures, or other property or to Tenant's business by reason thereof, and upon completion thereof, Tenant shall pay Owner's costs for making such repairs, upon presentation of bill therefor, as additional rent. SECTION 8.03. SURRENDER OF PREMISES At the expiration of the tenancy hereby created, Tenant shall surrender the leased premises in the same condition as the leased premises were in upon delivery of possession thereto under this lease, reasonable wear and tear excepted, and damage by unavoidable casualty excepted, and shall surrender all keys for the leased premises to Owner at the place then fixed for the payment of rent and shall inform Owner of all combinations on locks, safes, and vaults, if any, in the leased premises. Tenant shall re!move all of its trade fixtures, and any alterations or improvements as provided in Section 7.02 hereof, before surrendering the premises as aforesaid and shall repair any damage to the leased premises caused thereby. Tenant's obligations to observe or perform this covenant shall survive the expiration or other termination of the terms of this lease. ARTICLE IX INSURANCE AND INDEMNITY SECTION 9.01. PUBLIC LIABILITY, PROPERTY DAMAGE, PLATE GLASS INSURANCE Tenant agrees, at its own expense, to maintain in full force during the leased term a policy or policies or comprehensive liability insurance, including property damage, written by one or more responsible insurance companies licensed to do business in Massachusetts, which will insure Tenant and Owner (and such other persons, firms or corporations as are designated by Owner) against liability for injury to persons and/or property and death of any person or persons occurring in or about the premises. Each such policy shall be approved as to form and insurance company by Owner. The liability under such insurance shall not be less than $300,000.00 for any one person injured or killed, and not less than $500,000.00 for any one accident and not less than $50,000.00 property damage. If, in the considered opinion of Owner's insurance advisor, the amount of such coverage is not adequate, Tenant agrees to increase said coverage to such reasonable amounts as Owner's advisor shall deem adequate. Tenant shall also maintain and keep in force plate glass insurance coverage on all exterior plate glass in the premises. The insurance in this subparagraph provided may be covered by general policies covering all of-Tenant's stores. Tenant shall provide Owner with copies of certificates of all said policies including an endorsement which states that such insurance shall not be cancelled after thirty (3O) days' notice in writing to Owner. SECTION 9.02. INSURANCE OF TENANT'S FIXTURES Tenant agrees that 1t will at all times during the leased term maintain in force on all its fixtures and equipment in the premises a policy or policies of fire insurance with a standard extended coverage endorsement attached to the extent of at least eighty per cent (80%) of their insurable value, the proceeds of which will, so long as this lease is in effect, be used for the repair or replacement of the fixtures and equipment so insured. It is understood that Owner shall have no interest in the insurance upon Tenant's equipment and fixtures, and will sign all documents necessary or proper in connection with the settlement of any claim or loss by Tenant. Tenant shall have the right, at its sole option, to self-insure its fixtures and equipment. SECTION 9.03. HOLD HARMLESS Tenant will indemnify Owner and save it harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage to property arising from or out of any occurrence in, upon or at the demised premises or from the occupancy or use by Tenant of the demised premises or any part thereof, or occasioned wholly or in any part by any act or omission of Tenant, its agents, contractors, employees, servants, lessees, or concessionaires, unless said claims are caused by negligence of the Owner. In case Owner shall, without fault on its part, be made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Owner harmless and shall pay all costs, expenses and reasonable attorney fees incurred or paid by Owner in connection with such litigation. Tenant shall also pay all costs, expenses and reasonable attorney fees that may be incurred or paid by Owner in enforcing the covenants and agreements of this lease. Owner shall indemnify Tenant and save it harmless from and against any and all claims, actions, damages, etc. arising from or out of any occurrence in or upon the common areas of the Shopping Center. SECTION 9.04. FIRE AND EXTENDED COVERAGE INSURANCE (A) In case the premises shall be partially or totally destroyed by fire or other casualty insurable under full standard extended risk insurance as to become partially or totally untenantable, the same shall be repaired as speedily as possible at the expense of Owner, unless Owner shall not elect to rebuild as hereinafter provided, and (should there be a substantial interference with Tenant's business) a just and proportionate part of the fixed rent shall be abated until so repaired. (B) If less than Fifty (50%) Percent of the building in which the Leased Premises (as described in Section 1.01) are located shall be destroyed or damaged by fire or other casualty as to become wholly untenantable, then, in such event, Owner must rebuild or put said building in good condition and fit for occupancy, within a reasonable time after such destruction or damage, unless Tenant releases in writing Owner from such obligation. (C) If more than Fifty (50%) Percent of the building in which the premises are located shall be destroyed or so damaged by fire, or other casualty insurable under full standard extended risk insurance, as to become wholly untenantable or in the event the premises shall be partially or totally destroyed by a cause or casualty other than those covered by fire and extended coverage risk insurance then, in any such event, Owner may, if it so elects, rebuild or put said building in good condition and fit for occupancy, within a reasonable time after such destruction or damage, or may give notice in writing terminating this lease as of a date not later than ninety (90) days after any such damage or destruction. If Owner elects to repair or rebuild said building, it shall, within ninety (90) days after such injury, give the Tenant notice of its intention to repair and then to proceed with reasonable speed to make such repairs. Unless Owner elects to terminate this lease, this lease shall remain in full force and effect and the parties waive the provisions of any law to the contrary, (D) Owner's obligation (should it elect or be obligated to repair or rebuild) shall be limited to the basic building, store front, and interior work as covered by Description of Owner's Work, attached hereto, and Tenant shall forthwith replace or fully repair all exterior signs, trade fixtures, equipment, display cases and other installations originally installed by Tenant at its expense. (E) In addition to the insurance which Tenant is required to maintain pursuant to Article IX of this lease, for each municipal fiscal year commencing with Fiscal Year 1993, included within the term or renewals of this lease, Tenant shall pay to Owner as additional rent Sixteen and 6/10 (16.6%) percentum of the total premium paid by Owner for fire insurance (including the so-called "extended coverage endorsement") rent insurance, and comprehensive public liability upon Owner's buildings and improvements in the center in excess of the premiums paid by Owner during municipal fiscal year 1992. The amount of fire insurance to be maintained by Owner shall be not less than eighty (80%) percent and not more than one hundred (100%) percent of the actual cash value of Owner's buildings and improvements in the center as such value may exist from time to time. Tenant shall be required to reimburse Owner for Tenant's share of such insurance not more frequently than quarterly. With respect to any insurance effective for a term extending beyond the term of Tenant's lease, Tenant shall be obligated to pay only such proportion of Tenant's share of the premium as that portion of the term of the policy lapsing prior to the expiration of the term of Tenant's lease bears to the entire term of the policy. ARTICLE X UTILITIES SECTION 10.1. UTILITY CHARGES Tenant shall be solely responsible for and promptly pay all charges for heat, gas, electricity, or any other utility used or consumed in the leased premises. Should Owner elect to supply the gas, heat, electricity or any other utility used or consumed in the leased premises, Tenant agrees to purchase and pay for the same as additional rent at the applicable rates filed by the Owner with the proper regulatory authority. In no event shall Owner be liable for an interruption or failure in the supply of any such utilities to the leased premises. ARTICLE XI OFFSET STATEMENT, ATTORNMENT, SUBORDINATION SECTION 11.01. OFFSET STATEMENT Within ten days after request therefor by Owner, or in the event that upon any sale, assignment or hypothecation of the leased premises and/or the land thereunder by Owner an offset statement shall be required from Tenant; Tenant agrees to deliver in recordable form a certificate to any proposed mortgagee or purchaser, or to Owner, certifying (if such be the case) that this lease is in full force and effect and that there are no defenses or offsets thereto, or stating those claimed by Tenant. SECTION 11.02. ATTORNMENT Tenant shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage made by the Owner covering the leased premises, attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Owner under this lease. SECTION 11.03. SUBORDINATION Upon request of the Owner, Tenant will subordinate its rights hereunder to the lien of any mortgage or mortgages, or the lien resulting from any other method of financing or refinancing, now or hereafter in force against the land and/or buildings of which the leased premises are a part or against any buildings hereafter placed upon the land of which the leased premises are a part, and to all advances made or hereafter to be made upon the security thereof. Tenant shall have the right to record a Notice of Lease, at the Registry of Deeds; Owner agrees to cooperate in the necessary negotiation, execution, and recording thereof. SECTION 11.04. ATTORNEY-IN-FACT The Tenant, upon request of any party in interest, shall execute promptly such instruments or certificates to carry out the intent of Sections 11.02 and 11.03 above as shall be requested by the Owner. The Tenant hereby irrevocably appoints the Owner as attorney-in-fact for the Tenant with full power and authority to execute and deliver in the name of the Tenant any such instruments or certificates. If fifteen (15) days after the date of a written request by Owner to execute such instruments, the Tenant shall not have executed the same, the Owner may, at its option, cancel this lease without incurring any liability on account thereof, and the term hereby granted is expressly limited accordingly. ARTICLE XII ASSIGNMENT AND SUBLETTING SECTION 12.01 Tenant will not assign this lease in whole or in part, nor sublet all or any part of the leased premises, without the prior written consent of Owner in each instance. The consent by Owner to any assignment or subletting shall not constitute a waiver of the necessity for such consent to any subsequent assignment or subletting. This prohibition against assigning or subletting shall be construed to include a prohibition against any assignment or subletting by operation of law. If this lease be assigned, or if the leased premises or any part thereof be underlet or occupied by anybody other than Tenant, Owner may collect rent from the assignee, under-tenant or occupant, and apply the net amount collected to the rent herein reserved, but no such assignment, underletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, under-tenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. Notwithstanding any assignment or sublease, Tenant shall remain fully liable on this lease and shall not be released from performing any of the terms, covenants and conditions of this lease. Tenant shall have the right to sublet or assign the within lease to wholly owned subsidiary as long as the Tenant remains liable. Owner's approval of Tenant's subletting or assignment shall not be unreasonably withheld. In the event that Tenant merges or reorganizes, Tenant's successor in interest shall have the right to assume or be the assignee of the within lease, without the approval of Owner. ARTICLE XIII WASTE, GOVERNMENTAL REGULATIONS SECTION 13.01. WASTE OR NUISANCE Tenant shall not commit or suffer to be committed any waste upon the leased premises or any nuisance or other act or thing which may disturb the quiet enjoyment of any other tenant in the building in which the leased premises may be located, or in the Shopping Center, or which may disturb the quiet enjoyment of any person within hundred feet of the boundaries of the Shopping Center. SECTION 13.02. GOVERNMENTAL REGULATIONS Tenant shall, at Tenant's sole cost and expense, comply with all of the requirements of all county, municipal, state, federal and other governmental authorities, now in force, or which may hereafter be in force, pertaining to the said premises, and shall faithfully observe in the use of the premises all municipal and county ordinances and state and federal statutes now in force or which may hereafter be in force. ARTICLE XIV ADVERTISING, MERCHANTS ASSOCIATION SECTION 14.01. SOLICITATION OF BUSINESS Tenant and Tenant's employees and agents shall not solicit business in the parking or other common areas, nor shall Tenant distribute any handbills or other advertising matter in automobiles parked in the parking area or other common areas. ARTICLE XV EMINENT DOMAIN SECTION 15.01. TOTAL CONDEMNATION OF PREMISES If the whole of the leased premises shall be acquired or condemned by eminent domain for any public or quasi-public use or purpose, then the term of this lease shall cease and terminate as of the date of title vesting in such proceeding and all rents shall be paid up to that date and Tenant shall have any claim against Owner for the value of any unexpired term of this lease. SECTION 15.02. PARTIAL CONDEMNATION If any part of the leased premises shall be acquired or condemned as aforesaid, and in the event that such partial taking or condemnation shall render the leased premises unsuitable for the business of the Tenant, then the term of this lease shall cease and terminate as of the date of title vesting in such proceeding. Tenant shall have no claim against Owner for the value of any unexpired term of this lease and rent shall be adjusted to the date of such termination. In the event of a partial taking or condemnation which is not extensive enough to render the premises unsuitable for the business of the Tenant, then Owner shall promptly restore the leased premises to a condition comparable to its condition at the time of such condemnation less the portion lost in the taking, and this lease shall continue in full force and effect without any reduction or abatement of rent. SECTION 15.03. TOTAL CONDEMNATION OF PARKING AREA If the whole of the common parking area in the Shopping Center shall be acquired or condemned as aforesaid, then the term of this lease shall cease and terminate as of the date of title vesting in such proceeding unless Owner shall take immediate steps to provide other parking facilities substantially equal to the previously existing ratio between the common parking areas and the leased premises, and such substantially equal parking facilities shall be provided by Owner at its own expense within ninety (90) days from the date of acquisition. In the event that Owner shall provide such other substantially equal parking facilities, then this lease shall continue in full force and effect without any reduction or abatement of rent. SECTION 15.04. PARTIAL CONDEMNATION OF PARKING AREAS If any part of the parking area in the Shopping Center shall be acquired or condemned as aforesaid, and if, as the result thereof the ratio of square feet of parking field to square feet of the sales area of the entire Shopping Center buildings Is reduced to a ratio below two to one, then the term of this lease shall cease and terminate upon the vesting of title in such proceeding, unless the Owner shall take immediate steps toward increasing the parking ratio to a ratio in excess of two to one, in which event this lease shall be unaffected and remain in full force and effect without any reduction or abatement of rent. In event of termination of this lease aforesaid, Tenant shall have no claim against Owner for the value of any unexpired term of this lease and rent shall be adjusted to the date of said termination. SECTION 15.05. OWNER'S DAMAGES In the event of any condemnation or taking as aforesaid, whether whole or partial, the Tenant shall not be entitled to any part of the award paid for such condemnation and Owner is to receive the full amount of such award, the Tenant hereby expressly waiving any right or claim to any part thereof. SECTION 15.06. TENANT'S DAMAGES Although all damages in the event of any condemnation are to belong to the Owner whether such damages are awarded as compensation for dimunition in value of the leasehold or to the fee of the leased premises, Tenant shall have the right to claim and recover from the condemning authority, but not from Owner, such compensation as may be separately awarded or recoverable by Tenant in Tenant's owner right on account of any and all damage to Tenant's business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be put in removing Tenant's merchandise, furniture, fixtures, leasehold improvements and equipment, or for any other claims the Tenant may have. SECTION 15.07 CONDEMNATION OF LESS THAN A FEE In the event of a condemnation of a leasehold interest in all or a portion of the leased premises without the condemnation of the fee simple title also, this lease shall not terminate and such condemnation shall not excuse Tenant from full performance of all of its covenants hereunder, but Tenant in such event shall be entitled to present or pursue against the condemning authority its claim for and to receive all compensation or damages sustained by it by reason of such condemnation, and Owner's right to recover compensation or damages shall be limited to compensation for and damages if any, to its reversionary interest; it being understood, however, that during such time as Tenant shall be out of possession of the leased premises by reason of such condemnation, the lease shall not be subject to forfeiture for failure to observe and perform those covenants not calling for the payment of money. In the event the condemning authority shall fail to keep the premises in the state of repair required hereunder, or to perform any other covenant not calling for the payment of money, Tenant shall have ninety (90) days after the restoration of possession to it within which to carry out its obligations under such covenant or covenants. During such time as Tenant shall be out of possession of the leased premises by reason of such leasehold condemnation, Tenant shall pay to Owner, in lieu of the minimum and percentage rents provided for hereunder, and in addition to any other payments required of Tenant hereunder, an annual rent equal to the average annual minimum and percentage rents paid by Tenant for the period from the commencement of the term until the condemning authority shall take possession, or during the preceding three full calendar years, whichever period is shorter. At any time after such condemnation proceedings are commenced, Owner shall have the right, at its option, to require Tenant to assign to Owner all compensation and damages payable by the condemnor to Tenant, to be held without liability for interest thereon as security for the full performance of Tenant's covenants hereunder, such compensation and damages received pursuant to said assignment to be applied first to the payment of rents and all other sums from time to time payable by Tenant pursuant to the terms of this lease as such sums fall due, and the remainder, if any, to be payable to Tenant at the end of the term hereof or on restoration of possession to Tenant, whichever shall first occur, it being understood and agreed that such assignment shall not relieve Tenant of any of its obligations under this lease with respect to such rents, and other sums except as the same shall be actually received by Owner. ARTICLE XVI DEFAULT OF THE TENANT SECTION 16.01. RIGHT TO RE-ENTER In the event of any failure of Tenant to pay any rental due hereunder within ten (10) days after the same shall be due, or any failure to perform any other of the terms, conditions, or covenants of this lease to be observed or performed by Tenant for more than thirty (30) days after written notice of such default shall have been given to Tenant, or if Tenant or an agent of Tenant shall falsify any report required to be furnished to Owner pursuant to the terms of this lease, or if Tenant or any guarantor of this lease shall become bankrupt or insolvent, or file any debtor proceedings or take or have taken against Tenant or any guarantor of this lease in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant's or any such guarantor's property, or if Tenant or any such guarantor makes an assignment for the benefit of creditors, or petitions for or enters into an arrangement, or if Tenant shall abandon said premises, or suffer this lease to be taken under any writ or execution, the Owner besides other rights or remedies it may have, shall have the immediate right of re-entry and may remove, all persons and property from the leased premises and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Tenant, all without service of notice or resort to legal process and without being deemed guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. SECTION 16.02. RIGHT TO RELET Should Owner elect to re-enter, as herein provided, or should it take possession pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this lease or it may from time to time without terminating this lease, make such alterations and repairs as may be necessary in order to relet the premises, and relet said premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this lease) and at such rental or rentals and upon such other terms and conditions as Owner in its sole discretion may deem advisable; upon each such reletting all rentals received by the Owner from such reletting shall be applied, first, to the payment of any indebtedness other than rent due hereunder from Tenant to Owner; second, to the payment of any costs and expenses of such reletting, including brokerage fees and attorney's fees and of costs of such alterations and repairs; third, to the payment of rent due and unpaid hereunder. If such rentals received from such reletting during any month be less than that to be paid during that month by Tenant hereunder, Tenant shall pay any such deficiency to Owner. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of said premises by Owner shall be construed as an election on its part to terminate this lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Owner may at any time thereafter elect to terminate this lease for such previous breach. Should Owner at any time terminate this lease for any breach, in addition to any other remedies it may have, it may recover from Tenant all damages it may incur by reason of such breach, including the cost of recovering the leased premises, reasonable attorney's fees, and including the worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to rent reserved in this lease for the remainder of the stated term over the then reasonable rental value of the leased premises for the remainder of the stated term, all of which amounts shall be immediately due and payable from Tenant to Owner. In determining the rent which would be payable by Tenant hereunder, subsequent to default, the annual rent for each year of the unexpired term shall be equal to the average annual minimum and percentage rents paid by Tenant from the commencement of the term to the time of default, or during the preceding three full calendar years, whichever period is shorter. Owner shall have a good faith obligation to mitigate the damages caused by such failure(s) of Tenant. SECTION 16.03. LEGAL EXPENSES In case suit shall be brought for recovery of possession of the leased premises, for the recovery of rent or any other amount due under the provisions of this lease, or because of the breach of any other covenant herein contained on the part of Tenant to be kept or performed, and a breach shall be established, Tenant shall pay to Owner all expenses incurred therefor, including a reasonable attorney's fee. SECTION 16.04. WAIVER OF JURY TRIAL AND COUNTERCLAIMS The parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this lease, the relationship of Owner and Tenant, Tenant's use or occupancy of the leased premises, and/or any claim of injury or damage. SECTION 16.05. WAIVER OF RIGHTS OF REDEMPTION Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Owner obtaining possession of the leased premises by reason of the violation of Tenant of any of the covenants or conditions of this lease, or otherwise. ARTICLE XVII TENANT'S PROPERTY SECTION 17.01. TAXES ON LEASEHOLD Tenant shall be responsible for and shall pay before delinquency all municipal, county or state taxes assessed during the term of this lease against any leasehold interest or personal property of any kind, owned by or placed in, upon or about the leased premises by the Tenant. SECTION 17.02, LOSS AND DAMAGE Owner shall not be liable for any damage to property of Tenant or of others located on the leased premises, nor for the loss of or damage to any property of Tenant or of others by theft or otherwise. Owner shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the leased premises or from the pipes, appliances or plumbing works or from the roof, street or sub-surface or from any other place or by dampness or by any other cause of whatsoever nature. Owner shall not be liable for any such damage caused by other tenants or persons in the leased premises, occupants of adjacent property, of the Shopping Center, or the public, or caused by operations in construction of any private, public or quasi-public work. Owner shall not be liable for any latent defect in the leased premises or in the building of which they form a part except for a period of one (1) year from the date Tenant takes possession of the leased premises. All property of Tenant kept or stored on the leased premises shall be so kept or stored at the risk of Tenant only and Tenant shall hold Owner harmless from any claims arising out of damage to the same, including subrogation claims by Tenant's insurance carrier, unless such damage shall be caused by the willful act or gross neglect of Owner. Owner agrees to name Tenant as a named insured on any and all insurance policies covering the building; Tenant agrees to name the Owner as a named insured on any and all insurance policies covering the leased premises. SECTION 17.03. NOTICE BY TENANT Tenant shall give immediate notice to Owner in case of fire or accidents in the leased premises or in the building of which the premises are a part of defects therein or in any fixture or equipment. ARTICLE XVIII HOLDING OVER, SUCCESSORS SECTION 18.01. HOLDING OVER Any holding over after the expiration of the term hereof, with the consent of the Owner, shall be construed to be a tenancy from month to month at the rents herein specified (pro-rated on a monthly basis) and shall otherwise be on the terms and conditions herein specified, so far as applicable. SECTION 18.02. SUCCESSORS All rights and liabilities herein given to, or imposed upon, the respective parties hereto shall extend to and bind the several respective heirs, executors, administrators, successors, and assigns of the said parties; and if there shall be more than one tenant, they shall all be bound jointly and severally by the terms, covenants and agreements herein. No rights, however, shall inure to the benefit of any assignee of Tenant unless the assignment to such assignee shall have been approved by Owner in writing as provided in Section 12.01 hereof. ARTICLE XIX QUIET ENJOYMENT SECTION 19.01. OWNER'S COVENANT Upon payment by the Tenant of the rents herein provided, and upon the observance and performance of all the covenants, terms and conditions on Tenant's part to be observed and performed, Tenant shall peaceably and quietly hold and enjoy the leased premises for the term hereby demised without hindrance or interruption by Owner or any other person or persons lawfully or equitably claiming by, through or under the Owner, subject, nevertheless, to the terms and conditions of this lease. ARTICLE XX MISCELLANEOUS SECTION 20.01. WAIVER The waiver by Owner of any breach :f any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition or any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Owner shall not be deemed to be a waiver of and preceding breach by Tenant of any term, covenant or condition of this lease, other then the failure of Tenant to pay the particular rent so accepted, regardless of Owner's knowledge or such preceding breach at the time of acceptance c such rent. No covenant, term or condition, of this lease shall be deemed to have been waived by Owner, unless such waiver be in writing by Owner. SECTION 2O.02. ACCORD AND SATISFACTION No payment by Tenant or receipt by Owner of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompany any check or payment as rent be deemed an accord and satisfaction, and Owner may accept such check or payment without prejudice to Owner's right to recover the balance of such rent or pursue any other remedy in this lease provided. SECTION 20.03. ENTIRE AGREEMENT This lease and the Exhibits, and Rider, if any, attached hereto and forming a part hereof, set forth all the covenants, promises, agreements, conditions and understandings between Owner and Tenant concerning the leased premises and there are no covenants, promises, agreements, conditions, or understandings, either oral or written, between them other than are herein set forth. Except as herein otherwise provided, no subsequent alteration, amendment, change or addition to this lease shall be binding upon Owner or Tenant unless reduced to writing and signed by them. SECTION 20.04. NO PARTNERSHIP Owner does not, in any way or for any purpose, become a partner of Tenant in the conduct of its business, or otherwise, or joint adventurer or a member of a joint enterprise with Tenant. The provisions of this lease relating to the percentage rent payable hereunder are included solely for the purpose of providing a method whereby the rent is to be measured and ascertained. SECTION 20.05. FORCE MAJEURE In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war or other reason of a like nature not the fault of the party delayed in performing work or doing acts required under the terms of this lease, then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. The provisions of this Section 2O.05 shall not operate to excuse Tenant from prompt payment of rent, percentage rent, additional rent or any other payments required by the terms of this lease. SECTION 20.06. NOTICES Any notice, demand, request or other instrument which may be or are required to be given under this lease shall be delivered in person or sent by United States certified mail postage prepaid and shall be addressed (a) if to Owner at the address first hereinabove given or at such other address as Owner may designate by written notice and (b) if to Tenant at the leased premises or at such other address as Tenant shall designate by written notice. SECTION 20.07. CAPTIONS AND SECTION NUMBERS. The captions, section numbers, article numbers, and index appearing in this lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such sections or articles in this lease nor in any way affect this lease. SECTION 20.08. TENANT DEFINED, USE OF PRONOUNS The word "Tenant" shall be deemed and taken to mean each and every person or party mentioned as a Tenant herein, be the same one or more; and if there shall be more than one Tenant, any notice required or permitted by the terms of this lease may be given by or to any one thereof, and shall have the same force and effect as if given by or to all thereof. The use of the neuter singular pronoun to refer to Owner or Tenant shall be deemed a proper reference even though Owner or Tenant may be an individual, a partnership, a corporation, or a group of two or more individuals or corporations. The necessary grammatical changes required to make the provisions of this lease apply in the plural sense where there is more than one Owner or Tenant and to either corporations, associations, partnerships, or individuals, males or females, shall in all instances be assumed as though in each case fully expressed. SECTION 2O.09. BROKER'S COMMISSION Each of the parties represents and warrants that there are no claims for brokerage commissions or finder's fees in connection with the execution of this lease, except as listed below, and each of the parties agrees to indemnify the other against, hold it harmless from, all liabilities arising from any such claim (including, without limitation, the cost of counsel fees in connection therewith) except as follows: NONE SECTION 20.10. PARTIAL INVALIDITY If any term, covenant or condition of this lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this lease shall be valid and be enforced to the fullest extent permitted by law. SECTION 20.11. CONDOMINIUM CONVERSION RIGHT OF FIRST REFUSAL In the event that the Owner converts the shopping center in which the leased premises are located to condominium ownership and offers the leased premises for sale, Owner hereby grants to Tenant a right of first refusal to purchase the leased premises on the identical terms which the Owner is then willing to sell the leased premises for to any purchaser; Owner also agrees to give the Tenant forty-five (45) days by giving the Owner written notice, certified mail, return receipt requested, of Owner's then willingness to sell and all of such terms. If Tenant does not exercise its right of first refusal within said forty-five (45) days by giving the Owner written notice, certified mail, return receipt requested, and actually purchasing the leased premises not more than thirty (30) days after giving said notice of acceptance, said right of first refusal shall lapse. SECTION 20.12. RECORDING Tenant shall not record this lease without the written consent of Owner; however, upon the request of either party hereto the other party shall join in the execution of a m memorandum or so-called "short-form" of this lease for the purposes of recordation. Said memorandum or short form of this lease shall describe the parties, the leased premises, and the term of this lease and shall incorporate this lease by reference, SECTION 20.13. OUTSTANDING MORTGAGE LOAN ON SHOPPING CENTER COVENANT OF- QUIET ENJOYMENT IN THE EVENT OF FINANCING The Owner and Tenant agree that Owner has borrowed from Tenant a large portion of the funds needed by Owner for the construction of the shopping center in which the leased premises a-e located, and that a corresponding mortgage loan is presently outstanding. In the event that the Owner agrees to refinance the existing mortgage loan on the Shopping Center, Owner shall pay no prepayment penalty of any nature. In the event that the Owner borrows funds and mortgages the Shopping Center with another financial institution (i.e. other than the Tenant) Owner agrees to include in any mortgage and in all related documents a covenant of quiet enjoyment, guaranteeing the Tenant the right to continue occupation of the leased premises provided the Tenant is in compliance with the terms of this lease, regardless of the possible defaults of Owner in regard to such mortgagee financial institution. IN WITNESS WHEREOF, Owner and Tenant have signed and sealed this lease as of the day and year first above written. /s/ Louis Jl. Galanis --------------------------------------- Louis J. Galanis, Trustee of Five Jays Realty Trust, OWNER Date /s/ David L. Grey --------------------------------------- Ipswich Savings Bank, by its President, David L. Grey Date [GRAPHIC OMITTED: Building Ground Plan] EX-10.2 7 NORTH ANDOVER OFFICE PARK LEASE DATA PAGE LANDLORD: 451 ANDOVER STREET REALTY TRUST, C/O WINGATE MANAGEMENT COMPANY, INC., 75 CENTRAL STREET, BOSTON, MA 02109 TENANT: IPSWICH SAVINGS BANK Presently of 23 Market Street, Ipswich, Massachusetts 01938-0392 PREMISES: SUITE 105 SHOWN ON EXHIBIT A AND THE AREA NECESSARY FOR THE DRIVE THROUGH WINDGATE AS SHOWN ON EXHIBIT B 451 ANDOVER STREET ~HEREIN "OBI" 0R ON THE BUILDING") NORTH ANDOVER, MASSACHUSETTS 01845 NET RENTABLE AREA OF PREMISES: 4,685 + SQUARE FEET COMMENCEMENT DATE: See Rider 1 EXPIRATION DATE: See Rider 1 BASE RENT: See Rider 2.1 and 2.2 as Per Rider 1 YEAR: See Rider 2.1 and 2.2 as Per Rider 1 ANNUAL BASE RENT: See Rider 2.1 and 2.2 as Per Rider 1 MONTHLY BASE RENT: See Rider 2.1 and 2.2 as Per Rider 1 SECURITY DEPOSIT: $ ZERO USE: Retail Branch Bank Office and all other office and office related uses LIABILITY INSURANCE: $250,000 PER PERSON; $500,000 PER OCCURRANCE; $50,000 PROPERTY DAMAGE LIABILITY CONSTRUCTION/ RENOVATION: YES SPECIAL PROVISIONS: See Rider 1 TENANT: LANDLORD: IPSWICH SAVINGS BANK THE TITLED CORPORATION, TRUSTEE OF 451 ANDOVER STREET REALTY TRUST By: /s/ David Grey President By: /s/ Edward Dziadu - --------------------------- ----------------------------------- David L. Grey, President Edward J. Dziadul, President Date: 4-25-94 Date: 4/18/94 LEASE WHEREAS, The Titled Corporation, as Trustee of 451 Andover Street Realty Trust, under declaration of trust dated July 9, 1991, and recorded at the Essex South District Registry of Deeds at Book 3284. Page 341, and having a principal place of business at 451 Andover Street. North Andover, Massachusetts 01845 ("Landlord") is the owner of the land and building thereon located in North Andover, Essex County, Massachusetts, and shown on Plan No. 9336 recorded in Essex North Registry of Deeds, which presently contains two office buildings. namely 451 Andover Street, herein referred to as OBI, and 203 Turnpike Street, herein referred to as OBI II, and Landlord wishes to lease certain premises therein to Tenant: and WHEREAS, Tenant desires to demise these premises from Landlord. NO, THEREFORE. the parties agree as follows: ARTICLE I LEA5ED PREMISES Landlord hereby leases to Tenant, and Tenant hereby demises from Landlord, the Premises, excepting and reserving therefrom exterior walls and centerwalls: Landlord's equipment and fixtures, now or hereafter installed: and space for the installation of pipes, wires, conduits, and ducts to serve the Premises and/or other parts of the Building and subject to all rights reserved to Landlord by this Lease or by operation of law. Landlord grants to Tenant the exclusive use of that portion of the Lot for the purposes of drive-through banking shown on Exhibit B and in addition Landlord also grants to Tenant as appurtenant to the Premises the right, in common with others, to use (a) areas for access to and egress from such drive-through banking as shown on Exhibit B. (b) the common entrances. lobbies. corridors, stairways, elevators, and lavatories, and (c) pipes, wires. conduits and appurtenant equipment serving the Premises in common with other leased premises in the Building. See attached Exhibit A, floor plan of the Premises. ARTICLE II - TERM Tenant shall have and hold the Premises for a Term of Five Years (the "Term" commencing on the Commencement Date as defined in Rider 1, Section 1.2, and ending on the Expiration Date or any earlier date upon which the Lease term may be terminated by force of law or as hereinafter provided). ARTICLE III - BASE RENT A. Tenant agrees to pay annual Rent during said term at the rate shown on Rider 2.1 or in the alternative Rider 2.2 in accordance with Rider Section 1.3. payable without notice or demand and without offset of any kind or nature, in advance on the first day of each calendar month during the term hereof in monthly installments in the amount shown on Rider 2.1 or 2.2 as aforesaid, and proportionately for any fraction of a month at the beginning or end of the term, except as otherwise expressly provided herein. If the Commencement Date is other than the first day of a calendar month, an appropriate portion of the Base Rent for such month shall be paid on the Commencement Date. ARTICLE IV - USE The Premises shall be used and occupied by Tenant solely for the purpose specified as the Use on the Data Page and for such other lawful use incidental thereto, but for no other purpose. In using or occupying the Premises for such purpose. Tenant shall not cause business disruption to any other tenants or occupants of the Building, or do acts that constitute a nuisance Landlord makes no warranty or representation about the fitness of the Premises for Tenant's use except as set forth in this Lease. ARTICLE V - INSTALLATION OF EQUIPMENT AND FLOOR CAPACITY Tenant shall not place any load upon any floor of the Premises which exceeds the floor load capacity calculated on a square foot basis as determined by Landlord (partitions being considered as part of the load). Tenant will not move into or out of the Building, install any safe. heavy machinery, fixtures equipment, or bulky materials without Landlord's prior written consent which shall not be unreasonably withheld except for an A.T.M. machine and such machinery and equipment as may be necessary for the operation of Tenant's drive through as shown on Exhibit B. The moving and installation of such machines and equipment shall be at Tenant's sole expense. shall be in such manner and at such hours as to prevent business disruption to other occupants of the Building, and at the sole risk and hazard of the Tenant. Tenant agrees to indemnify and hold Landlord harmless from and against all liability resulting directly or indirectly from the installation or operation of such machines and equipment. ARTICLE VI - LANDLORD'S COVENANTS Landlord will furnish, maintain, repair, replace and operate the necessary equipment to provide heat and air conditioning as reasonably required for comfortable occupancy of the Premises. If Tenant requests heat or air conditioning services for non-business hours. Landlord will furnish such for the areas specified in a written request from Tenant delivered to the building superintendent or other agent of Landlord before 3:00 PM of the week day preceding the extra usage period. Landlord will maintain the Building structure. Building systems including the repair or replacement of any equipment. fixtures or mechanical installations that serve the premises, and Building common areas. all in good order and repair, except for reasonable wear and tear and damage by fire and other casualty and except that Landlord shall have no responsibility to maintain or repair the foregoing if damaged by Tenant negligence or misconduct. Landlord shall furnish water for ordinary cleaning, lavatory, drinking and medical treatment purposes. If Tenant uses water for any other purposes Landlord may (a) assess a reasonable charge for the additional water so used by Tenant or (b) install at Tenant's expense a water meter and thereby measure Tenant's water consumption for all purposes, and Tenant will pay for water consumed as shown on said meter. together with any sewer use charge based on said meter charges, as and when bills are rendered. Landlord shall be under no obligation to renovate or improve the Premises, unless so indicated on the Data Page and by attachment of Exhibit C. Landlord is under no responsibility or liability for inconvenience annoyance or loss of business arising from the failure or interruption in such services caused by breakage, vandalism, accident, strikes, repairs, or by inability (despite the exercise of reasonable diligence) to obtain fuel, electricity, or other service, or by any other cause or causes beyond the reasonable control of Landlord, or for tre cut-off of service or utility systems by Landlord or others made necessary by reason of accident or emergency or to make needed repairs. Failure or omission on the part of the Landlord to furnish such service shall not be construed as an actual or constructive, total or partial eviction of Tenant, nor work -an abatement of rent, nor render Landlord liable in damages, nor release Tenant from prompt fulfillment of any of the covenants under this Lease, In an event shall Landlord be liable for any indirect or consequential damages. ARTICLE VII - TENANT'S COVENANTS Tenant covenants with Landlord that during the term and for all such times as Tenant or any one claiming by, through or under it, shall hold or occupy the Premises or any part thereof: A. Rent Payment, Tenant will promptly pay when due all Rent. payable by Tenant hereunder, to Landlord at the address from time to time designated for the sending of notice to Landlord. B. Electricity, Tenant will pay the Landlord as additional rent the cost of all electrical current furnished to the Premises. Initially. Tenant shall pay Landlord on account, each month, together with its payment of base rent, one-sixth (1/6) of such sum as Landlord notifies Tenant is Landlord's reasonable estimate of the amount that Tenant will owe for electrical current furnished to the Premises during the next six (6) months, This estimated additional rent will be applied against the cost of electrical currents furnished to the Premises for such six (6) month period, As reviewed by Landlord approximately every six (6) months, if the estimated additional rent is less than the actual additional rent owed hereunder. Tenant will pay any excess due Landlord in full within ten (10) days after receipt of a bill therefor: and if the estimated additional rent collected by Landlord is greater than the actual additional rent owed hereunder. then at Landlord's option it will either (i) refund the excess or (ii) credit the excess against payments then due. or to become due, from Tenant under the Lease. Tenant acknowledges that the Premises are provided with a separate meter noting electrical use and that the actual additional rent owed hereunder will be determined based upon the rates in effect from time to time of the local electrical service company. Notwithstanding the foregoing, if the local electrical service company so requires. Tenant shall (i) purchase electrical current directly from such company. (ii) pay as they become due all bills therefor. and (iii) indemnify and hold Landlord harmless from any loss. cost or damage resulting from Tenant's failure to make such payments. C. Signs. Other than as provided in Rider 1 Tenant will not place any signs or other objects outside the Premises, either in corridors or on exterior Building walls, including without limitation window or door signs, and will maintain no draperies or other window coverings or lighting within the Premises that will affect the exterior appearance of the Building or tile appearance of interior space outside the Premises. without Landlords prior written consent. D. Restore and Repair. Tenant shall maintain the Premises. reasonable use and wear and tear and damage by fire or casualty excepted. Tenant will be responsible for daily cleaning and janitorial of the Premises. Landlord shall maintain all electrical, mechanical, plumbing, soil line, and other installations and facilities therein which serve Premises, and all doors of the Premises, in good order and repair, and replace glass in all windows with the same quality as that injured, broken or damaged, all at its own expense. All replacements of lighting tubes, lamps, bulbs, and ballasts required in the Premises will be furnished and installed at Tenants expense, Tenant will not make any structural alteration or addition to the Building or Premises without first obtaining, on each occasion, Landlord's consent in writing. All alterations or additions must be structurally and architecturally consistent with existing improvements. Upon the request of Landlord, Tenant will deliver a written schedule describing all such alterations or additions Landlord approval is not required for alterations or additions done by Tenant on the interior of the Premises that are non-structural in nature. Any alterations that would be visible from outside the building other than signs as set forth in Section 1.6 of Rider 1 will require the Landlords consent which shall not be unreasonably withheld, and any alterations that involve the buildings mechanical, electrical or plumbing systems other than an emergency will require notification to the landlord and are subject to reasonable requirements that the landlord may impose, such as review of plans and specifications, coordination of timing to avoid disruption of service to other tenants, and supervision and inspection by representatives of the building. Upon expiration or earlier termination of the term. (1) Landlord at its sole option may either retain its property, without cost to it, any alterations so made, or require Tenant to remove these at its sole cost and expense and restore the Premises to their original condition. (2) Tenant will peaceably deliver up the Premises to Landlord broom clean and in the same repair and condition as the Premises were in at the commencement of the term, reasonable wear and tear only excepted. (3) Tenant will peaceably deliver up all alterations and additions made to or upon the Premises in the same repair and condition as they were when completed, reasonable wear and tear and damage by fire or casualty only excepted. unless Landlord in its sole discretion requires Tenant to remove same, and (4) (except as elsewhere provided herein) Tenant will remove all personal property and fixtures belonging to Tenant or to anyone claiming through Tenant, including without limitation all trade fixtures and signs and any lettering painted by Tenant on any walls or doors with or without Landlord's consent. Tenant shall be responsible for all damage or injury to the Premises and to the Building caused by Tenant's installation or removal of alterations, additions, personal property, and fixtures. E. Assignment. Tenant shall not assign. transfer, mortgage, pledge or encumber this Lease, nor sublet any part of the Premises, nor permit occupancy of all or any part of the Premises by anyone other than Tenant without, on each occasion, obtaining the prior written consent of Landlord. which consent shall not be unreasonably withheld. As used herein, the term "assign" or "assignments includes, without limitation, any transfer of the Tenant's interest in the Lease by operation of law. Any assignment, transfer, mortgage, pledge, encumbrance, subletting, or occupancy without Landlord's consent shall be void and of no effect. Landlord's consent thereto on any occasion shall not constitute a waiver of the necessity of such consent on any subsequent occasion. Notwithstanding any such assignment, transfer, mortgage, pledge, sublet or other occupancy. Tenant shall remain primarily liable upon all the terms, conditions and covenants hereof and any assignee or sublessee shall have joint and several liability for the performance of the terms and provisions of this Lease. In the event that Landlord consents to any assignment, transfer, mortgage, pledge, or subletting. Tenant shall pay to Landlord as Additional Rent fifty percent (50%) of the amount by which any and all fees, rents, and other consideration Tenant receives from the assignee, transferee, mortgagee, pledgee, or sublessee, exceeds the sum of all rents owed by Tenant to Landlord: and in addition. Tenant shall pay Landlord promptly after billing for all costs incurred by Landlord in providing such consents, including reasonable legal expense. F. Compliance With Laws and Insurance Regulations. Tenant, at its sole expense, shall comply with all laws, ordinances, orders and regulations of Federal. State, County, and Municipal Authorities, and with any direction of any public officer, pursuant to law, which shall impose any violation, order or duty upon Landlord or Tenant with respect to the Premises, or its use or occupation, and shall furnish to Landlord copies of all such directives, orders, permits, inspections, and the like Tenant shall not do or permit to be done any act or thing upon the Premises, which will invalidate, or be in conflict with, fire insurance policies covering the Building and fixtures and property therein, and shall not do, or permit to be done, any act or thing upon the Premises which shall or might subject Landlord to any liability or responsibility for injury to any person or persons or to property by reason of any business or operation being carried on upon the Premises or for any other reason. Tenant, at its sole expense, shall comply with all rules, orders, regulations or requirements of the North Andover Fire department, Board of Fire Underwriters, Fire Insurance Rating Organization. or other authority having jurisdiction. and except as permitted by these authorities, shall not permit anything to be done on or about the Premises or be stored upon the Premises, and then only in such a manner of storage as not to increase the rate for any fire insurance applicable to the Building. Tenant shall provide on the Premises and maintain in good condition all safety and fire protection devices required by said Fire Department, or other authorities, or insurers If by reason of failure of Tenant to comply with the provisions of this paragraph, including without limitation, the use to which Tenant puts the Premises, the fire insurance rate shall at any time be higher than it otherwise would be, then Tenant shall pay to or reimburse Landlord, as Additional Rent hereunder, for that part of all fire insurance premiums paid by Landlord because of such failure or use by Tenant, and shall make such reimbursement upon the first day of the month following notice of such outlay by Landlord. Tenant shall not bring or permit to be brought or kept in or about the Premises any flammable, combustible or explosive fluid, material, or substance, or cause or permit any odors of cooking or other processes, or any unusual or other objectionable odors, to permeate from the Premises, The fact that the Premises are being used and occupied solely for the use set forth in Article IV hereof shall not relieve Tenant from the foregoing duties, obligations and expenses. G. Injury and Damage. All merchandise, fixtures, and personal property of any kind which may be on or about the Premises shall be at the sole risk and hazard of Tenant, and if the whole or any part thereof shall be destroyed or damaged by fire, theft, water, or otherwise, or in any other way or manner, no part of such loss or damage will be charged or borne by Landlord in any case whatsoever. H. Indemnification of Landlord. The Tenant will indemnify and hold Landlord and any agent harmless from and against any and all claims, liabilities, or penalties asserted by or on behalf of any person, business, or public authority, including Landlord, on account or based upon any injury to person, or loss of or damage to property, occurring in or emanating from the Premises, or occurring elsewhere in or about the Building and arising out of the use or occupancy of the Building or Premises by Tenant or by any person claiming through or under Tenant, resulting from omission, fault, negligence or misconduct of Tenant except such injury, loss or damage was caused by the omission, fault, negligence or misconduct of Landlord, its partners. officers, agents, employees, invitees and independent contractors: and in addition to and not in limitation of the foregoing, on account of or based upon any work or thing whatsoever done on the Premises (other than by Landlord or its contractors) or done by Tenant elsewhere in the Building: and in respect of any of the foregoing from and against all costs, expenses (including reasonable attorney's fees), and liabilities incurred in connection with any such claim, or any action or proceeding brought thereon; and in case any action or proceeding is brought against Landlord by reason of any such claim. Tenant upon notice from Landlord shall at Tenant's expense resist or defend such action or proceeding and employ counsel-reasonably satisfactory to Landlord, it being agreed that such counsel may act for insurance underwriters of Tenant engaged in such defense shall be deemed satisfactory. I. Indemnification of Tenant. The Landlord will indemnify and hold Tenant and any agent harmless from and against any and all claims, liabilities, or penalties asserted by or on behalf of any person, business, or public authority, including Tenant, on account or based upon any injury to person, or loss of or damage to property, occurring in or emanating from the Premises, or occurring elsewhere in or about the Building and arising out of the use or occupancy of the Building or Premises by Landlord or by any person claiming through or under Landlord, resulting from omission, fault, negligence or misconduct of Landlord except such injury, loss or damage was caused by the omission, fault, negligence or misconduct of Tenant, its partners, officers, agents, employees, invitees and independent contractors: and in addition to and not in limitation of the foregoing, on account of or based upon any work or thing whatsoever done by Landlord on the Premises or elsewhere in the Building: and in respect of any of the foregoing from and against all costs. expenses (including reasonable attorney's fees, and liabilities incurred in connection with any such claim, or any action or proceeding brought thereon: and in case any action or proceeding is brought against Tenant by reason of any such claim, Landlord upon notice from Tenant shall at Landlord's expense resist or defend such action or proceeding and employ counsel reasonably satisfactory to Tenant. it being agreed that such counsel may act for insurance underwriters of Landlord engaged in such defense shall be deemed satisfactory, J. Riqht to Enter. In case of an emergency on the Premises or in the Building, Landlord or its representatives may enter the Premises at any time to take such measures as may be needed to cope with the emergency. Landlord or its representatives have the right without charge to it and without reduction in rent. at reasonable times, with fifteen (15) days prior written notice to the Tenant, and in such manner as not unreasonable to interfere with tenants business, to enter (i) to view or show the Premises for any reason, (ii) to maintain, install, or relocate any of Landlord's fixtures serving the Premises or other parts of the Building. K. Obligation to Insure. Tenant shall carry and keep in force, at its own expense, with respect to the Premises, a policy or policies of comprehensive public liability and property damage insurance with any insurance company or companies qualified to do business in Massachusetts. Such Policies shall (i) indemnify Tenant against all claims and damages for any injury to or death of persons or damage to property which may be claimed to have occurred upon or been caused by activities or conditions within the Premises, and (ii) indemnify Landlord to the extent any such claims and demands are the responsibility or obligation of Landlord pursuant to this Lease or as a matter of law, and (iii) name the Landlord and any agent as an additional insured party as its interest may appear and shall be in the following minimum amounts (unless other amounts are specified oil the Data Page): Personal injury including death $250,000 for each person and $500,000 for each accident: Property damage - $50,000. Prior to occupancy. certificates of such policy or policies evidencing such coverage together with proof of payment shall be delivered to Landlord, who upon request shall be entitled to examine such policies. Such certificates shall state that said policies may not be cancelled or altered without at least ten (10) days prior written notice to Landlord and Tenant. The minimum insurance limits set forth above may be modified from time to time by written notice to Tenant, Tenant shall ensure that all of its agents, servants, joint venturers, independent contractors, and business invitees who perform services on, about, or from the Premises are covered by such notices or, if not. maintain adequate insurance in amounts at least equal to the above: and, at Landlord's request, Tenant will furnish evidence of such coverage. If Tenant fails to maintain proper insurance coverage, Landlord at its option may procure such insurance and Tenant shall pay Landlord for all costs of same as Additional Rent hereunder promptly upon billing. L. Liens. Tenant shall not permit to be created or suffer to exist any lien or encumbrance upon any part of the Premises, Tenant's interest in the Premises, the Building, or Lot which may be attributable to any act, agreement or omission of Tenant and shall. whenever such lien is filed purporting to be for labor or material furnished to the Tenant or other cause, discharge the same of record within thirty (30) days after the date of filing. M. Waste. Tenant shall not injure. overload, damage or deface the Premises, nor suffer or permit this to be done, nor commit waste, nor permit any hole to be drilled or made in the stone or brickwork of the Building. nor obstruct in any manner any portion of the Building not hereby demised or the sidewalks or approaches to the Building or Lot. N. Parkinq. Landlord reserves the right to designate certain parking areas on or about the Building or Lot as permitted or prohibited to Tenant and/or Tenant's employees, agents, servants, licensees, invitees, and-other visitors: to require any of these persons to place upon their motor vehicles markers indicating their status, which markers will be supplied by Landlord: and to tow or store at the expense of Tenant or of the owner, the motor vehicle of any of Tenant's employees, agents, servants, licensees, invitees, and visitors who fail to obey any designations, requirements, rules. or regulations made by Landlord with respect to parking. Notwithstanding the foregoing, Tenant shall have exclusive right to use the four parking spaces in front of the Premises for its customers and the first four parking spaces along the' row opposite the western side of the Premises as shown on Exhibit D. The Tenant may place signs so designating this exclusive use for its customers. 0. Rules and Regulations. The Building Rules and Regulations effective as of the Commencement Date are attached hereto as Exhibit E: but Landlord shall have the right to change said rules, Any such rules and regulations as Landlord may make for general application shall be faithfully observed and performed by Tenant and by the agents, employees, servants, licensees, invitees, and visitors of Tenant, and all such rules and regulations (as they may be amended from time to time). Landlord shall not be responsible to Tenant or to Tenant's agents, employees, servants, licensees, invitees, or visitors for failure to enforce any of the rules and regulations or for the nonobservance or violation of any of said rules and regulations by any other tenant or person, or for the nonobservance or violation of or failure to enforce or to perform the provisions of any other lease. Landlord agrees that such rules and regulations shall be uniformly applicable to and enforced against other Tenants and that they shall not amend, alter. or modify the terms and conditions set forth in this Lease. ARTICLE VIII - SUBORDINATION AND NON-DISTURBANCE This Lease is and shall be subject and subordinate to any mortgages which may now or hereafter affect Landlord's interest in the Lot or Building or both. to any advance made thereunder, and to all renewals. modifications. consolidations replacements, and extensions of such mortgages. The subordination set forth herein shall be automatic and self-operative, and no further instrument of subordination shall be required. but in confirmation of such subordination. Tenant shall, on demand, execute promptly any certificate that Landlord requests. Tenant hereby irrevocably constitutes and appoints Landlord the attorney-in-fact of Tenant to execute, acknowledge, and deliver any such certificate or certificates for and on behalf of Tenant. Tenant shall attorn to any mortgagee or other person that, through foreclosure or otherwise becomes owner of the Building and. provided Tenant is not in default hereunder such new owner will recognize this Lease. No mortgagee or other person will be bound by payment of rent or other charges made by Tenant more than one month in advance of its due date, nor bear any liability for acts or omissions of Landlord under this Lease. Prior to the effective date of any subordination set forth in this Clause. Landlord agrees to obtain from any mortgagee a "Non-Disturbance and Consent to Lease" in the form shown as Exhibit F attached hereto. ARTICLE IX - TENANT ESTOPPEL From time to time on request. Tenant will deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect (or that the same is in full force and effect as modified and stating the modifications): the dates to which rent and other charges have been paid: whether Tenant has exercised any options to extend the term of this Lease: and whether Landlord is in default. and if so. specifying each such default. Tenant shall complete. execute. and return Tenant Estoppel to Landlord within ten (10) days of its receipt by Tenant ARTICLE X - TRADE FIXTURES AND EQUIPMENT Any trade fixtures or equipment installed in or attached to the Premises and all other property of Tenant which was personal property prior to its installation. regardless of how attached or affixed to the Premises including any A.T.M. or other machine or equipment, shall remain the property of Tenant and Tenant shall. except if Tenant is in default or otherwise provided herein. have the right to remove its trade fixtures. equipment and property which it may have installed in or attached to the Premises. during the term. or within a reasonable time after any accelerated termination thereof or within a reasonable time after any permitted holding over: but Tenant shall promptly repair in a workmanlike manner any damage resulting from such removal, shall plug or close in an approved manner, any connection to sources of gas, air. water. electricity. heat or cooling. and shall do whatever is necessary so as to leave the Premises undefaced. ARTICLE XI - EMINENT DOMAIN A. If the Premises or any part thereof. or the whole or any major part affecting premises of the building or Lot is taken for any street or other public use, by action of the Town or other authorities, or if Landlord or Tenant is entitled to compensation by reason of anything lawfully done in pursuance of any public authority, then at Landlord's election this Lease and the term shall terminate, even if Landlord's entire interest is divested by such taking. If as a result of a taking or damage or destruction of the Premises, the same or any part thereof is rendered unfit for use and occupation, the rent shall be abated proportionately according to the nature and extent of the injury to the Premises until the Premises or, in case of such taking. what may remain thereof, shall have been put in proper condition Notwithstanding the above, should twenty percent (20%) of the Net Rentable Area of the Premises (unless Landlord furnished equivalent space) be so rendered untenantable. Tenant shall also have the option to terminate the Lease. Any election to terminate by either party shall be made not later than thirty (30) days after it receives notice of such taking or action or of the occurrence of such damage. B. Landlord reserves and excepts from this Lease all rights to damages resulting from the taking for public use of the Premises, Building, Lot, or any part thereof, or right to appurtenant thereto, or privilege or easement in, through, or over the same, and by way of such confirmation of the foregoing. Tenant hereby grants all rights to such damages previously accrued or accruing during the term to Landlord. and the right to prosecute any and all claims therefore. to have and to hold for Landlord forever. ARTICLE XII - FIRE AND OTHER DAMAGE A. Partial Destruction. If the Premises shall be partially damaged by fire or other cause without the fault or neglect of Tenant or of Tenant's servants, employees, agents, visitors or licensees. the Lease shall remain in effect and the damages (not including damages to Tenant's additions. improvements. alterations. fixtures, equipment. or personal property) shall be repaired by and at the expense of Landlord and the rent shall be apportioned according to the part of the Premises which is usable by Tenant until such repairs are made. But if such partial damage is due to the fault or neglect of Tenant or of Tenant's servants, employees, agents, visitors or licensees, the damage shall be repaired by Landlord at Tenant's sole cost and expense and there shall be no apportionment or abatement of rent. Such repairs shall be commenced within ninety (90) days of the damage and completed within one hundred eighty (180) days thereafter or the Tenant may at its option terminate this Lease. B. Total Destruction. If the Premises or a substantial portion of the public areas of the Building are totally damaged or rendered wholly untenantable by fire or other cause, or ordered to be demolished by the action of any public authority, Landlord or Tenant. may within sixty (60) days after such fire or other cause, give notice in writing of termination of the Lease and thereupon the term shall expire upon the date stated in the notice, which shall be no earlier than the thirtieth (30th) day after such notice is given. Landlord has the right to re-construct the Premises without Tenant terminating lease, if such repairs commence within ninety (90) days of damage and are completed within one hundred eighty (180) days thereafter. If the Lease is not so terminated. Landlord shall restore the same to a condition substantially suitable for their intended use within six (6) months after the fire or other casualty, if not, then Tenant may terminate this Lease by written notice to Landlord. Under no circumstances shall Landlord be liable to Tenant for loss or damage caused by Landlord's failure or refusal to restore the Premises or other damaged areas. If Tenant shall not be in default under this Lease, then all rents shall be adjusted and apportioned as of the date of the fire or casualty: provided, however, that if the Premises or Building were damaged as a result of any fault of or attributable to Tenant, Tenant's rental obligations shall not be apportioned but shall continue to the Expiration Date. C. Waiver of Subrogation. Landlord and Tenant will each use its best effort to cause all policies of fire, extended coverage, and other physical damage insurance covering the Premises, the Building, and any property therein to contain the insurer's waiver of subrogation and consent to pre-loss waiver of rights over by the insured. Effective only when permitted by the policy or when use of its good faith efforts could have obtained such a clause at no additional cost or premium, Landlord and Tenant respectively waive all claims and rights to recover against the other in event of insured loss or damage to the extent of insurance proceeds collected by the damaged party. ARTICLE XIII - TENANT'S DEFAULT If (a) Tenant fails to pay any and all rents or other sums payable by Tenant to Landlord hereunder within ten (10) days after written notice: or (b) if Tenant fails to perform or observe any other covenant or undertaking herein on its part to be performed and observed for a period of thirty (30) days after notice from Landlord of breach of such covenant: or (c) if the estate hereby created is taken by execution or by other process of law and not redeemed by Tenant within ninety (90) days thereafter: or (d) if proceedings for corporate reorganization or arrangement under the Bankruptcy Laws of the United States. or any laws supplementary or amending such reorganization or arrangement: or (e) if any assignment is made of Tenant's property for the benefit of creditors: or (f) if any proceedings are instituted by or against Tenant under any bankruptcy or insolvency law, or if a receiver for Tenant or other similar officer is appointed, and if any of said proceedings or the said appointment of any receiver or similar officer is not contested and dismissed within ninety (90) days after the institution or appointment thereof: then Landlord may, immediately or at any time thereafter (notwithstanding any license or waiver of any former breach or waiver and the benefit hereof, or consent in a former instance) and without demand or notice or need to comply with any statutes relating to summary process. in person or by agent or attorney, enter the Premises (forcibly, if necessary) or any part thereof and repossess the same as of its former estate, or terminate this Lease by written notice to Tenant, and in either case expel Tenant and those claiming through or under it and remove their effects without being deemed guilty of any manner of trespass and without prejudice to any remedy which otherwise might be used for arrears of rent or breach of covenant. and upon entry or notice as aforesaid this Lease shall terminate. Tenant hereby waives all statutory rights (including without limitation right of redemption) to the extent such rights may be lawfully waived with respect to such actions by Landlord, Notwithstanding anything else contained herein. Tenant shall not be deemed to be in non-monetary default unless such default remains uncured for more than thirty (30) days following written notice from Landlord specifying the nature of such default, or such longer period as may be reasonably required to correct such default Tenant's liability for maintenance and repair shall always be limited to the cost of accomplishing such maintenance or repair. ARTICLE XIV - LANDLORD'S DEFAULT Notwithstanding anything else contained herein, Landlord shall not be deemed to be in default unless such default remains uncured for more than thirty (30) days following written notice from Tenant specifying the nature of such default, or such longer period as may be reasonably required to correct such default Landlord's liability for maintenance and repair shall always be limited to the cost of accomplishing such maintenance or repair, In no event shall Landlord be liable for any consequential or indirect damages. ARTICLE XV - LANDLORD'S REMEDIES If this Lease is terminated as provided in Article XIV or otherwise for Tenant's breach or default, Tenant shall forthwith pay to Landlord all sums which were due prior to the date of such termination and Tenant shall pay on the days originally fixed herein for the payment thereof amounts equal to the several installments of Base Rent, all Additional Rent, estimated Additional Rent, and any and all other charges as they would have become due if this Lease had not been terminated, As an alternative. at the election of Landlord, Tenant will, at the time of such termination, pay to Landlord, as liquidated damages, the amount of the excess, if any, of the present value at the time of termination of the total rent and other benefits which would have accrued to Landlord for the remainder of the term over and above the fair market rental value of the Premises for said remainder of the term For the purpose of this paragraph, the total rent shall be computed by assuming that Tenant's share of real estate taxes, operating expense, and other charges would be the amount thereof, (if any) for the immediately preceding year of the term. As an additional and cumulative remedy, Tenant agrees (i) to indemnify and hold Landlord harmless from and against all expenses, together with interest from the date such expense is incurred at the rate set forth in Article XVI below, which Landlord may incur in collecting such amount or in obtaining possession of, or in re-letting the Premises, or in defending any action arising as a result of or in connection with a default, including without limitation. legal expenses, attorney's fees, brokerage fees, and the cost of putting the Premises in good order or preparing the same for rental: (ii) that Landlord may re-let the Premises or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which, at Landlord's option, may be less than or exceed the period which would otherwise have constituted the balance of the term and may grant concessions or free rent for a reasonable time. The failure of Landlord to re-let the Premises or any part thereof shall not release Tenant or affect Tenant's liability for damage Any suit brought to collect the amount of deficiency for any month shall not prejudice the right of Landlord to collect the deficiency for any subsequent month by a similar proceeding, Landlord may make such alterations, repairs, replacements and decorations on the Premises which in Landlord's sole judgement are advisable or necessary for the purpose of re-letting the Premises, and the making of such alterations or decorations shall not release Tenant from any liability. In the event the Premises are relet by Landlord. Tenant shall be entitled to a credit in the net amount of rent received by Landlord, after deduction of all expenses incurred in connection with Tenant's default, re-letting the Premises and collecting the rent. Tenant further agrees that if it fails to remove any of its property from the Premises within five (5) days of termination. Landlord is authorized, in its sole option, and in Tenant's name and on its behalf, either (i) to cause such property to be removed and placed in storage for the account and at the expense of Tenant: or (ii) to sell such property at public or private sale with or without notice. and to apply the proceeds, after the payment of all expenses of removal, storage and sale, to the indebtedness of Tenant to Landlord, the surplus, if any, to be paid to Tenant. ARTICLE XVI - INTEREST All payments due hereunder by Tenant shall bear a late charge of three (3%) percent of the total-amount due if not paid within ten (10) days after written notice. ARTICLE XVII - BROKER Tenant and Landlord represent that they have not contacted or negotiated with any broker in connection with this Lease, except for Wingate Management Company and except for Charles M. Thompson and CEK Properties, Inc., and will indemnify and hold each other harmless if such warranty proves false, Landlord accepts the responsibility for the payment of-Broker's fees, if any are due to Wingate Mangement Company, Charles M. Thompson or CEK Properties, Inc, and will hold the Tenant harmless against any claims actions or damages for such Broker's fees. ARTICLE XVIII - QUIET ENJOYMENT Upon Tenant observing and performing all of the terms, covenants and conditions in this Lease, Tenant shall peaceably and quietly have and hold the Premises. without hindrance or molestation by any person or persons lawfully claiming by, through, or under Landlord subject to the terms of this Lease, ARTICLE XIX - NOTICES All notices or other communications shall be given by registered mail, return receipt requested. and shall be duly served upon mailing, All notices for Landlord shall be addressed to Landlord. 451 Andover Street, Suite 210, North Andover, Massachusetts 01845, or to such other place or person that may be designated by written notice to Tenant, with a copy so mailed, or delivered in hand. to the site office of the Building Manager: and to the Tenant prior to its occupancy of the Premises, at its address as set forth on the Data Page, and, following occupancy, at the Premises or to such other place as may be designated by written notice to Landlord. ARTICLE XX - ENTIRE AGREEMENT This Lease, including the Data Page and any Exhibit attached hereto. sets forth the entire agreement between the parties hereto, supersedes all prior dealings, and cannot be modified or amended except in writing duly executed by the respective parties. ARTICLE XXI - PARTIAL INVALIDITY The invalidity of one or more phrases, sentences, clauses or Articles contained in this Lease shall not affect the remaining portions of this Lease or any part thereof, and in the event that any one or more of such phrases, sentences, clauses or Articles should be declared invalid by the final order, decree or judgement of a court of competent jurisdiction, this Lease shall be construed as if such invalid phrases, sentences, clauses or Articles had not been inserted in this Lease. ARTICLE XXII - HOLDOVER If Tenant remains in the Premises beyond the expiration of this Lease, such holding over shall not be deemed to create any tenancy, but Tenant shall be a Tenant at sufferance only, at one hundred fifteen percent 115%) of the last rent paid by the Tenant and other charges under this Lease, However, all conditions of this Lease to be performed by Tenant shall continue in force. At the option of Landlord expressed in written notice to Tenant, but not otherwise, such holding over shall constitute a renewal of the Lease for a period of one year. ARTICLE XXIII - NON-WAIVER PROVISION No assent. express or implied, by Landlord to any breach of any agreement or condition herein contained on the part of Tenant to be performed or observed, and no waiver, express or implied, of any such agreement or condition shall be deemed to be a waiver of or assent to any succeeding breach of the same or any other agreement or condition, the acceptance by Landlord of rent or other payment hereunder or silence by Landlord as to any breach shall not be construed a waiving any of Landlord's rights hereunder unless such waiver shall be in writing. No payment by Tenant or acceptance by Landlord of a check of a lesser amount than shall be due Landlord from Tenant shall be deemed to be anything but payment on account, and the acceptance by Landlord of a check for a lesser amount with an endorsement or statement thereon or upon a letter accompanying said check that said lesser amount is payment in full shall not be deemed in accord and satisfaction. and Landlord may accept said check without prejudice to recover the balance due or pursue any other remedy ARTICLE XXIV - PERSONS AND PROPERTY BOUND The word "Landlord" shall mean and bind Landlord and its legal representatives, successors and assigns. and the word "Tenant" shall mean and bind Tenant and its heirs, legal representatives, successors and permitted assigns, or those in any manner claiming through or under said Tenant, in each case where the context so admits Tenant hereby agrees for itself and such succeeding holder of its interest, or any portion thereof, (i) that Landlord and its successors in interest shall not be liable for acts and occurrence arising from and after the transfer of their interest as Landlord hereunder, (ii) that any judgement, decree or award obtained against Landlord or any successor which is in any manner related to this Lease, and the Premises, or Tenant's use or occupancy of the Premises or Building, whether at law or in equity, shall be satisfied out of Landlord's equity in the Building and the Lot to the extent then owned by Landlord or such successor, and (iii) that Tenant and its successors shall look only to such assets and to no other assets of Landlord or its successor for satisfaction ARTICLE XXV - AMERICANS WITH DISABILITIES ACT COMPLIANCE Landlord acknowledges its responsibility to make the Lot and Buildings comply with the requirements of the Americans with Disabilities Act 42 USC #12101 and the regulations and Accessibility Guidelines for Building and Facilities issued pursuant thereto ("ADA Requirements"). Tenant shall be responsible for their Premises meeting ADA Requirements. ARTICLE XXVI - COUNTERPARTS AND HEADNOTES This Lease is executed in two or more identical counterparts. each of which is an original that may be introduced in evidence or used for any purpose The headnotes throughout this Lease are for convenience or reference only, and shall in no way be deemed to limit, modify, or add to the interpretation, construction or meaning of any provision of this Lease. ARTICLE XXVII - RECORDING OF LEASE This Lease shall not be recorded, but a notice of Lease may be recorded at the request of Landlord or Tenant in the form attached hereto as Exhibit G. ARTICLE XXVIII - LAW This Lease shall be governed by, and interpreted in accordance with, the laws of the Commonwealth of Massachusetts. Executed under seal on the 18th day of April, 1994. LANDLORD: THE TITLED CORPORATION, TRUSTEE OF 451 ANDOVER STREET REALTY TRUST By: /s/ Edward J. Dziadul ------------------------------------------- Edward J. Dziadul, President DATE: 4/18/94 TENANT: IPSWICH SAVINGS BANK By: /s/ David L. Grey ------------------------------------------- David L. Grey TITLE: President DATE: 4/25/94 ------------------------------------------- RIDER 1 TO LEASE BETWEEN 451 ANDOVER STREET REALTY TRUST AND IPSWICH SAYINGS BANK 1.1 REGULATORY APPROVAL: This Lease is subject to the TENANT attaining all necessary governmental regulatory approvals to operate a retail bank branch office at the Premises. Upon execution of this Lease, the TENANT, at its own expense, shall diligently commence efforts to obtain said approvals. The TENANT shall obtain said approvals within one hundred and fifty (150) days from the execution of this Lease. The TENANT, at its option, may extend this time period for an additional ninety (90) days. If TENANT has not obtained said approvals within said one hundred and fifty (150) days or two hundred and forty (240) days if the TENANT exercises its option to extend LANDLORD or TENANT may terminate this Lease. Regardless of anything else contained herein, the TENANT may terminate this Lease at anytime prior to the commencement date if it receives a negative determination from any governmental regulatory body. 1.2 COMMENCEMENT DATE: This Lease shall commence sixty (60) days after all necessary governmental regulatory approvals to operate a retail bank branch office at the Premises have been granted to TENANT and all appeals from such approvals have been successfully concluded. 1.3 "DRIVE THROUGH WINDOW" APPROVALS: Upon execution of this Lease the LANDLORD shall diligently commence and pursue efforts including but not limited to retaining counsel, architect and planners, preparing plans. applying to the appropriate Boards or Commissions and completing expeditiously the processing through said Boards or Commissions to obtain all necessary governmental approvals allowing the construction of a two bay "drive through window reasonably satisfactory to the TENANT If the LANDLORD does not obtain approvals for the said "drive through window" or does not obtain the approvals until after the Lease has commenced then the Rent shall be reduced as per Rider 2.2. If the LANDLORD does obtain said approvals after the Commencement Date. the said Rent reduction shall be prorated to the date that said approvals have been attained. 1.4 LEASEHOLD IMPROVEMENTS: The TENANT shall undertake and pay for all leasehold improvements to the Premises including but not limited to the above mentioned "drive through window" It being understood that the TENANT shall perform leasehold improvements to the Premises, not including the "drive though window" of approximately $30,000.00 or more. Tenant shall certify the improvements it has performed and the costs incurred as a result of those improvements within sixty (60) days after improvements have been completed Tenant improvement work will be performed by the Tenant in good, workmanlike and lien-free manner. in compliance with all applicable laws and regulations and in a manner that minimizes to the extent possible interference with other occupants of the building. The LANDLORD agrees that TENANT may offset against the monthly RENT up to the amount of $30,000. the cost of the Leasehold Improvements, Before the TENANT commences any leasehold improvements the LANDLORD shall approve the leasehold improvements. said approval shall not be unreasonably withheld. 1.5 RIGHT TO EXTEND: Provided the TENANT is not in default of any of the terms and conditions of this LEASE and provided that the TENANT gives the LANDLORD six (6) months prior written notice, the LESSEE shall have the right to extend this lease for three (3) five (5) year terms The RENT for the extension terms shall be as detailed in Rider 2.1 or 2.2 as appropriate under Rider 1.3. 1.6 SIGNS: TENANT shall be allowed to install and shall pay for signage on the sides of the building where the Premises are located as well as a sign over the door that leads to the existing walk-in teller and signs on both sides of the drive up window all as shown on Exhibit B. The size. shape. materials and color of the signs shall be in conformity with the building design and shall require the written approval of the LANDLORD. which shall not be unreasonably withheld The TENANT shall be allowed to install and shall pay for a free standing sign to be placed on either Andover Street or Turnpike Street If the freestanding sign is located on Turnpike Street it shall be located no further north than the PREMISES. In addition. TENANT may erect an additional sign on the Route 133 side of the Property and LANDLORD recognizes and agrees that TENANT may obtain permission from the adjacent property owner to erect such a sign. The size. shape. materials and color of-the signs shall require the written approval of the LANDLORD which shall not be unreasonably withheld All signs will be subject to governmental approval. and that the tenant will maintain the signs at its cost and comply with all applicable laws in the installation, use and maintenance of the signs All such signs shall remain the property of the Bank. RIDER 2.1 TO LEASE BETWEEN 451 ANDOVER STREET REALTY TRUST AND IPSWICH SAVINGS BANK RENT WITH DRIVE-UP BASE TERM
YEAR YEARLY RENT MONTHLY RENT 1 $ 65,568.00 $ 5,463.98 2 $ 67,535.00 $ 5,627.90 3 $ 69,561.00 $ 5,796.74 4 $ 71,648.00 $ 5,970.64 5 $ 73,797.00 $ 6,149.76
FIRST OPTION
YEAR YEARLY RENT MONTHLY RENT 1 $ 76,011.00 $ 6,334.25 2 $ 78,291.00 $ 6,524.28 3 $ 80,640.00 $ 6,720.01 4 $ 83,059.00 $ 6,921.61 5 $ 85,551.00 $ 7,129.25
SECOND OPTION
YEAR YEARLY RENT MONTHLY RENT 1 $ 88,118.00 $ 7,343.13 2 $ 90,761.00 $ 7,563.43 3 $ 93,484.00 $ 7,790.33 4 $ 96,288.00 $ 8,024.04 5 $ 99,177.00 $ 8,264.76
RIDER 2.1 TO LEASE BETWEEN 451 ANDOVER STREET REALTY TRUST AND IPSWICH SAVINGS BANK Page Two
THIRD OPTION YEAR YEARLY RENT MONTHLY RENT 1 $ 102,152.00 $ 8,512.70 2 $ 105,217.00 $ 8,768.08 3 $ 108,374.00 $ 9,031.13 4 $ 111,625.00 $ 9,302.06 5 $ 114,973.00 $ 9,581.12
RIDER 2.2 TO LEASE BETWEEN 451 ANDOVER STREET REALTY TRUST AND IPSWICH SAVINGS BANK RENT WITHOUT DRIVE-UP BASE TERM
YEAR YEARLY RENT MONTHLY RENT 1 $ 50,000.00 $ 4,166.67 2 $ 51,500.00 $ 4,291.67 3 $ 53,045.00 $ 4,420.42 4 $ 54,636.00 $ 4,553.03 5 $ 56,275.00 $ 4,689.62
FIRST OPTION
YEAR YEARLY RENT MONTHLY RENT 1 $ 57,964.00 $ 4,830.31 2 $ 59,703.00 $ 4,975.22 3 $ 61,494.00 $ 5,124.48 4 $ 63,339.00 $ 5,278.21 5 $ 65,239.00 $ 5,436.56
SECOND OPTION
YEAR YEARLY RENT MONTHLY RENT 1 $ 67,196.00 $ 5,599.66 2 $ 69,212.00 $ 5,767.65 3 $ 71,288.00 $ 5,940.68 4 $ 73,427.00 $ 6,118.90 5 $ 75,630.00 $ 6,302.46
RIDER 2.2 TO LEASE BETWEEN 451 ANDOVER STREET REALTY TRUST AND IPSWICH SAVINGS BANK Page Two THIRD OPTION
YEAR YEARLY RENT MONTHLY RENT 1 $ 77,898.00 $ 6,491.54 2 $ 80,235.00 $ 6,686.28 3 $ 82,642.00 $ 6,886.87 4 $ 85,122.00 $ 7,093.48 5 $ 87,675.00 $ 7,306.28
NORTH ANDOVER LEASE EXHIBITS EXHIBIT A: Building Plan of Suite EXHIBIT B: Plan of drive-through, access and egress EXHIBIT C: Landlord' s Renovations EXHIBIT D: Plan of parking spaces for exclusive use of Bank EXHIBIT E: Building Rules and Regulations EXHIBIT F: Non-Disturbance and Consent to Lease EXHIBIT G: Notice of Lease EXHIBIT B Plan of drive-through, access and egress EXHIBIT C Landlord's Renovations {Not Applicable - Tenant undertaking improvements as per Rider 1, Section 1.4l EXHIBIT D Plan of parking spaces for exclusive use of Bank EXHIBIT E BUILDING RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE WITH ARTICLE VII (0) Effective February 17, 1984 1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules, stairways, corridors or halls shall not be obstructed or encumbered by any Tenant or used for any purpose other than for ingress to and egress from the demised premises and for delivery of merchandise and equipment in a prompt and efficient manner using elevators and passageways designated for such delivery by Landlord. There shall not be used in any space, or in the public hall of the building, either by any Tenant or by jobbers or others in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and sideguards. 2. The water and wash closets and plumbing fixtures shall not be used for any purposes other than those for which they were designed or constructed and no sweepings, rubbish, rags, acids or other substances shall be deposited therein, and the expense of any breakage, stoppage, or damage resulting from the violation of this rule shall be borne by the Tenant who, or whose clerks, agents, employees or visitors, shall have caused it. 3. No carpet, rug or other article shall be hung or shaken out of any window of the Building; and no Tenant shall sweep or throw or permit to be swept or thrown from the demised premises any dirt or other substances into any of the corridors or halls, elevators, or out of the doors or windows or stairways of the Building and Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance in the demised premises or permit or suffer the demised to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odor and/or variations, or interfere in any way with other Tenants or those having business therein, nor shall any animals or birds be kept in or about the Building. No bicycles or vehicles of any kind shall be brought or kept in or about the Premises. 4. No awnings or other projections shall be attached to the outside walls of the Building without the prior written consent of Landlord. 5. No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by any Tenant on any part of the outside of the demised premises or the Building or on the inside of the demised premises if the same is visible from the outside of the premises without the prior written consent of landlord. In the event of the violation of the foregoing by any tenant, Landlord may remove same without any liability, and may charge the expense incurred by such removal to Tenant or Tenants violating this rule. Interior signs on doors and directory tablet shall be inscribed, painted or affixed for each Tenant by Landlord at the expense of such Tenant,- and shall be of a size, color and style acceptable to Landlord. 6. No Tenant shall mark, paint, drill into, or in any way deface any part of the demised premises of the building of which they form a part, boring, cutting or stringing wires shall be permitted, except with the prior written Landlord, and as Landlord may direct. No Tenant shall lay linoleum, or other similar floor covering, 50 that the same shall come in direct contact with the floor of the demised premises, and, if linoleum or other similar floor covering desired to bc used an inter-lining of the builder's deadening felt shall be first affixed to tile floor, by a paste or other material, soluble in water, the use of cement or other similar adhesive material being expressly prohibited. 8. Freight, furniture, business equipment, merchandise and bulky matter of any description shall be delivered to and removed from the premises only on the elevators, through the entrances and corridors, during hours, and in the manner approved by Landlord. Landlord reserves the right to inspect all freight to be brought into the Building and to exclude from the Building al1 freight Which violates any of these Rules and Regulations or the Lease of which these rules and Regulations are a part. 9. Tenant shall not allow peddlers, solicitors or beggars in the Building and shall report such persons to the Building office. 10. Landlord shall have the right to prohibit any advertising by any Tenant which, in Landlord's opinion, tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising. ll. Tenant shall not bring or permit to be brought or kept in or on the demised premises, any flammable, combustible or explosive fluid material, chemical or substance, or cause or permit any odors of cooking or other processes, or any unusual or other objectionable odors to permeate in or emanate from the demised premises. 12. Tenant shall not place objects against glass partitions, doors or window which would be unsightly from the Building corridor or from the exterior of the Building. 13. Tenant shall not waste any services-furnished by Landlord and shall cooperate fully with Landlord to assure the most effective operation of the Building, heating and air-conditioning systems. 14. Tenant shall cooperate with Landlord in minimizing loss and risk thereof from fire and associated perils. 15. Tenant shall not use any part of the premises for manufacture or for the sale of merchandise of any kind at auction or for storage thereof preliminary to such sale. 16. Holidays, for purposes of the building operations, shall be those days upon which, in the State, the following holidays are New Year's Day Labor Day Memorial Day Thanksgiving Day Independence Day Christmas Day and any additional holidays that are observed which may, at any time be provided by City, County, State or Federal Governments. On the following holidays, the Buildings will be opened but no building services will be provided: Washington's Birthday Veteran's Day Patriot's Day Martin Luther King Day Columbus Day 17. Tenants will have their employees park in tho rear parking lots. They will request their employees not to park in any of the adjacent parking spaces in the front of the buildings, along the side or adjacent to the buildings in back. These spaces are for clients and patients. 18. The area around the fenced-in cooling tower behind the office buildings is a restricted area and parking is not allowed. 19. Building Emergency List In the event of a Building emergency it is helpful that the building management office and Building security have an up-to-date list of handicapped persons and their work location within the Building. It is requested that you keep the Building office up-to-date on any additions/deletions to this list. lease include those persons who might be considered temporarily handicapped due to any injury requiring crutches, etc. that would reduce their mobility. 20. "Right to Know Law." (See attached letter) 21. The following rules must be complied with when moving into or out of the office buildings: a. An insurance certificate from the mover is to be submitted to Evergreen Realty Management, Incorporated at the Building office prior to the move. b. The Building office must be advised in advance so that pads may be put in the elevator to protect the walls. c. When any heavy furniture or equipment is moved it is requested that masonite be placed on the floor so that the rug will not be pulled up. 22. Landlord reserves the right at any time to rescind, alter, or waive any Rule or Regulation at any time prescribed for the Building and to impose additional Rules and Regulations when, in its judgement, it deems it necessary, desirable or proper for its best interest and for the best interests of the Tenants, and no alteration or waiver of any Rule or Regulation in favor of one Tenant shall operate as an alteration or waiver in favor of any other Tenant. Landlord shall not be responsible to any Tenant for the non-observance or violation by any other Tenant, however resulting, of any of the Rules or Regulations at any time prescribed for the Building. January 11, 1993 TO: ALL TENANTS NORTH ANDOVER OFFICE PARK RE: "RIGHT TO KNOW" LAW August 1, 1984 was the effective date of the Massachusetts "Right to Know" Law. The law is so named because it deals with Employee's right to know about potentially hazardous chemicals in the workplace. The law applies to any business that manufactures, processes, uses or stores toxic or hazardous substances. Initially the "Massachusetts" Substance List" contains over 2,500 potentially hazardous or toxic substances. Primary responsibility is placed on manufacturers of hazardous on toxic substances to prepare a "Material Safety Data Sheet" or "MSDS"~ for their products. The MSDS includes information on the hazards of the substance such as potential for fire or explosion, health effects from exposure to the substance, information on proper handling and 6, safety precautions in dealing with the substance, and emergency accident procedures. As an employer, you are required to make available at the workplace the MSDS for each hazardous toxic substances present in the workplace. Employers who purchase hazardous substances and do not receive a date sheet must use "diligent efforts" to obtain the MSDS from the manufacturer or intermediate seller from whom they purchased the substance Employer must keep the information on file for thirty (30) years. Since there is a potential that Evergreen Realty Management employees could come in contact with substances within your occupied spaces' either under normal operating conditions or unforeseeable emergencies, it is requested that you provide a copy of any MSDS in your file to Evergreen Realty Management It is our expectation that you will comply with the law and cooperate with us so that we can meet our obligations as an employer. Sincerely, NORTH ANDOVER OFFICE PARK Patricia A. McMahan Site Manager EXHIBIT F REOGNITION AND NON-DISTURBANCE AGREEMENT This Recognition and Non- Disturbance Agreement dated as of , 1993, is by and between THE MANUFACTURERS LIFE INSURANCE COMAPANY, a Canadian Corporation (the "Mortgage") and , a Massachusetts corporation (the "Lessee"). Reference is made to (L) the Mortgage and Security Agreement, from 451 Andover Street Realty Trust (the "Mortgagor") dated April 18, 1990 and recorded with the Registry in Book 3096 Page 171 (the "Mortgage"), and (ii) the Lease dated , 1993, between the Mortgagor, as lessor, and the lessee, as lessee (the "Lease"), covering a portion of the premises described in the Mortgage. As and inducement to the Lessee to enter into the Lease, and in consideration of the mutual covenants set forth in this Agreement the Mortgagee and the Leasee hereby agree as follows: 1. In the event of and entry by Mortgagee to foreclose on the Mortgage or in the event of a foreclosure of the Mortgage by entry or by sale, the Lessee, if it is not then in default including the lapse of any applicable grace notice period) with respect to any of the covenants or conditions of the Lease by the Lessee to be performed or observed, shall peaceably hold and enjoy the demised premise for the remainder of the unexpired term of the Lease included all extension options) upon the same terms, covenants, and conditions, without any hindrances or interruptions from the Mortgagee. 2. In the event of foreclosure of the mortgage, the Lessee will recognize the Mortgagee, or its designee as its landlord for the remainder of the unexpired term of the Lease including all extension options) upon the covents and conditions thereof by the lessee to be performed and observed, and the Lessee hereby agrees to effort and observe the same. 3. As used herein wherever the context so requires of admits, the word "Mortgage" includes any persons claiming through or under the Mortgagee, including but not limited to any purchaser at foreclosure sale and the word "Lessee" shall include its successors and assigns. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed under seal by thgeir duly authorized officers, as of the first written. Mortgagee: THE MANUFACUTER LIFE INSURANCE COMPANY By: --------------------------------------------- Lessee: By: --------------------------------------------- Its President/CEO COMMONWEALTH OF MASSACHUSSETTS COUNTY, ss. ,1993 - ----------- -------- Then personally appeared the above named as the of and Acknowledged the foregoing instrument to be his/her act and deed on behalf of before me. ------------------------------------ Notary Public My Commission Expires: PROVINCE OF ONTARIO County, ss ,1993 Then personally appeared the above named As the of the Manufacturers Life Insurance Company and acknowledged he foregoing instrument to be his/her free act and deed on behalf of the Manufacturers Life Insurance Company before me. ------------------------------------ Notary Public My Commission Expires: EXHIBIT G Notice of Lease EXHIBIT G NOTICE OF LESSEE Notice is hereby given, pursuant to the provisions of Chapter 183, Section 4, of the General Laws, of the following lease: LANDLORD: 451 ANDOVER STREET REALTY TRUST c/o Wingate Management Company, Inc. 75 Central Street Boston, MA 02109 TENANT: IPSWICH SAVINGS BANK 23 Market Street Ipswich, MA 01938 DATE OF EXECUTION OE LEASE : April , 1994 DESCRIPTION OF DEMISED PREMISES: Suite _ and the Area necessary for the drive-through window on the premises located at 451 Andover Street, North Andover TERM OF LEASE: Five (5) Years COMMENCEMENT DATE: RIG~TS OF EXTENSION OR RENEWAL: Three Five-year Terms IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed under seal as of the 18th day of April, 1994. LANDLORD: THE TITLED CORPORATION, TRUSTEE OE 451 ANDOVER STREET REALTY TRUST By: /s/ /s/ Edward J. Dziadul - ------------------ ---------------------------------- Witness Edward J. Dziadul, President TENANT: IPSWICH SAVINGS BANK /s/ /s/ David L Grey - ------------------ ---------------------------------- Witness David L. Grey, Presdent April 18, 1994 Then personally appeared the above named Edward J. Dziadul, President as aforesaid, and acknowledged the foregoing instrument to be his free act and deed as said Trustee, before me /s/ Margret Braun ---------------------------------- --------------- | [STATE MARGRET BRAUN | Notary Public | SEAL] My commisstion Expires | | April 4, 1998 | My commission expires: ---------------------------------- COMMONWEALTH OE MASSACHUSETTS Essex, ss. April 25, 1994 Then personally appeared the above-named David L. Grey President as aforesaid, and acknowledged the foregoing to be his free act and deed as said President, before me /s/ Mariell Lyons ----------------- Notary Public My commission expires: October 6, 2000 IPSWICH SAVINGS BANK Mr. Edward J Dziadul, President The Titled Corporation, Trustee 451 Andover Street Realty Trust c/o N.P. Investment I. Co. Renaissance Tower 1201 Elm Street Suite 540C Dallas, Texas 75270 Dear Mr. Dziadul: This letter shall see to confirm our understanding regarding two items re1ating to the Lease between 451 Andover Street Realty Trust and Ipswich Savings Bank ("Bank") dated April , 1994. With respect to landscaped areas in front of the Premises, we have agreed that the Bank shall have the option to landscape such areas according to its own design and at its own expense subject to your approval, which approval shall not: be unreasonably withheld. Further, while the Bank acknowledges that you have made no representations regarding the actual electrical charges the Bank will incur, the Bank is relying on the attached information attached as Exhibit 1 which you have provided to us concerning the electrical charges incurred by your prior tenant Please sign this letter where indicated below to indicate your assent to these clarifications of the Lease Very tru1y yours, IPSWICH SAVINGS BANK By:/s/ David L. Grey ----------------------- David L. Grey President ASSENTED TO: THE TITLED CORPORATION, TRUSTEE OF 51 ANDOVER STREET REALTY TRUST By: ------------------------------- Edward J. Dziadul, President Date: ---------------------------- Lawrence Savings Bank Two Year electric History
Month 1992 1991 January $675.96 $273.34 February $460 50 $323.90 March $366.87 $693.33 April $621.68 $693.33 May $500.09 $536.00 June $269.13 $632.60 July $332.92 $682.35 August $339.47 $451.30 September $258 89 $219.07 October $483.21 $219.07 November $383.26 $494.10 December $674.95 $673.92 Monthly Average $447.24 $491.02
EX-10.3 8 LEASE THIS INDENTURE OF LEASE made by and between Henry C. Swanson and the Estate of Leo A. Marquis, (the "Lessor") and Ipswich Savings Bank, a Massachusetts savings bank having its principal office at 23 Market Street, Ipswich, Massachusetts (the "Lessee"), WITNESSETH WHEREAS, the Lessee desires to lease from the Lessor the area described as Leased Premises.(hereinafter the "Premises") located in the General Premises as described in Addendum A together with certain rights, privileges, easements and, appurtenances, including certain parking and utility rights on other premises outside the Premises, subject however to certain contingencies as hereinafter set forth: NOW, THEREFORE, the-Lessor and, Lessee covenant-and agree as follows: 1. DEMISED PREMISES: The Lessor hereby leases to the, Lessee the, Premises described in Addendum A consisting of approximately 1,988 square feet. 2. USE OF COMMON AREAS: The Lessor hereby grants to the Lessee during the term hereof the right to use, at all times, but in common with the Lessor and all those claiming by or through, the Lessor, all the Lessor's parking area, driveways, and sidewalks adjoining the Premises (hereinafter "common areas") for the purpose of ingress and-egress and the parking of-vehicles. Such access and parking rights are limited to the Lessee, its officers, agents, employees, invitees and customers and their vehicles. The Lessor also grants to the Lessee prior to and during the term hereof the right to enter upon and cross and requires and otherwise use the common areas and the Premises as may be reasonably necessary to construct, install, maintain, repair, restore, rebuild, alter or replace its banking equipment and other properties and to remove the same as hereinafter provided. The Lessor also grants to the 1 Lessee the right to construct, install, maintain, repair or replace across and under the Premises and the common areas lines for utilities including the right to excavate, provided that the Lessee shall restore the surface to its former condition at the sole cost and expense of the Lessee. 3. PARKING IN FRONT OF PREMISES: The Lessor agrees that if any vehicle or vehicles are parked in spaces located in front of the Premises for a period of one hour-or more and the store manager of Henry's Market is notified of such parking that the Lessor, acting through the store manager, will immediately remove such vehicle or vehicles. 4. CONTINGENCIES: This lease is subject to the Lessee's within ninety (90) days from the date of. execution of this lease obtaining all permits, licenses and other authorizations from the appropriate officials, boards or other bodies necessary to allow the Lessee to construct, maintain, and use the Premises for the purpose of establishing a retail branch bank with all the uses permitted to a branch bank including, but not limited to, the purpose of housing one or more Automated Teller Machines and night depository (all for use on a 24 hour per day basis) under Massachusetts General Laws. All to be done in compliance with-the provisions of all applicable zoning by-laws, subdivisions control laws, building and fire codes and all governmental laws, regulations, codes or orders affecting the Premises including approval for the location as a branch facility, and electronic branch facility of the Lessee by the Board of Bank Incorporators pursuant to the provision of Massachusetts General Laws, Chapter 172, Section 11 (all of the same being hereinafter referred to collectively as "Authorizations"). Lessee shall have the right to waive any contingency. If the contingencies of this section are not satisfied within ninety (90) days from the date of execution of this lease then this l ease shall become null and void. 5. TERM: The term of this lease shall be five (5) years commencing fifteen (15) days after all necessary governmental and regulatory approvals to operate a retail branch bank at the 2 Premises as set forth in Section 4 have been granted to Lessee and all appeals from such approvals have expired or. have been successfully concluded. At the end of five (5) years this lease shall automatically continue for an additional five (5) year period unless the Lessee in the last three (3) months of the fifth year notifies the Lessor in writing that the lease is to expire at the end of the ten years. At the end of the first five (5) year extension this lease shall automatically continue for a second five (5) year period unless the Lessee in the last three (3) months of the fifth year of the first extended term notifies the Lessor in writing that the lease is to expire at the end of the first five year extension. At the end of the second five year extension this lease shall automatically continue for a third additional five (5) year period unless the Lessee in the last three months of the second extended term notifies the Lessor in writing that the lease is to expire at the end of the second five year extension. At the end of the third five year-extension this lease shall automatically continue for a fourth additional five (5) year period unless the Lessee in the last three months of the third extended term notifies the Lessor in writing that the lease is to expire at the end of the third five year extension. At the. end of the fourth additional five year extension this lease-shall automatically continue for a fifth additional five (5) year period unless the Lessee in the last three months of the fourth extended term notifies the Lessor in writing that the lease is to expire at the end of the fourth five year extension. 6. RENT: Upon condition of the full, faithful and prompt performance, observance and fulfillment by the Lessor of all the Lessor's covenants, warranties, and representations and other obligations in connection with this lease, the Lessee will pay to the Lessor the following rent: Rent for the first five years shall be $3,000.00 per month, $36,000.00 per annum. 3 The Rent as stated above shall be adjusted in the renewal periods by the percentage increase in the United States Bureau of Labor Statistics Consumer Price Index for all Urban Consumers, Boston, Massachusetts [CPI-U] (the "Index") between the point at which the Index stood a month prior to the Commencement Date of the original term or any extended terms, as applicable, and the point at which the Index stands one month prior to the day as of when such adjustment is being made. If the Bureau of Labor Statistics shall cease publishing the Index, then the Lessor and Lessee may select another price index (reasonably comparable to the Index) published by the Bureau, or if not available, published by a private publisher, and thereafter such other price index shall be the Index hereunder. Provided, however, that such adjustment shall in no event exceed a ten (10%) percent increase on the monthly rent of $3,000.00 or $300.00 per renewal. 7. TITLE TO IMPROVEMENTS: The Lessee at all times shall be deemed to own all of the right, title and interest in and to all fixtures, equipment and other improvements hereafter placed, installed or erected upon or within the Premises, and the Lessor shall be deemed to have no right, title or interest in any such fixtures, equipment and other improvements and upon the expiration or earlier termination of this lease, as herein provided, the Lessee shall remove its properties from the Premises and restore the Premises to its condition at the commencement of this lease at Lessee's sole cost and expense with the exception of the vault which may be left in place at the option of the Lessee. 8. MAINTENANCE OF COMMON AREAS: The Lessor shall maintain and repair the common areas in good condition and shall remove all snow, ice, water, debris, and obstructions therefrom and maintain proper lighting therefor so as to keep the same at all times safe and clear and in good condition and repair and usable for their intended purposes, but the Lessor shall have no such responsibility with respect to the Premises. 4 9. UTILITIES AND HEAT: The Lessee shall pay for .all utilities consumed in connection with the equipment and machinery for the separately serviced use and occupancy of the Premises. 10. REPAIR AND MAINTENANCE: Lessee shall maintain the Premises, reasonable use and wear and tear and damage by fire or casualty excepted. Lessor shall provide, maintain, repair and replace the building structure, all electrical, mechanical, heating, ventilating and air conditioning equipment, plumbing, soil line, and other installations and facilities reasonably required for comfortable occupancy of the Premises in good order and repair and repair and replace glass or doors that may be damaged or broken all at its own expense. 11. REPRESENTATIONS AND WARRANTIES OF LESSOR: The Lessor covenants, warrants and represents as -follows: A. That the Lessor has good and marketable record title to the Premises and the common -areas free from all encumbrances which might interfere with the exercise or enjoyment by the Lessee of its rights and privileges hereunder, and has full right, power and authority to lease the Premises as herein provided. B. That during the term hereof-the Lessor shall not create, permit or suffer any mortgage, lien or encumbrance of any nature which is not subordinate to or which interferes with the exercise and enjoyment. by the Lessee of its rights and privileges hereunder upon the Premises or the common areas. C. That no mortgagee or owner of the Premises has or shall acquire any claim or interest in or to the properties and improvements of-the Lessee installed or erected upon or within the Premises. 12. PARKING: Lessee-agrees that its officers, agents and employees will park their vehicles only on such portions of the common areas as the Lessor from time to time shall designate as "employees' parking areas" which may be outside of but conveniently located with respect to the Premises and the common areas. Lessor 5 will do all things necessary and appropriate to insure a continuing and adequate traffic pattern as required for access to and from the Premises. 13. Cancellation: Lessee shall have the right to terminate this lease at any time upon at least ninety (90) days' advance notice to Lessor in the event that Henry's Market ceases to operate at its present location adjacent to the Premises. Lessee shall also have the right to terminate this lease at any time upon at least one year's advance notice to the Lessor provided -only that the Lessee shall not exercise such right for the sole purpose of relocating its automated remote transaction branch facility to a location within a one (1) mile radius of the Premises. Nothing herein contained shall prohibit the Lessee from so electing to terminate this lease without liability for liquidated damages or otherwise for the purpose of opening a new branch facility within a one (1) mile radius of the Premises if such branch facility shall include any manned function (such as a manned drive-up teller window or conventional manned teller branch facility) notwithstanding its inclusion also of automated banking facilities. 14. SIGNS: The Lessee may only erect such signs and banners on the Premises as it may deem necessary or appropriate for its purposes and which shall not be prohibited by any applicable zoning by-law, or other law, code, or regulation with respect to the erection and maintaining of signs. 15. INSURANCE: During the term hereof the Lessee shall at its own expense keep and maintain in force liability insurance in an amount not less than One Hundred Thousand Dollars ($100,000.00) for injury to or death of one - -(1) person as a result of one (1) occurrence, not less than. Three Hundred Thousand Dollars ($300,000.00) for injury to or death of more-than one (1) person as a result of one (1) occurrence and not -less than twenty-five Thousand Dollars ($25,000.00) property damage insuring Lessee and Lessor against any liability that it may accrue against them or either of them on account of any accident or happening on the 6 premises. Lessee shall furnish to Lessor certificates of all insurance required under this paragraph upon request. 16. AMERICANS WITH DISABILITIES ACT COMPLIANCE: Lessor acknowledges its responsibility to make the general premises and the Premises to comply with the requirements of the Americans with Disabilities Act, 42 USC #12101 and the regulations and accessibility guidelines for buildings and facilities issued pursuant thereto. 17. DAMAGE, DESTRUCTION OR TAKING: If a substantial portion of the Premises or common areas shall be destroyed or damaged by fire or other cause, or taken by action of a public authority, the Lessee may terminate this lease by written notice within sixty (60) days after such fire or other cause. 18. DEFAULT: If the Lessee defaults in the performance or observance of any of the covenants or conditions herein contained on its part to be performed or observed, the Lessor may give to the Lessee written notice thereof specifying the default, and if such default has not been cured within thirty (30) days of the giving of such notice, or such longer period as is hereinafter provided, the Lessor may give to the Lessee written notice of the termination of this lease, and the Lessee shall then surrender the Premises to the Lessor, and the Lessor may at any time after such termination resume possession of the Premises by any lawful means and, subject to the Lessee's right to remove its building and other improvements, remove the Lessee and other occupants and their effects, by dispossess proceedings or otherwise, without being liable to prosecution or damage therefor. Provided, however, that, if the Lessee shall in good faith contest-whether the Lessee is in default as specified in any written notice specifying default given by the Lessor as herein above provided (other than default in the payment of the rent hereunder) by instituting proceedings at law or in equity in any court of law having jurisdiction over the matter within thirty (30) days of the giving of such notice, the time within which the Lessee shall have to cure such default, if any, shall be extended to the date which is thirty (30) days after a 7 final adjudication of such proceedings unfavorable to the Lessee and the expiration of any applicable appeal period, or, if any appeal be taken and prosecuted by the Lessee in good faith, thirty (30) days after a final adjudication of the appeal unfavorable to the Lessee. 19. SHORT FORM: The parties hereto agree that upon request of either party, the other party will execute whatever instruments may be necessary for the recording of a short form or notice of this lease and any amendments thereto or modifications thereof. 20. NOTICES: All notices hereunder shall be sufficiently given and shall be deemed to be given when mailed by registered or certified mail, postage prepaid, if addressed to the Lessor: _____________________________; if addressed to the Lessee: Ipswich Savings Bank, 23 Market Street, Ipswich, Massachusetts 01938. The Lessor and Lessee may, by notice given hereunder, designate any different addresses to which subsequent notices shall be sent. 21. ADDRESS: Lessor will, upon receipt of a request therefor, assist the Lessee in having a formal address assigned to the Premises. 22. MISCELLANEOUS: This lease shall be governed by the laws of The Commonwealth of Massachusetts, shall be binding upon and. inure to the benefit of the Lessor and the Lessee and their respective successors and assigns, and may be amended or modified only by a written instrument signed by both parties hereto. 23. CAPTIONS: The captions or headings in this lease are for convenience only and in no way define, limit or describe the scope or intent of any provision of this lease. 8 Executed in duplicate as a sealed instrument this 4th day of March, 1996. WITNESS; LESSOR: /s/ James Stump /s/ Henry C. Swanson - ------------------------------ ------------------------------ Henry C. Swanson Estate of Leo A. Marquis /s/ Mary G. Richards By: /s/ Charlotte Marquis - ------------------------------ ------------------------------ LESSEE: Ipswich Savings Bank /s/ William Tinti By: /s/ David L Grey - ------------------------------ ------------------------------ ADDENDUM A ---------- 1. General Premises Owned by Lessor -------------------------------- Land and the buildings situated thereon consisting of approximately 51,514 square feet located at 588 Cabot Street, North Beverly, Massachusetts 2. Leased Premises --------------- 1,988 square feet at 588 Cabot Street, North Beverly, Massachusetts as shown on the plan attached hereto and marked "B" 10 EX-10.4 9 LEASE THIS INDENTURE made as of the _______ day of April 1997, by and between Mark Klaman, Trustee or Village Associates Trust, u/d/t dated March 2, 1984 recorded with the Essex South District Registry of Deeds in Book 7347, Page 556, and Ipswich Savings Bank. WITNESSETH: 1. Definitions. As used herein, the following terms shall have the meanings set forth below unless the context otherwise requires: (a) Lessor: Said Mark Klaman, Trustee of Village Associates Trust. (b) Lessee: Said Ipswich Savings Bank. (c) Premises: The approximately 1,200 square foot premises cross-hatched on Exhibit A-l, in the Shopping Center shown on Exhibit A. (d) Shopping Center: The Shopping Center, now known as The Village Shops at Vinnin Square at 600 Loring Avenue, in Salem, Massachusetts, shown on Exhibit A and outlined in bold lines thereon, and described by metes and bounds in Exhibit B. (e) Original Term: The period commencing on the Commencement Date (as hereinafter defined) and ending at 12:01 a.m. on October 1, 2000. (f) Term: Prior to the exercise by the Lessee of the Options to Extend, if any, as provided in Section 3.1 hereof, the Original Term; after the exercise by Lessee of any such Option to Extend, the Original Term as it may have been then extended. (g) Commencement Date: The earlier of (i) sixty (60) days after the Lessee has obtained all regulatory and other governmental Approvals (as defined in and more particularly set forth in Section 2 hereof necessary to locate, construct and operate a branch banking facility at the Premises; or (ii) the date Lessee opens for business at the Premises; or (iii) August 1, 1997. (h) Net Minimum Rental: Nineteen Thousand Two Hundred and 00/l00 ($19,200.00) Dollars per year during each Lease Year of the Original Term hereof, and thereafter Net Minimum Rental shall be adjusted as provided in Section 4 hereof. (i) Lease Interest Rate: the lesser of (i) eighteen (18) percent per annum; or (ii) the maximum rate permissible under applicable law. (j) Lease Year: The period beginning on each anniversary of the Commencement Date during the Term. (k) Permitted Use: branch banking facility and all uses necessary or incidental thereto, including, without limitation, drive-in banking services, maintenance of ATM's and safe deposit facilities and office and office related uses. (l) Common Areas: the parking and common area or areas located adjacent to the Premises and utilized as a part of the Shopping Center and all other common areas and facilities in the Shopping Center, all to the extent that the same may from time to time be provided by the Lessor for the convenience of all lessees occupying other portions of the Shopping Center, their customers and invitees, and such other persons as shall be permitted by the Lessor from time to time to use the same, subject to all of the express terms and provisions of Section 7. (m) Lessee's Trade Name: Ipswich Savings Bank. (n) Lessor's Address: 600 Loring Avenue, Salem, MA 01970 (o) Lessor's Counsel: Goldstein & Manello, P.C., 265 Franklin Street, Boston, MA 02110; Atm: Jeffrey L. Musman, Esquire. (p) Lessee's Address: 23 Market Street, Ipswich, MA 01938-2212; Attn: Treasurer or Chief Financial Officer (q) Lessee's Counsel: William Tinti, Esq., Tinti, Quinn & Merry, P.C., 22 Essex Street, Salem, MA 09l70. (r) Notice: shall mean notice as provided in Section 36 hereof. 2. The Shopping Center and the Premises. The Lessor does hereby let to the Lessee and the Lessee does hereby hire from the Lessor the Premises described in Section 1 in the Shopping Center described in Section 1, excepting and reserving to the Lessor, however, (a) the right to place in, over, upon or under the Premises (in such manner as to not substantially interfere with the Lessee's use of the Premises), utility lines, pipes and the like, to serve other premises in the Shopping Center, and to replace, maintain and repair such utility lines, pipes and the like, in, over, upon and under the Premises as may have been installed therein; (b) all other necessary or customary easements, appurtenances and rights of access to and egress from such other premises; and (c) all other rights reserved by the Lessor in this lease or otherwise, including, without limitation, the rights set forth in the second paragraph of Section 7. In the event of any conflict between the terms and provisions of this lease and the terms and provisions of Exhibits A or A-l, or both, the terms and provisions of this lease shall govern. Notwithstanding anything in this lease to the contrary, the Lessor reserves the right at any time or from time to time to change the name of the Shopping Center described in Section l (d). -2- Lessee shall have the further right to install and maintain ah automated teller machine ("ATM"), and to construct and maintain a drive-thru facility for such purpose to be located generally in. the location of the former UST Corp. drive-thru, as shown in the plan attached hereto as Exhibit "A-1". Lessee shall obtain all necessary permits and approvals and pay all costs of installing and maintaining the ATM and the drive-thru facility. Subject to the provisions of Sections 10 and 13 hereof, Lessee shall be permitted to install, at Lessee's sole cost and expense (i) at the location of the ATM, signage identifying Lessee, any automated teller network operated by Lessee and any shared automatic teller network with which the ATM is affiliated; and (ii) at the front of the building facing Loring Avenue, a sign directing customers to the ATM. Lessor shall have no responsibility for the ATM or the drive-thru and shall not be liable for any damage to the same, no matter how caused. Lessee shall pay all real or personal property taxes assessed or imposed on the ATM and the drive-thru. As soon as reasonably practicable, after the execution hereof, Lessee shall make application to (i) the Commissioner of Banks of the Commonwealth of Massachusetts and any other governmental authority as shall be necessary to locate and operate a branch banking facility of the Lessee at the Premises, and (ii) for all other permits and approvals, from all governmental authorities having jurisdiction necessary to complete construction of the Premises and the drive-thru facility, to install Lessee's signage as provided in Section 13 and to operate Lessee's business at the Premises (collectively, the "Approvals"). Lessee agrees to use its best efforts to diligently prosecute such applications, including, without limitation, paying all fees necessary to obtain such Approvals, and providing such documentation and information as shall be required by such governmental authorities in furtherance of such applications. If despite such efforts Lessee has been unable to obtain such Approvals on or before August 1, 1997, Lessee shall have the right to terminate this Lease by delivering Notice to the Lessor on or before such date. Lessor agrees to cooperate with Lessee in Lessee's attempt to obtain such Approvals and, where required by such governmental authorities, agrees to permit the use of Lessor's name in connection therewith as owner of the Shopping Center. Lessor agrees that it will execute such instruments as shall be reasonably required by such governmental authority of the owner of the Shopping Center with reference to any application by Lessee therefor, but all services performed, in connection therewith and all costs incurred and the exercise of rights pursuant to this Paragraph shall be at Lessee's sole expense and risk. 3. Term. TO HAVE AND TO HOLD the Premises unto the Lessee during the Term set forth in Section 1. In the event that Lessee should hold over after the expiration or sooner termination of the Term, the Term shall continue thereafter until terminated by either party by not less than thirty (30) days' prior written notice to the other, which notice may, however, be given prior to the commencement of such holdover. All of the terms and provisions of this. Lease in effect immediately prior to such holdover shall be applicable during such holdover and for any further time following the end of the Term during which the Lessee may continue tO use or occupy the Premises, except that the Lessee shall pay on account of the Net Minimum Rental an amount equal to one and one-half (1.5) times the Net Minimum Rental provided in Section l(b). 3.1 Options to Extend. Lessee shall have four (4) options to extend the Term of this Lease for additional periods of five (5) years each, commencing on the expiration of the Original Term, as it may have been extended, provided that Lessee shall give Lessor Notice of the exercise of its election not later than six (6) months prior to the expiration of the then Term; and provided further that Lessee shall not be in default at the time of giving of such Notice in the performance and observance of any of the terms and agreements in this Lease contained on the part of the Lessee to be performed and observed. (The option rights herein granted to Lessee shall be referred to as the "First Option to Extend," the "Second Option to Extend", the "Third Option to Extend" and the "Fourth Option to Extend", as the case may be extended applicable to such Option Period, the Third Option Period", and the "Fourth Option Period" as the case may be, and collectively, the "Option Periods".) 3.2 Options to Terminate. Lessee shall have the right at any time during the Term of the Lease to terminate the Lease as of the last day of a month ("Termination Date"), provided (i) that Lessee shall give Lessor Notice of the exercise of its rights so to terminate not less than twelve (12) months prior to the Termination Date; (ii) that Lessee shall not be in default at the time of the giving of such Note in the performance of any of the terms and agreements in this Lease contained on the part of the Lessee to be performed and observed; and (iii) that Lessee continues to pay all rental at the time and in the manner in the Lease provided, and to perform all of the other terms and conditions on the part of the Lessee to be performed and observed for the period following such Notice until the Termination Date. In the event Lessee exercises the right to terminate as aforesaid, Lessee, note the less may continue to lease and maintain the ATM and drive-thru area a tenant-at-will terminable by either Lessor or Lessee as of the last day of a month upon not less than six (6) months' Notice to the other. Rent for the use of such ATM and drive-thru area shall be at the rate of Two Hundred Fifty and 00/100 ($250.00) Dollars per month payable on the first day of each and every month. Notwithstanding the termination of the Lese as aforesaid, Lessee agrees that, except with respect to rent and term which are covered by this paragraph, Lessee shall observe each and every other term of the lease on the part of the Lessee to be observed and performed. 4. Rental. YIELDING AND PAYING therefor the Net Minimum Rental set forth in Section 1, payable in advance on the first day of each month during the Term in equal monthly installments. A proportinate part of the Net Minimum Rental shall be paid for any period of the commencement of the Term which shall be less than a full month. During each Lease Year of the Original Term hereof the Net Minimum Rental shall be paid for any period of the commencement of the Term which shall be less than a full month. During each Lease Year of the Original Term hereof, the Net Minimum Rental shall be Nineteen Thousand Two Hundred and 00/100 ($19,200.00) Dollars. In the event the Lessee exercises the First Option to Extend, the Net Minimum Rental for each Lease Year of the First Option Period also shall be Nineteen Thousand Two Hundred and 00/100 ($19,200.00) Dollars. In the event the Lessee exercises the Second Option to extend, the Net Minimum Rental for each Lease Year of the Second Option Period shall be Twenty Three Thousand Eight Hundred Eight and 00/100 (23,808.00) Dollars. In the event the Lessee exercises the Third Option to Extend, the Net Minimum Rental for each Lease Year of the Third Option Period shall be Twenty-Seven Thousand Three Hundred Seventy-Nine and 20/100 ($27,379.20) Dollars. In the event the Lessee exercises the Fourth Option to extend the Net Minimum Rental for each Lease Year of the Fourth Option Period shall be Thirty-One Thousand Four Hundred Eighty-Six and 08/100 ($31,486.08) Dollars. The Lessee shall pay the Net Minimum Rental due for the first month of the Term on or before the Commencement Date. The Lessee also agrees to pay, as additional rental, when due or payable, and except as otherwise expressly provided herein, all other obligations and liabilities which the Lessee assumes and agrees to pay by express assumption or agreement elsewhere in this lease, together with every fine, penalty, interest and cost which may be added thereto or become due or be imposed by operation of law for the non-payment or late payment thereof, and, in the event of any failure on the part of the Lessee so to pay or discharge any of the same, the Lessor shall have all rights and remedies as in the case of non-payment of the Net Minimum Rental. The Lessee also agrees to pay to the Lessor, on demand, as additional rental, interest at the Lease Interest Rate on all overdue installments of the Net Minimum Rental and additional rental from the respective due dates thereof until payment thereof in full. In the event that the aggregate of all payments (whether denominated as Net Minimum Rental, additional rental or otherwise) received by or paid to discharge an obligation of the Lessee as a result of any assignment, subletting or permission to use or occupy the Premises described in Section 11(e), whether or not the Lessor shall have consented thereto (it being agreed by the Lessee that nothing herein contained shall in any way affect the covenant herein elsewhere contained prohibiting an assignment hereof or underletting to or use, occupation or improvement by, others of the Premises or any part thereof without the Lessor's prior written consent), shall exceed the aggregate of the Net Minimum Rental, additional rental and other payments herein payable by or on behalf of the Lessee, then, and in such event, the Lessee agrees tO forthwith pay, as additional rental, the full amount of any such excess. The Net Minimum Rental and all items of additional rental shall be paid to the Lessor at the Lessor's address set forth in Section l(n), except that the Lessor may by written notice to the Lessee designate another address for purposes of this sentence. In addition to all of the rights and remedies of the Lessor set forth in this lease, if the Lessee shall fail to pay any item of rental due hereunder (whether denominated as Net Minimum Rental, additional rental or otherwise) within ten (10) days after the same shall have become due and payable, then and in such event the Lessee shall also pay to the Lessor a late payment service charge (in order to partially defray the Lessor's administrative and other overhead expenses) equal to the greater of Fifty 00/100 ($50.00) Dollars or one half of one (1/2%) percent of such unpaid sum per day for each day or part thereof after the due date thereof during which such payment shall not have been received by the Lessor, but in no event in excess of any maximum interest rate (if such sum shall be denominated as interest by any court of competent jurisdiction) permissible under applicable law, it being understood that nothing herein shall be deemed to extend the due date for payment of any sums required to be paid by the Lessee hereunder or to relieve the Lessee of its obligation to pay such sums at any time or times required by this lease. 5. Net Lease: Non-terminability. (a) This lease is a net lease and the Net Minimum Rental, additional rental and all other sums payable hereunder to or on behalf of the Lessor shall be paid without notice -5 - or demand, and without setoff, counterclaim, defense, abatement, suspension, deferment, reduction or deduction, except as expressly provided herein. (b) This lease shall not terminate, nor shall the Lessee have any right to terminate this lease, nor shall the obligations and liabilities of the Lessee set forth herein be otherwise affected, except as expressly provided herein. (c) The Lessee waives all rights (i) to any abatement, suspension, deferment, reduction or deduction of or from the Net Minimum Rental or the additional rental or (ii) to quit, terminate or surrender this lease or the Premises of any part thereof, except as expressly provided herein. (d) It is the intention of the parties hereto that the obligations of the Lessee hereunder shall be separate and independent covenants and agreements, that the Net Minimum Rental, the additional rental and all other sums payable by the Lessee to or on behalf of the Lessor shall continue to be payable in all events and that the obligations of the Lessee hereunder shall continue unaffected, unless the requirement to pay or perform the same shall have been terminated pursuant to an express provision of this lease. (e) The Lessee agrees that it will remain obligated under this lease in accordance with all of its terms and provisions, and that it will not take any action to terminate, rescind or avoid this lease or any portion thereof except as otherwise provided herein, notwithstanding (i) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding-up or other proceeding affecting the Lessor or any assignee of the Lessor in any such proceeding; and (ii) any action with respect to this lease which may be taken by any trustee or receiver of the Lessor or of any assignee of the Lessor in any such proceeding or by any court in any such proceeding. 6. Use of the Premises. The Premises may be used for the Permitted Use described in Section 1 and for no other purpose whatsoever, without the express written approval of the Lessor. 7. The Parking and Common Areas. The Lessee, its customers and invitees shall have the right, during the Term, to use the Common Areas in common with all other lessees occupying other portions of the Shopping Center, their customers and invitees, and such other persons as shall be permitted by the Lessor from time to time to use the Common Areas, subject, however, to such reasonable rules and regulations as may now be in force or as the Lessor may establish at any time or from time to time, which rules and regulations shall nonetheless encompass the provisions of Section 7.1 hereof, including, without limitation, the designation of the size and location of employee parking areas even if the same are not located within the Shopping Center. The Lessor shall have the right to have towed any vehicles which are parked in the Common Areas by the Lessee's employees in violation of the Lessor's rules and regulations regarding employee parking from time to time in effect. The Lessee covenants and agrees, however, that it will not permit its employees or concerns making deliveries to or pickups from the Premises to use any portion of the Common Areas (except as otherwise provided herein) other than such portions or portions reasonably situated as the Lessor shall from time to time set[ apart for such purpose and designate in writing, and that, to the extent there shall be any sidewalks immediately adjacent to the Premises, it will maintain such sidewalks in a neat and orderly condition, -6 - swept and free from ice and snow. The Lessor expressly reserves the right to enforce parking charges (by operation of meters or otherwise), and to temporarily close all, or any portion, of the Common Areas for the purpose of making repairs or changes thereto, in order to discourage non-customer parking, or otherwise. Notwithstanding the foregoing, Lessor agrees that it shall not install parking meters in the Shopping Center unless required by governmental authorities. Notwithstanding the foregoing, Lessee shall have the right, in order to maintain proper security for the operation of its business to have pickups or deliveries made from or to the Premises by Brinks or other similar carriers of cash, securities, instruments, records or other materials commonly transported by such carriers and to permit the use of such portions of the Common Areas adjacent to the Premises as shall be reasonably required for such purposes, provided, however, that any such use by Lessee of the Common Areas shall be accomplished, so far as reasonably practicable, in a manner which reduces to a minimum interference with the use of the Common Areas for the purposes for which they were intended or the conduct of business of other tenants of the Shopping Center. The Lessor may at any time or from time to time construct additional improvements in all or any part of the Shopping Center, or change the location or arrangement of any improvement in the Shopping Center or all or any part of the Common Areas, or add or deduct any land to or from the Shopping Center, or enlarge, reduce, change, enclose or increase the height of, the Shopping Center, or any building or other improvement therein, provided, however, no such construction, addition or change shall materially reduce the number of parking spaces available to Lessee at the Commencement Date, access to the Premises or the visibility of the Premises from Loring Avenue. Subject to the exclusions hereinafter set forth, the Lessee covenants and agrees to pay unto the Lessor, as additional rental, the Lessee's Fraction (as hereinafter defined) of the annual cost of (a) operating, managing, altering, improving, repairing, restoring, replacing, renovating, cleaning and maintaining the Common Areas, including, without limitation, the lighting thereof, the policing thereof, all plate glass therein, the heating, ventilating and air-conditioning thereof, the plumbing, sanitary sewage and electric systems therein and the sprinkler and other fire protection or other alarm systems therein, if any (including any main trunk line of any such systems, but excluding any branch runs and leads); (b) all real estate taxes, personal property taxes, business and occupation taxes, occupational license taxes, water charges, sewer charges, assessments, including, without limitation, betterment assessments or taxes in the nature thereof, and all other similar governmental taxes, impositions and charges which shall be levied, assessed, or imposed (but excluding any taxes for which Lessee shall be responsible for the payment of Lessee's Fraction under Section 8 hereof (i) upon or with respect to the Common Areas, including, without limitation the land on which the foregoing are constructed; or (ii) upon or with respect to the operation, maintenance, alteration, repair, rebuilding, use, occupancy or enjoyment of the Common Areas; under or by virtue of any present or future law, statute, charter, ordinance, regulation or other requirement of any governmental authority, whether federal, state, county, city, municipal or otherwise, all whether general, special, ordinary, extraordinary, foreseen or unforeseen; it being agreed that such taxes, charges, assessments and impositions shall include the costs and expenses incurred, in accordance with the penultimate paragraph of Section 8, in contesting the amount or validity of any thereof; (c) the premiums on the liability insurance policies insuring the Lessor against -7- damage to property or injuries or death to person or persons, in, on or about the Common Areas, including, without limitation, the roadways leading from and to the Common Areas, in amounts as shall be determined by the Lessor, and the premiums on the fire and casualty insurance policies insuring the Lessor including, without limitation, all insurance described in Section 16, in such amounts as shall be determined by the Lessor, (d) all administrative costs equal to fifteen (15%) percent of all additional rental payable to the Lessee pursuant to this Section 7 to help defray the Lessor's indirect cost of so providing, maintaining and insuring. Notwithstanding anything set forth in this lease to the contrary, the Lessee will pay to the Lessor monthly, together with the Net Minimum Rental, one-twelfth (1/12) of the amount estimated by the Lessor from time to time to reflect the Lessee's Fraction of such annual cost. Promptly after such cost is determined for each year, the Lessor will advise the Lessee in writing of the amount of the Lessee's Fraction thereof for such year, and the Lessor and the Lessee will account to each other so that the Lessee shall have paid to the Lessor for each such year the full amount of the Lessee's Fraction of such cost; any excess paid by the Lessee shall be credited against future payments required by this Section 7 next due, except that upon expiration of the Term any such excess shall be promptly refunded by the Lessor to the Lessee, and, in any event, any deficiency shall be promptly paid by the Lessee to the Lessor. For purposes of this Section, Lessee shall have the right to review at reasonable times and upon reasonable notice any of lessor's books and records relating to any such cost, for which Lessor is seeking reimbursement from Lessee. As used in this Section 7 and in Section 8, Lessee's Fraction shall be a fraction in which the numerator is the number of square feet of floor space in the Premises and the denominator is the number of square feet of floor space in all premises located in the Shopping Center, including the Premises then occupied by other lessees of the Lessor; it being agreed that all floor areas shall be computed within the exterior surfaces of all walls and any space in non-selling mezzanines shall not be considered. The cost described in the first sentence of this paragraph shall be deemed to include, without limitation, all costs and expenses of every kind and nature paid or incurred by the Lessor (including reasonable and appropriate reserves) in operating, managing, equipping, policing (if and to the extent provided by the Lessor), heating, ventilating, air conditioning, lighting, altering, improving, repairing, restoring, replacing, renovating, cleaning, maintaining and landscaping all portions of the Common Areas (including any parking structure subsequently installed in the Shopping Center), water and sewer or sewage treatment or removal charges, painting and caulking all exterior surfaces in the Shopping Center, including, without limitation any canopies in the Shopping Center, maintaining and illuminating any pylons in the Shopping Center and any signs thereon to be maintained and/or illuminated by the Lessor, premiums for liability, property damage, casualty, workmen's compensation, and any other insurance (including all insurance, hazard and otherwise, carried by the Lessor on any and all buildings and improvements in or about the Shopping Center and the Common Areas), the cost of on-site supervision and personnel, including, without limitation, the property manager, if any, staff, office rentals, wages, unemployment taxes, social security taxes and benefits, personal property taxes and assessments, fees for required licenses and permits, materials, supplies, operation of loudspeakers and any other equipment supplying music to any Common Areas (if any), or rental charges for any machinery and equipment, any and all alterations, improvements, repairs, restoration, replacements and renovation (whether interior, exterior, structural, non-structural, foreseen or unforeseen) to any portion of the Shopping Center which the Lessor shall deem necessary or appropriate or which shall be required of the Lessor by this or any other lease relating to the Shopping Center or by any law, rule, ordinance, -8 - regulation or requirement of any public authority or the Fire Insurance Rating Association having jurisdiction or as a result of any fire, casualty, taking by eminent domain or action by any public or other authority to the extent that the cost thereof shall exceed the net proceeds, if any, of any insurance or damages paid to the Lessor, including without limitation, any and all maintenance and repairs by the Lessor to the structural portions of all buildings and other improvements in the Shopping Center the roof, foundations, exterior walls, floors, subfloors, utilities and other portions of all such buildings and improvements to the extent so required of the Lessor of this or any other lease or agreement relating to the Shopping Center, and the costs of furnishing sprinkler protection in the Premises. Notwithstanding the foregoing, the costs described in this Section shall be deemed to exclude (a) any costs in altering, improving, repairing, restoring, replacing, renovating or maintaining leased portions of the Shopping Center; (b) the original costs of constructing any building, improvement, or the Common Areas, or additions thereto; (c) any costs incurred for the benefit of a particular Tenant which are to be paid for or by such Tenant as opposed to costs incurred for the benefit of the Shopping Center and/or a significant number of tenants thereof; (d) any costs incurred by Lessor in making structural repairs to any structural portion of the Shopping Center as provided in Section 28 hereof; (e) any costs incurred of a capital nature with respect to the HVAC, plumbing, electrical and alarm systems; and (f) any costs made necessary by Lessor's non compliance with governing codes, by-laws, regulations and ordinances related to the Shopping Center, but only if such were in effect at the time of the original construction of such component of the Shopping Center. 7.1 A. Lessor covenants and agrees that it shall at all times reasonably repair, maintain and police the Parking Areas and Common Areas of the Shopping Center, and will keep the Parking Area well lighted during all normal business hours of the Shopping Center, all with the intent of maintaining a first class shopping center. B. Lessor shall at all times maintain rules and regulations which prohibit Tenant or Tenants' employees parking in that portion of the Shopping Center designated on the plan attached hereto as the Front Parking Area (except for executive officers of Lessee not regularly employed at the Premises). Lessor shall at all times use reasonable efforts to enforce such rules and regulations. 8. Taxes and Other Charles. The Lessee agrees, except as otherwise expressly provided herein to the contrary, to pay, as the same become due and payable, all costs, expenses and obligations of every kind and nature for the operation, maintenance, repair, rebuilding, use, occupancy and enjoyment of the Premises. The Lessee also agrees, subject as aforesaid, to pay, within fifteen (15) days after demand, the Lessee's Fraction of all real estate taxes, personal property taxes, business and occupation taxes, occupational license taxes, water charges, sewer charges, assessments, including, without limitation, betterment assessments or taxes in the nature thereof, and all other similar governmental taxes, impositions and charges which shall be levied, assessed or imposed: (a) upon or with respect to the land under the buildings comprising the Shopping Center and such buildings; or (b) upon or with respect to the operation, maintenance, alteration, repair, rebuilding, use, occupancy or enjoyment of the buildings comprising the Shopping Center or any portion thereof; under or by virtue of any present or future law, statute, charter, ordinance, regulation or other requirement of any public authority, whether federal, state, county, city, municipal or otherwise, all whether general, special, ordinary, extraordinary, foreseen or unforeseen. Such taxes, charges, assessments and impositions shall include any costs and expenses incurred, in accordance with the penultimate paragraph of this Section 8, in contesting the amount or validity of any thereof. The Lessee agrees, except as aforesaid, to pay as aforesaid all gross receipts, gross income or similar taxes imposed or levied upon, assessed against or measured by the Net Minimum Rental, additional rental or any sums payable by the Lessee to or on behalf of the Lessor hereunder, or any sales or use taxes which may be levied or assessed against or payable by the Lessor or the Lessee on account of the acquisition, leasing, use or occupancy of the Premises or any portion thereof. Notwithstanding anything contained in this lease to the contrary, the Lessee will pay to the Lessor monthly, together with the Net Minimum Rental, one twelfth (1/12) of the amount from time to time estimated by the Lessor to reflect the Lessee's Fraction of all such taxes, charges, assessments, and impositions described in this Section 8 which are so levied, assessed or imposed, or billed to the Lessor by the appropriate public authority or authorities, if any. Promptly after the exact amount of the Lessee's fraction of all such taxes, charges, assessments and impositions are determined for each tax year, the Lessor will advise the Lessee in writing of the amount thereof for such year and the Lessor and the Lessee will account to each other (as often as such taxes, charges, assessments or impositions are payable to the proper authorities) so that the Lessee shall have paid to the Lessor prior to the expiration of ten (10) days after the Lessor has so advised the Lessee of such amount; the full amount of the Lessee's Fraction of all such taxes, charges, assessments and impositions for such tax year or portion thereof; any excess paid by the Lessee shall be credited against future payments required by this Section 8 next due, except that upon expiration of the Term of any such excess shall be promptly refunded by the Lessor to the Lessee, and any deficiency shall be promptly paid by the Lessee to the Lessor. Notwithstanding anything in this lease to the contrary contained, the Lessee shall not be required to pay or otherwise be responsible for (i) any local, state or federal capital levy, franchise tax, revenue tax, income tax or profits tax of the Lessor, or (ii) any estate, inheritance, devolution, succession or transfer tax which may be imposed upon or with respect to any transfer of the Lessor's interest in the Shopping Center; provided, however, that if any time hereafter the methods of taxation prevailing at the date hereof shall be altered so as to cause the whole or any part of the taxes, charges, assessments or impositions now or hereafter levied, assessed or imposed on real estate and the buildings, structures and other improvements thereon to be levied, assessed and imposed, wholly or partially as a gross receipts, gross income, capital levy, or other tax, on the rentals received therefrom, or if any tax, corporation franchise tax, assessment, levy (including but not limited to any municipal, state or federal levy), imposition or charge, or any part thereof, shall be measured by or based in whole or in part, upon the Shopping Center and shall be imposed upon the Lessor, then all such taxes, assessments, levies, impositions or charges, or the part -10- thereof so measured or based, shall be deemed to be an imposition levied, assessed or imposed upon or with respect to the Shopping Center, to the extent that the same would be payable if the Shopping Center were the only property of the Lessor subject thereto, and the Lessee shall pay to the Lessor the Lessee's Fraction of the same as and in the manner provided herein. If there are any taxes levied or assessed at the time on any item of rental payable hereunder, the Lessee further agrees to pay to the Lessor, as additional rental, the amount thereof. At the expiration of the Term, all payments for which the Lessee is responsible as provided in this Section 8, shall be prorated to the date of such expiration. The amount of any such payments which become due and payable after the expiration or sooner termination of the Term shall, on or prior to the date of such expiration or sooner termination, be deposited with the Lessor. If the Lessee shall not be then in default, the amount of any net refund, abatement, deduction, reduction, or credit received by the Lessor attributable to any such payment earlier made by the Lessee shall be credited against future payments required by this Section 8 next due, except that upon expiration of the Term any such excess shall be promptly refunded by the Lessor to the Lessee. In the event that the Lessor or any party authorized by the Lessor shall contest, by appropriate proceedings, the amount or validity of any such tax, assessment, imposition or charge the Lessee shall cooperate with the Lessor in the course thereof and execute any applications, appeals and other documents which may be required to enable the Lessor to maintain such proceedings, and there shall be appropriate adjustments by credits against future payments required by this Section 8, of all such taxes, assessments, impositions and charges to reflect any abatements, credits and refunds which may be received by the Lessor and to reflect the costs and expenses (including, without limitation, attorneys' and appraisal fees and expenses) of contesting the amount or validity of any such tax, assessment, imposition or charge. The Lessee agrees to pay, on or before the respective due dates, all such taxes, charges, assessments, or impositions levied, assessed or imposed at any time on the Lessee's fixtures, equipment, supplies, merchandise or other property in, on or about the Premises or Shopping Center. 9. Acceptance of the Premises "As-Is". The Lessee hereby acknowledges that upon taking occupancy or opening for business, whichever shall first occur, it shall be deemed to have accepted the Premises "as-is", after due inspection thereof and without any representation or warranty as to the use or condition thereof. 10. The Lessee's Construction. Promptly after notification by the Lessor to do so, the Lessee shall, at the Lessee's expense, do all work to the Premises necessary or appropriate to permit the Lessee to open for and operate its business, install an exterior sign in accordance with the requirements of Section 13 and equip the Premises with all trade fixtures and personal property necessary or appropriate for the operation of the Lessee's business in the Premises; provided, however, that none of the foregoing shall in any way hamper prosecution of any construction being undertaken in or about the Shopping Center. The Lessee agrees that all plans and specifications for all such work, equipment and preparation and all alterations, improvements, restorations, repairs, replacements or renovations which the Lessee may make pursuant to any term or provision of this lease or - 11 - any consent by the Lessor will be done by the Lessee in a good and workmanlike manner, free from material defects in design, construction, workmanship or materials, in accordance with all laws, ordinances, rules, regulations and requirements of public authorities and the Fire Insurance Rating Association having jurisdiction, and that same will not decrease the value of the Shopping Center. In addition, all of the foregoing will be done in such manner as will avoid jurisdictional or other labor disputes. All such work, building mechanicals and equipment, building alterations and improvements, restorations, repairs, replacements and renovations other than any bank equipment, ATMs, trade fixtures, signs, merchandise, supplies and other personal property of the Lessee shall forthwith become the property of the Lessor and shall be expressly subject to the provisions of Section 11(u). The Lessee may assign, encumber or otherwise create a security interest in, to or upon any of the Lessee's property in the Premises without first obtaining the Lessor's prior written consent provided, however, any such assignment, encumbrance or security interest shall not encumber any portion of the real estate, including the Premises, constituting the Shopping Center or any interest in this Lease. Upon such entry, all of the terms and provisions of this lease shall be in full force and effect except that the Lessee shall have no obligation to pay any Net Minimum Rental and other rentals until the Commencement Date, but from and after such entry the Lessee will pay all charges for light, heat, hot and cold water, electric current and any other services or utilities furnished to the Premises, including, without limitation, the charge described in Section ll(t). 11. The Lessee's Covenants. The Lessee hereby covenants with the Lessor that the Lessee until the expiration of the Term and for such further time as the Lessee, or any other person or persons claiming through or under the Lessee shall hold the Premises or any part thereof: (a) will pay to the Lessor all rental at the time and in the manner herein set forth; (b) will at all times maintain all walls of the Premises (including, without limitation, the so called glass or storefront), the floor and subfloor therein (but excluding any structural portion thereof as provided in Section 28 hereof), and the interior of the Premises, (including, without limitation the heating, ventilating, air conditioning, - - plumbing, sanitary sewage, electric, sprinkler and lighting systems and equipment therein (excluding, however any main trunk lines of any such system, but including any branch runs and leads) and all floor coverings, doors, door frames and door openers) in as good, clean and safe repair, order and condition as same were at the Commencement Date or may be put in thereafter, and all alterations, improvements, restoration, repairs, replacements or renovations to the Premises required by any and all laws, ordinances, rules, the regulations or requirements of all public authorities or the fire insurance rating association having jurisdiction, all whether ordinary or extraordinary; all replacements to be of the same kind and quality as those which are replaced; provided, however, that the Lessee shall not be responsible for repairs made necessary by accidental fire or other insured unavoidable casualty; (c) will make all repairs (whether interior, exterior, structural, nonstructural, ordinary or extraordinary) made necessary by the negligence or misuse of the Premises or the fixtures therein or appurtenances thereto by the Lessee, its agents, employees, customers or invitees, or by any forcible entry, vandalism or malicious mischief not reimbursable by the Lessor's insurance; (d) will pay all charges for light heat, hot and cold water, electric current and any other services or utilities furnished to the Premises; (e) will not assign this lease or sublet to any person, firm or corporation the whole or any part of the Premises, or permit any person, firm or corporation other than the Lessee to use or occupy the whole or any part thereof without obtaining on each occasion the prior written consent of the Lessor, which consent will not be unreasonably withheld, - 12- delayed or conditioned; provided, however, upon such assignment or subleasing the provisions of Section 3.2 shall thereupon become reciprocal, but no such consent by the Lessor (i) shall be deemed to be a waiver or release of any of the provisions of this Clause (e) or a consent or agreement to consent to any such assignment, subletting, or permission to use or occupy the Premises thereafter, (ii) shall relate to any other term or provision of this lease including, without limitation, the provisions of Section 6, and (iii) shall be deemed to permit any subdivision of the Premises or any use or occupancy of the Premises by more than one entity at any time; none of the foregoing shall release or discharge the Lessee from any obligations or liabilities set forth in this lease, which obligations and liabilities shall continue to be direct and primary in any event; (f) will not overload or deface the Premises or permit any use of the Premises which shall increase any insurance rate or create a fire hazard or be unlawful, improper, noisy or offensive or which constitutes a nuisance or which is contrary to any law, ordinance, rule, regulation or requirement of any public authority or the Fire Insurance Rating Association having jurisdiction, or which is injurious to any person or property, or commit waste, whether voluntary or involuntary, or permit anyone else to do any of the foregoing; (g) Lessee may maintain ATMs for use of its customers at any time (subject, however, to all applicable laws, rules, regulations or requirements of any public authorities having jurisdictions thereover; provided, however, if Lessee requires additional services in connection therewith, Lessee shall pay any additional costs incurred therefore); (h) will not use any advertising media that might be objectionable to the Lessor or other occupants of the Shopping Center, such as loud speakers, phonographs or radio broadcasts that may be heard outside the Premises; (i) will forthwith obtain and deliver to the Lessor and at all times thereafter maintain in full force and effect, liability insurance (with completed operations and contractual liability endorsements with limits acceptable to the Lessor and insuring both the Lessor and the Lessee against all claims, suits, obligations, liabilities and damages, including attorneys' fees, based upon or arising out of actual or alleged personal injuries or property damage resulting from, or occurring in the same course of, or on or about, or otherwise relating to the use or condition of, the Premises - all such insurance to be for the protection and benefit of, and adjustable with, the Lessor, the Lessor's mortgagees and the Lessee, as their interests may appear, and shall be in form and substance, and with additional limits, amounts and coverage, and such endorsements, in addition to those specified herein, as shall be satisfactory to the Lessor from time to time, and with insurers having current Alfred M. Best Company, Inc. ratings of A or better and financial size ratings of Class XII or higher, and satisfactory to the Lessor from time to time; the Lessee will on demand, as often as reasonably requested by the Lessor, furnish to the Lessor a complete list, statement and description of all such insurance, together with certificates from each insurance company issuing any thereof that same is in full force and effect, all premiums have been paid, and same will not be canceled except upon ten (10) days' prior written notice to the Lessor by registered mail, return receipt requested; such liability insurance to be so obtained and delivered prior to the Lessee's entry as permitted by Section 10; (j) will not do or permit to be done anything in or about the Premises which (i) shall make void or voidable any insurance carried by the Lessor or the Lessee which is required by any term or provision of this lease or which relates to the Shopping Center in any manner or way or (ii) shall increase or create extra premiums therefor and will pay the Lessor on demand, as additional rental, the amount of any such increase or extra premiums on insurance carried by the Lessor (k) will maintain and keep all windows, -window frames and plate glass in the Premises at all times in good repair, order and condition;-(1) will always conduct its operations in the Premises under the Lessee's Trade Name (or in the name of one or more - 13 - affiliates or divisions of Lessee) set forth in Section 1 unless the Lessor shall otherwise consent writing, which consent shall not be unreasonably withheld or delayed; (m) will not use the Common Areas or the sidewalks adjacent to the Premises, except for access to and from the Premises; (n) will furnish to the Lessor, promptly after the receipt of a request therefor, the license numbers of all vehicles, of all persons employed on the Premises by the Lessee; (o) will cooperate with Lessor in the event that the Lessor notifies the Lessee that one or more of the Lessee's employees have parked vehicles in violation of the Lessor's rules and regulations regarding employee parking and has such vehicles towed, in Lessor's attempts to recover from such employees all of the Lessor's costs and expenses in connection therewith; (p) will cause all freight to be delivered and/or removed and all refuse to be removed only in the manner and at such times as shall be designated by the Lessor from time to time, and never store or maintain any such freight or refuse outside of the Premises; (q) will not bum any trash, garbage or refuse of any kind on the Premises or dispose of any of same in any manner other than as expressly directed by the Lessor in writing from time to time; (r) will operate the heating, ventilating and air-conditioning systems in the Premises to adequately heat or cool the Premises, as the case may be; (s) will not solicit business in the parking or common area or areas or distribute handbills or other advertising media to, in or upon any vehicles parked in the Common Areas; (t) will pay, as additional rental, any trash charge from time to time determined by the Lessor as shall be appropriate to help defray the cost of any central station trash compactor and/or trash removal service in the Shopping Center provided by the Lessor; and (u) will, at the expiration or sooner termination of the Term, leave the Premises, including, without limitation, all walls of the Premises, the floor and sub-floor therein, and the interior of the Premises, including, without limitation, the heating, ventilating, air conditioning, plumbing, sanitary sewage, electric, sprinkler and lighting systems, and equipment therein, and all doors, door frames, door openers, windows, window frames and plate glass, in as good, clean and safe repair, order and condition as the same were at the Commencement Date or may be put in thereafter, reasonable wear and tear excepted, all replacements to be of the same kind and quality as what is replaced, subject to the provision in Clause (b) above, and provided that the Lessee shall not be responsible for repairs made necessary by reasonable wear and tear, but the Premises shall be left clean and renantable, orderly and free of occupants, in any event, and provided further the Lessee shall not be responsible for any such repairs made necessary by any casualty insured against, so long as all insurance proceeds paid or payable on account of such casualty are paid over or assigned to Lessor together with the amount of any deductible. The Lessee shall remove from the Premises at or prior to such expiration or sooner termination all fixtures,- equipment, signs, merchandise, supplies and other property of the Lessee, and the Lessee shall, at its sole cost and expense, repair any damage caused by such removal. Upon such expiration or termination, the Lessor may, in addition to all other rights and remedies, without being guilty of any trespass, tort or breach of contract, remove from the Premises any or all fixtures, equipment, signs, merchandise, supplies and other property of the Lessee not removed by the Lessee as provided in the immediately preceding sentence, and either store same for the account of the Lessee at its expense, without obligation or liability on account of any theft, loss, damage or monetary shortage, or deem same to be abandoned and subject to use, sale or other disposition without obligation or liability to account to the Lessee for the proceeds thereof. Notwithstanding the expiration or sooner termination of the Term, the Lessee shall continue to be responsible for, and shall pay to the Lessor all costs incurred. by the Lessor in connection with any such removal, storage, sale or other disposition. - 14- 12. No Alterations or Improvements. Except to the extent permitted by Section 10 in connection with the original construction of the Premises and the Lessee's obligations set forth in the last sentence of this Section 12, and except for reasonable periodic redecoration of the Premises, the Lessee will make no alterations, additions or improvements to the Premises without on each occasion first obtaining the prior written consent of the Lessor, which consent shall not be unreasonably withheld, delayed or conditioned. Notwithstanding any such consent by the Lessor, the Lessee will restore the Premises to their former condition following any such alterations, improvements or additions at the expiration or sooner termination of the Term unless the Lessor by written notice to the Lessee at the time of such consent or at any time prior to such expiration or termination shall waive its rights to such restoration, in which event the Lessee shall have no right so to restore the Premises. 13. The Lessee's Signs. The Lessee will not, without the Lessor's prior written consent, or as otherwise provided herein, maintain, or permit anyone else to maintain, any interior (except for signs affixed to interior walls of the leased premises) or exterior sign, placard, lettering, advertising media, shade, awning, aerial, flagpole or the like anywhere in the Shopping Center, or any exterior lighting, decorations, painting or any fences. Except as otherwise herein provided, the Lessee shall not maintain any exterior sign, placard, lettering or advertising media in violation of the Lessor's established sign standards from time to time. Lessee shall have the right, subject to Lessor's design approval as aforesaid, and the approval of all governmental authorities having jurisdiction, to install and maintain (i) a placard sign on the exterior of the Premises identifying the Lessee; (ii) a sign of approximately 3' x 5' on the front of the building facing Loring Avenue identifying Lessee and/or directing customers to the Premises and/or to the drive-thru ATM; (iii) a sign on the end of the building facing the Loring Hills Condominium identifying the Lessee and/or directing customers to the Premises; and (iv) a sign identifying Lessee prominently displayed on a central directory pylon sign to be situated near the Loring Avenue entrance to the Shopping Center for which governmental approvals may be obtained, if Lessor elects to construct the same. (If Lessor fails or elects not to construct a central pylon sign within ninety (90) days following the installation of traffic lights in the proximity of the Shopping Center, Lessee may subject to Lessor's design approval and all- governmental approvals, install a pylon sign near said entrance directing customers to Lessee's drive thru ATM. 14. Sole Risk and Hazard. All fixtures, equipment, signs, merchandise, supplies and other property on or about the Premises shall be at the Lessee's sole risk and hazard, and if the whole or any part thereof shall be destroyed or damaged by fire water or otherwise, or by use or abuse of water, or by leaking or bursting of water pipes, or in any way or manner, including, without limitation, the acts or omissions of any other occupant of any portion of the Shopping Center, no part of said loss or damage is to be charged to or borne by the Lessor in any case whatsoever, except only to the extent caused by the Lessor's negligence or willful ~default, and, except to such extent, the Lessee agrees to exonerate and indemnify the Lessor from and against any and all claims, suits, obligations, liabilities and damages, including attorneys' fees based upon or arising out of any of the foregoing. - 15- 15. Fire, Casualty, Taking. PROVIDED, ALWAYS, that in case, after the execution hereof and before the expiration of the. Term, the Premises, or any part thereof, or more than thirty (30%) percent of the Shopping Center shall be taken by any exercise of the right of eminent domain or by action of any public or other authority, or in case, after the execution hereof and before the expiration of the Term, the Premises, or any part thereof, or more than thirty (30%) percent of the Shopping Center shall be destroyed or damaged by fire or casualty, then this lease and the Term shall terminate at the election of the Lessor, which election must be exercised by written notice to the Lessee within sixty (60) days after such taking, destruction, damage or action, and such election may be made in case of any such taking notwithstanding the entire interest of the Lessor may have been divested by such taking. If the Lessor shall not elect to terminate this lease, the Lessor shall with reasonable promptness restore the Premises as nearly as practicable to the condition which existed immediately prior to such event, or, in the event of any such destruction or damage by fire or casualty, so much thereof as the Lessee is not herein elsewhere required to insure against destruction or damage by fire or casualty, to a single contiguous unit, - all only to the extent of the Lessor's insurance proceeds or damages or awards resulting from such taking, destruction, damage or action allocable to the Premises, as the case may be, after deducting the Lessor's costs and expenses of collecting same. If the Lessor shall not elect to terminate this Lease, and commences restoration of the Premises and such restoration is not completed by the Lessor within twelve (12) months of such event, Lessee shall have the right to terminate this Lease by Notice to Lessor given prior to the time the Premises are ready for occupancy, or if during the last two (2) years of the Term, as the same may have been extended, there is a taking, -fire or other casualty pursuant to which the Lessor could terminate this Lease as hereinabove set forth, the Lessee similarly shall have the right to terminate this Lease by delivering to Lessor written notice of Lessee's election to terminate within sixty (60) days after such taking, destruction, damage or action. The Lessor will give the Lessee notice of when the Premises are ready for occupancy, and upon such notice the Lessee will comply with all of the provisions of Section 10 and Lessee will complete such restoration required by said Section 10 within ninety (90) days of such Notice. If the Premises or Shopping Center or any part of either thereof shall be taken by eminent domain, all damages from such taking other than that which relate solely to the Lessee's fixtures and equipment, shall vest in the Lessor, the Lessee having no right to damages for loss of its leasehold interest in any event, and the Lessee covenants and agrees to execute such assignments or other documents and to take any steps which may be necessary to vest such damages in the Lessor, the Lessee hereby irrevocably appoints the Lessor as its agent and attorney-in-fact to execute and deliver any such assignments and documents which the Lessor deems necessary or appropriate to carry out the intent and purposes of this sentence, such appointment being a power coupled with an interest. 16. The Lessor's Insurance. The Lessor will, upon commencement of the Term, obtain and thereafter maintain in full force and effect (or cause to be so obtained and maintained), (a) fire and lighting and extended coverage insurance on such portions of the Premises and Shopping Center as the Lessee is not herein elsewhere required to insure for. not less than the replacement value of such portions without deduction or adjustment for depreciation, except that an appropriate deductible clause shall be permitted; and (b) such other insurance on the Premises and Shopping Center against such insurable hazards, and such additional limits and amounts on all such insurance as are from time to time commonly obtained by owners of property similar to the Shopping Center or are required - 16- by the holder of any mortgage on any portion of the Shopping Center, or the Lessor shall otherwise deem appropriate, including without limitation, rent insurance and war risk insurance. Such insurance shall be with insurance companies qualified to do business in the state in which the Premises are located; it being understood, however, that any such insurance may be blanket with other insurance maintained by the Lessor or the Lessor's affiliates. 17. Default By The Lessee. PROVIDED, ALSO, and this lease is upon the condition, that (a) in the event of any failure by the Lessee to pay any item of rental (whether the Net Minimum Rental or any item of additional rental) continuing for ten (10) days after Notice specifying such failure, without its being waived or cured; or (b) in the event of any failure by the Lessee to perform, fulfill or observe any other representation, warranty or agreement by the Lessee set forth herein, continuing for thirty (30) days after Notice from the Lessor specifying such failure, without its being waived or its effect cured, or the cure thereof commenced and diligently prosecuted at all times thereafter; or (c) in the event that the estate created hereby shall be taken on execution, or by other process of law; or (d) in the event that the Lessee or any guarantor of the Lessee shall commit any act which would permit the entry of an order for relief under the Bankruptcy Code (or any successor thereto) or be declared bankrupt or insolvent according to law; or (e) in the event that any petition under federal or state law pertaining to bankruptcy or insolvency or for a reorganization or other relief shall be filed by or against the Lessee or any guarantor of the Lessee; or (f) in the event that any assignment, trust, mortgage or other transfer in trust or otherwise shall be made for the benefit of creditors; or (g) in the event that the Lessee or any such guarantor shall make or offer a composition of the Lessee's or such guarantor's debts, as the case may be, with its creditors; or (h) in the event that a receiver, trust or similar officer or creditors' committee shall be appointed take charge of any property of or to operate or wind up the affairs of the Lessee or such guarantor; or (i) in the event that the Lessee shall vacate or abandon the Premises, except Lessee shall not be deemed to have vacated the Premises if it has closed the Premises for remodeling, and such remodeling is completed within thirty (30) days, then in any of said cases (notwithstanding any license of any former breach of covenant or condition or waiver of the benefit hereof, or consent in a former instance) the Lessor or the Lessor's agents may lawfully immediately, or at any time thereafter and without further demand or notice, enter into and upon the Premises or any part thereof in the name of the whole and repossess the same as of the Lessor's former estate and expel the Lessee and those claiming by, through or under the Lessee and remove the Lessee's or their effects (in any of said cases forcibly, if necessary) without being deemed guilty of any manner of trespass, and without prejudice to any remedies which might otherwise be used for arrears of rental or preceding breach of covenant or condition, and upon entry as aforesaid this lease shall terminate, or the Lessor may terminate this lease by written notice to the Lessee, the Lessee in any event waiving all statutory rights of redemption, and the Lessee covenants with the Lessor that in case of such termination, or in case of termination under statute for default of the Lessee, the Lessee will at the election of the Lessor (which election may be made or changed at any time or from time to time before the settlement), either (a) pay, as liquidated damages for so much of the unexpired Term as is covered thereby, and at the same times and in the same installments as are specified in this lease, sums equal to the rental and other payments herein named or if the Premises shall have been relet, sums equal to the excess of the rental and other payments last mentioned over the net sums actually received by the Lessor for the period to which the rental and other payments last - 17- mentioned relate; or (b) pay, as liquidated damages for the then unexpired Term, a sum which at the time of such termination or at the time to which installments of liquidated damages shall have been paid represents the excess of the rental and other payments herein named over the then rental value of the Premises for the residue of the Term; or (c) indemnify the Lessor against loss of the rental and other payments herein named at the time of such termination or from the time to which installments of liquidated damages shall have been paid, during the residue of the Term each of the foregoing three alternatives being separable. The rental and other payments named herein shall be deemed to be the Net Minimum Rental plus all items of additional rental herein named. In addition to the foregoing and regardless of which of the foregoing alternatives shall have been elected, the Lessee agrees to pay to the Lessor on demand all expenses incurred by the Lessor in order to (a) obtain possession of the Premises; (b) make such alterations, improvements, repairs, replacements, renovation and restoration as the Lessor deems necessary or advisable to put the Premises in good and rentable repair, order and condition; and (c) relet the Premises, including without limitation, the fees of attorneys, brokers, engineers and architects. Notwithstanding anything elsewhere in this lease contained, however, in the event that during any twelve (12) month period the Lessor shall have sent two (2) or more notices of the kind referred to in Clauses (a) or (b) in the first sentence of this paragraph, even though the Lessee shall have cured the failure or failures specified in such notices, or waived the cure thereof or, with respect to a notice of the kind referred to in Clause (b) in the first sentence of this Section 17, commenced such cure and diligently prosecuted same at all times thereafter, and in the event that subsequently the Lessee shall fail to pay any item of rental or perform, fulfill or observe any other representation, warranty or agreement of the Lessee set forth herein (all as set forth in Clauses (a) and (b) in the first sentence of this paragraph), then in any such event the provisions for notice and grace periods set forth in such Clauses (a) and (b) shall not be applicable to such subsequent failure or failures and, therefore, the Lessor shall have the right, without demand or notice, to exercise all of its rights and remedies set forth in this paragraph or otherwise. In the event that any failure by the Lessee to perform, fulfill or observe any agreement herein to be performed, fulfilled or observed by the Lessee continues for thirty (30) days, or, in situations involving potential danger to the health or safety of persons in, or about the Premises or a further material deterioration of, or damage to, the Premises, after written notice specifying such failure without its being waived, its effect cured, or the cure thereof commenced and diligently prosecuted at all times thereafter, the Lessor may at its election perform, fulfill or observe such agreement for and on behalf of the Lessee, and any amount which the Lessor shall expend for such purpose, or which shall otherwise be due by the Lessee tO the Lessor hereunder, shall be deemed to be additional rental and shall be paid to the Lessor on demand, together with interest thereon at the Lease Interest Rate, from the date of expenditure or the date the same shall have become due to the date of payment thereof in full. Whenever in this lease provision is made that either party shall have the right to terminate this lease, then, unless in said provision it is expressly provided otherwise, neither party shall thereafter have any claim against the other under this lease or on account of the termination thereof. - 18 - Whenever in the Lease provision is made for the performance by either of any term, covenant, condition or agreement herein contained within a specified time period, such period shall be extended for the period (not to exceed ninety (90) days) of any delay in performance caused by acts of God, material shortages, or other conditions beyond the control of such party. Nothing herein contained shall in any way constructed to extend the time for performance of any monetary obligation herein contained. 18. Quiet Enjoyment. Lessee, subject to the Terms and provisions of this lease, on payment of the Net Minimum Rental and all other rental charges and observing, keeping and performing all of the other Terms and provisions of this Lease on Lessee's part to be observed, kept and performed, shall lawfully, peaceably and quietly have, hold, occupy and enjoy the premises during the Term hereof, without hindrance or ejection by Lessor or any party claiming by, through or under Lessor; the foregoing covenant is in lieu of any other covenant express or implied. 19. Broker. The Lessee and Lessor covenant and agree each each other that it has not dealt with any broker or any other person who would be entitled to be paid a fee, commission or any other compensation (the "Broker") in connection with this lease and the use and occupation of the Premises by the Lessee, and Lessee and Lessor shall indemnify and hold the other harmless from any loss or damage caused by such party's misrepresentation herein contained. 20. Subsidiaries or Affiliates of Lessor. The Lessee will not claim or attempt to enforce any right or remedy against any one or more of the employees, agents, officers, directors, parents, subsidiaries or affiliates of the Lessor, arising out of or in any way based upon this lease or any act or omission by the Lessor with respect to this lease or all or any portion of the Premises or Shopping Center, except to the extent expressly permitted by any written instrument signed by any one or more of the foregoing. The Lessor will not claim or attempt to enforce any right or remedy against any one or more of the employees, agents, officers or directors of Lessee for any breach of Lessee's obligations hereunder except to the extent expressly permitted by any written consent signed by one or more of the foregoing. 21. Notice of Default to the Lessor. In no event will the Lessor be deemed to be in default because of any failure by the Lessor to perform, fulfill or observe any covenant or agreement set forth herein or because of any breach of any warranty by the Lessor set forth herein for thirty (30) days after written notice to the Lessor specifying such failure or breach, without its being waived, or if its effect is cured, or if the cure thereof is commenced and diligently prosecuted thereafter. 22. Subordination. (a) The Lessee will on request, any ti9me or form time to time by any holder of a mortgage on all or any portion of the Shopping Center (i) surbordinate this lease and all of the Lessee's rights and estate hereunder to such mortgage and to any renewals, extensions, substitutions, refinancings, modifications, or amendments therof if the holder of such mortgage shall provide to Lessee a non-disturbance agreement to the effect that in the event of a foreclosure of such mortgage, Lessee's possession of the Premises and its rights and privileges under this Lease shall not be disturbed by such holder, or anyone claiming under such holder so long as Lessee shall not be in default under this Lease; or (ii) declare this lease to be prior to such mortgage and to any renewals, -19- extensions, modifications or amendments thereof; and in either such case, Lessee will on request agree with such holder that the Lessee will attorny thereto in the event of foreclosure and that the Lessee will not without the consent of such holder amend this lease or prepay any item of rental hereunder. (b) If Lessor shall elect to convert the Shopping Center or any portion thereof to a condominium (which election may be changed from time to time) and the Premises shall constitute a unit thereof, Lessee agrees that, at Lessor's request, it shall subordinate this lease to the condominium documents, including, without limitation, the Master Deed provided such documents do not materially adversely affect Lessee's rights and interests under this Lease and that this Lease shall be deemed to refer to the condominium unit constituting or approximately constituting the Premises, and Lessee shall observe the obligations imposed upon occupants of units to the extent not inconsistent herewith; provided, however, that Lessor shall have and retain all rights to vote or other rights associated with a unit. If Lessor shall intend to sell the unit, Lessor shall offer such unit to Lessee upon the terms, provisions and conditions which Lessor would be willing to sell the same to a bona fide third party; and Lessee shall have thirty (30) days within which to accept such offer in writing. Such condominium documents shall not be inconsistent with the provisions of this lease or- adversely affect Lessee. 23. No Liens. The Lessee will forthwith cause any mechanics', materialmen's or other liens which may be recorded or perfected or which may otherwise attach to all or any portion of the Shopping Center as a result of work done by or for the Lessee to be discharged or released of record or fully bonded by a surety satisfactory tO the Lessor. 24. Entry and Inspection By The Lessor. The Lessor and its agents shall have the right to enter into and upon the Premises or any part thereof, at all reasonable times and upon reasonable notice, only when accompanied by a bank officer who will be made available for the purpose, to examine the same and make repairs or alterations the Lessor is expressly required hereunder or desires to make thereto. On or before the Commencement Date, Lessee shall provide to Lessor names and telephone numbers of all bank officers Lessor may contact to respond in the event of an emergency and alternative procedures Lessor may follow in the event such persons are not available in such emergency situations. The Lessee shall permit inspection of the Premises (except for the vault areas), at all reasonable times upon reasonable notice, by prospective purchasers or mortgagees and during the last year of the Term, by prospective lessees and shall permit the usual "To Let" or "For Sale" signs to be placed on the Premises. 25. Notice to Mortgagee. Upon receipt of a written request by the Lessor or any holder or a mortgage on all or any part of the Premises or Shopping Center, the Lessee will thereafter send any such holder copies of all notices of default or termination or both given by the Lessee to the Lessor in accordance with any provision of this lease. In the event of any failure by the Lessor to perform, fulfill or observe any agreement by the Lessor herein or any breach by the Lessor of any representation or warranty of the Lessor herein, any such holder may at its election cure such failure or breach for and on behalf of the Lessor. 26. Memorandum of Lease. Neither party will record this lease, but each party will on demand by the other party execute an appropriate memorandum or notice of this lease in form and substance reasonably satisfactory to the Lessor, and either party may -20- record same at its expense. Promptly following the Commencement Date, the parties will execute a document in recordable form and satisfactory in form and substance to the Lessor setting forth the commencement and expiration dates of the Term. 27. Waiver of Subrogation. To the extent available under standard policies of insurance without extra cost, or if extra cost shall be charged therefor, so long as the other party pays such extra cost, each party hereby waives all liability and all rights to recovery and subrogation against, and agrees that neither it nor its' insurers will sue the other party for any loss of or damage to property arising out of fire or casualty and each party agrees that all insurance policies relating to the Premises will contain waivers by the insurer of such liability, recovery, subrogation and suit. If extra cost is chargeable therefor, each party shall advise the other party of the amount of the extra cost and the other party, at its election, may pay the same, but shall not be obligated to do so. 28. Repairs By The Lessor. Except to the extent that the same shall be the responsibility of the Lessee pursuant to any other term or provision of this lease, and except for delays caused by or resulting from act of God, war, fire, casualty, strike, shortage of labor or materials or any other cause beyond the Lessor's control, the Lessor agrees to maintain and repair all structural portions of the Premises and the foundations thereof including the structural portions of the walls, exterior and demising, the floor, and sub-floor and the roof but specifically excluding any non-structural portion of any of the foregoing. 29. Estoppel Letter. The Lessee will from time to time, upon not less than fifteen (15) days' prior written request by the Lessor, deliver to the Lessor, any actual or prospective purchaser or holder of a mortgage on all or any part of the Premises a written statement certifying whether or not this lease is in full force and effect and stating (a) the last date to which the rental and other payments have been made; (b) the amendments, if any, to this lease; (c) whether or not the Lessor is in default in the performance, fulfillment or observance of any representation, warranty or agreement set forth herein or has any indebtedness to the Lessee for the payment of money; and (d) if so, each default or indebtedness. The Lessee hereby irrevocably appoints the Lessor as its agent and attorneyin-fact to execute and deliver any such statement, such appointment being coupled with an interest, in the event that within such fifteen (15) day period, the Lessee shall fail so to deliver any such statement to the Lessor or any such actual or prospective purchaser or holder. 30. Collateral Assignment of Lease. With respect to any assignment by the Lessor of the Lessor's interest in this lease or the rental and other payments payable hereunder, conditional in nature or otherwise, which assignment is made to the holder of a first mortgage on the Lessor's estate, the Lessee agrees: (a) that the execution thereof by the Lessor and the acceptance thereof by the holder of such mortgage shall never be deemed an assumption by such holder of any of the obligations of the Lessor hereunder, unless such holder shall, by written notice sent to the Lessee, expressly otherwise elect; and (b) that, except as aforesaid, such holder shall be treated as having assumed the Lessor's obligations hereunder only upon foreclosure of such holder's mortgage and the taking of possession of the Premises. -21- 31. No Liability. Anything else in this lease to the contrary notwithstanding, the Lessee shall look solely to the estate and property of the Lessor in the Shopping Center for the satisfaction of any claim for the payment of money by the Lessor by reason of any default or breach by the Lessor of any of the terms and provisions of this lease to be performed, fulfilled or observed by the Lessor, and no other property or assets of the Lessor shall be subject to levy, execution or other enforcement procedure for the satisfaction of the Lessee's remedies for any such default or breach. 32. The Lessor While An Owner. As used herein "Lessor" shall mean the owner from time to time of the Lessor's estate and property in the Shopping Center and if such estate and property be sold or transferred, the seller or transferee shall thereupon be relieved of all obligations and liabilities hereunder thereafter arising or occurring, and the purchaser or transferee shall thereupon be deemed to have assumed and agreed to perform and observe all obligations and liabilities hereunder thereafter arising or occurring or based on occurrences or situations thereafter arising or occurring, subject in any event to the provisions of Section 32. 33. Miscellaneous. All terms and provisions of this lease shall be independent and shall inure to the benefit of and be binding upon the personal representatives, successors and assigns of the parties, except as otherwise expressly provided herein. Every term and provision of this lease shall be deemed of the essence and every breach thereof material to the Lessor. All representations, warranties and agreement of the Lessee in this lease shall be deemed special, unique and extraordinary; any breach of any provision thereof by the Lessee shall be deemed to cause the Lessor irreparable injury not properly compensable by damages in an action at law, and the rights and remedies of the Lessor hereunder may therefore be enforced both at law or in equity, by injunction or otherwise. All rights and remedies of each party shall be cumulative and not alternative, in addition to and not exclusive of any other right or remedy to which such party may be lawfully entitled in case of any breach or threatened breach of any term or provision herein except as otherwise expressly provided herein; the rights and remedies of each party shall be continuing and not exhausted by any one or more uses thereof, and may be exercised at any time or from time to time and as often as may be expedient; any option or election to enforce any such right or remedy may be exercised or changed at any time or from time to time. This lease sets forth the entire agreement of the parties, and no custom, act, forbearance, or words or silence at any time, gratuitous or otherwise, shall impose any additional obligation or liability upon either party or waive or release either party from any default or the performance of fulfillment of any obligation or liability or operate as against either party as a supplement, alteration, amendment or change of any term or provision set forth herein, including this Clause, unless set forth in a written instrument duly executed by such party expressly stating that it is intended to impose such an additional obligation or liability or to constitute such a waiver or release, or that it is intended to operate as such a supplement, alteration, amendment or change. 34. Notice. All notices and other communications shall be in writing and deemed given and delivered to the Lessor when mailed, by registered or certified mail, postage and registration or certification charges prepaid, addressed, in the case of the Lessor, to the Lessor at the Lessor's Address set forth in Section 1, with a copy simultaneously so mailed to the Lessor's Counsel set forth in Section 1, at its address set -22- forth in Section 1; and addressed, in the case of the Lessee, to the Lessee at the Lessee's Address set forth in Section 1, with a copy simultaneously so marked to the Lessee's counsel set forth in Section 1, except that either party may, by written notice to the other, designate another address which shall thereupon become the effective address of such party for the purposes of this Section. 35. First Refusal. (a) So long as the lease shall remain in full force and effect, without default on the part of Lessee, Lessee shall have the right of "first refusal" (as described herein below) to lease either (i) 2,000 square feet of space fronting on Loring Avenue being a portion of the 3,095 square foot square store premises (the "Pediatric Space") currently leased by Pediatric Health Care Associates, P.C. ("Pediatric") under a lease which expires by its terms on January 31, 2001 or (ii) the entire Pediatric Space. (b) Lessor has advised Lessee that Pediatric has an option to extend the term of its lease for an additional five (5) year period after January 31, 2001. Lessor agrees that it shall not grant any right or option to use or occupy all or any portion of the Pediatric Space to any other person or entity (unless such right or option is expressly subject to the right of first refusal herein provided to Lessee), however, nothing herein shall preclude Lessor from further extending the term of the lease with Pediatric or entering into a new lease with Pediatric with respect to the Pediatric Space on any terms and conditions whatsoever without complying with the terms of this paragraph. (c) When such space shall become, or shall be about to become within the next twelve (12) months (as determined by Lessor) available for leasing, whether at the expiration of the lease term applicable thereto or earlier, Lessor shall give Lessee written notice thereof (the "Availability Notice"). If within five (5) business days after delivery of the Availability Notice, Lessee shall give Lessor written notice that Lessee is interested in leasing either (i) 2,000 square feet of space within the Pediatric Space fronting on Loring Avenue or (ii) the entire Pediatric Space, Lessor agrees that for a period of thirty (30) days it will negotiate in good faith with Lessee towards arriving at the terms upon which said space shall be added to the Premises. In the event that within such period such negotiations shall not result in an agreement upon said terms, Lessor thereafter may lease said space to any other tenant without re-offering the same to Lessee. (d) If Lessee shall be unable to deliver said space to Lessee on the date agreed upon by reason of the holding over of the tenant or other occupant, Lessor shall use reasonable efforts to obtain possession of said space, but Lessor shall not be subject to any liability for failure so to give possession of said space. It is expressly understood and agreed that unless Lessor and Lessee shall agree otherwise, Lessee shall take such space "as is" and without any requirement that Lessor shall do any work therein in order to prepare such space for occupancy by Lessee. 36. Local Law. This lease shall be construed and enforced in all respects in accordance with the laws of the state in which the Premises are located. 37. Headings. The Cover Page and Table of Contents preceding this lease and the captions to the various Sections of this lease have been inserted for reference only and -23 - shall not in any manner be construed as modifying, amending or affecting in any way the express terms and provisions hereof. 38. Separability. If any term or provision of this lease or the application thereof to any person, property or circumstance shall to any extent be invalid or unenforceable, the remainder of this lease, or the application of such term or provision to persons, properties and circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this lease shall be valid and enforced to the fullest extent permitted by law. 39. Authority. The execution and delivery of this Lease by the party so executing and delivering this Lease on behalf of the Lessor and Lessee, respectively, constitutes a warranty and representation by such party that such party is duly authorized and empowered for and on behalf of such party to execute and deliver this Lease, and that this Lease constitutes a valid and binding obligation of such party. WITNESS the execution hereof under seal the day and year first above written. SEAL WITNESS: LESSOR: VILLAGE ASSOCIATES TRUST By:/s/ Mark Klaman Mark Klaman, as Trustee ---------------------------- as aforesaid, and not individually WITNESS: LESSEE: IPSWICH SAVINGS BANK By: /s/ David L. Grey, President Not Individually ---------------------------- (duly authorized) -24- EXHIBIT B The premises comprising the Shopping center are more particularly bounded and described as follows: Parcel l A certain parcel of land located in Salem, Essex County, Massachusetts with the buildings thereon, if any, as shown on a Plan entitled "Plan of Land in Salem, Mass. prepared for David Hark and Roger D. Ariola Trust, February 23, 1984, T & M Engineering Associates, Inc., 22 Willow Ave., Salem, Mass., 01970, Scale: 1" = 40'" to be recorded herewith; and further bounded and described as follows: Beginning at the westerly point of Loring Hills Avenue and land now or formerly of Yelverton and runninq S 42 degrees 59 or 05" W, one hundred ten (110) feet by land now or formerly of Yelverton and Baker; Thence turning and running N 47 degrees 00' 55" W, fifteen (15) feet by land of 596 Loring Avenue Realty Trust; Thence turning and running S 42 degrees 59' 05" W, one hundred twenty-eight and 33/100 (128.33) feet by land last named; Thence turning and runninq S 39 degrees 30' 05" W, fifty-six and 26/100 (56.26) feet by land last named; Thence turning and running S 55 degrees 41' 16" W, twenty-four and 65/100 (24.65) feet; Thence turninq and running S 61 degrees 22' 16" W, twenty-five and 92/100 (25.92) feet to land of Living and Learning Centers, Inc; Thence turning and running N 39 degrees 30' O0" W, one hundred eighty-one and 74/100 (181.74) feet by land last named; Thence turning and running N 42 degrees 59' 05 W, two hundred seventy and 57/100 (270.57) feet to Loring Hills Avenue; Thence turning and running S 47 degrees 00' 55 E, one hundred fifty-three (153) feet to the point of beqinning. Shown as Lot D-l on the above mentioned plan and containing approximately 42,748 a square feet, more or less. Parcel 2 - -------- The land with the building thereon, situated on the North- westerly side of Loring Avenue in the City of Salem, Essex County, Massachusetts, as shown on a plan entitled, "Plan of land, Salem, Mass., prepared for Turn-Key Realty - owner, Industrial National Mortgage Company" drawn by Carter and Towers Engineering Corp., having a scale of 1" = 20' and being dated 5/14/1980, recorded with Essex South Registry of Deeds, Plan Book 159, Plan 98, bounded and described as follows: Beginning at the Southerly corner of land now or formerly belonging to Rose F. Baker as shown on said plan; Thence, Southwest, by said Loring Avenue, a distance of 65.00 feet to a point; Thence, Northwest continuing by said Loring Avenue, a distance of 41.03 feet to a point; Thence, Southwest continuing by said Loring Avenue, a distance of 82.72 feet; Thence, Northwest by land now or fomerly belonging to Industrial National Mortgage Company, and being shown as Lot "D" on said plan, a distance of 56.26 feet to a point; Thence, Southeast, a distance of 15.00 feet to a point; Thence, Northeast, a distance of 10.00 feet to a point; Thence, Southeast by land now or formerly belonging to Rose F. Baker as shown on said plan, a distance of 110.OO feet to the point of beginning. Said parcel containing 12,354 square feet more or less accoding to said plan. EX-10.5 10 LEASE ----- THIS INDENTURE made as of the 27th day of February, 1998, by and between Andrew B. Rose, Trustee of 89 Pleasant Street Realty Trust, u/d/t dated August 9, 1983 recorded with the Essex South District Registry of Deeds in Book 7347, Page 428, and Ipswich Savings Bank. W I T N E S S E T H: - - - - - - - - - - 1. Definitions. As used herein, the following terms shall have the meanings set' forth below unless the context otherwise requires: (a) Lessor: Said Andrew B. Rose, Trustee of 89 Pleasant Street Realty Trust. (b) Lessee: Said Ipswich Savings Bank. (c) Premises: The approximately 2,112 square foot premises cross-hatched on Exhibit A-l, in the Shopping Center shown on Exhibit A. (d) Shopping Center: The Shopping Center at 89 Pleasant Street in Marblehead, Massachusetts, shown on Exhibit A and outlined in bold lines thereon, and described by metes and bounds in Exhibit B. (e) Original Term: The period commencing on the Commencement Date (as hereinafter defined) and ending at 12:01 a.m. on fifth (5th) anniversary of the Commencement Date. (f) Term: Prior to the exercise by the Lessee of the Options to Extend, if any, as provided in Section 3.1 hereof, the Original Term; after the exercise by Lessee of any such Option to Extend, the Original Term as it may have been then extended. (g) Commencement Date: The earlier of (i) sixty (60) days after the Lessee has obtained all regulatory and other governmental Approvals (as defined in and more particularly set forth in Section 2 hereof) necessary to locate, construct and operate a branch banking facility at the Premises; or (ii) the date Lessee opens for business at the Premises. (h) Net Minimum Rental: Twenty One Thousand Seven Hundred fifty-three and 60/100 ($21,753.60) Dollars per year during each of the first three (3) Lease Years of the Original Term hereof, and thereafter Net Minimum Rental shall be adjusted as provided in Section 4 hereof. (i) Lease Interest Rate: The lesser of (i) eighteen (18) percent per annum; or (ii) the maximum rate permissible under applicable law. (i) (j) Lease Year: The period beginning on each anniversary of the Commencement Date during the Term. (k) Permitted Use: Branch banking facility and all uses necessary or incidental thereto, including, without limitation, drive-in banking services, maintenance of ATM's and safe deposit facilities and office and office related uses. (l) Overage Rent: As defined in Section 4.1. (m) Common Areas: The parking and common area or areas located adjacent to the Premises and utilized as a part of the Shopping Center and all other common areas and facilities in the Shopping Center, all to the extent that the same may from time to time be provided by the Lessor for the convenience of all lessees occupying other portions of the Shopping Center, their customers and invitees, and such other persons as shall be permitted by the Lessor from time to time to use the same, subject to all of the express terms and provisions of Section 7. (n) Lessee's Trade Name: Ipswich Savings Bank or Ipswich Bank. (o) Lessor's Address: 600 Loring Avenue, Salem, MA 01970-2212; (p) Lessor's Counsel: Goldstein & Manello, P.C., 265 Franklin Street, Boston, MA 02110; Attn: Jeffrey L. Musman, Esquire. (q) Lessee's Address: 23 Market Street, Ipswich, MA 01938-2212; Attn: President or Chief Executive Officer (r) Lessee's Counsel: William Tinti, Esq., Tinti, Quinn & Merty, P.C., 222 Essex Street, Salem, MA 09170. (s) Notice: Shall mean notice as provided in Section 36 hereof. 2. The Shopping Center and the Premises. The Lessor does hereby let to the Lessee and the Lessee does hereby hire-from the Lessor the Premises described in Section 1 in the Shopping Center described in Section 1, excepting and reserving to the Lessor, however, (a) the right to place in, over, upon or under the Premises (in such manner as to not substantially interfere with the Lessee's use of the Premises), utility lines, pipes and the like, to serve other premises in the Shopping Center, and to replace, maintain and repair such utility lines, pipes and the like, in, over, upon and under the Premises as may have been installed therein; (b) all other necessary or customary easements, appurtenances and rights of access to and egress from such other premises; and (c) all other tights reserved by the Lessor in this lease or otherwise, including, without limitation, the rights set forth in the third paragraph of Section 7. In the event of any conflict between the terms and provisions of this lease and the terms and provisions of Exhibits A or A-l, or both, the terms and provisions of this lease shall govern. Notwithstanding anything in this lease to the contrary, the Lessor reserves the right at any time or from time to time to change the name of the Shopping Center described in Section l(d). As soon as reasonably practicable after the execution hereof Lessee shall make application to (i) the Commissioner of Banks of the Commonwealth of Massachusetts and any other governmental authority as shall be necessary to locate and operate a branch banking facility of the Lessee at the Premises, and (ii) for all other permits and approvals, from all governmental authorities having jurisdiction necessary to complete construction of the Premises and, to install Lessee's signage as provided in Section 13 and to operate Lessee's business at the Premises (collectively, the "Approvals"). Lessee agrees to use its best efforts to diligently prosecute such applications, including, without limitation, paying all fees necessary to obtain such Approvals, and providing such documentation and information as shall be requited by such governmental authorities in furtherance of such applications. If despite such efforts Lessee has been unable to obtain such Approvals on or before July 1, 1998, Lessee shall have the right to terminate this Lease by delivering Notice to the Lessor on or before such date. Lessor agrees to cooperate with Lessee in Lessee's attempt to obtain such Approvals and, where required by such governmental authorities, agrees to permit the use of Lessor's name in connection therewith as owner of the Shopping Center. Lessor agrees that it will execute such instruments as shall be reasonably required by such governmental authority of the owner of the Shopping Center with reference to any application by Lessee therefor, but all services performed in connection therewith and all costs incurred and the exercise of rights pursuant to this Paragraph shall be at Lessee's sole expense and risk. 3. Term. TO HAVE AND TO HOLD the Premises unto the Lessee during the Term set forth in Section 1. In the event that Lessee should hold over after the expiration or sooner termination of the Term, the Term shall continue thereafter until terminated by either party by not less than thirty (30) days' prior written notice to the other, which notice may, however, be given prior to the commencement of such holdover. All of the terms and provisions of this lease u1 effect immediately prior to such holdover shall be applicable during such holdover and for any further time following the end of the Term during which the Lessee may continue to use or occupy the Premises, except that the Lessee shall pay on account of the Net Minimum Rental an amount equal to one and one-half (1.5) times the Net Minimum Rental provided in Section 1(b). 3.1 Options-to-Extend. Lessee shall have (3) options to extend the Term of this Lease for additional periods of five (5) years each, commencing on the expiration of the Original Term, as it may have been extended, provided that Lessee shall give Lessor Notice of the exercise of its election not later than six (6) months prior to the expiration of the then Term; and provided further that Lessee shall not be--in:default at the time of giving of such Notice in the performance and observance of any of the terms and agreements in this Lease .contained on the part of the Lessee. to (b) performed and observed. (The option rights herein granted to Lessee shall be referred to as the "First Option to Extend," the "Second Option to Extend", and the "Third Option to Extend", as the case may be, and, collectively, the "Options to Extend"; and the period by which the Term may be extended applicable to such Option to Extend shall be referred to as the "First Option Period" the "Second Option Period", and the "Third Option Period", as the case may be and, collectively, the "Option Periods".) 4. Rental. YIELDING AND PAYING therefor the Net Minimum Rental set forth in Section 1, payable in advance on the first day of each month during the Term in equal monthly installments. A proportionate part of the Net Minimum Rental shall be paid for any period of the commencement of the Term which shall be less than a full month. During each of the first three (3) Lease Years of the Original Term hereof, the Net Minimum Rental shall be Twenty One Thousand Seven Hundred fifty-three and 60/100 ($21,753.60) Dollars. Thereafter for the remaining two (2) years of the Original Term hereof, the Net Minimum Rental will be Thirty Six Thousand Seven Hundred Forty-Eight Thousand and 80/100 ($36,748.80) Dollars. In the event the Lessee exercises the First Option to Extend, the Net Minimum Rental for each Lease Year of the First Option Period shall be Forty Thousand Four Hundred Twenty Three and 68/100 ($40,423.68) Dollars. In the event the Lessee exercises the Second Option to Extend, the Net Minimum Rental for each Lease Year of the Second Option Period shall be Forty Four Thousand Four Hundred Sixty Six and 05/100 ($44,466.05) Dollars. In the event the Lessee exercises the Third Option to Extend, the Net Minimum Rental for each Lease Year of the Third Option Period shall be Forty Eight Thousand Nine Hundred Twelve and 65/100 ($48,912.65) Dollars. The Lessee shall pay the Net Minimum Rental due for the first month of the Term on or before the Commencement Date. The Lessee also agrees to pay, as additional rental, when due or payable, and except as otherwise expressly provided herein, all other obligations and liabilities which the Lessee assumes and agrees to pay by express assumption or agreement elsewhere in this lease, together with every fine, penalty, interest and cost which may be added thereto or become due or be imposed by operation of law for the non-payment or late payment thereof, and, in the event of any failure on the part of the Lessee so to pay or discharge any of the same, the Lessor shall have all rights and remedies as in the case of non-payment of the Net Minimum Rental. The Lessee also agrees to pay to the Lessor, on demand, as additional rental, interest at the Lease Interest Rate on all overdue installments of the Net Minimum Rental and additional rental from the respective due dates thereof until payment thereof in full. In the event that the aggregate of all payments (whether denominated as Net Minimum Rental, additional rental or otherwise) received by or paid to discharge an obligation of the Lessee as 8 result of any assignment, subletting or permission to use or occupy the Premises described in Section 11(e), whether or not the Lessor shall have consented thereto (it being agreed by the Lessee that nothing herein contained shall in any way affect the covenant herein elsewhere contained prohibiting an assignment hereof or underletting to or use, occupation or improvement by, others of the Premises or any part thereof without the Lessor's prior written consent), shall exceed the aggregate of the Net Minimum Rental, additional rental and other payments herein payable by or on behalf of the Lessee, then, and in such event, the Lessee agrees to forthwith pay, as additional rental, the full amount of any such excess. The Net Minimum Rental and all items of additional rental shall be paid to the Lessor at the Lessor's address set forth in Section l(o), except that the Lessor may by written notice to the Lessee designate another address for purposes of this sentence. In addition to all of the rights and remedies of the Lessor set forth in this lease, if the Lessee shall fail to pay any item of rental due hereunder (whether denominated as Net Minimum Rental, additional rental or otherwise) within ten (10) days after the same shall have become due and payable, then and in such event the Lessee shall also pay to the Lessor a late payment service charge (in order to partially defray the Lessor's administrative and other overhead expenses) equal to the greater of Fifty 00/100 ($50.00) Dollars or one-half of one (1/2%) percent of such unpaid sum per day for each day or part thereof after the due date thereof during which such payment shall not have been received by the Lessor, but in no event in excess of any maximum interest rate (if such sum shall be denominated as interest by any court of competent jurisdiction) permissible under applicable law, it being understood that nothing herein shall be deemed to extend the due date for payment of any sums required to be paid by the Lessee hereunder or to relieve the Lessee of its obligation to pay such sums at any time or times required by this lease. 4.1 Overage Rent. In addition to the Net Minimum Rental hereabove reserved, the Lessee covenants and agrees with the Lessor hat commencing on the first (1st) day of the month following the "Overage Date" (as hereinafter defined) and on the first day of each succeeding month during the balance of the first three (3) Lease Years of the Term, the Lessee will pay to the Lessor an additional rental (sometimes hereinafter called "Overage Rent') as hereinafter provided. On or before the fifteenth (15th) day after the close of each and every calendar quarter (such last day of the quarter shall herein be referred to as "Quarterly Reporting Date") during the term, the Lessee shall render a true and correct statement signed by the Chief Financial Officer of Lessee certifying the total level of "Deposits at the Premises". The last day of the first quarter in which the level of Deposits at the Premises shall equal or exceed $20 million shall be deemed to be the Overage Date. If the Overage Date is determined at a time after the first installments of Overage Rent is payable to Lessor, such installments shall be paid to Lessor with the installment of Overage Rent next due after the Overage Date is determined. Overage Rent shall thereafter be due for each month on. during the first three (3) Lease Years of the Original Term as follows: (i) For each month during the calendar quarter immediately following the Overage Date, the Lessee will pay to the Lessor an additional rental of One Thousand Two Hundred Forty-Nine and 60/100 ($1,249.60) Dollars per month; (ii) For each month during any calendar quarter following a quarter in which the level of Deposits at the Premises as of the Quarterly Reporting Date shall equal or exceed $20 million, the Lessee will pay to the Lessor an additional rental of One Thousand Two Hundred Forty-Nine and 60/100 ($1,249.60) Dollars per month; (iii)For each month during any calendar quarter following a quarter in which the level of Deposits at the Premises as of the Quarterly Reporting Date shall equal or exceed $19 million but be less than $20 million, the Lessee will pay to the Lessor an additional rental of Eight Hundred Thirty-Three and 97/100 Dollars ($833.07) per month. (iv) For each month during any calendar quarter following a quarter in which the level of Deposits at the Premises as of the Quarterly Reporting Date shall equal or exceed $18 miLlion but be less than $19 million, the Lessee will pay to the Lessor an additional rental of Four Hundred Sixteen and 53/100 ($416.53) Dollars per month. (v) For each month during any calendar quarter following a calendar quarter in which the level of Deposits at the Premises is less than $18 million, no Overage Rent will be required. For purposes hereof Deposits at the Premises shall mean all deposits of money whether on demand, for a specified term, or otherwise at the Premises as certified by the Lessee to the Commissioner of Banks, the FDIC, Lessee's stockholders, Lessee's Board of Directors, or as determined by Lessee's independent accountants. 5. Net Lease: Non-terminability. (a) This lease is a net lease and the Net Minimum Rental, additional rental and all other sums payable hereunder to or on behalf of the Lessor shall be paid without notice or demand, and without setoff, counterclaim, defense, abatement, suspension, deferment, reduction or deduction, except as expressly provided herein. (b) This lease shall not terminate, nor shall the Lessee have any right to terminate this lease, nor shall the obligations and liabilities of the Lessee set forth herein be otherwise affected, except as expressly provided herein. (c) The Lessee waives all rights (i) to any abatement, suspension, deferment, reduction or deduction of or from the Net Minimum Rental or the additional rental or (ii) to quit, terminate or surrender this lease or the Premises of any part thereof, except as expressly provided herein. (d) It is the intention of the parties hereto that the obligations of the Lessee hereunder shall be separate and independent covenants and agreements, that the Net Minimum Rental, the additional rental and all other sums payable by the Lessee to or on behalf of the Lessor shall continue to be payable in all events and that the obligations of the Lessee hereunder shall continue unaffected, unless the requirement to pay or perform the same shall have been terminated pursuant to an express provision of this lease. (e) The Lessee agrees that it will remain obligated under this lease in accordance with all of its terms and provisions, and that it will not take any action to terminate, rescind or avoid this lease or any portion thereof except as otherwise provided herein, notwithstanding (i) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding-up or other proceeding affecting the Lessor or any assignee of the Lessor in any such proceeding; and (ii) any action with respect to this lease which may be taken by any trustee or receiver of the Lessor or of any assignee of the Lessor in any such proceeding or by any court in any such proceeding. 6. Use of the Premises. The Premises may be used for the Permitted Use described in Section 1 and for no other purpose whatsoever, without the express written approval of the Lessor. 7. The Parking and Common Areas. The Lessee, its customers and invitees shall have the right, during the Term, to use the Common Areas in common with all other lessees occupying other portions of the Shopping Center, their customers and invitees, and such other persons as shall be permitted by the Lessor from time to time to use the Common Areas, subject, however, to such reasonable rules and regulations as may now be in force or as the Lessor may establish at any time or from time to time, which rules and regulations shall nonetheless encompass the provisions of Section 7.1 hereof, including, without limitation, the designation of the size and location of employee parking areas even if the same are not located within the Shopping Center. The Lessor shall have the right to have towed any vehicles which are parked in the Common Areas by the Lessee's employees in violation of the Lessor's rules and regulations regarding employee parking from rime to time in effect. The Lessee covenants and agrees, however, that it will not permit its employees or concerns making deliveries to or pickups from the Premises to use any portion of the Common Areas (except as otherwise provided herein) other than such portions or portions reasonably situated as the Lessor shall from time to time set apart for such purpose and designate in writing, and that, to the extent there shall be any sidewalks immediately adjacent to the Premises, it will maintain such sidewalks in a neat and orderly condition, swept and free from ice and snow. The Lessor expressly reserves the right to enforce parking charges (by operation of meters or otherwise), and to temporarily close all, or any portion, of the Common Areas for the purpose of making repairs or changes thereto, in order to discourage non customer parking, or otherwise. Notwithstanding the foregoing, Lessor agrees that it shall not install parking meters in the Shopping Center unless required by governmental authorities. Notwithstanding the foregoing, Lessee shall have the right, in order to maintain proper security for the operation of its business to have pickups or deliveries made from or to the Premises by Brinks or other similar carriers of cash, securities, instruments, records or other materials commonly transported by such carriers and to permit the use of such portions of the Common Areas adjacent to the Premises as shall be reasonably required for such purposes, provided, however, that any such use by Lessee of the Common Areas shall be accomplished, so far as reasonably practicable, in a manner which reduces to a minimum interference with the use of the Common Areas for the purposes for which they were intended or the conduct of business of other tenants of the Shopping Center. The Lessor may at any time or from time to time construct additional improvements in all or any part of the Shopping Center, or change the location or arrangement of any improvement in the Shopping Center or all or any part of the Common Areas, or add or deduct any land to or from the Shopping Center, or enlarge, reduce, change, enclose or increase the height of, the Shopping Center, or any building or other improvement therein, provided, however, no such construction, addition or change shall materially reduce the number of parking spaces available to Lessee at the Commencement Date, access to the Premises or the visibility of the Premises from Pleasant Street. Subject to the exclusions hereinafter set forth, the Lessee covenants and agrees to pay unto the Lessor, as additional rental, the Lessee's Fraction (as hereinafter defined) of the annual cost of (a) operating, managing, altering, improving, repairing, restoring, replacing, renovating, cleaning and maintaining the Common Areas, including, without limitation. the lighting thereof, the policing thereof, all plate glass therein, the heating ventilating and air-conditioning thereof, the plumbing, sanitary sewage and electric systems therein and the sprinkler and other fire protection or other alarm systems therein, if any (including any main trunk line of any such systems, but excluding any branch runs and leads); (b) all real estate taxes, personal property taxes, business and occupation taxes, occupational license taxes, water charges, sewer charges, assessments, including, without limitation, betterment assessments or taxes in the nature thereof, and all other similar governmental taxes, impositions and charges which shall be levied, assessed, or imposed (but excluding any taxes for which Lessee shall be responsible for the payment of Lessee's Fraction under Section 8 hereof (i) upon or with respect to the Common Areas, including, without limitation the land on which the foregoing are constructed; or (ii) upon or with respect to the operation, maintenance, alteration, repair, rebuilding, use, occupancy or enjoyment of the Common Areas; under or by ovirtue of any present or future law, statute, charter, ordinance, regulation or other requirement of any governmental authority, whether federal, state, county, city, municipal or otherwise, all whether general, special, ordinary, extraordinary, foreseen or unforeseen; it being agreed that such taxes, charges, assessments and impositions Shall include the costs and expenses incurred, in accordance with the penultimate paragraph of Section 8, in contesting the amount or validity of any thereof; (c) the premiums on the liability insurance policies insuring the Lessor against damage to property or injuries or death to person or persons, in, on or about the Common Areas, including, without limitation, the roadways leading from and to the Common Areas, in amounts as shall be determined by the Lessor, and the premiums on the fire and casualty insurance policies insuring the Lessor including, without limitation, all insurance described in Section 16, in such amounts as shall be determined by the Lessor, (d) all administrative costs equal to fifteen (15%) percent of all additional rental payable to the Lessee pursuant to this Section 7 to help defray the Lessor's indirect cost of so providing, maintaining and insuring. Notwithstanding anything set forth in this lease to the contrary, the Lessee will pay to the Lessor monthly, together with the Net Minimum Rental, one-twelfth (1/12) of the amount estimated by the Lessor from time to time to reflect the Lessee's Fraction of such annual cost. Promptly after such cost is determined for each year, the Lessor will advise the Lessee in writing of the amount of the Lessee's Fraction thereof for such year, and the Lessor and Lessee will account to each other so that the Lessee shall have paid to the Lessor for each such year the full amount of the Lessee's Fraction of such cost; any excess paid by the Lessee shall be credited against future payments required by this Section 7 next due, except that upon expiration of the Term any such excess shall be promptly refunded by the Lessor to the Lessee, and, in any event, any deficiency shall be promptly paid by the Lessee to the Lessor. For purposes of this Section, Lessee shall have the right to review at reasonable times and upon reasonable notice any of Lessor's books and records relating to any such cost, for which Lessor is seeking reimbursement from Lessee. As used in this Section 7 and in Section 8, Lessee's Fraction shall be a fraction in which the numerator is the number of square feet of floor space in the Premises and the denominator is the number of square feet of floor space in all premises located in the Shopping Center, including the Premises then occupied by other lessees of the Lessor; it being agreed that all floor areas shall be computed within the exterior surfaces of all walls and any space in non-selling mezzanines shall not be considered. The cost described in the first sentence of this paragraph shall be deemed to include, without limitation, all costs and expenses of every kind and nature paid or incurred by the Lessor (including reasonable and appropriate reserves) in operating, managing, equipping, policing (if and to the extent provided by the Lessor), heating, ventilating, air conditioning, lighting, altering, improving, repairing, restoring, replacing, renovating, cleaning, maintaining and landscaping all portions of the Common Areas (including any parking structure subsequently installed in the Shopping Center), water and sewer or sewage treatment or removal charges, painting and caulking all exterior surfaces in the Shopping Center, including, without limitation any canopies in the Shopping Center, maintaining and illuminating any pylons in the Shopping Center and any signs thereon to be maintained and/or illuminated by the Lessor, premiums for liability, property damage, casualty, workmen's compensation, and any other insurance (including all insurance, hazard and otherwise, carried by the Lessor on any and all buildings and improvementS in or about the Shopping Center and the Common Areas), the cost of on-site supervision and personnel, including, without limitation, the property manager, if any, staff, office rentals, wages, unemployment taxes, social security taxes and benefits, personal property taxes and assessments, fees for required licenses and permits, materials, supplies, operation of loudspeakers and any other equipment supplying music to any Common Areas (if any), or rental charges for any machinery and equipment, any and all alterations, improvements, repairs, restoration, replacements and renovation (whether interior, exterior, structural, non-structural, foreseen or unforeseen), to any portion of the Shopping Center which the Lessor shall deem necessary or appropriate or which shall be required of the Lessor by this or any other lease relating to the Shopping Center or by any law, rule, ordinance, regulation or requirement of any public authority or the Fire Insurance Rating Association having jurisdiction or as a result of any fire, casualty, taking by eminent domain or action by any public or other authority to the extent that the cost thereof shall exceed the net proceeds, if any, of any insurance or damages paid to the Lessor, including without limitation, any and all maintenance and repairs by the Lessor to the structural portions of all buildings and other improvements in the Shopping Center, the roof, foundations, exterior walls, floors, subfloors, utilities and other portions of all such buildings and improvements to the extent so required of the Lessor of this or any other lease or agreement relating to the Shopping Center, and the costs of furnishing sprinkler protection in the Premises. Notwithstanding the foregoing, the costs described in this Section shall be deemed to exclude (a) any costs in altering, improving, repairing, restoring, replacing, renovating or maintaining leased portions of the Shopping Center; (b) the original costs of constructing any building, improvement, or the Common Areas, or additions thereto (c) any costs incurred for the benefit of a particular Tenant which are to be paid for or by such Tenant as opposed to costs incurred for the benefit of the Shopping Center and/or a significant number of tenants thereof; (d) any costs incurred by Lessor in making structural repairs to any structural portion of the Shopping Center as provided in Section 28 hereof; (e) any costs incurred of a capital nature with respect to the HVAC, plumbing, electrical and alarm systems; and (f) any costs made necessary by Lessor's non-compliance with governing codes, by-laws, regulations and ordinances related to the Shopping Center, but only if such were in effect are the time of the original construction of such component of the Shopping Center. 7.1 A. Lessor covenants and agrees that it shall at all times reasonably repair, maintain and police the Parking Areas and Common Areas of the Shopping Center, and will Keep the Parking Area well lighted during all normal business hours of the Shopping Center, all with the intent of maintaining a first class shopping center. 8. Taxes and Other Charges. The Lessee agrees, except as otherwise expressly provided herein to the contrary, to pay, as the same become due and payable, all costs expenses and obligations of every kind and nature for the operation, maintenance, repair, rebuilding, use, occupancy and enjoyment of the Premises. The Lessee also agrees, subject as aforesaid, to pay, within fifteen (15) days after demand, the Lessee's Fraction of all real estate taxes, personal property taxes, business and occupation taxes, occupational license taxes, water charges, sewer charges, assessments, including, without limitation, betterment assessments or taxes in the nature thereof, and all other similar governmental taxes, impositions and charges which shall be levied, assessed or imposed: (a) upon or with respect to the land under the buildings comprising the Shopping Center and such buildings; or (b) upon or with respect to the operation, maintenance, alteration, repair, rebuilding, use, occupancy or enjoyment of the buildings comprising the Shopping Center or any portion thereof. under or by virtue of any present or future law, statute, charter, ordinance, regulation or other requirement of any public authority, whether federal, state, county, city, municipal or otherwise, all whether general, special, ordinary, extraordinary, foreseen or unforeseen. Such taxes, charges, assessments and impositions shall include any costs and expenses incurred, in accordance with the penultimate paragraph of this Section 8, in contesting the amount or validity of any thereof. The Lessee agrees, except as aforesaid, to pay as aforesaid all gross receipts, gross income or similar taxes imposed or levied upon, assessed against or measured by the Net Minimum Rental, additional rental or any sums payable by the Lessee to or on behalf of the Lessor hereunder, or any sales or use taxes which may be levied or assessed against or payable by the Lessor or the Lessee on account of the acquisition, leasing, use or occupancy of the Premises or any portion thereof; Notwithstanding anything contained in this lease to the contrary, the Lessee will pay to the Lessor monthly, together with the Net Minimum Rental, one twelfth (1/12) of the amount from time to time estimated by the Lessor to reflect the Lessee's Fraction of all such taxes, charges, assessments, and impositions described in this Section 8 which are so levied, assessed or imposed, or billed to the Lessor by the appropriate public authority or authorities, if any. Promptly after the exact amount of the Lessee's fraction of all such taxes, charges, assessments and impositions are determined for each tax year, the Lessor will advise the Lessee in writing of the amount thereof for such year and the Lessor and the Lessee will account to each other (as often as such taxes, charges, assessments or impositions are payable to the proper authorities) so that the Lessee shall have paid to the Lessor prior to the expiration of ten (1O) days after the Lessor has so advised the Lessee of such amount; the full amount of the Lessee's Fraction of all such taxes, charges, assessments and impositions for such tax year or portion thereof, any excess paid by the Lessee shall be credited against future payments required by this Section 8 next due, except that upon expiration of the Term of any such excess shall be promptly refunded by the Lessor to the Lessee, and any deficiency shall be promptly paid by the Lessee to the Lessor. Notwithstanding anything in this lease to the contrary contained, the Lessee shall not be required to pay or otherwise be responsible for (i) any local, state or federal capital levy, franchise tax, revenue tax, income tax or profits tax of the Lessor, or (ii) any estate, inheritance, devolution, succession or transfer tax which may be imposed upon or with respect to any transfer of the Lessor's interest in the Shopping Center; provided, however, that if any time hereafter the methods of taxation prevailing at the date hereof shall be altered so as to cause the whole or any part of the taxes, charges, assessments or impositions now or hereafter levied, assessed or imposed on real estate and the buildings, structures and other improvements thereon to be levied, assessed and imposed, wholly or partially as a gross receipts, gross income, capital levy, or other tax, on the rentals received therefrom, or if any tax, corporation franchise tax, assessment, levy (including but not limited to any municipal, state or federal levy), imposition or charge, or any part thereof, shall be measured by or based in whole or in part upon the Shopping Center and shall be imposed upon the Lessor, then all such taxes, assessments, levies, impositions or charges, or the pat thereof so measured or based, shall be deemed to be an imposition levied, assessed or imposed upon or with respect to the Shopping Center, to the extent that the same would be payable if the Shopping Center were the only property of the Lessor subject thereto, and the Lessee shall pay to the Lessor the Lessee's Fraction of the same as and in-the manner provided herein. [f there are any taxes levied or assessed at the time on any item of rental payable hereunder, the Lessee further agrees to pay to the Lessor, as additional rental, the amount thereof. At the expiration of the Term, all payments for which the Lessee is responsible as provided in this Section 8, shall be prorated to the date of such expiration. The amount of any such payments which become due and payable after the expiration or sooner termination of the Term shall, on or prior to the date of such expiration or sooner termination, be deposited with the Lessor. If the Lessee shall not be then in default, the amount of any net refund, abatement, deduction, reduction, or credit received by the Lessor attributable to any such payment earlier made by the Lessee shall be credited against future payments required by this Section 8 next due, except that upon expiration of the Term any such excess shall be promptly refunded by the Lessor to the Lessee. In the event that the Lessor or any party authorized by the Lessor shall contest, by appropriate proceedings, the amount or validity of any such tax, assessment, imposition or charge the Lessee shall cooperate with the Lessor in the course thereof and execute any applications, appeals and other documents which may be required to enable the Lessor to maintain such proceedings, and there shall be appropriate adjustments by credits against future payments required by this Section 8, of all such taxes, assessments, impositions and charges or reflect any abatements, credits and refunds which may be received by the Lessor and to reflect the costs and expenses (including, without limitation, attorneys' and appraisal fees and expenses) of contesting the amount or validity of any such tax, assessment, imposition or charge. The Lessee agrees to pay, on or before the respective due dates, all such taxes, charges, assessments, or impositions levied, assessed or imposed at any time on the Lessee's fixtures, equipment, supplies, merchandise or other property in, on or about the Premises or Shopping Center. 9. Acceptance of the Premises "As-Is". The Lessee hereby acknowledges that upon taking occupancy or opening for business, whichever shall first occur, it shall be deemed to have accepted the Premises "as-is", after due inspection thereof and without any representation or warranty as to the use or condition thereof. 10. The Lessee's Construction. Promptly after notification by the Lessor to do so, the Lessee shall, at the Lessee's expense, do all work to the Premises necessary or appropriate to permit the Lessee to open for and operate its business, install an exterior sign in accordance with the requirements of Section 13 and equip the Premises with all trade fixtures and personal property necessary or appropriate for the operation of the Lessee's business in the Premises; provided, however, that none of the foregoing shall in any way hamper prosecution of any construction being undertaken in or about the Shopping Center. The Lessee agrees that all plans and specifications for all such work, equipment and preparation and all alterations, improvements, restorations, repairs, replacements or renovations which the Lessee may make pursuant to any term or provision of this lease or any consent by the Lessor will be done by the Lessee in a good and workmanlike manner, free from material defects in design, construction, workmanship or materials, in accordance with all laws, ordinances, rules, regulations and requirements of public authorities and the Fire Insurance Rating Association having jurisdiction, and that same will not decrease the value of the Shopping Center. In addition, all of the foregoing will be done in such manner as will avoid jurisdictional or other labor disputes. All such work, building mechanicals and equipment, building alterations and improvements, restorations, repairs, replacements and renovations other than any bank equipment, ATMs, trade fixtures, signs, merchandise, supplies and other personal property of the Lessee shall forthwith become the property of the Lessor and shall be expressly subject to the provisions of Section 11(u). The Lessee may assign, encumber or otherwise create a security interest in, to or upon any of the Lessee's property in the Premises without first obtaining the Lessor's prior written consent provided, however, any such assignment, encumbrance or security interest shall not encumber any portion of the real estate, including the Premises, constituting the Shopping Center or any interest in this Lease. Upon such entry, all of the terms and provisions of this lease shall be-in-full force and effect except that the Lessee shall have no obligation to pay any Net Minimum Rental and other rentals until the Commencement Date, but from and after such entry the Lessee will pay all charges for light, heat, hot and cold water, electric current and any other services or utilities furnished to the Premises, including, without limitation, the charge described in Section 11(t). 11. The Lessee's Covenants. The Lessee hereby covenants with the Lessor that the Lessee until the expiration of the Term and for such further time as the Lessee, or any other person or persons claiming through or under the Lessee shall hold the Premises or any part thereof: (a) will pay to the Lessor all rental at the time and in the manner herein set forth; (b) will at all times maintain all walls of the Premises (including, without limitation, the so-called glass or storefront), the floor and subfloor therein (but excluding any structural portion thereof as provided in Section 28 hereof), and the interior of the Premises, (including, without limitation the heating, ventilating, air conditioning, plumbing, sanitary sewage, electric, sprinkler and lighting systems and equipment therein (excluding, however any main trunk lines of any such system, but including any branch runs and leads) and all floor coverings, doors, door frames and door openers) in as good, clean and safe repair, order and condition as same were at the Commencement Date or may be put in thereafter, and all alterations, improvements, restoration, repairs, replacements or renovations to the Premises required by any and all laws, ordinances, rules, the regulations or requirements of all public authorities or the fire insurance rating association having jurisdiction, all whether ordinary or extraordinary all replacements to be of the same kind and quality as those which are replaced; provided, however, that the Lessee shall not be responsible for repairs made necessary by accidental fire or other insured unavoidable casualty; (c) will make all repairs (whether interior, exterior, structural, nonstructural, ordinary or extraordinary) made necessary by the negligence or misuse of the Premises or the fixtures therein or appurtenances thereto by the Lessee, its agents, employees, customers or invitees, or by any forcible entry, vandalism or malicious mischief not reimbursable by the Lessor's insurance; (d) will pay all charges for light, heat, hot and cold water, electric current and any other services or utilities furnished to the Premises; (e) will not assign this lease or sublet to any person, firm or corporation the whole or any part of the Premises, or permit any person, firm or corporation other than (pound)he Lessee to use or occupy the whole or any part thereof without obtaining on each occasion the prior written consent of the Lessor, which consent will not be unreasonably withheld, delayed or conditioned, but no such consent by the Lessor (i) shall be deemed to be a waiver or release of any of the provisions of this Clause (e) or a consent or agreement to consent to any such assignment, subletting, or permission to use or occupy the Premises thereafter, (ii) shall relate to any other term or provision of this lease including, without limitation, the provisions of Section 6, and (iii) shall be deemed to permit any subdivision of the Premises or any use or occupancy of the Premises by more than one entity at any time; none of the foregoing shall release or discharge the Lessee from any obligations or liabilities set forth in this lease, which obligations and liabilities shall continue to be direct and primary in any event; (f) will not overload or deface the Premises or permit any use of the Premises which shall increase any insurance rate or create a fire hazard or be unlawful, improper, noisy or offensive or which constitutes a nuisance or which is contrary to any law, ordinance, rule, regulation or requirement of any public authority or the Fire Insurance Rating Association having jurisdiction, or which is injurious to any person or property, or commit waste, whether voluntary or involuntary, or permit anyone else to do any of the foregoing; (g) Lessee may:maintain ATMs for use of its customers at any time (subject, however, to all applicable laws, rules, regulations or requirements of any public authorities having jurisdictions thereover; provided, however, if Lessee requires additional services in connection therewith, Lessee shall pay any additional costs incurred therefore) (h) will not use any advertising media that might be objectionable to the Lessor or other occupants of the Shopping Center, such as loud speakers, phonographs or radio broadcasts that may be heard outside the Premises; (i) will forthwith obtain and deliver to the Lessor and at all times thereafter maintain in full force and effect, liability insurance (with completed operations and contractual liability endorsements with limits acceptable to the Lessor and insuring both the Lessor and the Lessee against all claims, suits, obligations liabilities and damages, including attorneys' fees, based upon or arising out of actual or alleged personal injuries or property damage resulting from, or occurring in the same course of, or on or about, or otherwise relating to the use or condition of, the Premises all such insurance to be for the protection and benefit of, and adjustable with, the Lessor, the Lessor's mortgagees and the Lessee, as their interests may appear, and shall be in form and substance, and with additional limits, amounts and coverage, and such endorsements, in addition to those specified herein, as shall be satisfactory to the Lessor from time to time, and with insurers having current Alfred M. Lest Company, Inc. ratings of A or better and financial size ratings of Class XII or higher, and satisfactory to the Lessor from rime to time; the Lessee will on demand, as often as reasonably requested by the Lessor, furnish to the Lessor a complete list, statement and description of all such insurance, together with certificates from each insurance company issuing any thereof that same is in full force and effect, all premiums have been paid, and same will not be canceled except upon ten (1O) days' prior written notice to the Lessor by registered mail, return receipt requested; such liability insurance to be so obtained and delivered prior to the Lessee's entry as permitted by Section 10; (j) will not do or permit to be done anything in or about the Premises which (i) shall make void or voidable any insurance carried by the Lessor or the Lessee which is required by any term or provision of this lease or which relates to the Shopping Center in any manner or way or (ii) shall increase or create extra premiums therefor and will pay the Lessor on demand, as additional rental, the amount of any such increase or extra premiums on insurance carried by the Lessor; (k) will maintain and keep all windows, window frames and plate glass in the Premises at all times in good repair, order and condition; (l) will always conduct its operations in &e Premises under the Lessee's Trade Name (or in the name of one or more affiliates or divisions of Lessee) set forth in Section l unless the Lessor shall otherwise consent writing, which consent shall not be unreasonably withheld or delayed; (m) will not use the Common Areas or the sidewalks adjacent to the Premises, except for access to and from the Premises; (n) will furnish to the Lessor, promptly after the receipt of a request therefor, the license numbers of all vehicles of all persons employed on the Premises by the Lessee; (o) will cooperate with Lessor in the event that the Lessor notifies the Lessee that one or more of the Lessee's employees have parked vehicles in violation of the Lessor's rules and regulations regarding employee parking and has such vehicles towed, in Lessor's attempts to recover from such employees all of the Lessor's costs and expenses in connection therewith; (p) will cause all freight to be delivered and/or removed and all refuse to be removed only in the manner and at such times as shall be designated by the Lessor from time to time, and never store or maintain any such freight or refuse outside of the Premises; (q) will not burn any trash, garbage or refuse of any kind on the Premises or dispose of any of same in any manner other than as expressly directed by the Lessor in writing from time to time; (r) will operate the heating, ventilating and air conditioning systems in the Premises to adequately heat or cool the Premises, as the case may be; (s) will not solicit business in the parking or common area or areas or distribute handbills or other advertising media to, in or upon any vehicles parked in the Common Areas; (t) will pay, as additional rental, any trash charge from time to time determined by the Lessor as shall be appropriate to help defray the cost of any central station trash compactor and/or trash removal service in the Shopping Center provided by the Lessor; and (u) will, at the expiration or sooner termination of the Term, leave the Premises, including, without limitation, all walls of the Premises, the floor and sub-floor therein, and the interior of the Premises, including, without limitation, the heating, ventilating, air conditioning, plumbing, sanitary sewage electric, sprinkler and lighting systems, and equipment therein, and all doors, door frames, door openers, windows, window frames and plate glass, in as good, clean and safe repair, order and condition as the same were at the Commencement Date or may be put in thereafter, reasonable wear and tear excepted, all replacements to be of the same kind and quality as what is replaced, subject to the provision in Clause (b) above, and provided that the Lessee shall not be responsible for repairs made necessary by reasonable wear and rear, but the Premises shall be left clean and tenantable, orderly and free of occupants, in any event, and provided further the Lessee shall not be responsible for any such repairs made necessary by any casualty insured against, so long as all insurance proceeds paid or payable on account of such casualty are paid over or assigned to Lessor together with the amount of any deductible. The Lessee shall remove from the Premises at or prior to such expiration or sooner termination all fixtures, equipment, signs, merchandise, supplies and other property of the Lessee, and the Lessee shall, at its sole cost and expense, repair any damage caused by such removal. Upon such expiration or termination, the Lessor may, in addition to all other rights and remedies, without being guilty of any trespass, tort or breach of contract, remove from the Premises any or all fixtures, equipment, signs, merchandise, supplies and other property of the Lessee not removed by the Lessee as provided in the immediately preceding sentence, and either store same for the account of the Lessee at its expense, without obligation or liability on account of any theft, loss, damage or monetary shortage, or deem same to be abandoned and subject to use; sale or other disposition without obligation or liability to account to the Lessee for the proceeds thereof. Notwithstanding the expiration or sooner termination of the Term, the Lessee shall continue to be responsible for, and shall pay to the Lessor all costs incurred by the Lessor in connection with any such removal, storage, sale or other disposition. 12. No Alterations or Improvements. Except to the extent permitted by Section 10 in connection with the original construction of the Premises and the Lessee's obligations set forth in the last sentence of this Section 12, and except for reasonable periodic redecoration of the Premises,.the Lessee will make no alterations, additions or improvements to the Premises without on each occasion first obtaining the prior written consent of the Lessor, which consent shall not be unreasonably withheld, delayed or conditioned. Notwithstanding any such consent by the Lessor, the Lessee will restore the Premises to their former condition following any such alterations, improvements or additions at the expiration or sooner termination of the Term unless the Lessor by written notice to the Lessee at the time of such consent or at any time prior to suck expiration or termination shall waive its rights to such restoration, in which event the Lessee shall have no right so to restore the Premises. 13. The Lessee's Signs. The Lessee will not, without the Lessor's prior written consent, or as otherwise provided herein, maintain, or permit anyone else to maintain, any interior (except for signs affixed to interior walls of the leased premises) or exterior sign, placard, lettering, advertising media, shade, awning, aerial, flagpole or the like anywhere in the Shopping Center, or any exterior lighting, decorations, painting or any fences. Except as otherwise herein provided, the Lessee shall not maintain any exterior sign, placard, lettering or advertising media in violation of the Lessor's established sign standards from time to time. Lessee shall have the right, subject to Lessor's design approval as aforesaid, and the approval of all governmental authorities having jurisdiction, to install and maintain two (2) approximately 3' x 5' carved wooden placard signs on the exterior of the Premises identifying the Lessee. 14. Sole Risk and Hazard. All fixtures, equipment, signs, merchandise, supplies and other property on or about the Premises shall be at the Lessee's sole risk and hazard, and if the whole or any part thereof shall be destroyed or damaged by fire, water or otherwise, or by use or abuse of water, or by leaking or bursting of water pipes, or in any way or manner, including, without limitation, the acts or omissions of any other occupant of any portion of the Shopping Center, no part of said loss or damage is to be charged to or borne by the Lessor in any case whatsoever, except only to the extent caused by the Lessor's negligence or willful default. and, except to such extent, the Lessee agrees to exonerate and indemnify the Lessor from and against any and all claims, suits, obligations, liabilities and damages, including attorneys' fees based upon or arising out of any of the foregoing. 15. Fire, Casualty, Taking. PROVIDED, ALWAYS, that in case, after the execution hereof and before the expiration of the Term, the Premises, or any part thereof, or more than thirty (30%) percent of the Shopping Center shall be taken by any exercise of the right of eminent domain or by action of any public or other authority, or in case, after the execution hereof and before the expiration of the Term, the Premises, or any part thereof, or more than thirty (30%) percent of the Shopping Center shall be destroyed or damaged by fire or casualty, then this lease and the Term shall terminate at the election of the Lessor, which election must be exercised by written notice to the Lessee within sixty (60) days after such taking, destruction, damage or action, and such election may be made in case of any such taking notwithstanding the entire interest of the Lessor may have been divested by such taking. If the Lessor shall not elect to terminate this lease, the Lessor shall with reasonable promptness restore the Premises as nearly as practicable to the condition which existed immediately prior to such event, or, in the event of any such destruction or damage by fire or casualty, so much thereof as the Lessee is not herein elsewhere required to insure against destruction or damage by fire or casualty, to a single contiguous unit all only to the extent of the Lessor's insurance proceeds or damages or awards resulting from such taking, destruction, damage or action allocable to the Premises, as the case may be, after deducting the Lessor's costs and expenses of collecting same. If the Lessor shall not elect to terminate this Lease, and commences restoration of the Premises and such restoration is not completed by the Lessor within twelve (12) months of such event, Lessee shall have the right to terminate this Lease by Notice to Lessor given prior to the time the Premises are ready for occupancy, or if during the last two (2) years of the Term, as the same may have been extended, there is a taking, fire or other casualty pursuant to which the Lessor could terminate this Lease as hereinabove set forth, the Lessee similarly shall have the right to terminate this Lease by delivering to Lessor written notice of Lessee's election to terminate within sixty (60) days after such taking, destruction, damage or action. The Lessor will give the Lessee notice of when the Premises are ready for occupancy, and upon such notice the Lessee will comply with all of the provisions of Section 10 and Lessee will complete such restoration required by said Section 10 within ninety (90) days of such Notice. If the Premises or Shopping Center or any part-of either thereof shall be taken by eminent domain, all damages from such taking other than that[ which relate solely to the Lessee's fixtures and equipment, shall vest in the Lessor, the Lessee having no right to damages for loss of its leasehold interest in any event, and the Lessee covenants and agrees to execute such assignments or other documents and to take any steps which may be necessary to vest such damages in the Lessor, the Lessee hereby irrevocably appoints the Lessor as its agent and attorney-in-fact to execute and deliver any such assignments and documents which the Lessor deems necessary or appropriate to carry out the intent and purposes of this sentence, such appointment being a power coupled with an interest. 16. The Lessor's Insurance. The Lessor will, upon commencement of the Term, obtain and thereafter maintain in full force and effect (or cause to be so obtained and maintained), (a) fire and lighting and extended coverage insurance on such portions of the Premises and Shopping Center as the Lessee is not herein elsewhere required to insure for not less than the replacement value of such portions without deduction or adjustment for depreciation, except that an appropriate deductible clause shall be permitted; and (b) such other insurance on the Premises and Shopping Center against such insurable hazards, and such additional limits and amounts on all such insurance as are from time to time commonly obtained by owners of property similar to the Shopping Center or are required by the holder of any mortgage on any portion of the Shopping Center, or the Lessor shall otherwise deem appropriate, including, without limitation, rent insurance and war risk insurance. Such insurance shall be with insurance companies qualified to do business in the state in which the Premises are located; it being understood, however, that any such insurance may be blanket with other insurance maintained by the Lessor or the Lessor's affiliates. 17. Default By The Lessee. PROVIDED, ALSO, and this lease is upon the condition, that (a) in the event of any failure by the Lessee to pay any item of rental (whether the Net Minimum Rental or any item of additional rental) continuing for ten (10) days after Notice specifying such failure, without its being waived or cured; or (b) in the event of any failure by the Lessee to perform, fulfill or observe any other representation, warranty or agreement by the Lessee set forth herein, continuing for thirty (30) days after Notice from the Lessor specifying such failure, without its being waived or its effect cured, or the cure thereof commenced and diligently prosecuted at all times thereafter; or (c) in the event that the estate created hereby shall be taken on execution, or by other process of law; or (d) in the event that the Lessee or any guarantor of the Lessee shall commit any act which would permit the entry of an order for relief under the Bankruptcy Code (or any successor thereto) or be declared bankrupt or insolvent according to law; or (e) in the event that any petition under federal or state law pertaining to bankruptcy or insolvency or for a reorganization or other relief shall be filed by or against the Lessee or any guarantor of the Lessee; or (f) in the event that any assignment, trust, mortgage or other transfer in trust or otherwise shall be made for the benefit of creditors; or (g) in the event that the Lessee or any such guarantor shall make or offer a composition of the Lessee's or such guarantor's debts, as the case may be, with its creditors, or (h) in the event that a receiver, trust or similar office or creditors' committee shall be appointed take charge of any property of or to operate or wind up the affairs of the Lessee or such guarantor; or (i) in the event that the Lessee shall vacate or abandon the Premises, except Lessee shall not be deemed to have vacated the Premises if it has closed the Premises for remodeling, and such remodeling is completed within thirty (30) days; nor shall Lessee be deemed to have vacated or abandoned the premises so long as it shall continue to pay all Net Minimum Rent and all additional rent due hereunder, then in any of said cases (notwithstanding any license of any former breach of covenant or condition. or waiver of the benefit hereof, or consent in a former instance), the Lessor or the Lessor's agents may lawfully immediately, or at any time thereafter and without further demand or notice, enter into and upon the Premises or any part thereof in the name of the whole and repossess the same as of the Lessor's former estate and expel the Lessee and those claiming by, through or under the Lessee and remove the Lessee's or their effects (in any of said cases forcibly, if necessary) without being deemed guilty of any manner of trespass, and without prejudice to any remedies which might otherwise be used for arrears of rental or preceding breach of covenant or condition, and upon entry as aforesaid this lease shall terminate, or the Lessor may terminate this lease by written notice to the Lessee, the Lessee in any event waiving all statutory rights of redemption, and the Lessee covenants with the Lessor that in case of such termination, or in case of termination under statute for default of the Lessee, the Lessee will at the election of the Lessor (which election may be made or changed at any time or from time to time before the settlement), either (a) pay, as liquidated damages for so much of the unexpired Term as is covered thereby, and at the same times and in the same installments as are specified in this lease, sums equal to the rental and other payments herein named or, if the Premises shall have been relet, sums equal to the excess of the rental and other payments last mentioned over the net sums actually received by the Lessor for the period to which the rental and other payments last mentioned relate; or (b) pay, as liquidated damages for the then unexpired Term, a sum which at the time of such termination or at the time to which installments of liquidated damages shall have been paid represents the excess of the rental and other payments herein named over the then rental value of the Premises for the residue of the Term; or (c) indemnify the Lessor against loss of the rental and other payments herein named at the time of such termination or from the time to which installments of liquidated damages shall have been paid, during the residue of the Term each of the foregoing three alternatives being separable. The rental and other payments named herein shall be deemed to be the Net Minimum Rental plus all items of additional rental herein named. In addition to the foregoing and regardless of which of the foregoing alternatives shall have been elected, the Lessee agrees to pay to the Lessor on demand all expenses incurred by the Lessor in order to (a) obtain possession of the Premises; (b) make such alterations, improvements, repairs, replacements, renovation and restoration as the Lessor deems necessary or advisable to put the Premises in good and rentable repair, order and condition; and (c) relet the Premises, including without limitation, the fees of attorneys, brokers, engineers and architects. Notwithstanding anything elsewhere in this lease contained, however, in the event that during any twelve (12) month period the Lessor shall have sent two (2) or more notices of the kind referred to in Clauses (a) or (b) in the first sentence of this paragraph, even though the Lessee shall have cured the failure or failures specified in such notices, or waived the cure thereof, or, with respect to a notice of the kind referred to in Clause (b) in the first sentence of this Section 17, commenced such cure and diligently prosecuted same at all times thereafter, and in the event that subsequently the Lessee shall fail to pay any item of rental or perform, fulfill or observe any other representation, warranty or agreement of the Lessee set forth herein (all as set forth in Clauses (a) and (b) in the first sentence of this paragraph), then in any such event the provisions for notice and grace periods set forth in such Clauses (a) and (b) shall not be applicable to such subsequent failure or failures and, therefore, the Lessor shall have the right, without demand or notice, to exercise all of its rights and remedies set forth in this paragraph or otherwise. In the event that any failure by the Lessee to perform, fulfill or observe any agreement herein to be performed, fulfilled or observed by the Lessee continues for thirty (30) days, or, in situations involving potential danger to the health or safety of persons in, or about the Premises or a further material deterioration of, or damage to, the Premises, after written notice specifying such failure without its being waived, its effect cured, or the cure thereof commenced and diligently prosecuted at all times thereafter, the Lessor may at its election perform, fulfill or observe such agreement for and on behalf of the Lessee, and any amount which the Lessor shall expend for such purpose, or which shall otherwise be due by the Lessee to the Lessor hereunder, shall be deemed to be additional rental and shall be paid to the Lessor on demand, together with interest thereon at the Lease Interest Rate, from the date of expenditure or the date the same shall have become due to the date of payment thereof in full. Whenever in this lease provision is made that either party shall have the right to terminate this lease, then, unless in said provision it is expressly provided otherwise, neither party shall thereafter have any claim against the other under this lease or on account of the termination thereof. Whenever in this Lease provision is made for the performance by either party of any term, covenant, condition or agreement herein contained within a specified time period, such period shall be extended for the period (not to exceed ninety (90) days) of any delay in performance caused by acts of God, material shortages, or other conditions beyond the control of such party. Nothing herein contained shall in any way be construed to extend the time for performance of any monetary obligation herein contained 18. Quiet Enjoyment. Lessee, subject to the Terms and provisions of this Lease, on payment of the Net Minimum Rental and all other rental charges and observing, keeping and performing all of the other Terms and provisions of this Lease on Lessee's part to be observed, kept and performed, shall lawfully, peaceably and quietly have, hold, occupy and enjoy the Premises during the Term hereof, without hindrance or ejection by Lessor or any party claiming by, through or under Lessor; the foregoing covenant is in lieu of any other covenant express or implied. 19. Broker. The Lessee and lessor covenant and agree with each other that it has not dealt with any broker or any other person who would be entitled to be paid a fee, commission or any other compensation (the "Broker") in connection with this lease and the use and occupation of the Premises by the Lessee, and Lessee and Lessor shall indemnify and hold the other harmless from any loss or damage caused by such party's misrepresentation herein contained. 20. Subsidiaries or Affiliates of Lessor. The Lessee will not claim or attempt to enforce any right or remedy against any one or more of the employees, agents, officers, directors, parents, subsidiaries or affiliates of the Lessor, arising out of or in any way based upon this lease or any act or omission by the Lessor with respect to this lease or all or any portion of the Premises or Shopping Center, except to the extent expressly permitted by any written instrument signed by any one or more of the foregoing. The Lessor will not claim or attempt to enforce any right-or remedy against any one or more of the employees, agents, officers or directors of Lessee for any breach of Lessee's obligations-hereunder except to the extent expressly permitted by any written consent signed by one or more of the foregoing. 21. Notice of Default to the Lessor. In no event will the Lessor be deemed to be in default because of any failure by the Lessor to perform, fulfill or observe any covenant or agreement set forth herein or because of any breach of any warranty by the Lessor set forth herein for thirty (30) days after written notice to the Lessor specifying such failure or breach, without its being waived, or if its effect is cured, or if the cure thereof is commenced and diligently prosecuted thereafter. 22. Subordination. (a) The Lessee will on request, any time or from time to time by any holder of a mortgage on all or any portion of the Shopping Center (i) subordinate this lease and all of the Lessee's rights and estate hereunder to such mortgage and to any renewals, extensions, substitutions, refinancings, modifications or amendments thereof if the holder of such mortgage shall provide to Lessee a non-disturbance agreement to the effect that in the event of a foreclosure of such mortgage, Lessee's possession of the Premises and its rights and privileges under this Lease shall not be disturbed by such holder, or anyone claiming under such holder so long as Lessee shall not be in default under this Lease; or (ii) declare this lease to be prior to such mortgage and to any renewals, extensions, modifications or amendments thereof; and in either such case, Lessee will on request agree with such holder that the Lessee will attorn thereto in the event of foreclosure and that the Lessee will not without the consent of such holder amend this lease or prepay any item of rental hereunder. (b) If Lessor shall elect to convert the Shopping Center or any portion thereof to a condominium (which election may be changed from time to time) and the Premises shall constitute a unit thereof, Lessee agrees that, at Lessor's request, it shall subordinate this lease to the condominium documents, including, without limitation, the Master Deed provided such documents do not materially adversely affect Lessee's rights and interests under this Lease and that this Lease shall be deemed to refer to the condominium unit constituting or approximately constituting the Premises, and Lessee shall observe the obligations imposed upon occupants of units to the extent not inconsistent herewith; provided, however, that Lessor shall have and retain all rights to vote or other rights associated with a unit. If Lessor shall intend to sell the unit, Lessor shall offer such unit to Lessee upon the terms, provisions and conditions which Lessor would be willing to sell the same to a bona fide third party; and Lessee shall have thirty (30) days within which to accept such offer in writing. Such condominium documents shall not be inconsistent with the provisions of this lease or adversely affect Lessee. 23. No Liens. The Lessee will forthwith cause any mechanics', materialmen's or other liens which may be recorded or perfected or which may otherwise attach to all or any portion of the Shopping Center as a result of work done by or for the Lessee to be discharged or released of record or fully bonded by a surety satisfactory to the Lessor. 24. Entry and Inspection By The Lessor. The Lessor and its agents shall have the right to enter into and upon the Premises or any part thereof, at all reasonable times and upon reasonable notice, only when-accompanied by a bank officer who will be made available for the purpose, to examine the same and make repairs or alterations the Lessor is expressly required hereunder or desires to make thereto. On or before the Commencement Date, Lessee shall provide to Lessor names and telephone numbers of all bank officers Lessor may contact to respond in the event of an emergency and alternative procedures Lessor may follow in the event such persons are not available in such emergency situations. The Lessee shall permit inspection of the Premises (except for the vault areas)t at all reasonable times upon reasonable notice, by prospective purchasers or mortgagees and during the last year of the Term, by prospective lessees and shall permit the usual "To Let" or "For Sale" signs to be placed on the Premises. 25. Notice to Mortgagee. Upon receipt of a written request by the Lessor or any holder or a mortgage on all or any part of the Premises or Shopping Center, the Lessee will thereafter send any such holder copies of all notices of default or termination or both given by the Lessee to the Lessor in accordance with any provision of this Lease. In the event of any failure by the Lessor to perform, fulfill or observe any agreement by the Lessor herein or any breach by the Lessor of any representation or warranty of the Lessor herein, any such holder may at its election cure such failure or breach for and on behalf of the Lessor. 26. Memorandum of Lease. Neither party will record this lease, but each party will on demand by the other party execute an appropriate memorandum or notice of this lease in form and substance reasonably satisfactory to the Lessor, and either party may record same at its expense. Promptly following the Commencement Date, the parties will execute a document in recordable form and satisfactory in form and substance to the Lessor setting Forth the commencement and expiration dates of the Term. 27. Waiver of Subrogation. To the extent available under standard policies of insurance without extra cost, or if extra cost shall be charged therefor, so long as the other party pays such extra cost, each party hereby waives all liability and all rights to recovery and subrogation against, and agrees that neither it nor its insurers will sue the other party for any loss of or damage to property arising out of fire or casualty and each party agrees that all insurance policies relating to the Premises will contain waivers by the insurer of such liability, recovery, subrogation and suit. If extra cost is chargeable therefor, each party shall advise the other party of the amount of the extra cost and the other party, at its election, may pay the same, but shall not be obligated to do so. 28. Repairs By The Lessor. Except to the extent that the same shall be the responsibility of the Lessee pursuant to any other term or provision of this lease, and except for delays caused by or resulting from act of God, war, fire, casualty; strike, shortage of labor or materials or any other cause beyond the Lessor's control, the Lessor agrees to maintain and repair all structural portions of the Premises and the foundations thereof including the structural portions of the walls, exterior and demising, the floor, and sub-floor and the roof but specifically excluding any non-structural portion of any of the foregoing. 29. Estoppel Letter. The Lessee will from time to time, upon not less than fifteen (15) days' prior written request by the Lessor, deliver to the Lessor, any actual or prospective purchaser or holder of a mortgage on all or any part of the Premises a written statement certifying whether or not this lease is in full force and effect and stating (a) the last date to which the rental and other payments have been made; (b) the amendments, if any, to this lease; (c) whether or not the Lessor is in default in the performance, fulfillment or observance of any representation, warranty or agreement set forth herein or has any indebtedness to the Lessee for the payment of money; and (d) if so, each default or indebtedness. The Lessee hereby irrevocably appoints the Lessor as its agent and attorney-in-fact to execute and deliver any such statement, such appointment being coupled with an interest, in the event that within such fifteen (15) day period, the Lessee shall fail so to deliver any such statement to the Lessor or any such actual or prospective purchaser or holder. 30. Collateral Assignment of Lease. With respect to any assignment by the Lessor of the Lessor's interest in this lease or the rental and other payments payable hereunder, conditional in nature or otherwise, which assignment is made to the holder of a first mortgage on the Lessor's estate, the Lessee agrees. (a) that the execution thereof by the Lessor and the acceptance thereof by the holder of such mortgage shall never be deemed an assumption by such holder of any of the obligations of the Lessor hereunder, unless such holder shall, by written notice sent to the Lessee, expressly otherwise elect; and (b) that, except as aforesaid, such holder shall be treated as having assumed the Lessor's obligations hereunder only upon foreclosure of such holder's mortgage and the taking of possession of the Premises. 31. No Liability. Anything else in this lease to the contrary notwithstanding, the Lessee shall look solely to the estate and property of the Lessor in the Shopping Center for the satisfaction of any claim for the payment of money by the Lessor by reason of any default or breach by the Lessor of any of the terms and provisions of this lease to be performed, fulfilled or observed by the Lessor, and no other property or assets of the Lessor shall be subject to levy, execution or other enforcement procedure for the satisfaction of the Lessee's remedies for any such default or breach. 32. The Lessor While An Owner. As used herein "Lessor" shall mean the owner from time to time of the Lessor's estate and property in the Shopping Center and if such estate and property be sold or transferred, the seller or transferor shall thereupon be relieved of all obligations and liabilities hereunder thereafter arising or occurring, and the purchaser or transferee shall thereupon be deemed to have assumed and agreed to perform and observe all obligations and liabilities hereunder thereafter arising or occurring or based on occurrences or situations thereafter arising or occurring, subject in any event to the provisions of Section 32. 33. Miscellaneous. All terms and provisions of this lease shall be independent and shall inure to the benefit of and be binding upon the personal representatives, successors and assigns of the parties, except as otherwise expressly provided herein. Every term and provision of this lease shall be deemed of the essence and every breach thereof material to the Lessor. All representations, warranties and agreement of the Lessee in this lease shall be deemed special, unique and extraordinary; any breach of any provision thereof by the Lessee shall be deemed to cause the Lessor irreparable injury not properly compensable by damages in an action at law, and the rights and remedies of the Lessor hereunder may therefore be enforced both at law or in equity, by injunction or otherwise. All rights and remedies of each party shall be cumulative and not alternative, in addition to and not exclusive of any other right or remedy to which such party may be lawfully entitled in case of any breach or threatened breach of any term or provision herein except as otherwise expressly provided herein; the rights and remedies of each party shall be continuing and not exhausted by any one or more uses thereof, and may be exercised at any time or from time to time and as often as may be expedient; any option or election to enforce any such right or remedy may be exercised or changed at any time or from time to time. This lease sets forth the entire agreement of the parties, and no custom, act, forbearance, or words or silence at any time, gratuitous or otherwise, shall impose any additional obligation or liability upon either party or waive or release either party from any default or the performance of fulfillment of any obligation or liability or operate as against either party as a supplement, alteration, amendment or change of any term or provision set forth herein, including this Clause, unless set forth in a written-instrument duly executed by such party expressly stating that it is intended to impose such an additional obligation or liability or to constitute such a waiver or release, or that it is intended 10 operate as such a supplement, alteration, amendment or change. 34. Notice. All notices and other communications shall be in writing and deemed given and delivered to the Lessor when mailed, by registered or certified mail, postage and registration or certification charges prepaid, addressed, in the case of the Lessor, to the Lessor at the Lessor's Address set forth in Section 1, with a copy simultaneously so mailed to the Lessor's Counsel set forth in Section 1, at its address set forth in Section 1; and addressed, in the case of the Lessee, to the Lessee at the Lessee's Address set forth in Section 1, with a copy simultaneously so marked to the Lessee's counsel set forth in Section 1, except that either party may, by written notice to the other, designate another address which shall thereupon become the effective address of such party for the purposes of this Section. 35. Local Law. This lease shall be construed and enforced in all respects in accordance with the laws of the state in which the Premises are located: 36. Headings. The Cover Page and Table of Contents preceding this lease and the captions to the various Sections of this lease have been inserted for reference only and shall not in any manner be construed as modifying, amending or affecting in any way the express terms and provisions hereof. 37. Separability, If any term or provision of this lease or the application thereof to any person, property or circumstance shall to any extent be invalid or unenforceable, the remainder of this lease, or the application of such term or provision to persons, properties and circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this lease shall be valid and enforced to the fullest extent permitted by law. 38. Authority. The execution and delivery of this Lease by the party so executing and delivering this Lease on behalf of the Lessor and Lessee, respectively, constitutes a warranty and representation by such party that such party is duly authorized and empowered for and on behalf of such party to execute and deliver this Lease and that this Lease constitutes a valid and binding obligation of such party. WITNESS the execution hereof under seal the day and year first above written SEAL WITNESS: LESSOR: 89 PLEASANT STREET REALTY TRUST /s/ By: /s/ Andrew B. Rose - -------------------------- -------------------------- Andrew B. Rose, as Trustee as aforesaid, and not individually WITNESS: LESSEE: IPSWICH SAVINGS BANK /s/ By: /s/ David L. Grey - -------------------------- -------------------------- President not individually (duly authorized) EX-10.6 11 LEASE THIS LEASE, entered into this 12th day of June, 1998, between Linda Farnum ("Owner"), Benjamin Farnum ("Assignee"), both of North Andover, Massachusetts, hereinafter called the "Landlord" (which expression shall include their heirs, executors, administrators, legal representatives, successors and assigns), and Ipswich Savings Bank of 23 Market Street, Ipswich, Massachusetts hereinafter the "Tenant" (which expression shall include its successors and assigns). WHEREAS the Owner is successor to Nettie A. Humphreys who, as Landlord entered into a lease with BankBoston N.A. dated October 25, 1977 as the same may have been amended and extended by Letter of July 17, 1997 and Amendment to Lease dated December 3, 1997 ("BankBoston Lease"); and WHEREAS BankBoston's interest in the BankBoston Lease was assigned to the Assignee under an Assignment and Assumption of Lease dated December 3, 1997, and WHEREAS Owner, Assignee and Tenant entered into an Option to Lease Real Estate dated April 14, 1998, which Option is exercised by the execution of this sublease (hereinafter "Lease"); WHEREAS BankBoston has consented to this Lease by a consent document dated June 5, 1998 attached hereto as exhibit "A" NOW, THEREFORE, the Landlord (consisting of the Owner and Assignee together) and Tenant covenant and agree as follows: 1. PREMISES: The Landlord does hereby demise and lease unto the Subtenant a certain parcel of registered land with the building and other improvements thereon (hereinafter called the ("Premises") situated at 470 Main Street, Reading, Massachusetts, and bounded and described as set forth on Exhibit B annexed hereto and made a part hereof by reference. 2. USE: Subject to Tenant obtaining all necessary permits and approvals, Tenant may use the Premises for a branch bank with a drive-in teller window and, provided Landlord gives prior written consent which will not be unreasonably withheld, for any other lawful purpose. Landlord shall have the right to withhold Landlord's consent to any use of the Premises as a restaurant 3 TERM: The term of this Lease shall be five years from the date of execution of this Lease. The Tenant is also granted three (3) options to extend said term for further successive periods of five (5) years each, each such option to be exercised by written notice to Landlord at least ninety (90) days prior to the expiration of the then existent term, and upon the giving of such notice, without any further instrument, lease or agreement, this lease shall be extended. 4. RENT: Tenant will pay Landlord rent at the rate of Forty Eight Thousand and 00/100 Dollars ($48,000.00) per year during the first two and one half (2 1/2) years of the original term. Said rent shall be paid by the Tenant in equal monthly installments of Four Thousand and 00/100 Dollars ($4000.00) each on the first day of each month in advance during said period. The rent shall be increased at the end of each two and one half (2 l/2) year period ("Period") during the original term and any extension term, if any, by the higher of Five (5%) Percent of the latest rent or the percentage increase in the cost of living as indicated by the United States Bureau of Labor Statistics, Consumer Price Index for all Urban Consumers, Boston, Mass. {CPI- U} ("Index") between the point at which the Index stood a month prior to the Beginning of the Period and the point at which the Index stands one month prior to the day as of which such adjustment is being made. If said Index is no longer in existence, then a comparable successor index or other governmental index or other method shall be used to ascertain the amount of increase in the cost of living. 5. TAXES: The Tenant will pay, at least fifteen (15) days before the date on which interest or penalties would begin to accrue on account of such taxes, directly to the taxing authority, all municipal real estate taxes, liens and assessments levied against the Premises during the original term commencing with the execution of this Lease and also during any extensions or renewals of said Lease or during the continued occupancy of the Premises by Tenant after expiration of the Lease. Such real estate taxes, municipal liens or assessments shall be apportioned in the first year in which the Tenant is obligated to pay such taxes and in the year in which shall occur the termination or expiration of this Lease. If any first mortgagee of the Premises shall require Landlord to make monthly payments to it on account of real estate taxes which Tenant is obligated to pay under this Lease, then for so long as such deposits may be required, Tenant shall make monthly payments of such estimated taxes to Landlord on the same day Tenant pays its basic monthly rent hereunder. The Landlord may and, at the request of the Tenant, shall make application for abatement of taxes assessed upon the Premises and will diligently prosecute the same to a conclusion, or it will, at the election of the Tenant, permit the Tenant to do so in the name of the Landlord, or in the name of the Tenant if the law will so permit; provided, however, that the Tenant shall bear the expense of bringing and prosecuting any such proceedings concerning the Premises and shall reimburse Landlord for any such expense or, if requested by Landlord, pay any such expense directly. 6. INSURANCE: Tenant shall maintain: (i) physical hazard insurance on an "all risks" basis in an amount not less than 100% of the full replacement cost of the Premises; (ii) flood insurance if and as required by applicable federal law; and (iii) comprehensive commercial general liability insurance in an amount of not less than $1,000,000 per occurrence and a combined aggregate blanket coverage of not less than $5,000,000 including contractual liability coverage. All policies regarding such insurance shall be issued by companies licensed to do business in the state where the policy is issued and also in The Commonwealth of Massachusetts that have a financial rating and size and provide deductible amounts acceptable to Landlord, name Landlord and/or if directed by Landlord any mortgagee of the Premises, loss payee and/or additional insured, and provide that no cancellation or material modification of such policies shall occur without thirty days prior written notice to the Landlord and/or any covered mortgagee. Such policies shall include: (i) a replacement cost endorsement; (ii) a demolition cost endorsement; (iii) an increased cost of construction endorsement; and (iv) such other endorsements as Landlord may reasonably require. Tenant will furnish to Landlord annually and upon request such original policies, certificates of insurance, or other evidence of the foregoing as is acceptable to Landlord. The terms of all insurance policies shall be such that no co- insurance provisions apply, or if a policy does contain a co- insurance provision, Tenant shall insure the Premises in an amount sufficient to prevent the application of the co-insurance provisions; Tenant shall not permit any use of the premises which shall be contrary to any law or regulation from time to time established by the New England Fire Insurance Rating Association, or any similar body succeeding to its powers. 7. UTILITIES: Tenant during the term hereof or any holding over period, shall pay for all water, gas, electricity, fuel, or other utilities and services and for all sewer and sewer use charges consumed on or relating to the Premises. 8. CONDITION OF PREMISES, REPAIRS AND MAINTENANCE: (a) Tenant accepts the Premises in the condition in which they are on the date of commencement of the term hereof acknowledging that they are in good order and condition and sufficient for the uses intended by Tenant. Tenant agrees that it has had full and adequate opportunity to inspect the Premises and has done so to its satisfaction. Landlord had made and Tenant has relied on no representations and warranties, whether express or implied, as to the condition of the Premises or their suitability for Tenant's use. (b) Tenant will maintain the Premises, reasonable use and wear and tear and damage by fire or casualty excepted and will make repairs, restorations and replacements to the Premises as and when needed to preserve the Premises in the condition they were in at the date of the commencement of this Lease. (c) Tenant shall at its expense maintain, repair and renew (as necessary) the Premises including all its mechanical and utility systems, so as to keep them in good and safe operating condition in all respects. (d) Tenant shall at its own expense keep the sidewalks, curbs, entrances, passageways, parking lot and areas adjoining the Premises in a clean and orderly condition, free from snow, ice, rubbish and obstructions. (e) Tenant shall at its own expense conform to and satisfy any present or future governmental or regulatory requirements applicable to the Premises which must be satisfied to enable Tenant to use the Premises for Tenant's purposes. (f) Tenant shall pay to the Landlord a security deposit in the amount of $4,000 which Landlord shall retain as security for the performance of the Tenant's obligations hereunder. Such deposit shall be returned to the Tenant within thirty (30) days after the end of the term of this Lease provided the Premises at such time are in the same condition as they are now in, reasonable wear and tear and damage by casualty only excepted, and the Tenant is not otherwise in default hereunder. Landlord shall not be liable to Tenant for any interest on such payment, shall not be obligated to escrow or segregate such amount, and shall not be liable to account for such amount to Tenant until termination of this Lease. (g) All property of any kind which may be on the Premises (whether belonging to the Tenant or to third persons) shall be at the sole risk of Tenant or those claiming by, through or under Tenant, and Landlord shall not be liable to Tenant for any injury, loss or damage to any person or property on the Premises in any event. 9. ASSIGNMENT: The Landlord agrees that the Tenant may sublet all or any part of the Premises or of the building thereon, or may assign this Lease, but only with the written consent of Landlord, which will not be unreasonably withheld, at any time or times during either the original term or any option period. Notwithstanding any such assignment or subletting, the Tenant shall remain directly liable for the performance of all lease obligations under this lease, including without limitation the payment of rent and other sums due hereunder. 10. ALTERATIONS. (a) Tenant shall have the right to make such non-structural alterations, additions and improvements to the Premises as may be necessary or desirable for its business provided that in each instance Tenant shall obtain Landlord's prior written consent thereto which shall not be unreasonably withheld. No other alterations, additions and improvements shall be permitted without the prior written consent of Landlord which may be withheld in Landlord's sole discretion. (b) Tenant shall, before making any alterations, additions or improvements at its own expense obtain all permits, approvals and certificates required by any governmental authority and shall promptly deliver copies of same to Landlord. Tenant shall cause Tenant's contractors and subcontractors to carry such worker's compensation, general liability and personal and property damage insurance as Landlord may reasonably require. Tenant agrees to hold Landlord free and harmless from any liability for labor or materials supplied for such work and shall keep the Premises free from mechanics or similar liens of any kind by obtaining waivers thereof and by removing or bonding any lien filed, within ten (10) days from receipt of notice of the filing thereof. (c) Any and all alterations, additions or improvements to the Premises made by the Tenant during the term of this Lease shall become the property of the Landlord without payment therefor by the Landlord. 11. INDEMNIFICATION AND LIABILITY: (a) Tenant shall indemnify and save Landlord and any holder of any mortgage on the Premises harmless from all loss and damage arising in any way out of Tenant's use or occupation of the Premises, including any reasonable attorney fees or other costs incurred to enforce this provision. Tenant's obligation under this provision shall survive the termination of this Lease. (b) Tenant shall not permit and shall take reasonable steps to prevent any parking on the Premises except by employees, agents and business invitees of Tenant or any assignee or subtenant of Tenant, and without any assignee or subtenant of Tenant, and without limiting in any way Tenant's obligations under subsection (a) of this Section 11, Tenant shall be fully responsible for and shall indemnify and hold Landlord harmless from any loss or liability, including any attorney's fees, whether incurred to enforce this indemnity or otherwise, arising from any parking on the Premises, whether permitted or otherwise. 12. DESTRUCTION BY CASUALTY: (a) If the Premises are partially damaged or destroyed by storm, fire, lightening, earthquake or other casualty, but are still usable by Tenant for the conduct of its business in substantially the same manner as it was conducted immediately prior to such damage or destruction, the basic rental hereunder shall be adjusted to take into account the value of any leased space lost as a result of the damage or destruction. Said rental adjustment shall apply until the damage is repaired or the destroyed areas are restored by Landlord (if Landlord opts to effect such repairs or restoration). If the damage or destruction is so extensive as to render the Premises not suitable for the said conduct of Tenant's business, this Lease shall terminate thirty (30) days after the date of such damage or destruction, unless within said thirty (30) days Landlord by notice either delivered to Tenant or mailed to Tenant by certified mail, return receipt requested (and postmarked within the aforesaid thirty- day period) informs Tenant of its intention to repair or restore the Premises, in which event Landlord shall have sixty (60) days measured from the date of the damage or destruction to commence repair or restoration to render the Premises tenantable. During the period of such repairs or restoration the rent hereunder shall be abated in its entirety, except to the extent Tenant is able to use the Premises, in which event the rent shall be adjusted to reflect such use. If the Landlord shall not commence repair or restoration with said sixty (60) days or shall not thereafter diligently pursue such repair or restoration to completion, Tenant shall have the right to terminate this Lease by written notice delivered to Landlord or mailed to Landlord by certified mail, return receipt requested, within fifteen (15) days after the expiration of said sixty (60) day period or of the failure (which shall then be continuing) by the Landlord to diligently pursue such repair or restoration, as the case may be. Tenant hereby irrevocably transfers, sets over and assigns to Landlord all Tenant rights in and to the insurance proceeds payable on account of damage or destruction to the Premises. If Landlord shall so elect to repair or restore, Tenant shall immediately pay over to Landlord any such proceeds which may be paid to it directly or to it and Landlord jointly. 13. EMINENT DOMAIN: (a) If the entire Premises shall be taken for public or quasi-public purposes, then this Lease shall terminate as of the date Tenant shall be required by law to vacate the Premises and surrender them to the authority making the taking. (b) If such portion of the Premises shall be taken as to render the Premises unsuitable for the continuance of Tenant's business in substantially the same manner as the same was being conducted immediately prior to such taking, then Tenant shall have the right to terminate this Lease by giving written notice to Landlord within thirty (30) days after receipt of Notice of Entry for purposes of effectuating the taking. If the costs of repairing or restoring the Premises after a partial taking is more than twenty (20%) percent of their value immediately prior to such taking, Landlord may at its option terminate this Lease by written notice to Tenant within thirty (30) days after the date of the taking. (c) If this Lease shall not be so terminated, Landlord shall restore the Premises with all reasonable dispatch to as close as possible to the condition the Premises were in immediately prior to said taking. Any provision of this subsection (c) to the contrary notwithstanding, Landlord shall not be required to restore if Landlord's mortgagees shall refuse to permit application of Landlord's condemnation proceeds towards the costs of such restoration. (d) If the Premises, or any part thereof, shall be rendered untenantable and the Lease is not terminated, the rent herein reserved or a just and proportionate part thereof, shall be suspended or abated according to the nature and extent of the taking from the date of such taking until the Premises shall be restored, and if after such restoration the Premises are smaller than they were prior to the taking or the utility thereof to Tenant otherwise diminished, the annual rent shall be equitably reduced. (e) In the event of any such taking, the proceeds thereof shall be payable to Landlord or Landlord's first mortgagee, if so required by the applicable terms of the mortgage and Tenant shall have absolutely no right or interest in any award. Tenant hereby irrevocably appoints Landlord as its attorney in fact for purposes of collecting any such condemnation award and dealing with all governmental authorities with respect thereto. This power of attorney is coupled with an interest and hence is irrevocable. (f) If Landlord shall be obligated to repair or restore as aforesaid, and if the Premises are restored within four (4) months after the date of such taking, then Tenant may, in addition to all other rights and remedies it may have, terminate this Lease. 14 TENANT'S FAILURE TO PERFORM: (a) If Tenant shall at any time fail to pay any tax or assessment as required in this Lease or to take out, of pay for, maintain or deliver any of the insurance policies provided for in this Lease, or shall fail to make any other payment or perform any other act on its part to be made or performed under this Lease, then Landlord, after thirty (30) days' written notice to Tenant, except when other notice is expressly provided for in this Lease (or without notice in case of an emergency), and without waiving or releasing Tenant from any obligation of Tenant contained in this Lease, may (but shall be under no obligation to) (l) Pay any tax or assessment so payable by Tenant; or (2) Take out, pay for and maintain any of the insurance policies provided for in this Lease; or (3) make any other payments or perform or cause to be performed any act on Tenant's part to be made or performed as in this Lease provided; and may enter upon the Premises for any such purpose, and take all such action thereon as may be necessary therefor. (b) All sums so paid by Landlord and all costs and expenses incurred by Landlord in connection with the performance of any such act, together with interest thereon at the rate of 14% per annum or such lesser rate as may at the time be the maximum rate permitted by law, from the respective dates of Landlord's making of such payments or incurring of each such cost and expense, shall be paid by Tenant to Landlord on demand as if the same were additional rent hereunder (and nonpayment of which shall have the consequences as nonpayment of rent). 15. MECHANIC'S LIENS: Notice is hereby given that Landlord shall not be liable for any labor or materials furnished, or to be furnished to the Tenant and no mechanic's liens or other liens for any such labor or materials shall, except as otherwise required by law, attach to or affect the reversionary or other estate or interest of Landlord in and to the Premises. Tenant further agrees to indemnify and hold harmless Landlord against any and all costs it may suffer on account of the same. 16. 16. LANDLORD'S ACCESS: Tenant agrees that Landlord upon reasonable advance notice to Tenant (or without notice in case of emergency) may enter upon the Premises at reasonable hours so as not to unduly interfere with the normal conduct of Tenant's business (or at any time in case of emergency) for the purposes of inspecting the same and making repairs thereto as it may be required or permitted to do under the terms of this Lease. Landlord shall have the right, during the last year of the term hereof or after Tenant has failed to exercise any renewal option, to place signs upon the Premises indicating they are for sale or for rent, and to enter the Premises and to exhibit the same for the purposes of sale or mortgage and to exhibit the same to any prospective Tenant. 17. EXPIRATION OF TERM: (a) Tenant at the expiration of the term hereof, or at any prior termination as herein provided, shall peaceably yield up the Premises and all additions, improvements and alterations made thereupon in the same condition and repair as the same were in at the commencement of this Lease, or may have been put in thereafter, reasonable wear and use, damage by fire or other casualty or by excepted. (b) Tenant and those claiming by, through or under Tenant, shall prior to the expiration of this Lease or prior termination thereof remove its personal property, trade fixtures and any equipment installed by it from the Premises, provided that if such removal causes any damage to the Premises, Tenant shall promptly repair the same (c) Any property, fixtures or equipment of Tenant's remaining on the Premises after said expiration or termination may be removed and disposed of by Landlord as Landlord shall determine, and Landlord may charge the cost of such removal and any repairs or replacements to the Tenant, and may retain the proceeds or other consideration of any sale or other disposition of such items. 18. HOLDING OVER: In the event that Tenant, or anyone claiming by, through or under Tenant, or if any property, fixtures or equipment of any such person shall remain on the Premises after the termination of this Lease or any renewals, extensions or modifications thereof, or if any repairs to the Premises for which any such person is responsible are commenced but not completed prior to such termination or if Landlord notifies tenant in writing within 15 days after such termination that there are repairs required for which Tenant is responsible and Tenant has an obligation to make such repairs, this shall be deemed to be a tenancy by such person from month to month subject to all the terms and conditions hereof as may be applicable, including but not limited to the payment of taxes and utilities, provision of insurance, making repairs and maintaining the Premises. 19. SIGNS: No signs, billboards, posters or advertising material of any type or description shall be erected or kept on the Premises except in accordance with local laws, regulations and ordinances. 20. DEFAULT AND TERMINATION OF LEASE. If the rent herein reserved shall not have been paid when due, and shall remain unpaid for ten (10) days after written notice by Landlord to Tenant; or if any of the other covenants, conditions and obligations of Tenant under this Lease shall not be performed within thirty (30) days after written notice by Landlord to. Tenant thereof, or if by the nature of said default more than thirty (30) days shall be required to cure the same, if such curative action is not commenced within thirty (30) days and diligently pursued thereafter until completed; or in the event that Tenant shall be adjudicated a bankrupt or should a permanent receiver in insolvency or permanent trustee in bankruptcy of Tenant be appointed and said appointment shall not have been vacated within sixty (60) days, or should Tenant make a general assignment for the benefit of creditors, or file a voluntary petition for bankruptcy, then and in each such case, at Landlord's option, and to the extent allowed by law, but only during the continuance of such default or event of insolvency or bankruptcy, Landlord may declare the term of this Lease ended and enter into the Premises or any part thereof, whether with or without process of law, expel Tenant or any person or persons occupying in or upon said Premises, using such force as may be necessary to do so, and so repossess and enjoy the said Premises as if Landlord's former estate, without being guilty of trespass, forcible entry, detainer or other tort. 21. ADDITIONAL REMEDIES ON DEFAULT: Notwithstanding any termination pursuant to Section 20 above or any entry or re-entry by Landlord, Tenant agrees to pay and be liable for on the days originally fixed herein for the payment thereof, amounts equal to the several installments of rent and any other charges herein reserved as they would, under the terms of this Lease become due if this Lease had not been terminated or if Landlord had not entered or re-entered as aforesaid, and whether the Premises be relet or remain vacant in whole or in part or for a period less than the remainder of the term, or for the whole thereof; but in the event the Premises be relet, in whole or in part, by Landlord, Tenant shall be entitled to a credit in the net amount of rent received by the Landlord in reletting, after deduction of reasonable expenses incurred in reletting the Premises and in collecting the rent in connection therewith. Tenant shall also be liable to Landlord for all expenses (including reasonable attorneys' fees) incurred by Landlord in enforcing its rights under this Lease in the event of a default by Tenant, and such expenses may also be deducted from any credit due Tenant on account of any reletting by Landlord. 22. ESTOPPEL CERTIFICATE: Upon not less than fifteen (15) days prior written request, Landlord and Tenant agree, each in favor of the other to execute, acknowledge and deliver a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if there have been any modifications that the same are in full force and effect as modified and stating the modifications), and the dates to which the basic rent hereunder and other charges have been paid and any other information reasonably requested. Any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser, mortgagee or lending source. 23. MORTGAGES: Landlord shall pay when due all payments on account of mortgages affecting the Premises If Landlord shall fail to make such payments, Tenant may, after ten (10) days notice to Landlord, during which period Landlord shall fail to make such payment, make the payment required of Landlord for the benefit of Landlord and Landlord agrees to repay the same to Tenant immediately upon demand and if not, Tenant shall have the right to deduct the same from rentals or other sums then payable and/or thereafter accruing under the terms of this Lease. 24. SUBORDINATION: This Lease will be subject and subordinate to any first mortgage hereafter placed upon the Premises to any bank, insurance company or institutional lender of the like. 25. COVENANT OF QUIET ENJOYMENT: Landlord covenants that upon Tenant's paying the rent herein reserved and performing and observing all the other covenants to be performed and observed on the part of Tenant, Tenant may peaceably and quietly have, hold and enjoy the Premises throughout the full term of this Lease without any manner of hindrance or molestation from Landlord or anyone claiming under Landlord. No mortgage shall be placed by Landlord on the Premises unless the mortgagee enters a non-disturbance agreement with respect to this Lease which reasonably protects Tenant's rights under this Lease. 26. DISPUTES: It is agreed between the parties that if at any time a dispute should arise as to the propriety or necessity of Tenant making any payment or performing any obligations required hereunder, Tenant may pay or perform the same under protest and such payment or performance under protest shall not be considered to be voluntary on the part of Tenant. 27. ASSENTS: No assent, express or implied, by one party to any breach of any covenant or condition herein contained on the part of the other to be performed or observed, and no waiver, express or implied, of or failure by one party to insist on the other's prompt performance or observance of any such covenant or condition, shall be deemed to be a waiver of or assent to any succeeding breach of same, or any other covenant or condition, and, except as provided herein, any party may assert its rights and remedies hereunder without any prior or additional notice to the other that it proposes to do so The payment by Tenant and acceptance by Landlord of rent or other payment hereunder or silence by either party as to any breach shall not be construed as waiving any of such party's rights hereunder unless such waiver is in writing. No payment by Tenant or acceptance by Landlord of a lesser amount than shall be due Landlord from Tenant shall be deemed to be anything but payment on account, and the acceptance by Landlord of a check for a lesser amount with an endorsement or statement thereon or upon a letter accompanying said checks hall not be deemed an accord and satisfaction, and Landlord may accept said check without prejudice to recover the balance due or pursue any other remedy which may be available to Landlord. No waiver, change, modification or discharge by either party hereto of any provision in this Lease shall be deemed to have been made or shall be effective unless expressed in writing and signed by both Landlord and Tenant. 28. CUMULATIVE RIGHTS: Any and all rights and remedies which either party may have hereunder shall be cumulative and the exercise of any one of such rights shall not bar the exercise of any other right or remedy which said party may have. In addition to the other remedies in this Lease provided, Landlord and the holder of any mortgage shall each be entitled to the restraint by injunction of the violation or attempted or threatened violation of any of the covenants, conditions or provisions of this Lease or to a decree compelling performance of any such covenants, conditions or provisions. 29. NOTICES: All notices, demands and requests which may or are required to be given by either party to the other shall be in writing. All notices, demands and requests to Tenant shall be deemed to have been properly given when served personally on an officer of Tenant or when sent by registered or certified mail, postage prepaid, addressed to Tenant at 23 Market Street, Ipswich, MA 01938, or at such other place as Tenant may from time to time designate in a written notice to Landlord and such holder. All notices, demands and requests to Landlord shall be deemed to have been properly given if served personally or when sent by registered or certified mail, postage prepaid to Landlord at 397 Farnum Street, North Andover, MA 01845-5611, or at such other place or places as Landlord may from time to time designate in a written notice to Tenant. 30 SHORT FORM: The parties hereto agree that upon request by either party, the other party will execute whatever instruments may be necessary for the recording of a short form or notice of this Lease, and any amendments or modifications thereof. 31. BINDING EFFECT: This Lease shall be binding upon and inure to the benefit of all administrators, executors, personal representatives, heirs, successors and permitted assigns, including all permitted sublessees, of the parties hereto. Each sublessee or assignee shall as a precondition to Landlord's approval of Tenant's subletting the Premises or assigning this Lease execute such written instrument's) as Landlord shall reasonably require evidencing its agreement to be bound by each and every term of this Lease, provided that such an agreement shall not unless specifically provided operate to release Tenant form its obligations hereunder. 32. GENERAL PROVISIONS: (a) This instrument contains the entire and exclusive agreement between the parties and supersedes and terminates all prior or contemporaneous arrangements, understandings and agreements, whether oral or written. This Lease may not be amended or modified, except by a writing executed by Landlord and Tenant and approved by any first mortgagee. (b) In construing this Lease, feminine or masculine pronouns shall be substituted for those of neuter form and vice versa, and the plural for singular and singular for plural in any place where the context may require. (c) This Lease shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts. In the event any provision of this Lease shall be determined to be invalid or unenforceable under applicable law such provision shall, insofar as possible, be construed or applied in such manner as will permit enforcement; otherwise this Lease shall be construed as if such provision had never been made part hereof. (d) The headings used herein are used only for convenience of reference and are not to be considered a part of this Lease or to be used in determining the intent of the parties hereto. 33. FIRST REFUSAL: If, at any time during the term of this lease, the Landlord shall receive a bona fide written offer from any party to purchase the Premises subject to the terms of this Lease, which offer the Landlord desires to accept, the Landlord shall give written notice to the Tenant of such offer, setting forth all the terms, conditions and provisions of the same. If, within fifteen (15) days after receipt of such notice and information, the Tenant shall desire to enter into an agreement with the Landlord on all the same terms and conditions as such offer, then the Landlord shall promptly enter into an agreement with the Tenant for the sale of the Premises to the Tenant on all such terms and conditions. If, however, the Tenant shall not so notify the Landlord within fifteen (15) days after receipt of advice of such offer and all of its terms and conditions, then the Landlord shall be free to sell the Premises, but only in accordance with the terms of such offer, subject, however, to this Lease and all of its terms and conditions, including, without limitation, this Right of First Refusal. 34. GOVERNMENT APPROVALS: This Lease is contingent upon the Tenant obtaining all necessary written approvals and permits from all applicable government authorities, whether federal, state or local, including without limitation any approvals and permits for the use of the Premises as a location for a branch bank together with a drive in facility. If the Tenant is unable to obtain any of the aforesaid approvals or permits within four (4) months after the execution of this Lease, then in such event the Tenant at any time after the execution of this Lease shall have the right to terminate this Lease by written notice to that effect to the Landlord, whereupon this Lease shall be of no further force or effect, the Security Deposit shall be returned in accordance with the provisions of Section 8 (e), and neither party hereto shall have any further rights against the other party at either law or equity. If the Lease is not terminated within such four (4) month period, this Lease shall remain in full force and effect. If Tenant terminates this Lease pursuant to this Section, Tenant shall owe rent for any period from the execution of this Lease until the time of termination and shall not be entitled to any refund of rent covering such period. 35. EXPIRATION OF BANKBOSTON LEASE: It is hereby agreed between the Parties hereto that upon the expiration of the BankBoston Lease on or before October 24, 2002, that this Lease shall continue in full force and effect and become the sole Lease on the Premises. IN WITNESS WHEREOF, the Landlord and the Tenant have duly executed, sealed and delivered this instrument, the day and year first above written. LANDLORD OWNER: IN WITNESS WHEREOF, the Landlord and the Tenant have duly executed, sealed and delivered this instrument, the day and year first above written. LANDLORD OWNER: /s/ William J. Tinti /s/ Linda Farnum - ----------------------------------- --------------------------------------- Linda Farnum ASSIGNEE: /s/ William J. Tinti /s/ Benjamin Farnum - ----------------------------------- --------------------------------------- Benjamin Farnum TENANT IPSWICH SAVINGS BANK /s/ William J. Tinti By: /s/ David L. Grey - ----------------------------------- --------------------------------------- Its: President and not individually EXHIBIT A CONSENT TO LEASE AND SUBLEASE BankBoston, N.A., a national banking association having a principal office at One BankBoston Place, Waltham, Massachusetts, as Assignor under a certain Assignment and Assumption of Lease dated December 3, 1997 recorded with Middlesex South Land Registration Office as Document No. 1052778 relating to property on 47O Main Street, Reading, Massachusetts hereby provides consent as required by Section 9 of said Assignment and Assumption of Lease to the subsequent assignment and subletting under the Lease to the Ipswich Savings Bank and this instrument shall constitute the prior written consent necessary from BankBoston, N.A. under said Section to the Lease and Sublease of June 12, 1998 to the Ipswich Savings Bank BANKBOSTON, N.A. By: /s/ John C. Duffy June 5, 1998 - ----------------------------------- ----------------------------------- John C. Duffy, Director Date Retail Facilities Management /s/ June 5, 1998 - ----------------------------------- ----------------------------------- Witness Date Date EXHIBIT B A certain parcel of registered land situated on Main Street, Reading, Middlesex County, Commonwealth of Massachusetts, bounded and described as follows: EASTERLY by Main Street, seventy-seven and 48/100 feet; SOUTHERLY by land now or formerly of Grace T Laing, one hundred thirty-seven and 06/100 feet; WESTERLY by Ash Street, eighty-three and 83/100 feet; and NORTHERLY by lands now or formerly of George Warren Rushton et al, and of Viola A. Miller et al Trustees, one hundred thirty-nine and 40/100 feet. All of said boundaries have been determined by the Land Court to be located as shown on a plan, as modified and approved by the Land Court, filed in the Land Registration Office, a copy of a portion of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 411, Page 25, with Certificate No. 61643, (Plan No. 20154A) NOTICE OF LEASE In accordance with the provisions of Massachusetts General Laws, Tercentenary Edition, Chapter 183, Section 4, as amended, notice is hereby given of the Lease hereinafter referred to: PARTIES TO LEASE: - ----------------- LESSOR: Linda Farnum, Owner Benjamin Farnum, Assignee Both of North Andover, Massachusetts LESSEE: Ipswich Savings Bank of Ipswich, Massachusetts DATE OF EXECUTION OF LEASE: - --------------------------- June 12, 1998 DESCRIPTION OF PREMISES DEMISED (in the form contained in the Lease): - ------------------------------- A certain parcel of registered situated on Main Street, Reading, Massachusetts, and bounded and described as set forth on Exhibit B annexed to the lease and made a part thereof by reference, a copy of which Exhibit B is also annexed to this Notice of Lease, said demised premises being the same premises as are described in Certificate of Title No. 198413 in the name of said Linda Farnum filed with the South Registry District of Middlesex County, Book 1122 Page 63. TERM OF LEASE: - -------------- The original term of said lease shall be five (5) years commencing on June 12, 1998, subject however to earlier termination of said lease as therein provided RIGHTS OF EXTENSION OR RENEWAL: - ------------------------------- Lessee is granted three (3) options to extend said term for further successive periods of five (5) years each, each such option to be exercised by written notice to Lessor at least ninety (90) days prior to the expiration of the then existent term, and upon the giving of such notice, without any further instrument, lease or agreement, this lease shall be extended, and the demised premises shall be deemed and considered to have been demised by Lessor to Lessee for the additional term of the option period beginning immediately upon the expiration of the then existent term upon the same terms and conditions as are set forth in the lease for the original term, except as otherwise provided in said lease as to rent. RIGHT OF FIRST REFUSAL: - ----------------------- Lessee is granted a right of first refusal to purchase the demised premises upon the terms and conditions set forth in said lease. WITNESS ------- the execution hereof under seal by said parties to said Lease this 12th day of June, 1998 Witnesses to signatures: LESSOR: /s/ William J. Tinti /s/ Linda Farnum - ----------------------------------- --------------------------------------- Linda Farnum /s/ William J. Tinti /s/ Benjamin Farnum - ----------------------------------- --------------------------------------- Benjamin Farnum LESSEE: IPSWICH SAVINGS BANK /s/ William J. Tinti By: /s/ David L. Grey - ----------------------------------- President and not individually --------------------------------------- Its: President and not individually COMMONWEALTH OF MASSACHUSETTS Essex, ss. June 12, 1998 Then personally appeared the above-named Linda Farnum, and acknowledged the foregoing instrument to be her free act and deed, before me, William J. Tinti -------------------------- Notary Public My Commission Expires: 6/28/2000 COMMONWEALTH OF MASSACHUSETTS Essex, ss. June 12,1998 Then personally appeared the above-named Benjamin Farnum, and acknowledged the foregoing instrument to be his free act and deed, before me, Willia J. Tinti ----------------------------------- Notary Public My Commission Expires: 6/28/2000 COMMONWEALTH OF MASSACHUSETTS Essex, ss. June l2,1998 Then personally appeared the above-named David L. Grey of Ipswich Savings Bank, and acknowledged the foregoing instrument to be his free act and deed and the free act and deed of said Bank, before me William J. Tinti ----------------------------------- Notary Public My Commission Expires: 6/23/2000 EXHIBIT B A certain parcel of registered land situated on Main Street, Reading, Middlesex County, Commonwealth of Massachusetts, bounded and described as follows: EASTERLY by Main Street, seventy-seven and 48/100 feet; SOUTHERLY by land now or formerly of Grace T. Laing, one hundred thirty-seven and 06/100 feet; WESTERLY by Ash Street, eighty-three and 83/100 feet; and NORTHERLY by lands now or formerly of George Warren Rushton et al, and of Viola A. Miller et al Trustees, one hundred thirty-nine and 40/100 feet. All of said boundaries have been determined by the Land Court to be located as shown on a plan, as modified and approved by the Land Court, filed in the Land Registration Office, a copy of a portion of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 411, Page 25, with Certificate No. 61643, (Plan No. 20154A) OPTION TO LEASE REAL ESTATE This Agreement made this 14th day of April, 1998, by and between Linda Farnum, owner and Benjamin Farnum, assignee of Lease of North Andover, MA (the "Lessors") who warrant that they are the owners and assignee and hold together the entire title interest in certain property located at 470 Main Street in Reading, MA and Ipswich Savings Bank of Ipswich, MA (collectively the "Lessee"). In consideration of the covenants hereinafter contained, the sum of Four Thousand ($4,000) Dollars paid by the Lessee to the Lessors herewith and for other good and valuable consideration, the parties agree as follows: 1. The Lessors hereby grant to the Lessee the option to Lease the premises located at 47O Main Street in Reading, MA, ("Property") as shown on a plan recorded with the Land Registration Office for Middlesex South District Registry of Deeds in Registration Book 41l, Page 25, more particularly described in Exhibit A attached hereto (the "Premises") for $4,000 per month for a term of five years with three additional five year options to extend; such option to be exercised by notice in writing to the Lessor on or before June 14, 1998; provided that the Lessee has obtained consent from BankBoston to the leasing of the Property by the Lessee under the terms of a certain Lease, Notice of which Lease was recorded with said Deeds on November 17, 1977 as Document No. 568271 and Amendment of Lease recorded with said Deeds on December 3, 1997 as Document No. 1052779 all attached hereto as Exhibit "B", and the Assignment and Assumption of Lease dated December 3, 1997 recorded as Document No. 1052778 between the Lessor and BankBoston attached hereto as Exhibit "C". 2. Lessors represent and warrant that there are no other communications, agreements, undertakings, contracts or obligations which would affect, relate to or impact on this Option Agreement or the subsequent Lease to the Lessee except for said BankBoston Lease, Notice of Lease, Amendment of Lease and Assignment and Assumption of Lease all of which have been attached hereto as Exhibits "B" and "C". Specifically, Lessors warrant and represent that BankBoston has no other right, claim or legal standing in regard to a Lease from Lessors to Lessee of the Property, except for Section 9 of said Assignment and Assumption of Lease which requires BankBoston's prior written consent to any assignment or subletting which consent may not be unreasonably withheld. 3. If Lessee exercises the option to Lease, the Lessee and the Lessor shall forthwith execute a Commercial Lease Agreement mutually satisfactory to both parties ("Lease") with rent at $4,000 per month and one-half the option payment consisting of $2,000 shall be applied to the first month's rental under the Lease. The Lease shall be a triple net Lease; shall include a rent escalation at 5% or Consumer Price Index whichever is higher at every two and one-half year intervals; provide for Lessor consent to any repairs or alterations, allow Lessee to assign or sublet without limitation except for Lessor approval which shall not be reasonably withheld and include a right of first refusal to purchase the Premises and the Property in favor of the Lessee. If Lessee does not exercise the option to lease, this Option shall terminate, the $4,000 shall be retained by the Lessor and there shall be no further recourse by either party. WITNESS the execution hereof under seal. /s/ Linda Farnum, /s/ Benjamin Farnum ----------------------------- ----------------------------- Linda Farnum, Lessor Benjamin Farnum Assignee of Lease IPSWICH SAVINGS BANK /s/ David L. Grey ---------------------------- By: David L. Grey, President EXHIBIT A A certain parcel of registered land situation on Main Street, Reading, Middlesex County, Commonwealth of Massachusetts, bounded and described as follows: EASTERLY by Main Street, seventy-seven and 48/100 feet; SOUTHERLY by land now or formerly of Grace T. Laing, one hundred thirty-seven and 06/l00 feet; WESTERLY by Ash Street, eighty-three and 83/100 feet; and NORTHERLY by lands now or formerly of George Warren Rushton et al, and o(pound) Viola A. Miller et al Trustees, one hundred thirty-nine and 40/1O0 feet. All of said boundaries have been determined by the Land Court to be located as shown on a plan, as modified and approved by the Land Court, filed in the Land Registration Office, a copy of a portion of which is filed in the Registry of Deeds for the South Registry DistrIct of Middlesex County in Registration Book 411, Page 25, with Certificate No. 61643. EXHIBIT B NOTICE OF LEASE In accordance with the provisions of Massachusetts General Laws, Tercentenary Edition, Chapter 183, Section 4, as amended, notice is hereby given of the Lease hereinafter referred to. PARTIES TO LEASE: ----------------- LESSOR - NETTIE A. HUMPHREYS of North Andover, Massachusetts. LESSEE - OLD COLONY BANK AND TRUST COMPANY OF MIDDLESEX COUNTY DATE OF EXECUTION OR LEASE: - --------------------------- October 25, 1977. DESCRIPTION OF PREMISES DEMISED (in the form contained in the Lease): - -------------------------------- A certain parcel of registered land situated on Main Street, Reading, Massachusetts, and bounded and de- scribed as set forth on Exhibit A annexed to the lease and made a part thereof by reference, a copy of which Exhibit A is also annexed to this Notice of Lease, said demised premises being the same premises as are described in Certificate of Title No.153422 in the name of said Nettie A. Humphreys filed with the South Registry district of Middlesex County. TERM OF LEASE: - -------------- The original term of said lease shall be twenty (20) years commencing on October 25, 1977, subject however to earlier termination of said lease as therein provided. RIGHTS OF EXTENSION OR RENEWAL: - ------------------------------- Lessee is granted four (4) options to extend said term for further successive period of five (5) years each. each such option to be exercised by written notice to Lessor at least ninety (90) days prior to the expiration of the then existent term of said lease, and upon the giving of such notice, without any further instrument, lease or agreement, said lease shall be extended, and the demised premises shall be deemed and considered to have been demised by Lessor to Lessee for the additional term of the option period beginning immediately upon the expiration of the then existent term upon the same terms and conditions as are set forth in the lease for the original term, except as otherwise provided in said lease as to rent. RIGHT OF FIRST REFUSAL: - ----------------------- Lessee is granted a right of first refusal to purchase the demised premises upon the terms and conditions set forth in said lease. WITNESS the execution hereof under seal by said parties to said Lease this 18th day of November , 1977. Witnesses to signatures: Johm P. Mullerland By /s/ Nettie A. Humphreys - ----------------------------- --------------------------------------- LESSOR NETTIE A. HUMPHREYS OLD COLONY BANK AND TRUST COMPANY OF MIDDLESEX COUNTY /s/ LESSEE By /s/ Bernard P. Murphy - --------------------------- --------------------------------------- Its Senior Vice President and Treasurer COMMONWEALTH OF MASSACHUSETTS ESSEX ,SS. 18 November , 1977 Then personally appeared the above-named NETTIEA. HUMPHREYS, and acknowledged the foregoing instrument to be her free act and deed, before me, /s/ John P. Mulholland ---------------------- Notary Public John P. Mulholland My commission expires: 28 April 1978 COMMONWEALTH OF MASSACHUSETTS MIDDLESEX ,SS. 12 January , 1978 Then personally appeared the above-named BERNARDP. MURPHY of OLD COLONY BANK AND TRUST COMPANY OF MIDDLESEX COUNTY, and acknowledged the foregoing instrument to be his free act and deed and the free act and deed of said Trust Company, before me, /s/ ----------------------------------- Notary Public My commission expires:July 25, 1980 RE: Certificate of Title No. 198413, filed Book 1122, Page 63, Middlesex South Land Registration Office, Memoranda of Encumbrances, Document 568271, Notice of Lease, Option to Purchase and Vote, dated Nov. 16, 1977 and registered March 24, 1978. AMENDMENT OF LEASE This Agreement is made this 3rd day of December, 1997, by and among BankBoston, N.A., a national banking association having a principal office at One BankBoston Place, Waltham, Massachusetts 02154 ("Tenant") and Linda Farnum of 397 Farnum Street, North Andover, Massachusetts 01845 ("Landlord"). WHEREAS, Landlord, as successor to Nettie A. Humphreys, is landlord, and Tenant, as successor to Old Colony Bank and Trust Company of Middlesex County, is tenant under a lease dated October 25, 1977, as the same may have been extended by Tenant's letter of Landlord of July 17, 1997, with respect to the premises at 470 Main Street, Reading, Massachusetts (the "Lease"), and WHEREAS, Landlord and Tenant wish to amend the Lease. NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows: 1. The second sentence of Article IV of the Lease is deleted in its entirety and the following substituted therefor: "The Tenant is also granted one(1) renewal option to extend said term for a period office (5) years, such option to be exercised by written notice to Landlord at least ninety (90) days prior to the expiration of the original term of twenty (20) years, and upon the giving of such notice, without any further instrument, lease or agreement, this lease shall be extended, and the demised premises shall be deemed and considered to have been demised by Landlord to Tenant for the additional five years beginning immediately upon the expiration of the original term upon the same terms and conditions as are set forth in this lease for the original term, except as hereinafter otherwise set forth in ARTICLE V hereof. Unless the parties otherwise agree in writing, subject to the terms of ARTICLE XVI, in no event shall the term of this lease extend beyond October 24, 2002." 2. Except as amended, the terms and conditions of the Lease shall remain in full force and effect. 3. This Agreement may be executed in counterparts. IN WITNESS THEREOF, Landlord and Tenant, have hereby caused these presents to be duly signed and sealed as of the date first-above written. Landlord: /s/ Linda Farnum --------------------------------- Linda Farnum Tenant: BankBoston, N.A. By: /s/ John C. Duffy --------------------------------- John C. Duffy, Director Retail Facilities Management Signed 6/28/97 COMMONWEALTH OF MASSACHUSETTS Essex , 88. December 3, 1997 Then personally appeared the above-named Linda Farnum and acknowledged the foregoing instrument to be her free act and dead, before me, Notary Public CHERYL A. McELDOWNEY -------------------- Notary Public My Commission Expires May 22, 2000 COMMONWEALTH OF MASSACHUSETTS Middlesex ,ss. November 26, 1997 Then personally appeared the above-named John C. Duffy on behalf of BankBoston, N.A. and acknowledged the foregoing instrument to be the duly authorized act of BankBoston, N.A. and as the free act and deed of himself acting as agent of and on behalf of BankBoston, N.A., before me, /s/ Jaime B. Fraser ------------------- Jaime B. Fraser Notary Public My Commission expires Feb. 19, 2000 RE:Certificate of Title No. 198413, filed Book 1122, Page 63, Middlesex South Land Registration Office, Memoranda of Encumbrances, Document 568271, Notice of Lease, Option to Purchase and Vote, dated nov. 18, 1977 and registered March 24, 1978. EXHIBIT C ASSIGNMENT AND ASSUMPTION OF LEASE ---------------------------------- This Agreement is made this 3rd day of December, 1997 by and among BANKBOSTON, N.A. a national banking association having a principal office at One BankBoston Place, Waltham, Massachusetts 02154 ("Assignor") and BENJAMIN FARNUM of 397 FarnumStreet, NorthAndover, Massachusetts 01845 ("Assignee"). KNOW ALL MEN BY THESE PRESENTS: WHEREAS, Linda H. Farnum, of 397 Farnum Street, North Andover, Massachusetts 01845 ("Landlord") is successor to Nettie A. Humphreys who, as landlord entered into a Lease with Assignor, as tenant, dated October 25, 1977 as the same may have been amended and as extended by Assignor's letter of July 17, 1997 to Landlord and an Amendment to Lease dated October 3, 1997 (the "Lease"), with respect to premises in the building known and numbered as 470 Main Street, Reading, Massachusetts, a copy of which Lease is attached as Exhibit A hereto and incorporated by reference herein; and WHEREAS, Assignor desires to assign and Assignee desires to acquire Assignor's interest in and to the Lease; NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows: 1. Assignor hereby assigns, sells, transfers, conveys and delivers unto Assignee all of Assignor's right, title and interest as tenant in, to and under the Lease and any leasehold improvements therein, effective from and after December 15, 1997 (the "Effective Data"). 2. Assignee hereby accepts the assignment of the Lease from Assignor and hereby assumes and agrees to perform and observe directly to the Landlord under the Lease all the obligations, terms, covenants, and conditions thereof to be observed or performed by Assignor thereunder from and after the Effective Date. The obligations of Assignee shall run directly to all persons claiming by, through or under Landlord by virtue of any existing or future instruments affecting or encumbering the property in which the premises demised under the Lease are located. 3. Assignor shall indemnify, defend, and hold harmless Assignee from and against any and all loss, cost, liability, and expense (including reasonable attorneys' fees) arising from or related to the failure by Assignor to perform and observe any of the obligations, terms, covenants, and conditions to be performed or observed by Assignor as tenant under the Lease prior to the Effective Date. 4. Assignee shall indemnify, defend, and hold harmless Assignor from and against any and all loss, cost, liability, and expense (including reasonable attorneys' fees) arising from or related to the failure by Assignee to perform or observe any of the obligations, terms, covenants, and conditions to be performed or observed by Assignee as tenant under the Lease from and after the Effective Date. 5. Assignor represents that it is not in default under the Lease, that its leasehold interest is not encumbered by any prior transfer, assignment, mortgage or any encumbrance, and that Assignor has full and lawful authority to assign the Lease. 6. Assignee hereby attorns to and recognizes Landlord as landlord under the Lease and agrees to pay all rent, additional rent and all other charges payable after the Effective Date under the Lease directly to Landlord. 7. The right, title and interest transferred by this Agreement, includes, without limitation, the benefits of any subordination, non-disturbance and attornment agreement executed by the holder of any mortgage, deed of trust or other encumbrance on the property in which the premises demised under the Lease are located, and, to the extent applicable, any easements, rights-of-way, privileges or other rights appurtenant to said premises. 8. Assignor represents to Assignee that (a) the Lease represents the entire agreement between the Assignor and the Landlord, is in full force and effect and, except as referenced herein, has not been assigned, modified, supplemented or amended in any way; (b) the copy of the Lease attached hereto as Exhibit A is a true, correct and complete copy of the Lease, including any and all amendments thereto; and (c) monthly payments under the Lease are being made on a current basis and ll monetary obligations of the Tenant under the Lease, to the extent then due and payable, have been paid through December 31, 1997. 9. This Assignment and Assumption of Lease and any subsequent assignment or subletting under the Lease are not permitted by the Assignee without the prior written consent of the Assignor which consent shall not be unreasonably withheld. 10. This Agreement may be executed in several counterparts and may not be changed, modified, discharged or terminated orally or in any manner other than by agreement in writing signed by the parties hereto or their respective successors and assigns. IN WITNESS WHEREOF, Assignor and Assignee, intending to be legally bound, have hereby caused these presents to be duly signed and sealed as of the 3rd day of December, 1997. ASSIGNOR: BankBoston, N.A. By: /s/ John C. Duffy --------------------- John C. Duffy, Director Retail Facilities Management ASSIGNEE: /s/ Benjamin Farnum --------------- Benjamin Farnum CONSENTOFLANDLORD I. Linda Farnum, hereby consent to the Assignment and Assumption of Lease of December 3, 1997 from BankBoston, N.A. to Benjamin Farnum. Witness my hand and seal this 3rd day of December, 1997. /s/ Linda Farnum ---------------- Linda Farnum CONSENT TO LEASE AND SUBLEASE BankBoston, N.A., a national banking association having a principal office at One BankBoston Place, Waltham, Massachusetts, as Assignor under a certain Assignment and Assumption of Lease dated December 3, 1997 recorded with Middlesex South Land Registration Office as Document No. 1052778 relating to property on 470 Main Street, Reading, Massachusetts hereby provides consent as required by Section 9 of said Assignment and Assumption of Lease to the subsequent assignment and subletting under the Lease to the Ipswich Savings Bank and this instrument shall constitute the prior written consent necessary from Bank Boston, N.A. under said Section to the Lease and Sublease of June __, 1998 to the Ipswich Savings Bank. BANKBOSTON, N.A. By: /s/ John C. Duffy June 5, 1998 - ---------------------------- -------------------------------- John C. Duffy, President Date Retail Facilities Management /s/ June 5, 1998 - ---------------------------- --------------------------------- Witness Date EX-10.7 12 ----------------------------------------------------------------------- | Confidential | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Ipswich Savings Bank | | | | Annual Incentive Plan Document | | | | | | | | | | | | BOARD OF DIRECTOR APPROVAL-- 08/16/95 | | | | EXECUTIVE COMMITTEE APPROVAL-- 09/19/95 | | | | | | | | | | | | September 15, 1995 | | | | | | | | | | | | Prepared by | | THE EXECUTIVE STUDIES GROUP | | A Division of BEN S. COLE FINANCIAL INCORPORATED | | 130 High Street Boston, MA 02110 | | | | TEL: 617/350-9900 FAX:617/350-9909 | | | ----------------------------------------------------------------------- 1. Purpose The Ipswich Savings Bank (the "Bank) Annual Incentive Plan (the "Plan") is intended to encourage and reward outstanding performance on the part of participating executives. 2. Administration The Plan will be administered by the Compensation Committee of the Bank (the "Committee") and the Committee's interpretation and application of the program of the Plan shall be final and binding on all concerned. Applicable variables for the current Plan year are in Appendix A. 3. Participants The executives who will be eligible to receive awards will be those designated in writing by the Committee (a "Participant"). The Committee may revise such designations from time to time at the beginning or during the Bank's fiscal year. 4. Award Targets Each participant will have an award target (a "Target Award") expressed as a percentage of salary. Salary for this purpose will be the annualized base salary in effect on the last day of the Bank's fiscal year. 5. Award Determination Awards earned under the Plan will depend on Bank performance compared to performance of all publicly held savings banks in Massachusetts based on annual return on equity ("ROE"). 6. Peer Banks Peer banks will be all Massachusetts savings bank that are publicly held during the whole Bank fiscal year. If a Peer bank has a fiscal year other than a calendar year, the results used will be the fiscal year that ends closest to the end of the Bank's fiscal year. 7. Performance Measure The performance measure will be ROE as reported to stockholders using year end equity. For the Bank ROE will be calculated after provision for any payments under this Plan. Payments due will depend upon the ROE percentile position the Bank achieves. 8. ROE/Target Award Relationship The following schedule will determine the ROE percentile and Target Award relationship.
% of Target ROE Percentile Award Earned Below 50th percentile 0% At 50th percentile 50% At 67th percentile 100% At 75th percentile 125% At 90th percentile 150% Above 90th percentile 200%
For purposes of calculating the Bank's percentile among peer banks, actual ROE rankings for the 50th, 75th and 90th percentiles must equal the next highest whole number. In between these percentiles, the actual Bank ROE percentile ranking would be rounded to the nearest full percentile to interpolate the % of Target Award Earned percentage amount to the nearest full percentage point. All actual award amounts will be rounded to the nearest $100. 9. Bank/Individual Award Mix Each Award will consist of a Bank portion that will be paid automatically and an individual portion that will depend on achievement of other objectives. The mix of Bank and individual awards will be 75% Bank and 25% individual for the CEO, and 50% Bank and 50% individual for other Participants. 10. Individual Awards Individual awards will be based on achievement of goals established at the beginning of the year. The Compensation Committee will determine the individual award for the CEO and the CEO will recommend individual awards to the Committee for all other Participants. Individual awards may vary from zero to the maximum determined by the combination of % of Target Award earned in Section 9 and the Bank/Individual Award mix in Section 10. Regardless of overall Bank results, up to a minimum of the individual portion amount at 100% of Target Award may be paid based on individual performance assessment. 11. Payment of Awards Payment of all awards for the year will be made in cash as soon as possible after peer group results are available. A participant must be an employee of the Bank on the last day of the fiscal year to receive an award payment under the Plan. 12. Extraordinary Items The Committee may decide to include or exclude any profit or loss items that are determined to be extraordinary. Such determination will be made at the time of such event 13. Amendment The Plan will be in effect for fiscal year 1995 and subsequent years. The Committee may at any time amend or discontinue the plan, provided, however, that no amendment may adversely affect the rights of any Participant during a Plan year. 14. Employment Rights The Plan does not confer upon any Participant any right to continued employment nor does it interfere in any way with the right of the Bank to terminate the employment of a Participant. APPENDIX A 1. 1995 Annual Incentive Plan Participants
Participant Target Award (% Salary) ----------- ----------------------- Chief Executive Of ficer (Grey) 20% Chief Financial Officer (Kenney) 10%
2. Peer Group The 26 publicly-held savings banks in Massachusetts as delineated in the SNL Securities September 1995 monthly market report. 3. 1995 ROE/Target Award Relationships (Assumes 26 banks.)
Bank Ranking ROE Percentiie % Target Award Earned ------------ -------------- --------------------- 1-13 Below 50th percentile 0 % 14 At 50th percentile 50 15 At 56th percentile 68 16 At 60th percentile 80 17 At 65th percentile 95 18 At 69th percentile 107 19 At 73rd percentile 119 20 At 75th percentile 125 21 At 81st percentile 135 22 At 85th percentile 142 23 At 88th percentile 147 24 At 90th percentile 150 25-26 Over 90th percentile 200
EX-10.8 13 Exhibit 10.8 Director Recognition and Retirement Plan This Director Recognition and Retirement Plan (the "Plan") is adopted by Ipswich Savings Bank, (the "Bank") as of the 18th day of May, 1999. WHEREAS, the Bank desires to recognize the valuable services its Directors have performed and will continue to perform for the Bank; WHEREAS, the Bank also desires to provide for future growth and expansion of the Bank by being in a position to attract additional, qualified individuals to serve as Directors of the Bank and by providing to its Directors additional financial flexibility that will enable them, under appropriate circumstances, to consider retiring from or rotating off the Board of Directors so as to permit others to have the opportunity to serve as members of the Board; NOW, THEREFORE, the Board hereby adopts the following Director Recognition and Retirement Plan: 1 . Applicability. The Plan shall apply to all persons who serve as Directors of the Bank during any period in which the Plan is in effect. It shall not apply to persons who ceased to serve as Directors of the Bank before the date of Plan adoption. 2 . Recognition and Retirement Benefit. Except to the extent otherwise provided in Section , if a Director should at any time cease to serve as a member of the Board of Directors of the Bank for any reason, the Bank will immediately pay to the Director (or to the Director's estate, if applicable) in one lump sum an amount equal to two times the highest annual aggregate compensation paid to or for the benefit of the Director for his or her service on the Board during the then most recently concluded three calendar years. 3 . Removal for Cause. No Director shall receive any payment under this Plan if he or she is removed from the Board of Directors for cause in accordance with the procedures set forth in the Bank's By-Laws. 4 . Employment Status. This Plan is not an agreement for the employment of a Director and shall confer no rights on a Director except as herein expressly provided. 5 . Withholding. All payments made by the Bank under this Plan shall be net of any tax or other amounts required to be withheld by the Bank under applicable Federal and state law. 6 . Governing Law. This Plan shall be construed in accordance with, and governed for all purposes by the laws of The Commonwealth of Massachusetts, without regard to its principles of conflicts of laws. 7 . Enforcement. In the event that any action is instituted by a former Director under this Plan to enforce or interpret any of the terms hereof, such former Director shall be entitled to be paid all costs and expenses, including reasonable attorneys' fees, incurred by such former Director with respect to such action, unless as a part of such action, a court of competent jurisdiction determines that each of the material assertions made by the former Director as a basis for such action was not made in good faith or was frivolous. 8 . Establishment of a Holding Company. The stockholders of the Bank have approved the formation of a holding company (the "Holding Company") for the Bank ("Holding Company Reorganization"). Once established, the Holding Company will be the sole stockholder of the Bank. This Plan shall become a plan and obligation of the Holding Company as of the time the Holding Company becomes the sole stockholder of the Bank. At that time all references to the "Bank" (other than references in Section ) in this Plan shall become references to the "Holding Company." Ceasing to serve as a Director of the Bank while continuing to serve as a Director of the Holding Company shall not be a basis for payment under this Plan. Notwithstanding any other provision of this Plan, the Holding Company Reorganization shall not constitute a Change in Control (as defined in Section 10). 9 . Amendment; Termination. This Plan may be amended or terminated at any time by a vote of the Board of Directors until such time as a Change in Control (as defined in Section ) shall have occurred. During the two year period following a Change in Control, this Plan may not be terminated or amended in any way that might limit amounts payable to any Director or former Director. 10 . Change in Control. Except to the extent otherwise provided in Section , for the purposes of this Plan "Change in Control" shall mean the occurrence of any one or more of the following five events: 10.1 If there has occurred a change in control which the Bank or Holding Company would be required to report in response to Item 1 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; 10.2 When any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Holding Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Holding Company or the Bank, as the case may be; 10.3 During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Holding Company, and any new director (other than a director designated by a person who has entered into an agreement with the Holding Company to effect a transaction described in Section 10.2, 10.4, or 10.5 of this Plan) whose election by the Board or nomination for election by the Holding Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Holding Company; 10.4 The stockholders of the Holding Company approve a merger, share exchange or consolidation ("merger or consolidation") of the Holding Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Holding Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Holding Company or such surviving entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Holding Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Holding Company's then outstanding securities; or 10.5 The stockholders of the Holding Company or the Bank approve a plan of complete liquidation of the Holding Company or the Bank or an agreement for the sale or disposition by the Holding Company or the Bank of all or substantially all of the Holding Company's or the Bank's assets. 11 . Binding Effect. This Plan shall be binding on the successors and assigns of the parties hereto. EX-10.9 14 MERGER SEVERANCE BENEFIT PROGRAM Exhibit 10.9 A. Covered Employees: Subject to paragraph B below, the Merger Severance Benefit (as hereinafter defined) will be provided to any employee whose employment is terminated within six months after a Change of Control (as herein defined). B. Limitations on Change of Control Benefits 1. General. No employee will be eligible for a Merger Severance Benefit if (a) his employment is terminated for "Cause", (b) he is a temporary employee, (c) his compensation with the Bank is more than 50% commission-based, or (d) he is offered a Comparable Position within the Bank and refuses to accept such position. 2. Cause. The term "Cause" shall mean and include (a) neglect of or refusal to perform, other than as a result of sickness, accident or similar cause beyond an employee's reasonable control, any duty or responsibility as an employee of the Bank after written notice by the Bank to the employee; (b) any material breach by the employee of any agreement to which the employee and the Bank are both parties; (c) dishonesty with respect to the Bank or the commission of any crime (other than minor traffic violations); or (d) any material misconduct or material neglect of duties by the employee in connection with the business or affairs of the Bank. The foregoing definition of Cause is in no way intended to limit or qualify the right of the Bank to terminate any person's employment for any reason. 3. Comparable Position. A comparable position shall mean a position which is offered to an employee where there is no reduction in base salary or scheduled hours, and where the employee is not required to commute more than 35 miles further than the employee's present commute. C. Definition of "Change of Control": A "Change of Control" will be deemed to have occurred 1. If there is a merger or consolidation of the Bank with any other bank or corporation and the voting securities of the Bank outstanding immediately prior to such merger or consolidation do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Bank or such surviving entity immediately after such merger or consolidation, or 2. When any person or entity or group of persons or entities either related or acting in concert becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities of the Bank representing more than fifty percent (50%) of the total number of votes that may be cast for the election of directors of the Bank, or 3. If the Bank sells all or substantially all of its assets to another bank or corporation, other than in a transaction in which the voting securities of the Bank outstanding immediately prior to such transaction continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Bank or such surviving entity immediately after such transaction, or 4. If during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who are Continuing Directors (as herein defined) cease for any reason to constitute at least a majority of the Board of Directors of the Bank. For this purpose, a "Continuing Director" shall mean (a) an individual who was a director of the Bank at the beginning of such period or (b) any new director (other than a director designated by a person who has entered into any agreement with the Company to effect a transaction described in clause (1), (2) or (3) of this Paragraph C) whose election by the Board or nomination for election by the Bank's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved. D. "Merger Severance Benefit" Defined. The Merger Severance Benefit hereunder shall include each of the following three items: 1. Payment in one lump sum as of date of termination of employment of a severance benefit equal to the greater of (i) two weeks Base Salary for each year of service (with partial years of service included in the calculation on a pro-rated basis), up to a maximum benefit of 26 weeks Base Salary; or (ii) the applicable Minimum Benefit set forth in paragraph E below; and 2. Continuation of health benefits and life insurance benefits for a period of time after termination equal to the number of weeks (and partial weeks) of Base Salary to which the employee is entitled under the preceding paragraph, on the same terms and conditions as though the employee had remained an active employee; and 3. After the end of the period during which benefits are continued under the preceding paragraph, COBRA benefits determined as though employment had terminated at the end of such period. For purposes of this paragraph D and paragraph E below, "Base Salary" shall not include bonus payments, 401(k) matching payments, pension payments, or other payments not specifically provided for under this program. However, the lump sum payment made under section D(1) above will be "W-2 income" from which a 401(k) employee contribution will be automatically deducted (and in connection with which a 401(k) employer matching contribution will be made) to the extent that the employee is a participant in the 401(k) plan as of the date of termination of employment (it being understood that employees may withdraw from the 401(k) plan at any time prior to such date of termination of employment). E. Minimum Benefit. Subject to the limitations set forth in paragraph B(1) above: 1. All officers of the level of Vice President and above shall receive the maximum benefit of 26 weeks Base Salary; and 2. All other elected and appointed officers shall receive at least 13 weeks Base Salary; and 3. All other full-time employees shall receive at least 2 weeks Base Salary; and 4. All part-time employees shall receive at least 2 weeks Base Salary. F. Continuation of Benefits for Commissioned Employees. Although employees whose compensation is more than 50% commission-based are not generally eligible for Merger Severance Benefits, as set forth in paragraph B above, such employees shall be entitled to: 1. Continuation of health insurance benefits for a period of six months (in the case of vice presidents and assistant vice presidents) or three months (in the case of all other such employees) after termination, on the same terms and conditions as though such employee had remained an active employee during such period; and 2. After the end of the period during which health benefits are continued under clause (1) above, COBRA benefits determined as though employment had terminated at the end of such period. G. Offset for Amounts Received Under Other Agreements or Laws. Merger Severance Benefits payable pursuant to this program shall be reduced by the amount of any equivalent severance pay benefits payable to an officer under any employment or change of control contract or to any employee under any "tin parachute", WARN or similar law. H. Withholding. All payments will be subject to usual and customary withholding and co-payments by employees for health, life insurance and dental benefits. The Bank shall have the right to withhold from lump sum amounts otherwise payable the aggregate amount of any co-payments required to be made by employees with respect to employee benefit programs which are continued under the Merger Severance Program. I Parachute Payment. In the event that any severance payment otherwise payable under this Plan exceeds in the aggregate the amount that may be deducted by the Bank by reason of the operation of Section 280G of the Internal Revenue Code of 1986, as amended, the amount of such payments shall be reduced to the maximum which can be deducted by the Bank. This provision shall not be deemed to modify or otherwise have any impact on any individual retirement plan or employment or severance agreement between the Bank and any employee of the Bank. EX-10.10 15 Exhibit 10.10 Execution Copy AMENDED AND RESTATED EMPLOYMENT AGREEMENT AGREEMENT made as of the 18th day of June, 1997, as further amended and restated as of the 18th day of May, 1999, by and between IPSWICH SAVINGS BANK, a Massachusetts-chartered savings bank, with its main office in Ipswich, Massachusetts (the "Bank") and David L. Grey of Wenham, Massachusetts (the "Executive"). WITNESSETH WHEREAS, the parties hereto desire to continue to provide for the Executive's continued employment by the Bank by amending and restating that certain Amended and Restated Employment Agreement entered into as of June 18, 1997 and further amended and restated as of June 17, 1998; NOW THEREFORE, in consideration of the mutual covenants contained herein, the Bank and the Executive agree as follows: 1 . Employment. The Bank agrees to employ the Executive for the purpose of serving as its President and Chief Executive Officer, on the terms and conditions hereinafter set forth. 2 . Capacity. The Executive shall serve the Bank as President and Chief Executive Officer, subject to his election by the Bank's Board of Directors. In addition, upon completion of the presently-pending "Holding Company Reorganization" (as such term is defined in Section ) the Executive shall serve as President and Chief Executive Officer of Ipswich Bancshares, Inc. (the "Company"), subject to his election by the Company's Board of Directors. Unless otherwise determined by the Board of Directors of the Company, the Executive shall not be entitled to compensation in addition to the compensation set forth in Section 4 of this Agreement as a result of his serving as an officer of the Company. 3 . Effective Date and Term. The commencement date (the "Commencement Date") of this Agreement shall be June 18, 1997. The initial term of the Executive's employment hereunder shall be for three years from the Commencement Date. The parties intend that, at any point in time during the Executive's employment hereunder, the then-remaining term of his employment under this Agreement shall be three years. Accordingly, the term of employment shall be automatically extended by one day for each day that the Executive remains employed by the Bank. The last day of such term as so extended from time to time is herein sometimes referred to as the "Expiration Date"; provided that for purposes of Section 11, the "Expiration Date" shall be (i) the third anniversary of the date on which the Board designates another executive to act in the Executive's place under Section 11, or (ii) the Long Term Disability Date (as defined in Section 11), whichever is earlier. 4 . Compensation and Benefits. The regular compensation and benefits payable to the Executive under this Agreement shall be as follows: (a) Salary. For all services rendered by the Executive under this Agreement, the Bank shall pay the Executive a base salary at the rate of $145,000 per year, subject to increase from time to time in accordance with the usual practice of the Bank with respect to review of compensation of its senior executives. In addition, if the Board increases the Executive's annual base salary at any time before the Expiration Date, such increased annual base salary shall become a floor below which such annual base salary shall not fall at any future time during the term of the Executive's employment without his written consent. The Executive's salary shall be payable in periodic installments in accordance with the Bank's usual practice for its senior executives. (b) Regular Benefits. The Executive shall also be entitled to participate in any and all employee benefit plans, medical insurance plans, disability income plans, retirement plans, bonus incentive plans, and other benefit plans from time to time in effect for senior executives of the Bank. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of the Bank and (iii) the discretion of the Board of Directors of the Bank or any administrative or other committee provided for in or contemplated by such plan. Nothing paid to the Executive under any plan, policy or arrangement currently in effect or made available in the future shall be deemed to be in lieu of other compensation to the Executive as described in this Agreement. (c) Business Expenses. The Bank shall reimburse the Executive for all reasonable travel and other business expenses incurred by him in the performance of his duties and responsibilities, subject to such reasonable requirements with respect to substantiation and documentation as may be specified by the Bank. (d) Vacation. The Executive shall be entitled to not less than four (4) weeks of vacation per year, to be taken at such times and intervals as shall be determined by the Executive with the approval of the Bank, which approval shall not be reasonably withheld. (e) Other Benefits. (1) Automobile Allowance. The Bank shall pay Executive not less than $6,932 per year as an automobile allowance. (2) SBLI Insurance. The Bank shall continue to pay an annual premium of $1,680 for a Savings Bank Life Insurance policy on the life of the Executive of which the Executive is the owner and beneficiary. (3) Supplemental Disability Policy. The Bank shall continue to pay the annual premium for a supplemental disability insurance policy ("Supplemental Policy") which provides, in the event of the Executive's disability (as defined in the Supplemental Policy), for annual supplemental disability payments in addition to payments made under the Bank's group long term disability insurance plan. The Supplemental Policy currently provides for an annual supplemental benefit of $78,600, and will be amended from time to time so that it continues to provide for a supplemental disability payment sufficient to maintain the Executive's aggregate annual long term disability benefit (including amounts payable under the Bank's group long term disability plan) at 70% of his Cash Compensation as of the date benefits are first payable under the Supplemental Policy. The term "Cash Compensation" shall mean the Executive's annual base salary as of the date of determination plus the annual cash bonus paid to the Executive during the year preceding the date of determination. (f) No Impact on Other Agreements. Nothing in this Agreement shall have any affect on the Executive's rights under (i) that certain Split Dollar Agreement dated February 21, 1996 between the Bank and the Executive (as the same may be amended from time to time) or (ii) options granted to the Executive pursuant to the stock option plans of the Bank or the Company. 5 . Extent of Service. During his employment hereunder, the Executive shall, subject to the direction and supervision of the Board of Directors of the Bank, devote his full time, best efforts and business judgment, skill and knowledge to the advancement of the Bank's interests and to the discharge of his duties and responsibilities hereunder. He shall not engage in any other business activity, except as may be approved by the Board of Directors; provided, however, that nothing herein shall be construed as preventing the Executive from: (a) investing his assets in a manner not prohibited by Section 12 hereof, and in such form or manner as shall not require any material services on his part in the operations or affairs of the companies or the other entities in which such investments are made; (b) serving on the board of directors of any company, subject to the prohibitions set forth in Section 12 and provided that he shall not be required to render any material services with respect to the operations or affairs of any such company; or (c) engaging in religious, charitable or other community or non-profit activities which do not impair his ability to fulfill his duties and responsibilities under this Agreement. 6 . Termination Upon Death. In the event of the Executive's death during the Executive's employment hereunder, the Bank shall pay to the Executive's beneficiary designated in writing to the Bank prior to his death (or to his estate, if he fails to make such designation), (i) any base salary or other compensation earned (together with a pro rata portion of the bonus payable with respect to the year in which death occurred) but not paid to Executive prior to the date of death, plus (ii) the base salary that Executive would have earned for a period of six (6) months following his death, plus (iii) a pro rata portion of any bonuses or other incentive compensation that Executive would have earned if he had been employed for the full fiscal year in which he died, payable at the time of payment of similar bonuses made to other Executives of the Bank, plus (iv) any death benefits that Executive is entitled to under the Bank's policies in effect on Executive's date of death. 7 . Termination by the Bank for Cause. (a) Termination of Employment. The Executive's employment hereunder may be terminated by the Bank for Cause without further liability on the part of the Bank, effective immediately, by a vote of a majority of all of the members of the Executive Committee and a majority of all of the members of the Board of Directors of the Bank. The Bank shall provide the Executive with written notice setting forth in reasonable detail the nature of such Cause. (b) Cause. For purposes of this Agreement a termination shall be a termination for "Cause" only if the termination is for fraud, misappropriation or embezzlement in the Executive's performance of his duties as an employee of the Bank or any subsidiary or affiliate thereof, or conviction of the Executive of a crime involving moral turpitude. 8. Termination by the Executive. (a) Termination by the Executive for Good Reason. The Executive may terminate his employment hereunder for Good Reason at any time by delivery of written notice to the Bank within the one year period commencing upon the occurrence of the Good Reason. Unless otherwise agreed to by the Bank, such termination shall not be effective until thirty (30) days after such written notice is delivered. (b) Good Reason. For purposes of this Agreement, the term "Good Reason" shall mean: (1) the failure of the Board of Directors of the Company to elect the Executive to the office of President and Chief Executive Officer of the Company, or to continue the Executive in such office, or the failure of the Board of Directors of the Bank to elect the Executive to the office of President and Chief Executive Officer of the Bank, or to continue the Executive in such office; (2) the failure by the Bank to comply with the provisions of Section 4(a); (3) a significant change in the nature or scope of the Executive's responsibilities, authorities, powers, functions or duties; or (4) a material breach by the Bank of any of the provisions of this Agreement which failure or breach shall have continued for thirty (30) days after written notice from the Executive to the Bank specifying the nature of such failure or breach. In addition,"Good Reason" shall include the following events but only if they shall occur within two years following a Change in Control: (5) the failure by the Bank to continue to provide the Executive with benefits substantially similar to those available to the Executive under any of the life insurance, medical, health and accident, or disability plans or any other material benefit plans in which the Executive was participating at the time of the Change in Control, or the taking of any action by the Bank which would directly or indirectly materially reduce any of such benefits, or the failure by the Bank to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Bank in accordance with the Bank's normal vacation policy in effect at the time of the Change in Control; (6) A reasonable determination by the Executive that, as a result of a Change in Control, he is unable to exercise the responsibilities, authorities, powers, functions or duties exercised by the Executive immediately prior to such Change in Control; (7) A reasonable determination by the Executive that, as a result of a Change in Control, his working conditions have significantly worsened; or (8) the failure of the Bank or the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. (c) Change in Control. Except to the extent otherwise provided in Section , for the purposes of this Agreement "Change in Control" shall mean the occurrence of any one or more of the following four events: (1) If there has occurred a change in control which the Bank or Company would be required to report in response to Item 1 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; (2) When any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Company or the Bank, as the case may be; (3) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Section 8(c)(2), 8(c)(4), or 8 (c) 5 of this Agreement) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Company; (4) The stockholders of the Company approve a merger, share exchange or consolidation ("merger or consolidation") of the Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Company's then outstanding securities; or (5) The stockholders of the Company or the Bank approve a plan of complete liquidation of the Company or the Bank or an agreement for the sale or other disposition by the Company or the Bank of all or substantially all of the Company's or the Bank's assets. (d) Voluntary Termination. The Executive may, upon thirty (30) days prior written notice to the Bank, effect a Voluntary Termination of his employment hereunder. A "Voluntary Termination" shall mean a termination of employment by the Executive on his own initiative other than (a) a termination due to death or disability, or (b) a termination for Good Reason. 9 . Termination by the Bank Without Cause. The Executive's employment with the Bank may be terminated without cause only by a two-thirds vote of all of the members of the Board of Directors of the Bank on written notice to the Executive. 10 . Certain Termination Benefits. In the event of termination by the Executive for Good Reason pursuant to Section (a) or termination by the Bank without cause pursuant to Section 8(a), the Executive shall be entitled to the following benefits: (a) Severance Payments. The Executive shall be entitled to a lump sum payment, payable within 30 days of the last day of his employment, equal to the sum of the following: (1) Payment for Services Already Rendered. An amount equal to the sum of (a) the Executive's base salary for the period through the date of termination, plus (b) the Executive's pro rata share (based on the number of whole or partial months during which the Executive was employed in the year of termination divided by 12) of the highest annual bonus paid during the three fiscal years preceding the termination of employment, plus (c) all accrued vacation; plus (2) Severance Pay. A severance benefit equal to three times the sum of (a) the Executive's then current annual base salary; (b) the highest annual bonus paid to the Executive during the three fiscal years preceding the termination of employment; and (c) the highest annual payments that the Bank made to the Executive or on his behalf during the three fiscal years preceding the termination of employment under Section 4(e)(1), 4(e)(2) and 4(e)(3) hereof. (b) Benefit Continuation. For the period subsequent to the date of termination until the Expiration Date, the Executive shall continue to receive all benefits described in Section 4(b) above existing on the date of termination. For purposes of application of such benefits the Executive shall be treated as if he had remained in the employ of the Bank, with a total annual salary at the rate in effect on the date of termination, and service credits will continue to accrue during such period as if the Executive had remained in the employ of the Bank. If, in spite of the provisions of this Section 10(b), benefits or service credits under any benefit plan shall not be payable or provided under any such plan to the Executive, or to the Executive's dependents, beneficiaries or estate, because the Executive is no longer deemed to be an employee of the Bank, the Bank itself shall pay for, or provide for payment of, such benefits and service credits for such beneficiaries to the Executive, or to the Executive's dependents, beneficiaries or estate. (c) No Duty to Mitigate. In the event of termination of the Executive's employment, the Executive shall be under no obligation to seek other employment or to mitigate damages and there shall be no offset against any amounts due the Executive under this Agreement for any reason, including, without limitation, on account of any remuneration attributable to any subsequent employment that the Executive may obtain. (d) No Benefits Upon Voluntary Termination or Termination for Cause. In the event of Voluntary Termination pursuant to Section 8(d) or termination of the Executive's employment for Cause pursuant to Section 7, all obligations of the Bank under this Agreement shall terminate as of the date of termination, but vested rights of the parties hereunder shall not be affected. 11 . Disability. If, due to physical or mental illness, the Executive shall be disabled so as to be unable to perform substantially all of his duties and responsibilities hereunder, the Bank, acting through its Board of Directors, may designate another executive to act in his place during the period of his disability, but such action by the Bank shall constitute Good Reason if it occurs after a Change in Control. Notwithstanding any such designation, the Executive shall continue to receive his full salary and benefits under Section 4 of this Agreement until the earlier of (X) the Expiration Date, or (Y) the date on which he becomes eligible for disability income under the Bank's long term disability income plan ("Long Term Disability Date"). While receiving disability payments under such plan the Executive shall, until the Expiration Date, receive a salary from the Bank which will equal seventy (70%) percent of the Executive's Cash Compensation (as defined in Section 4(e)(3)) as of the Long Term Disability Date, when combined with the Executive's disability income payments under the Bank's group plan and under the supplemental disability insurance policy maintained by the Bank for the Executive. The Executive shall also continue to participate in the Bank's benefit plans and to receive other benefits as specified in Section 4 until the Expiration Date. Nothing contained in this Section shall preclude the Bank from terminating the Executive's employment without cause pursuant to Section 9, subject to its payment of benefits as provided in Section 10. 12 . Noncompetition. During the Executive's employment by the Bank hereunder and during a period of one year following the date of termination of his employment with the Bank for any reason, the Executive will not, directly or indirectly whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, or through any Person (as hereafter defined), compete in the Bank's market area (defined as Essex County, Massachusetts) with the banking or any other business conducted by the Bank or any Subsidiary during the period of his employment hereunder, nor will he attempt to hire any employee of the Bank, assist in such hiring by any other Person, encourage any such employee to terminate his or her relationship with the Bank or to conduct with any other Person any business or activity which such customer conducts or could conduct with the Bank. For purposes of this Section 12, the Executive shall not be deemed to be competing with the Bank if he is employed outside of the Bank's market area for a bank or corporation which has its headquarters outside of the Bank's market area, even if such bank or corporation has a branch or office in the Bank's market area. Notwithstanding the foregoing, this Section 12 will have no further force and effect if, within two years following the occurrence of a Change in Control (as defined in Section (c), the Executive terminates his employment for Good Reason pursuant to Section 8(a) or the Bank terminates the Executive's employment without cause pursuant to Section . 13 . Confidential Information. The Executive will not disclose to any other Person (except as required by applicable law or in connection with the performance of his duties and responsibilities hereunder), or use for his own benefit or gain, any confidential information of the Bank obtained by him incident to his employment with the Bank. The term "confidential information" includes, without limitation, financial information, business plans, prospects and opportunities (such as lending relationships, financial product developments, or possible acquisitions or dispositions of business or facilities) which have been discussed or considered by the management of the Bank but does not include any information which has become part of the public domain by means other than the Executive's nonobservance of his obligations hereunder. 14 . Post-Termination Obligations. (a) Upon termination of the Executive's employment for any reason, the Executive shall act at all times in an ethical manner with regard to, and shall take no action which directly or indirectly has or could reasonably be expected to have the effect of terminating or otherwise adversely affecting the relationship of the Bank with any employees of, or others with business or advantageous relationships with, the Bank or any of its affiliates. (b) During the term of the Executive's employment hereunder and for one (1) full year after the termination thereof for any reason, or subject to ordinary court process, the Executive shall, upon reasonable notice, use his reasonable best efforts to cooperate with the Bank by providing such information and assistance to the Bank as may reasonably be required by the Bank at the Bank's expense in connection with any litigation not commenced by or involving the Executive in which the Bank is, or may become, a party. 15 . Relief; Interpretation. The Executive agrees that the Bank shall be entitled to injunctive relief for any breach by him of the covenants contained in Sections 12, 13 and 14. In the event that any provision of the foregoing Sections shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a period of time, too large a geographic area, or too great a range of activities, it shall be interpreted to extend only over the maximum period of time, geographic area, or range of activities as to which it may be enforceable. For purposes of Sections 12, 13 and 14, the term "Bank" shall mean the Bank and its subsidiaries and affiliates. 16 . Withholding. All payments made by the Bank under this Agreement shall be net of any tax or other amounts required to be withheld by the Bank under applicable law. 17 . Indemnification. The Bank shall indemnify and hold harmless the Executive (and his heirs, executors and administrators) to the fullest extent permitted by applicable law, regulations, regulatory bulletin, and/or any other regulatory requirement, as the same exists or may hereafter be promulgated or amended, against all expense, liability and loss (including, without limitation, attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive as a consequence of the Executive being or having been made a party to, or being or having been involved, in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the Executive is or was a director or officer of the Bank or is or was serving at the request of the Bank as a trustee, director or officer or of another corporation (including, but not limited to, a subsidiary or an Affiliate of the Bank), and such indemnification shall continue after the Executive shall cease to be an officer, director or trustee. The right to indemnification conferred hereby shall be a contract right and shall also include, to the extent permitted by applicable law or regulation, the right to be paid by the Bank the expenses incurred in defending any such proceeding in advance of the final disposition upon receipt by the Bank of an undertaking by or on behalf of the Executive to repay such amounts or a portion thereof, if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Bank pursuant hereto or as otherwise authorized by law but such repayment by the Executive shall only be in an amount ultimately determined to exceed the amount to which the Executive was entitled to be indemnified. 18 . Certain Additional Payments by the Bank. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Bank 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, but determined without regard to any additional payments required under this Section 18) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect to hereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 18(c), all determinations required to be made under this Section 18, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such "big five" certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Bank and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Bank. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Bank. Any Gross-Up Payment, as determined pursuant to this Section 18, shall be paid by the Bank to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Bank and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Bank should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Bank exhausts its remedies pursuant to Section 18(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Bank to or for the benefit of the Executive. (c) The Executive shall notify the Bank in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Bank of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Bank of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Bank (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Bank notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (1) give the Bank any information reasonably requested by the Bank relating to such claim, (2) take such action in connection with contesting such claim as the Bank shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Bank, (3) cooperate with the Bank in good faith in order effectively to contest such claim, and (4) permit the Bank to participate in any proceedings relating to such claim; provided, however, that the Bank shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 18(c), the Bank shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Bank shall determine; provided, however, that if the Bank directs the Executive to pay such claim and sue for a refund, the Bank shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Bank's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Bank pursuant to Section 18(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Bank's complying with the requirements of Section ) promptly pay to the Bank the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Bank pursuant to Section 18(c, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Bank does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 19 . Arbitration of Disputes. Except as otherwise provided in Section , any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the laws of the Commonwealth of Massachusetts by three arbitrators, one of whom shall be appointed by the Bank, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Boston. Such arbitration shall be conducted in the City of Boston in accordance with the rules of the American Arbitration Association, except with respect to the selection of arbitrators which shall be as provided in this Section 19. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In the event that it shall be necessary or desirable for the Executive to retain legal counsel and/or incur other costs and expenses in connection with the enforcement of any or all of the Executive's rights under this Agreement, the Bank shall pay (or the Executive shall be entitled to recover from the Bank, as the case may be) the Executive's reasonable attorneys' fees and other reasonable costs and expenses in connection with the enforcement of said rights (including the enforcement of any arbitration award in court) regardless of the final outcome, unless and to the extent the arbitrators shall determine that under the circumstances recovery by the Executive of all or a part of any such fees and costs and expenses would be unjust. 20 . Assignment; Successors and Assigns, etc. Neither the Bank nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party and without such consent any attempted transfer or assignment shall be null and of no effect; provided, however, that the Bank may assign its rights under this Agreement without the consent of the Executive in the event the Bank shall hereafter effect a reorganization, consolidate with or merge into any other Person, or transfer all or substantially all of its properties or assets to any other Person. This Agreement shall inure to the benefit of and be binding upon the Bank and the Executive, its successors, executors, administrators, heirs and permitted assigns. In the event of the Executive's death prior to the completion by the Bank of all payments due him under this Agreement, the Bank shall continue such payments to the Executive's beneficiary designated in writing to the Bank prior to his death (or to his estate, if he fails to make such designation). 21 . 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. 22 . Prior Agreements. This Agreement supersedes the Employment Agreement made as of November 13, 1989, as subsequently amended, by and between the Executive and the Bank. The Executive hereby represents and warrants that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which he is a party or is bound, and that he is not now subject to any covenants against competition or similar covenants which would affect the performance of his obligations hereunder. 23 . 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 Bank or, in the case of the Bank, at its main office, attention of the Board of Directors. 24 . Amendment and Waiver. This Agreement may be amended or modified only by a written instrument signed by the Executive and by duly authorized representatives of the Bank. 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. 25 . Governing Law. This Agreement shall be construed under and be governed in all respects by the substantive laws of the Commonwealth of Massachusetts, without regard to its principles of conflicts of laws. 26 . Definition of "Person". For purposes of this Agreement, the term "Person" shall mean an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization. 27 . Establishment of a Holding Company. The stockholders of the Bank have approved the formation of Ipswich Bancshares, Inc., a holding company (the "Holding Company") for the Bank ("Holding Company Reorganization"). Once the Holding Company Reorganization is completed, the Company will be the sole stockholder of the Bank. Notwithstanding any other provision of this Agreement, the Holding Company Reorganization shall not constitute a Change in Control (as defined in Section ). IN WITNESS WHEREOF, this Agreement and the amendment and restatement hereof have been executed as a sealed instrument by the Bank, by its duly authorized officer, and by the Executive, as of the dates first above written. ATTEST: IPSWICH SAVINGS BANK By: - ------------------------------- ------------------------------------- Title: --------------------------------- [Seal] WITNESS EXECUTIVE /s/ David L. Grey - ------------------------------- --------------------------------------- David L. Grey EX-10.11 16 Exhibit 10.11 Execution Copy AMENDED AND RESTATED EMPLOYMENT AGREEMENT AGREEMENT made as of the 18th day of June, 1997, as amended and restated as of the 17th day of June, 1998 and the 18th day of May, 1999 by and between IPSWICH SAVINGS BANK, a Massachusetts-chartered saving bank, with its main office in Ipswich, Massachusetts (the "Bank") and Francis Kenney of North Andover, Massachusetts (the "Executive"). WITNESSETH WHEREAS, in recognition of the Executive's contribution to the growth and success of the Bank, the parties hereto desire to provide for the Executive's continued employment by the Bank by entering into this Employment Agreement; NOW THEREFORE, in consideration of the mutual covenants contained herein, the Bank and the Executive agree as follows: 1 . Employment. The Bank agrees to employ the Executive for the purpose of serving as its Senior Vice President and Chief Financial Officer, on the terms and conditions hereinafter set forth. 2 . Capacity. The Executive shall serve the Bank as Senior Vice President, Treasurer and Chief Financial Officer, subject to his election by the Bank's Board of Directors. In addition, upon completion of the presently-pending "Holding Company Reorganization" (as such term is defined in Section 27) the Executive shall serve as Senior Vice President and Chief Financial Officer of Ipswich Bancshares (the "Company"), subject to his election by the Company's Board of Directors. Unless otherwise determined by the Board of Directors of the Company, the Executive shall not be entitled to compensation in addition to the compensation set forth in Section 4 of this Agreement as a result of his serving as an officer of the Company. 3 . Effective Date and Term. The commencement date (the "Commencement Date") of this Agreement shall be June 18, 1997. The initial term of the Executive's employment hereunder shall be for eighteen months from the Commencement Date. The parties intend that, at any point in time during the Executive's employment hereunder, the then-remaining term of his employment under this Agreement shall be eighteen months. Accordingly, the term of employment shall be automatically extended by one day for each day that the Executive remains employed by the Bank. The last day of such term as so extended from time to time is herein sometimes referred to as the "Expiration Date"; provided that, for purposes of Section 11, the "Expiration Date" shall be the eighteen month anniversary of (i) the date on which the Board designates another executive to act in the Executive's place under Section 11, or (ii) the Long Term Disability Date (as defined in Section 11), whichever is earlier. 4 . Compensation and Benefits. The regular compensation and benefits payable to the Executive under this Agreement shall be as follows: (a) Salary. For all services rendered by the Executive under this Agreement, the Bank shall pay the Executive a base salary at the rate of $65,000 per year, subject to increase from time to time in accordance with the usual practice of the Bank with respect to review of compensation of its senior executives. In addition, if the Board increases the Executive's annual base salary at any time before the Expiration Date, such increased annual base salary shall become a floor below which such annual base salary shall not fall at any future time during the term of the Executive's employment without his written consent. The Executive's salary shall be payable in periodic installments in accordance with the Bank's usual practice for its senior executives. (b) Regular Benefits. The Executive shall also be entitled to participate in any and all employee benefit plans, medical insurance plans, disability income plans, retirement plans, bonus incentive plans, and other benefit plans from time to time in effect for senior executives of the Bank. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of the Bank and (iii) the discretion of the Board of Directors of the Bank or any administrative or other committee provided for in or contemplated by such plan. Nothing paid to the Executive under any plan, policy or arrangement currently in effect or made available in the future shall be deemed to be in lieu of other compensation to the Executive as described in this Agreement. (c) Business Expenses. The Bank shall reimburse the Executive for all reasonable travel and other business expenses incurred by him in the performance of his duties and responsibilities, subject to such reasonable requirements with respect to substantiation and documentation as may be specified by the Bank. (d) Vacation. The Executive shall be entitled to not less than three (3) weeks of vacation per year, to be taken at such times and intervals as shall be determined by the Executive with the approval of the Bank, which approval shall not be unreasonably withheld. (e) No Impact on Options. Nothing in this Agreement shall have any affect on the Executive's rights under stock options granted to the Executive pursuant to the Bank's stock option plans. 5 . Extent of Service. During his employment hereunder, the Executive shall, subject to the direction and supervision of the Board of Directors of the Bank, devote his full time, best efforts and business judgment, skill and knowledge to the advancement of the Bank's interests and to the discharge of his duties and responsibilities hereunder. He shall not engage in any other business activity, except as may be approved by the Board of Directors; provided, however, that nothing herein shall be construed as preventing the Executive from: (a) investing his assets in a manner not prohibited by Section 12 hereof, and in such form or manner as shall not require any material services on his part in the operations or affairs of the companies or the other entities in which such investments are made; (b) serving on the board of directors of any company, subject to the prohibitions set forth in Section 12 and provided that he shall not be required to render any material services with respect to the operations or affairs of any such company; or (c) engaging in religious, charitable or other community or non-profit activities which do not impair his ability to fulfill his duties and responsibilities under this Agreement. 6 . Termination Upon Death. In the event of the Executive's death during the Executive's employment hereunder, the Bank shall pay to the Executive's beneficiary designated in writing to the Bank prior to his death (or to his estate, if he fails to make such designation), (i) any base salary or other compensation earned (together with a pro rata portion of the bonus payable with respect to the year in which death occurred) but not paid to Executive prior to the date of death, plus (ii) the base salary that Executive would have earned for a period of six (6) months following his death, plus (iii) a pro rata portion of any bonuses or other incentive compensation that Executive would have earned if he had been employed for the full fiscal year in which he died, payable at the time of payment of similar bonuses made to other Executives of the Bank, plus (iv) any death benefits that Executive is entitled to under the Bank's policies in effect on Executive's date of death. 7 . Termination by the Bank for Cause. (a) Termination of Employment. The Executive's employment hereunder may be terminated by the Bank for Cause without further liability on the part of the Bank, effective immediately, by a vote of a majority of all of the members of the Executive Committee and a majority of all of the members of the Board of Directors of the Bank. The Bank shall provide the Executive with written notice setting forth in reasonable detail the nature of such Cause. (b) Cause. For purposes of this Agreement a termination shall be a termination for "Cause" only if the termination is for fraud, misappropriation or embezzlement in the Executive's performance of his duties as an employee of the Bank or any subsidiary or affiliate thereof, or conviction of the Executive of a crime involving moral turpitude. 8 . Termination by the Executive. (a) Termination by the Executive for Good Reason. The Executive may terminate his employment hereunder for Good Reason at any time by delivery of written notice to the Bank within the one year period commencing upon the occurrence of the Good Reason. Unless otherwise agreed to by the Bank, such termination shall not be effective until thirty (30) days after such written notice is delivered. (b) Good Reason. For purposes of this Agreement, the term "Good Reason" shall mean: (1) the failure of the Board of Directors of the Company to elect the Executive to the office of Chief Financial Officer, or to continue the Executive in such office, or the failure of the Board of Directors of the Bank to elect the Executive to the office of Chief Financial Officer, or to continue the Executive in such office; (2) the failure by the Bank to comply with the provisions of Section 4(a); (3) a material breach by the Bank of any of the provisions of this Agreement which failure or breach shall have continued for thirty (30) days after written notice from the Executive to the Bank specifying the nature of such failure or breach. In addition,"Good Reason" shall include the following events but only if they shall occur within two years following a Change in Control: (4) the failure by the Bank to continue to provide the Executive with benefits substantially similar to those available to the Executive under any of the life insurance, medical, health and accident, or disability plans or any other material benefit plans in which the Executive was participating at the time of the Change in Control, or the taking of any action by the Bank which would directly or indirectly materially reduce any of such benefits, or the failure by the Bank to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Bank in accordance with the Bank's normal vacation policy in effect at the time of the Change in Control; (5) A reasonable determination by the Executive that, as a result of a Change in Control, he is unable to exercise the responsibilities, authorities, powers, functions or duties exercised by the Executive immediately prior to such Change in Control; (6) A reasonable determination by the Executive that, as a result of a Change in Control, his working conditions have significantly worsened; or (7) the failure of the Bank to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. (c) Change in Control. For the purposes of this Agreement "Change in Control" shall mean the occurrence of any one or more of the following four events: (1) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), other than the Company or the Bank, becomes a "beneficial owner" (as such term is defined in Rule 13d-3 as promulgated under the Securities Exchange Act of 1934) directly or indirectly of securities representing 25% or more of the total number of votes that may be cast for the election of Directors of the Company or the Bank and two thirds of the Board of Directors of the Company or the Bank (the "Board") has not consented to such event prior to its occurrence or within sixty (60) days thereafter, provided that if the consent occurs after the event, it shall only be valid for the purposes of this paragraph (i) if a majority of the consenting Board is comprised of Directors of the Company or the Bank who were Directors of the Company or the Bank immediately prior to the event; (2) Within two years after a merger, consolidation or sale of assets involving the Company or the Bank, or a contested election of a Company or a Bank Director, or any combination of the foregoing, the individuals who were Directors of the Company or the Bank immediately prior thereto shall cease to constitute a majority of the Board; (3) Within two years after a tender offer or exchange offer for voting securities of the Company or the Bank (other than by the Company or the Bank), the individuals who were Directors of the Company or the Bank immediately prior thereto shall cease to constitute a majority of the Board. Under no circumstances shall the Holding Company Reorganization constitute a Change in Control. (d) Voluntary Termination. The Executive may, upon thirty (30) days prior written notice to the Bank, effect a Voluntary Termination of his employment hereunder. A "Voluntary Termination" shall mean a termination of employment by the Executive on his own initiative other than (a) a termination due to death or disability, or (b) a termination for Good Reason. 9 . Termination by the Bank Without Cause. The Executive's employment with the Bank may be terminated without cause only by a majority vote of all of the members of the Board of Directors of the Bank on written notice to the Executive. 10 . Certain Termination Benefits. In the event of termination by the Executive for Good Reason pursuant to Section 8(a) or termination by the Bank without cause pursuant to Section , the Executive shall be entitled to the following benefits: (a) Severance Payments. The Executive shall be entitled to a lump sum payment, payable within 30 days of the last day of his employment, equal to the sum of the following: (1) Payment for Services Already Rendered. An amount equal to the sum of (a) the Executive's base salary for the period through the date of termination, plus (b) the Executive's pro rata share (based on the number of whole or partial months during which the Executive was employed in the year of termination divided by 12) of the annual bonus paid during the fiscal year preceding the termination of employment, plus (c) all accrued vacation; plus (2) Severance Pay. In the event of termination of employment by either the Executive for Good Reason pursuant to Section 8(a) or the Bank without cause pursuant to Section 9, the Executive shall be entitled to a severance benefit equal to 150% of the sum of (x) the annual bonus paid to the Executive during the fiscal year preceding the termination of employment and (y) the Executive's then current annual base salary. (b) Benefit Continuation. For the period subsequent to the date of termination until the Expiration Date, the Executive shall continue to receive all benefits described in Section 4(b) above existing on the date of termination. For purposes of application of such benefits the Executive shall be treated as if he had remained in the employ of the Bank, with a total annual salary at the rate in effect on the date of termination, and service credits will continue to accrue during such period as if the Executive had remained in the employ of the Bank. If, in spite of the provisions of this Section 10(b), benefits or service credits under any benefit plan shall not be payable or provided under any such plan to the Executive, or to the Executive's dependents, beneficiaries or estate, because the Executive is no longer deemed to be an employee of the Bank, the Bank itself shall pay for, or provide for payment of, such benefits and service credits for such beneficiaries to the Executive, or to the Executive's dependents, beneficiaries or estate. (c) No Duty to Mitigate. In the event of termination of the Executive's employment, the Executive shall be under no obligation to seek other employment or to mitigate damages and there shall be no offset against any amounts due the Executive under this Agreement for any reason, including, without limitation, on account of any remuneration attributable to any subsequent employment that the Executive may obtain. (d) No Benefits Upon Voluntary Termination or Termination for Cause. In the event of Voluntary Termination pursuant to Section 8(d) or termination of the Executive's employment for Cause pursuant to Section 7, all obligations of the Bank under this Agreement shall terminate as of the date of termination, but vested rights of the parties hereunder shall not be affected. 11 . Disability. If, due to physical or mental illness, the Executive shall be disabled so as to be unable to perform substantially all of his duties and responsibilities hereunder, the Bank, acting through its Board of Directors, may designate another executive to act in his place during the period of his disability, but such action by the Bank shall constitute Good Reason if it occurs after a Change in Control. Notwithstanding any such designation, the Executive shall continue to receive his full salary and benefits under Section 4 of this Agreement until the earlier of (X) the Expiration Date, or (Y) the date on which he becomes eligible for disability income under the Bank's long term disability income plan ("Long Term Disability Date"). While receiving disability payments under such plan the Executive shall, until the Expiration Date, receive a salary from the Bank which will equal seventy (70%) percent of the Executive's Cash Compensation (as defined below) as of the Long Term Disability Date, when combined with the Executive's disability income payments under the Bank's group long term disability plan. The Executive shall also continue to participate in the Bank's benefit plans and to receive other benefits as specified in Section 4 until the Expiration Date. Nothing contained in this Section 11 shall preclude the Bank from terminating the Executive's employment without cause pursuant to Section 9, subject to its payment of benefits as provided in Section 10. The term "Cash Compensation" shall mean the Executive's annual base salary as of the Long Term Disability Date plus the annual cash bonus paid to the Executive during the fiscal year preceding the Long Term Disability Date. 12 . Noncompetition. During the Executive's employment by the Bank hereunder and during a period of one year following the date of termination of his employment with the Bank for any reason, the Executive will not, directly or indirectly whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, or through any Person (as hereafter defined), compete in the Bank's market area (defined as Essex County, Massachusetts) with the banking or any other business conducted by the Bank or any Subsidiary during the period of his employment hereunder, nor will he attempt to hire any employee of the Bank, assist in such hiring by any other Person, encourage any such employee to terminate his or her relationship with the Bank or to conduct with any other Person any business or activity which such customer conducts or could conduct with the Bank. For purposes of this Section 12, the Executive shall not be deemed to be competing with the Bank if he is employed outside of the Bank's market area for a bank or corporation which has its headquarters outside of the Bank's market area, even if such bank or corporation has a branch or office in the Bank's market area. Notwithstanding the foregoing, this Section 12 will have no further force and effect if, within two years following the occurrence of a Change in Control (as defined in Section ), the Executive terminates his employment for Good Reason pursuant to Section 8 (a) or the Bank terminates the Executive's employment without cause pursuant to Section 9. 13 . Confidential Information. The Executive will not disclose to any other Person (except as required by applicable law or in connection with the performance of his duties and responsibilities hereunder), or use for his own benefit or gain, any confidential information of the Bank obtained by him incident to his employment with the Bank. The term "confidential information" includes, without limitation, financial information, business plans, prospects and opportunities (such as lending relationships, financial product developments, or possible acquisitions or dispositions of business or facilities) which have been discussed or considered by the management of the Bank but does not include any information which has become part of the public domain by means other than the Executive's nonobservance of his obligations hereunder. 14 . Post-Termination Obligations. (a) Upon termination of the Executive's employment for any reason, the Executive shall act at all times in an ethical manner with regard to, and shall take no action which directly or indirectly has or could reasonably be expected to have the effect of terminating or otherwise adversely affecting the relationship of the Bank with any employees of, or others with business or advantageous relationships with, the Bank or any of its affiliates. (b) During the term of the Executive's employment hereunder and for one (1) full year after the termination thereof for any reason, or subject to ordinary court process, the Executive shall, upon reasonable notice, use his reasonable best efforts to cooperate with the Bank by providing such information and assistance to the Bank as may reasonably be required by the Bank at the Bank's expense in connection with any litigation not commenced by or involving the Executive in which the Bank is, or may become, a party. 15 . Relief; Interpretation. The Executive agrees that the Bank shall be entitled to injunctive relief for any breach by him of the covenants contained in Sections 12, 13 and 14. In the event that any provision of the foregoing Sections shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a period of time, too large a geographic area, or too great a range of activities, it shall be interpreted to extend only over the maximum period of time, geographic area, or range of activities as to which it may be enforceable. For purposes of Sections 12, 13 and 14, the term "Bank" shall mean the Bank and its subsidiaries and affiliates. 16 . Withholding. All payments made by the Bank under this Agreement shall be net of any tax or other amounts required to be withheld by the Bank under applicable law. 17 . Indemnification. The Bank shall indemnify and hold harmless the Executive (and his heirs, executors and administrators) to the fullest extent permitted by applicable law, regulations, regulatory bulletin, and/or any other regulatory requirement, as the same exists or may hereafter be promulgated or amended, against all expense, liability and loss (including, without limitation, attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive as a consequence of the Executive being or having been made a party to, or being or having been involved, in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the Executive is or was a director or officer of the Bank or is or was serving at the request of the Bank as a trustee, director or officer or of another corporation (including, but not limited to, a subsidiary or an Affiliate of the Bank), and such indemnification shall continue after the Executive shall cease to be an officer, director or trustee. The right to indemnification conferred hereby shall be a contract right and shall also include, to the extent permitted by applicable law or regulation, the right to be paid by the Bank the expenses incurred in defending any such proceeding in advance of the final disposition upon receipt by the Bank of an undertaking by or on behalf of the Executive to repay such amounts or a portion thereof, if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Bank pursuant hereto or as otherwise authorized by law but such repayment by the Executive shall only be in an amount ultimately determined to exceed the amount to which the Executive was entitled to be indemnified. 18 . Code Section 280G Reduction. Notwithstanding any other provisions of this Agreement or of any other agreement, contract, understanding, plan or program entered in to or maintained by the Bank, if any payment or benefit received or to be received by the Executive in connection with the termination of the Executive's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with (a) the Bank or any Affiliate, Parent or Subsidiary of the Bank, or (b) any person affiliated with the Bank or any such person) (all such payments and/or benefits, including the payments and benefits, if any, under this Agreement, being hereinafter referred to as the "Total Payments") would subject the Executive to an Excise Tax (as defined below), and if such Total Payments less the Excise Tax is less than the maximum amount of Total Payments which would otherwise be payable to the Executive without imposition of an Excise Tax, then, to the extent necessary to eliminate the imposition of an Excise Tax (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement), (i) the cash and non-cash payments and benefits payable under this Agreement shall first be reduced (but not below zero),and (ii) all other cash and non-cash payments and benefits shall next be reduced (but not below zero); but only if, by reason of any such reduction, the Total Payments with any such reduction shall exceed the Total Payments without any such reduction. For purposes of this Section 18, (A) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the date of termination of employment shall be taken into account, (B) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected in good faith by the Bank does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, including (without limitation) by reason of Section 280G(b)(4)(A) of the Code, and (C) the value of any non-cash payment or benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Bank's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided above, the foregoing calculations and determinations shall be made in good faith by the Bank and the Executive. If no agreement on the calculations is reached, then the Executive and the Bank will agree to the selection of an accounting firm to make the calculations. If no agreement can be reached regarding the selection of an accounting firm the Bank will select a prominent national accounting firm which has no current or recent business relationship with the Bank. The Bank shall pay all costs and expenses incurred in connection with any such calculations or determinations. Any calculations or determinations made in accordance with this Section 18 shall be conclusive and binding on all parties. For purposes of this Section 18, the term "Excise Tax" shall mean any excise tax imposed under Section 4999 of the Code and/or any successor section thereto. 19 . Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the laws of the Commonwealth of Massachusetts by three arbitrators, one of whom shall be appointed by the Bank, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Boston. Such arbitration shall be conducted in the City of Boston in accordance with the rules of the American Arbitration Association, except with respect to the selection of arbitrators which shall be as provided in this Section 19. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In the event that it shall be necessary or desirable for the Executive to retain legal counsel and/or incur other costs and expenses in connection with the enforcement of any or all of the Executive's rights under this Agreement, the Bank shall pay (or the Executive shall be entitled to recover from the Bank, as the case may be) the Executive's reasonable attorneys' fees and other reasonable costs and expenses in connection with the enforcement of said rights (including the enforcement of any arbitration award in court) regardless of the final outcome, unless and to the extent the arbitrators shall determine that under the circumstances recovery by the Executive of all or a part of any such fees and costs and expenses would be unjust. 20 . Assignment; Successors and Assigns, etc. Neither the Bank nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party and without such consent any attempted transfer or assignment shall be null and of no effect; provided, however, that the Bank may assign its rights under this Agreement without the consent of the Executive in the event the Bank shall hereafter effect a reorganization, consolidate with or merge into any other Person, or transfer all or substantially all of its properties or assets to any other Person. This Agreement shall inure to the benefit of and be binding upon the Bank and the Executive, its successors, executors, administrators, heirs and permitted assigns. In the event of the Executive's death prior to the completion by the Bank of all payments due him under this Agreement, the Bank shall continue such payments to the Executive's beneficiary designated in writing to the Bank prior to his death (or to his estate, if he fails to make such designation). 21 . 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. 22 . Prior Agreements. This Agreement supersedes the Severance Agreement made as of September 27, 1995 by and between the Executive and the Bank. The Executive hereby represents and warrants that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which he is a party or is bound, and that he is not now subject to any covenants against competition or similar covenants which would affect the performance of his obligations hereunder. 23 . 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 Bank or, in the case of the Bank, at its main office, attention of the Board of Directors. 24 . Amendment and Waiver. This Agreement may be amended or modified only by a written instrument signed by the Executive and by duly authorized representatives of the Bank. 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. 25 . Governing Law. This Agreement shall be construed under and be governed in all respects by the substantive laws of the Commonwealth of Massachusetts, without regard to its principles of conflicts of laws. 26 . Definition of "Person". For purposes of this Agreement, the term "Person" shall mean an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization. 27 . Establishment of a Holding Company. The stockholders of the Bank have approved the formation of Ipswich Bancshares, Inc., a holding company for the Bank ("Holding Company Reorganization"). Once the Holding Company Reorganization is completed, the Company will be the sole stockholder of the Bank. Notwithstanding any other provision of this Agreement, the Holding Company Reorganization shall not constitute a Change in Control. IN WITNESS WHEREOF, the Company, the Bank and the Executive have executed this Agreement under seal as of the dates first above written. ATTEST: IPSWICH SAVINGS BANK ______________________________ By: David L. Grey, President [Seal] WITNESS EXECUTIVE - ------------------------------ Francis Kenney The undersigned hereby guarantees the obligations of Ipswich Savings Bank under the foregoing agreement IPSWICH BANCSHARES, INC. By: David L. Grey, President EX-10.12 17 Exhibit 10.12 Execution Copy Amended and Restated Severance Agreement This Amended and Restated Agreement (the "Agreement") is entered into by and between Thomas R. Girard, Vice President of Mortgage Banking of Ipswich Savings Bank (the "Executive") and Ipswich Savings Bank (the "Bank"). The Agreement was effective as of the 18th day of June, 1997 (the "Effective Date") and amended and restated on May 18, 1999. WHEREAS, the Bank has formed Ipswich Bancshares as its holding company (the "Company") and is in the process of completing a "Holding Company Reorganization;" WHEREAS, the Board of Directors of the Bank desires to assure that the Executive, in the Executive's capacity as an executive officer of the Bank, will consider the prospect of a "Change in Control" (as defined in Section 1(a) below) of the Company or the Bank in an objective manner; and WHEREAS, the Executive desires to commit himself to serve the Bank to the best of his ability; NOW, THEREFORE, in consideration of the foregoing and the agreements of the parties herein contained, the parties hereto agree as follows: 1. Consequences of Termination of the Executive's Employment Following Change in Control. If there is a "Change in Control" (as defined in subsection (a) below) during the "Term" (as defined in Section 2 below), the provisions of this Section shall apply and shall continue to apply throughout the remainder of the Term. If, within three months following a "Change in Control" (as defined in subsection (a) below), the Executive's employment is terminated by the Executive following a reduction of the Executive's commission schedule (other than a reduction which is based on the Bank's financial performance and is similar to the reduction made to the compensation provided to each other officer of the Bank), the Executive (or the Executive's estate, if applicable) shall receive such compensation as is provided to the Executive pursuant to subsection (c) below. Similarly, if the Executive's employment is terminated without "cause" (as defined in subsection (b) below) by the Bank within three months following a "Change in Control" (as defined in subsection (a) below), the Executive (or the Executive's estate, if applicable) shall receive such compensation as is provided to the Executive pursuant to subsection (c) below. (a) For the purposes of this Section "Change in Control" shall mean the occurrence of any one or more of the following events: (i) after the Effective Date, any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), other than the Company or the Bank, becomes a "beneficial owner" (as such term is defined in Rule 13d-3 as promulgated under the Securities Exchange Act of 1934) directly or indirectly of securities representing 25% or more of the total number of votes that may be cast for the election of Directors of the Company or the Bank and two thirds of the Board of Directors of the Company or the Bank (the "Board") has not consented to such event prior to its occurrence or within sixty (60) days thereafter, provided that if the consent occurs after the event, it shall only be valid for the purposes of this paragraph (i) if a majority of the consenting Board of the Company or the Bank is comprised of Directors of the Company or the Bank who were Directors of the Company or the Bank immediately prior to the event; (ii) within two years after a merger, consolidation or sale of assets involving the Company or the Bank, or a contested election of a Company or a Bank Director, or any combination of the foregoing, the individuals who were Directors of the Company or the Bank immediately prior thereto shall cease to constitute a majority of the Board; or (iii) within two years after a tender offer or exchange offer for voting securities of the Company or the Bank (other than by the Company), the individuals who were Directors of the Company or the Bank immediately prior thereto shall cease to constitute a majority of the Board. Under no circumstances shall the Holding Company Reorganization constitute a Change in Control. (b) For purposes of this Section 1, "cause" shall mean activities which have had an adverse effect on the financial strength or stability of the Bank; neglect of duties for which employed (other than on account of a medically determinable disability which renders the Executive incapable of performing such services); committing fraud, misappropriation or embezzlement in the performance of duties as an employee of the Bank; conviction of a felony involving a crime of moral turpitude; or willfully engaging in conduct injurious to the Bank. (c) If the Executive becomes entitled to receive compensation pursuant to this Section, he shall receive a lump-sum payment from the Bank within 30 days of the termination of his employment in an amount equal to the lesser of (i) one times the Executive's compensation during the fiscal year preceding the date of termination of employment as reported to the Executive on Form W-2, or (ii) $150,000. 2. Employment Status. This Agreement is not an agreement for the employment of the Executive and shall confer no rights on the Executive except as herein expressly provided. 3. Term and One-Year Extension. The term of this Agreement shall be one year commencing with the Effective Date hereof (the "Term"). The Term of this Agreement will, however, be automatically extended for additional periods of one year commencing on the first anniversary of the Effective Date and on each subsequent anniversary thereafter, unless either party notifies the other in writing at least three months prior to the date of such anniversary of the Effective Date that the Agreement is not to be extended. 4. Exclusivity Covenant; Noncompetition. (a) Except with the prior written consent of the Board, the Executive will not while in the employ of the Bank, undertake or engage in any other employment occupation or business enterprise. Further, the Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest, in the areas where the Bank maintains banking offices, adverse or antagonistic to the Bank, its business or prospects, financial or otherwise, or take any action towards any of the foregoing, except for any investment representing less than one percent (1%) of the voting shares of any private or publicly-held corporation. (b) During a period of one year following the date of termination of the Executive's employment with the Bank for any reason, whether voluntary or involuntary, the Executive will not, directly or indirectly whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, or through any Person (as hereafter defined), compete in the Bank's market area (defined as Essex County, Massachusetts) with the mortgage banking or any other business conducted by the Bank or any Subsidiary during the period of his employment hereunder, nor will he attempt to hire any employee of the Bank, assist in such hiring by any other Person, encourage any such employee to terminate his or her relationship with the Bank or to conduct with any other Person any business or activity which such customer conducts or could conduct with the Bank. 5. Assignment. This Agreement and the rights and obligations of the parties hereto shall bind and inure to the benefit of each of the parties hereto and shall also bind and inure to the benefit of any successor or successors of the Company or the Bank by reorganization, merger or consolidation and any assignee of all or substantially all of its business and properties, but, except as to any such successor or assignee of the Company or the Bank, neither this Agreement nor any rights or benefits hereunder may be assigned by the Company or the Bank or by the Executive. 6. Withholding. All payments made by the Bank under this Agreement shall be net of any tax or other amounts required to be withheld by the Bank under applicable Federal and state law. 7. Governing Law. This Agreement shall be construed in accordance with, and governed for all purposes by, the laws of the Commonwealth of Massachusetts, without regard to its principles of conflicts of laws. 8. Interpretation. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 9. Enforcement. Any legal expenses incurred by the Executive in enforcing his rights hereunder (regardless of whether the provisions of this Agreement have terminated) shall be paid by the Bank, provided that both the Executive prevails on the merits of his claim or claims and the Bank's rights of appeal with respect to such claim or claims have been exhausted or have otherwise expired. The Bank shall pay such legal expenses (or reimburse the Executive, if appropriate) within thirty (30) days after the later of the date on which the conditions specified in the previous sentence are fulfilled or the date on which the Executive submits evidence of such legal expenses to the Board. 10. Amendment and Waiver. This Agreement may not be amended, supplemented or waived except by a writing signed by the party against which such amendment or waiver is to be enforced. The waiver by any party of a breach of any provision of this Agreement shall not operate to, or be construed as a waiver of, any other breach of that provision nor as a waiver of any breach of another provision. 11. Binding Effect. Subject to the provisions of Section 4 hereof, this Agreement shall be binding on the successors and assigns of the parties hereto. 12. Notices. Any notices, requests, demands and other communications provided for by the 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 Bank or, in the case of the Company or the Bank, at their main office, attention of the President (with a copy to Carol Hempfling Pratt, Foley, Hoag & Eliot, One Post Office Square, Boston, Massachusetts 02109). 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which is an original but which shall together constitute one and the same instrument. IN WITNESS WHEREOF, the Company, the Bank and the Executive have executed this Agreement under seal as of the date first set forth above. IPSWICH SAVINGS BANK EXECUTIVE By: - ------------------------ --------------------------- David L. Grey, President Thomas R. Girard The undersigned hereby guarantees the obligations of Ipswich Savings Bank under the foregoing Agreement IPSWICH BANCSHARES, INC. By: - ------------------------ David L. Grey, President EX-10.13 18 Exhibit 10.13 Execution Copy EMPLOYMENT AGREEMENT AGREEMENT made as of the 17th day of June, 1998, by and between IPSWICH SAVINGS BANK, a Massachusetts-chartered saving bank, with its main office in Ipswich, Massachusetts (the "Bank") and Richard P. Duffett of Woburn, Massachusetts(the "Executive"). WITNESSETH WHEREAS, in recognition of the Executive's contribution to the growth and success of the Bank, the parties hereto desire to provide for the Executive's continued employment by the Bank by entering into this Employment Agreement; NOW THEREFORE, in consideration of the mutual covenants contained herein, the Bank and the Executive agree as follows: 1 . Employment. The Bank agrees to employ the Executive for the purpose of serving as its Senior Vice President and Chief Operations Officer, on the terms and conditions hereinafter set forth. 2 . Capacity. The Executive shall serve the Bank as Senior Vice President and Chief Operations Officer, subject to his election by the Bank's Board of Directors. 3 . Effective Date and Term. The commencement date (the "Commencement Date") of this Agreement shall be June 17, 1998. The initial term of the Executive's employment hereunder shall be for one year from the Commencement Date. The parties intend that, at any point in time during the Executive's employment hereunder, the then-remaining term of his employment under this Agreement shall be one year. Accordingly, the term of employment shall be automatically extended by one day for each day that the Executive remains employed by the Bank. The last day of such term as so extended from time to time is herein sometimes referred to as the "Expiration Date"; provided that, for purposes of Section 11, the "Expiration Date" shall be the first anniversary of (i) the date on which the Board designates another executive to act in the Executive's place under Section 11, or (ii) the Long Term Disability Date (as defined in Section 11), whichever is earlier. 4 . Compensation and Benefits. The regular compensation and benefits payable to the Executive under this Agreement shall be as follows: (a) Salary. For all services rendered by the Executive under this Agreement, the Bank shall pay the Executive a base salary at the rate of $67,000 per year, subject to increase from time to time in accordance with the usual practice of the Bank with respect to review of compensation of its senior executives. In addition, if the Board increases the Executive's annual base salary at any time before the Expiration Date, such increased annual base salary shall become a floor below which such annual base salary shall not fall at any future time during the term of the Executive's employment without his written consent. The Executive's salary shall be payable in periodic installments in accordance with the Bank's usual practice for its senior executives. (b) Regular Benefits. The Executive shall also be entitled to participate in any and all employee benefit plans, medical insurance plans, disability income plans, retirement plans, bonus incentive plans, and other benefit plans from time to time in effect for senior executives of the Bank. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of the Bank and (iii) the discretion of the Board of Directors of the Bank or any administrative or other committee provided for in or contemplated by such plan. Nothing paid to the Executive under any plan, policy or arrangement currently in effect or made available in the future shall be deemed to be in lieu of other compensation to the Executive as described in this Agreement. (c) Business Expenses. The Bank shall reimburse the Executive for all reasonable travel and other business expenses incurred by him in the performance of his duties and responsibilities, subject to such reasonable requirements with respect to substantiation and documentation as may be specified by the Bank. (d) Vacation. The Executive shall be entitled to not less than three (3) weeks of vacation per year, to be taken at such times and intervals as shall be determined by the Executive with the approval of the Bank, which approval shall not be reasonably withheld. (e) No Impact on Options. Nothing in this Agreement shall have any affect on the Executive's rights under stock options granted to the Executive pursuant to the Bank's stock option plans. 5 . Extent of Service. During his employment hereunder, the Executive shall, subject to the direction and supervision of the Board of Directors of the Bank, devote his full time, best efforts and business judgment, skill and knowledge to the advancement of the Bank's interests and to the discharge of his duties and responsibilities hereunder. He shall not engage in any other business activity, except as may be approved by the Board of Directors; provided, however, that nothing herein shall be construed as preventing the Executive from: (a) investing his assets in a manner not prohibited by Section 12 hereof, and in such form or manner as shall not require any material services on his part in the operations or affairs of the companies or the other entities in which such investments are made; (b) serving on the board of directors of any company, subject to the prohibitions set forth in Section 12 and provided that he shall not be required to render any material services with respect to the operations or affairs of any such company; or (c) engaging in religious, charitable or other community or non -profit activities which do not impair his ability to fulfill his duties and responsibilities under this Agreement. 6 . Termination Upon Death. In the event of the Executive's death during the Executive's employment hereunder, the Bank shall pay to the Executive's beneficiary designated in writing to the Bank prior to his death (or to his estate, if he fails to make such designation), (i) any base salary or other compensation earned (together with a pro rata portion of the bonus payable with respect to the year in which death occurred) but not paid to Executive prior to the date of death, plus (ii) the base salary that Executive would have earned for a period of six (6) months following his death, plus (iii) a pro rata portion of any bonuses or other incentive compensation that Executive would have earned if he had been employed for the full fiscal year in which he died, payable at the time of payment of similar bonuses made to other Executives of the Bank, plus (iv) any death benefits that Executive is entitled to under the Bank's policies in effect on Executive's date of death. 7 . Termination by the Bank for Cause. (a) Termination of Employment. The Executive's employment hereunder may be terminated by the Bank for Cause without further liability on the part of the Bank, effective immediately, by a vote of a majority of all of the members of the Executive Committee and a majority of all of the members of the Board of Directors of the Bank. The Bank shall provide the Executive with written notice setting forth in reasonable detail the nature of such Cause. (b) Cause. For purposes of this Agreement a termination shall be a termination for "Cause" only if the termination is for fraud, misappropriation or embezzlement in the Executive's performance of his duties as an employee of the Bank or any subsidiary or affiliate thereof, or conviction of the Executive of a crime involving moral turpitude. 8 . Termination by the Executive. (a) Termination by the Executive for Good Reason. The Executive may terminate his employment hereunder for Good Reason at any time by delivery of written notice to the Bank within the one year period commencing upon the occurrence of the Good Reason. Unless otherwise agreed to by the Bank, such termination shall not be effective until thirty (30) days after such written notice is delivered. (b) Good Reason. For purposes of this Agreement, the term "Good Reason" shall mean: (1) the failure of the Board of Directors of the Bank to elect the Executive to the office of Chief Operations Officer, or to continue the Executive in such office; (2) the failure by the Bank to comply with the provisions of Section 4(a); (3) a material breach by the Bank of any of the provisions of this Agreement which failure or breach shall have continued for thirty (30) days after written notice from the Executive to the Bank specifying the nature of such failure or breach. In addition,"Good Reason" shall include the following events but only if they shall occur within two years following a Change in Control: (4) the failure by the Bank to continue to provide the Executive with benefits substantially similar to those available to the Executive under any of the life insurance, medical, health and accident, or disability plans or any other material benefit plans in which the Executive was participating at the time of the Change in Control, or the taking of any action by the Bank which would directly or indirectly materially reduce any of such benefits, or the failure by the Bank to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Bank in accordance with the Bank's normal vacation policy in effect at the time of the Change in Control; (5) A reasonable determination by the Executive that, as a result of a Change in Control, he is unable to exercise the responsibilities, authorities, powers, functions or duties exercised by the Executive immediately prior to such Change in Control; (6) A reasonable determination by the Executive that, as a result of a Change in Control, his working conditions have significantly worsened; or (7) the failure of the Bank to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. (c) Change in Control. For the purposes of this Agreement "Change of Control" shall mean the occurrence of any one or more of the following four events: (1) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), other than the Bank, becomes a "beneficial owner" (as such term is defined in Rule 13d-3 as promulgated under the Securities Exchange Act of 1934) directly or indirectly of securities representing 25% or more of the total number of votes that may be cast for the election of Directors of the Bank and two thirds of the Board of Directors of the Bank (the "Board") has not consented to such event prior to its occurrence or within sixty (60) days thereafter, provided that if the consent occurs after the event, it shall only be valid for the purposes of this paragraph (i) if a majority of the consenting Board is comprised of Directors of the Bank who were Directors of the Bank immediately prior to the event; (2) Within two years after a merger, consolidation or sale of assets involving the Bank, or a contested election of a Bank Director, or any combination of the foregoing, the individuals who were Directors of the Bank immediately prior thereto shall cease to constitute a majority of the Board; (3) Within two years after a tender offer or exchange offer for voting securities of the Bank (other than by the Bank), the individuals who were Directors of the Bank immediately prior thereto shall cease to constitute a majority of the Board; or (4) Within two years after an acquisition in which the Bank becomes a wholly-owned subsidiary of a bank holding company, individuals who were Directors of the Bank immediately prior to such acquisition shall not constitute a majority of the board of directors of the parent bank holding company. (d) Voluntary Termination. The Executive may, upon thirty (30) days prior written notice to the Bank, effect a Voluntary Termination of his employment hereunder. A "Voluntary Termination" shall mean a termination of employment by the Executive on his own initiative other than (a) a termination due to death or disability, or (b) a termination for Good Reason. 9 . Termination by the Bank Without Cause. The Executive's employment with the Bank may be terminated without cause only by a majority vote of all of the members of the Board of Directors of the Bank on written notice to the Executive. 10 . Certain Termination Benefits. In the event of termination by the Executive for Good Reason pursuant to Section (a) or termination by the Bank without cause pursuant to Section , the Executive shall be entitled to the following benefits: (a) Severance Payments. The Executive shall be entitled to a lump sum payment, payable within 30 days of the last day of his employment, equal to the sum of the following: (1) Payment for Services Already Rendered. An amount equal to the sum of (a) the Executive's base salary for the period through the date of termination, plus (b) the Executive's pro rata share (based on the number of whole or partial months during which the Executive was employed in the year of termination divided by 12) of the annual bonus paid during the fiscal year preceding the termination of employment, plus (c) all accrued vacation; plus (2) Severance Pay. A severance benefit equal to the sum of (a) the Executive's then current annual base salary; plus (b) an amount equal to the annual bonus paid to the Executive during the fiscal year preceding the termination of employment. (b) Benefit Continuation. For the period subsequent to the date of termination until the Expiration Date, the Executive shall continue to receive all benefits described in Section 4(b) above existing on the date of termination. For purposes of application of such benefits the Executive shall be treated as if he had remained in the employ of the Bank, with a total annual salary at the rate in effect on the date of termination, and service credits will continue to accrue during such period as if the Executive had remained in the employ of the Bank. If, in spite of the provisions of this Section 10(b), benefits or service credits under any benefit plan shall not be payable or provided under any such plan to the Executive, or to the Executive's dependents, beneficiaries or estate, because the Executive is no longer deemed to be an employee of the Bank, the Bank itself shall pay for, or provide for payment of, such benefits and service credits for such beneficiaries to the Executive, or to the Executive's dependents, beneficiaries or estate. (c) No Duty to Mitigate. In the event of termination of the Executive's employment, the Executive shall be under no obligation to seek other employment or to mitigate damages and there shall be no offset against any amounts due the Executive under this Agreement for any reason, including, without limitation, on account of any remuneration attributable to any subsequent employment that the Executive may obtain. (d) No Benefits Upon Voluntary Termination or Termination for Cause. In the event of Voluntary Termination pursuant to Section 8(d) or termination of the Executive's employment for Cause pursuant to Section 7, all obligations of the Bank under this Agreement shall terminate as of the date of termination, but vested rights of the parties hereunder shall not be affected. 11 . Disability. If, due to physical or mental illness, the Executive shall be disabled so as to be unable to perform substantially all of his duties and responsibilities hereunder, the Bank, acting through its Board of Directors, may designate another executive to act in his place during the period of his disability, but such action by the Bank shall constitute Good Reason if it occurs after a Change in Control. Notwithstanding any such designation, the Executive shall continue to receive his full salary and benefits under Section 4 of this Agreement until the earlier of (X) the Expiration Date, or (Y) the date on which he becomes eligible for disability income under the Bank's long term disability income plan ("Long Term Disability Date"). While receiving disability payments under such plan the Executive shall, until the Expiration Date, receive a salary from the Bank which will equal seventy (70%) percent of the Executive's Cash Compensation (as defined below) as of the Long Term Disability Date, when combined with the Executive's disability income payments under the Bank's group long term disability plan. The Executive shall also continue to participate in the Bank's benefit plans and to receive other benefits as specified in Section 4 until the Expiration Date. Nothing contained in this Section shall preclude the Bank from terminating the Executive's employment without cause pursuant to Section 9, subject to its payment of benefits as provided in Section 10. The term "Cash Compensation" shall mean the Executive's annual base salary as of the Long Term Disability Date plus the annual cash bonus paid to the Executive during the fiscal year preceding the Long Term Disability Date. 12 . Noncompetition. During the Executive's employment by the Bank hereunder and during a period of one year following the date of termination of his employment with the Bank for any reason, the Executive will not, directly or indirectly whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, or through any Person (as hereafter defined), compete in the Bank's market area (defined as Essex County, Massachusetts) with the banking or any other business conducted by the Bank or any Subsidiary during the period of his employment hereunder, nor will he attempt to hire any employee of the Bank, assist in such hiring by any other Person, encourage any such employee to terminate his or her relationship with the Bank or to conduct with any other Person any business or activity which such customer conducts or could conduct with the Bank. For purposes of this Section 12, the Executive shall not be deemed to be competing with the Bank if he is employed outside of the Bank's market area for a bank or corporation which has its headquarters outside of the Bank's market area, even if such bank or corporation has a branch or office in the Bank's market area. Notwithstanding the foregoing, this Section will have no further force and effect if, within two years following the occurrence of a Change in Control (as defined in Section ), the Executive terminates his employment for Good Reason pursuant to Section (a) or the Bank terminates the Executive's employment without cause pursuant to Section . 13 . Confidential Information. The Executive will not disclose to any other Person (except as required by applicable law or in connection with the performance of his duties and responsibilities hereunder), or use for his own benefit or gain, any confidential information of the Bank obtained by him incident to his employment with the Bank. The term "confidential information" includes, without limitation, financial information, business plans, prospects and opportunities (such as lending relationships, financial product developments, or possible acquisitions or dispositions of business or facilities) which have been discussed or considered by the management of the Bank but does not include any information which has become part of the public domain by means other than the Executive's nonobservance of his obligations hereunder. 14 . Post-Termination Obligations. (a) Upon termination of the Executive's employment for any reason, the Executive shall act at all times in an ethical manner with regard to, and shall take no action which directly or indirectly has or could reasonably be expected to have the effect of terminating or otherwise adversely affecting the relationship of the Bank with any employees of, or others with business or advantageous relationships with, the Bank or any of its affiliates. (b) During the term of the Executive's employment hereunder and for one (1) full year after the termination thereof for any reason, or subject to ordinary court process, the Executive shall, upon reasonable notice, use his reasonable best efforts to cooperate with the Bank by providing such information and assistance to the Bank as may reasonably be required by the Bank at the Bank's expense in connection with any litigation not commenced by or involving the Executive in which the Bank is, or may become, a party. 15 . Relief; Interpretation. The Executive agrees that the Bank shall be entitled to injunctive relief for any breach by him of the covenants contained in Sections 12, 13 and 14. In the event that any provision of the foregoing Sections shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a period of time, too large a geographic area, or too great a range of activities, it shall be interpreted to extend only over the maximum period of time, geographic area, or range of activities as to which it may be enforceable. For purposes of Sections 12, 13 and 14, the term "Bank" shall mean the Bank and its subsidiaries and affiliates. 16 . Withholding. All payments made by the Bank under this Agreement shall be net of any tax or other amounts required to be withheld by the Bank under applicable law. 17 . Indemnification. The Bank shall indemnify and hold harmless the Executive (and his heirs, executors and administrators) to the fullest extent permitted by applicable law, regulations, regulatory bulletin, and/or any other regulatory requirement, as the same exists or may hereafter be promulgated or amended, against all expense, liability and loss (including, without limitation, attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive as a consequence of the Executive being or having been made a party to, or being or having been involved, in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the Executive is or was a director or officer of the Bank or is or was serving at the request of the Bank as a trustee, director or officer or of another corporation (including, but not limited to, a subsidiary or an Affiliate of the Bank), and such indemnification shall continue after the Executive shall cease to be an officer, director or trustee. The right to indemnification conferred hereby shall be a contract right and shall also include, to the extent permitted by applicable law or regulation, the right to be paid by the Bank the expenses incurred in defending any such proceeding in advance of the final disposition upon receipt by the Bank of an undertaking by or on behalf of the Executive to repay such amounts or a portion thereof, if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Bank pursuant hereto or as otherwise authorized by law but such repayment by the Executive shall only be in an amount ultimately determined to exceed the amount to which the Executive was entitled to be indemnified. 18 . Code Section 280G Reduction. Notwithstanding any other provisions of this Agreement or of any other agreement, contract, understanding, plan or program entered in to or maintained by the Bank, if any payment or benefit received or to be received by the Executive in connection with the termination of the Executive's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with (a) the Bank or any Affiliate, Parent or Subsidiary of the Bank, or (b) any person affiliated with the Bank or any such person) (all such payments and/or benefits, including the payments and benefits, if any, under this Agreement, being hereinafter referred to as the "Total Payments") would subject the Executive to an Excise Tax (as defined below), and if such Total Payments less the Excise Tax is less than the maximum amount of Total Payments which would otherwise be payable to the Executive without imposition of an Excise Tax, then, to the extent necessary to eliminate the imposition of an Excise Tax (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement), (i) the cash and non-cash payments and benefits payable under this Agreement shall first be reduced (but not below zero),and (ii) all other cash and non-cash payments and benefits shall next be reduced (but not below zero); but only if, by reason of any such reduction, the Total Payments with any such reduction shall exceed the Total Payments without any such reduction. For purposes of this Section 18, (A) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the date of termination of employment shall be taken into account, (B) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected in good faith by the Bank does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, including (without limitation) by reason of Section 280G(b)(4)(A) of the Code, and (C) the value of any non-cash payment or benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Bank's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided above, the foregoing calculations and determinations shall be made in good faith by the Bank and the Executive. If no agreement on the calculations is reached, then the Executive and the Bank will agree to the selection of an accounting firm to make the calculations. If no agreement can be reached regarding the selection of an accounting firm the Bank will select a prominent national accounting firm which has no current or recent business relationship with the Bank. The Bank shall pay all costs and expenses incurred in connection with any such calculations or determinations. Any calculations or determinations made in accordance with this Section 18 shall be conclusive and binding on all parties. For purposes of this Section 18, the term "Excise Tax" shall mean any excise tax imposed under Section 4999 of the Code and/or any successor section thereto. 19 . Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the laws of the Commonwealth of Massachusetts by three arbitrators, one of whom shall be appointed by the Bank, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Boston. Such arbitration shall be conducted in the City of Boston in accordance with the rules of the American Arbitration Association, except with respect to the selection of arbitrators which shall be as provided in this Section 19. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In the event that it shall be necessary or desirable for the Executive to retain legal counsel and/or incur other costs and expenses in connection with the enforcement of any or all of the Executive's rights under this Agreement, the Bank shall pay (or the Executive shall be entitled to recover from the Bank, as the case may be) the Executive's reasonable attorneys' fees and other reasonable costs and expenses in connection with the enforcement of said rights (including the enforcement of any arbitration award in court) regardless of the final outcome, unless and to the extent the arbitrators shall determine that under the circumstances recovery by the Executive of all or a part of any such fees and costs and expenses would be unjust. 20 . Assignment; Successors and Assigns, etc. Neither the Bank nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party and without such consent any attempted transfer or assignment shall be null and of no effect; provided, however, that the Bank may assign its rights under this Agreement without the consent of the Executive in the event the Bank shall hereafter effect a reorganization, consolidate with or merge into any other Person, or transfer all or substantially all of its properties or assets to any other Person. This Agreement shall inure to the benefit of and be binding upon the Bank and the Executive, its successors, executors, administrators, heirs and permitted assigns. In the event of the Executive's death prior to the completion by the Bank of all payments due him under this Agreement, the Bank shall continue such payments to the Executive's beneficiary designated in writing to the Bank prior to his death (or to his estate, if he fails to make such designation). 21 . 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. 22 . Prior Agreements. This Agreement supersedes the Severance Agreement made as of November 19, 1997 by and between the Executive and the Bank. The Executive hereby represents and warrants that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which he is a party or is bound, and that he is not now subject to any covenants against competition or similar covenants which would affect the performance of his obligations hereunder. 23 . 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 Bank or, in the case of the Bank, at its main office, attention of the Board of Directors. 24 . Amendment and Waiver. This Agreement may be amended or modified only by a written instrument signed by the Executive and by duly authorized representatives of the Bank. 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. 25 . Governing Law. This Agreement shall be construed under and be governed in all respects by the substantive laws of the Commonwealth of Massachusetts, without regard to its principles of conflicts of laws. 26 . Definition of "Person". For purposes of this Agreement, the term "Person" shall mean an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization. IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Bank, by its duly authorized officer, and by the Executive, as of the date first above written. ATTEST: IPSWICH SAVINGS BANK By: - ---------------------------------- ---------------------------------- [Seal] Title: ---------------------------- WITNESS EXECUTIVE - ---------------------------------- ---------------------------------- Richard P. Duffett EX-10.14(A) 19 Exhibit 10.14(a) Execution Copy AMENDED AND RESTATED SPLIT DOLLAR AGREEMENT Nationwide Life Insurance Co. Life Insurance Policy No. N100136450 AGREEMENT made as of the 21st day of February, 1996, and amended and restated as of this 18th day of May, 1999 by and among Eastern Bank, Lynn, Massachusetts, Trustee of the Ipswich Irrevocable Insurance Trust (the "Trust"), David L. Grey of Wenham, Massachusetts (the "Employee"), and Ipswich Savings Bank, Ipswich, Massachusetts (the "Employer" or the "Bank"). WHEREAS, the Employee has established a life insurance program for the benefit and protection of his family under Policy No. N100136450 (the "Policy") issued by Nationwide Life Insurance Company, of Columbus, Ohio (the "Insurer"); and WHEREAS, the Employer wishes to continue to help the Employee provide such insurance for the benefit and protection of his family by contributing to the Trust each year, until the obligations to make such payments terminate in accordance with Section 2.1 of this Agreement, $60,000 to pay the premiums under the Policy; and WHEREAS, the Employee is and will continue to be the sole owner of the Policy, and has assigned the Policy to the Trust for the purpose of providing security for the repayment, under certain circumstances, of the "Secured Obligations" (as such term is defined in that certain Amended and Restated Assignment of Life Insurance Policy as Collateral, as amended and restated as of the date hereof (the "Collateral Assignment")); and WHEREAS, it is the desire of the parties to define the extent of the Bank's obligations to fund the Trust and of the Trust's interest in the cash surrender value and death proceeds of the Policy; NOW THEREFORE, in consideration of the mutual promises contained herein, it is agreed between the parties hereto as follows: Article I Ownership of Policy 1.1 The Policy is the exclusive property of the Employee, who may exercise all rights of ownership with respect to his interest therein, subject to the security interest of the Trust as expressed in this Agreement or in the Collateral Assignment of the Policy to the Trust and to any death benefit which may become due to the Trust. Article II Payment of Premiums 2.1 Until December 31, 2020 (or until the earlier of (x) the date on which the Employer shall have fully funded the Trust as provided in Section 9.2, and (y) such date as this Agreement is earlier terminated as provided in Article VII), the Employer shall, at least twenty days before each anniversary date of the Policy, contribute to the Trust $60,000 so as to enable the Trust to pay such amount as the annual premium under the terms of the Policy. 2.2 To the extent that it receives contributions from the Employer pursuant to Section 2.1 or Section 9.2, the Trust shall, before the same become due, pay the $60,000 annual premiums under the Policy until this Agreement has been terminated as provided in Article VII. If requested, the Trust shall provide proof to the Employee of the timely payment of each premium. Article III Collateral Assignment 3.1 To secure the repayment to the Trust of the Secured Obligations under certain circumstances, the Employee has contemporaneously with the execution of this Agreement assigned the Policy to the Trust as collateral, by means of the form of Collateral Assignment attached to this Agreement as Schedule 1. The Collateral Assignment shall not be altered, terminated or amended by Employee without the express written consent of the Trust and the Bank. The parties agree to take all action necessary to cause such assignment to conform to the provisions of this Agreement. Article IV Rights in Policy 4.1 The Trust shall have no right to borrow against the Policy. 4.2 The Employee, in recognition of the defined contribution provisions of this Agreement and the variable nature of the death benefits, retains the express right to allocate the aggregate account value to particular investment vehicles. 4.3 The Employee shall have the right to exchange the Policy for such other policies and/or insurers that he deems appropriate based upon the investment performance or financial condition of the Insurer, subject to the approval of the Trust, which approval shall not unreasonably be denied. The Employer shall have the right to approve any amendment to or exchange of the Policy proposed by the Employee, but only to the extent that such amendment or exchange materially increases the annual premium for such Policy. Action by the Employee or the Trust to change the Policy and/or insurer pursuant to this Section 4.3 shall not otherwise alter the respective rights and responsibilities of the parties set forth in this Agreement. 4.4 Neither the Trust nor the Employer shall have any responsibility for a shortfall in the projected total return on the paid-in premiums available to provide the death benefit under the Policy. 4.5 Neither the Trust nor the Employer shall take any action that might endanger the interest of the Employee in the Policy. The Employee shall not take any action that might endanger the interest of the Trust in the Policy. 4.6 The Employee retains all other rights in the Policy not specifically assigned to the Trust including, but not limited to, the following rights: (a) The right to surrender the Policy as set forth in Paragraph 4 of the Collateral Assignment. (b) The right to change the beneficiary of the Policy, to the extent of his interest in such Policy. (c) The right to select optional methods of settlement with regard to the death benefit provided in PART TWO of Section 6.1. (d) The right to borrow against the Policy (subject to the limitations contained in the Collateral Assignment). (e) All other rights contained in the Policy, to the extent the exercise of such rights does not adversely affect the Trust's interest in the Policy. Article V Payment of Cash Surrender Value 5.1 In the event this Agreement is terminated pursuant to Section 7.1 (a) (appointment of a conservator or receiver for the Employer) or Section 7.1 (b) (surrender of policy by Employee), the Trust shall have the unqualified right to receive from the Insurer a sum (the "Premium Reimbursement") which is equal to the lesser of (a) the then cash surrender value as defined in the Policy or (b) the aggregate unreimbursed amount of (1) premium payments paid by the Employer to the Trust for payment of premiums under the Policy pursuant to Section 2.1 and (2) any amounts paid by the Employer to fund the Trust as provided in Section 9.2. This amount shall be established in a written statement to the Insurer by the Trust, and the Insurer shall have the right, without liability to the Employee or his beneficiary or beneficiaries of the Policy, to rely exclusively upon such statement. The Trustee shall, upon receiving such sum, release the Collateral Assignment of the Policy and (after deducting its appropriate fees and expenses) pay the remaining amounts in the Trust to or upon the direction of the Employee. 5.2 Except as otherwise provided in Sections 5.3 or 9.1 hereof, upon termination of this Agreement pursuant to Section 7.1 (c) (retirement or termination of employment of Employee), the Trustee shall have the unqualified right to receive from the Insurer the following proportion of the Premium Reimbursement if such termination occurs during the designated calendar year: Calendar Year Proportion of Premium Period Reimbursement 1996 80% 1997 60% 1998 40% 1999 20% 2000 and after None The Trustee shall, upon receiving such proportion, if any, release the Collateral Assignment of the Policy and (after deducting its appropriate fees and expenses) pay the remaining amounts in the Trust to or upon the direction of the Employee. 5.3 In the event that this Agreement shall terminate pursuant to Section 7.1 (c) because the Employer shall have terminated the Employee's employment for "cause" (as hereinafter defined), the Trustee shall have the unqualified right to receive from the Insurer 100% of the Premium Reimbursement, notwithstanding any provisions of Section 5.2 to the contrary. The Trustee shall, upon receiving such proportion, release the Collateral Assignment of the Policy and (after deducting its appropriate fees and expenses) pay the remaining amounts in the Trust to or upon the direction of the Employee. For purposes of this Agreement, Employee's employment shall have been terminated for "cause" if, and only if, such employment shall have been terminated as a result of Employee's deliberate dishonesty with respect to the Employer that results in his conviction of a crime. The decision to terminate the Employee for "cause" as defined herein shall require a vote of the majority of the Executive Committee and a majority of the Board of Directors of the Employer. It is understood that the benefits under this Agreement are being provided to the Employee as a substitute for (and not as a supplement to) a qualified pension plan. Accordingly, but for the specific "cause" exceptions set forth above, which are to be construed narrowly, it is the parties' intention that the Employee's rights in the benefits provided hereunder be inviolate to the same extent as would be pension benefits under a pension plan qualified under ERISA. If this Section 5.3 is applicable, the Employer shall certify (the "Employer's Certification") to the Trustee and the Insurer that the Employee's employment was terminated for cause (with specific details as to the basis for its determination that "cause" existed), and shall send a copy of such Employer's Certification to the Employee by certified mail, return receipt requested. Unless the Trustee shall have received, within 15 days after its receipt of the Employer's Certification, a notice from the Employee, executed under the pains and penalties of perjury, to the effect that no basis for a determination of "cause" existed (the "Employee Notice"), the Trustee and the Insurer shall have the right, without liability to the Employee or his beneficiary or beneficiaries of the Policy, to rely exclusively upon the Employer's certification. If the Trustee receives an Employee Notice, the determination of whether "cause" existed shall be submitted to arbitration in accordance with Section 12.4 hereof. Article VI Payment of Death Benefit 6.1 In the event of the death of the Employee while the Policy and this Agreement are in force, the proceeds of the Policy shall be divided into two parts and paid as follows: PART ONE: To the Trust, a sum, if any, equal to the proportion of the Premium Reimbursement which the Trust would then have the right to receive under Section 5.2 hereof. PART TWO: To the designated beneficiaries of the Employee, the remaining proceeds of the Policy. Article VII Termination of Agreement 7.1 This Agreement shall terminate: (a) Upon the appointment of a Conservator or Receiver of the assets of Employer by the Massachusetts Commissioner of Banks or by the Federal Deposit Insurance Corporation. (b) Upon a surrender of the Policy by the Employee, provided, however, that a surrender of the Policy in connection with the issuance of a replacement or exchange policy pursuant to Section 4.3 shall not be deemed to be a surrender of the Policy for purposes of this Section 7.1 (b). (c) Upon the retirement of the Employee or the earlier termination of his employment by the Employer under circumstances not described in Sections 7.1 (a) or 7.1(b) , provided, however, that if there shall have occurred a Change in Control the termination of the Employee's employment shall not cause a termination of this Agreement and this Agreement shall not terminate until the Employee attains the age of 65 (or such earlier date as this Agreement may be terminated pursuant to Section 5.3 or this Article VII). (d) Upon the death of the Employee. Article VIII Termination of Trust's Obligation 8.1 Neither the Employer nor the Trust shall have any further obligation to make contributions or to pay premiums under Article II in the event of termination of this Agreement, it being understood that this Agreement shall not terminate, and the Trust's obligation to pay premiums under Article II shall continue (following the funding of the Trust pursuant to Section 9.2), notwithstanding termination of Employee's employment following a Change in Control. Article IX Change in Control 9.1 Upon the occurrence of a Change in Control (as defined in Section 9.3 below), the Trustee's right to receive a proportion of the Premium Reimbursement pursuant to Section 5.2 shall immediately terminate. In such a circumstance, the Collateral Assignment of the Policy shall remain in effect until the Employee attains the age of 65 (or such earlier date as this Agreement may be terminated pursuant to Article VII) in order to secure the Employer's rights under Sections 5.1 and 5.3, but within 15 days after the Employee's 65th birthday the Trustee shall release the Collateral Assignment and (after deducting its appropriate fees and expenses) pay the remaining amounts, if any, in the Trust to or upon the direction of the Employee. 9.2 Upon the occurrence of a Change in Control (as defined below) the Employer or its successor shall, as soon as possible, but in no event later than 15 days following such Change in Control, make an irrevocable contribution to the Trust in an amount equal to the discounted value of future premiums under the Policy from the date of the Change in Control until December 31, 2020, as determined by an actuary or other consultant employed by the Trust. The Trust, with the consent of the Executive, shall apply the full amount of such contribution toward the purchase of one or more annuities (collectively, the "Annuity") from one or more legal reserve life insurance companies with a Standard & Poor rating of AA or better or the equivalent (collectively, the "Annuity Issuer"). Such Annuity shall provide for the payment of the annual Policy premium pursuant to Section 2.1, commencing on the Policy anniversary next following the purchase of the Annuity and ending on the Policy anniversary next following the Employee's attainment of age sixty-four (64), whether or not the Employee continues to be employed by the Employer. The Annuity may provide for the Annuity Issuer to pay the premiums directly to the issuer of the Policy, or, if appropriate, to the Trustee, which shall then pay the premiums to the issuer of the Policy as set forth in Section 2.2 above. The Employer or its successor shall also, at the same time as it makes the contribution to the Trust under the preceding paragraph, make a further irrevocable contribution to the Trust in an amount sufficient to pay for the Trustee's fees and for actuarial, accounting, legal and other professional or administrative services necessary to implement the terms of this Agreement following a Change in Control. Such amount shall be determined by the Trustee's estimate of its fees (as provided in the Trust Agreement) and by estimates obtained by the Trustee from the independent actuaries, accountants, lawyers and other appropriate professional and administrative personnel who provided such services to the Trust or the Employer immediately before the Change in Control. After making the irrevocable contributions required by this Section 9.2, the Employer's only remaining obligation shall be to make further contributions under this Section 9.2 to the extent that at any time the Trustee determines that amounts contributed by the Employer pursuant to this Section 9.2 are not sufficient to pay all premiums, fees and expenses as required by this Section 9.2 . 9.3 For the purposes of this Agreement "Change in Control" shall have the meaning defined in that certain Employment Agreement made as of the 18th day of June, 1997, as further amended and restated as of the 18th day of May, 1999, by and between the Bank and the Employee, as such Employment Agreement was in effect on such date (the "Employment Agreement"). 9.4 The stockholders of the Employer have approved a reorganization ("Holding Company Reorganization") which, if consummated, would result in the Employer becoming a wholly-owned subsidiary of Ipswich Bancshares, Inc., a holding company formed by the Employer (the "Holding Company"). If the Holding Company Reorganization or any similar reorganization should be consummated, the stockholders of the Employer immediately prior to the reorganization (other than those exercising dissenters' rights) would become all of the stockholders of the Holding Company immediately after the reorganization, and the Employer would become a wholly-owned subsidiary of the Holding Company. The Employee understands and agrees that under no circumstances will any such reorganization constitute a Change in Control for purposes of this Agreement or for any other purpose. From and after a Holding Company Reorganization, the term "Employer" as used in this Article IX shall include both the Bank and the Holding Company. Article X Exchange of Policy 10.1 In the event the Trust elects or is required to exchange the Policy under Section , the Employee shall execute any forms necessary or appropriate to effect such exchange including, without limitation, the surrender of the Policy, the transfer of proceeds to the new insurer and the execution of a new Split Dollar Agreement and Collateral Assignment. Such exchange shall qualify under Section 1035 of the Internal Revenue Code or successor provisions of similar import. Article XI Obligations of Insurer 11.1 Any payments made or action taken by the Insurer in accordance with the provisions of the Policy and the Collateral Assignment of the Policy shall fully discharge it from all claims, suits, and demands of all persons whatsoever. Article XII Miscellaneous 12.1 This Agreement shall be binding upon the parties hereto, their heirs, legal representative, successors and assigns. 12.2 This Agreement and the Collateral Assignment embody all agreements made with respect to the Policy, and no change, alteration, or modification may be made except in writing signed by all parties hereto. 12.3 This Agreement shall be governed by, and construed in accordance with the provisions of, the laws of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws. 12.4 Any dispute, controversy or claim with respect to any party's performance under this Agreement shall be settled by arbitration in accordance with the laws of The Commonwealth of Massachusetts by a single arbitrator who shall be selected by the American Arbitration Association in Boston, Massachusetts. Such arbitration shall be conducted in the City of Boston in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Punitive damages shall not awarded. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. * * * IN WITNESS WHEREOF, the parties hereto have set their hand and seals on the day and year first above written. EASTERN BANK, Trustee By: _____________________ Its _____________________ --------------------- David L. Grey, Employee IPSWICH SAVINGS BANK, Employer By: _____________________ Its _____________________ EX-10.14(B) 20 Exhibit 10.14(b) Execution Copy AMENDED AND RESTATED IPSWICH IRREVOCABLE INSURANCE TRUST This AGREEMENT made the 21st day of February, 1996 and amended and restated as of May 18, 1999, by and between Ipswich Savings Bank, Ipswich, Massachusetts ("the Company") and Eastern Bank, Lynn, Massachusetts (the "Trustee"). WHEREAS, David L. Grey, an employee of the Company (the "Employee"), has established a life insurance program under Policy No. N100136450 issued by Nationwide Life Insurance Company (the "Policy"); WHEREAS, the Company has entered into a so-called Split Dollar Agreement (as amended from time to time, the "Split Dollar Agreement") pursuant to which it has agreed to contribute to an insurance trust amounts necessary to pay the premiums due on said Policy until the retirement or earlier termination of its obligations under said Split Dollar Agreement; WHEREAS, pursuant to the Split Dollar Agreement the Employee has assigned the Policy to said insurance trust for the the purpose of providing security for the repayment, under certain circumstances, of the "Secured Obligations" (as such term is defined in that certain Amended and Restated Assignment of Life Insurance Policy as Collateral in favor of the Trustee dated as of February 21, 1996 and subsequently amended and restated (the "Collateral Assignment"); and WHEREAS, the Company wishes to amend and restate the provisions of this insurance trust (the "Trust") so as to reflect its revised obligations under the Split Dollar Agreement; and WHEREAS, pursuant to its obligations under the Split Dollar Agreement the Company wishes to continue to contribute to the Trust assets that shall be held therein, subject (but only to the extent of the Company's rights therein) to the claims of the Company's creditors in the event of the Company's Insolvency, as herein defined, until paid to the Employee and his beneficiaries in such manner and at such times as specified in the Split Dollar Agreement; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: 1 Section . ESTABLISHMENT OF TRUST (a) The Company shall, at least on an annual basis, make or cause to be made contributions to the Trust of cash or property, including insurance contracts and/or marketable securities, which are acceptable to the Trustee and which shall become the principal of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust and the Split Dollar Agreement. The Company, in its sole discretion, may at any time, or from time to time, make deposits of cash or other property into the Trust in addition to those amounts required hereunder; neither the Trustee nor the Employee or any beneficiary shall have any right to compel such additional deposits. (b) The Trust hereby established shall be irrevocable. (c) The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part 1, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. (d) The principal of the Trust, and any earnings thereon, shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of the Employee and (but only to the extent of the Company's rights therein) the Company's general creditors as herein set forth. The Employee and his beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust until such time as the Secured Obligations have been satisfied. Any rights created under the Split Dollar Agreement to cause the Company to make payments with respect to premiums due or to become due under this Policy or this Trust Agreement shall be mere unsecured contractual rights of the Employee and his beneficiaries against the Company. To the extent of the Company's rights therein, any assets held by the Trust will be subject to the claims of the Company's general creditors under Federal and state law in the event of Insolvency, as defined in Section 3(a) herein. (e) The following provision shall govern the operation of this Trust, and the provisions of this Section 1(e) shall supersede and control over any conflicting provision of this Trust. The parties recognize and agree that this Trust has been created solely to fund and secure payment of the Secured Obligations and that in order to provide such security the Policy (which is and shall remain property of the Employee) has been deposited in this Trust. The general creditors of the Company shall have no rights in or with respect to Trust assets other than the right, under the limited conditions described in this Trust, to receive such Premium Reimbursements (as such term is defined in the Split Dollar Agreement) as may constitute Secured Obligations. To the extent the Trustee shall at any time have an obligation to make funds available to such general creditors to satisfy such Secured Obligations, it shall first distribute any assets held by the Trust other than the Policy. If after such distribution the Secured Obligations shall remain unsatisfied, the Trustee shall notify the Employee and cooperate reasonably with any proposal that the Employee may offer to provide assets (other than the Policy) for distribution so as to minimize the potential economic loss that a distribution from the Policy might cause to the Employee . Once the Secured Obligations have been satisfied, any remaining assets in the Trust shall be returned to the Employee or his heirs, and the creditors of the Company shall have no further rights in and to any Trust assets. 2 Section . PAYMENT OF PREMIUM REIMBURSEMENT (a) The Trustee shall promptly pay over to the Company the Premium Reimbursement (as defined in Section 5.1 of the Split Dollar Agreement) in the event of termination of the Split Dollar Agreement pursuant to Sections 7.1(a) or 7.1(b) thereof. (b) The Trustee shall promptly pay over to the Company any Premium Reimbursement received by it pursuant to Section 5.2 or 5.3 of the Split Dollar Agreement in the event of termination thereof pursuant to Section 7.1(c) thereof. (c) The Trustee shall promptly pay over to the Company any Premium Reimbursement received by it under Section 6.1, Part One, of the Split Dollar Agreement by virtue of the death of the Employee. (d) The Trustee shall make provision for the reporting and withholding of any Federal, state or local taxes that may be required to be so withheld with respect to any payment pursuant to the terms of the Split Dollar Agreement and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by the Company. 3 Section . TRUSTEE RESPONSIBILITY WHEN COMPANY IS INSOLVENT (a) The Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) the Company is unable to pay its debts as they become due, or (ii) a receiver is appointed for the Company by the Commissioner of Banks of Massachusetts or the Federal Deposit Insurance Corporation. (b) At all times during the continuance of this Trust, as provided in Section 1(e) hereof, the principal and income of the Trust shall be subject to claims of general creditors of the Company under Federal and state law as set forth below. (1) The Board of Directors and the Chief Executive Officer of the Company shall have the duty to inform the Trustee in writing of the Company's Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company has become Insolvent and, pending such determination, the Trustee shall discontinue payment of amounts to the Employee or his beneficiaries. (2) Unless the Trustee has actual knowledge of the Company's Insolvency, or has received notice from the Company or a person claiming to be a creditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Company's solvency. (3) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall hold its interest in the cash surrender value of the Policy pursuant to Article V of the Split Dollar Agreement for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of the Employee or his beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due under the Split Dollar Agreement or otherwise. (4) The Trustee shall resume its obligations to the Employee and his beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent). 4 Section . PAYMENT TO COMPANY (a) Except as provided in Sections 2 and 3 hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to the Company or to divert to others any of the Trust assets before all payments of amounts due have been made to the Employee and his beneficiaries pursuant to the terms of the Split Dollar Agreement. 5 Section . INVESTMENT AUTHORITY (a) In no event may the Trustee invest in securities (including stock or rights to acquire stock) or obligations issued by the Company, other than a de minimis amount held in common investment vehicles in which the Trustee invests. All rights associated with assets of the Trust shall be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable by or rest with the Employee. (b) The Trustee shall have the additional power in its discretion: (1) To exercise all voting rights with respect to the shares of stock held in the Trust and to grant proxies, discretionary or otherwise; (2) To cause any shares of stock to be registered and held in the name of one or more of its nominees, or one or more nominees of any system for the central handling of securities, without increase or decrease of liability; (3) To collect and receive any and all money and other property due to the Trust and to give full discharge therefor; (4) To settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trustee; or commence or defend suits or legal proceedings to protect any interest of the Trust; and to represent the Trust in all suits or legal proceedings in any court or before any other body or tribunal; (5) To organize under the laws of any state a corporation for the purpose of acquiring and holding title to any property which it is authorized to acquire under this Agreement and to exercise with respect hereto and, or all of the powers set forth in this Agreement; (6) To determine how all receipts and disbursements shall be credited, charged or apportioned as between income and principal; and (7) Generally to do all acts, whether or not expressly authorized, which the Trustees may deem necessary or desirable for the protection of the Trust. 6 Section . DISPOSITION OF INCOME (a) During the term of this Trust, all income received by the Trust, net of expenses, shall be accumulated and reinvested. 7 Section . ACCOUNTING BY TRUSTEE The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between the Company and the Trustee. Within 90 days following the close of each calendar year and within 60 days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions affected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. 8 Section . RESPONSIBILITY OF TRUSTEE. (a) The Trustee shall act with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use, in the conduct of an enterprise of a like character and with like aims, provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Company which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by the Company. In the event of a dispute between the Company and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Company agrees to indemnify the Trustee against the Trustee's costs, expenses and liabilities (including, without limitation, attorney's fees and expenses) relating thereto and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. (c) The Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder. (d) The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder. (e) The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (f) Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. 9 Section . COMPENSATION AND EXPENSES OF TRUSTEE The Company shall pay all administrative and Trustee's fees and expenses. If not so paid, the fees and expenses shall be paid from the Trust. 10 Section . RESIGNATION AND REMOVAL OF TRUSTEE (a) The Trustee may resign at any time by written notice to the Company, which shall be effective 60 days after receipt of such notice unless the Company and the Trustee agree otherwise. (b) The Trustee may be removed by Company on 30 days' notice or upon shorter notice accepted by the Trustee. (c) Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within 60 days after receipt of notice of resignation or removal and the successor Trustee acceptance of appointment unless Company extends the time limit. (d) If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under paragraph (a) or (b) of this section. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. 11 Section . APPOINTMENT OF SUCCESSOR (a) If the Trustee resigns or is removed in accordance with section 10(a) or (b) hereof, the Company shall appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace the Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new trustee who shall have all the rights and powers of the former trustee, including ownership rights in the Trust assets. The former trustee shall execute any instrument necessary or reasonably requested by the Company or the successor trustee to evidence the transfer. (b) The successor trustee need not examine the records and acts of any prior trustee, and may retain or dispose of existing Trust assets, subject to Sections 7 and 8 hereof. The successor trustee shall not be responsible for and Company shall indemnify and defend the successor trustee from any claim or liability resulting from any action or inaction of any prior trustee or from any other past event, or any condition existing at the time it becomes successor trustee. (c) AMENDMENT OR TERMINATION (d) This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Split Dollar Agreement or shall make the Trust revocable. (e) The Trust shall terminate upon the termination of the Split Dollar Agreement and the distribution of all proceeds from the Policy as directed herein or in the Split Dollar Agreement. Any funds remaining after the distribution of all proceeds of the policy to which the Employee is entitled shall be distributed to the Company. Section 12. MISCELLANEOUS (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to the Employee and his beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts, unless otherwise preempted by any applicable federal law. Section 13. NOTICES Any notice or communication which the Company or Trustee may be required or may desire to give to the other party under any provision of this Trust Agreement shall be given in writing and personally delivered to, or mailed, faxed or delivered by overnight courier service to the address given below: If to the Company:Ipswich Savings Bank Market Street Ipswich, Massachusetts 01938 Attention: Chairman If to the Trustee: Eastern Bank 270 Union Street Lynn, Massachusetts 01901 Attention: Any notice which is personally delivered shall be deemed to have been given on the date it is personally delivered. Any notice which is mailed shall be deemed to have been given on the third business day after deposit in the mail, registered or certified mail, postage prepaid and return receipt requested. Any notice which is delivered by overnight courier service shall be deemed to have been given on the business day after deposit with such courier service. Any notice which is transmitted by facsimile shall be deemed to have been given on the day that such notice is transmitted. The Company or Trustee may change the address to which notices, requests and other communications are to be sent to it by giving written notice of such address change to the other party in conformity with this Section 14, but such change shall not be effective until notice of such change has been received by the other party. Section 14. EFFECTIVE DATE The effective date of this Trust Agreement shall be February 21, 1996. * * * [The remainder of this page has been intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized offices and their respective seals to be hereunto affixed as of the day and year first above written. IPSWICH SAVINGS BANK By: ----------------------------- Its: ----------------------------- EASTERN BANK, Trustee By: ----------------------------- Its: ----------------------------- EX-10.15 21 DATA PROCESSING AGREEMENT Ipswich Savings Bank - ----------------------------------- Customer Name 23 Market Street 2/20/97 - ----------------------------------- ----------------------------------- Street Address Date Ipswich. MA 01938 - ----------------------------------- City, State and Zip Code NCR CORPORATION ("NCR") and the Customer named above ("Customer',) agree that all Services and Materials acquired from NCR, either directly or indirectly, will be furnished only under the terms and conditions of this Agreement. 1.0 DEFINITIONS 1.1 "Agreement" is defined as this Data Processing Agreement. 1.2 "NCR" means NCR Corporation. 1.3 "Contract" is defined as the content of this Agreement together with the contents of an Order for Services and/or Materials placed by Customer and accepted by NCR while this Agreement is in effect. 1.4 "Data Processing Services", or "DP Services", are defined as those services performed by NCR in the handling and processing of Customer's data at an NCR "Data Processing Center" ("DPC"). 1.5 "Material" is defined as all tangible items provided Customer under the Contracts and includes Software, instructions, literature, input/output data communications equipment and supplies. 1.6 "Software" is defined as all programs which run on a computer system which is not resident in an NCR DPC, whether referred to as software, firmware or otherwise, and related documentation, furnished by NCR to Customer, on whatever media, whether separately licensed by NCR, or provided as a result of Software Services. Software includes copies, portions, and modified versions of Software. Software may include programs and related documentation which are owned by third parties and sublicensed by NCR to Customer. 1.7 "Order" is defined as an Order for Services and/or Material placed by Customer on an NCR Order Form which sets forth a description of the Services and/or Material together with the pertinent specifications and schedules. 1.8 "Services" include Data Processing Services and all other services rendered by NCR. 2.0 Term This Agreement will become effective upon acceptance by NCR and remain effective until terminated by either party with at least one hundred eighty (180) days prior written notice. Termination of this Agreement will not terminate the obligations of any existing Contract between the parties which shall continue for the term specified in the applicable Order. 3.0 ENTIRE AGREEMENT 3.1 The Contract between NCR and Customer constitutes the entire agreement between the parties relating to the Services and Material ordered and supersedes all prior agreements, understandings (oral and written), negotiations, letters, proposals or other matters with respect thereto, except as attached to the Order and specifically incorporated by reference. NCR RESERVES THE RIGHT TO REJECT ANY ORDER. 3.2 If any provision of this Agreement or of any Order is illegal, invalid, or void under Federal or State law, it will be severable; however, the remaining provisions will not be impaired. 4.0 SUPPLIES Unless specified in the Contract, supplies are not provided by NCR 5.0 HOURS OF OPERATION DP Services are performed at one or more NCR DPCs during the hours and on the days specified in the Order. 6.0 DATA INPUT AND TRANSMISSION 6.1 Customer will deliver or transmit input data to the DPC at its own expense and will pay the expense of return delivery or transmission. Input media must be in good condition, and the data format must meet NCR's specifications. Any incorrect or unusable input data will be corrected, regenerated, and/or retransmitted by Customer. At NCR's option, resulting delays may extend the time for processing. 6.2 In the event input data is to be received from multiple locations, NCR is not obligated to commence processing until all data is received at the DPC. 7.0 REPORT PROCESSING AND DELIVERY Except as otherwise provided herein, reports and media to be furnished by the DPC will be made available to Customer at the DPC or be made available for transmission to Customer at the time specified in the Order. If Customer requires delivery or transmission, Customer will arrange and pay for required transportation or transmission. 8.0 INVOICING. TAXES AND PAYMENT 8.1 NCR will invoice Customer as specified by an Order, plus shipping, distribution, installation charges, deinstallation charges, and applicable taxes. Prices stated on Orders do not include taxes whether levied on NCR or Customer. 8.2 Invoices are due and payable upon receipt unless otherwise provided by NCR If Customer fails to pay any amount within thirty (30) days after written notice of its delinquency, NCR may suspend or terminate performance immediately (or as soon thereafter as permitted by law). Customer is liable for reinstatement charges. 8.3 Delinquent accounts bear service charges at the rate specified on the invoice, or the maximum rate allowed by law, whichever is less. If it is necessary to refer any claim for collection, NCR is entitled to recover the reasonable and necessary costs and expenses of collection, including attorneys' fees. 9.0 RESPONSIBILITIES OF CUSTOMER 9.1 Customer agrees that Services rendered and Material furnished shall not relieve the Customer from any obligation to maintain records. 9.2 Customer is at all times responsible for implementation and operation of its accounting, management, and reporting systems, audit functions, and recovery routines and for operating and maintaining input/output equipment and other on-site computer equipment. Services rendered and Materials furnished by NCR will not impose upon nor transfer to NCR the responsibility for such functions. 9.3 In the event any equipment is furnished to Customer under this Agreement, title shall remain in NCR Customer shall not transfer possession of, allow any lien against, or prejudice NCR's ownership of such equipment. Customer agrees to execute documents reasonably required to ensure NCR's title and ownership. Upon termination of a Contract under which equipment is furnished to Customer, such equipment will be returned to NCR in as good condition as when received, reasonable wear and tear excepted. 9.4 Customer will notify the DPC in writing in advance when system parameters for DP Services are to be changed or portions of files are to be deleted. 9.5 With respect to DP Services, corrections necessitated by Customer's incorrect posting or defective input will be entered in subsequent processing runs unless the DPC can produce the corrected reports and Customer agrees to pay for the additional processing required at the then current rates. 9.6 Loss or contamination of data, damage to media, or other difficulties attributable to supplies, input media, or data format not meeting NCR specifications, and any delays resulting therefrom, will be solely Customer's responsibility and corrections will be at Customer's expense. 9.7 Customer will check and balance each DP Service report upon receipt and will reconcile its reports. Failure of Customer to notify NCR within two business days after receipt of any discrepancies will be deemed acceptance of such reports as complete and satisfactory performance by NCR 9.8 To mitigate against the possibility of loss of input data or of Customer data maintained by NCR, Customer agrees to maintain in a safe place, other than at the DPC, source and backup data sufficient for file and input data re- creation. Nothing shall relieve Customer of this responsibility. Customer will provide, at its own expense, insurance coverage against loss of data and will take precautions required by law or regulation. 9.9 NCR maintains fidelity coverage to protect itself from losses suffered as a result of wrongful or dishonest acts committed by its employees and agents, including contract programmers. Customer is responsible for purchasing its own coverage to protect itself from wrongful or dishonest acts committed by its employees. 9.10 Customer agrees to purchase from NCR, Customer's entire requirement for the types of Services ordered under this Agreement during the term hereof. In the event Customer fails to purchase from NCR its entire requirement for such Services; Customer agrees to pay NCR the prorata termination charge attached to the Order. 9.11 The Agreement shall be considered confidential by Customer. Customer agrees not to disclose the Agreement or its terms to any person other than NCR, an employee of Customer who reasonably needs access to the Agreement or a representative of a Federal or State regulatory agency pursuant to an examination of Customer. 9.12 Customer, as a user of an ATM interchange, indemnifies and agrees to hold harmless NCR, its officers, directors, employees and agents from and against any and all liability and every loss, cost, claim, demand, cause of action and expense (including, without limitation, the cost of investigating any claim, the cost of litigation and attorney,s fees, whether or not legal proceedings are instituted) paid or incurred by any one-or more-of them arising from, attributable to, or in connection with, the ATM interchange or Customer's participation in the interchange. Customer acknowledges that it is solely responsible for its own compliance with all applicable federal, state and local laws and regulations, and agrees to indemnify and hold harmless NCR, its officers, directors, employees and agents from and against any and all liability and every loss, cost, claim, demand, cause of action and expense arising out of any act or omission by Customer in violation of any such law or regulation. NCR will! not be liable to Customer for any loss, cost, damage, claim, demand, cause of action or expense (including, without limitation, the cost of investigating any claim, the cost of litigation and attorney's fees, whether or not legal proceedings are instituted), or any compensatory, punitive, special, incidental or consequential damages (including loss of profits), arising from or in connection with any use or operation of the ATM interchange or failure to use or operate the ATM interchange. 10.0 RESPONSIBILITIES OF NCR 10.1 When performing DP Services NCR will exercise reasonable care in handling Customer's input media and data. In the event errors in or loss to Customer's data result from the fault or negligence of NCR, NCR will, to the extent commercially reasonable, correct such errors at its own expense. 10.2 NCR'S LIABILITY AND CUSTOMER'S SOLE REMEDY IN THE EVENT OF LOSS OF MEDIA OR DATA, ERRONEOUS PROCESSING, OR DAMAGE OR CONTAMINATION TO EITHER DATA OR MEDIA, WILL BE LIMITED TO REPLACEMENT OF THE MEDIA ON WHICH DATA IS STORED, AND/OR TO THE EXTENT COMMERCIALLY REASONABLE, CORRECTION OF ERRORS IN PROCESSING. CUSTOMER WILL ALWAYS MAINTAIN BACKUP DATA AS PROTECTION AGAINST SUCH LOSS, DAMAGE, OR CONTAMINATION. 10.3 EXCEPT AS OTHERWISE STATED, ANY EQUIPMENT, SERVICES OR MATERIALS PROVIDED BY NCR PURSUANT TO THIS AGREEMENT ARE PROVIDED WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND THOSE ARISING FROM A COURSE OF DEALING. UNLESS SPECIFICALLY SET FORTH HEREIN, NCR SHALL NOT BE LIABLE FOR ANY EXPENSES OR DAMAGES INCURRED BY CUSTOMER, WHETHER INTERNAL TO CUSTOMER OR PAID BY CUSTOMER TO ANY THIRD PARTY, WHICH MAY ARISE OUT OF FAILURE OF THE EQUIPMENT OR MATERIALS TO FUNCTION OR DUE TO ANY MALFUNCTION OF EQUIPMENT OR MATERIALS OR NCR'S FAILURE TO PROVIDE SERVICES AS SET FORTH HEREIN, UPON WHATEVER CAUSE OF ACTION ANY CLAIM IS BASED, EXCEPT THAT NCR SHALL BE LIABLE FOR PERSONAL INJURY, INCLUDING DEATH, AND FOR DAMAGE TO REAL OR TANGIBLE PERSONAL-PROPERTY, UP TO $1,000,000 PER OCCURRENCE FOR SUCH DAMAGE, TO THE EXTENT CAUSED BY NCR'S NEGLIGENCE OR WILLFUL MISCONDUCT. CUSTOMER'S RIGHTS AND REMEDIES SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER RIGHTS AND REMEDIES RELATED TO ANY CONTRACT OR SERVICES. 10.4 NCR WILL NOT BE RESPONSIBLE FOR ERRORS OR DELAYS RESULTING FROM THE FAULTY TRANSMISSION OF DATA FROM CUSTOMER OR FOR DELAYS IN PROCESSING OR IN THE DELIVERY OF THE PROCESSED DATA DUE TO CAUSES BEYOND ITS CONTROL. IN NO EVENT WILL NCR BE LIABLE FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTLY DAMAGES, OR FOR LOSS OF PROFITS, REVENUE OR DATA, WHETHER IN AN ACTION IN CONTRACT, TORT, PRODUCT LIABILITY, STATUTE OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF THOSE DAMAGES, ARISING FROM THIS AGREEMENT OR ITS PERFORMANCE. 11.0 REGULATORY AGENCIES AND OTHER LEGAL REQUIREMENTS 11.1 The data, records and reports to be generated, received or maintained by NCR under this Agreement may be subject to examination by Federal and State regulatory agencies that have jurisdiction over Customer's business, to the same extent as such records would be subject if they were maintained and produced by Customer itself on its own premises. Any Services and Materials required of NCR as a result of such examination which are not specifically included in an Order will be furnished by NCR at NCR's then-current rates upon payment terms specified by NCR at the time such Services and Materials are furnished. Master File data shall only be furnished subject to the terms of Section 13.1. NCR agrees to allow reasonable audits by and on behalf of Customer. NCR may make reasonable charges to Customer of expenses incurred by NCR in connection with any such audit. 11.2 Customer will be solely responsible for maintaining records required by Federal and State regulatory agencies. The data, records and reports to be generated, received, or maintained by NCR in the performance of a Contract are not represented to comply with either Federal or State regulatory requirements. 11.3 Customer shall have the responsibility of notifying the appropriate Federal and State regulatory agencies, in accordance with their requirements, of all information required concerning the DP Services, including, but not limited to, the commencement of, termination of, and methods and control procedure used in processing Customer's data. 11.4 NCR shall use reasonable efforts to incorporate regulatory updates and changes as required in the Services provided by NCR 11.5 NCR shall use reasonable efforts to notify Customer of system changes which materially affect the Services provided by NCR to Customer. 12.0 SYSTEM CAPABILITY 12.1 CUSTOMER IS RESPONSIBLE FOR VERIFYING, IN ADVANCE OF THE COMMENCEMENT OF SERVICES BY NCR, THAT THE SERVICES, REPORTS, METHODS, TECHNIQUES AND SOFTWARE CONTRACTED FOR ARE SUITABLE FOR THE CUSTOMER'S INTENDED PURPOSE, AND THAT WHEN FUNCTIONING IN ACCORDANCE WITH THE APPLICABLE CONTRACT, THEY WILL FULFILL CUSTOMER'S REQUIREMENTS. 12.2 Customer agrees to maintain a sufficient number of competent personnel for training, implementation, and use of the Services and Materials to be furnished by NCR pursuant to the Order. 13.0 RETENTION OF DATA FILES 13.1 Upon termination of DP Services, NCR will furnish Customer, upon written request, Customer's master file data maintained by NCR. Such data will be in a format available at NCR and will be provided only after return of NCR Confidential Material and payment of any outstanding charges due NCR, including charges for accrued development expenses and early termination, if any, and charges for master file media and reproduction services. Customer hereby grants NCR a security interest in the Master File which shall be released by NCR upon payment by Customer of any outstanding charges. 13.2 NCR may destroy Customer's input data and materials thirty (30) days after final use of such materials for processing. At Customer's expense, NCR may retain data for an additional agreed upon period. 13.3 Upon notice of intent to terminate this Agreement, if requested, NCR will provide Customer with all current Customer account information contained in NCR's then current files in the standard machine format and media used by NCR at the time. All costs (programming, materials, computer time, etc.) incurred by NCR in producing said records will be paid by the Customer in accordance with the then current NCR price schedule. 14.0 NCR CONFIDENTIAL MATERIAL 14.1 NCR Confidential Material includes Software, all other material furnished by NCR relating to Services, Software, equipment and supplies furnished by NCR, and all copies, portions of and information contained therein. NCR Confidential Material shall at all times remain the property of NCR or of NCR's licensor, as the case may be. 14.2 Customer shall not: (i) sell, rent, loan, disclose, communicate, or otherwise directly or.indirectly make available NCR Confidential Material to any other party; (ii) disassemble, decompile or otherwise reverse engineer any Software; or (iii) make any copies of NCR Confidential Material without the prior written authorization of NCR. The copyright notices and any other proprietary legends of NCR and, if applicable,- its licensor, shall be reproduced by Customer on all copies, portions, and modified versions of NCR Confidential Material, including those in machine-readable form, and Customer shall maintain records of the number of all such copies, portions, and modified versions. 14.3 Except as otherwise specifically set forth in this Agreement, upon termination of this Agreement for any reason, all NCR Confidential Material shall be immediately returned by Customer to NCR. 15.0 CONFIDENTIALITY 15.1 For a period of two (2) years from the date of disclosure, NCR shall use reasonable efforts to prevent the disclosure to any other person, firm or corporation of the customer input data received from Customer for processing ("Confidential Information"). 15.2 Customer will indemnify and hold NCR harmless from and against any liability or forfeiture arising out of NCR's compliance with any Customer demand or direction relating to NCR's receipt, processing, retention, disclosure, or non-disclosure of Customer's Confidential Information, data, and processing results. 16.0 DISPUTES 16.1 "Dispute" means any controversy or claim between Customer and NCR. It includes controversies or claims that are related directly or indirectly to this Agreement, any Contract or any Services, whether based on contract, statute, tort, fraud, fraudulent inducement, misrepresentation, or other legal or equitable theory, whenever brought, between Customer and NCR or any of NCR's or Customer's employees or agents. 16.2 Dispute Negotiation -- NCR and Customer agree to use good faith efforts to resolve any Dispute promptly and fairly. If NCR and Customer are unable to resolve a Dispute by negotiation, both parties agree to submit it to arbitration. 16.3 Arbitration -- If a Dispute is not successfully resolved, it shall be subject to binding arbitration under the then-current rules and supervision of the American Arbitration Association ("AAA"). The Federal Arbitration Act, 9 U.S.C. Sections 1 to 16, not Ohio law, will govern the arbitrability of all claims. A single arbitrator who is knowledgeable in business information and electronic data processing systems will conduct the arbitration. The arbitrator's decision and award will be final and binding, and either party may enter it in any court with jurisdiction. The arbitrator will not have authority to award punitive or other non-compensatory damages to either party. The arbitration will be held in the city where the AAA regional office closest to Customer's headquarters is located. Each party will bear its own attorney's fees and related costs associated with the arbitration. NCR and Customer will pay all other costs and expenses of the arbitration as the rules of the AAA provide. 17.0 TERMINATION 17.1 Either party may terminate an Order if: A.A party files a petition of bankruptcy or receivership, or makes an assignment for the benefit of creditors, or should a receiver be appointed or applied for; or B. A party is unable to cure a default of any of its obligations hereunder within thirty (30) days of written notice being received by the defaulting party. If NCR is unable to cure a default, pursuant to this paragraph 17.1, Customer may terminate an Order without obligation to NCR for early termination charges as defined below. Customer is liable to NCR for all other invoices, charges, etc., outstanding as of the termination date. 17.2 Customer may terminate for convenience an Order prior to the end of any term. In the event of such early termination, Customer will pay NCR a termination charge equal to 80% of the average monthly billing charges that would have been paid to NCR during the remainder of the Term. The average monthly billing charge is the greater of the proposed monthly billing or-the average monthly billing during the most recent Term, and includes processing and network management services. In addition, NCR shall retain any deposit previously paid by and/or due from Customer, the amount of the additional extended discount for the portion of the term used, and any other charges due to NCR as of the termination date. Section 17.2 is superseded as outlined in the Addendum (page 30) and Schedule A (page 31). 17.3 Upon receiving Customer's notice of intent to terminate, NCR will, when requested and when all invoices due have been paid, provide Customer with all of the Customer's account information contained in NCR's current files. This information will be provided in the standard machine format on media used by NCR at the time. All costs for programming, materials, computer time, etc., incurred by NCR will be paid by the Customer in accordance with the then-current price schedule. 17.4 Upon termination, Customer will, at its expense, immediately return all copies of NCR Confidential Material to NCR. 18.0 OFFICE OF THRIFT SUPERVISION 18.1 NCR agrees that during the term of this Agreement, the Office of Thrift Supervision (OTS) will have the authority and responsibility provided to the other regulatory agencies pursuant to the Bank Service Corporation Act, 12 U.S.C. Section 1867(c). If applicable to Customer, NCR will provide the OTS District Director of the district in which the DPC providing Services under this Agreement is located with a copy of the current third party review report when a review by the OTS has been performed. NCR agrees to annually provide the OTS of the district in which the DPC providing Services under this Agreement is located with a copy of NCR's parent corporation, NCR Corp., current audited financial statements. 18.2 NCR agrees to release the information necessary to allow Customer to develop a disaster contingency plan which will work in concert with NCR's plan. NCR's disaster recovery plan for all DPC's is reviewed on an annual basis. The communications portion of disaster recovery is tested every year on a rotating basis. NCR will release the results of the disaster recovery contingency test to Customer on an annual basis. 19.0 ASSIGNMENT: NON-WAIVER 19.1 Neither Customer nor NCR may assign this Agreement or its rights or obligations under it without the express written consent of the other, except NCR may assign this Agreement to its parent corporation or any of its affiliates and may use subcontractors to fulfill its obligations. 19.2 Failure to enforce any Contract term is not a waiver of future enforcement of that or any other term. 20.0 PROCESSING PRIORITIES DP Services have processing priority over other services at the DPC. In the event that processing cannot continue on-site, DP Services will receive processing priority over other services at the back-up processing site. 21.0 NOTICES Notices required or authorized in this Agreement shall be given by private or public delivery/mail service providing for receipted delivery, to the Customer's address above, or if to NCR to the DPC primarily responsible for providing DP Services to Customer, and shall be deemed received upon receipted delivery. SECTIONS 22.0 THROUGH 26.0 ARE ONLY APPLICABLE IN THE EVENT NCR LICENSES SOFTWARE TO CUSTOMER AND, TOGETHER WITH THE REST OF THIS AGREEMENT, SHALL GOVERN SOFTWARE LICENSING. 22.0 SOFTWARE LICENSE 22.1 Subject to acceptance of the Order by NCR, payment of the applicable license fee entitles Customer to the use of the Software according to the terms of this Agreement until the one-time license is terminated pursuant to the terms hereof. Payment of the license fee set forth on an accepted order entitles Customer to a non-transferable and non-exclusive license to use Software only on the designated equipment and only during the period Customer is using and has paid for both Data Processing Services and Software support services. If the designated equipment becomes temporarily inoperative, the Software may be used on back-up equipment for the period during which the designated equipment is inoperative. Customer may make a copy of the Software solely for backup purposes. Certain Software may include means to limit or inhibit copying. Unless otherwise authorized in writing by NCR, Customer shall not: (i) make available, or cause to be made available, any Software for the use of or by any other party, whether or not for consideration; (ii) sublicense or distribute Software to any third party; (iii) modify the Software; or (iv) transmit, directly or indirectly, or use Software outside the United States, unless otherwise authorized in writing by NCR, in which case Customer shall obtain any required governmental authorizations and permits. 22.2 The term of the license for the Software shall begin upon delivery, except when a test period is provided, in which case the earlier of (a) expiration of the test period, or (b) the date the Software is put into productive use. A license for Software: (i) may be terminated pursuant to Sections 14.0 and 17.0 of this Agreement; (ii) automatically terminates when Customer ceases to use the Software in connection with the designated equipment; (iii) automatically terminates when Customer ceases to use or pay for Data Processing Services; or (iv) may be terminated immediately by NCR if Customer fails to comply with the requirements of this Section and Section 22.1. Upon expiration or termination of a license for any reason, Customer shall cease to use the Software, delete it from its library, and return it to NCR. 22.3 If Customer elects to terminate a license for Software, that license shall not be considered to have been terminated by the Customer, unless and until Customer returns the Software to NCR. 23.0 SOFTWARE SUPPORT SERVICES NCR may provide software support services for Software that it licenses to Customer. If NCR provides such support and Customer orders it, then NCR shall provide software support services for the Software for a support fee to be paid by Customer. The initial fee shall be set forth on the Order, but such fee may be increased by NCR after a 30-day notice to the Customer. Software support services are limited to answering reasonable questions, reasonable ongoing education, and providing updates when available. 24.0 PROGRAMMING SERVICES "Programming Services" is creating a program or modifying an existing program to perform functions or to cause to function in a particular manner by NCR for Customer. Customer may order programming services from NCR. The Order will contain a description of the work and the applicable fee. NCR shall be the owner of the product of Programming Services. 25.0 PATENT. COPYRIGHT AND TRADE SECRET INDEMNIFICATION 25.1 NCR will indemnify, defend, and hold Customer harmless with respect to any legal action, and will pay the cost of any settlement and any damages awarded as a result of such legal action against Customer, based on an allegation that the Software furnished by NCR hereunder infringes a United States patent, copyright, or trade secret. 25.2 If Customer's use of the Software is enjoined because of an infringement, or if, in NCR's opinion, the Software is likely to become the subject of an infringement claim, NCR will, at its option: (i) procure for Customer the continued use of the Software; (ii) replace or modify the Software so that it becomes non-infringing; or (iii) if either of these options is not reasonably feasible, terminate the license and return to Customer all fees paid to NCR for the use of such infringing Software, less a reasonable value for the prior use thereof. 25.3 NCR shall not have any liability to Customer under any provision of this section: (i) if any infringement or allegation of infringement is based on the use of any Software in combination with any program or equipment not furnished by-NCR; (ii) if the infringement claim relates to Software which is used by Customer in a manner for which it was not designed; (iii) if Customer fails to promptly notify NCR in writing of any legal action or allegation of infringement or thereafter fails to provide NCR with all reasonable and necessary cooperation in the defense or settlement of such claims; or (iv) if NCR does not have sole control of the defense of any legal action and all negotiations for its settlement. THE ABOVE STATES THE ENTIRE LIABILITY OF NCR WITH RESPECT TO INFRINGEMENT OF PATENTS, RIGHTS, OR TRADE SECRETS, FOR ALL EQUIPMENT, SERVICES AND MATERIAL PROVIDED UNDER THIS AGREEMENT. 26.0 WARRANTY AND LIMITATION OF LIABILITY NCR warrants that Software when operating in conjunction with unaltered associated software on designated equipment, and within required operational conditions, will reasonably comply during the test period with the Customer-level documentation furnished to Customer. NCR assumes no responsibility for Software which has been altered or modified. Customer shall determine compliance during the 30-day test period which commences immediately following delivery. If, during the test period, the Software, exclusive of documentation, is found to be not complying, NCR shall effect a resolution (which may be a subsequent issue) or terminate the license for the Software and in such event the applicable license fees previously paid to NCR by Customer will be refunded. THIS LIMITED WARRANTY STATES ALL OF NCR'S LIABILITY AND CUSTOMER'S EXCLUSIVE REMEDIES WITH RESPECT TO SOFTWARE. AFTER THE EXPIRATION OF THE LIMITED WARRANTY PERIOD, CUSTOMER ASSUMES THE ENTIRE COST OF ALL NECESSARY SERVICES OR CORRECTIONS. Ipswich Savings Bank NCRCORPORATION - --------------------------------- (Customer Name) By: David L. Grey By: - --------------------------------- --------------------------------- Title: President, not individually Title: - --------------------------------- --------------------------------- Date: 2/20/97 Date: - --------------------------------- --------------------------------- 1996 SCHEDULE 1 HOURS OF OPERATION, HOLIDAYS AND REPORT AVAILABILITY I. HOURS The NCR New England Data Center will be in operation for processing in accordance with the following schedules: 8:00 AM - 8:00 PM Monday through Friday 8:00 AM - 4:00 PM Saturday II. HOLIDAYS The NCR New England Data Center will be closed on the following holidays: New Year's Day Martin Luther King's Birthday Washington's Birthday Memorial Day Independence Day Labor Day Columbus Day Veterans Day Thanksgiving Day Christmas Day III. PROCESSING COMPLETION NCR New England Data Center agrees to complete the processing of the customer's input transactions and to have completed work ready for dispatching to the customer on the morning of the working day following the day on which the reported transaction occurred, such time to be no later, under normal conditions, than 9:00 a.m. local time. A working day means any day except Saturday, Sunday, or a holiday. Regularly scheduled reports (weekly, monthly) shall be made available within 48 hours following the close of the period. Other reports will be made available on a mutually agreed upon schedule. SCHEDULE 2 CHARGES I. STARCOM Financial Deposit Account System A. Processing Charges: Deposit account processing charges - to be paid monthly, based on the number of "Open Accounts" reported on the Savings Trial Balance (080), plus "Accounts Closed" during the month. Monthly 1. Regular Deposit Accounts - System Type 0 $.26 2. Certificates or Repo's - System Type 2 with a contract term of: a.181 or more days $.26 b. 30 through 180 days $.33 c. Less than 30 days $.42 3. NOW/DDA Accounts - System Type 3 $.54 4. STARS Retirement Account Processing a. Per STARS Account, per month (in addition to 1, 2, or 3 above) $.03 b. Monthly minimum $106.00 B. Handling Charges for magnetic tape input of NOW/DDA inclearing items delivered or transmitted to the data center: 1 Charges for receiving transmission of inclearing items, via phone lines, in addition to Item B.l. above Special Quote C. Minimum Deposit Account Processing Charges, per month (Item A. above only) $1,000.00 II. STARCOM Financial Loan Account System A. Processing Charges: Loan account processing charges - to be paid monthly based on the number of "Open Accounts" reported on the Loan Trial Balance (290). 1. Line-of-Credit, AMI, and Consumer Loans $ .03 2. Commercial Loans $ .14 3. Construction Loans $ .95 4. All other loans $ .45 a. Bill & Receipt or Coupon (in addition to loan account charge) $ .085 5. Minimum Loan Account Processing charges, per month $ 500.00 B. Serviced and Participation Loans: 1 . Processing charges, per loan, per month (in addition to A. above) $.40 III. STARCOM Financial General Ledger System A. Master file set-up regardless of transaction processing - $ 2 ,000.00 (plus travel, mileage, and reimbursable) * B. Processing Charges: Processing charges - to be paid monthly, based on institution asset size. Assets will be determined each January 1, based on the most recent Statement of Condition submitted to the FHLBB, FDIC, NCUA or other federal agency, and will then be used for the entire calendar year. Less than 100 Million $ 667.00 At least 100 but less than 200 Million $ 811.00 At least 200 but less than 300 Million $ 974.00 At least 300 but less than 400 Million $ 1,121.00 At least 400 but less than 500 Million $ 1,245.00 At least 500 million but less than 1 Billion $ 1,389.00 1 Billion or more $ 1,666.00 C. Transaction File Only: For preparation and transmission of the daily transaction file for use with selective back-office systems, processing charges to be paid monthly, based on institution asset size. Assets will be determined each January 1, based on the most recent Statement of Condition submitted to the FHLBB, FDIC, NCUA or other federal - agency, and will then be used for the entire calendar year. Less than 100 Million $ 334.00 At least 100 but less than 200 Million $ 405.00 At least 200 but less than 300 Million $ 477.00 At least 300 but less than 400 Million $ 550.00 At least 400 but less than 500 Million $ 622.00 At least 500 million but less than 1 Billion $ 694.00 1 Billion or more $ 833.00 D. Maintenance or changes to the transaction generator file, per occurrence $ 111.00 Note: This charge includes all changes made on a single processing day. E. Programming Accounting Department Style (PADS) reports developed by NCR New England DPC* Special Quote F. Running of up to 3 PADS reports, per month* No Charge G. Running of PADS reports over three reports per month, per report run* $168.00 * Item not eligible for discounts IV. STARCOM Financial: Other Charges A. Masterfile Conversion and Maintenance* 1. Initial conversion and masterfile set-up a. Computer time, per hour - new customer $ 265.00 b. Computer waiting time, per hour $ 67.00 c. DPC prepared input media, per item $ .20 2. Additions, changes, deletions to masterfile a. Entered by customer through on-line terminal No Charge b. Customer prepared media, per item (where available) $ .12 c. DPC prepared media, per item $ .22 B. Program Conditioning Charges* All applicable program conditioning charges are due at time of order. If one or more modules are not contracted originally, these charges shall be due when the applicable module is ordered. 1. Deposit accounts other than NOW/DDA $ 5,000.00 2. NOW/DDA accounts $ 2,500.00 3. Loan Accounts $ 5,500.00 4. General Ledger $ 2,000.00 5. General Ledger interface to Back Office System $ 2,000.00 6. Minimum Starcom monthly application charge $ 1,500.00 C. System Account Type Table (SATT) Set-up or maintenance* 1. Submitted via form or letter a. Per occurrence, first type $ 70.00 b. Each additional type $ 26.00 c. Maximum per occurrence $ 382.00 2. Additions or changes to parameter file $ 26.00 a. Maximum per occurrence $ 338.00 * Item not eligible for discounts D. Additional Customer Operations Manual* $ 50.00 (One free per customer) E. Additional copies or more frequent processing of Special Quote standard system reports, and requests for special reports including processing, programming, software, system engineering design and testing.* Special Quote F. Account Statements 1. Full detail - per account appearing on the statement $ .14 2. Full detail - a. per each item appearing on statement $ .00 b. each inclearing item through magnetic tape $ .00 3. Summary only - per account appearing on the statement $ .024 4. STARS Statements, each $ .14 G. Magnetic Tape File Preparation and Handling Services 1. For direct submission to government agencies, per tape (e.g. state and federal 1099s, etc.)* $ 250.00 2. For submission to credit bureaus, coupon manufacturers, or other servicers, per tape $ 55.00 3. FNMA Laser and FHLMC MIDANET, each tape or \ transmission $ 55.00 4. CDP $ 200.00 5. ACH Monthly processing charge $ 40.00 6. Other acceptable magnetic tape Special Quote H. Report Utility- Savings and Loans* 1. Base charge per customer processing request $ 150.00 2. Per account on file $ .002 *Item not eligible for discounts 3. Per Account (in addition to Item B. 2. above) a. Per account reported $ .003 b. Per account sorted and reported $ .004 NOTE: Only one of a. and b. is chargeable, not both. 4. a. Per page printed $ .05 b. Per label printed $ .05 5. Computer Output Microfiche (COM) a. Per frame $ .02 b. Additional copies Special Quote 6. Discount if on-line file is used (Deposits only) 35% 7. Minimum charge per processing- Up to 25,000 accounts on file $ 250.00 25,001 to 50,000 accounts $ 290.00 50,001 to 75,000 accounts $ 340.00 Over 75,000 accounts $ 420.00 I. Input of Transactions Received from Outside Sources, via Magnetic Tape or generated through Pre-authorized Transfers (PATS) 1. Per transaction $ .065 2. Minimum charge per occurrence $ 5.00 NOTE: Excluded are NOW/DDA inclearings as well as transactions created or generated by the STARCOM Financial System, for which no additional charges will be assessed. J. Direct Attached ATM Processing and Reporting* 1. Per month, first ATM $ 279.00 2. Per month, each additional ATM $ 84.00 K. Shared ATM/POS Network Services* 1. Monthly base charge, per network $ 300.00 2. Preparation, handling and transmission of account a. Transaction Processing Fee, Per EFT cardholder account per month $ .16 b. Balance files, per EFT cardholder account per month $ .25 K. 3. Receiving transmission, printing and distribution of network reports, Monthly fee - Remote Print $ 100.00 DPC Print $ 200.00 (Special quote if additional programming, sorting, etc. needed to be compatible with NCR New England DPC reporting.) 4. Communications Costs (if incurred by NCR New England DPC)* Special Quote 5. Conversion, set-up and network fees for 3rd party ATM on-line or off-line networks* Special Quote L. Electronic Transfer Services- ATM processing costs consist of one-time fees in addition to monthly fees. The charge for transaction processing volumes in the monthly prices takes into consideration account activity with monthly minimum charges offered. Detail pricing will be provided on request.* M. CD Notice of Earnings/Renewal $ .12 N. Savings Automatic Interest Rate Change (ARC), per month $ 67.00 O. Deposit Account Floating Rate Earnings Calculation (VRWD), per account, per month $ .06 P. VRD Processing, per month $ 75.00 Q. Sweep Account Processing a. Per linked pair of accounts, per month $ .12 b. Minimum charge per month $ 225.00 R Terminal Installation and Other Charges* 1. Initial installation of terminals: The initial installation charges for terminals into the STARCOM system for each new data center customer are shown on the next page. These charges include communications programming and the set-up of terminals into test files if required. The number of terminals or locations does not affect the initial installation charges. The specific charges do not reapply where the same charges have been made for either STARCOM loans or deposits, except in those cases identified in paragraph P.2.a.
Initial Interface & Installation Charges: a NCR NEW ENGLAND DPC BAS 5000 (UTAK) Special Quote b. ISC 8 Work Station Special Quote c. ISC Pinnacle Special Quote d. Docutel/Olivetti Line One/M30 Special Quote e. Burroughs EF7000 Special Quote f. DSI Special Quote g. IBM 3600/4700 (per controller) Special Quote h. UNISYS FAS Finesse Special Quote i. Any other terminal including NCR New England DPC or other manufacturers, subject to support and interface availability. Special Quote
All of the above charges are due at time of order. 2. Additional installation charges: a. The addition of any terminal, the replacement of terminals or the movement of a terminal from one location (branch) to another after initial installation and conversion to a STARCOM Financial application is subject to the following additional software installation charges: 1. Per workstation $ 45.00 2. If done at nonstandard time (in addition to 1 above) $ 100.00 S. Transaction Analysis Report, per month* $ 81.00 T. Federal Forms (1099, 1098, W2-P, 5498, etc.) (including preparation, handling and postage)* Special Quote U. Other Miscellaneous items*: Bonds, Treasury Bills, Coupons (per account) $ .47 Welfare Match tapes per occurrence $ 250.00 Reconciliation tapes(PDO, Club) $ 80.00 Reconciliation tapes (Money order) $ 185.00 Household Reporting Special Quote Town Code Reporting $ 165.00 Excess Deposit Report - Quarterly $ 150.00 - Special Request $ 300.00 CUNA Mutual Report (per occurrence) $ 135.00 Laser printing of forms Special Quote NCR New England DPC provided forms, Mortgage bills, or Stock Statements Special Quote V. Computer Output Microfiche (COM)-All STARCOM Reports * (Effective 1/1/97) Up to 5,999 Accounts - Per Month Charge $ 100.00 6,000 to 9,999 Accounts - Per Month Charge $ 200.00 10,000 to 14,999 Accounts - Per Month Charge $ 250.00 15,000 to 19,999 Accounts - Per Month Charge $ 300.00 20,000 to 29,999 Accounts - Per Month Charge $ 400.00 30,000 to 39,999 Accounts - Per Month Charge $ 500.00 40,000 to 49,999 Accounts - Per Month Charge $ 600.00 50,000 to S9,999 Accounts - Per Month Charge $ 700.00 60,000 to 74,999 Accounts - Per Month Charge $ 800.00 75,000 to 99,999 Accounts - Per Month Charge $1,000.0 100,0000 and up Accounts - Per Month Charge $1,500.0 V. Satellite Services A. STARSTREAM II/ORACLE-Current Customers Only 1. Monthly software license fee per personal computer connected to STARSTREAM II/ORACLE $ 134.00 2. Usage fees: a. Per record accessed (STARSTREAM) $ .0025 b. Per 1,000 accounts on the month-end trial balances, per month (STARSTREAM II/ORACLE) $ 14.06 c. Minimum charge $ 266.00 B. Oracle/Client Server 1. Upgrade from Non Client/Server single user package** a. One time License Fee $ 1,585.00 b. Monthly Maintenance Fee $ 58.00 2. Single User Package** a. One time License Fee $ 2,333.00 b. Monthly Maintenance Fee $ 58.00 3. Five User Package** a. One time License Fee $ 8,000.00 b. Monthly Maintenance Fee $ 194.00 4. Ten User Package** a. One time License Fee $15,000.00 b. Monthly Maintenance Fee $ 277.00 **Package includes SQL*Net, SQL*Plus, Data Browser, Reports V2, and Pathway Access 5. Usage fee per 1,000 accounts per month $ 14.34 (Minimum Charge of $272 per month) $ 272.00 6. WIN/Route for DOS, per Network $ 149.00 7. Telebit Netblazer PN2 for Ethernet $ 2,300.00 8. One time file extraction, per open account $ .07 a. $1,133.00 minimum b. $3,605.00 maximum 9. History: a. Standard Detail No Charge b. Additional Detail, per 1,000 items $ .26 c. Standard Summary No Charge d. Additional Summary, per 1,000 items $ .64 10. Storage fees Special Quote 11. Training: a. Client/Server & Data Browser, per day (3 day course for 2 people) $500.00 b. Oracle Reports 2.0, per day (4 day course for 2 people) $ 750.00 c. Additional people over 2, per person per day $ 75.00 12. Installation, per day $ 500.00 Note: All mileage and reimbursable related to this product is chargeable to the customer. C. Customer Information System (CIS) 1. CIS Overview a. One day overview session N/C b. One CIS Reference Manual N/C c. Additional copies of reference manual, each $ 50.00 2. Test Migration a. Under 15,000 open & closed accounts $ 800.00 b. 15,000 and over and less than 40,000 open & closed accounts $1,200.00 c. 40,000 and over open & closed accounts $1,600.00 The above includes 2 complete sets of migration reports. Remote transmissions of the migration reports included in the above quoted price. You also have the option of receiving any or all of the test migration reports on paper at a cost of $40/box of green bar paper or $60/box if laser printed. Optionally, you can receive these reports on fiche at a cost of $1.95 per page of master fiche printed and $0.25 per page of fiche copy. 3. Imperial Scrub, per open & closed account (This includes two passes of the files. Phase I - reports only; Phase II - updating files as well as reports. The entire scrub is billed when tapes are extracted for Phase I.) <15,000 Accounts $ .25/account Minimum $1,500.00 15,000 - 40,000 accounts $.23/account 40,000 accounts $.22/account 4. TPM Training 2-3 Hours $ 300.00 a. Additional manual, each $ 15.00 The above includes a short session conducted by the Data Center TPM administrator. 1 TPM manual at no charge. 5. Hands-on CIS Training- includes training and scenario manuals for up to five people a. Four days at the DPC, per day $ 500.00 b. Three days at institution, per day $ 750.00 6. Migration a. Non-STARSTREAM II customer 1. per account $ .10 2. Minimum $1,700.00 b. Current STARSTREAM II customer 1. per account $ .03 2. Minimum $ 500.00 7. Test Bank Charges During Hands on training, the Institution will be granted access to the test bank. This access will allow the people trained to then train the Institutions personnel in a hands on environment. 1. Access up to migration date N/C 2. Beyond migration date $100.00/Week 8. Conversion Coverage 1. Two NCR Analysts for three days N/C 2. Additional coverage, per person, per day $ 250.00 9. Other Charges 1. CIS migration table changes, per occurrence $ 200.00 2. Post Migration training (up to 5 people per session) $150.00/per person/per session Note: All mileage and reimbursable related to this product is chargeable to the customer. D. Micro Upload 1. Single-User OTLF - 1st copy $ 1,500.00 2. Additional copies $ 1,000.00 3. Network ( 8 stations max.) Server 1 $ 2,000.00 Server 2 $ 1,500.00 Server 3 $ 1,500.00 4. Installation & Training $500.00 per day 5. Annual maintenance fee (15% OTLF) billed by Integrated Software Systems Note: All mileage and reimbursable related to this product is chargeable to the customer. E. Micro StarReport 1. One time license fee $ 2,652.00 2. Monthly software maintenance fee $ 35.00 3. Installation & Training $ 750.00 4. Cleo Communication Board $ 975.00 Note: All mileage and reimbursable related to this product is chargeable to the customer. F. The services listed in sections G-L are specially quoted due to the numerous factors involved in determining the price. The following is a list of the factors considered when quoting these products. One-time license fee Single user versus Multi user Stand alone versus local area network version Monthly versus annual maintenance fee Additional copies of the software Installation and training Customer support Extraction of files Network upgrades PC upgrades Additional software (i.e. Word Perfect) Documentation Consultation and development Contract length (i.e. five year versus 3 year agreement) Number of ports, connections, workstations, etc. Additional equipment (i.e. communication boards, printers) Additional services (i.e. custom programming) Usage fees G. Conversant (Voice Response System) See Section VF H. Branch Management System (BMS) See Section VF I. Optical Disk See Section VF J. Collection Management System See Section VF K. Item Processing (through NCR Framingham) See Section VF L. NCR NEW ENGLAND DPC Mortgage Management and/or Consumer Loan System Modules: 1. Base System includes FHA/VA processing and Advanced ARM Disclosure modules 2. Secondary Market 3. Closing 4. Uplink (requires NCR New England DPC Micro Upload) 5. Credit Bureau Uplink 6. Branch Processor 7. Multiple Office Console 8. HMDA/CRA Management M. The following products are offered by NCR New England DPC in conjunction with our solution partners. All pricing is special quote. 1. Micro Accounts Payable 2. Asset/Liability and Financial Planning System 3. Financial Information Plus 4. Micro Fixed Assets 5. General Ledger 6. Safe Deposit Box 7. Investment Accounting & Management System 8. Enterprise Information System (EIS) 9. Micro Securities Management System 10. Investment Portfolio Accounting 11. Loan Loss Control 12. Payroll Accounting 13. Cost Allocation System 14. Financial Report Writer 15. Shareholder Accounting 16. Asset/Liability Budget Management(ALBUM) 17. Collection Express 18. Check Express 19. Data Express 20. Escrow Express 21. Loan Setup Express 22. Name & Address Express 23. Marketing Info Center 24. The Satisfaction System 25. The Profile System 26. Customer Info Center 27. Electronic Reports 28. Management Info Center 29. Int. Rate Change System 30. Statement Express N. 9*1*1 Disaster Recovery System 1. One-time license fee $ 3,000.00 2. Monthly software license maintenance fee $ 37.50 3. Installation, training and consultation (1 day) plus mileage and reimbursable $ 750.00 VI. Network Management Charges A. Communication Network Management Charges for Dedicated Lines All DPC on-line customers sharing communication lines shall share the total data communication network management charges on a prorated basis. B. Communication Network Management Charges for Dial-up Lines (where available) The customer will be billed line charges and connect time, plus its prorated share for communication equipment and other necessary communication network management services. C. Connect and Disconnect Charges All connect and disconnect charges for telephone communications will be billed to the appropriate customer. D. Private Communications The customer may elect to install private communications, in which case the customer will order and be billed directly by the communication vendor. The customer will be billed monthly by NCR New England DPC for data sets, adapters,and communications equipment; for installation of this equipment; and for related network management services. E. Network Engineering Network engineering services including consultation, design changes, additions, etc. will be charged on a time-and-materials basis plus mileage and reimbursable expenses, if incurred. F. Termination Charges In the event the customer terminates this agreement after the date of the order, the customer will pay NCR New England DPC for services provided through the effective date of cancellation plus a termination charge determined as follows: (i) if the service commitment period for the canceled interexchange services is month-to-month, then there shall be no additional cancellation charge in excess of the one months interexchange service charges. (ii) if the services commitment period for the canceled interexchange services is greater than month-to-month and such cancellation becomes effective prior to the completion of the first year of the service commitment period, then the cancellation charge shall be an amount equal to the balance of the unexpired portion of the first year of the service commitment period plus twenty percent of the balance of the monthly interexchange service charges for the remainder of the service commitment period beyond the first year. (iii) if the service commitment period for the canceled interexchange service is greater than month-to-month and such cancellation becomes effective after the completion of the first year of the service commitment period, then the cancellation charge shall be an amount equal to twenty percent of the balance of the monthly interexchange service charges for the remainder of the service commitment period. VII. STARCOM Financial System - Five Year Variable Agreement NCR NEW ENGLAND DPC may increase the rates specified in this agreement provided that not less than ninety (90) days written notice shall be given to the customer before the effective date of the increase. If the increase exceeds 9% in any calendar year, the customer may terminate this agreement without any termination charge on the effective date of the increase with thirty (30) days written notice to NCR New England DPC. In the event that the customer terminates this agreement after the date of the order, whether prior to or after certification, NCR New England DPC shall be entitled to retain any deposit previously paid by and/or due from the customer, any charges due for the initial conversion and masterfile set-up, all discounts applicable with this contract, and in lieu of other damages actually incurred, the termination charges listed below: Eighty percent (80%) of the average monthly billing for the most recent three month period times the number of months remaining under the term of this agreement Termination charges are billable when cancellation notification is received by NCR and payable within 30 days. When the term of the Data Processing Agreement or any renewal term thereof expires, the Agreement shall renew automatically for a term equal to the expiring term unless Customer provides to NCR New England DPC, at least one hundred eighty (180) days prior to the scheduled expiration date, written notification of termination for each processing application and software license covered by the Agreement. If a shorter renewal term is desired, written notice must be provided to NCR New England DPC not less than one hundred eighty (180) days prior to the scheduled expiration date of the current term. Should the renewal term be less than three years, the customer may be subject to the then current highest rate plus the following surcharge: TERM SURCHARGE 2 Years 10% 1 Year 15% Monthly* 25% *Monthly terms are not eligible for volume discounts. In the event that the customer elects for an early termination of this agreement, all discounts provided to the customer for the remainder of their billing will cease. Customer agrees to refund to NCR New England DPC all discounts provided during this contract term, from the date of this agreement until the time of the early termination. All other standard early termination charges will be incurred by the bank. All costs relating to the deconversion (i.e. programming, materials, computer time, special processing, etc.) will be invoiced to the customer by NCR when incurred and payable within 30 days. All invoices must be paid in full prior to releasing final deconversion data. REPORTS AND SERVICES The STARCOM Financial System includes all standard reports listed below. The reports listed below are representative; their titles, contents and frequency are subject to change without notice. I. STARCOM Financial Deposit Account System Reports A. Daily Report Preparation 1. Teller Terminal Proof 2. Daily Transaction Summary Report 3. Savings Transaction Journal 4. Savings Exception Activity Journal 5. NOW/DDA Account: a. Non-Sufficient and Uncollected Funds Report b. Waived Service Charge Journal c. Kiting Suspect Report d. Stop Payment Suspect Report e. Over draft Journal f. Returned Items Report g. Non-Sufficient Funds (NSF) Notices h. Uncollected Funds Notices 6. Savings Trial Balance (Totals Only) 7. Savings Daily Maintenance Journal 8. CIF N & A Search Key Update 9. Direct Deposit Validation Report 10. NOW Inclearing Validation Report 11. ATM Transaction Validation 12. Savings Exception Recap Report 13. Savings Variable Rate Earnings Report 14. Certificate Maturity Update Journal 15. Permanent Withdrawal Order (PWO) and Income Processing Update Journal 16. Autotrans Reconciliation Report 17. Summary of Month-to-Date Savings Account Activity 18. Misc. Receipts and Checks Issued Register 19. Misc. Receipts and Checks Issued Summary B. Weekly Report Preparation 1. Savings Overdraft Trial Balance 2. Savings Trial Balance (Fiche Only) C. Monthly Report Preparation 1. Savings Trial Balance (Detail) (Fiche Only) 2. Certificate of Deposit Recap 3. Dormant and Inactive Report 4. New Account Listing 5. Closed Account Listing 6. Certificate of Deposit - Maturity Summary 7. Combined Statements Register 8. Retirement Account Billing Report 9. Retirement Account Trial Balance 10. Pension Fund Statements Register 11. STARS Overage Report/Notices 12. Investment Changes Report 13. Matured Investment Report 14. Accounts Eligible for Distribution 15. Accounts Requiring Distribution 16. Accounts Over Reinvestment Level 17. Age Summary Report 18. Distribution Summary D. Periodic Report Preparation 1. Anticipated Earnings Recalculation Journal 2. Pre-Check Exception Report 3. Savings History Print 4. Savings Account Type Table Update Report 5. Stop Payment Expiration Report 6. Savings Masterfile Print 7. Parameter Update Journal 8. Check Register 9. Earnings Crediting Exception Report 10. Earnings Transfer Journal 11. Earnings Distribution Journal and Trial Balance (Fiche Only) E. Annual Report Preparation 1. Purged Accounts Listing 2. Earnings Paid YTD Reported to IRS 3. Federal Forms Exception Report 4. STARS Shortage Report/Notices 5. All Federal Forms (see Schedule 2 for pricing) II. STARCOM Financial Loan Account System Reports A. Daily Report Preparation 1. Collateral Loan Transaction Journal 2. Exception Loan Transaction Journal 3. Consumer Loan Transaction Journal 4. Commercial Loan Transaction Journal 5. Loan Transaction Journal 6. Mortgage Loan Active-Delinquent Journal 7. Mortgage Loan Transaction Journal 8. Loan SATT Index Rate Update 9. Loan Maintenance Journal 10. Input Loan Summary Trial Balance 11. Accrual Loan Trial Balance 12. Collection Loan Disbursement Report 13. Loan Trial Balance (Summary) 14. Summary of Month-to-Date Loan 15. Commercial Loan Delinquency Report 16. Commercial Loan New Account Report 17. Commercial Loan Paid-Off Account Report 18. Commercial Loan Line of Credit Report 19. Commercial Loan Collateral Control Report 20. Commercial Loan Maintenance Journal 21. Commercial Loan Review Report 22. Commercial Loan Trial Balance 23. Consumer Loan Exception Journal 24. Single Payment Loan Maturity Report 25. Single Payment Loan Renewal 26. New Consumer Loan Report 27. New Consumer Loan Report 28. Paid Off Consumer Loan Report 29. Subsidiary Journal Participation Loans 30. Subsidiary Journal Update Report 31. Construction Loan Update Report 32. Lot Status Report B. Monthly Report Preparation 1. New Installation Loans Report 2. New Mortgage - Collateral Loans Report 3. Loans in Foreclosure Report 4. Paid Off Mortgage - Collateral Loans Report 5. Loan Trial Balance (Detail) 6. Accrued/Prepaid Journal 7. Delinquency Summary 8. Pledged Loan Report 9. Pledged Savings on Loan Accounts 10. Analysis of Loans by Asset Limitation Code 11. Analysis of Loans by FSLIC Location Code 12. Analysis of Loans by Interest Rate 13. Analysis of Loans by Location Code 14. Analysis of Loans by Purpose Code 15. Collateral Loan Report 16. Deferred Income and Expense Trailer Print 17. Deferred Expense Journal 18. Deferred Income Journal 19. Schedule RC-J Report 20. Section H Report 21. Maturity Projection Report 22. Commercial Delinquency Summary 23. Commercial Loan Inactive Account Report 24. Consumer Loan Delinquency Summary 25. (Mortgage) Loan Activity Report FNMA LASER 26. (Mortgage) Loan Activity Summary FNMA LASER 27. Monthly Payment/Note Rate Change FNMA LASER 28. Trial Balance FNMA LASER 29. FNMA 2010 Monthly Accounting Report 30. FNMA 2020 Liquidation Schedule 31. FNMA 2030 Monthly Summary Report 32. GNMA 1710A Issuers Monthly Accounting Report 33. GNMA 1710E Liquidation Schedule 34. GNMA 1710D Issuers Monthly Summary Report 35. MBS Other Detail Report 36. Cash Receipts Serviced Loans 37. Delinquent Serviced Loans 38. New/Closed Accounts Serviced Loans 39. Next Month Prepaid Serviced Loans 40. Prepaid Receipts Serviced Loans 41. Trial Balance Serviced Loans 42. Remittance Reconciliation 43. Participation Report Summary 44. 308 Group Report (FHLMC MIDANET) C. Periodic Report Preparation 1. Loan Masterfile Print 2. Commercial Loan Masterfile Print 3. Late Charge Journal 4. Delinquency Report 5. Slow Loan Report 6. Delinquency Report by Investor 7. Delinquency Summary by Investor 8. Consumer Loan Delinquency Report 9. Commercial Delinquency by Investor 10. Commercial Delinquency Summary by Investor 11. Consumer Delinquency by Investor 12. Consumer Delinquency Summary by Investor 13. Adjustable Mortgage Loan - Notice Options 14. Alternative Mortgage Instrument Analysis Report 15. Single Payment Loan Maturity Notice 16. Collection Card 17. Paid Off Loan Card 18.FNMA Special Trial Balance 19. Line of Credit Earnings Report 20. Line of Credit Trial Balance 21. Commercial Loan Compensating Balance Report 22. FHA Case Number Listing 23. IRS Report 24. Loan Disclosure Statement 25. Escrow Disbursements Due 26. Insurance Disbursements Due 27. MIP Disbursement Due 28. Taxes Due Report 29. Loan History Print 30. Purged Account Report 31. Pending Payoff Report 32. Loan Portfolio 33. Recycle/Assumption Report 34. Dealer Floorplan Update Report 35. Dealer Floorplan Collateral Report 36. Dealer Floorplan Report by Collateral Report 37. Dealer Trial Balance 38. Dealer Statistical Loan Volume 39. Dealer Floorplan Purged Collateral Report 40. Dealer Floorplan Report 41. Dealer Floorplan Inventory Report 42. Dealer Funds Report 43. Construction Loan Update Report 44. Construction Loan Builder Summary 45. Construction Loan Bill 46. Construction Loan Billing Summary 47. Construction Loan Summary Report 48. Construction Loan Master File Print 49. Loan Standard Account Type Table 50. Participation Report 51. Loan Totals Only Trial Balance 52. FHLMC Form 11 Detail 53. FHLMC Form 13SF Detail 54. FHLMC Form 381 Detail 55. FHLMC Delivery Detail Report 56. FHLMC Delivery Exception Report 57. FNMA Loan Schedule 1068 58. FNMA Loan Schedule 1069 59. FNMA Delivery Exception Report 60. Loan Masterfile Processing Report III. STARCOM Financial General Ledger System Reports A. Daily Report Preparation 1. Transaction Entry Run Report: Input Source Totals 2. Daily Trial Balance and Posting Run: Detail and Summary 3. G/l Cycle Update Report 4. Trial Balance by Account 5. Trial Balance by Master Record 6. Master File Maintenance Report B. Monthly Report Preparation 1. Monthly Statement of Operations (Income and Expense) 2. Custom Statement of Conditions 3. Custom Statement of Operations 4. G/L Data Extract for Financial Information Plus C. Periodic Report Preparation 1. Snapshot Report 2. Budget Report 3. Standing Journal Entry Snapshot Print Report 4. Account/Department Cross Reference Report 5. Chart of Accounts SCHEDULE 4 ADDITIONAL PROVISIONS The NCR New England DPC STARCOM Financial System is an on-line system currently capable of processing the following applications: loans, savings, NOW/DDA, and general ledger. Transactions entered through the on-line terminals cause the accounts to be updated simultaneously. Because transactions are entered on-line, the source or original entry documents are retained in the institution. The institution may inquire into individual accounts at any time. If necessary, changes (maintenance) can be performed through the on-line terminals. When disruption of communications with the central processor occurs, data capture, a terminal option, can be used to allow continued processing via off-line operations. This same option provides for the automatic re-entry of transactions processed off-line when communications are re-established. Otherwise, transactions processed through the terminal in the off-line mode are manually re-entered when communications are re-established. The system provides individual account level codes which restrict on-line accessibility to a given account. In addition, access to the on-line file is controlled by operator sign-on codes. The level of the sign-on code determines the amount of operator accessibility. The control and procedures governing the issuance of these codes to operating personnel are the responsibility of the customer. The NCR New England DPC Regional STARCOM Data Centers use computer hardware which provides adequate processing power to serve the needs of our customers. The current equipment configuration will be published at least annually to the Users Group. NCR New England DPC reserves the right to make computer or equipment changes necessary to serve our customers. Each NCR New England DPC Regional STARCOM Data Center has a formalized procedure for maintaining masterfile account data. In the event of a disaster, these files, along with other data, would be used to recreate the destroyed files. The disaster procedures for each Data Center are available for inspection at the data center for the Users Committee, third party auditor, and state or federal examiners. NCR New England DPC agrees that during the term of the Agreement, the Office of Thrift Supervision (OTS) will have the authority and responsibility provided to the other regulatory agencies pursuant to the Bank Service Corporation Act, 12 U.S.C. Section 1867(c). NCR New England DPC also will provide the OTS District Director of the district in which the NCR New England DPC data processing center providing services under the Agreement is located with a copy of the current third party review report when a review has been performed. NCR New England DPC agrees to provide the Office of the Thrift Supervision of the district in which the NCR New England DPC data processing center providing services under this Agreement is located with a copy of NCR New England DPC's current audited financial statements annually. NCR New England DPC also agrees to release the information necessary to allow Customer to develop a disaster contingency plan which will work in concert with NCR New England DPC's plan. SECURITY OF CUSTOMER INFORMATION Data Processing Center on-site fire retardant data vaults will be utilized on a daily basis, to store magnetic masterfiles and the daily transaction files. Duplicate copies of the masterfile will be stored on a weekly basis, at a secure off-site location and will be backed up with the daily transactions retained at the on-site secure location. Data Processing Center has installed protective measures to insure the continuation of processing in the event of disaster such as fire, flood, or loss of power. These may include security systems, smoke, fire, and water detectors, back-up generators, uninterruptable power supply (U.P.S.) In the event that processing cannot continue on- site, communications may be routed to the back up processing hot-site through the Mobile Communications Vehicle. Data Processing Center has a disaster recovery plan in place which outlines procedures that will be followed in the event of disaster. These plans are currently being updated by the installation of the 9.1.1 Disaster Recovery software for Data Processing Center Environments. Data Processing Center has a planned minimum response time of 72 hours required to restore access to user institutions' records in the event of a disaster. The 9.1.1 Disaster Recovery software for Data Processing Centers will be reviewed in all data centers on an annual basis. The communications portion of disaster recovery will be tested periodically. The NCR New England DPC Corporation provides insurance coverage for NCR New England DPC Data Processing Centers. This coverage includes the replacement of E.D.P. equipment, reconstruction of data file media, and extra expense that might result should a loss occur. These insurance policies will not indemnify our customers. Procurement of telephone services and/or communications hardware from third parties ("Provider(s)") is done as an accommodation to Customer. NCR NEW ENGLAND DPC IS NOT RESPONSIBLE FOR AND DOES NOT WARRANT THE PERFORMANCE OF ANY PROVIDER OR ITS SERVICES AND CUSTOMER AGREES THAT NCR NEW ENGLAND DPC HAS NO LIABILITY THEREFOR. Customer agrees to be bound by the terms of (i) any agreement between NCR New England DPC and any Provider and/or (ii) any applicable tariff, which terms relate to warranties, the limitation of such Provider's liabilities, and the availability of remedies. If Customer sues a Provider and obtains a judgment against it or settles a controversy with a Provider, and NCR New England DPC is liable to the provider therefor, whether by operation of law or by contract or otherwise, Customer shall indemnify NCR New England DPC therefor. ADDENDUM TO THE DATA PROCESSING AGREEMENT BETWEEN THE IPSWICH SAVINGS BANK AND THE NCR NEW ENGLAND DATA CENTER In consideration of a five year Data Processing Agreement, the NCR Data Center will make the following incentives available to the Ipswich Savings Bank. o Waiver of the 1997 & 1998 price increase that will become effective in the month this Agreement is signed. In the event NCR deems in necessary to increase prices in the future, they will be tied to but not to exceed the published CPI rate. o Ipswich Savings Bank will retain the 19% discount on core processing from its previous contract. Ipswich Savings Bank will not incur a surcharge for their ISC teller terminals as described in the 1996 terminal twilight letter from NCR. o Ipswich Savings Bank will not incur early termination penalties if they migrate to the Autobank system during this five year agreement. Standard conversion charges would apply. o Ipswich will have an "early out" option that can be exercised during the month of August 1998 for both STARCOM and Item processing. Under this option Ipswich Savings Bank may give NCR six months notification of their intention to deconvert; and not pay early termination penalties as outlined in schedule A. This option supersedes schedule A. If Ipswich exercises this option three fifths of all discount given the Institution over the first 18 months of the contract will be paid back to NCR and all future discounts on processing will be halted for the remaining six months. If these discounts are not paid back this option will be null and void and early termination penalties for a five year contract will apply as outline in schedule A of this agreement. o Thefollowing products will be discounted if purchased by February 28th of 1998: BMS Software - 10% Oracle migration fee of seven cents an account will be waived IS migration fee of three cents an account will be waived Optical Disk- 10% Conversant (service bureau option) - 10% NCR's charges for contract termination can be found on the attached Schedule A. These charges supersede the charges listed in our Data processing and pricing Agreement. APPROVALS TO THIS ADDENDUM: IPSWICH SAVINGS BANK BY:/s/David Grey - --------------------------------------- David Grey, President, not individually NCR NEW ENGLAND DATA CENTER BY: - --------------------------------------- SCHEDULE A In the event that the customer terminates this agreement after the date of the order, whether prior to or after certification, NCR shall be entitled to retain any deposit previously paid by and/or due from the customer, any charges due for the initial conversion and masterfile set up, and in lieu of other damages actually incurred, their termination charges listed below: Termination During Months Month 1-12 o Eight times the average monthly billing* for the most recent three month period, or eight times the proposed monthly billing*, whichever is greater. Month 13 - 24 o Six times the average monthly billing* for the most recent three month period. Month 25 - 36 o Four times the average monthly billing* for the most recent three month period Month 37 - 60 o Three times the average monthly billing* for the most recent three month period. *Monthly billing - as described above refers to Monthly Base charges and Data Communications charges only. This schedule supersedes the early termination penalties in section 17-2. EX-27 22
9 1,000 6-MOS DEC-31-1999 JUN-30-1999 6,418 5,626 0 0 29,917 19,336 18,877 193,103 1,830 269,757 202,209 48,000 3,963 0 0 0 252 15,333 269,757 7229 1532 72 8,833 3,221 4,669 4,164 90 65 3,700 1,931 1,931 0 0 1,352 .56 .53 3.23 249 0 40 0 1,742 27 25 1,830 1,830 0 0
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