SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of Report
(Date of Earliest Event Reported):
December 24, 2008 (December 19, 2008)
ENTERPRISE
BANCORP, INC.
(exact name of
registrant as specified in charter)
Massachusetts
(State or Other Jurisdiction
of Incorporation)
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0-21021
(Commission
File Number)
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04-3308902
(IRS Employer
Identification No.)
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222
Merrimack Street
Lowell, Massachusetts
(address of principal executive offices)
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01852
(Zip Code)
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(978)
459-9000
(Registrants
telephone number, including area code)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 5.02(e)
Compensatory
Arrangements of Certain Officers
Amendments to Executive Salary Continuation
Agreements
On December 19,
2008, the registrants principal subsidiary, Enterprise Bank and Trust Company
(the Bank), entered into amendments to the existing supplemental salary
continuation agreements that it maintains with its chairman, George L. Duncan, its
president and chief lending officer, Richard W. Main, and one of its executive
vice presidents, Robert R. Gilman. The
amendments, copies of which are included as Exhibits 10.1.1, 10.1.2 and 10.1.3 to
this report, are intended to implement certain changes to the existing
agreements that are required to be made by year-end 2008 to ensure continuing
compliance with the executive deferred compensation rules of the Internal
Revenue Service under Section 409A of the Internal Revenue Code and the
IRSs final implementing regulations (the 409A Rules).
The
material changes to the existing agreements resulting from the amendments are
as follows: (i) the vesting of the
executives retirement benefit will continue if he reduces his work schedule to
less than full-time, so long as his work hours remain at more than 20% of his
average hours over the last three years (this change has no effect on Messrs. Duncan
and Gilman, who are already fully vested in their benefits under the existing
agreements); (ii) the executives fully vested benefit becomes
automatically payable upon a change of control (this change also has no effect
on Messrs. Duncan and Gilman, who are already receiving payments of their
fully vested benefits under the existing agreements); and (iii) the
amendment and termination provisions contained in the existing agreements have
been revised to comply with certain technical requirements of the 409A Rules.
The
Banks initial adoption of the existing agreements and the material terms
thereof were previously reported by the registrant in its current report on Form 8-K
filed on July 20, 2005.
Amended and Restated Executive Employment
Agreements
On December 19,
2008, the registrant and the Bank entered into new amended and restated employment
agreements with Messrs. Duncan and Main and with John P. Clancy, Jr.,
the chief executive officer of the registrant and the Bank. These new agreements, copies of which are
included as Exhibits 10.2.1, 10.2.2 and 10.2.3 to this report, replace in their
entirety the previous employment agreements that the registrant and the Bank had
maintained with each of Messrs. Duncan, Main and Clancy. The new agreements are intended to both simplify
the executives existing contractual arrangements and implement certain changes
to the previous agreements that are required to be made by year-end 2008 to
ensure continuing compliance with the 409A Rules.
The
material changes to the previous agreements resulting from the adoption of the
new agreements are as follows: (i) the timing of the payments of certain
severance benefits under the agreements has been modified to ensure compliance
with the 409A Rules, including payments of benefits in lump sum rather than in
installments; (ii) the registrant and the Bank have retained
2
claw back rights with respect to the various
severance benefits payable under the agreement in the event that the executive
breaches certain confidentiality, non-competition and non-solicitation
obligations; (iii) the executive has granted a general release to the
registrant and the Bank in exchange for the various severance benefits payable
under the agreement; (iv) additional return of materials and intellectual
property obligations have been added on the part of the executive; and (v) the
executives non-competition and non-solicitation obligations have been updated.
The
adoption of the previous agreements by the registrant and the Bank and the
material terms thereof, including several amendments to such agreements, were
previously reported by the registrant in its annual report on Form 10-K
filed for the year ended December 31, 2003, its quarterly report filed for
the quarter ender March 31, 2004, its current reports on Forms 8-K filed
on January 3, 2005 and October 18, 2006 and its annual report on Form 10-K
filed for the year ended December 31, 2006.
Amended and Restated Change in
Control/Noncompetition Agreement
On December 19,
2008, the registrant and the Bank entered into a new amended and restated change
in control/noncompetition agreement with Mr. Gilman. This new agreement, a copy of which is
included as Exhibit 10.3.1 to this report, replaces in its entirety the
previous change in control/noncompetition agreement that the registrant and the
Bank had maintained with Mr. Gilman.
The new agreement is intended to both update the executives existing change
in control and non-competition arrangements and implement certain changes to
the previous agreement that are required to be made by year-end 2008 to ensure
continuing compliance with the 409A Rules.
The
material changes to the previous agreement resulting from the adoption of the
new agreement are as follows: (i) the timing of the payments of severance
benefits under the agreement has been modified to ensure compliance with the 409A
Rules, including payments of the benefits in lump sum rather than in
installments; (ii) the registrant and the Bank have retained claw back rights
with respect to severance benefits under certain circumstances in the event
that the executive breaches certain confidentiality, non-competition and
non-solicitation obligations; (iii) the executive has granted a general
release to the registrant and the Bank in exchange for the severance benefit
payable in connection with a change in control; (iv) additional return of
materials and intellectual property obligations have been added on the part of
the executive; and (v) the executives non-competition and
non-solicitation obligations have been updated.
The
adoption of Mr. Gilmans previous change in control/noncompetition
agreement by the registrant and the Bank and the material terms thereof,
including certain amendments to the agreement, were previously reported by the
registrant in its quarterly report filed for the quarter ended September 30,
2001, its current report on Form 8-K filed on July 20, 2005 and its
annual report on Form 10-K filed for the year ended December 31,
2006.
3
Item 9.01.
Financial Statements and Exhibits
(a)
Not applicable
(b)
Not applicable
(c)
The following exhibits are included with this report:
Exhibit 10.1.1
First Amendment dated December 19,
2008 to Salary Continuation Agreement dated as of July 15, 2005 by and between
the Bank and George L. Duncan.
Exhibit 10.1.2
First Amendment dated December 19,
2008 to Salary Continuation Agreement dated as of July 15, 2005 by and
between the Bank and Richard W. Main.
Exhibit 10.1.3
First Amendment dated December 19,
2008 to Salary Continuation Agreement dated as of July 15, 2005 by and
between the Bank and Robert R. Gilman.
Exhibit 10.2.1
Employment Agreement dated December 19,
2008 by and among the Registrant, the Bank and George L. Duncan.
Exhibit 10.2.2
Employment Agreement dated December 19,
2008 by and among the Registrant, the Bank and Richard W. Main.
Exhibit 10.2.3
Employment Agreement dated December 19,
2008 by and among the Registrant, the Bank and John P. Clancy, Jr.
Exhibit 10.3.1
Change in Control/Noncompetition
Agreement dated December 19, 2008 by and among the Registrant, the Bank
and Robert R. Gilman.
[Remainder of Page Intentionally
Blank]
4
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 hereunto duly authorized.
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ENTERPRISE BANCORP, INC.
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Date: December 24,
2008
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By:
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/s/
James A. Marcotte
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James A.
Marcotte
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Executive
Vice President, Treasurer
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and Chief
Financial Officer
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5
Exhibit 10.1.1
ENTERPRISE BANK AND TRUST COMPANY
FIRST AMENDMENT TO SALARY CONTINUATION AGREEMENT
THIS FIRST AMENDMENT is adopted this 19th day of
December, 2008 by and between ENTERPRISE BANK AND TRUST COMPANY, a
state-chartered commercial bank located in Lowell, Massachusetts (the Bank),
and GEORGE L. DUNCAN (the Executive).
The Bank and the Executive have previously executed
that certain Salary Continuation Agreement on July 15, 2005 effective as
of January 1, 2005 (the Agreement).
The
undersigned hereby amend the Agreement for the purpose of bringing the
Agreement into compliance with Section 409A of the Internal Revenue Code
of 1986, as amended. Therefore, the
following changes shall be made:
Sections 1.2 and 1.13 of the Agreement shall be deleted in their
entirety.
Section 1.17 of the Agreement shall be deleted in its entirety and
replaced by the following:
1.17
Separation from Service
means
termination of the Executives employment
with the Bank for
reasons other than death or Disability.
Whether a Separation from Service has occurred is determined in
accordance with the requirements of Code Section 409A based on whether the
facts and circumstances indicate that the Bank and Executive reasonably
anticipated that no further services would be performed after a certain date or
that the level of bona fide services the Executive would perform after such
date (whether as an employee or as an independent contractor) would permanently
decrease to no more than twenty percent (20%)
of
the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding thirty-six (36) month
period (or the full period of services to the Bank if the Executive has been
providing services to the Bank less than thirty-six (36) months).
The first sentence of Section 2.1 of the Agreement shall be
deleted in its entirety and replaced by the following:
2.1
Normal Retirement Benefit
.
If the Executive reaches Normal Retirement Age prior to experiencing a
Separation from Service, the Bank shall distribute the benefit described in
this Section 2.1 in lieu of any other benefit under this Article.
The first sentence of Section 2.3 of the Agreement shall be
deleted in its entirety and replaced by the following:
2.3
Disability Benefit
.
Upon the occurrence of Disability prior to Normal Retirement Age, the
Bank shall distribute the benefit described in this Section 2.3 in lieu of
any other benefit under this Article.
The first sentence of Section 2.4 and Subsections 2.4.1 and 2.4.2
of the Agreement shall be deleted in their entirety and replaced by the
following:
2.4
Change of Control Benefit
.
Upon a Change in Control, the Bank shall distribute the benefit
described in this Section 2.4 in lieu of any other benefit under this
Article.
2.4.1
Amount of Benefit
.
The benefit under this Section 2.4 is the Normal Retirement Benefit
amount described in Section 2.1.1.
The Executive shall be one hundred percent (100%) vested in the Normal
Retirement Benefit upon a Change in Control.
2.4.2
Distribution of Benefit
.
The Bank shall distribute the annual benefit to the Executive in twelve
(12) consecutive equal monthly installments commencing within thirty (30) days
following a Change in Control. The
annual benefit shall be distributed to the Executive for twenty (20) years.
The following Section 2.6 shall be added to the Agreement
immediately following Section 2.5:
2.6
Change in Form or Timing of
Distributions
. For
distribution of benefits under this Article 2, the Executive and the Bank
may, subject to the terms of Sections 8.1 and 8.2 below, amend this Agreement
to delay the timing or change the form of distributions; provided, however,
that any such amendment:
(a)
may
not accelerate the time or schedule of any distribution, except as provided in
Code Section 409A;
(b)
must,
for benefits distributable under Sections 2.1 and 2.3, be made at least twelve
(12) months prior to the first scheduled distribution;
(c)
must,
for benefits distributable under Sections 2.1, 2.2 and 2.4, delay the
commencement of distributions for a minimum of five (5) years from the
date the first distribution was originally scheduled to be made;
and
(d)
must take effect not less than twelve (12)
months after the amendment is made.
The first sentence of Section 3.1 of the Agreement shall be
deleted in its entirety and replaced by the following:
3.1
Death Benefit
.
If the Executive dies prior to experiencing a Separation from Service
and prior to reaching Normal Retirement Age, the Bank shall distribute to the
Beneficiary the benefit described in this Section 3.1 in lieu of any other
benefit under Article 2 of this Agreement.
Section 8.1, including without limitation Subsections 8.1.1 and
8.1.2, of the Agreement shall be deleted in its entirety and replaced by the
following:
8.1
Amendments
. This Agreement may be amended
only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this
Agreement
2
to conform with written directives to the Bank from
its auditors or banking regulators or to comply with legislative or
administrative changes of applicable tax law, including without limitation Section 409A
of the Code and any and all Treasury regulations and guidance promulgated
thereunder.
The following Sections 8.3 and 8.4 shall be added to the Agreement
immediately following Section 8.2:
8.3
Plan Termination Generally
. This
Agreement may be terminated only by a written agreement signed by the Bank and
the Executive. Any termination of this
Agreement shall not result in any loss of accrued benefits to the Executive,
and the benefit to the Executive hereunder in the event of any such termination
shall be the Account Value as of the date this Agreement is terminated. Except as provided in Section 8.4 below,
the termination of this Agreement shall not cause a distribution of benefits
under this Agreement. Rather, after such
termination, benefit distributions will be made at the earliest distribution
event permitted under Article 2 or Article 3 of this Agreement.
8.4
Plan Terminations Under Section 409A
.
Notwithstanding anything to the contrary in Section 8.3 above, if
this Agreement is terminated under any of the following circumstances, then the
Bank may distribute the Account Value, as determined as of the date of such
termination, to the Executive in a lump sum, subject to the terms set forth
below:
(a)
Within thirty (30) days before or twelve (12)
months after a Change in Control, provided that all distributions are made no
later than twelve (12) months following such termination of this Agreement and
further provided that all of the Banks arrangements that are
substantially similar to this Agreement are likewise terminated so that the
Executive and all participants in such similar arrangements are required
to receive all amounts of compensation deferred under the terminated
arrangements within twelve (12) months of such terminations;
(b)
Upon the Banks dissolution or with the
approval of the Federal Deposit Insurance Corporation or any successor federal
agency, provided that the amounts deferred under this Agreement are included in
the Executives gross income in the latest of (i) the calendar year in
which this Agreement is terminated; (ii) the calendar year in which the
amount payable to the Executive under this Agreement is no longer subject to a
substantial risk of forfeiture; or (iii) the first calendar year in which
the distribution is administratively practical; or
(c)
Upon the Banks termination of this Agreement
and all other arrangements that would be aggregated with this Agreement
pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive
participated in such arrangements (Similar Arrangements), provided that (i) such
termination and accompanying liquidation of the Account Value does not occur
proximate to a downturn in the financial health of the Bank, (ii) all
termination distributions are made no earlier than twelve (12) months and no
later than twenty-four (24) months following such termination, and (iii) the
Bank does not adopt any new arrangement that would be a Similar Arrangement for
a minimum of three (3) years following the date on
3
which the Bank takes all necessary action to
irrevocably terminate this Agreement and liquidate the Account Value.
IN WITNESS OF THE ABOVE
, the Executive and a duly authorized representative of the Bank have
signed this First Amendment as a sealed instrument.
Executive:
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Enterprise Bank and Trust
Company
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/s/ George L. Duncan
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By:
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/s/ John P. Clancy, Jr.
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George L. Duncan
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Title: Chief Executive Officer
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4
Exhibit 10.1.2
ENTERPRISE BANK AND TRUST COMPANY
FIRST AMENDMENT TO SALARY CONTINUATION AGREEMENT
THIS FIRST AMENDMENT is adopted this 19th day of December 19,
2008 by and between ENTERPRISE BANK AND TRUST COMPANY, a state-chartered
commercial bank located in Lowell, Massachusetts (the Bank), and RICHARD W.
MAIN (the Executive).
The Bank and the Executive have previously executed
that certain Salary Continuation Agreement on July 15, 2005 effective as
of January 1, 2005 (the Agreement).
The
undersigned hereby amend the Agreement for the purpose of bringing the
Agreement into compliance with Section 409A of the Internal Revenue Code
of 1986, as amended. Therefore, the
following changes shall be made:
Sections 1.2 and 1.13 of the Agreement shall be deleted in their
entirety.
Section 1.17 of the Agreement shall be deleted in its entirety and
replaced by the following:
1.17
Separation from Service
means
termination of the Executives employment
with the Bank for
reasons other than death or Disability.
Whether a Separation from Service has occurred is determined in
accordance with the requirements of Code Section 409A based on whether the
facts and circumstances indicate that the Bank and Executive reasonably
anticipated that no further services would be performed after a certain date or
that the level of bona fide services the Executive would perform after such
date (whether as an employee or as an independent contractor) would permanently
decrease to no more than twenty percent (20%)
of
the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding thirty-six (36) month
period (or the full period of services to the Bank if the Executive has been
providing services to the Bank less than thirty-six (36) months).
The first sentence of Section 2.1 of the Agreement shall be
deleted in its entirety and replaced by the following:
2.1
Normal Retirement Benefit
.
If the Executive reaches Normal Retirement Age prior to experiencing a
Separation from Service, the Bank shall distribute the benefit described in
this Section 2.1 in lieu of any other benefit under this Article.
The first sentence of Section 2.3 of the Agreement shall be
deleted in its entirety and replaced by the following:
2.3
Disability Benefit
.
Upon the occurrence of Disability prior to Normal Retirement Age, the
Bank shall distribute the benefit described in this Section 2.3 in lieu of
any other benefit under this Article.
The first sentence of Section 2.4 and Subsections 2.4.1 and 2.4.2
of the Agreement shall be deleted in their entirety and replaced by the
following:
2.4
Change of Control Benefit
.
Upon a Change in Control, the Bank shall distribute the benefit
described in this Section 2.4 in lieu of any other benefit under this
Article.
2.4.1
Amount of Benefit
.
The benefit under this Section 2.4 is the Normal Retirement Benefit
amount described in Section 2.1.1.
The Executive shall be one hundred percent (100%) vested in the Normal
Retirement Benefit upon a Change in Control.
2.4.2
Distribution of Benefit
.
The Bank shall distribute the annual benefit to the Executive in twelve
(12) consecutive equal monthly installments commencing within thirty (30) days
following a Change in Control. The
annual benefit shall be distributed to the Executive for twenty (20) years.
The following Section 2.6 shall be added to the Agreement
immediately following Section 2.5:
2.6
Change in Form or Timing of
Distributions
. For
distribution of benefits under this Article 2, the Executive and the Bank
may, subject to the terms of Sections 8.1 and 8.2 below, amend this Agreement
to delay the timing or change the form of distributions; provided, however,
that any such amendment:
(a)
may
not accelerate the time or schedule of any distribution, except as provided in
Code Section 409A;
(b)
must,
for benefits distributable under Sections 2.1 and 2.3, be made at least twelve
(12) months prior to the first scheduled distribution;
(c)
must,
for benefits distributable under Sections 2.1, 2.2 and 2.4, delay the
commencement of distributions for a minimum of five (5) years from the
date the first distribution was originally scheduled to be made;
and
(d)
must take effect not less than twelve (12)
months after the amendment is made.
The first sentence of Section 3.1 of the Agreement shall be
deleted in its entirety and replaced by the following:
3.1
Death Benefit
.
If the Executive dies prior to experiencing a Separation from Service
and prior to reaching Normal Retirement Age, the Bank shall distribute to the
Beneficiary the benefit described in this Section 3.1 in lieu of any other
benefit under Article 2 of this Agreement.
Section 8.1, including without limitation Subsections 8.1.1 and
8.1.2, of the Agreement shall be deleted in its entirety and replaced by the
following:
8.1
Amendments
. This Agreement may be amended
only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this
Agreement
2
to conform with written directives to the Bank from
its auditors or banking regulators or to comply with legislative or
administrative changes of applicable tax law, including without limitation Section 409A
of the Code and any and all Treasury regulations and guidance promulgated
thereunder.
The following Sections 8.3 and 8.4 shall be added to the Agreement
immediately following Section 8.2:
8.3
Plan Termination Generally
. This
Agreement may be terminated only by a written agreement signed by the Bank and
the Executive. Any termination of this
Agreement shall not result in any loss of accrued benefits to the Executive,
and the benefit to the Executive hereunder in the event of any such termination
shall be the Account Value as of the date this Agreement is terminated. Except as provided in Section 8.4 below,
the termination of this Agreement shall not cause a distribution of benefits
under this Agreement. Rather, after such
termination, benefit distributions will be made at the earliest distribution
event permitted under Article 2 or Article 3 of this Agreement.
8.4
Plan Terminations Under Section 409A
.
Notwithstanding anything to the contrary in Section 8.3 above, if
this Agreement is terminated under any of the following circumstances, then the
Bank may distribute the Account Value, as determined as of the date of such
termination, to the Executive in a lump sum, subject to the terms set forth
below:
(a)
Within thirty (30) days before or twelve (12)
months after a Change in Control, provided that all distributions are made no
later than twelve (12) months following such termination of this Agreement and
further provided that all of the Banks arrangements that are
substantially similar to this Agreement are likewise terminated so that the
Executive and all participants in such similar arrangements are required
to receive all amounts of compensation deferred under the terminated
arrangements within twelve (12) months of such terminations;
(b)
Upon the Banks dissolution or with the
approval of the Federal Deposit Insurance Corporation or any successor federal
agency, provided that the amounts deferred under this Agreement are included in
the Executives gross income in the latest of (i) the calendar year in
which this Agreement is terminated; (ii) the calendar year in which the
amount payable to the Executive under this Agreement is no longer subject to a
substantial risk of forfeiture; or (iii) the first calendar year in which
the distribution is administratively practical; or
(c)
Upon the Banks termination of this Agreement
and all other arrangements that would be aggregated with this Agreement
pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive
participated in such arrangements (Similar Arrangements), provided that (i) such
termination and accompanying liquidation of the Account Value does not occur
proximate to a downturn in the financial health of the Bank, (ii) all
termination distributions are made no earlier than twelve (12) months and no
later than twenty-four (24) months following such termination, and (iii) the
Bank does not adopt any new arrangement that would be a Similar Arrangement for
a minimum of three (3) years following the date on
3
which the Bank takes all necessary action to
irrevocably terminate this Agreement and liquidate the Account Value.
IN WITNESS OF THE ABOVE
, the Executive and a duly authorized representative of the Bank have
signed this First Amendment as a sealed instrument.
Executive:
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Enterprise Bank and Trust
Company
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/s/ Richard W. Main
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By:
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/s/ John P. Clancy, Jr.
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Richard W. Main
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Title: Chief Executive Officer
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4
Exhibit 10.1.3
ENTERPRISE BANK AND TRUST COMPANY
FIRST AMENDMENT TO SALARY CONTINUATION AGREEMENT
THIS FIRST AMENDMENT is adopted this 19th day of
December, 2008 by and between ENTERPRISE BANK AND TRUST COMPANY, a
state-chartered commercial bank located in Lowell, Massachusetts (the Bank),
and
ROBERT R. GILMAN
(the
Executive).
The Bank and the Executive have previously executed
that certain Salary Continuation Agreement on July 15, 2005 effective as
of January 1, 2005 (the Agreement).
The
undersigned hereby amend the Agreement for the purpose of bringing the
Agreement into compliance with Section 409A of the Internal Revenue Code
of 1986, as amended. Therefore, the
following changes shall be made:
Sections 1.2 and 1.13 of the Agreement shall be deleted in their
entirety.
Section 1.17 of the Agreement shall be deleted in its entirety and
replaced by the following:
1.17
Separation from Service
means
termination of the Executives employment
with the Bank for
reasons other than death or Disability.
Whether a Separation from Service has occurred is determined in
accordance with the requirements of Code Section 409A based on whether the
facts and circumstances indicate that the Bank and Executive reasonably
anticipated that no further services would be performed after a certain date or
that the level of bona fide services the Executive would perform after such
date (whether as an employee or as an independent contractor) would permanently
decrease to no more than twenty percent (20%)
of
the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding thirty-six (36) month
period (or the full period of services to the Bank if the Executive has been
providing services to the Bank less than thirty-six (36) months).
The first sentence of Section 2.1 of the Agreement shall be
deleted in its entirety and replaced by the following:
2.1
Normal Retirement Benefit
.
If the Executive reaches Normal Retirement Age prior to experiencing a
Separation from Service, the Bank shall distribute the benefit described in
this Section 2.1 in lieu of any other benefit under this Article.
The first sentence of Section 2.3 of the Agreement shall be
deleted in its entirety and replaced by the following:
2.3
Disability Benefit
.
Upon the occurrence of Disability prior to Normal Retirement Age, the
Bank shall distribute the benefit described in this Section 2.3 in lieu of
any other benefit under this Article.
The first sentence of Section 2.4 and Subsections 2.4.1 and 2.4.2
of the Agreement shall be deleted in their entirety and replaced by the
following:
2.4
Change of Control Benefit
.
Upon a Change in Control, the Bank shall distribute the benefit
described in this Section 2.4 in lieu of any other benefit under this
Article.
2.4.1
Amount of Benefit
.
The benefit under this Section 2.4 is the Normal Retirement Benefit
amount described in Section 2.1.1.
The Executive shall be one hundred percent (100%) vested in the Normal
Retirement Benefit upon a Change in Control.
2.4.2
Distribution of Benefit
.
The Bank shall distribute the annual benefit to the Executive in twelve
(12) consecutive equal monthly installments commencing within thirty (30) days
following a Change in Control. The
annual benefit shall be distributed to the Executive for twenty (20) years.
The following Section 2.6 shall be added to the Agreement
immediately following Section 2.5:
2.6
Change in Form or Timing of
Distributions
. For
distribution of benefits under this Article 2, the Executive and the Bank
may, subject to the terms of Sections 8.1 and 8.2 below, amend this Agreement
to delay the timing or change the form of distributions; provided, however,
that any such amendment:
(a)
may
not accelerate the time or schedule of any distribution, except as provided in
Code Section 409A;
(b)
must,
for benefits distributable under Sections 2.1 and 2.3, be made at least twelve
(12) months prior to the first scheduled distribution;
(c)
must,
for benefits distributable under Sections 2.1, 2.2 and 2.4, delay the
commencement of distributions for a minimum of five (5) years from the
date the first distribution was originally scheduled to be made;
and
(d)
must take effect not less than twelve (12)
months after the amendment is made.
The first sentence of Section 3.1 of the Agreement shall be
deleted in its entirety and replaced by the following:
3.1
Death Benefit
.
If the Executive dies prior to experiencing a Separation from Service
and prior to reaching Normal Retirement Age, the Bank shall distribute to the
Beneficiary the benefit described in this Section 3.1 in lieu of any other
benefit under Article 2 of this Agreement.
Section 8.1, including without limitation Subsections 8.1.1 and
8.1.2, of the Agreement shall be deleted in its entirety and replaced by the
following:
8.1
Amendments
. This Agreement may be amended
only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this
Agreement
2
to conform with written directives to the Bank from
its auditors or banking regulators or to comply with legislative or
administrative changes of applicable tax law, including without limitation Section 409A
of the Code and any and all Treasury regulations and guidance promulgated
thereunder.
The following Sections 8.3 and 8.4 shall be added to the Agreement
immediately following Section 8.2:
8.3
Plan Termination Generally
. This
Agreement may be terminated only by a written agreement signed by the Bank and
the Executive. Any termination of this
Agreement shall not result in any loss of accrued benefits to the Executive,
and the benefit to the Executive hereunder in the event of any such termination
shall be the Account Value as of the date this Agreement is terminated. Except as provided in Section 8.4 below,
the termination of this Agreement shall not cause a distribution of benefits
under this Agreement. Rather, after such
termination, benefit distributions will be made at the earliest distribution
event permitted under Article 2 or Article 3 of this Agreement.
8.4
Plan Terminations Under Section 409A
.
Notwithstanding anything to the contrary in Section 8.3 above, if
this Agreement is terminated under any of the following circumstances, then the
Bank may distribute the Account Value, as determined as of the date of such
termination, to the Executive in a lump sum, subject to the terms set forth
below:
(a)
Within thirty (30) days before or twelve (12)
months after a Change in Control, provided that all distributions are made no
later than twelve (12) months following such termination of this Agreement and
further provided that all of the Banks arrangements that are
substantially similar to this Agreement are likewise terminated so that the
Executive and all participants in such similar arrangements are required
to receive all amounts of compensation deferred under the terminated
arrangements within twelve (12) months of such terminations;
(b)
Upon the Banks dissolution or with the
approval of the Federal Deposit Insurance Corporation or any successor federal
agency, provided that the amounts deferred under this Agreement are included in
the Executives gross income in the latest of (i) the calendar year in
which this Agreement is terminated; (ii) the calendar year in which the
amount payable to the Executive under this Agreement is no longer subject to a
substantial risk of forfeiture; or (iii) the first calendar year in which
the distribution is administratively practical; or
(c)
Upon the Banks termination of this Agreement
and all other arrangements that would be aggregated with this Agreement
pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive
participated in such arrangements (Similar Arrangements), provided that (i) such
termination and accompanying liquidation of the Account Value does not occur
proximate to a downturn in the financial health of the Bank, (ii) all
termination distributions are made no earlier than twelve (12) months and no
later than twenty-four (24) months following such termination, and (iii) the
Bank does not adopt any new arrangement that would be a Similar Arrangement for
a minimum of three (3) years following the date on
3
which the Bank takes all necessary action to
irrevocably terminate this Agreement and liquidate the Account Value.
IN WITNESS OF THE ABOVE
, the Executive and a duly authorized representative of the Bank have
signed this First Amendment as a sealed instrument.
Executive:
|
|
Enterprise Bank and Trust
Company
|
|
|
|
|
|
|
/s/ Robert R. Gilman
|
|
By:
|
/s/ John P. Clancy, Jr.
|
Robert R. Gilman
|
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Title: Chief Executive Officer
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4
Exhibit 10.2.1
EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT
made and entered into on the 19th day of December, 2008, by and between
Enterprise Bancorp, Inc.
, a
Massachusetts corporation with a principal office at 222 Merrimack Street,
Lowell, Massachusetts 01852
(
Company)
and its wholly owned subsidiary,
Enterprise Bank and Trust Company
,
a Massachusetts trust company with its main office at 222 Merrimack Street,
Lowell, Massachusetts 01852 ( Bank)
(Bank and Company being collectively referred to herein as the Employer), and
George L. Duncan
, who resides at
710 Andover Street, Lowell, Massachusetts
01852 ( Executive), amends and restates the Employment Agreement dated
as of January 1, 2004, as amended.
The provisions of this Restatement are effective as of April 1,
2008 (Effective Date).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS,
Executive has been employed by Employer for a substantial length of time and
the services of Executive, his experience, and his knowledge of the affairs of
Employer are of great value to Employer and Employer desires to continue to
employ Executive as an active employee and to have him serve as Chairman of the
Board of Directors of both Company and Bank under the terms and conditions set
forth below; and
WHEREAS, Executive desires to continue to be employed
by Employer as an active employee and to serve as Chairman of the Board of
Directors of both Company and Bank upon the terms and conditions hereinafter
set forth;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, and intending to be
legally bound hereby, it is hereby agreed as follows:
1.
Employment; Position; Term
.
Employer hereby employs Executive, and Executive agrees to be
employed as an active employee and to serve in the capacity of Chairman of the
Board of Directors of both Company and Bank for a term commencing as of the Effective
Date and ending on the third anniversary of the Effective Date, April 1, 2011 (Term of Employment);
provided
,
however
,
that,
commencing on the date one year after the Effective Date, and on each annual
anniversary of such date (such date and each annual anniversary thereof, the Renewal
Date), unless previously terminated, the Term of Employment shall be
automatically extended so as to terminate three years from such Renewal Date,
unless, at least 60 days prior to the Renewal Date, either Employer or
Executive gives notice to the other that the Term of Employment shall not be so
extended (Notice of Non-Renewal). By
way of example, on April 1, 2009, the Term of Employment shall be extended
from a term ending on April
GALLAGHER &
CAVANAUGH, LLP, 100 FOOT OF JOHN STREET, LOWELL, MASSACHUSETTS 01852
1, 2011 to a term ending on April 1, 2012. Upon
the timely delivery by either party of a Notice of Non-Renewal, the Term of
Employment shall no longer be subject to the automatic extension provided for
herein, but rather shall expire upon the conclusion of the then Term of
Employment (Expiration of Term Due to Non-Renewal). By way of example, if a Notice of Non-Renewal
were first delivered on November 1, 2009, the Term of Employment would
expire on April 1, 2012. A Notice of Non-Renewal may not be delivered by
Employer during the two year period immediately following a Change in Control
event (as hereinafter defined)
. Executives service as a director of Employer and/or any Affiliate (as
hereafter defined) shall be without any further compensation in addition to
that set forth herein.
2.
Duties; Place of
Employment; Time and Efforts
.
2.1 Duties.
During the Term of
Employment, Executive shall exercise and assume such duties, responsibilities
and authorities as are provided in the bylaws of Employer with respect to
holding the office of Chairman of the
Board of Directors of the Company and Bank. Notwithstanding the above, Executive shall
not be required to perform any duties and responsibilities which would result
in Employers or Executives noncompliance with, or any other violation of, any
applicable law, regulation, regulatory policy or other regulatory requirement.
2.2 Place of Employment.
Executive shall render his services primarily
at Employers office in Lowell, Massachusetts. Executive shall travel as
reasonably required for the performance of his duties hereunder.
2.3 Time and Efforts.
During the Term of Employment, Executive
shall, except for periods of absence occasioned by illness, vacation, and any
other reasonable leaves of absence in accordance with applicable policies,
programs, procedures or practices of Employer, diligently and conscientiously
devote his full business time and attention and best efforts, business skills,
ability and fidelity to the business of Employer and the discharge of his
duties hereunder;
provided
,
however
, that Executive may, so long
as such activities (individually and collectively) do not conflict or
materially interfere with the performance of Executives duties hereunder (a) continue
to serve on any boards and committees on which Executive is presently serving
or in a position which Executive currently holds provided same has been
disclosed to Employer on a schedule attached to this Agreement; (b) manage
his personal financial affairs, including his personal passive
investments; (c) serve on boards of
directors or trustees or committees of civic or charitable organizations or
trade associations, and (d) with the written consent of the Board of
Directors, as evidenced by a formally adopted vote or resolution and subject to
such terms and conditions specified in any such vote or resolution, serve as a
non-employee director, trustee, manager or partner of any business entity.
2
3.
Compensation and Other
Benefits
.
3.1
Base Salary
.
In consideration of the services of Executive, Employer shall pay to Executive
a base salary of
$203,899.80
per annum, together with such increases as
the Board of Directors of Employer may from time to time approve in its sole
discretion (but such shall be reviewed by the Board at least annually), in
equal installments in accordance with the customary payroll practices of
Employer (Base Salary).
3.2 Annual Cash Bonus.
During the Term of Employment, Executive shall be entitled to participate in an
equitable manner with other executive officers of Employer in such
discretionary bonus payment or awards as may be authorized, declared and/or paid by the Board of Directors to Employers
executive employees. Nothing in this
Agreement, however, shall be construed to require Employer to establish,
maintain or continue any bonus plan, program or arrangement. Except as otherwise expressly provided by
their terms, such bonus plan, programs or arrangements are subject to modification
or termination by Employer at any time in its sole discretion. No other compensation or additional benefits
provided for in this Agreement shall be deemed to be a substitute for
Executives right to receive such bonuses if, when and as declared and paid by
the Board of Directors.
3.3 Incentive, Retirement, and Savings Plans.
During the Term of Employment, Executive shall be entitled to
participate in all incentive, pension, retirement, savings, stock option and
other stock grant and equity compensation plans, as well as all other
nonseverance related benefits, plans and programs, which may be maintained from
time to time by Employer for the benefit of senior executives and/or
other employees of Employer.
3.4 Welfare Benefit Plans.
During the Term of Employment, Executive and
his spouse and other eligible dependents shall be entitled to participate in,
and be covered by, all of the health and other welfare benefit plans and
programs that may be maintained from time to time by Employer for the benefit
of senior executives and/or other employees of Employer. In the case of any group disability plan
maintained by Employer, Employer shall provide Executive the opportunity to pay
directly by payroll deduction or otherwise all or any portion of the premium on
any policy or policies providing such coverage.
3.5 Expense Reimbursement.
During the Term of Employment, Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses,
including reasonable business travel expenses, incurred by Executive in
performing his duties and responsibilities under this Agreement, in accordance with the policies, programs,
procedures and practices of Employer as in effect at the time the expense was
incurred. To the extent necessary to avoid characterizing any reimbursement to
Executive as deferred compensation under Section 409A of the Internal
Revenue Code of 1986, as amended (Code) and the United States Treasury
regulations then in effect (Treas. Regs.), such
3
reimbursements shall be paid
on or before March 1 following the close of the calendar year in which the
expense was incurred by Executive.
Amounts which are not submitted within the required timeframe shall not
be eligible for reimbursement hereunder.
3.6 Fringe Benefits; Automobile.
During the Term of
Employment, Executive shall be eligible to benefit from such fringe benefits
and perquisites, in accordance with the policies, programs, procedures and
practices of Employer, as may be in effect and provided from time to time to
senior executives and/or other employees of Employer, and shall be entitled to
the use of an automobile, of a type commensurate with Executives office and
standing, at Employers expense.
3.7 Vacation.
Executive shall earn and accrue thirty-one
(31) days of vacation for each twelve month period served during the Term of
Employment. Executive shall be entitled
to the continuation of his Base Salary and benefits during vacations to be
scheduled at the reasonable convenience of the parties hereto. Vacation will be earned ratably over the
course of each such twelve month period and shall be used in accordance with
Employers policies.
3.8 Salary Continuation Agreement.
The parties acknowledge that Executive and Bank
are parties to a Salary Continuation Agreement dated as of July 15,
2005. Each of the Employer and Executive
agrees to fulfill its obligations under such Salary Continuation Agreement in
accordance with the terms thereof.
4.
Termination
.
Unless Executives employment is terminated pursuant to
this Section 4, Employer will continue to employ Executive and Executive
will continue to serve Employer throughout the Term of Employment. Termination of Executives employment will
constitute an automatic termination of all other positions held by Executive
including service as a director, unless otherwise requested by Employer.
4.1 Expiration of the Term Due to
Non-Renewal.
Upon
Expiration of Term Due to Non-Renewal, Executives employment with Employer
will be terminated (herein date of termination) without further action by
Executive or Employer and Executive will be entitled to receive the following:
(a) earned and accrued but previously
unpaid Base Salary through the date of termination,
(b) payment in respect of any vacation
days accrued but unused through the date of termination,
(c) reimbursement of any remaining
expense properly incurred in accordance with Employers policy prior to the
date of termination and not yet reimbursed by Employer,
4
(d) any bonus actually awarded or earned,
but not yet paid as of the date of termination,
and
(e) any vested benefits under any
insurance policy, pension, retirement, savings, stock option and other stock grant
and equity compensation plans, together with any other non-severance related
compensation and benefits as may be provided in accordance with the terms and
provisions of any other agreements between Executive and either Company or Bank
and any applicable plans, programs, procedures and practices of Employer.
The aggregate benefits payable pursuant to clauses
(a), (b), (c) and (d) are hereafter referred to as the Accrued
Obligations. The vested benefits
referenced in clause (e) are hereafter referred to as the Additional
Benefits.
4.2 Death
.
The
employment of Executive hereunder shall terminate immediately upon his death;
provided
,
however
,
that in the event of death, the Employer will pay to the beneficiary named on
the Designation of Beneficiary form completed by Executive the following:
(a) the Accrued Obligations,
(b)
the
Additional Benefits,
(c) a
lump sum amount equal to six months of Base Salary at the rate in effect on
the date of death, payable within thirty (30) days of the date of death (Lump
Sum Payment), and
(d) continuation,
at no cost to Executives spouse and other eligible dependents, of all health
and other welfare benefits provided under Section 3.4 of this Agreement
for the benefit of Executives spouse and other eligible dependents for a
period commencing on the date of death and ending, with respect to Executives
spouse, on the earlier of her death or remarriage and, with respect to any
other eligible dependent of Executive, the date such dependent is no longer
eligible for such coverage in accordance with the terms of any applicable plan.
4.3
Disability.
Employer
will have the right to suspend Executives employment hereunder in the event
Executive becomes disabled (Disability Suspension), by giving written notice
of same to Executive (Notice of Disability Suspension). Executives Disability Suspension shall
become effective upon the 30
th
day following the date of the Notice
of Disability Suspension (Disability Suspension Effective Date). For purposes of this Agreement, disability
shall mean (1) Executive is unable to engage in any substantial gainful
activity by reason of any medically determined physical or mental impairment
that can be expected to result in death or to last for a continuous period of
not less than twelve (12) months, or (2) Executive is, by reason of any
medically determinable physical or mental impairment that can be
5
expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement or
disability benefits for a period of not
less than three (3) months under any group long-term disability plan or
accident and health plan then maintained by Employer. In the event that Executive returns to
full-time employment with Employer following the Notice of Disability
Suspension but prior to the Disability Suspension Effective Date, the Notice of
Disability Suspension shall be deemed automatically withdrawn. In any event, the period of Disability
Suspension will end on the earliest to occur of the following (Disability
Termination Date): (A) the date on
which Executive returns to full-time employment with Employer; (B) Executives
death, in which event the provisions of Section 4.2 shall govern; or (C) the
termination by either party or the expiration of the Term of Employment, in
each case in accordance with the terms of this Agreement.
Employer shall pay to Executive, as of the Disability
Suspension Effective Date, the Accrued Obligations. During the period of Disability Suspension up
until the Disability Termination Date Executive shall:
(a) receive an amount equal, on a per
annum basis, to seventy-five percent (75%) of Executives Highest Annual
Compensation, as hereafter defined, as determined on the Disability Suspension
Effective Date. Such amount shall be
paid by Employer, commencing on the first ordinary payroll payment date
following the Disability Suspension Effective Date, in equal periodic
installments in accordance with Employers ordinary payroll practices in effect
at the time of such payments are made.
The payments made pursuant to this provision shall be in addition to any
payments or other benefits payable to Executive under any qualified or
nonqualified retirement plans or programs maintained by Employer but shall be
reduced by any payments received by Executive during such Disability Suspension
under any group long-term disability plan maintained by Employer;
(b) continue to accrue and participate in
all incentive, pension, retirement, savings, stock option and other stock grant
and equity compensation plans, as well as all other employee benefit plans and
programs, which are referenced in Section 3.3; and
(c) continue to receive all life, health
and other welfare coverage and benefits as set forth in Section 3.4,
including those for the benefit of Executives spouse and other eligible
dependents.
From and after the Disability Suspension Effective
Date, Employer shall be free to fill Executives positions;
provided
,
however
,
that if Executive is able to return to full-time employment with Employer at
any time during the period of Disability Suspension prior to the Disability
Termination Date, Executive shall resume his positions and duties with Employer
unless Employer has filled either of those positions and does not reappoint
Executive to both such positions, in
6
which event, Executive may, at his option:
(i) assume the position(s) and
duties that Employer may assign to him at the same Base Salary as was in effect
on the Disability Suspension Effective Date and, otherwise, on the same terms
and conditions as set forth herein; or
(ii) in the event that the position and
duties assigned to him would constitute a material diminution in his authority,
duties or responsibilities or otherwise constitute Good Reason, as hereinafter
defined, Executive may exercise his right to terminate this Agreement for Good
Reason pursuant to Section 4.5.
In the event that Executive refuses to assume the
position and duties assigned to him pursuant to Clause (i) under
circumstances that do not constitute Good Reason, such shall constitute a
Voluntary Termination by Executive subject to Section 4.6 below.
Notwithstanding any other provision contained in this
Agreement to the contrary, the occurrence of a Disability Suspension shall not
in any way prevent or otherwise limit the parties from exercising any of their
respective rights to terminate the Term of Employment at any time in accordance
with the terms of this Agreement or from delivering Notice of Non-Renewal
pursuant to Section 1.
Further, nothing in this Section shall be deemed
as a waiver by Executive of his right to unpaid leave under the Family and
Medical Leave Act of 1993, the Americans with Disabilities Act of 1990, or any
analogous provision of state law.
4.4
For Cause
.
Subject to compliance with the procedure set forth herein, Employer
will have the right to terminate Executives employment for Cause. For purposes of this Agreement, Cause
means: (i) Executives willful and continued failure to substantially
perform his employment duties (other than any such failure resulting from
Executives illness or disability, which shall be subject to the provisions of the
preceding Section), or (ii) Executives willfully engaging in conduct
(other than conduct related to the operation of an automobile) which is
demonstrably and materially injurious to Employer, monetarily or otherwise;
provided
,
however
,
that no act or failure to act, on the part of Executive shall be deemed willful
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executives act or failure to act, was in the best
interest of Employer. Upon such termination, Executive will thereafter be
entitled to receive only the compensation and benefits set forth in Section 4.1
(a) through (e) hereinabove applicable to Expiration of the Term Due
to Non-Renewal.
(a)
Procedure
. At a
meeting of the applicable Employers Board of Directors, duly called for the
purpose of determining whether Cause exists (Determination Meeting), the
alleged acts or omissions of Executive must be found by two-thirds of the
disinterested directors present at the
7
meeting to have been
established beyond reasonable doubt. For
purposes of this Section 4.4, disinterested shall mean those directors
other than the Executive and any other directors who are alleged to have been
involved or otherwise to have an interest in any of such alleged acts or
omissions of the Executive. If said
Board determines, as set forth in the preceding sentence, that Cause exists,
said Employer shall deliver, within ten (10) days of the Determination
Meeting, written notice to Executive of same which shall set forth, in
reasonable detail, the findings of the Board as to the act(s) and/or
omission(s), including the dates, facts and circumstances, constituting Cause (Notice
of Termination For Cause). The Notice
of Termination For Cause shall also advise Executive that unless an Opportunity
Notice, as hereinafter defined, is delivered by Executive as hereinafter
provided, Executives employment shall terminate for Cause effective on the
eleventh (11
th
) day after the
receipt by Executive of the Notice of Termination For Cause. Executive may, within ten (10) days of
his receipt of the Notice of Termination For Cause, request, by written notice
delivered to said Employer, that a special meeting of the Board be called for
the purpose of providing Executive an opportunity to appear before the Board,
with counsel, to discuss such act(s) or omission(s) (Opportunity
Notice). Upon receipt of the
Opportunity Notice, a special meeting of the Board shall be duly called to take
place on a date selected by the Board, which is not less than ten (10) nor
more than thirty (30) days after Employers receipt of the Opportunity Notice,
at the principal office of said Employer or such other locations as has been
mutually agreed upon by Employer and Executive (Final Meeting). If the Board does not, by vote of greater
than one-third of the disinterested directors present at the meeting, rescind
its Notice of Termination For Cause at the Final Meeting or Executive fails to
attend the Final Meeting for any reason other than either a valid medical
reason or a reason that is deemed credible and sufficient by the acting
Chairman of the Board in his or her sole and absolute discretion (in which
event, the Chairman shall reschedule the Final Meeting to a date selected by
him or her that is practical in light of the reason for Executives failure to
attend), Executives employment shall be terminated for Cause effective
immediately as of the conclusion of the Final Meeting, without further notice. The procedure set forth herein shall at all
times be subject to the requirements of applicable law, regulation, regulatory
policy or other regulatory requirements.
(b)
Suspension
.
Notwithstanding anything to the contrary in this Agreement, during the
period commencing on the date on which notice of the Determination Meeting is
duly given to the Board and ending the earliest of the date of (i) the
Determination Meeting, if no determination of Cause is made at said meeting as
hereinabove provided, (ii) the date
of
8
termination (which may be
either the eleventh day following Executives receipt of the Notice of
Termination For Cause if an Opportunity Notice is not delivered by Executive as
hereinabove provided or the date of the Final Meeting if an Opportunity Notice
is provided and the Notice of Termination of Cause is not rescinded at such
meeting), or (iii) the date of the Final Meeting if the Notice of
Termination For Cause is rescinded as set forth in Subsection (c) below:
(1) Executive,
in the sole discretion of the Board, may be suspended from employment with
Employer and the Board may, during such period, reasonably limit Executives
access to the principal offices and any other premises of Employer and/or
Executives access to any of Employers assets or personnel; and
(2)
Executive shall continue to receive his Base Salary and all benefits in
accordance with Section 3 of this Agreement to the extent such payments
and benefits are not prohibited by applicable law, regulation, regulatory
policy or other regulatory requirement.
(c) Rescission
of Notice of Termination For Cause
. In the event that the Final Meeting is not
called as provided for herein, or a quorum of the Board fails to appear for the
Final Meeting, or the Board votes to rescind its Notice of Termination for
Cause then such Notice shall be deemed rescinded and Executive shall be
returned to his duties as of the date of such rescission.
(d)
Timeliness.
No event shall constitute grounds for a Cause
termination in the event that Employer fails to take action within 90 days
after Employers Chairman or the Chairman of Employers Audit Committee obtains
knowledge of the occurrence of such event.
(e)
Payment upon
Termination For Cause
. If
Executives employment shall be terminated for Cause as set forth herein,
Employer shall pay Executive:
(i) the
Accrued Obligations, and
(ii) the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement.
4.5 Involuntary Termination.
4.5.1 Termination by Employer Without
Cause.
Employer
may, unilaterally, terminate Executives employment for any reason and without
Cause or for no reason at all at any time during the Term of Employment upon
sixty (60) days prior written notice to Executive. If Employer terminates Executives employment
pursuant to this Section 4.5.1, then the Term of Employment shall
thereupon end (Date of Involuntary Termination) and Executive shall, subject
to Bank Regulatory Limitations as referenced in
9
Section 4.14, only
be entitled to receive the following:
(a) the
Accrued Obligations;
provided
,
however
, that in addition to the
payment of the per diem value of any unused vacation days that have accrued
during the Term of Employment prior to the Date of Involuntary Termination,
Executive shall receive the unused, unaccrued portion of any vacation days
available through the end (but not beyond) the calendar year in which the Date of
Involuntary Termination occurs,
(b)
the
Additional Benefits,
(c) an
aggregate amount equal to three times Executives Highest Annual Compensation,
as hereinafter defined (Severance Payment), such amount shall be paid no
later than two and one-half (2 ½) months after the close of the taxable year of
Executive or Employer in which the Date of Involuntary Termination occurs,
(d) to
have Employer pay the full premiums (employer and employee portions) for
Executives and any covered beneficiarys coverage under COBRA health
continuation benefits over the eighteen (18) month period immediately following
the date of termination. Notwithstanding
the foregoing, if Executive accepts post-employment with another entity that
provides comparable healthcare, during such period, Employer shall not provide
Executive with such health continuation benefits, and
(e) reimbursement
for the reasonable fees of a professional out-placement service selected by
Executive; provided, however, that only expenses incurred by Executive no later
than the end of the second taxable year following the year in which the Date of
Involuntary Termination occurs shall be reimbursed and such reimbursement shall
be paid by the end of the third taxable year following the year in which the
Date of Involuntary Termination occurs.
4.5.2 Termination by Executive For Good Reason.
Executive may terminate his employment for Good Reason. Upon a termination by Executive for Good
Reason, Executive shall be entitled to the same payments and benefits as provided
in Section 4.5.1 above. In no event
shall a termination of Executives employment for Good Reason occur unless and
until Executive provides Employer, within ninety (90) calendar days following
the date on which the facts and circumstances underlying the finding of Good
Reason reasonably could have been known by Executive, with written notice
thereof stating with specificity the facts and circumstances underlying the
finding of Good Reason and, if the basis for such finding of Good Reason is
capable of being cured by Employer, providing Employer with an opportunity to
cure the same within thirty (30) calendar days after receipt of such
notice. If Executive terminates his
employment pursuant to this Section 4.5.2, then the Term of Employment
shall end upon the receipt by Employer of the notice required by this Section 4.5.2;
10
provided
,
however
, that if the basis for such
finding of Good Reason is capable of being cured but Employer fails to cure as hereinabove
provided, the Term of Employment shall end on the thirty-first calendar day
following such notice (Date of Involuntary Termination).
Good Reason shall mean, without Executives prior
written consent, the occurrence of any of the following events or actions:
(a) material
diminution of Base Salary ;
(b) material diminution in Executives
authority, duties or responsibilities;
(c) material diminution in the authority,
duties or responsibilities of the supervisor to whom Executive is required to
report, including a requirement that Executive report to a corporate officer or
employee instead of directly to the Board of Directors;
(d) material diminution in the budget
over which Executive retains authority;
(e) material change in geographic location
at which Executive must perform the services; or
(f) any other action or inaction that
constitutes a material breach of the terms of an applicable employment
agreement including, but not limited to Employers failure to obtain a
satisfactory agreement from any successor(s) to assume and agree to
perform Employers obligations under this Agreement.
In order to constitute an Involuntary Termination under this Section 4.5.2,
Executive must actually terminate his employment pursuant to this Section 4.5.2
within six (6) months following the date on which the facts and
circumstances underlying the finding of Good Reason reasonably could have been
known by Executive.
4.6 Voluntary Termination.
Executive shall give Employer not less than sixty
(60) days prior written notice of his intention voluntarily to terminate his
employment by Employer other than for Good Reason. If Executive terminates his
employment on his own initiative without Good Reason and under circumstances
other than (i) a termination due to death, (ii) a termination due to
Retirement, or (iii) an Expiration of the Term due to Non-Renewal, then
Executive upon such termination (Voluntary Termination), will only be
entitled to receive the following:
(a) the
Accrued Obligations, and
(b) the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement.
4.7 Termination Due to Retirement.
During the Term of
11
Employment, Executive may, having reached sixty-five (65) years of age,
voluntarily terminate his employment hereunder by giving not less than sixty
(60) days prior written notice to Employer (Retirement). Upon expiration of said sixty (60) day notice
period (Retirement Effective Date), Executive will only be entitled to
receive the following:
(a) the
Accrued Obligations,
(b) the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement,
(c) any rights to indemnification in
accordance with Section 6 of this Agreement,
(d) to continue, together with his spouse
and eligible dependents, participation in the welfare benefits described in Section 3.4
(collectively, the Continuing Benefit Plans);
provided
,
however
, that coverage (with regard
to medical and dental benefits for the period after the end of the eighteen
(18) month period following the date of termination) shall, unless same is a
nontaxable benefit excludible from income under Section 105 of the Code,
be deemed to be monthly, in-kind payments of the premiums and will be taxable
income to Executive; and
provided
,
further
, that the participation by
Executive (and, to the extent applicable, Executives spouse and dependents) in
any Continuing Benefit Plan shall cease on the date, if any, on which Executive
becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer (End
Date). Executives participation in the
Continuing Benefit Plans will be on the same terms and conditions that would
have applied had Executive continued to be employed by Employer through the End
Date. To the extent any such benefits
cannot be provided under the terms of the applicable plan, policy or program,
Employer shall provide (or shall cause to be provided) a comparable benefit under
another plan.
4.8 Highest Annual Compensation.
Highest Annual
Compensation means, as determined as of the date of termination of Executives
Term of Employment under the applicable termination provision set forth above,
the sum of (a) the highest per annum rate of base salary paid by Employer
to Executive at any time during the Term of Employment prior to such date of
termination, and (b) the highest annual cash performance bonus or other
annual cash incentive compensation paid by Employer to Executive, including all
such cash amounts paid to Executive individually and as part of an employee or
executive compensation group (or which
would have been paid but for an election by Executive to defer payment to a later
period) with respect to any fiscal year of Employer during the Term of
Employment prior to such date of termination.
12
4.9 Change in Control.
A Change in Control event means any event that may qualify as a Change in
Control under Companys 2003 Stock Incentive Plan, as may be amended
and in effect from time to time.
(a)
Termination pursuant to
certain provisions prior to a Change in Control event
. If the Term of Employment has been terminated
pursuant to Sections 4.2, 4.6 or 4.7 at any time during the twelve month period
prior to a Change in Control event, Executive or the named beneficiary or other
legal representative, as the case may be, shall be entitled to receive, in addition to payments and
benefits set forth in the applicable Section, the Severance Payment as set
forth in Section 4.5.1(c) above subject to the provisions of Section 4.11
(Change in Control Payment);
provided
,
however
, that any sums previously
paid to Executives named beneficiary or other legal representative pursuant to
Section 4.2(c) providing for a Lump Sum Payment shall reduce the
amount of the Change in Control Payment.
In any such case, the Change in Control Payment shall be paid on the
earliest date during the first taxable year of Executive following the taxable
year of Executive in which Executives employment terminates on which such
payment can be made in compliance with Section 409A of the Code.
(b)
Termination pursuant to
certain provisions following a Change in Control event
. (i) If,
during the period beginning on the date of the Change in Control event and
ending on the date two (2) years after a Change in Control event, Executives
Term of Employment is terminated pursuant to Section 4.2, Executives
named beneficiary or other legal representative, as the case may be, shall be
entitled to receive, in addition to payments and benefits set forth in Section 4.2,
the Change in Control Payment;
provided
,
however
, that payment of the Change
in Control Payment shall be in lieu of the Lump Sum Payment. In such case, the Change in Control Payment
will be paid immediately within thirty (30) days of the date of death. (ii) If, during the period beginning on
the date of the Change in Control Event and ending on the date that is one (1) year
after a Change in Control Event, Executive either voluntarily terminates his
employment pursuant to Section 4.6, or retires pursuant to Section 4.7,
then Executive shall be entitled to receive the Change in Control Payment, such
Payment to be paid within thirty (30) days following the date Executive
employment terminates.
4.10 Release.
In the event of termination of employment for any
reason, the payments and other benefits (if any) required to be provided to
Executive pursuant to this Section 4 (including those, if any, required
under this Section 4 to be paid pursuant to other sections of this
Agreement) will be in full and complete satisfaction of any and all obligations
owing to Executive pursuant to this Agreement
and, to the fullest extent permitted by law, any other claims
13
Executive
may have in respect of Executives employment by Employer. Such amounts shall
constitute liquidated damages with respect to any and all such rights and
claims and, upon Executives receipt of such amounts, Employer shall be
released and discharged from any and all liability to Executive in connection
with this Agreement or otherwise in connection with Executives employment by
Employer. Notwithstanding the foregoing, Executive shall retain all rights (i) with
respect to Employers continuing obligations to indemnify Executive as a former
officer or director of Employer as set forth in Section 6, (ii)
matters covered by
provisions of this Agreement that expressly survive the termination of this
Agreement, (iii) rights to which
Executive is entitled by virtue of his participation in the employee benefit
plans, policies and arrangements of Employer, and (iv) as otherwise
excluded by applicable law.
4.11 Code Section 280G Reduction.
Anything in this
Agreement or in any other agreement, contract, understanding, plan or program,
entered into or maintained by Employer to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by Employer to or
for the benefit of Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
(collectively, the Payments), would be subject to the excise tax imposed by Section 4999
of the Code, and/or any successor provision or section thereto (such excise
tax, together with any interest or penalties incurred by Executive with respect
to such excise tax, collectively, the Excise Tax), and if the Payments less
the Excise Tax would be less than the amount of the Payments that would
otherwise be payable to Executive without imposition of the Excise Tax, then,
to the extent necessary to eliminate the imposition of the Excise Tax (and
taking into account any reduction in the Payments provided by reason of Section 280G
of the Code in any such other agreement, contract, understanding, plan or
program), the cash and non-cash payments and benefits payable to Executive
shall be reduced (with Executive being provided with the amount of each payment
and benefit as calculated by Employer and given ten (10) business days in
which to prioritize the order of reduction of each such payment or benefit);
but only if, by reason of any such reduction, the Payments with any such
reduction shall exceed the Payments less the Excise Tax without any such
reduction. For purposes of this Section 4.11,
(i) no portion of the Payments, the receipt or enjoyment of which Executive
shall have effectively waived in writing prior to the date of termination,
shall be taken into account, (ii) no portion of the Payments shall be
taken into account that, in the opinion of tax counsel selected in good faith
by Employer, 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, (iii) any payments and/or benefits under this Agreement or
otherwise for services to be rendered on or after the effective date of a
Change in Control shall be reduced only to the extent necessary so that such
payments and/or benefits in their entirety constitute reasonable compensation
14
for services actually rendered within the meaning of Section 280G(b)(4)(B) of
the Code or are otherwise not subject to disallowance as deductions, in the
opinion of the tax counsel referred in the immediately preceding clause (ii) of
this sentence, and (iv) the value of any non-cash payment or benefit or
any deferred payment or benefit included in the Payments shall be determined by
Employers independent auditors in accordance with the principles of Sections
280G(d)(3) and 280G(d)(4) of the Code and the applicable regulations
or proposed regulations under the Code.
Except as otherwise provided in this Section 4.11, the foregoing
calculations and determinations shall be made in good faith by Employer and
shall be conclusive and binding upon the parties. Employer shall pay all costs and expenses
incurred in connection with any such calculations or determinations.
4.12 Timing of Payment; Section 409A
. All Accrued Obligations payable under this
Agreement shall be paid in cash in single lump sum within fourteen (14) days
following the date of termination (or at such earlier date required by law). The Additional Benefits shall be paid in
accordance with the terms of the applicable plan, program or arrangement. Except to the extent prohibited by
applicable law or the terms of this Agreement, all other payments to which
Executive shall be entitled to under this Section 4 shall be made within
thirty (30) days following the date of termination, subject to the following:
(a) Payments to Executive under this Section 4
shall be bifurcated into two portions, consisting of a portion that does not
constitute nonqualified deferred compensation within the meaning of Section 409A
of the Code and a portion that does constitute
nonqualified deferred compensation. Payments
hereunder shall first be made from the portion, if any, that does not consist
of nonqualified deferred compensation until it is exhausted and then shall be
made from the portion that does constitute nonqualified deferred compensation.
However, anything in this Agreement to
the contrary notwithstanding, if at the time of Executives termination of
employment, Executive is considered a specified employee as defined in
Section 409A(a)(2)(B)(i) of the Code, then to the extent required by Section 409A
of the Code, no payments that
constitute nonqualified deferred compensation shall be payable prior to the
date that is the earlier of (i) six months and a day after Executives
date of termination, or (ii) Executives death (Earliest Payment Date). Any payments that are delayed pursuant
to the preceding sentence shall be paid on the Earliest Payment Date. The
determination of whether, and the extent to which, any of the payments to be
made to Executive hereunder are nonqualified deferred compensation shall be
made after the application of all applicable exclusions under Treas. Reg. §
1.409A-1(b)(9). Any payments that are intended to qualify for the exclusion for
separation pay due to involuntary separation from
15
service set forth in Treas. Reg. § 1.409A-1(b)(9)(iii) must be
paid no later than the last day of the second taxable year of Executive
following the taxable year of Executive in which the Date of Termination
occurs.
(b) The intent of the parties is that
payments and benefits under this Agreement comply with Section 409A and,
accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith.
The parties acknowledge
and agree that the interpretation of Section 409A of the Code and its
application to the terms of this Agreement is uncertain and may be subject to
change as additional guidance and interpretations become available. Anything to
the contrary herein notwithstanding, all benefits or payments provided by
Employer to Executive that would be deemed to constitute nonqualified deferred
compensation within the meaning of Section 409A of the Code are intended
to comply with Section 409A of the Code. If, however, any such benefit or
payment is deemed to not comply with Section 409A of the Code, Employer
and Executive agree that this Agreement may be amended (and that any such amendment may be
retroactive to the extent permitted under Section 409A), as reasonably
requested by either party, and as may be necessary to fully comply with Section 409A
of the Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.
4.13 No Obligation to Mitigate; Set Off Under Certain Circumstances.
In the event of any
termination of Executives employment under this Section 4, Executive
shall be under no obligation to seek other employment or to mitigate damages,
and no payment provided for in this Agreement shall be reduced by any
compensation earned by Executive as the result of employment by another
employer, or from self-employment, after the termination of his employment with
Employer. Notwithstanding the foregoing,
nothing herein shall be deemed to prevent Employer from setting off against any
amounts due to Executive under this Agreement any amounts due from Executive to
Employer as of the date of such payment.
4.14 Bank Regulatory Limitations.
Any payments made to
Executive pursuant to this Agreement, or otherwise, are subject to and conditioned
upon their compliance with 12 U.S.C. § 1818(k) and any applicable
regulations promulgated thereunder. In
addition, to the extent required by applicable law, regulation, regulatory
policy or other regulatory requirement, the aggregate amount and/or value of
the compensation paid as a result of any termination of Executives employment
with Employer, regardless of the reason for any such termination of employment,
shall not exceed the limit prescribed by such applicable law, regulation,
regulatory policy or other regulatory requirement.
16
4.15 Option
to Serve as Consultant.
During the Term of Employment and in lieu of a termination under
Sections 4.5, 4.6 or 4.7, the parties may mutually agree that Executives
position under Section 1 and his duties, as well as the time and effort
required, under Section 2 be modified and the compensation set forth in Section 3
be adjusted as set forth in this Section 4.15 and, in such event,
Executive shall continue in the employ of Employer under the same terms and
conditions, including but not limited to benefits under sections 3.3 through
3.7, as is set forth in this Agreement except as specifically modified by this Section 4.15.
(a)
Position
and Duties
. Executive shall
serve as a consultant to Employer and shall render such services of an advisory
or consultative nature as Employer may reasonably require of him from time to
time and he shall assist Employer in its relations with its employees and
customers, such that Employer shall have the benefit of Executives experience
and knowledge of Employers business and operations, his reputation and
contacts in the industry generally as well as Employers market area and his
general business experience. In the event that Executive was serving as a
director as referenced in Section 1, there shall be no affirmative
obligation on the part of Executive to serve or continue to serve as such and
service as a director shall be in accordance with the mutual agreement of
Executive and Employer.
(b)
Time
and Effort
. Executive shall
perform such services at a level of at least fifty percent (50%) of the
services that Executive performed over the 36 month period occurring
immediately prior to the implementation of this Section 4.15.
(c)
Compensation
. Upon implementation of this Section 4.15,
Executive shall receive, in equal installments in accordance with the customary
payroll practices of Employer, compensation, in lieu of the compensation set
forth in sections 3.1 and 3.2, in an amount equal, on a per annum basis, to
fifty percent (50%) of Executives Highest Annual Compensation as determined as
of the day immediately prior to the implementation of this Section 4.15
and such amount shall constitute Executives Base Salary amount for all
purposes of this Agreement.
5.
Confidentiality/Non-competition/Non-solicitation/Intellectual
Property.
5.1 Confidentiality.
Executive shall not, during the Employment
Term or anytime thereafter, make use of or disclose any Confidential Information
to any person or entity (including, but not limited to any bank, trust company,
credit union, corporation, firm, unincorporated organization, association,
partnership, limited liability company, trust estate, joint venture or other
business organization or entity) (Person) for any reason or purpose
whatsoever other than in furtherance of Employers business. The term Confidential Information shall
mean all confidential information of or relating to Employer and any Person
effectively controlling, effectively controlled by or
17
effectively under common
control with Employer (Affiliate) including, without limitation, financial
information and data, business plans and information regarding prospects and
opportunities (such as, by way of example only, client and customer lists and
acquisition, disposition, expansion, product development and other strategic
plans), but does not include any information that is or becomes public
knowledge by means other than Executives breach or nonobservance of his
obligations described in this Section 5.1.
Notwithstanding the foregoing, Executive may disclose such Confidential
Information as he may be legally required to do so on the advice of counsel in
connection with any legal or regulatory proceeding;
provided
,
however
, that Executive shall
provide Employer with prior written notice of any such required or potentially
required disclosure and shall cooperate with Employer and use his best efforts
under such circumstances to obtain appropriate confidential treatment of any
such Confidential Information that may be so required to be disclosed in
connection with any such legal or regulatory proceeding. Executives obligation to refrain from
disclosing Confidential Information under this Section 5.1 shall continue
in effect in accordance with its terms following any termination of this
Agreement pursuant to Section 4 above.
5.2 Non-competition.
Without
prior written consent of the Board of Directors of Employer, Executive agrees
that he will not, at any time during the Term of Employment and for the
two-year period following the Expiration of the Term of Employment for
Non-Renewal as set forth in Section 4.1 or the termination of the Term of
Employment for any reason as set forth above in Sections 4.4 through 4.7,
directly or indirectly, whether as owner, partner, shareholder (other than the
holder of 1% or less of the common stock of any company the common stock of
which is listed on a national stock exchange or quoted on the Nasdaq Stock
Market), or as consultant, agent, employee of any other Person or otherwise,
engage in competition (as to any service or product provided by Employer or for
which Employer had made substantial preparation to enter into or offer prior to
the termination of Executives employment) with Employer or any of its
Affiliates anywhere within a ten (10) mile radius of any city or town in
which Bank or any Affiliate has a branch or other office (or to such lesser
extent and for such lesser period as may be deemed enforceable, it being the
intention of the parties that this Section 5.2 shall be so enforced);
provided
,
however
, that the restrictive covenant set forth
herein shall automatically terminate or expire upon a Change in Control event
and shall not be of any further force or effect whatsoever following said
Change in Control event.
5.3 Non-solicitation.
Without prior written
consent of the Board of Directors of Employer, Executive agrees that he will
not, at any time during the two-year period following the Expiration of the
Term of Employment for Non-Renewal as set forth in Section 4.1 or the
termination of the Term of Employment for any reason as set forth above in
Sections 4.4 through 4.7:
18
(a) hire or attempt to hire, or assist in
hiring, any employees of Employer or any of its Affiliates, or solicit,
encourage or induce any such employee to terminate his or her relationship with
Employer or any such Affiliate; or
(b) solicit, encourage or induce any customer
or client of Employer or any of its Affiliates to terminate his or its
relationship with Employer or any such Affiliate or to do business with anyone
other than Employer and its Affiliates.
5.4 Intellectual
Property.
Executive will, during the period of his employment, disclose to
Employer promptly and fully all Intellectual Property (as defined below) made
or conceived by Executive (either solely or jointly with others) including but
not limited to Intellectual Property which relate to the business of Employer
or result from work performed by him for Employer. All Intellectual Property
and all records related to Intellectual Property, whether or not patentable,
shall be and remain the sole and exclusive property of Employer and Employer
shall have the exclusive worldwide and perpetual right to use, make, and sell
products and/or services derived therefrom.
Intellectual Property means all copyrights, trademarks, trade names,
trade secrets, proprietary information, inventions, designs, developments, and
ideas, and all know-how related thereto. Executive hereby assigns and agrees to
assign to Employer all his rights to Intellectual Property and any patents,
trademarks, or copyrights which may be issued with respect to Intellectual Property. Executive further acknowledges that all work
shall be work made for hire. During and after the Term of Employment, Executive
agrees to assist Employer, without charge to Employer but at its request and
expense, to obtain and retain rights in Intellectual Property, and will execute
all appropriate related documents at the request of Employer. Executive and
Employer agree that this Section 5.4 shall not apply to any Intellectual
Property for which no equipment, supplies, facilities, trade secret, or other
confidential information of Employer was used and which was developed entirely
on his own time, provided that it does not relate to the business of Employer
or and does not result from any work performed by him for Employer.
5.5 Return
of Materials.
Upon the termination of Executives employment, Executive will return to
Employer all Employer property, including all materials furnished to Executive
during the Term of Employment (including but not limited to keys, computers,
automobiles, electronic communication devices, files, electronic storage
devices and identification cards); provided, however, that Executive may retain
copies of materials relating to his compensation or benefits. In addition, upon
termination, Executive will provide Employer with all passwords and similar
information which are reasonably necessary for Employer to access materials on
which Executive worked or to otherwise continue in its business.
19
5.6 Injunctive Relief.
Executive acknowledges and agrees that the
protections of Employer set forth in this Section 5 are fair and
reasonable and are necessary for Employer to protect its legitimate business
interests, including its Confidential Information and business relationships,
and that Employer will have no adequate remedy at law, and would be irreparably
harmed, if Executive breaches or threatens to breach any of the provisions of
this Section 5. Executive agrees
that Employer shall be entitled to seek equitable and/or injunctive relief to
prevent any breach of threatened breach of this Section 5, and to specific
performance of each of the terms of this Section 5 in addition to any
other legal or equitable remedies that Employer may have, without posting a
bond. Executive further agrees that he
shall not, in any equity proceeding relating to the enforcement of the terms of
this Section 5, raise the defense that Employer has an adequate remedy at
law.
5.7 Claw-back.
To
the fullest extent permitted by law, in the event that Executive breaches any
of the provisions of Sections 5.1, 5.2, or 5.3:
(a) Employer shall be
entitled to recoup payments made to Executive pursuant to Section 4
hereof, provided, however, that, in the event of a breach of Section 5.1,
such recoupment shall be limited to the reasonable damages incurred by Employer
as a result of such breach and, in the event of a breach of Section 5.2 or
Section 5.3, such recoupment shall be equal to the total payments made to
Executive pursuant to Section 4 multiplied by a fraction, the numerator of
which is the number of months remaining from the date of such breach to the
second anniversary of the Term of Employment or Expiration of the Term of
Employment for Non-Renewal, as the case may be, and the denominator of which is
twenty-four (24) months; and
(b) to the extent that
any other benefits are being provided to Executive pursuant to Section 4,
such will cease immediately, and Executive will not be entitled to any further
compensation and benefits from Employer pursuant to Section 4.
5.8 Special Severability.
The terms and provisions of this Section 5
are intended to be separate and divisible provisions and if, for any reason,
any one or more of them is held to be invalid or unenforceable, neither the
validity nor the enforceability of any other provision of this Agreement shall
thereby be affected.
6.
Indemnification.
Executive (and his heirs, executors and
administrators) shall be indemnified and held harmless by Employer to the
fullest extent permitted by applicable law, regulation, regulatory policy or
other regulatory requirement, against all expenses, liabilities and losses
(including without limitation, all reasonable attorneys fees and all
judgments, fines, excise taxes or penalties and amounts paid or to be paid in
settlement) incurred or suffered by Executive as a consequence of Executive
being or having been made a party to, or being or having been involved in, any
threatened, pending or
20
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Executive
is or was a trustee, director or officer of Employer or is or was serving at
the request of Employer as a trustee, director or officer of Employer or is or
was serving at the request of Employer as a trustee, director or officer of
another corporation or other entity and such indemnification shall continue
after 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, regulation, regulatory policy or other regulatory requirement, the
right to be paid by Employer the expenses incurred in defending any such
proceeding in advance of the final disposition upon receipt by Employer of an
undertaking by or on behalf of Executive to repay such amount or a portion
thereof, if it shall ultimately be determined that Executive is not entitled to
be indemnified by Employer pursuant hereto or as otherwise authorized by law,
regulation, regulatory policy or other regulatory requirement, but such
repayment by Executive shall only be in an amount ultimately determined to
exceed the amount to which Executive was entitled to be indemnified. Employers acceptance of any such undertaking
by or on behalf of Executive may not be conditioned upon any evidence or
demonstration by or on behalf of Executive of any financial capacity to make
any such repayment at the time such undertaking is delivered. The provisions of this Section 6 shall
survive any termination of this Agreement.
7.
Notices
. Any notice given hereunder shall be in
writing and shall be deemed given when delivered in-hand to the other party, by
facsimile transmission, by overnight courier, or by registered or certified
mail (return receipt requested, postage prepaid) addressed to the appropriate
party at the address first set forth above, or at such other address as the
party shall designate from time to time in a notice.
8.
Disputes
.
Any dispute, claim or controversy arising out of or relating to this Agreement
or the breach, termination, enforcement, interpretation or validity thereof hereof (other than an action brought by Employer
for injunctive or other equitable relief in the enforcement of Employers
rights under Section 5 above, in which case such action may be brought in
any court of competent jurisdiction), including the determination of the
scope or applicability of this Agreement to arbitrate, shall be determined by
arbitration in Boston, Massachusetts, before three neutral arbitrators (one of
whom shall be appointed by Employer, one by Executive and the third by the
first two arbitrators). The arbitration
shall be administered by JAMS pursuant to its Streamlined Arbitration Rules and
Procedures. Judgment on the Award may be entered in any court having
jurisdiction. This clause shall not preclude parties from seeking provisional
remedies in aid of arbitration from a court of appropriate jurisdiction. In the event that it shall be necessary or
desirable for Executive to retain legal counsel and/or incur other costs and
expenses in
21
connection with the enforcement of any or all of
Executives rights under this Agreement, Employer shall pay (or Executive shall
be entitled to recover from Employer, as the case may be) Executives
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 that the arbitrators shall determine that Executive has not acted in
good faith or presented a
bona fide
claim
or dispute or that under the circumstances recovery by Executive of all or part
of any such fees and costs and expenses would be inequitable or otherwise
unjust.
The
parties agree that any and all disputes, claims or controversies arising out of
or relating to this Agreement shall first be submitted to JAMS, or its
successor, for mediation, and if the matter is not resolved through mediation,
then it shall be submitted to JAMS, or its successor, for final and binding
arbitration pursuant to the arbitration clause set forth above. Either party
may commence mediation by providing to JAMS and the other party a written
request for mediation, setting forth the subject of the dispute and the relief
requested. The parties will cooperate with JAMS and with one another in
selecting a mediator from JAMS panel of neutrals, and in scheduling the
mediation proceedings. The parties covenant that they will participate in the
mediation in good faith. Employer shall
pay (or Executive shall be entitled to recover from Employer, as the case may
be) Executives reasonable attorneys fees and other reasonable costs of such
mediation. All offers, promises, conduct
and statements, whether oral or written, made in the course of the mediation by
any of the parties, their agents, employees, experts and attorneys, and by the
mediator or any JAMS employees, are confidential, privileged and inadmissible
for any purpose, including impeachment, in any arbitration or other proceeding
involving the parties, provided that evidence that is otherwise admissible or
discoverable shall not be rendered inadmissible or non-discoverable as a result
of its use in the mediation. Either party may initiate arbitration with respect
to the matters submitted to mediation by filing a written demand for arbitration
at any time following the initial mediation session or 45 days after the date
of filing the written request for mediation, whichever occurs first. The
mediation may continue after the commencement of arbitration if the parties so
desire. Unless otherwise agreed by the parties, the mediator shall be
disqualified from serving as arbitrator in the case. The provisions of this
Clause may be enforced by any Court of competent jurisdiction, and the party
seeking enforcement shall be entitled to an award of all costs, fees and
expenses, including attorneys fees, to be paid by the party against whom
enforcement is ordered.
In the event that
within thirty (30) calendar days after the date that Executives Term of
Employment has been terminated by Employer for Cause or by Executive for Good
Reason, Executive (in the case of termination for Cause), or Employer (in the
case of termination for Good Reason), notifies the other in writing that a
dispute exists concerning the termination of employment either for Cause or for
Good Reason, as the case may be (Notice of Dispute),
22
(1) Executive shall be entitled, to the extent
not prohibited by applicable law, regulation, regulatory policy or other
regulatory requirement, to be paid his Base Salary pursuant to Section 3.1
and to continue to receive all other benefits set forth in Section 3 until
the earliest to occur of the following: (i) the expiration of the then
current Term of Employment, or (ii) the resolution, pursuant to the
provisions of Section 8, of such dispute; and
(2) there shall be no reduction whatsoever of
any amounts subsequently paid to Executive upon resolution of such dispute as a
result of, or in respect to, such interim payments or coverage;
provided
,
however
, that the Notice of Dispute
is given in good faith, sets forth a
bona fide
claim
or dispute and Executive pursues the resolution of such dispute with reasonable
diligence. The Notice of Dispute
hereunder shall in all circumstances constitute (a) a Notice of
Non-Renewal under Section 1 for purposes of determining the expiration of
the then current Term of Employment, and (b) a request for mediation and,
therefore, a copy of such Notice of Dispute shall be provided to JAMS as set
forth above.
9.
Binding Effect;
Successors
. This Agreement shall inure to the benefit of
and be binding upon Employer, its successors and assigns, and Executive and his
heirs, legal or personal representatives, but shall not inure to the benefit of
or be enforceable by any third party except as otherwise expressly provided
herein. Except as otherwise expressly
provided herein, Employer and Executive agree on behalf of themselves and of
any other person or persons claiming any benefits by virtue of this Agreement,
that this Agreement and the rights, interests and benefits under it shall not
be assigned, transferred, pledged, or hypothecated in any way by Employer or
Executive or by any other person claiming under Employer or Executive by virtue
hereof; provided, however, that an assignment may be made to the extent that
the other party has consented to same in writing.
9.1 Executive.
This Agreement is personal to Executive and, without the
prior written consent of Employer, shall not be assignable by Executive, except
that Executives rights to receive any compensation or benefits under this
Agreement may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a qualified domestic relations
order. In the event of Executives death
prior to the completion by Employer of all payments due to Executive under this
Agreement, Employer shall continue to make such payments to Executives
beneficiary(ies) as designated in writing by Executive to Employer prior to his
death (or to his estate, if he fails to make such designation).
9.2 Employer.
Both Company and Bank shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of its businesses and/or assets to assume
23
expressly and agree to perform this Agreement in the same
manner and to the same extent as if no sucession had taken place. Failure of either Company or Bank to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle Executive to compensation
in the same amount and on the same terms as he would be entitled to hereunder
if he terminated this Agreement for Good Reason following a Change in Control,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed to be the date of
termination. As used in this Agreement, Company,
Bank and Employer shall mean the Company, Bank and Employer as hereinbefore
defined and any sucessor to the business and/or assets of either Company or
Bank as aforesaid which successor assumes and agrees to perform this Agreement
by operation of law or otherwise.
10.
Miscellaneous.
10.1 Governing Law.
This Agreement is made and delivered in, and
shall be construed in accordance with the substantive laws of, the Commonwealth
of Massachusetts without regard to conflict of law principles.
10.2 Amendments;Waiver.
No amendment, waiver or modification of this
Agreement shall be valid unless the same shall be in writing and signed by the
party sought to be charged therewith;
provided
,
however
, that no amendment that will
result in a violation of Section 409A of the Code, or any other provision
of applicable law, may be made to this Agreement and any such amendment shall
be void
ab initio
. Failure to
insist in any one or more instances on strict compliance with the terms of this
Agreement shall not be deemed a waiver. Waiver of a breach of any provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
10.3 Entire Agreement.
The parties acknowledge and
agree that they are not relying on any representations, oral or written, other
than those expressly contained herein.
This Agreement supersedes all proposals, oral or written, all
negotiations, conversations or discussions between the parties and all course
of dealing. All prior understandings and agreements between the parties are
hereby merged in this Agreement, which alone is the complete and exclusive
statement of their understanding.
10.4 Withholdings;
Reporting.
All payments to be made to Executive by
Employer shall be subject to withholding of such amounts, if any, relating to
tax and other payroll deductions as Employer may reasonably determine it should
withhold pursuant to any applicable law and regulation. Employer may withhold
from any amounts payable under this Agreement such taxes as shall be required
to be withehld pursuant to any applicable law or regulation. Executive
acknowledges that Employer may be required to report amounts deferred by or for
Executive under nonqualified deferred compensation plans on forms W-2 and
agrees that Employer shall comply with all such
24
requirements and Executive agrees to pay and be solely
responsible for all taxes, interest and penalties.
10.5 Enforceability.
If any portion or provision of this Agreement
shall to any extent to be declared illegal or uneforceable 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 uneforceable, 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.
10.6 Captions.
Paragraph headings are for convenience of
reference only and are not intended to create substantive rights or
obligations.
10.7 Survivorship.
The respective rights and oblitations of the
parties to this Agreement including, without limitation, any of their
respective rights and obligations under Section 6 of this Agreement, shall
survive any termination of this Agreement or any termination of Executives
employment hereunder for any reason to the extent necessary to accomplish the
intended preservation of such rights and obligations.
10.8 Construction.
The parties acknowledge that they each
participated in drafting this Agreement, and there shall be no presumption
against any party on the ground that such party was responsible for preparing
this Agreement or any part hereof.
[Remainder of Intentionally Blank]
25
IN WITNESS WHEREOF
,
this Agreement has been duly executed by the undersigned as of the day and year
first above written.
ATTEST:
|
|
ENTERPRISE
BANCORP, INC.
|
|
|
|
|
|
|
/s/ Tanya A.
Hubanks
|
|
By
|
/s/ James F.
Conway, III
|
|
|
James F.
Conway, III
|
|
|
Director,
Chairman of Compensation
|
|
|
Committee
|
|
|
|
|
|
|
ATTEST:
|
|
ENTERPRISE BANK
AND TRUST
COMPANY
|
|
|
|
|
|
|
/s/ Tanya A.
Hubanks
|
|
By
|
/s/ James F.
Conway, III
|
|
|
James F.
Conway, III
|
|
|
Director,
Chairman of Compensation
|
|
|
Committee
|
|
|
|
|
|
|
WITNESS:
|
|
EXECUTIVE
|
|
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|
/s/ Tanya A.
Hubanks
|
|
/s/ George L.
Duncan
|
|
|
George L. Duncan
|
26
Exhibit 10.2.2
EMPLOYMENT
AGREEMENT
This
EMPLOYMENT
AGREEMENT
made and entered into on the 19th day of December, 2008,
by and between
Enterprise Bancorp, Inc.
,
a Massachusetts corporation with a principal office at 222 Merrimack Street,
Lowell, Massachusetts 01852
(Company)
and its wholly owned
subsidiary,
Enterprise Bank and Trust Company
,
a Massachusetts trust company with its main office at 222 Merrimack Street,
Lowell, Massachusetts 01852 (Bank)
(Bank and Company being collectively referred to herein as Employer), and
Richard W. Main
, who resides at 1
Overlook Drive, Chelmsford, Massachusetts
01824 (the Executive), amends and restates the Employment Agreement
dated as of January 1, 2004, as amended.
The provisions of this Restatement are effective as of April 1,
2008 (the Effective Date).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS, Executive has been employed by Employer for
a substantial length of time and the services of Executive, his experience, and
his knowledge of the affairs of Employer are of great value to Employer and
Employer desires to continue to employ Executive as the President of the
Company and President and Chief Lending Officer of the Bank under the terms and
conditions set forth below; and
WHEREAS, Executive
desires to continue to be employed by Employer as President of Company and
President and Chief Lending Officer of Bank upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound hereby, it is hereby agreed as follows:
1.
Employment; Position; Term
.
Employer hereby employs Executive, and
Executive agrees to be employed as President of Company and President and Chief
Lending Officer of Bank for a term commencing as of the Effective Date and
ending on the second anniversary of the Effective Date, April 1, 2010 (Term of Employment);
provided
,
however
,
that,
commencing on the date one year after the Effective Date, and on each annual
anniversary of such date (such date and each annual anniversary thereof, the Renewal
Date), unless previously terminated, the Term of Employment shall be
automatically extended so as to terminate two years from such Renewal Date,
unless, at least 60 days prior to the Renewal Date, either Employer or
Executive gives notice to the other that the Term of Employment shall not be so
extended (Notice of Non-Renewal). By
way of example, on April 1, 2009, the Term of Employment shall be extended
from a term ending on April 1, 2010
to a term ending on April 1,
GALLAGHER &
CAVANAUGH, LLP, 100 FOOT OF JOHN STREET, LOWELL, MASSACHUSETTS 01852
2011. Upon the timely delivery by either party of a Notice of
Non-Renewal, the Term of Employment shall no longer be subject to the automatic
extension provided for herein, but rather shall expire upon the conclusion of
the then Term of Employment (Expiration of Term Due to Non-Renewal). By way of example, if a Notice of Non-Renewal
were first delivered on November 1, 2009, the Term of Employment would
expire on April 1, 2011. A Notice of Non-Renewal may not be delivered by
Employer during the two year period immediately following a Change in Control
event (as hereinafter defined)
. Executives service as a director of Employer and/or any Affiliate (as
hereafter defined) shall be without any further compensation in addition to
that set forth herein.
2.
Duties;
Place of Employment; Time and Efforts
.
2.1 Duties.
During the Term of
Employment, Executive shall exercise and assume such duties, responsibilities
and authorities as are provided in the bylaws of Employer with respect to
holding the office of President of Company and President and Chief Lending
Officer of Bank. Notwithstanding the
above, Executive shall not be required to perform any duties and
responsibilities which would result in Employers or Executives noncompliance
with, or any other violation of, any applicable law, regulation, regulatory
policy or other regulatory requirement.
2.2 Place of Employment.
Executive shall render his services primarily
at Employers office in Lowell, Massachusetts. Executive shall travel as
reasonably required for the performance of his duties hereunder.
2.3 Time and Efforts.
During the Term of Employment, Executive
shall, except for periods of absence occasioned by illness, vacation, and any
other reasonable leaves of absence in accordance with applicable policies,
programs, procedures or practices of Employer, diligently and conscientiously
devote his full business time and attention and best efforts, business skills,
ability and fidelity to the business of Employer and the discharge of his
duties hereunder;
provided
,
however
, that Executive may, so long
as such activities (individually and collectively) do not conflict or
materially interfere with the performance of Executives duties hereunder (a) continue
to serve on any boards and committees on which Executive is presently serving
or in a position which Executive currently holds provided same has been
disclosed to Employer on a schedule attached to this Agreement; (b) manage
his personal financial affairs, including his personal passive
investments; (c) serve on boards of
directors or trustees or committees of civic or charitable organizations or
trade associations, and (d) with the written consent of the Board of
Directors, as evidenced by a formally adopted vote or resolution and subject to
such terms and conditions specified in any such vote or resolution, serve as a
non-employee director, trustee, manager or partner of any business entity.
2
3.
Compensation
and Other Benefits
.
3.1
Base Salary
.
In consideration of the services of Executive, Employer shall pay to Executive
a base salary of $
193,919.96
per annum, together with such increases as
the Board of Directors of Employer may from time to time approve in its sole
discretion (but such shall be reviewed by the Board at least annually), in
equal installments in accordance with the customary payroll practices of
Employer (Base Salary).
3.2 Annual Cash Bonus.
During the Term of Employment, Executive shall be entitled to participate in an
equitable manner with other executive officers of Employer in such
discretionary bonus payment or awards as may be authorized, declared and/or paid by the Board of Directors to Employers
executive employees. Nothing in this
Agreement, however, shall be construed to require Employer to establish, maintain
or continue any bonus plan, program or arrangement. Except as otherwise expressly provided by
their terms, such bonus plan, programs or arrangements are subject to
modification or termination by Employer at any time in its sole
discretion. No other compensation or
additional benefits provided for in this Agreement shall be deemed to be
a substitute for Executives right to receive such bonuses if, when and as
declared and paid by the Board of Directors.
3.3 Incentive, Retirement, and Savings
Plans.
During the
Term of Employment, Executive shall be
entitled to participate in all incentive, pension, retirement, savings, stock
option and other stock grant and equity compensation plans, as well as all
other nonseverance related benefits, plans and programs, which may be
maintained from time to time by Employer for the benefit of senior executives
and/or other employees of Employer.
3.4 Welfare Benefit Plans.
During the Term of Employment, Executive and
his spouse and other eligible dependents shall be entitled to participate in,
and be covered by, all of the health and other welfare benefit plans and
programs that may be maintained from time to time by Employer for the benefit
of senior executives and/or other employees of Employer. In the case of any group
disability plan maintained by Employer, Employer shall provide Executive the
opportunity to pay directly by payroll deduction or otherwise all or any
portion of the premium on any policy or policies providing such coverage.
3.5 Expense
Reimbursement.
During the Term of Employment, Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses, including reasonable business
travel expenses, incurred by Executive in performing his duties and
responsibilities under this Agreement, in accordance
with the policies, programs, procedures and practices of Employer as in effect
at the time the expense was incurred. To the extent necessary to avoid
characterizing any reimbursement to Executive as deferred compensation under Section 409A
of the Internal Revenue Code of 1986, as amended (Code) and the United States
Treasury regulations then in effect (Treas. Regs.), such
3
reimbursements shall be paid on or before March 1 following the
close of the calendar year in which the expense was incurred by Executive. Amounts which are not submitted within the
required timeframe shall not be eligible for reimbursement hereunder.
3.6 Fringe Benefits; Automobile.
During the Term of
Employment, Executive shall be eligible to benefit from such fringe benefits
and perquisites, in accordance with the policies, programs, procedures and
practices of Employer, as may be in effect and provided from time to time to
senior executives and/or other employees of Employer, and shall be entitled to
the use of an automobile, of a type commensurate with Executives office and
standing, at Employers expense.
3.7 Vacation.
Executive shall earn and accrue thirty-one
(31) days of vacation for each twelve month period served during the Term of
Employment. Executive shall be entitled
to the continuation of his Base Salary and benefits during vacations to be
scheduled at the reasonable convenience of the parties hereto. Vacation will be earned ratably over the
course of each such twelve month period and shall be used in accordance with
Employers policies.
3.8 Salary Continuation Agreement.
The parties acknowledge that Executive and
Bank are parties to a Salary Continuation Agreement dated as of July 15,
2005. Each of the Employer and Executive
agrees to fulfill its obligations under such Salary Continuation Agreement in
accordance with the terms thereof.
4.
Termination
.
Unless
Executives employment is terminated pursuant to this Section 4, Employer
will continue to employ Executive and Executive will continue to serve Employer
throughout the Term of Employment. Termination
of Executives employment will constitute an automatic termination of all other
positions held by Executive including service as a director, unless otherwise
requested by Employer.
4.1 Expiration of the Term Due to
Non-Renewal.
Upon
Expiration of Term Due to Non-Renewal, Executives employment with Employer
will be terminated (herein date of termination) without further action by
Executive or Employer and Executive will be entitled to receive the following:
(a) earned
and accrued but previously unpaid Base Salary through the date of termination,
(b) payment
in respect of any vacation days accrued but unused through the date of
termination,
(c) reimbursement
of any remaining expense properly incurred in accordance with Employers policy
prior to the date of termination and not yet reimbursed by Employer,
4
(d) any
bonus actually awarded or earned, but not yet paid as of the date of
termination, and
(e) any
vested benefits under any insurance policy, pension, retirement, savings, stock
option and other stock grant and equity compensation plans, together with any
other non-severance related compensation and benefits as may be provided in
accordance with the terms and provisions of any other agreements between
Executive and either Company or Bank and any applicable plans, programs,
procedures and practices of Employer.
The aggregate benefits payable
pursuant to clauses (a), (b), (c) and (d) are hereafter referred to
as the Accrued Obligations. The vested
benefits referenced in clause (e) are hereafter referred to as the Additional
Benefits.
4.2 Death
.
The employment of Executive hereunder shall terminate
immediately upon his death;
provided
,
however
, that in the event of death,
the Employer will pay to the beneficiary named on the Designation of
Beneficiary form completed by Executive the following:
(a)
the
Accrued Obligations,
(b)
the
Additional Benefits,
(c) a lump sum amount equal to six months
of Base Salary at the rate in effect on the date of death, payable within
thirty (30) days of the date of death (Lump Sum Payment), and
(d) continuation, at no cost to Executives
spouse and other eligible dependents, of all health and other welfare benefits
provided under Section 3.4 of this Agreement for the benefit of Executives
spouse and other eligible dependents for a period commencing on the date of
death and ending, with respect to Executives spouse, on the earlier of her
death or remarriage and, with respect to any other eligible dependent of
Executive, the date such dependent is no longer eligible for such coverage in
accordance with the terms of any applicable plan.
4.3
Disability.
Employer will have the right to
suspend Executives employment hereunder in the event Executive becomes
disabled (Disability Suspension), by giving written notice of same to
Executive (Notice of Disability Suspension).
Executives Disability Suspension shall become effective upon the 30
th
day following the date of the Notice of Disability Suspension (Disability
Suspension Effective Date). For
purposes of this Agreement, disability shall mean (1) Executive is unable
to engage in any substantial gainful activity by reason of any medically
determined physical or mental impairment that can be expected to result in
death or to last for a continuous period of not less than twelve (12) months,
or (2) Executive is, by reason of any medically determinable physical or
mental impairment that can be
5
expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, receiving income
replacement or disability benefits for a
period of not less than three (3) months under any group long-term
disability plan or accident and health plan then maintained by Employer. In the event that Executive returns to
full-time employment with Employer following the Notice of Disability
Suspension but prior to the Disability Suspension Effective Date, the Notice of
Disability Suspension shall be deemed automatically withdrawn. In any event, the period of Disability
Suspension will end on the earliest to occur of the following (Disability
Termination Date): (A) the date on
which Executive returns to full-time employment with Employer; (B) Executives
death, in which event the provisions of Section 4.2 shall govern; or (C) the
termination by either party or the expiration of the Term of Employment, in
each case in accordance with the terms of this Agreement.
Employer shall pay to
Executive, as of the Disability Suspension Effective Date, the Accrued
Obligations. During the period of
Disability Suspension up until the Disability Termination Date Executive shall:
(a) receive
an amount equal, on a per annum basis, to seventy-five percent (75%) of
Executives Highest Annual Compensation, as hereafter defined, as determined on
the Disability Suspension Effective Date.
Such amount shall be paid by Employer, commencing on the first ordinary
payroll payment date following the Disability Suspension Effective Date, in
equal periodic installments in accordance with Employers ordinary payroll
practices in effect at the time of such payments are made. The payments made pursuant to this provision
shall be in addition to any payments or other benefits payable to Executive
under any qualified or nonqualified retirement plans or programs maintained by
Employer but shall be reduced by any payments received by Executive during such
Disability Suspension under any group long-term disability plan maintained by
Employer;
(b) continue
to accrue and participate in all incentive, pension, retirement, savings, stock
option and other stock grant and equity compensation plans, as well as all
other employee benefit plans and programs, which are referenced in Section 3.3;
and
(c) continue
to receive all life, health and other welfare coverage and benefits as set
forth in Section 3.4, including those for the benefit of Executives
spouse and other eligible dependents.
From and after the
Disability Suspension Effective Date, Employer shall be free to fill Executives
positions;
provided
,
however
, that if Executive is able
to return to full-time employment with Employer at any time during the period
of Disability Suspension prior to the Disability Termination Date, Executive
shall resume his positions and duties with Employer unless Employer has filled
either of those positions and does not reappoint Executive to both such
positions, in
6
which event, Executive may, at his option:
(i) assume
the position(s) and duties that Employer may assign to him at the same
Base Salary as was in effect on the Disability Suspension Effective Date and,
otherwise, on the same terms and conditions as set forth herein; or
(ii) in
the event that the position and duties assigned to him would constitute a
material diminution in his authority, duties or responsibilities or otherwise
constitute Good Reason, as hereinafter defined, Executive may exercise his
right to terminate this Agreement for Good Reason pursuant to Section 4.5.
In the event that
Executive refuses to assume the position and duties assigned to him pursuant to
Clause (i) under circumstances that do not constitute Good Reason, such
shall constitute a Voluntary Termination by Executive subject to Section 4.6
below.
Notwithstanding any other
provision contained in this Agreement to the contrary, the occurrence of a Disability
Suspension shall not in any way prevent or otherwise limit the parties from
exercising any of their respective rights to terminate the Term of Employment
at any time in accordance with the terms of this Agreement or from delivering
Notice of Non-Renewal pursuant to Section 1.
Further, nothing in this Section shall
be deemed as a waiver by Executive of his right to unpaid leave under the
Family and Medical Leave Act of 1993, the Americans with Disabilities Act of
1990, or any analogous provision of state law.
4.4
For Cause
.
Subject to compliance with the procedure set forth herein, Employer
will have the right to terminate Executives employment for Cause. For purposes
of this Agreement, Cause means: (i) Executives willful and continued
failure to substantially perform his employment duties (other than any such
failure resulting from Executives illness or disability, which shall be
subject to the provisions of the preceding Section), or (ii) Executives
willfully engaging in conduct (other than conduct related to the operation of
an automobile) which is demonstrably and materially injurious to Employer,
monetarily or otherwise;
provided
,
however
, that no act or failure to
act, on the part of Executive shall be deemed willful unless done, or omitted
to be done, by Executive not in good faith and without reasonable belief that
Executives act or failure to act, was in the best interest of Employer. Upon
such termination, Executive will thereafter be entitled to receive only the
compensation and benefits set forth in Section 4.1 (a) through (e) hereinabove
applicable to Expiration of the Term Due to Non-Renewal.
(a)
Procedure
. At a
meeting of the applicable Employers Board of Directors, duly called for the
purpose of determining whether Cause exists (Determination Meeting), the
alleged acts or omissions of Executive must be found by two-thirds of the
disinterested directors present at the
7
meeting to have been established beyond reasonable doubt. For purposes
of this Section 4.4, disinterested shall mean those directors other than
the Executive and any other directors who are alleged to have been involved or
otherwise to have an interest in any of such alleged acts or omissions of the
Executive. If said Board determines, as
set forth in the preceding sentence, that Cause exists, said Employer shall
deliver, within ten (10) days of the Determination Meeting, written notice
to Executive of same which shall set forth, in reasonable detail, the findings
of the Board as to the act(s) and/or omission(s), including the dates,
facts and circumstances, constituting Cause (Notice of Termination For
Cause). The Notice of Termination For
Cause shall also advise Executive that unless an Opportunity Notice, as
hereinafter defined, is delivered by Executive as hereinafter provided,
Executives employment shall terminate for Cause effective on the eleventh (11
th
) day after the receipt by
Executive of the Notice of Termination For Cause. Executive may, within ten (10) days of
his receipt of the Notice of Termination For Cause, request, by written notice
delivered to said Employer, that a special meeting of the Board be called for
the purpose of providing Executive an opportunity to appear before the Board, with
counsel, to discuss such act(s) or omission(s) (Opportunity
Notice). Upon receipt of the
Opportunity Notice, a special meeting of the Board shall be duly called to take
place on a date selected by the Board, which is not less than ten (10) nor
more than thirty (30) days after Employers receipt of the Opportunity Notice,
at the principal office of Employer or such other locations as has been
mutually agreed upon by Employer and Executive (Final Meeting). If the Board does not, by vote of greater than
one-third of the disinterested directors present at the meeting, rescind its
Notice of Termination For Cause at the Final Meeting or Executive fails to
attend the Final Meeting for any reason other than either a valid medical
reason or a reason that is deemed credible and sufficient by the acting
Chairman of the Board in his or her sole and absolute discretion (in which
event, the Chairman shall reschedule the Final Meeting to a date selected by
him or her that is practical in light of the reason for Executives failure to
attend), Executives employment shall be terminated for Cause effective
immediately as of the conclusion of the Final Meeting, without further
notice. The procedure set forth herein
shall at all times be subject to the requirements of applicable law,
regulation, regulatory policy or other regulatory requirements.
(b)
Suspension
. Notwithstanding anything to the contrary in
this Agreement, during the period commencing on the date on which notice of the
Determination Meeting is duly given to the Board and ending the earliest of the
date of (i) the Determination Meeting, if no determination of Cause is
made at said meeting as hereinabove provided,
(ii) the date of
8
termination (which may be either the eleventh day following Executives
receipt of the Notice of Termination For Cause if an Opportunity Notice is not
delivered by Executive as hereinabove provided or the date of the Final Meeting
if an Opportunity Notice is provided and the Notice of Termination of Cause is
not rescinded at such meeting), or (iii) the date of the Final Meeting if
the Notice of Termination For Cause is rescinded as set forth in Subsection (c) below:
(1) Executive, in the sole discretion of the
Board, may be suspended from employment with Employer and the Board may, during
such period, reasonably limit Executives access to the principal offices and
any other premises of Employer and/or Executives access to any of Employers
assets or personnel; and
(2) Executive shall continue to receive his Base
Salary and all benefits in accordance with Section 3 of this Agreement to
the extent such payments and benefits are not prohibited by applicable law,
regulation, regulatory policy or other regulatory requirement.
(c) Rescission
of Notice of Termination For Cause
. In the event that the Final Meeting is not
called as provided for herein, or a quorum of the Board fails to appear for the
Final Meeting, or the Board votes to rescind its Notice of Termination for
Cause then such Notice shall be deemed rescinded and Executive shall be
returned to his duties as of the date of such rescission.
(d)
Timeliness.
No event shall constitute grounds for a Cause
termination in the event that Employer fails to take action within 90 days
after Employers Chairman or the Chairman of Employers Audit Committee obtains
knowledge of the occurrence of such event.
(e)
Payment upon Termination For Cause
. If Executives employment shall be terminated
for Cause as set forth herein, Employer shall pay Executive:
(i) the
Accrued Obligations, and
(ii) the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement.
4.5 Involuntary Termination.
4.5.1 Termination by Employer Without
Cause.
Employer
may, unilaterally, terminate Executives employment for any reason and without
Cause or for no reason at all at any time during the Term of Employment upon
sixty (60) days prior written notice to Executive. If Employer terminates Executives employment
pursuant to this Section 4.5.1, then the Term of Employment shall
thereupon end (Date of Involuntary Termination) and Executive shall, subject
to Bank Regulatory Limitations as referenced in
9
Section 4.14,
only be entitled to receive the following:
(a) the
Accrued Obligations;
provided
,
however
, that in addition to the
payment of the per diem value of any unused vacation days that have accrued
during the Term of Employment prior to the Date of Involuntary Termination,
Executive shall receive the unused, unaccrued portion of any vacation days
available through the end (but not beyond) the calendar year in which the Date
of Involuntary Termination occurs,
(b)
the
Additional Benefits,
(c) an aggregate amount equal to two
times Executives Highest Annual Compensation, as hereinafter defined (Severance
Payment), such amount shall be paid no later than two and one-half (2 ½)
months after the close of the taxable year of Executive or Employer in which
the Date of Involuntary Termination occurs,
(d) to have Employer pay the full
premiums (employer and employee portions) for Executives and any covered
beneficiarys coverage under COBRA health continuation benefits over the
eighteen (18) month period immediately following the date of termination. Notwithstanding the foregoing, if Executive
accepts post-employment with another entity that provides comparable
healthcare, during such period, Employer shall not provide Executive with such
health continuation benefits, and
(e) reimbursement for the reasonable fees
of a professional out-placement service selected by Executive; provided,
however, that only expenses incurred by Executive no later than the end of the
second taxable year following the year in which the Date of Involuntary
Termination occurs shall be reimbursed and such reimbursement shall be paid by
the end of the third taxable year following the year in which the Date of
Involuntary Termination occurs.
4.5.2 Termination by Executive For Good Reason.
Executive may terminate his employment for Good Reason. Upon a termination by Executive for Good
Reason, Executive shall be entitled to the same payments and benefits as
provided in Section 4.5.1 above. In
no event shall a termination of Executives employment for Good Reason occur
unless and until Executive provides Employer, within ninety (90) calendar days
following the date on which the facts and circumstances underlying the finding
of Good Reason reasonably could have been known by Executive, with written notice
thereof stating with specificity the facts and circumstances underlying the
finding of Good Reason and, if the basis for such finding of Good Reason is
capable of being cured by Employer, providing Employer with an opportunity to
cure the same within thirty (30) calendar days after receipt of such
notice. If Executive terminates his
employment pursuant to this Section 4.5.2, then the Term of Employment
shall end upon the receipt by Employer of the notice required by this Section 4.5.2;
10
provided
,
however
, that if the basis for such
finding of Good Reason is capable of being cured but Employer fails to cure as
hereinabove provided, the Term of Employment shall end on the thirty-first calendar day following
such notice (Date of Involuntary Termination).
Good Reason
shall mean, without Executives prior written consent, the occurrence of any of
the following events or actions:
(a) material diminution
of Base Salary ;
(b) material
diminution in Executives authority, duties or responsibilities;
(c) material
diminution in the authority, duties or responsibilities of the supervisor to
whom Executive is required to report, including a requirement that Executive
report to a corporate officer or employee instead of directly to the Board of
Directors;
(d) material
diminution in the budget over which Executive retains authority;
(e) material
change in geographic location at which Executive must perform the services; or
(f) any
other action or inaction that constitutes a material breach of the terms of an
applicable employment agreement including, but not limited to Employers
failure to obtain a satisfactory agreement from any successor(s) to assume
and agree to perform Employers obligations under this Agreement.
In order to constitute an Involuntary Termination
under this Section 4.5.2, Executive must actually terminate his employment
pursuant to this Section 4.5.2 within six (6) months following the
date on which the facts and circumstances underlying the finding of Good Reason
reasonably could have been known by Executive.
4.6 Voluntary Termination.
Executive shall give
Employer not less than sixty (60) days prior written notice of his intention
voluntarily to terminate his employment by Employer other than for Good Reason.
If Executive terminates his employment on his own initiative without Good
Reason and under circumstances other than (i) a termination due to death, (ii) a
termination due to Retirement, or (iii) an Expiration of the Term due to
Non-Renewal, then Executive upon such termination (Voluntary Termination),
will only be entitled to receive the following:
(a) the Accrued
Obligations, and
(b) the Additional Benefits, in
accordance with the terms of the applicable plan, program or arrangement.
4.7 Termination Due to Retirement.
During the Term of
11
Employment, Executive may, upon reaching sixty-three
(63) years of age, voluntarily terminate his employment hereunder by giving not
less than sixty (60) days prior written notice to Employer (Retirement). Upon expiration of said sixty (60) day notice
period (Retirement Effective Date), Executive will only be entitled to
receive the following:
(a) the Accrued
Obligations,
(b) the Additional Benefits, in
accordance with the terms of the applicable plan, program or arrangement,
(c) any
rights to indemnification in accordance with Section 6 of this Agreement,
(d) to
continue, together with his spouse and eligible dependents, participation in
the welfare benefits described in Section 3.4 (collectively, the Continuing
Benefit Plans);
provided
,
however
, that coverage (with regard
to medical and dental benefits for the period after the end of the eighteen
(18) month period following the date of termination) shall, unless same is a
nontaxable benefit excludible from income under Section 105 of the Code,
be deemed to be monthly, in-kind payments of the premiums and will be taxable
income to Executive; and
provided
,
further
, that the participation by
Executive (and, to the extent applicable, Executives spouse and dependents) in
any Continuing Benefit Plan shall cease on the date, if any, on which Executive
becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer (End
Date). Executives participation in the
Continuing Benefit Plans will be on the same terms and conditions that would
have applied had Executive continued to be employed by Employer through the End
Date. To the extent any such benefits
cannot be provided under the terms of the applicable plan, policy or program,
Employer shall provide (or shall cause to be provided) a comparable benefit
under another plan.
4.8 Highest Annual Compensation.
Highest Annual
Compensation means, as determined as of the date of termination of Executives
Term of Employment under the applicable termination provision set forth above,
the sum of (a) the highest per annum rate of base salary paid by Employer
to Executive at any time during the Term of Employment prior to such date of termination,
and (b) the highest annual cash performance bonus or other annual cash
incentive compensation paid by Employer to Executive, including all such cash
amounts paid to Executive individually and as part of an employee or executive
compensation group (or which would have been paid but for an election by
Executive to defer payment to a later period) with respect to any fiscal year
of Employer during the Term of Employment prior to such date of termination.
4.9 Change in Control.
A Change in Control event means
12
any event that may
qualify as a Change in Control under Companys 2003 Stock Incentive Plan
,
as may be amended and in effect from time to time.
(a)
Termination pursuant to certain provisions prior to a Change in Control
event
. If the Term of
Employment has been terminated pursuant to Sections 4.2, 4.6 or 4.7 at any time
during the twelve month period prior to a Change in Control event, Executive or
the named beneficiary or other legal representative, as the case may be, shall
be entitled to receive, in addition to
payments and benefits set forth in the
applicable Section, the Severance Payment as set forth in Section 4.5.1(c) above
subject to the provisions of Section 4.11 (Change in Control Payment);
provided
,
however
,
that any sums previously paid to the Executives named beneficiary or other
legal representative pursuant to Section 4.2(c) providing for a Lump
Sum Payment shall reduce the amount of the Change in Control Payment.
In any such case, the Change in Control Payment shall be paid on the
earliest date during the first taxable year of Executive following the taxable
year of Executive in which Executives employment terminates on which such
payment can be made in compliance with Section 409A of the Code.
(b)
Termination pursuant to certain provisions following a Change in
Control event
. (i) If, during the period beginning on the date
of the Change in Control event and ending on the date two (2) years after
a Change in Control event, Executives Term of Employment is terminated
pursuant to Section 4.2, Executives named beneficiary or other legal
representative, as the case may be, shall be entitled to receive, in addition
to payments and benefits set forth in Section 4.2, the Change in Control
Payment;
provided
,
however
,
that payment of the Change in Control Payment shall be in lieu of the Lump Sum
Payment. In such case, the Change in
Control Payment will be paid immediately within thirty (30) days of the date of
death; (ii) If, during the period beginning on the date of the Change in
Control Event and ending on the date that is one (1) year after a Change
in Control Event, Executive either voluntarily terminates his employment
pursuant to Section 4.6, or retires pursuant to Section 4.7, then
Executive shall be entitled to receive the Change in Control Payment, such
Payment to be paid within thirty (30) days following the date Executive
employment terminates.
4.10 Release.
In the event of termination of employment for any
reason, the payments and other benefits (if any) required to be provided to
Executive pursuant to this Section 4 (including those, if any, required
under this Section 4 to be paid pursuant to other sections of this
Agreement) will be in full and complete satisfaction of any and all obligations
owing to Executive pursuant to this Agreement
and, to the fullest extent permitted by law, any other claims Executive may
have in respect of Executives employment by Employer. Such
13
amounts shall constitute
liquidated damages with respect to any and all such rights and claims and, upon
Executives receipt of such amounts, Employer shall be released and discharged
from any and all liability to Executive in connection with this Agreement or
otherwise in connection with Executives employment by Employer.
Notwithstanding the foregoing, Executive shall retain all rights (i) with
respect to Employers continuing obligations to indemnify Executive as a former
officer or director of Employer as set forth in Section 6, (ii)
matters covered by
provisions of this Agreement that expressly survive the termination of this
Agreement, (iii) rights to which
Executive is entitled by virtue of his participation in the employee benefit plans,
policies and arrangements of Employer, and (iv) as otherwise excluded by
applicable law.
4.11 Code Section 280G Reduction.
Anything in this
Agreement or in any other agreement, contract, understanding, plan or program,
entered into or maintained by Employer to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by Employer to or
for the benefit of Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
(collectively, the Payments), would be subject to the excise tax imposed by Section 4999
of the Code, and/or any successor provision or section thereto (such excise
tax, together with any interest or penalties incurred by Executive with respect
to such excise tax, collectively, the Excise Tax), and if the Payments less
the Excise Tax would be less than the amount of the Payments that would
otherwise be payable to Executive without imposition of the Excise Tax, then,
to the extent necessary to eliminate the imposition of the Excise Tax (and
taking into account any reduction in the Payments provided by reason of Section 280G
of the Code in any such other agreement, contract, understanding, plan or
program), the cash and non-cash payments and benefits payable to the Executive
shall be reduced (with Executive being provided with the amount of each payment
and benefit as calculated by the Employer and given ten (10) business days
in which to prioritize the order of reduction of each such payment or benefit);
but only if, by reason of any such reduction, the Payments with any such
reduction shall exceed the Payments less the Excise Tax without any such
reduction. For purposes of this Section 4.11,
(i) no portion of the Payments, the receipt or enjoyment of which
Executive shall have effectively waived in writing prior to the date of
termination, shall be taken into account, (ii) no portion of the Payments
shall be taken into account that, in the opinion of tax counsel selected in
good faith by Employer, 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, (iii) any
payments and/or benefits under this Agreement or otherwise for services to be
rendered on or after the effective date of a Change in Control shall be reduced
only to the extent necessary so that such payments and/or benefits in their
entirety constitute reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4)(B) of the
14
Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred in the immediately
preceding clause (ii) of this sentence, and (iv) the value of any
non-cash payment or benefit or any deferred payment or benefit included in the
Payments shall be determined by Employers independent auditors in accordance
with the principles of Sections 280G(d)(3) and 280G(d)(4) of the Code
and the applicable regulations or proposed regulations under the Code. Except as otherwise provided in this Section 4.11,
the foregoing calculations and determinations shall be made in good faith by
Employer and shall be conclusive and binding upon the parties. Employer shall pay all costs and expenses
incurred in connection with any such calculations or determinations.
4.12 Timing of Payment; Section 409A
. All Accrued Obligations payable under this
Agreement shall be paid in cash in single lump sum within fourteen (14) days
following the date of termination (or at such earlier date required by law). The Additional Benefits shall be paid in
accordance with the terms of the applicable plan, program or arrangement. Except to the extent prohibited by
applicable law or the terms of this Agreement, all other payments to which
Executive shall be entitled to under this Section 4 shall be made within
thirty (30) days following the date of termination, subject to the following:
(a) Payments
to Executive under this Section 4 shall be bifurcated into two portions,
consisting of a portion that does not constitute nonqualified deferred
compensation within the meaning of Section 409A of the Code and a portion
that does constitute
nonqualified
deferred compensation. Payments hereunder shall first be made from the portion,
if any, that does not consist of nonqualified deferred compensation until it is
exhausted and then shall be made from the portion that does constitute
nonqualified deferred compensation. However, anything in this Agreement to the contrary notwithstanding, if at the
time of Executives termination of employment, Executive is considered a
specified employee as defined in Section 409A(a)(2)(B)(i) of the
Code, then to the extent required by Section 409A of the Code, no payments that constitute nonqualified
deferred compensation shall be payable prior to the date that is the earlier of
(i) six months and a day after Executives date of termination, or (ii) Executives
death (Earliest Payment Date). Any
payments that are delayed pursuant to the preceding sentence shall be paid on
the Earliest Payment Date. The determination of whether, and the extent to
which, any of the payments to be made to Executive hereunder are nonqualified
deferred compensation shall be made after the application of all applicable
exclusions under Treas. Reg. § 1.409A-1(b)(9). Any payments that are intended
to qualify for the exclusion for separation pay due to involuntary separation
from service set forth in Treas. Reg. § 1.409A-1(b)(9)(iii) must be paid
no later
15
than the last day of the second taxable year
of Executive following the taxable year of Executive in which the Date of
Termination occurs.
(b) The intent of the parties is that payments and benefits
under this Agreement comply with Section 409A and, accordingly, to the
maximum extent permitted, this Agreement shall be interpreted to be in
compliance therewith.
The parties acknowledge and agree that the interpretation
of Section 409A of the Code and its application to the terms of this
Agreement is uncertain and may be subject to change as additional guidance and
interpretations become available. Anything to the contrary herein
notwithstanding, all benefits or payments provided by Employer to Executive
that would be deemed to constitute nonqualified deferred compensation within
the meaning of Section 409A of the Code are intended to comply with Section 409A
of the Code. If, however, any such benefit or payment is deemed to not comply
with Section 409A of the Code, Employer and Executive agree that this
Agreement may be amended (and that any such amendment may be retroactive to the
extent permitted under Section 409A), as reasonably requested by either
party, and as may be necessary to fully comply with Section 409A of the
Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.
4.13 No Obligation to Mitigate; Set Off Under
Certain Circumstances.
In
the event of any termination of Executives employment under this Section 4,
Executive shall be under no obligation to seek other employment or to mitigate
damages, and no payment provided for in this Agreement shall be reduced by any
compensation earned by Executive as the result of employment by another
employer, or from self-employment, after the termination of his employment with
Employer. Notwithstanding the foregoing,
nothing herein shall be deemed to prevent Employer from setting off against any
amounts due to Executive under this Agreement any amounts due from Executive to
Employer as of the date of such payment.
4.14 Bank Regulatory Limitations.
Any payments made to
Executive pursuant to this Agreement, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. § 1818(k) and any
applicable regulations promulgated thereunder.
In addition, to the extent required by applicable law, regulation,
regulatory policy or other regulatory requirement, the aggregate amount and/or
value of the compensation paid as a result of any termination of Executives
employment with Employer, regardless of the reason for any such termination of
employment, shall not exceed the limit prescribed by such applicable law,
regulation, regulatory policy or other regulatory requirement.
4.15 Option to Serve
as Consultant.
During the
Term of Employment and in lieu of a termination under Sections 4.5, 4.6 or 4.7,
the
16
parties
may mutually agree that Executives position under Section 1 and his
duties, as well as the time and effort required, under Section 2 be
modified and the compensation set forth in Section 3 be adjusted as set
forth in this Section 4.15 and, in such event, Executive shall continue in
the employ of Employer under the same terms and conditions, including but not
limited to benefits under sections 3.3 through 3.7, as is set forth in this
Agreement except as specifically modified by this Section 4.15.
(a)
Position
and Duties
. Executive shall
serve as a consultant to Employer and shall render such services of an advisory
or consultative nature as Employer may reasonably require of him from time to
time and he shall assist Employer in its relations with its employees and
customers, such that Employer shall have the benefit of Executives experience
and knowledge of Employers business and operations, his reputation and
contacts in the industry generally as well as Employers market area and his
general business experience. In the event that Executive was serving as a
director as referenced in Section 1, there shall be no affirmative
obligation on the part of Executive to serve or continue to serve as such and
service as a director shall be in accordance with the mutual agreement of
Executive and Employer.
(b)
Time
and Effort
. Executive shall
perform such services at a level of at least fifty percent (50%) of the
services that Executive performed over the 36 month period occurring
immediately prior to the implementation of this Section 4.15.
(c)
Compensation
. Upon implementation of this Section 4.15,
Executive shall receive, in equal installments in accordance with the customary
payroll practices of Employer, compensation, in lieu of the compensation set
forth in sections 3.1 and 3.2, in an amount equal, on a per annum basis, to
fifty percent (50%) of Executives Highest Annual Compensation as determined as
of the day immediately prior to the implementation of this Section 4.15
and such amount shall constitute Executives Base Salary amount for all
purposes of this Agreement.
5.
Confidentiality/Non-competition/Non-solicitation/Intellectual
Property.
5.1 Confidentiality.
Executive shall not, during the Employment
Term or anytime thereafter, make use of or disclose any Confidential
Information to any person or entity (including, but not limited to any bank,
trust company, credit union, corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust estate, joint
venture or other business organization or entity) (Person) for any reason or
purpose whatsoever other than in furtherance of Employers business. The term Confidential Information shall
mean all confidential information of or relating to Employer and any Person
effectively controlling, effectively controlled by or effectively under common
control with Employer (Affiliate) including, without
17
limitation,
financial information and data, business plans and information regarding
prospects and opportunities (such as, by way of example only, client and
customer lists and acquisition, disposition, expansion, product development and
other strategic plans), but does not include any information that is or becomes
public knowledge by means other than Executives breach or nonobservance of his
obligations described in this Section 5.1.
Notwithstanding the foregoing, Executive may disclose such Confidential
Information as he may be legally required to do so on the advice of counsel in
connection with any legal or regulatory proceeding;
provided
,
however
, that Executive shall
provide Employer with prior written notice of any such required or potentially
required disclosure and shall cooperate with Employer and use his best efforts
under such circumstances to obtain appropriate confidential treatment of any
such Confidential Information that may be so required to be disclosed in
connection with any such legal or regulatory proceeding. Executives obligation to refrain from
disclosing Confidential Information under this Section 5.1 shall continue
in effect in accordance with its terms following any termination of this
Agreement pursuant to Section 4 above.
5.2 Non-competition.
Without
prior written consent of the Board of Directors of Employer, Executive agrees
that he will not, at any time during the Term of Employment and for the
two-year period following the Expiration of the Term of Employment for
Non-Renewal as set forth in Section 4.1 or the termination of the Term of
Employment for any reason as set forth above in Sections 4.4 through 4.7,
directly or indirectly, whether as owner, partner, shareholder (other than the
holder of 1% or less of the common stock of any company the common stock of
which is listed on a national stock exchange or quoted on the Nasdaq Stock
Market), or as consultant, agent, employee of any other Person or otherwise,
engage in competition (as to any service or product provided by Employer or for
which Employer had made substantial preparation to enter into or offer prior to
the termination of Executives employment) with Employer or any of its
Affiliates anywhere within a ten (10) mile radius of any city or town in
which Bank or any Affiliate has a branch or other office (or to such lesser
extent and for such lesser period as may be deemed enforceable, it being the
intention of the parties that this Section 5.2 shall be so enforced);
provided
,
however
, that the restrictive covenant set forth
herein shall automatically terminate or expire upon a Change in Control event
and shall not be of any further force or effect whatsoever following said
Change in Control event.
5.3 Non-solicitation.
Without prior written
consent of the Board of Directors of Employer, Executive agrees that he will
not, at any time during the two-year period following the Expiration of the
Term of Employment for Non-Renewal as set forth in Section 4.1 or the
termination of the Term of Employment for any reason as set forth above in
Sections 4.4 through 4.7:
18
(a) hire
or attempt to hire, or assist in hiring, any employees of Employer or any of
its Affiliates, or solicit, encourage or induce any such employee to terminate
his or her relationship with Employer or any such Affiliate; or
(b) solicit,
encourage or induce any customer or client of Employer or any of its Affiliates
to terminate his or its relationship with Employer or any such Affiliate or to
do business with anyone other than Employer and its Affiliates.
5.4 Intellectual Property.
Executive will, during the period of his
employment, disclose to Employer promptly and fully all Intellectual Property
(as defined below) made or conceived by Executive (either solely or jointly
with others) including but not limited to Intellectual Property which relate to
the business of Employer or result from work performed by him for Employer. All
Intellectual Property and all records related to Intellectual Property, whether
or not patentable, shall be and remain the sole and exclusive property of
Employer and Employer shall have the exclusive worldwide and perpetual right to
use, make, and sell products and/or services derived therefrom. Intellectual Property means all copyrights,
trademarks, trade names, trade secrets, proprietary information, inventions,
designs, developments, and ideas, and all know-how related thereto. Executive
hereby assigns and agrees to assign to Employer all his rights to Intellectual
Property and any patents, trademarks, or copyrights which may be issued with
respect to Intellectual Property.
Executive further acknowledges that all work shall be work made for
hire. During and after the Term of Employment, Executive agrees to assist
Employer, without charge to Employer but at its request and expense, to obtain
and retain rights in Intellectual Property, and will execute all appropriate
related documents at the request of Employer. Executive and Employer agree that
this Section 5.4 shall not apply to any Intellectual Property for which no
equipment, supplies, facilities, trade secret, or other confidential
information of Employer was used and which was developed entirely on his own
time, provided that it does not relate to the business of Employer or and does
not result from any work performed by him for Employer.
5.5 Return of Materials.
Upon the termination of Executives
employment, Executive will return to Employer all Employer property, including
all materials furnished to Executive during the Term of Employment (including
but not limited to keys, computers, automobiles, electronic communication
devices, files, electronic storage devices and identification cards); provided,
however, that Executive may retain copies of materials relating to his
compensation or benefits. In addition, upon termination, Executive will provide
Employer with all passwords and similar information which are reasonably
necessary for Employer to access materials on which Executive worked or to
otherwise continue in its business.
19
5.6
Injunctive
Relief.
Executive acknowledges
and agrees that the protections of Employer set forth in this Section 5
are fair and reasonable and are necessary for Employer to protect its
legitimate business interests, including its Confidential Information and
business relationships, and that Employer will have no adequate remedy at law,
and would be irreparably harmed, if Executive breaches or threatens to breach
any of the provisions of this Section 5.
Executive agrees that Employer shall be entitled to seek equitable
and/or injunctive relief to prevent any breach of threatened breach of this Section 5,
and to specific performance of each of the terms of this Section 5 in
addition to any other legal or equitable remedies that Employer may have,
without posting a bond. Executive
further agrees that he shall not, in any equity proceeding relating to the
enforcement of the terms of this Section 5, raise the defense that
Employer has an adequate remedy at law.
5.7
Claw-back.
To
the fullest extent permitted by law, in the event that Executive breaches any
of the provisions of Sections 5.1, 5.2 or 5.3:
(a)
Employer shall be entitled to recoup payments
made to Executive pursuant to Section 4 hereof, provided, however, that,
in the event of a breach of Section 5.1, such recoupment shall be limited
to the reasonable damages incurred by Employer as a result of such breach and,
in the event of a breach of Section 5.2 or Section 5.3, such
recoupment shall be equal to the total payments made to Executive pursuant to Section 4
multiplied by a fraction, the numerator of which is the number of months
remaining from the date of such breach to the second anniversary of the Term of
Employment or Expiration of the Term of Employment for Non-Renewal, as the case
may be, and the denominator of which is twenty-four (24) months; and
(b)
to the extent that any other benefits are
being provided to Executive pursuant to Section 4, such will cease
immediately, and Executive will not be entitled to any further compensation and
benefits from Employer pursuant to Section 4.
5.8
Special
Severability.
The terms and
provisions of this Section 5 are intended to be separate and divisible
provisions and if, for any reason, any one or more of them is held to be
invalid or unenforceable, neither the validity nor the enforceability of any
other provision of this Agreement shall thereby be affected.
6.
Indemnification.
Executive (and his heirs, executors and
administrators) shall be indemnified and held harmless by Employer to the
fullest extent permitted by applicable law, regulation, regulatory policy or
other regulatory requirement, against all expenses, liabilities and losses
(including without limitation, all reasonable attorneys fees and all
judgments, fines, excise taxes or penalties and amounts paid or to be paid in
settlement) incurred or suffered by Executive as a consequence of Executive
being or having been made a party to, or being or having been involved in, any
threatened, pending or
20
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Executive
is or was a trustee, director or officer of Employer or is or was serving at
the request of Employer as a trustee, director or officer of Employer of is or
was serving at the request of Employer as a trustee, director or officer of
another corporation or other entity and such indemnification shall continue
after 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, regulation, regulatory policy or other regulatory requirement,
the right to be paid by Employer the expenses incurred in defending any such
proceeding in advance of the final disposition upon receipt by Employer of an
undertaking by or on behalf of Executive to repay such amount or a portion
thereof, if it shall ultimately be determined that Executive is not entitled to
be indemnified by Employer pursuant hereto or as otherwise authorized by law,
regulation, regulatory policy or other regulatory requirement, but such
repayment by Executive shall only be in an amount ultimately determined to
exceed the amount to which Executive was entitled to be indemnified. Employers acceptance of any such undertaking
by or on behalf of Executive may not be conditioned upon any evidence or
demonstration by or on behalf of Executive of any financial capacity to make
any such repayment at the time such undertaking is delivered. The provisions of this Section 6 shall
survive any termination of this Agreement.
7.
Notices
. Any notice given hereunder shall be in
writing and shall be deemed given when delivered in-hand to the other party, by
facsimile transmission, by overnight courier, or by registered or certified
mail (return receipt requested, postage prepaid) addressed to the appropriate
party at the address first set forth above, or at such other address as the
party shall designate from time to time in a notice.
8.
Disputes
. Any dispute, claim or
controversy arising out of or relating to this Agreement or the breach,
termination, enforcement, interpretation or validity thereof hereof (other than an action brought by Employer
for injunctive or other equitable relief in the enforcement of Employers
rights under Section 5 above, in which case such action may be brought in
any court of competent jurisdiction), including the determination of the
scope or applicability of this Agreement to arbitrate, shall be determined by
arbitration in Boston, Massachusetts, before three neutral arbitrators (one of
whom shall be appointed by Employer, one by Executive and the third by the
first two arbitrators). The arbitration
shall be administered by JAMS pursuant to its Streamlined Arbitration Rules and
Procedures. Judgment on the Award may be entered in any court having
jurisdiction. This clause shall not preclude parties from seeking provisional
remedies in aid of arbitration from a court of appropriate jurisdiction. In the event that it shall be necessary or
desirable for Executive to retain legal counsel and/or incur other costs and
expenses in
21
connection with the enforcement of any or all of
Executives rights under this Agreement, Employer shall pay (or Executive shall
be entitled to recover from Employer, as the case may be) Executives
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 that the arbitrators shall determine that Executive has not acted in
good faith or presented a
bona fide
claim
or dispute or that under the circumstances recovery by Executive of all or part
of any such fees and costs and expenses would be inequitable or otherwise
unjust.
The parties agree that any and
all disputes, claims or controversies arising out of or relating to this
Agreement shall first be submitted to JAMS, or its successor, for mediation,
and if the matter is not resolved through mediation, then it shall be submitted
to JAMS, or its successor, for final and binding arbitration pursuant to the
arbitration clause set forth above. Either party may commence mediation by
providing to JAMS and the other party a written request for mediation, setting
forth the subject of the dispute and the relief requested. The parties will
cooperate with JAMS and with one another in selecting a mediator from JAMS
panel of neutrals, and in scheduling the mediation proceedings. The parties
covenant that they will participate in the mediation in good faith. Employer
shall pay (or Executive shall be entitled to recover from Employer, as the case
may be) Executives reasonable attorneys fees and other reasonable costs of
such mediation. All offers, promises,
conduct and statements, whether oral or written, made in the course of the
mediation by any of the parties, their agents, employees, experts and
attorneys, and by the mediator or any JAMS employees, are confidential,
privileged and inadmissible for any purpose, including impeachment, in any
arbitration or other proceeding involving the parties, provided that evidence
that is otherwise admissible or discoverable shall not be rendered inadmissible
or non-discoverable as a result of its use in the mediation. Either party may
initiate arbitration with respect to the matters submitted to mediation by
filing a written demand for arbitration at any time following the initial
mediation session or 45 days after the date of filing the written request for
mediation, whichever occurs first. The mediation may continue after the
commencement of arbitration if the parties so desire. Unless otherwise agreed
by the parties, the mediator shall be disqualified from serving as arbitrator
in the case. The provisions of this Clause may be enforced by any Court of
competent jurisdiction, and the party seeking enforcement shall be entitled to
an award of all costs, fees and expenses, including attorneys fees, to be paid
by the party against whom enforcement is ordered.
In the event that
within thirty (30) calendar days after the date that Executives Term of
Employment has been terminated by Employer for Cause or by Executive for Good
Reason, Executive (in the case of termination for Cause), or Employer (in the
case of termination for Good Reason), notifies the other in writing that a
dispute exists concerning the termination of employment either for Cause or for
Good Reason, as the case may be (Notice of Dispute),
22
(1)
Executive shall be
entitled, to the extent not prohibited by applicable law, regulation,
regulatory policy or other regulatory requirement, to be paid his Base Salary
pursuant to Section 3.1 and to continue to receive all other benefits set
forth in Section 3 until the earliest to occur of the following: (i) the
expiration of the then current Term of Employment, or (ii) the resolution,
pursuant to the provisions of Section 8, of such dispute; and
(2)
there shall be no
reduction whatsoever of any amounts subsequently paid to Executive upon
resolution of such dispute as a result of, or in respect to, such interim
payments or coverage;
provided
,
however
,
that the Notice of Dispute is given in good faith, sets forth a
bona fide
claim or dispute and Executive pursues the
resolution of such dispute with reasonable diligence. The Notice of Dispute hereunder shall in all
circumstances constitute (a) a Notice of Non-Renewal under Section 1
for purposes of determining the expiration of the then current Term of
Employment, and (b) a request for mediation and, therefore, a copy of such
Notice of Dispute shall be provided to JAMS as set forth above.
9.
Binding Effect; Successors
. This Agreement shall inure to the benefit of
and be binding upon Employer, its successors and assigns, and Executive and his
heirs, legal or personal representatives, but shall not inure to the benefit of
or be enforceable by any third party except as otherwise expressly provided
herein. Except as otherwise expressly
provided herein, Employer and Executive agree on behalf of themselves and of
any other person or persons claiming any benefits by virtue of this Agreement,
that this Agreement and the rights, interests and benefits under it shall not
be assigned, transferred, pledged, or hypothecated in any way by Employer or
Executive or by any other person claiming under Employer or Executive by virtue
hereof; provided, however, that an assignment may be made to the extent that
the other party has consented to same in writing.
9.1
Executive.
This Agreement is personal to Executive and, without the
prior written consent of Employer, shall not be assignable by Executive, except
that Executives rights to receive any compensation or benefits under this
Agreement may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a qualified domestic relations
order. In the event of Executives death
prior to the completion by Employer of all payments due to Executive under this
Agreement, Employer shall continue to make such payments to Executives
beneficiary(ies) as designated in writing by Executive to Employer prior to his
death (or to his estate, if he fails to make such designation).
9.2
Employer.
Both Company and Bank shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its businesses
and/or assets to assume
23
expressly and agree to perform
this Agreement in the same manner and to the same extent as if no sucession had
taken place. Failure of either Company
or Bank to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Executive to compensation in the same amount and on the same terms as he would
be entitled to hereunder if he terminated this Agreement for Good Reason following
a Change in Control, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed to be
the date of termination. As used in this
Agreement, Company, Bank and Employer shall mean the Company, Bank and
Employer as hereinbefore defined and any sucessor to the business and/or assets
of either Company or Bank as aforesaid which successor assumes and agrees to
perform this Agreement by operation of law or otherwise.
10.
Miscellaneous.
10.1
Governing Law.
This Agreement is made and delivered in, and
shall be construed in accordance with the substantive laws of, the Commonwealth
of Massachusetts without regard to conflict of law principles.
10.2
Amendments; Waiver.
No amendment, waiver or modification of this
Agreement shall be valid unless the same shall be in writing and signed by the
party sought to be charged therewith;
provided
,
however
, that no amendment that will
result in a violation of Section 409A of the Code, or any other provision
of applicable law, may be made to this Agreement and any such amendment shall
be void
ab initio
. Failure to
insist in any one or more instances on strict compliance with the terms of this
Agreement shall not be deemed a waiver. Waiver of a breach of any provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
10.3
Entire Agreement.
The parties acknowledge and
agree that they are not relying on any representations, oral or written, other
than those expressly contained herein.
This Agreement supersedes all proposals, oral or written, all
negotiations, conversations or discussions between the parties and all course
of dealing. All prior understandings and agreements between the parties are
hereby merged in this Agreement, which alone is the complete and exclusive
statement of their understanding.
10.4
Withholdings; Reporting.
All payments to be made to Executive by
Employer shall be subject to withholding of such amounts, if any, relating to
tax and other payroll deductions as Employer may reasonably determine it should
withhold pursuant to any applicable law and regulation. Employer may withhold
from any amounts payable under this Agreement such taxes as shall be required
to be withehld pursuant to any applicable law or regulation. Executive
acknowledges that Employer may be required to report amounts deferred by or for
Executive under nonqualified deferred compensation plans on forms W-2 and
agrees that Employer shall comply with all such
24
requirements and Executive
agrees to pay and be solely responsible for all taxes, interest and penalties.
10.5
Enforceability.
If any portion or provision of this Agreement
shall to any extent to be declared illegal or uneforceable 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 uneforceable, 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.
10.6
Captions.
Paragraph headings are for convenience of
reference only and are not intended to create substantive rights or
obligations.
10.7
Survivorship.
The respective rights and oblitations of the
parties to this Agreement including, without limitation, any of their
respective rights and obligations under Section 6 of this Agreement, shall
survive any termination of this Agreement or any termination of Executives
employment hereunder for any reason to the extent necessary to accomplish the
intended preservation of such rights and obligations.
10.8
Construction.
The parties acknowledge that they each
participated in drafting this Agreement, and there shall be no presumption
against any party on the ground that such party was responsible for preparing
this Agreement or any part hereof.
[Remainder of Page Intentionally
Blank]
25
IN WITNESS WHEREOF
, this
Agreement has been duly executed by the undersigned as of the day and year
first above written.
ATTEST:
|
ENTERPRISE BANCORP, INC.
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|
/s/ Tanya A. Hubanks
|
|
By
|
/s/ James F. Conway, III
|
|
James F. Conway, III
|
|
Director, Chairman of Compensation
|
|
Committee
|
|
|
|
|
|
|
ATTEST:
|
ENTERPRISE BANK AND TRUST
COMPANY
|
|
|
|
|
|
|
/s/ Tanya A. Hubanks
|
|
By
|
/s/ James F. Conway, III
|
|
James F. Conway, III
|
|
Director, Chairman of Compensation
|
|
Committee
|
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WITNESS:
|
EXECUTIVE
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/s/ Tanya A. Hubanks
|
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/s/ Richard W. Main
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Richard W. Main
|
26
Exhibit 10.2.3
EMPLOYMENT
AGREEMENT
This
EMPLOYMENT AGREEMENT
made and entered into on the 19th day of December, 2008, by and between
Enterprise Bancorp, Inc.
, a
Massachusetts corporation with a principal office at 222 Merrimack Street,
Lowell, Massachusetts 01852
(Company)
and its wholly owned
subsidiary,
Enterprise Bank and Trust Company
,
a Massachusetts trust company with its main office at 222 Merrimack Street,
Lowell, Massachusetts 01852 (Bank)(Bank
and Company being collectively referred to herein as the Employer), and
John P. Clancy, Jr.
, who
resides at 11 Tanglewood Drive, Chelmsford, Massachusetts 01824 (the Executive), amends and restates
the Employment Agreement dated as of April 1, 2004, as amended. The provisions of this Restatement are
effective as of April 1, 2008 (Effective Date).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS,
Executive has been employed by Employer for a substantial length of time and
the services of Executive, his experience, and his knowledge of the affairs of
Employer are of great value to Employer and Employer desires to continue to
employ Executive as its Chief Executive Officer under the terms and conditions
set forth below; and
WHEREAS, Executive desires to continue to be employed
by Employer as Chief Executive Officer upon the terms and conditions
hereinafter set forth;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, and intending to be
legally bound hereby, it is hereby agreed as follows:
1.
Employment; Position; Term
.
Employer hereby employs Executive, and
Executive agrees to be so employed, in the capacity of Chief Executive Officer
of Employer for a term commencing as of the Effective Date and ending on the
second anniversary of the Effective Date, April 1, 2010 (Term of Employment);
provided
,
however
,
that, commencing on the date one year after the
Effective Date, and on each annual anniversary of such date (such date and each
annual anniversary thereof, the Renewal Date), unless previously terminated,
the Term of Employment shall be automatically extended so as to terminate two
years from such Renewal Date, unless, at least 60 days prior to the Renewal Date,
either Employer or Executive gives notice to the other that the Term of
Employment shall not be so extended (Notice of Non-Renewal). By way of example, on April 1,
2009, the Term of Employment shall be extended from a term ending on April 1,
2010 to a term ending on April 1,
2011. Upon the timely delivery by either party of a Notice of Non-Renewal, the
Term of Employment shall no longer be subject to the automatic extension
provided for
GALLAGHER &
CAVANAUGH, LLP, 100 FOOT OF JOHN STREET, LOWELL, MASSACHUSETTS 01852
herein, but rather shall
expire upon the conclusion of the then Term of Employment (Expiration of Term
Due to Non-Renewal). By way of example,
if a Notice of Non-Renewal were first delivered on November 1, 2009, the
Term of Employment would expire on April 1, 2011. A Notice of Non-Renewal
may not be delivered by Employer during the two year period immediately
following a Change in Control event (as hereinafter defined)
. Executives
service as a director of Employer and/or any Affiliate (as hereafter
defined), shall be without any further compensation in addition to that set
forth herein.
2.
Duties; Place of
Employment; Time and Efforts
.
2.1
Duties.
During the Term of Employment,
Executive shall exercise and assume such duties, responsibilities and
authorities as are provided in the bylaws of Employer with respect to holding
the office of Chief Executive Officer.
Executive shall at all times discharge his duties in consultation with
and under supervision of and shall report directly to the Board of
Directors. Notwithstanding the above,
Executive shall not be required to perform any duties and responsibilities
which would result in Employers or Executives noncompliance with, or any
other violation of, any applicable law, regulation, regulatory policy or other
regulatory requirement.
2.2
Place
of Employment.
Executive shall
render his services primarily at Employers office in Lowell, Massachusetts.
Executive shall travel as reasonably required for the performance of his duties
hereunder.
2.3
Time
and Efforts.
During the Term of
Employment, Executive shall, except for periods of absence occasioned by
illness, vacation, and any other reasonable leaves of absence in accordance
with applicable policies, programs, procedures or practices of Employer,
diligently and conscientiously devote his full business time and attention and
best efforts, business skills, ability and fidelity to the business of Employer
and the discharge of his duties hereunder;
provided
,
however
, that Executive may, so long
as such activities (individually and collectively) do not conflict or
materially interfere with the performance of Executives duties hereunder (a) continue
to serve on any boards and committees on which Executive is presently serving
or in a position which Executive currently holds provided same has been
disclosed to Employer on a schedule attached to this Agreement; (b) manage
his personal financial affairs, including his personal passive
investments; (c) serve on boards of
directors or trustees or committees of civic or charitable organizations or
trade associations, and (d) with the written consent of the Board of
Directors, as evidenced by a formally adopted vote or resolution and subject to
such terms and conditions specified in any such vote or resolution, serve as a
non-employee director, trustee, manager or partner of any business entity.
3.
Compensation and Other
Benefits
.
3.1
Base Salary
. In consideration of the services of
Executive,
2
Employer shall pay to
Executive a base salary of
$350,000.75
per annum, together with such
increases as the Board of Directors of Employer may from time to time approve
in its sole discretion (but such shall be reviewed by the Board at least annually),
in equal installments in accordance with the customary payroll practices of
Employer (Base Salary).
3.2
Annual
Cash Bonus.
During the Term of Employment, Executive shall be entitled
to participate in an equitable manner with other executive officers of Employer
in such discretionary bonus payment or awards as may be authorized, declared and/or paid by the Board of Directors to Employers
executive employees. Nothing in this
Agreement, however, shall be construed to require Employer to establish, maintain
or continue any bonus plan, program or arrangement. Except as otherwise expressly provided by
their terms, such bonus plan, programs or arrangements are subject to
modification or termination by Employer at any time in its sole
discretion. No other compensation or
additional benefits provided for in this Agreement shall be deemed to be
a substitute for Executives right to receive such bonuses if, when and as
declared and paid by the Board of Directors.
3.3
Incentive,
Retirement, and Savings Plans.
During
the Term of Employment, Executive shall
be entitled to participate in all incentive, pension, retirement, savings,
stock option and other stock grant and equity compensation plans, as well as
all other nonseverance related benefits, plans and programs, which may be
maintained from time to time by Employer for the benefit of senior executives
and/or other employees of Employer.
3.4
Welfare
Benefit Plans.
During the Term
of Employment, Executive and his spouse and other eligible dependents shall be
entitled to participate in, and be covered by, all of the health and other
welfare benefit plans and programs that may be maintained from time to time by
Employer for the benefit of senior executives and/or other employees of
Employer. In the case of any group
disability plan maintained by Employer, Employer shall provide Executive the
opportunity to pay directly by payroll deduction or otherwise all or any
portion of the premium on any policy or policies providing such coverage.
3.5
Expense
Reimbursement.
During the Term
of Employment, Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses, including reasonable business travel expenses,
incurred by Executive in performing his duties and responsibilities under this
Agreement, in accordance with the
policies, programs, procedures and practices of Employer as in effect at the
time the expense was incurred. To the extent necessary to avoid characterizing
any reimbursement to Executive as deferred compensation under Section 409A
of the Internal Revenue Code of 1986, as amended (the Code) and the United States Treasury regulations
then in effect (Treas. Regs.), such reimbursements shall be paid on or before
March 1 following the close of the calendar year in which the expense was
incurred by Executive.
3
Amounts which are not submitted within the required timeframe shall not
be eligible for reimbursement hereunder.
3.6
Fringe
Benefits; Automobile.
During the
Term of Employment, Executive shall be eligible to benefit from such fringe
benefits and perquisites, in accordance with the policies, programs, procedures
and practices of Employer, as may be in effect and provided from time to time
to senior executives and/or other employees of Employer, and shall be entitled
to the use of an automobile, of a type commensurate with Executives office and
standing, at Employers expense.
3.7
Vacation.
Executive shall earn and accrue twenty-six
(26) days of vacation for each twelve month period served during the Term of
Employment. Executive shall be entitled
to the continuation of his Base Salary and benefits during vacations to be
scheduled at the reasonable convenience of the parties hereto. Vacation will be earned ratably over the
course of each such twelve month period and shall be used in accordance with
Employers policies.
4.
Termination
.
Unless Executives employment is terminated pursuant to
this Section 4, Employer will continue to employ Executive and Executive
will continue to serve Employer throughout the Term of Employment. Termination of Executives employment will
constitute an automatic termination of all other positions held by Executive
including service as a director, unless otherwise requested by Employer.
4.1
Expiration
of the Term Due to Non-Renewal.
Upon
Expiration of Term Due to Non-Renewal, Executives employment with Employer
will be terminated (herein date of termination) without further action by
Executive or Employer and Executive will be entitled to receive the following:
(a)
earned
and accrued but previously unpaid Base Salary through the date of termination ,
(b)
payment
in respect of any vacation days accrued but unused through the date of
termination,
(c)
reimbursement
of any remaining expense properly incurred in accordance with Employers policy
prior to the date of termination and not yet reimbursed by Employer,
(d)
any
bonus actually awarded or earned, but not yet paid as of the date of
termination, and
(e)
any
vested benefits under any insurance policy, pension, retirement, savings, stock
option and other stock grant and equity compensation plans, together with any
other non-severance related compensation and benefits as may be provided in
accordance with the terms and provisions of any other agreements between
Executive and
4
either Company or Bank and any applicable plans,
programs, procedures and practices of Employer.
The aggregate
benefits payable pursuant to clauses (a), (b), (c) and (d) are
hereafter referred to as the Accrued Obligations. The vested benefits referenced in clause (e) are
hereafter referred to as the Additional Benefits.
4.2
Death
.
The employment of Executive hereunder shall terminate
immediately upon his death;
provided
,
however
, that in the event of death,
the Employer will pay to the beneficiary named on the Designation of
Beneficiary form completed by Executive the following:
(a)
the
Accrued Obligations,
(b)
the
Additional Benefits,
(c)
a
lump sum amount equal to six months of Base Salary at the rate in effect on
the date of death, payable within thirty (30) days of the date of death (Lump
Sum Payment), and
(d)
continuation,
at no cost to Executives spouse and other eligible dependents, of all health
and other welfare benefits provided under Section 3.4 of this Agreement
for the benefit of Executives spouse and other eligible dependents for a
period commencing on the date of death and ending, with respect to Executives
spouse, on the earlier of her death or remarriage and, with respect to any
other eligible dependent of Executive, the date such dependent is no longer
eligible for such coverage in accordance with the terms of any applicable plan.
4.3
Disability.
Employer
will have the right to suspend Executives employment hereunder in the event
Executive becomes disabled (Disability Suspension), by giving written notice
of same to Executive (Notice of Disability Suspension). Executives Disability Suspension shall
become effective upon the 30
th
day following the date of the Notice
of Disability Suspension (Disability Suspension Effective Date). For purposes of this Agreement, disability
shall mean (1) Executive is unable to engage in any substantial gainful
activity by reason of any medically determined physical or mental impairment
that can be expected to result in death or to last for a continuous period of
not less than twelve (12) months, or (2) Executive is, by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months, receiving income replacement or disability benefits for a period of not less than three (3) months
under any group long-term disability plan or accident and health plan then
maintained by Employer. In the event
that Executive returns to full-time employment with Employer following the
Notice of Disability Suspension but prior to the Disability Suspension
Effective Date, the Notice of Disability Suspension shall be deemed
automatically withdrawn. In any event,
the period of Disability Suspension will
5
end on the earliest to occur of the following (Disability Termination
Date): (A) the date on which
Executive returns to full-time employment with Employer; (B) Executives
death, in which event the provisions of Section 4.2 shall govern; or (C) the
termination by either party or the expiration of the Term of Employment, in
each case in accordance with the terms of this Agreement.
Employer shall pay to Executive, as of the Disability
Suspension Effective Date, the Accrued Obligations. During the period of Disability Suspension up
until the Disability Termination Date Executive shall:
(a)
receive
an amount equal, on a per annum basis, to seventy-five percent (75%) of
Executives Highest Annual Compensation, as hereafter defined, as determined on
the Disability Suspension Effective Date.
Such amount shall be paid by Employer, commencing on the first ordinary
payroll payment date following the Disability Suspension Effective Date, in
equal periodic installments in accordance with Employers ordinary payroll
practices in effect at the time of such payments are made. The payments made pursuant to this provision
shall be in addition to any payments or other benefits payable to Executive
under any qualified or nonqualified retirement plans or programs maintained by
Employer but shall be reduced by any payments received by Executive during such
Disability Suspension under any group long-term disability plan maintained by
Employer;
(b)
continue
to accrue and participate in all incentive, pension, retirement, savings, stock
option and other stock grant and equity compensation plans, as well as all other
employee benefit plans and programs, which are referenced in Section 3.3;
and
(c)
continue
to receive all life, health and other welfare coverage and benefits as set
forth in Section 3.4, including those for the benefit of Executives
spouse and other eligible dependents.
From and after the Disability Suspension Effective
Date, Employer shall be free to fill Executives positions;
provided
,
however
,
that if Executive is able to return to full-time employment with Employer at
any time during the period of Disability Suspension prior to the Disability
Termination Date, Executive shall resume his positions and duties with Employer
unless Employer has filled either of those positions and does not reappoint
Executive to both such positions, in which event, Executive may, at his option:
(i)
assume
the position(s) and duties that Employer may assign to him at the same
Base Salary as was in effect on the Disability Suspension Effective Date and,
otherwise, on the same terms and conditions as set forth herein; or
(ii)
in
the event that the position and duties assigned to him would constitute a
material diminution in his authority, duties
6
or responsibilities or
otherwise constitute Good Reason, as hereinafter defined, Executive may
exercise his right to terminate this Agreement for Good Reason pursuant to Section 4.5.
In the event that Executive refuses to assume the
position and duties assigned to him pursuant to Clause (i) under
circumstances that do not constitute Good Reason, such shall constitute a
Voluntary Termination by Executive subject to Section 4.6 below.
Notwithstanding any other provision contained in this
Agreement to the contrary, the occurrence of a Disability Suspension shall not
in any way prevent or otherwise limit the parties from exercising any of their
respective rights to terminate the Term of Employment at any time in accordance
with the terms of this Agreement or from delivering Notice of Non-Renewal
pursuant to Section 1.
Further, nothing in this Section shall be deemed
as a waiver by Executive of his right to unpaid leave under the Family and
Medical Leave Act of 1993, the Americans with Disabilities Act of 1990, or any
analogous provision of state law.
4.4
For Cause
.
Subject to compliance with the procedure set
forth herein, Employer will have the right to terminate Executives
employment for Cause. For purposes of
this Agreement, Cause means: (i) Executives willful and continued
failure to substantially perform his employment duties (other than any such
failure resulting from Executives illness or disability, which shall be
subject to the provisions of the preceding Section), or (ii) Executives
willfully engaging in conduct (other than conduct related to the operation of
an automobile) which is demonstrably and materially injurious to Employer,
monetarily or otherwise;
provided
,
however
, that no act or failure to
act, on the part of Executive shall be deemed willful unless done, or omitted
to be done, by Executive not in good faith and without reasonable belief that
Executives act or failure to act, was in the best interest of Employer. Upon
such termination, Executive will thereafter be entitled to receive only the
compensation and benefits set forth in Section 4.1 (a) through (e) hereinabove
applicable to Expiration of the Term Due to Non-Renewal.
(a)
Procedure
. At a
meeting of the applicable Employers Board of Directors, duly called for the
purpose of determining whether Cause exists (Determination Meeting), the alleged
acts or omissions of Executive must be found by two-thirds of the disinterested
directors present at the meeting to have been established beyond reasonable
doubt. For purposes of this Section 4.4,
disinterested shall mean those directors other than the Executive and any
other directors who are alleged to have been involved or otherwise to have an
interest in any of such alleged acts or omissions of the Executive. If said Board determines, as set forth in the
preceding sentence, that Cause exists, said Employer shall deliver, within ten (10) days
of the Determination Meeting, written notice to Executive of same which shall
set forth, in reasonable detail, the findings of the Board
7
as to the act(s) and/or
omission(s), including the dates, facts and circumstances, constituting Cause
(Notice of Termination For Cause). The
Notice of Termination For Cause shall also advise Executive that unless an
Opportunity Notice, as hereinafter defined, is delivered by Executive as
hereinafter provided, Executives employment shall terminate for Cause
effective on the eleventh (11
th
) day
after the receipt by Executive of the Notice of Termination For Cause. Executive may, within ten (10) days of
his receipt of the Notice of Termination For Cause, request, by written notice
delivered to said Employer, that a special meeting of the Board be called for
the purpose of providing Executive an opportunity to appear before the Board,
with counsel, to discuss such act(s) or omission(s) (Opportunity
Notice). Upon receipt of the
Opportunity Notice, a special meeting of the Board shall be duly called to take
place on a date selected by the Board, which is not less than ten (10) nor
more than thirty (30) days after Employers receipt of the Opportunity Notice,
at the principal office of said Employer or such other locations as has been
mutually agreed upon by Employer and Executive (Final Meeting). If the Board does not, by vote of greater
than one-third of the disinterested directors present at the meeting, rescind
its Notice of Termination For Cause at the Final Meeting or Executive fails to
attend the Final Meeting for any reason other than either a valid medical
reason or a reason that is deemed credible and sufficient by the acting
Chairman of the Board in his or her sole and absolute discretion (in which
event, the Chairman shall reschedule the Final Meeting to a date selected by
him or her that is practical in light of the reason for Executives failure to
attend), Executives employment shall be terminated for Cause effective
immediately as of the conclusion of the Final Meeting, without further
notice. The procedure set forth herein
shall at all times be subject to the requirements of applicable law,
regulation, regulatory policy or other regulatory requirements.
(b)
Suspension
.
Notwithstanding anything to the contrary in this Agreement, during the
period commencing on the date on which notice of the Determination Meeting is
duly given to the Board and ending the earliest of the date of (i) the
Determination meeting, if no determination of Cause is made at said meeting as
hereinabove provided, (ii) the date
of termination (which may be either the eleventh day following Executives
receipt of the Notice of Termination For Cause if an Opportunity Notice is not
delivered by Executive as hereinabove provided or the date of the Final Meeting
if an Opportunity Notice is provided and the Notice of Termination of Cause is
not rescinded at such meeting), or (iii) the date of the Final Meeting if
the Notice of Termination For Cause is rescinded as set forth in Subsection (c) below:
(1) Executive,
in the sole discretion of the Board may be
8
suspended from employment
with Employer and the Board may, during such period, reasonably limit
Executives access to the principal offices and any other premises of Employer
and/or Executives access to any of Employers assets or personnel; and
(2)
Executive shall continue to receive his Base Salary and all benefits in
accordance with Section 3 of this Agreement to the extent such payments
and benefits are not prohibited by applicable law, regulation, regulatory
policy or other regulatory requirement.
(c)
Rescission
of Notice of Termination For Cause
.
In the event that the Final Meeting is not called as provided for
herein, or a quorum of the Board fails to appear for the Final Meeting, or the
Board votes to rescind its Notice of Termination for Cause then such Notice
shall be deemed rescinded and Executive shall be returned to his duties as of
the date of such rescission.
(d)
Timeliness.
No event shall constitute grounds for a
Cause termination in the event that Employer fails to take action within 90
days after Employers Chairman or the Chairman of Employers Audit Committee
obtains knowledge of the occurrence of such event.
(e)
Payment upon Termination For Cause
. If Executives employment shall be terminated
for Cause as set forth herein, Employer shall pay Executive:
(i)
the
Accrued Obligations, and
(ii)
the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement.
4.5
Involuntary
Termination.
4.5.1
Termination
by Employer Without Cause.
Employer
may, unilaterally, terminate Executives employment for any reason and without
Cause or for no reason at all at any time during the Term of Employment upon
sixty (60) days prior written notice to Executive. If Employer terminates Executives employment
pursuant to this Section 4.5.1, then the Term of Employment shall
thereupon end (Date of Involuntary Termination) and Executive shall, subject
to Bank Regulatory Limitations as referenced in Section 4.14, only be
entitled to receive the following:
(a)
the
Accrued Obligations;
provided
,
however
, that in addition to the
payment of the per diem value of any unused vacation days that have accrued
during the Term of Employment prior to the Date of Involuntary Termination,
Executive shall receive the unused, unaccrued portion of any vacation days available
through the end (but not beyond) the calendar year in which the Date of
Involuntary Termination occurs,
(b)
the
Additional Benefits,
9
(c)
an
aggregate amount equal to two times Executives Highest Annual Compensation, as
hereinafter defined (Severance Payment), such amount shall be paid no later
than two and one-half (2 ½) months after the close of the taxable year of
Executive or Employer in which the Date of Involuntary Termination occurs,
(d)
to
have Employer pay the full premiums (employer and employee portions) for
Executives and any covered beneficiarys coverage under COBRA health
continuation benefits over the eighteen (18) month period immediately following
the date of termination. Notwithstanding
the foregoing, if Executive accepts post-employment with another entity that
provides comparable healthcare, during such period, Employer shall not provide
Executive with such health continuation benefits, and
(e)
reimbursement
for the reasonable fees of a professional out-placement service selected by
Executive; provided, however, that only expenses incurred by Executive no later
than the end of the second taxable year following the year in which the Date of
Involuntary Termination occurs shall be reimbursed and such reimbursement shall
be paid by the end of the third taxable year following the year in which the
Date of Involuntary Termination occurs.
4.5.2
Termination
by Executive For Good Reason.
Executive may terminate his employment
for Good Reason. Upon a termination by
Executive for Good Reason, Executive shall be entitled to the same payments and
benefits as provided in Section 4.5.1 above. In no event shall a termination of Executives
employment for Good Reason occur unless and until Executive provides Employer,
within ninety (90) calendar days following the date on which the facts and
circumstances underlying the finding of Good Reason reasonably could have been
known by Executive, with written notice thereof stating with specificity the
facts and circumstances underlying the finding of Good Reason and, if the basis
for such finding of Good Reason is capable of being cured by Employer,
providing Employer with an opportunity to cure the same within thirty (30)
calendar days after receipt of such notice.
If Executive terminates his employment pursuant to this Section 4.5.2,
then the Term of Employment shall end upon the receipt by Employer of the
notice required by this Section 4.5.2;
provided
,
however
, that if the basis for such
finding of Good Reason is capable of being cured but Employer fails to cure as
hereinabove provided, the Term of Employment shall end on the thirty-first calendar day following
such notice (Date of Involuntary Termination).
Good Reason
shall mean, without Executives prior written consent, the occurrence of any of
the following events or actions:
(a)
material
diminution of Base Salary ;
(b)
material
diminution in Executives authority, duties or
10
responsibilities;
(c)
material
diminution in the authority, duties or responsibilities of the supervisor to
whom Executive is required to report, including a requirement that Executive
report to a corporate officer or employee instead of directly to the Board of
Directors;
(d)
material
diminution in the budget over which Executive retains authority;
(e)
material
change in geographic location at which Executive must perform the services; or
(f)
any
other action or inaction that constitutes a material breach of the terms of an
applicable employment agreement including, but not limited to Employers
failure to obtain a satisfactory agreement from any successor(s) to assume
and agree to perform Employers obligations under this Agreement.
In order to constitute an Involuntary Termination under this Section 4.5.2,
Executive must actually terminate his employment pursuant to this Section 4.5.2
within six (6) months following the date on which the facts and
circumstances underlying the finding of Good Reason reasonably could have been
known by Executive.
4.6
Voluntary
Termination.
Executive shall
give Employer not less than sixty (60) days prior written notice of his
intention voluntarily to terminate his employment by Employer other than for
Good Reason. If Executive terminates his employment on his own initiative
without Good Reason and under circumstances other than (i) a termination
due to death, (ii) a termination due to Retirement, or (iii) an
Expiration of the Term due to Non-Renewal, then Executive upon such termination
(Voluntary Termination), will only be entitled to receive the following:
(a)
the
Accrued Obligations, and
(b)
the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement.
4.7
Termination
Due to Retirement.
During the
Term of Employment, Executive may, upon reaching sixty-two (62) years of age,
voluntarily terminate his employment hereunder by giving not less than sixty
(60) days prior written notice to Employer (Retirement). Upon expiration of said sixty (60) day notice
period (Retirement Effective Date), Executive will only be entitled to
receive the following:
(a)
the
Accrued Obligations,
(b)
the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement,
11
(c)
any
rights to indemnification in accordance with Section 6 of this Agreement,
(d)
to
continue, together with his spouse and eligible dependents, participation in
the welfare benefits described in Section 3.4 (collectively, the Continuing
Benefit Plans);
provided
,
however
, that coverage (with regard
to medical and dental benefits for the period after the end of the eighteen
(18) month period following the date of termination) shall, unless same is a
nontaxable benefit excludible from income under Section 105 of the Code,
be deemed to be monthly, in-kind payments of the premiums and will be taxable
income to Executive; and
provided
,
further
, that the participation by
Executive (and, to the extent applicable, Executives spouse and dependents) in
any Continuing Benefit Plan shall cease on the date, if any, on which Executive
becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer (End
Date). Executives participation in the
Continuing Benefit Plans will be on the same terms and conditions that would
have applied had Executive continued to be employed by Employer through the End
Date. To the extent any such benefits
cannot be provided under the terms of the applicable plan, policy or program,
Employer shall provide (or shall cause to be provided) a comparable benefit
under another plan.
4.8
Highest
Annual Compensation.
Highest Annual
Compensation means, as determined as of the date of termination of Executives
Term of Employment under the applicable termination provision set forth above,
the sum of (a) the highest per annum rate of base salary paid by Employer
to Executive at any time during the Term of Employment prior to such date of
termination, and (b) the highest annual cash performance bonus or other
annual cash incentive compensation paid by Employer to Executive, including all
such cash amounts paid to Executive individually and as part of an employee or
executive compensation group (or which
would have been paid but for an election by Executive to defer payment to a
later period) with respect to any fiscal year of Employer during the Term of
Employment prior to such date of termination.
4.9
Change
in Control.
A Change in
Control event means any event that
may qualify as a Change in Control under Companys 2003 Stock Incentive Plan,
as may be amended and in effect from time to time.
(a)
Termination pursuant to certain provisions prior to a Change in Control
event
. If the Term of
Employment has been terminated pursuant to Sections 4.2, 4.6 or 4.7 at any time
during the twelve month period prior to a Change in Control event, Executive or
the named beneficiary or other legal representative, as the case may be, shall
be entitled to receive, in addition to
payments and benefits set forth in the
12
applicable Section, the
Severance Payment as set forth in Section 4.5.1(c) above subject to
the provisions of Section 4.11 (Change in Control Payment);
provided
,
however
,
that any sums previously paid to Executives named beneficiary or other legal
representative pursuant to Section 4.2(c) providing for a Lump Sum
Payment shall reduce the amount of the Change in Control Payment.
In any such case, the Change in Control Payment shall be paid on the
earliest date during the first taxable year of Executive following the taxable
year of Executive in which Executives employment terminates on which such
payment can be made in compliance with Section 409A of Code.
(b)
Termination pursuant to certain provisions following a Change in
Control event
. (i) If, during the period beginning on the date
of the Change in Control event and ending on the date two (2) years after
a Change in Control event, Executives Term of Employment is terminated
pursuant to Section 4.2, Executives named beneficiary or other legal
representative, as the case may be, shall be entitled to receive, in addition to
payments and benefits set forth in Section 4.2, the Change in Control
Payment;
provided
,
however
,
that payment of the Change in Control Payment shall be in lieu of the Lump Sum
Payment. In such case, the Change in
Control Payment will be paid immediately within thirty (30) days of the date of
death; (ii) If, during the period beginning on the date of the Change in
Control Event and ending on the date that is one (1) year after a Change
in Control Event, Executive either voluntarily terminates his employment
pursuant to Section 4.6, or retires pursuant to Section 4.7, then
Executive shall be entitled to receive the Change in Control Payment, such
Payment to be paid within thirty (30) days following the date Executive
employment terminates. .
4.10
Release.
In the event of termination of
employment for any reason, the payments and other benefits (if any) required to
be provided to Executive pursuant to this Section 4 (including those, if
any, required under this Section 4 to be paid pursuant to other sections
of this Agreement) will be in full and complete satisfaction of any and all
obligations owing to Executive pursuant to this Agreement and, to the fullest extent permitted by law, any other claims
Executive may have in respect of Executives employment by Employer. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon Executives receipt of such amounts, Employer shall
be released and discharged from any and all liability to Executive in
connection with this Agreement or otherwise in connection with Executives
employment by Employer. Notwithstanding the foregoing, Executive shall retain
all rights (i) with respect to Employers continuing obligations to
indemnify the Executive as a former officer or director of Employer as set
forth in Section 6, (ii) matters
covered by provisions of this Agreement that expressly survive the termination
of this Agreement, (iii) rights to
which Executive is entitled by virtue of his
13
participation in the
employee benefit plans, policies and arrangements of Employer, and (iv) as
otherwise excluded by applicable law.
4.11
Code Section 280G
Reduction.
Anything in this
Agreement or in any other agreement, contract, understanding, plan or program,
entered into or maintained by Employer to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by Employer to or
for the benefit of Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
(collectively, the Payments), would be subject to the excise tax imposed by Section 4999
of the Code, and/or any successor provision or section thereto (such excise
tax, together with any interest or penalties incurred by Executive with respect
to such excise tax, collectively, the Excise Tax), and if the Payments less
the Excise Tax would be less than the amount of the Payments that would
otherwise be payable to Executive without imposition of the Excise Tax, then,
to the extent necessary to eliminate the imposition of the Excise Tax (and
taking into account any reduction in the Payments provided by reason of Section 280G
of the Code in any such other agreement, contract, understanding, plan or
program), the cash and non-cash payments and benefits payable to Executive
shall be reduced (with Executive being provided with the amount of each payment
and benefit as calculated by Employer and given ten (10) business days in
which to prioritize the order of reduction of each such payment or benefit);
but only if, by reason of any such reduction, the Payments with any such
reduction shall exceed the Payments less the Excise Tax without any such
reduction. For purposes of this Section 4.11,
(i) no portion of the Payments, the receipt or enjoyment of which
Executive shall have effectively waived in writing prior to the date of
termination, shall be taken into account, (ii) no portion of the Payments
shall be taken into account that, in the opinion of tax counsel selected in
good faith by Employer, 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, (iii) any
payments and/or benefits under this Agreement or otherwise for services to be
rendered on or after the effective date of a Change in Control shall be reduced
only to the extent necessary so that such payments and/or benefits in their
entirety constitute reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of the tax
counsel referred in the immediately preceding clause (ii) of this
sentence, and (iv) the value of any non-cash payment or benefit or any
deferred payment or benefit included in the Payments shall be determined by
Employers independent auditors in accordance with the principles of Sections
280G(d)(3) and 280G(d)(4) of the Code and the applicable regulations
or proposed regulations under the Code.
Except as otherwise provided in this Section 4.11, the foregoing
calculations and determinations shall be made in good faith by Employer and
shall be conclusive and binding upon the parties. Employer shall
14
pay all costs and
expenses incurred in connection with any such calculations or determinations.
4.12
Timing of
Payment; Section 409A
. All
Accrued Obligations payable under this Agreement shall be paid in cash in
single lump sum within fourteen (14) days following the date of termination (or
at such earlier date required by law).
The Additional Benefits shall be paid in accordance with the terms of the
applicable plan, program or arrangement.
Except to the extent prohibited by applicable law or the terms of
this Agreement, all other payments to which Executive shall be entitled to
under this Section 4 shall be made within thirty (30) days following the
date of termination, subject to the following:
(a)
Payments
to Executive under this Section 4 shall be bifurcated into two portions,
consisting of a portion that does not constitute nonqualified deferred
compensation within the meaning of Section 409A of the Code and a portion
that does constitute nonqualified
deferred compensation. Payments hereunder shall first be made from the portion,
if any, that does not consist of nonqualified deferred compensation until it is
exhausted and then shall be made from the portion that does constitute
nonqualified deferred compensation. However, anything in this Agreement to the contrary notwithstanding, if at the
time of Executives termination of employment, Executive is considered a
specified employee as defined in Section 409A(a)(2)(B)(i) of the
Code, then to the extent required by Section 409A of the Code, no payments that constitute nonqualified
deferred compensation shall be payable prior to the date that is the earlier of
(i) six months and a day after Executives date of termination, or (ii) Executives
death (Earliest Payment Date). Any
payments that are delayed pursuant to the preceding sentence shall be paid on
the Earliest Payment Date. The determination of whether, and the extent to
which, any of the payments to be made to Executive hereunder are nonqualified
deferred compensation shall be made after the application of all applicable
exclusions under Treas. Reg. § 1.409A-1(b)(9). Any payments that are intended
to qualify for the exclusion for separation pay due to involuntary separation
from service set forth in Treas. Reg. § 1.409A-1(b)(9)(iii) must be paid
no later than the last day of the second taxable year of Executive following
the taxable year of Executive in which the Date of Termination occurs.
(b)
The intent of the parties is that payments
and benefits under this Agreement comply with Section 409A and,
accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. The parties acknowledge and agree that the
interpretation of Section 409A of the Code and its application to the
terms of this Agreement is uncertain and may be subject to change as additional
15
guidance and interpretations become available. Anything
to the contrary herein notwithstanding, all benefits or payments provided by
Employer to Executive that would be deemed to constitute nonqualified deferred
compensation within the meaning of Section 409A of the Code are intended
to comply with Section 409A of the Code. If, however, any such benefit or
payment is deemed to not comply with Section 409A of the Code, Employer
and Executive agree
that this Agreement may be amended (and that any
such amendment may be retroactive to the extent permitted under Section 409A),
as reasonably requested by either party, and as may be necessary to fully
comply with Section 409A of the Code and all related rules and
regulations in order to preserve the payments and benefits provided hereunder
without additional cost to either party.
4.13
No
Obligation to Mitigate; Set Off Under Certain Circumstances.
In the event of any termination of
Executives employment under this Section 4, Executive shall be under no
obligation to seek other employment or to mitigate damages and no payment
provided for in this Agreement shall be reduced by any compensation earned by
Executive as the result of employment by another employer, or from
self-employment, after the termination
of his employment with Employer.
Notwithstanding the foregoing, nothing herein shall be deemed to prevent
Employer from setting off against any amounts due to Executive under this
Agreement any amounts due from Executive to Employer as of the date of such
payment.
4.14
Bank
Regulatory Limitations.
Any
payments made to Executive pursuant to this Agreement, or otherwise, are
subject to and conditioned upon their compliance with 12 U.S.C. §
1818(k) and any applicable regulations promulgated thereunder. In addition, to the extent required by
applicable law, regulation, regulatory policy or other regulatory requirement,
the aggregate amount and/or value of the compensation paid as a result of any
termination of Executives employment with Employer, regardless of the reason
for any such termination of employment, shall not exceed the limit prescribed
by such applicable law, regulation, regulatory policy or other regulatory
requirement.
4.15 Option to Serve as Consultant.
During the Term of Employment and in lieu of
a termination under Sections 4.5, 4.6 or 4.7, the parties may mutually agree
that Executives position under Section 1 and his duties, as well as the
time and effort required, under Section 2 be modified and the compensation
set forth in Section 3 be adjusted as set forth in this Section 4.15
and, in such event, Executive shall continue in the employ of Employer under
the same terms and conditions, including but not limited to benefits under
sections 3.3 through 3.7, as is set forth in this Agreement except as
specifically modified by this Section 4.15.
(a)
Position and Duties
. Executive shall serve as a consultant to
16
Employer and shall render such services of an
advisory or consultative nature as Employer may reasonably require of him from
time to time and he shall assist Employer in its relations with its employees
and customers, such that Employer shall have the benefit of Executives
experience and knowledge of Employers business and operations, his reputation
and contacts in the industry generally as well as Employers market area and
his general business experience. In the event that Executive was serving as a
director as referenced in Section 1, there shall be no affirmative
obligation on the part of Executive to serve or continue to serve as such and
service as a director shall be in accordance with the mutual agreement of
Executive and Employer.
(b)
Time and Effort
. Executive shall perform such services at a
level of at least fifty percent (50%) of the services that Executive performed
over the 36 month period occurring immediately prior to the implementation of
this Section 4.15.
(c)
Compensation
. Upon implementation of this Section 4.15,
Executive shall receive, in equal installments in accordance with the customary
payroll practices of Employer, compensation, in lieu of the compensation set
forth in sections 3.1 and 3.2, in an amount equal, on a per annum basis, to
fifty percent (50%) of Executives Highest Annual Compensation as determined as
of the day immediately prior to the implementation of this Section 4.15
and such amount shall constitute Executives Base Salary amount for all
purposes of this Agreement.
5.
Confidentiality/Non-competition/Non-solicitation/Intellectual
Property.
5.1
Confidentiality.
Executive shall not, during the Employment
Term or anytime thereafter, make use of or disclose any Confidential
Information to any person or entity (including, but not limited to any bank,
trust company, credit union, corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust estate, joint
venture or other business organization or entity) (Person) for any reason or
purpose whatsoever other than in furtherance of Employers business. The term Confidential Information shall
mean all confidential information of or relating to Employer and any Person
effectively controlling, effectively controlled by or effectively under common
control with Employer (Affiliate) including, without limitation, financial
information and data, business plans and information regarding prospects and
opportunities (such as, by way of example only, client and customer lists and
acquisition, disposition, expansion, product development and other strategic
plans), but does not include any information that is or becomes public knowledge
by means other than Executives breach or nonobservance of his obligations
described in this Section 5.1.
Notwithstanding the foregoing, Executive may disclose such Confidential
Information as he may be legally required to do so on the advice of counsel in
connection with any legal
17
or regulatory
proceeding;
provided
,
however
, that Executive shall
provide Employer with prior written notice of any such required or potentially
required disclosure and shall cooperate with Employer and use his best efforts
under such circumstances to obtain appropriate confidential treatment of any
such Confidential Information that may be so required to be disclosed in
connection with any such legal or regulatory proceeding. Executives obligation to refrain from
disclosing Confidential Information under this Section 5.1 shall continue
in effect in accordance with its terms following any termination of this
Agreement pursuant to Section 4 above.
5.2
Non-competition.
Without prior written consent of the
Board of Directors of Employer, Executive agrees that he will not, at any time
during the Term of Employment and for the two-year period following the
Expiration of the Term of Employment for Non-Renewal as set forth in Section 4.1
or the termination of the Term of Employment for any reason as set forth above
in Sections 4.4 through 4.7, directly or indirectly, whether as owner, partner,
shareholder (other than the holder of 1% or less of the common stock of any
company the common stock of which is listed on a national stock exchange or
quoted on the Nasdaq Stock Market), or as consultant, agent, employee of any
other Person or otherwise, engage in competition (as to any service or product
provided by Employer or for which Employer had made substantial preparation to
enter into or offer prior to the termination of Executives employment) with
Employer or any of its Affiliates anywhere within a ten (10) mile radius
of any city or town in which Bank or any Affiliate has a branch or other office
(or to such lesser extent and for such lesser period as may be deemed
enforceable, it being the intention of the parties that this Section 5.2
shall be so enforced);
provided
,
however
, that the restrictive covenant set forth
herein shall automatically terminate or expire upon a Change in Control event
and shall not be of any further force or effect whatsoever following said
Change in Control event.
5.3
Non-solicitation.
Without prior written consent of the
Board of Directors of Employer, Executive agrees that he will not, at any time
during the two-year period following the Expiration of the Term of Employment
for Non-Renewal as set forth in Section 4.1 or the termination of the Term
of Employment for any reason as set forth above in Sections 4.4 through 4.7:
(a)
hire
or attempt to hire, or assist in hiring, any employees of Employer or any of
its Affiliates, or solicit, encourage or induce any such employee to terminate
his or her relationship with Employer or any such Affiliate; or
(b)
solicit,
encourage or induce any customer or client of Employer or any of its Affiliates
to terminate his or its relationship with Employer or any such Affiliate or to
do business with anyone other than Employer and its Affiliates.
18
5.4
Intellectual
Property.
Executive will, during
the period of his employment, disclose to Employer promptly and fully all
Intellectual Property (as defined below) made or conceived by Executive (either
solely or jointly with others) including but not limited to Intellectual
Property which relate to the business of Employer or result from work performed
by him for Employer. All Intellectual Property and all records related to
Intellectual Property, whether or not patentable, shall be and remain the sole and
exclusive property of Employer and Employer shall have the exclusive worldwide
and perpetual right to use, make, and sell products and/or services derived
therefrom. Intellectual Property means
all copyrights, trademarks, trade names, trade secrets, proprietary
information, inventions, designs, developments, and ideas, and all know-how
related thereto. Executive hereby assigns and agrees to assign to Employer all
his rights to Intellectual Property and any patents, trademarks, or copyrights
which may be issued with respect to Intellectual Property. Executive further acknowledges that all work
shall be work made for hire. During and after the Term of Employment, Executive
agrees to assist Employer, without charge to Employer but at its request and
expense, to obtain and retain rights in Intellectual Property, and will execute
all appropriate related documents at the request of Employer. Executive and
Employer agree that this Section 5.4 shall not apply to any Intellectual
Property for which no equipment, supplies, facilities, trade secret, or other
confidential information of Employer was used and which was developed entirely
on his own time, provided that it does not relate to the business of Employer
or and does not result from any work performed by him for Employer.
5.5
Return
of Materials.
Upon the
termination of Executives employment, Executive will return to Employer all
Employer property, including all materials furnished to Executive during the
Term of Employment (including but not limited to keys, computers, automobiles,
electronic communication devices, files, electronic storage devices and
identification cards); provided, however, that Executive may retain copies of
materials relating to his compensation of benefits. In addition, upon termination, Executive will
provide Employer with all passwords and similar information which are
reasonably necessary for Employer to access materials on which Executive worked
or to otherwise continue in its business.
5.6
Injunctive
Relief.
Executive acknowledges
and agrees that the protections of Employer set forth in this Section 5
are fair and reasonable and are necessary for Employer to protect its
legitimate business interests, including its Confidential Information and
business relationships, and that Employer will have no adequate remedy at law,
and would be irreparably harmed, if Executive breaches or threatens to breach
any of the provisions of this Section 5.
Executive agrees that Employer shall be entitled to seek equitable
and/or injunctive relief to prevent any breach of threatened breach of this Section 5,
and to specific performance of each of the terms of this Section 5
19
in addition to any other
legal or equitable remedies that Employer may have, without posting a
bond. Executive further agrees that he
shall not, in any equity proceeding relating to the enforcement of the terms of
this Section 5, raise the defense that Employer has an adequate remedy at
law.
5.7
Claw-back.
To
the fullest extent permitted by law, in the event that Executive breaches any
of the provisions of Section 5.1, 5.2 or 5.3:
(a)
Employer shall be entitled to recoup payments
made to Executive pursuant to Section 4 hereof, provided, however, that,
in the event of a breach of Section 5.1, such recoupment shall be limited
to the reasonable damages incurred by Employer as a result of such breach and,
in the event of a breach of Section 5.2 or Section 5.3, such
recoupment shall be equal to the total payments made to Executive pursuant to Section 4
multiplied by a fraction, the numerator of which is the number of months
remaining from the date of such breach to the second anniversary of the Term of
Employment or Expiration of the Term of Employment for Non-Renewal, as the case
may be, and the denominator of which is twenty-four (24) months; and
(b)
to the extent that any other benefits are
being provided to Executive pursuant to Section 4, such will cease
immediately, and Executive will not be entitled to any further compensation and
benefits from Employer pursuant to Section 4.
5.8
Special
Severability.
The terms and
provisions of this Section 5 are intended to be separate and divisible
provisions and if, for any reason, any one or more of them is held to be
invalid or unenforceable, neither the validity nor the enforceability of any
other provision of this Agreement shall thereby be affected.
6.
Indemnification.
Executive (and his heirs, executors and
administrators) shall be indemnified and held harmless by Employer to the
fullest extent permitted by applicable law, regulation, regulatory policy or
other regulatory requirement, against all expenses, liabilities and losses
(including without limitation, all reasonable attorneys fees and all
judgments, fines, excise taxes or penalties and amounts paid or to be paid in
settlement) incurred or suffered by Executive as a consequence of 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 Executive
is or was a trustee, director or officer of Employer or is or was serving at
the request of Employer as a trustee, director or officer of the Employer of is
or was serving at the request of Employer as a trustee, director or officer of
another corporation or other entity and such indemnification shall continue
after 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, regulation, regulatory policy or other regulatory requirement,
the right to be
20
paid by Employer the
expenses incurred in defending any such proceeding in advance of the final
disposition upon receipt by Employer of an undertaking by or on behalf of
Executive to repay such amount or a portion thereof, if it shall ultimately be
determined that Executive is not entitled to be indemnified by Employer
pursuant hereto or as otherwise authorized by law, regulation, regulatory
policy or other regulatory requirement, but such repayment by Executive shall
only be in an amount ultimately determined to exceed the amount to which
Executive was entitled to be indemnified.
Employers acceptance of any such undertaking by or on behalf of
Executive may not be conditioned upon any evidence or demonstration by or on
behalf of Executive of any financial capacity to make any such repayment at the
time such undertaking is delivered. The provisions of this Section 6 shall
survive any termination of this Agreement.
7.
Notices
. Any notice given hereunder shall be in
writing and shall be deemed given when delivered in-hand to the other party, by
facsimile transmission, by overnight courier, or by registered or certified
mail (return receipt requested, postage prepaid) addressed to the appropriate
party at the address first set forth above, or at such other address as the
party shall designate from time to time in a notice.
8.
Disputes
. Any dispute, claim or
controversy arising out of or relating to this Agreement or the breach,
termination, enforcement, interpretation or validity thereof hereof (other than an action brought by Employer
for injunctive or other equitable relief in the enforcement of Employers
rights under Section 5 above, in which case such action may be brought in
any court of competent jurisdiction), including the determination of the
scope or applicability of this Agreement to arbitrate, shall be determined by
arbitration in Boston, Massachusetts, before three neutral arbitrators (one of
whom shall be appointed by Employer, one by Executive and the third by the
first two arbitrators). The arbitration
shall be administered by JAMS pursuant to its Streamlined Arbitration Rules and
Procedures. Judgment on the Award may be entered in any court having
jurisdiction. This clause shall not preclude parties from seeking provisional
remedies in aid of arbitration from a court of appropriate jurisdiction. In the event that it shall be necessary or
desirable for Executive to retain legal counsel and/or incur other costs and
expenses in connection with the enforcement of any or all of Executives rights
under this Agreement, Employer shall pay (or Executive shall be entitled to
recover from Employer, as the case may be) Executives 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 that the arbitrators
shall determine that Executive has not acted in good faith or presented a
bona fide
claim or dispute or that under the circumstances
recovery by Executive of all or part of any such fees and costs and expenses
would be inequitable or otherwise unjust.
21
The parties agree that any and
all disputes, claims or controversies arising out of or relating to this
Agreement shall first be submitted to JAMS, or its successor, for mediation,
and if the matter is not resolved through mediation, then it shall be submitted
to JAMS, or its successor, for final and binding arbitration pursuant to the
arbitration clause set forth above. Either party may commence mediation by
providing to JAMS and the other party a written request for mediation, setting
forth the subject of the dispute and the relief requested. The parties will
cooperate with JAMS and with one another in selecting a mediator from JAMS
panel of neutrals, and in scheduling the mediation proceedings. The parties
covenant that they will participate in the mediation in good faith. Employer
shall pay (or Executive shall be entitled to recover from Employer, as the case
may be) Executives reasonable attorneys fees and other reasonable costs of
such mediation. All offers, promises,
conduct and statements, whether oral or written, made in the course of the
mediation by any of the parties, their agents, employees, experts and
attorneys, and by the mediator or any JAMS employees, are confidential,
privileged and inadmissible for any purpose, including impeachment, in any
arbitration or other proceeding involving the parties, provided that evidence
that is otherwise admissible or discoverable shall not be rendered inadmissible
or non-discoverable as a result of its use in the mediation. Either party may
initiate arbitration with respect to the matters submitted to mediation by
filing a written demand for arbitration at any time following the initial
mediation session or 45 days after the date of filing the written request for
mediation, whichever occurs first. The mediation may continue after the
commencement of arbitration if the parties so desire. Unless otherwise agreed
by the parties, the mediator shall be disqualified from serving as arbitrator
in the case. The provisions of this Clause may be enforced by any Court of
competent jurisdiction, and the party seeking enforcement shall be entitled to
an award of all costs, fees and expenses, including attorneys fees, to be paid
by the party against whom enforcement is ordered.
In the event that within thirty (30) calendar days
after the date that Executives Term of Employment has been terminated by
Employer for Cause or by Executive for Good Reason, Executive (in the case of
termination for Cause), or Employer (in the case of termination for Good
Reason), notifies the other in writing that a dispute exists concerning the
termination of employment either for Cause or for Good Reason, as the case may
be (Notice of Dispute),
(1)
Executive
shall be entitled, to the extent not prohibited by applicable law, regulation,
regulatory policy or other regulatory requirement, to be paid his Base Salary
pursuant to Section 3.1 and to continue to receive all other benefits set
forth in Section 3 until the earliest to occur of the following: (i) the
expiration of the then current Term of Employment, or (ii) the resolution,
pursuant to the provisions of Section 8, of such dispute; and
(2)
there
shall be no reduction whatsoever of any amounts
22
subsequently paid
to Executive upon resolution of such dispute as a result of, or in respect to,
such interim payments or coverage;
provided
,
however
,
that the Notice of Dispute is given in good faith, sets forth a
bona fide
claim or dispute and Executive pursues the
resolution of such dispute with reasonable diligence. The Notice of Dispute hereunder shall in all
circumstances constitute (a) a Notice of Non-Renewal under Section 1
for purposes of determining the expiration of the then current Term of
Employment, and (b) a request for mediation and, therefore, a copy of such
Notice of Dispute shall be provided to JAMS as set forth above.
9.
Binding Effect; Successors
. This Agreement shall inure to the benefit of
and be binding upon Employer, its successors and assigns, and Executive and his
heirs, legal or personal representatives, but shall not inure to the benefit of
or be enforceable by any third party except as otherwise expressly provided
herein. Except as otherwise expressly
provided herein, Employer and Executive agree on behalf of themselves and of
any other person or persons claiming any benefits by virtue of this Agreement,
that this Agreement and the rights, interests and benefits under it shall not
be assigned, transferred, pledged, or hypothecated in any way by Employer or
Executive or by any other person claiming under Employer or Executive by virtue
hereof; provided, however, that an assignment may be made to the extent that
the other party has consented to same in writing.
9.1
Executive.
This Agreement is personal to Executive and, without the
prior written consent of Employer, shall not be assignable by Executive, except
that Executives rights to receive any compensation or benefits under this
Agreement may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a qualified domestic relations
order. In the event of Executives death
prior to the completion by Employer of all payments due to Executive under this
Agreement, Employer shall continue to make such payments to Executives
beneficiary(ies) as designated in writing by Executive to Employer prior to his
death (or to his estate, if he fails to make such designation).
9.2
Employer.
Both Company and Bank shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its businesses
and/or assets to assume expressly and agree to perform this Agreement in the
same manner and to the same extent as if no sucession had taken place. Failure of either Company or Bank to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle Executive to compensation
in the same amount and on the same terms as he would be entitled to hereunder
if he terminated this Agreement for Good Reason following a Change in Control,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed to be the
23
date
of termination. As used in this
Agreement, Company, Bank and Employer shall mean Company, Bank and
Employer as hereinbefore defined and any sucessor to the business and/or assets
of either Company or Bank as aforesaid which successor assumes and agrees to
perform this Agreement by operation of law or otherwise.
10.
Miscellaneous.
10.1
Governing Law.
This Agreement is made and delivered in, and
shall be construed in accordance with the substantive laws of, the Commonwealth
of Massachusetts without regard to conflict of law principles.
10.2
Amendments; Waiver.
No amendment, waiver or modification of this
Agreement shall be valid unless the same shall be in writing and signed by the
party sought to be charged therewith;
provided
,
however
, that no amendment that will
result in a violation of Section 409A of the Code, or any other provision
of applicable law, may be made to this Agreement and any such amendment shall
be void
ab initio
. Failure to
insist in any one or more instances on strict compliance with the terms of this
Agreement shall not be deemed a waiver. Waiver of a breach of any provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
10.3
Entire Agreement.
The parties acknowledge and
agree that they are not relying on any representations, oral or written, other
than those expressly contained herein.
This Agreement supersedes all proposals, oral or written, all
negotiations, conversations or discussions between the parties and all course
of dealing. All prior understandings and agreements between the parties are
hereby merged in this Agreement, which alone is the complete and exclusive
statement of their understanding.
10.4
Withholdings; Reporting.
All payments to be made to Executive by
Employer shall be subject to withholding of such amounts, if any, relating to
tax and other payroll deductions as Employer may reasonably determine it should
withhold pursuant to any applicable law and regulation. Employer may withhold
from any amounts payable under this Agreement such taxes as shall be required
to be withehld pursuant to any applicable law or regulation. Executive
acknowledges that Employer may be required to report amounts deferred by or for
Executive under nonqualified deferred compensation plans on forms W-2 and
agrees that Employer shall comply with all such requirements and Executive
agrees to pay and be solely responsible for all taxes, interest and penalties.
10.5
Enforceability.
If any portion or provision of this Agreement
shall to any extent to be declared illegal or uneforceable 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 uneforceable, shall not be affected thereby, and each
portion
24
and
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
10.6
Captions.
Paragraph headings are for convenience of
reference only and are not intended to create substantive rights or obligations.
10.7
Survivorship.
The respective rights and oblitations of the
parties to this Agreement including, without limitation, any of their
respective rights and obligations under Section 6 of this Agreement, shall
survive any termination of this Agreement or any termination of Executives
employment hereunder for any reason to the extent necessary to accomplish the
intended preservation of such rights and obligations.
10.8
Construction.
The parties acknowledge that they each
participated in drafting this Agreement, and there shall be no presumption
against any party on the ground that such party was responsible for preparing
this Agreement or any part hereof.
[Remainder of Page Intentionally
Blank]
25
IN WITNESS WHEREOF
,
this Agreement has been duly executed by the undersigned as of the day and year
first above written.
ATTEST:
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ENTERPRISE BANCORP, INC.
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/s/ Tanya A. Hubanks
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By
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/s/ James F. Conway, III
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James F. Conway, III
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Director, Chairman of Compensation
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Committee
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ATTEST:
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ENTERPRISE BANK AND TRUST
COMPANY
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/s/ Tanya A. Hubanks
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By
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/s/ James F. Conway, III
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James F. Conway, III
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Director, Chairman of Compensation
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Committee
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WITNESS:
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EXECUTIVE
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/s/ Tanya A. Hubanks
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/s/ John P. Clancy, Jr.
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John P. Clancy, Jr.
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26
Exhibit 10.3.1
CHANGE IN CONTROL/NONCOMPETITION AGREEMENT
This
Change in Control/Noncompetition Agreement (this Agreement) entered into on
the 19th day of December, 2008, by and among Enterprise Bancorp, Inc., a
Massachusetts corporation (the Company), and its wholly owned subsidiary,
Enterprise Bank and Trust Company, a Massachusetts bank and trust company with
its main office in Lowell, Massachusetts (the Bank) (the Bank and the Company
shall be hereinafter collectively referred to as the Employers), and Robert
R. Gilman of Lowell, Massachusetts (the Executive), amends and restates the
Change In Control/Noncompetition Agreement dated as of August, 2001, as amended
on July 15, 2005 (Amendment 1) and December 13, 2006 (Amendment
2). The provisions of this Restatement
are effective as of January 1, 2008 (the Effective Date).
1.
Purpose
. To allow the
Executive to consider the prospect of a Change in Control (as defined in Section 2
hereof) in an objective manner and in consideration of the Executives
agreement to abide by the confidentiality and noncompetition provisions set
forth in Section 8 hereof and the services to be rendered by the Executive
to the Bank, and in order to protect the ongoing business interests and
competitiveness of the Employers and in consideration of the Employers
agreement to provide the severance benefits to protect the Executive in the
event of a Change in Control as set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Executive and the Employers, the parties have entered into
this Agreement and have mutually agreed to be bound by the terms and conditions
hereof.
2.
Change in Control
.
For purposes of this Agreement, a Change in Control event means any
event that may qualify as a Change in Control under Companys 2003 Stock
Incentive Plan, as the same may be amended and continue in effect from time to
time hereafter.
3.
Terminating Event
.
For purposes of this Agreement, the term Terminating Event shall mean
any termination of the employment of the Executive with the Bank for any
reason, whether or not such termination is initiated by the Bank, including
without limitation termination for cause or by reason of the Executives death
or disability, or by the Executive, including without limitation resignation by
reason of retirement or for no reason at all.
4.
Severance
Payments
.
(a)
If a Terminating Event occurs within two (2) years
after the date on which a Change in Control has occurred, then the Executive
shall be entitled to receive the following:
(i)
an aggregate
amount equal to 1.5 times the Executives Highest Annual Compensation (as
defined in paragraph (c) of this Section 4) (hereinafter Lump Sum
Payment), payable within thirty (30) days of the date on which the Executives
employment with the Bank terminates (the Date of Termination);
(ii)
any base salary,
commissions or other compensation accrued or earned, but not yet paid, as of
the Date of Termination and any annual or other bonus actually awarded, but not
yet paid, as of the Date of Termination, such amounts to be paid on the Date of
Termination;
(iii)
reimbursement for all
business expenses for which the Executive would ordinarily be reimbursed by the
Employers in the ordinary course of business in accordance with the Employers
policies, programs, procedures or practices incurred, but not yet paid, as of
the Date of Termination, such amount to be paid on the Date of Termination;
(iv)
payment of the per diem
value of any unused vacation days, whether deemed to be accrued or unaccrued,
that would be available to the Executive through the end of the calendar year
(but not beyond) in which the Date of Termination occurs;
(v)
continuation of the
Employers employee welfare benefit plans, programs and practices in which the
Executive and his spouse and any other eligible dependents participate or are
eligible to participate as of the Date of Termination or, if more favorable to
the Executive, as of the date of a Change in Control, at the levels in effect
on, and at the same out-of-pocket costs to the Executive as of, the Date of
Termination or, if more favorable to the Executive, as of the date of a Change
in Control, for the eighteen-month period commencing on the Date of
Termination; and
(vi)
any other compensation
and benefits as may be provided in accordance with the terms and provisions of
any other agreements between the Executive and either of the Employers and of
any applicable plans, programs, policies, procedures or practices of the
Employers.
(b)
If a Terminating Event occurs within one (1) year
prior to the date on which a Change in Control occurs, then the Executive shall
be entitled to receive, as provided in this paragraph (b), all of the payments
and benefits that he would have been entitled to receive under paragraph (a) of
this Section 4, unless such Terminating Event occurs as a result of a
termination for Cause (as such term is defined in paragraph (k) of Section 8
below), in which case no increase or adjustments to the amounts paid or
benefits provided to the Executive in connection with such Terminating Event
shall be made under this paragraph (b).
If required in accordance with the immediately preceding sentence, the
amounts paid and benefits provided to the Executive in connection with a
Terminating Event that occurs within one (1) year prior to the date on
which a Change in Control occurs shall be increased or otherwise adjusted to
ensure that the Executive receives the full payments and benefits contemplated
by paragraph (a) of this Section 4.
If the payments and/or benefits to be received by the Executive in
connection with a Terminating Event that has occurred within one (1) year
prior to the date on which a Change in Control occurs are required to be
increased or adjusted under this paragraph (b), then the Executive shall be
paid on the first ordinary payroll payment date of the Bank following the
occurrence of such Change in Control the cash amount necessary to ensure that
the Executive shall have received the full amounts of the payments and benefits
that the Executive would have received as of such date under paragraph (a) of
this Section 4.
(c)
Highest Annual Compensation Defined
.
For purposes of this Section 4, the Executives
Highest Annual Compensation shall mean, as determined as of any Date of
Termination, the sum of (i) the highest per annum rate of base salary paid
by the Employers to the Executive at any time during the three-year period
prior to such Date of Termination, (ii) the highest amount of commission
or other compensation (which is not otherwise included in the base
2
salary and bonus amounts referred in clauses (i) and
(iii) of this paragraph (c)) paid by the Employers to the Executive with
respect to any of the three most recently completed fiscal years of the Bank
prior to such Date of Termination, and (iii) the highest annual incentive
compensation or other bonus amount paid by the Employers to the Executive (or
which would have been paid but for an election by the Executive to defer
payment to a later period) with respect to any of the three most recently
completed fiscal years of the Bank prior to such Date of Termination.
(d)
Payments Pending Resolution of Dispute
.
In the event of any dispute concerning payments or
other benefits to be received by the Executive under this Section 4, the
Executive shall be entitled until the resolution of such dispute to be paid in
accordance with the Banks ordinary payroll practices his then current base
salary and to continue to receive all other welfare benefits then being
provided to him by the Employers, and there shall be no reduction whatsoever of
any amounts subsequently paid to the Executive upon resolution of such dispute
as a result of, or in respect to, such interim payments or coverage.
(e)
No Obligation to Mitigate
.
In the event that any payments or benefits are to be
received by the Executive under this Section 4, the Executive shall be
under no obligation to seek other employment or to mitigate damages and there
shall be no offset against any amount due the Executive under this Agreement
for any reason, including, without limitation, on account of any remuneration
or benefits attributable to any subsequent employment that the Executive may
obtain.
(f)
Code Section 280G Reduction
. Anything in this Agreement or in any
other agreement, contract, understanding, plan or program entered into or
maintained by the Employers to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Employers to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
(collectively, the Payments), would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the Code), and/or any
successor provision or section thereto (such excise tax, together with any
interest or penalties incurred by the Executive with respect to such excise
tax, collectively, the Excise Tax), and if the Payments less the Excise Tax
would be less than the amount of the Payments that would otherwise be payable
to the Executive without imposition of the Excise Tax, then, to the extent
necessary to eliminate the imposition of the Excise Tax (and taking into
account any reduction in the Payments provided by reason of Section 280G
of the Code in any such other agreement, contract, understanding, plan or
program), the cash and non-cash payments and benefits payable to the Executive
shall be reduced (with the executive being provided with the amount of each
payment and benefit as calculated by the Employers and given ten (10) business
days in which to prioritize the order of reduction of each such payment or
benefit); but only if, by reason of any such reduction, the Payments with any
such reduction shall exceed the Payments less the Excise Tax without any such
reduction. For purposes of this Section 4(f),
(i) no portion of the Payments, the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination, shall be taken into account, (ii) no portion of the Payments
shall be taken into account that, in the opinion of tax counsel selected in
good faith by the Employers, 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, (iii) any
payments and/or benefits under this Agreement or otherwise for services to be
rendered on or after the effective date of a Change in Control shall be
3
reduced only to the extent necessary so that such
payments and/or benefits in their entirety constitute reasonable compensation
for services actually rendered within the meaning of Section 280G(b)(4)(B) of
the Code or are otherwise not subject to disallowance as deductions, in the
opinion of the tax counsel referred to in the immediately preceding clause (ii) of
this sentence, and (iv) the value of any non-cash payment or benefit or
any deferred payment or benefit included in the Payments shall be determined by
the Employers independent auditors in accordance with the principles of
Sections 280G(d)(3) and 280G(d)(4) of the Code and the applicable
regulations or proposed regulations under the Code. Except as otherwise provided in this Section 4(f),
the foregoing calculations and determinations shall be made in good faith by
the Employers and shall be conclusive and binding upon the parties. The Employers shall pay all costs and
expenses incurred in connection with any such calculations or determinations.
(g)
Section 409A
. Payments to which Executive shall be entitled
to under this Section 4 shall be made subject to the following:
(i)
Payments to
Executive under this Section 4 shall be bifurcated into two portions,
consisting of a portion that does not constitute nonqualified deferred
compensation within the meaning of Section 409A of the Code and a portion
that does constitute nonqualified deferred compensation. Payments hereunder
shall first be made from the portion, if any, that does not consist of
nonqualified deferred compensation until it is exhausted and then shall be made
from the portion that does constitute nonqualified deferred compensation.
However, anything in this Agreement to
the contrary notwithstanding, if at the time of Executives termination of
employment, Executive is considered a specified employee as defined in
Section 409A(a)(2)(B)(i) of the Code, then to the extent required by Section 409A
of the Code, no payments that
constitute nonqualified deferred compensation shall be payable prior to the
date that is the earlier of (i) six months and a day after Executives date
of termination, or (ii) Executives death (Earliest Payment Date). Any payments that are delayed pursuant
to the preceding sentence shall be paid on the Earliest Payment Date. The
determination of whether, and the extent to which, any of the payments to be
made to Executive hereunder are nonqualified deferred compensation shall be
made after the application of all applicable exclusions under Treas. Reg. §
1.409A-1(b)(9). Any payments that are intended to qualify for the exclusion for
separation pay due to involuntary separation from service set forth in Treas.
Reg. § 1.409A-1(b)(9)(iii) must be paid no later than the last day of the
second taxable year of Executive following the taxable year of Executive in
which the Date of Termination occurs.
(ii)
The intent of the
parties is that payments and benefits under this Agreement comply with Section 409A
and, accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. The parties acknowledge and agree that
the interpretation of Section 409A of the Code and its application to the
terms of this Agreement is uncertain and may be subject to change as additional
guidance and interpretations become available. Anything to the contrary herein
notwithstanding, all benefits or payments provided by Employer to Executive
that would be deemed to constitute nonqualified deferred compensation within
the meaning of Section 409A of the Code are intended to comply with Section 409A
of the Code. If, however, any such benefit or payment is deemed to not comply
with Section 409A of the Code, Employer
4
and Executive agree that this
Agreement may be amended (and that any such amendment may be retroactive to the
extent permitted under Section 409A), as reasonably requested by either
party, and as may be necessary to fully comply with Section 409A of the
Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.
(h)
Release
.
In
the event of termination of employment for any reason, the payments and other
benefits (if any) required to be provided to Executive pursuant to this Section 4
(including those, if any, required under this Section 4 to be paid
pursuant to other sections of this Agreement) will be in full and complete
satisfaction of any and all obligations owing to Executive pursuant to this
Agreement and, to the fullest extent permitted by law, any other claims
Executive may have in respect of Executives employment by Employer. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon Executives receipt of such amounts, Employer shall
be released and discharged from any and all liability to Executive in
connection with this Agreement or otherwise in connection with Executives
employment by Employer. Notwithstanding the foregoing, Executive shall retain
all rights (i) with respect to matters covered by provisions of this
Agreement that expressly survive the termination of this Agreement, (ii) rights to which Executive is
entitled by virtue of his participation in the employee benefit plans, policies
and arrangements of Employer, and (iii) as otherwise excluded by
applicable law.
5.
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.
6.
Term
. This
Agreement shall take effect on and as of the Effective Date and shall
terminate, subject to the applicability of paragraph (b) of Section 4
above, upon the earlier of (a) termination of the employment of the
Executive for reason of the Executives death or permanent disability, in which
case any amounts due to the Executive or the beneficiary named on the
Designation of Beneficiary form completed by Executive or his legal
representative, as the case may be, shall be determined in accordance with Section 4
of this Agreement, if applicable, or otherwise in accordance with the
Employers applicable plans, programs, policies, procedures or practices then
in effect, (b) the resignation or termination of the Executive for any
reason prior to a Change in Control, or (c) the second anniversary of the
date on which a Change in Control shall have occurred; provided, however, that
in any event the provisions of Section 8 hereof shall remain in full force
and effect in accordance with their terms.
7.
Withholding; Reporting
.
All payments to
be made to Executive by Employer shall be subject to withholding of such
amounts, if any, relating to tax and other payroll deductions as Employer may
reasonably determine it should withhold pursuant to any applicable law and
regulation. Employer may withhold from any amounts payable under this Agreement
such taxes as shall be required to be withheld pursuant to any applicable law
or regulation. Executive acknowledges that Employer may be required to report
amounts deferred by or for Executive under nonqualified deferred compensation
plans on forms W-2 and agrees that Employer shall comply with all such
requirements and Executive agrees to pay and be solely responsible for all
taxes, interest and penalties.
5
8.
Confidential
Information; Noncompetition
.
(a)
Confidentiality
.
The Executive shall not, during or after the period during which he is
employed by the Bank, make use of or disclose any Confidential Information (as
defined herein) to any natural person or entity, other than the Employers or
any of their affiliates or any of the Employers or their affiliates
employees, consultants, advisors, agents or other representatives who have a
need to know any such information, for any reason or purpose whatsoever. The term Confidential Information shall
mean all confidential information of or relating to the Employers and any of
their affiliates, including without limitation financial information and data,
business plans and information regarding prospects and opportunities (such as,
by way of example only, client and customer lists and acquisition, disposition,
expansion, product development and other strategic plans), but does not include
any information that is or becomes public knowledge by means other than the
Executives breach or nonobservance of his obligations described in this
paragraph (a). Notwithstanding the
foregoing, the Executive may disclose such Confidential Information as he may
be legally required to do so on the advice of counsel in connection with any
legal or regulatory proceeding; provided, however, that the Executive shall
provide the Employers with prior written notice of any such required or
potentially required disclosure and shall cooperate with the Employers and use
his best efforts under such circumstances to obtain appropriate confidential
treatment of any such Confidential Information that may be so required to be
disclosed in connection with any such legal or regulatory proceeding. The Executives obligation to refrain from
disclosing any Confidential Information under this paragraph (a) shall
continue in effect in accordance with its terms following any termination of
this Agreement pursuant to Section 6 above.
(b)
Noncompetition
. If the Executives employment with the Bank
is terminated for any reason prior to a Change in Control (whether or not such
termination is initiated by the Bank or by the Executive), then during the
period of one (1) year following the date of such termination (and
assuming no Change in Control occurs at any time during such one-year period),
the Executive shall not: (i) directly
or indirectly, whether as owner, partner, shareholder (other than the holder of
1% or less of the common stock of any company the common stock of which is
listed on a national stock exchange or quoted on the Nasdaq Stock Market),
consultant, agent, employee or otherwise, engage in competition with the
Employers or any of their affiliates within a ten (10) mile radius of any
city or town in which the Bank or any affiliate has a branch or other office
(or to such lesser extent and for such lesser period as may be deemed
enforceable, it being the intention of the parties that this Section 8(b) shall
be so enforced);
provided
,
however
, that the restrictive covenant set forth
herein shall automatically terminate or expire upon a Change in Control event
and shall not be of any further force or effect whatsoever following said
Change in Control event.
(c)
Non-solicitation
.
Without
prior written consent of Employers, Executive agrees that he will not, at any
time during the one-year period following the termination of Executives
employment for any reason prior to a Change in Control (whether or not such
termination is initiated by the Bank or by the Executive):
(i)
hire
or attempt to hire, or assist in hiring, any employees of Employer or any of
its affiliates, or solicit, encourage or induce any such employee to terminate
his or her relationship with Employer or any such affiliate; or
6
(ii)
solicit, encourage or induce any customer
or client of Employer or any of its affiliates to terminate his or its
relationship with Employer or any such affiliate or to do business with anyone
other than Employer and its affiliates.
(d)
Payment
Following Termination by Employer Without Cause
. In consideration of the restrictive covenants
set forth herein, in the event that Employer unilaterally terminates
Executives employment for any reason (as distinguished from a termination
initiated by the Executive) other than a termination for Cause (as defined in
paragraph (k) of this Section 8), then the Executive shall receive,
subject to Bank Regulatory Limitations as referenced in Section 18, an
aggregate amount equal to seventy-five percent (75%) of the sum of (i) the
per annum rate of base salary paid by the Employers to the Executive as of the
date on which the Executives employment with the Bank is terminated, (ii) the
amount of commission or other compensation (which is not otherwise included in
the base salary and bonus amounts referenced in clauses (i) and (iii) of
this paragraph (c)) paid by the Employers to the Executive with respect to the
most recently completed fiscal year prior to such date on which the Executives
employment with the Bank is terminated, and (iii) the annual incentive or
other bonus amount paid by the Employers to the Executive (or which would have
been paid but for an election by the Executive to defer payment to a later
period) with respect to the most recently completed fiscal year prior to such
date on which the Executives employment with the Bank is terminated. Such amount shall be paid no later than two
and one-half (2 ½) months after the close of the taxable year of Executive or
Employers in which Executives employment is terminated as provided in this Section 8(d).
(e)
Claw-back.
To the fullest
extent permitted by law, in the event that Executive breaches any of the
provisions of Sections 8(a), (b) or (c),
Employers shall be entitled
to recoup payments made to Executive pursuant to Section 8 (d) hereof,
provided, however, that, in the event of a breach of Section 8(a), such
recoupment shall be limited to the reasonable damages incurred by Employers as
a result of such breach and, in the event of a breach of Section 8(b) or
Section 8(c), such recoupment shall be equal to the total payments made to
Executive pursuant to Section 8(d) multiplied by a fraction, the
numerator of which is the number of months remaining from the date of such
breach to the first anniversary of the date such Executives employment was terminated
as set forth in Section 8(d), and the denominator of which is twelve (12)
months
(f)
Intellectual
Property
. Executive will, during the
period of his employment, disclose to Employers promptly and fully all
Intellectual Property (as defined below) made or conceived by Executive (either
solely or jointly with others) including but not limited to Intellectual
Property which relate to the business of Employers or result from work
performed by him for Employers. All Intellectual Property and all records
related to Intellectual Property, whether or not patentable, shall be and
remain the sole and exclusive property of Employers and Employers shall have
the exclusive worldwide and perpetual right to use, make, and sell products
and/or services derived therefrom.
Intellectual Property means all copyrights, trademarks, trade names,
trade secrets, proprietary information, inventions, designs, developments, and
ideas, and all know-how related thereto. Executive hereby assigns and agrees to
assign to Employers all his rights to Intellectual Property and any patents,
trademarks, or copyrights which may be issued with respect to Intellectual
Property. Executive further acknowledges
that all work shall be work made for hire. During and after the Term of Employment,
Executive agrees to assist Employers, without charge to Employer but at its
request and expense, to obtain and retain rights in Intellectual Property, and
will execute all appropriate related documents at the request of
7
Employers. Executive and Employers agree that
this Section 8(f) shall not apply to any Intellectual Property for
which no equipment, supplies, facilities, trade secret, or other confidential
information of Employers was used and which was developed entirely on his own
time, provided that it does not relate to the business of Employers or and does
not result from any work performed by him for Employers.
(g)
Return of
Materials
.
Upon the termination of Executives
employment, Executive will return to Employers all property of Employers,
including all materials furnished to Executive during his employment (including
but not limited to keys, computers, automobiles, electronic communication
devices, files, electronic storage devices and identification cards); provided,
however, that Executive may retain copies of materials relating to his
compensation or benefits. In addition, upon termination, Executive will provide
Employers with all passwords and similar information which are reasonably
necessary for Employers to access materials on which Executive worked or to
otherwise continue in its business.
(h)
Injunctive Relief
.
The Executive acknowledges and agrees that the Employers will have no
adequate remedy at law, and would be irreparably harmed, if the Executive
breaches or threatens to breach any of the provisions of this Section 8. The Executive agrees that the Employers shall
be entitled to equitable and/or injunctive relief to prevent any breach or
threatened breach of this Section 8, and to specific performance of each
of the terms of this Section 8 in addition to any other legal or equitable
remedies that the Employers may have.
The Executive further agrees that he shall not, in any equity proceeding
relating to the enforcement of the terms of this Section 8, raise the
defense that the Employers have an adequate remedy at law.
(i)
Special Severability
.
The terms and provisions of this Section 8 are intended to be
separate and divisible provisions and if, for any reason, any one or more of
them is held to be invalid or unenforceable, neither the validity nor the
enforceability of any other provision of this Agreement shall thereby be
affected.
(k)
Cause Defined
.
Termination by the Bank of the Executives employment for Cause shall
mean termination on the basis of (i) the Executives willful and continued
failure to substantially perform his employment duties (other than any such
failure resulting from the Executives death or incapacity due to physical or
mental illness) after (A) a written demand for substantial performance is
delivered to the Executive by the Banks Chief Executive Officer, which demand
specifically identifies the manner in which the Chief Executive Officer
believes that the Executive has not substantially performed his employment
duties, and (B) the Executive has been afforded a reasonable opportunity
to meet with the Chief Executive Officer regarding such assertions of
nonperformance, or (ii) the Executives willfully engaging in conduct
(other than conduct related to the operation of an automobile) which is
demonstrably and materially injurious to the Bank, monetarily or
otherwise. For purposes of this
paragraph (h), no act, or failure to act, on the part of the Executive shall be
deemed willful unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that his action or omission was in the
best interests of the Bank. The
Executive shall be deemed to have been terminated for Cause only at such time
as there shall have been delivered to him a written notice of termination by
the Bank, which specifies in detail the particulars of the Executives conduct
that serve as the basis for such termination for Cause.
8
9.
Arbitration Disputes
.
Any controversy or claim arising out of or relating to this Agreement or
the breach hereof, other than an action brought by the Employers for injunctive
or other equitable relief in the enforcement of the Employers rights under Section 8
above, in which case such action may be brought in any court of competent
jurisdiction, 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 Employers, 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, Massachusetts. Such
arbitration shall be conducted in the City of Boston, Massachusetts 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 9. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
10.
Successors
.
(a)
Each of the Company and the Bank will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its businesses
and/or assets to assume expressly and agree to perform this Agreement in the
same manner and to the same extent as if no such succession had taken
place. Failure of either the Company or
the Bank to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation in the same amount and on the same terms as he would
be entitled to hereunder if a Terminating Event were to occur within two (2) years
after a Change in Control, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed to be the date of such
Terminating Event. As used in this
Agreement, Company, Bank and Employers shall mean the Company, the Bank
and the Employers as hereinbefore defined and any successor to the business
and/or assets of either the Company or the Bank as aforesaid which successor
assumes and agrees to perform this Agreement by operation of law or otherwise.
(b)
This Agreement shall inure to the benefit
of and be binding upon the Employers and the Executive, their respective
successors, executors, administrators, heirs and permitted assigns. In the event of the Executives death prior
to the payment of any sum due him under this Agreement, the Employers shall
make such payment to the Executives beneficiary designated in writing to the
Employers prior to his death (or to his estate, if he fails to make such
designation).
11.
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.
12.
Waiver
. No waiver of
any provision hereof shall be effective unless made in writing and signed by
the waiving party. The failure of any
party to require the performance of any terms or obligation of this Agreement,
or the waiver by any party of any breach of this
9
Agreement, shall not prevent any subsequent
enforcement of such terms or obligation or be deemed a waiver of any subsequent
breach.
13.
Notices
. Any notices,
requests, demands and other communication provided for by this Agreement shall
be sufficient if in writing and delivered in person or sent by registered or
certified mail, postage prepaid, to the Executive at the last address the
Executive has filed in writing with the Employers or, in the case of the
Employers, at their executive offices, attention of the Chief Executive
Officer.
14.
Amendment
. This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by duly authorized representatives of each of the Employers
provided
,
however
,
that no amendment that will result in a violation of Section 409A of the
Code, or any other provision of applicable law, may be made to this Agreement
and any such amendment shall be void
ab
initio
.
15.
Governing Law
.
This is a Massachusetts contract and shall be construed under and is
governed in all respect by the laws of the Commonwealth of Massachusetts.
16.
Captions
. The captions
of this Agreement are for convenience of reference only, are not part of the
terms of this Agreement and shall have no force or effect in the application or
interpretation thereof.
17.
Entire Agreement
.
This Agreement contains the entire agreement between the parties to this
Agreement concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.
18.
Bank Regulatory Limitations
.
Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
§ 1828(k) and any applicable regulations promulgated thereunder. In addition, to the extent required by
applicable law, regulation, regulatory policy or other regulatory requirement,
the aggregate amount and/or value of the compensation paid as a result of any
termination of the Executives employment with the Employers, regardless of the
reason for any such termination of employment, shall not exceed the limit
prescribed by such applicable law, regulation, regulatory policy or other
regulatory requirement.
[Remainder
of Page Intentionally Blank]
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IN WITNESS WHEREOF, this
Agreement has been executed as a sealed instrument on behalf of the Employers
by their duly authorized officers and by the Executive as of the date first
above written.
ATTEST:
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ENTERPRISE BANCORP, INC.
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/s/ Richard W. Main
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By:
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John P. Clancy, Jr.
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John P. Clancy, Jr.
|
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Chief Executive Officer
|
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ATTEST:
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ENTERPRISE BANK AND TRUST COMPANY
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/s/ Richard W. Main
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By:
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/s/ John P. Clancy, Jr.
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John P. Clancy, Jr.
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Chief Executive Officer
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WITNESS:
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EXECUTIVE
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/s/ Richard W. Main
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/s/ Robert R. Gilman
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Robert R. Gilman
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December 19, 2008
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Date
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