EMPLOYMENT AGREEMENT
EXHIBIT
10.7.12
This EMPLOYMENT AGREEMENT (this
“Agreement”) is made and entered into as of April 21, 2009 by and among
NewAlliance Bank, a Connecticut savings bank (the “Bank”), NewAlliance
Bancshares, Inc., a business corporation organized under the laws of the State
of Delaware (the “Company”) and Xxxxx Xxxxxx Xxxxx, Xx. (the
“Executive”).
W I T N E
S S E T H:
WHEREAS, the Bank desires to employ
Executive, and Executive desires to be employed by the Bank, as President, under
the terms and conditions herein;
WHEREAS, the Company desires to employ
Executive, and Executive desires to be employed by the Company, as an Executive
Vice President under the terms and conditions herein. The Bank and
the Company are collectively referred to herein as the “Employers”.
NOW, THEREFORE, in consideration of the
premises and the mutual covenants and conditions hereinafter set forth, the
Employers and the Executive hereby agree as follows:
SECTION
1. EFFECTIVE
DATE; EMPLOYMENT.
This Agreement shall be effective on
the date first written above (the “Effective Date”). The Employers
agree to employ the Executive, and the Executive hereby agrees to such
employment, during the period and upon the terms and conditions set forth in
this Agreement.
SECTION
2. EMPLOYMENT
PERIOD.
(a) The
terms and conditions of this Agreement shall be and remain in effect beginning
with the Effective Date and continuing until April 1, 2012 (the “Initial Term”),
plus such extensions, if any, as are provided pursuant to Section 2(b) hereof
(the “Employment Period”).
(b) Except
as provided in Section 2(c), prior to April 1, 2010 and each annual anniversary
thereafter, the Board of Directors of the Employers shall consider and review
(after taking into account all relevant factors, including the Executive’s
performance and any recommendation of the Chief Executive Officer) a one-year
extension of the term of this Agreement, and the term shall continue to extend
each year (beginning with the first annual anniversary date) if the Board of
Directors so approve such extension unless the Executive gives written notice to
the Employers of the Executive’s election not to extend the term, with such
notice to be given not less than ninety (90) days prior to any such anniversary
date. If the Board of Directors elects not to extend the term, it
shall give written notice of such decision to the Executive no later than
December 31st of the year preceding any such anniversary date. If the Executive
does not receive such notice, the Executive may, by written notice given at any
time prior to February 1st of such anniversary date, request from the Chief
Executive Officer written
confirmation
that the term has been extended and, if such confirmation is not received by the
Executive within thirty (30) days after the request therefor is made, the
Executive may treat the term as having not been extended. Upon termination of
the Executive’s employment with the Employers for any reason whatsoever, any
annual extensions provided pursuant to this Section 2(b), if not theretofore
discontinued, shall automatically cease. In addition, no annual renewals shall
extend beyond the Executive’s 65th birthday, and in no event shall the
Employment Period extend beyond the Executive’s 65th birthday.
(c) Nothing
in this Agreement shall be deemed to prohibit the Employers at any time from
terminating the Executive’s employment during the Employment Period with or
without notice for any reason, provided, however, that the relative rights and
obligations of the Employers and the Executive in the event of any such
termination, including any requirements with respect to prior notice of such
termination, shall be determined under this Agreement.
SECTION
3. DUTIES.
Throughout the Employment Period, the
Executive shall serve as President of the Bank and Executive Vice President of
the Company, having such power, authority and responsibility and performing such
duties as are prescribed by or under the Bylaws of the Employers and as are
customarily associated with such positions as determined by the Employers’ Chief
Executive Officer. The Executive shall initially report directly to
the Chief Executive Officer. The Employers' Chief Executive Officer
may, during the term of the Employment Agreement, alter Executive's job and/or
reporting responsibilities as she deems appropriate to the effective management
of the Employers, provided that Executive shall at all times be on the senior
executive team. The Executive shall devote his full business time, attention,
skills and efforts (other than during weekends, holidays, vacation periods, and
periods of illness or leaves of absence and other than as permitted or
contemplated by Section 7) to the business and affairs of the Employers and
shall use his best efforts to advance the interests of the
Employers.
SECTION
4. CASH
AND OTHER COMPENSATION.
(a) In
consideration for the services to be rendered by the Executive hereunder, the
Bank shall pay to him a salary of four hundred thirty thousand dollars
($430,000) annually (“Base Salary”) as of the date of this
Agreement. The Executive’s Base Salary shall be payable in
approximately equal installments in accordance with the Bank’s customary payroll
practices for senior officers. Base Salary shall include any amounts
of compensation deferred by the Executive under any tax-qualified retirement or
welfare benefit plan or any other deferred compensation
arrangement. The Compensation Committee of the Board of Directors of
the Employers (the “Committee”) shall review the Executive’s annual rate of
salary at such times during the Employment Period as it deems appropriate, but
not less frequently than once every twelve months (provided that the initial
review may be deferred until the Executive’s regular review for the period
beginning April 1, 2010), and may, in its discretion, approve an increase
therein. Such review of Executive’s Base Salary shall take into
account not only the Executive’s performance as well as the Employer’s
performance since the date of the last review conducted pursuant to this Section
4(a) but also shall take into consideration the salaries of similarly situated
officers at comparably situated financial institutions as determined by the
Compensation
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Committee
thereof as well as any recommendation of the Chief Executive
Officer. In addition to salary, the Executive may receive other cash
compensation from the Employers for services hereunder at such times, in such
amounts and on such terms and conditions as the Committee may determine from
time to time. Any increase in the Executive’s annual salary shall become the
Base Salary of the Executive for purposes hereof. The Executive’s
Base Salary as in effect from time to time cannot be decreased by the Employers
without the Executive’s express prior written consent.
(b) The
Executive shall be entitled to participate in an equitable manner with all other
executive officers of the Employers in discretionary bonuses to executive
officers as authorized by the Committee. No other compensation
provided for in this Agreement shall be deemed a substitute for the Executive’s
right to participate in such bonuses when and as declared by the
Committee. In connection with the foregoing, under the terms of the
Bank’s Executive Incentive Plan (the “EIP”), annual cash bonuses can be awarded
to the Executive; the initial percentage accorded to Executives shall be 60% of
the Executive’s Base Salary at the “Target” level. The Compensation
Committee shall make an annual determination of the exact percentage of Base
Salary to be used with respect to the possible bonus, if any, to be paid to the
Executive for the relevant plan year and shall notify the Executive by the end
of March of the EIP’s plan year to which such percentage shall be applicable,
commencing March 2010.
SECTION
5. EMPLOYEE
BENEFIT PLANS AND PROGRAMS.
(a) During
the Employment Period, the Executive shall be treated as an employee of the
Employers and shall be entitled to participate in and receive benefits under any
and all qualified or non-qualified active retirement programs covering employees
of the Employers (including but not limited to the Company’s Employee Stock
Ownership Plan (the “ESOP”), the Bank’s 401(k) Plan, the ESOP and 401(k) SERPs
and any other similar plans that may be adopted in the future), any and all
group life, health (including hospitalization, medical and major medical),
dental, accident and long-term disability insurance plans, and any other
employee benefit and compensation plans (including, but not limited to, the EIP
and any incentive compensation plans or program or any stock benefit plans that
apply to the executive group) as may from time to time be maintained by, or
cover employees of, the Employers, in accordance with the terms and conditions
of such employee benefit plans and programs and compensation plans and programs
and consistent with the Employers’ customary practices. The Executive
shall be ineligible for the Bank’s defined benefit Pension Plan, to which no new
participants are currently permitted. Nothing paid to the Executive
under any such plan or program will be deemed to be in lieu of other
compensation to which the Executive is entitled under this
Agreement.
(b) During
the Employment Period, the Employers shall provide the Executive with an expense
allowance (“Expense Allowance”) payable monthly equal to approximately $500 per
month to pay for the costs of an automobile. Such Expense Allowance
shall take into account the federal and state income tax effect on the Executive
of receipt of such allowance. In the event that with respect to a
given calendar year occurring during the term of this Agreement, the Executive
believes that he drove during such year Business Miles (as hereinafter defined)
in excess of the Covered Business Miles (as hereinafter defined) in connection
with the business of
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the
Employers and wishes to seek reimbursement as provided herein for such excess,
within 40 days after the end of such calendar year, the Executive shall provide
information to the Employers (as well as any additional information as the
Employers may reasonably request in order to review the Executive’s claim) with
respect to the number of miles driven in the such calendar year in connection
with the business of the Employers (“Business Miles”). In the event
the number of Business Miles driven during such calendar year is determined by
the Employers to be more than 3,600 (“Covered Business Miles”), the Employers
will provide the Executive an additional reimbursement for the Business Miles in
excess of the Covered Business Miles at a rate equal to the standard mileage
rate as published by the Internal Revenue Service for the period in which the
excess Business Miles were incurred (“Reimbursement Rate”), with such
reimbursement to be provided no later than March 15 of the year immediately
following the year in which the excess Business Miles were
incurred. The Expense Allowance and the Covered Business Miles may be
reviewed by the Compensation Committee and, if increased, shall be reflected in
an addendum hereto. Notwithstanding the foregoing, nothing herein
shall be deemed to impose upon the Employers or obviate the Executive’s
obligation, legal or otherwise, to maintain liability insurance with respect to
the Executive’s personal use of an automobile.
(c) The
Employers shall provide and pay for a parking space for Executive in the
Employers’ main office parking garage or, if such space shall become unavailable
due to tenant commitments or otherwise, in an alternative convenient closed
parking garage.
(d) The
Executive shall be entitled to paid holidays and paid vacations consistent with
the Employers’ policy for executive officers. Currently, that policy provides
for four weeks of vacation, pro-rated for any partial year. All vacations must
be cleared through the Chief Executive Officer.
(e) The
Employers shall provide during the term of this Agreement, subject to the
limitations set forth herein, for the Executive to receive, at the Employers’
expense, the services of a tax professional and a personal financial planning
professional (which may be the same person or entity for both services) (the
“Tax Service Professional”) selected by the Employers and reasonably
satisfactory to the Executive. Subject to the limitations set forth
herein, if the Employer does not specify a Tax Services Professional reasonably
acceptable to the Executive, the Executive will be entitled to use the services
of a Tax Services Professional of his choosing and seek reimbursement by the
Employers for the reasonable cost of such Tax Service Professional actually
incurred by the Executive. The services to be provided shall include
(i) the preparation of all required federal, state and local personal income tax
returns, (ii) advice with respect to federal, state and local income tax
treatment of cash and other forms of compensation paid to the Executive by the
Employers and (iii) investment and retirement counseling and estate
planning. Notwithstanding the foregoing, the annual cost to the
Employers of providing the services to the Executive of such Tax Service
Professional, whether such Tax Service Professional is selected by the Employers
or the Executive, shall not exceed $2,000 (the “Annual Cost”), prior to any
adjustment for income tax effects of reimbursement for such
expense. Reimbursement of the Executive for the Annual Cost shall
take into account the federal and state income tax effect on the Executive of
receipt of such Annual Cost, and such reimbursement shall be paid promptly by
the Employers and in any event no later than March 15 of the year immediately
following the year in which the Annual Cost was incurred. The Annual
Cost shall
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be
reviewed annually by the Compensation Committee and, if increased, shall be
reflected in an addendum hereto.
(f) Executive
shall move his principal residence to the New Haven area as soon as practicable.
In connection therewith, the Employers shall (i) reimburse the Executive for
reasonable transportation, temporary housing, meals and related costs incurred
for a period up to ninety (90) days after the Effective Date, subject to a
budget approved by the Chief Financial Officer of the Employers. (which period
may be extended beyond ninety (90) days for one additional 90 day period with
the prior written consent of the Chief Executive Officer) (the “Temporary
Residence Period”). (ii) the Employers will reimburse the Executive for all
reasonable moving, packing and unpacking costs associated with moving
Executive’s household goods from Georgia to a permanent or temporary residence
in the New Haven area, subject to a budget approved by the Chief Financial
Officer of the Employers. Executive will be reimbursed only for one move; (iii)
provided Executive purchases a primary residence in the New Haven area within
one year following the Effective Date, reimburse the Executive for all
reasonable closing costs and fees in connection with the Executive’s purchase of
a primary residence in the New Haven area (including costs related to mortgage
financing, legal, and title, but excluding any broker’s commission), subject to
a budget approved by the Chief Financial Officer of the Employers; and (iv)
provided Executive purchases a primary residence in the New Haven area within
one year following the Effective Date, the Employers will facilitate Executive’s
purchase of a new home in Connecticut by making available to Executive the net
sale proceeds from his home in Georgia based on its appraised value, whether or
not it actually sells to a third party prior to the time the Executive purchases
his New Haven area home, by Employers’ use of a relocation service that will
manage/effectuate the sale of the home and arrange for determination of
appraised value. The appraised value shall be determined conclusively through
the relocation service’s suggested appraisal process that shall be obtained and
paid for by or on behalf of the Employers. Executive shall be required to
satisfy all mortgages, liens and monetary encumbrances on his residence in
connection with this transaction and shall execute all documents and take all
actions reasonably requested of him by the Employers in order to accomplish this
objective.
(g) During
the Employment Period, the Employers will reimburse and/or pay for the
Executive’s cost of membership in a New Haven area country club (such country
club as is reasonably agreed to by the Chief Executive Officer and the
Executive), including all membership bonds or surety, initiation or membership
fees, annual dues, capital assessments, and all business-related expenses
incurred at the club (“Club Expenses”). The Executive shall be
reimbursed for the cost of Club Expenses expended by the Executive no later than
March 15 of the year immediately following the year in which the Club expenses
were incurred, and any such reimbursement and/or payment of the Club Expenses by
the Employers shall take into account the federal and state income tax effect on
the Executive of receipt of or reimbursement for the Club Expenses.
SECTION
6. INDEMNIFICATION
AND INSURANCE.
(a) During
the Employment Period and for a period of six years thereafter, the Employers
shall cause the Executive to be covered by and named as an insured under any
policy
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or
contract of insurance obtained by it to insure its directors and officers
against personal liability for acts or omissions in connection with service as
an officer or director of the Employers or service in other capacities at the
request of the Employers. The coverage provided to the Executive
pursuant to this Section 6 shall be of the same scope and on the same terms and
conditions as the coverage (if any) provided to other officers or directors of
the Employers or any successors.
(b) To
the maximum extent permitted under applicable law, the Employers shall indemnify
the Executive against and hold the Executive harmless from any costs,
liabilities, losses and exposures that may be incurred by the Executive
in his capacity as a director or officer of the Employers or any
subsidiary or affiliate.
SECTION
7. OUTSIDE
ACTIVITIES.
The Executive may (a) serve as a member
of the boards of directors of such business, community and charitable
organizations as the Executive may disclose to and as may be approved by the
Employers (which approval shall not be unreasonably withheld), and (b) perform
duties as a trustee or personal representative or in any other fiduciary
capacity, provided that in each case such service shall not materially interfere
with the performance of the Executive’s duties under this Agreement or present
any conflict of interest. The Executive may also engage in personal
business and investment activities which do not materially interfere with the
performance of the Executive’s duties hereunder, provided that such activities
are not prohibited under any code of conduct or investment or securities trading
policy established by the Employers and generally applicable to all similarly
situated executives. If the Executive is discharged or suspended, or is subject
to any regulatory prohibition or restriction with respect to participation in
the affairs of the Employers, the Executive shall not directly or indirectly
provide services to or participate in the affairs of the Employers in a manner
inconsistent with the terms of such discharge or suspension or any applicable
regulatory order.
SECTION
8. WORKING
FACILITIES AND EXPENSES.
It is understood by the parties that
the Executive’s principal place of employment shall be at the Bank’s principal
executive office located in New Haven, Connecticut, or at such other CEO
approved location within 50 miles of the address of such principal executive
office, or at such other location as the Employers and the Executive may
mutually agree upon. The Employers shall provide the Executive at his
principal place of employment with a private office, secretarial services and
other support services and facilities suitable to his position with the
Employers and necessary or appropriate in connection with the performance of his
assigned duties under this Agreement. The Employers shall reimburse
the Executive for his ordinary and necessary business expenses attributable to
the Employers’ business, including, without limitation, the Executive’s travel
and entertainment expenses incurred in connection with the performance of his
duties for the Employers under this Agreement, in each case upon presentation to
the Employers of an itemized account of such expenses in such form as the
Employers may reasonably require, and such reimbursement shall be paid promptly
by the Employers and in any event no later than March 15 of the year immediately
following the year in which the expenses were incurred.
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SECTION
9. TERMINATION
OF EMPLOYMENT WITH BENEFITS.
(a) Subject
to Sections 9(b) and 9(c), the Executive shall be entitled to the benefits
described in Section 9(b) in the event that:
(i) his
employment with the Employers terminates during the Employment Period as a
result of the Executive’s termination for Good Reason (as defined in Section
9(a)(i)(A) and (B) of this Agreement), which shall mean a termination based on
the following:
(A) any
material breach of this Agreement by the Employers, including without limitation
any of the following: (1) a material diminution in the Executive’s base
compensation, or (2) a material diminution in the Executive’s authority or
responsibilities as prescribed in Section 3, or
(B) any
material change in the geographic location at which the Executive must perform
his services under this Agreement (defined as a move or series of moves of at
least 50 miles from 000 Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx);
provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to the Employers within ninety (90)
days of the initial existence of the condition, describing the existence of such
condition, and the Employers shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Employers received the written
notice from the Executive. If the Employers remedy the condition
within such thirty (30) day cure period, then no Good Reason shall be deemed to
exist with respect to such condition. If the Employers do not remedy
the condition within such thirty (30) day cure period, then the Executive may
deliver a notice of termination for Good Reason at any time within sixty (60)
days following the expiration of such cure period; or
(ii) the
Executive’s employment with the Employers is terminated by the Employers during
the Employment Period for any reason other than for “cause,” death or
“Disability,” as provided in Section 10(a).
(b) Subject
to Section 9(c), and provided that no Change in Control (as defined in Section
11(a) hereof) has occurred, the Employers shall pay and provide to the Executive
(or, in the event of his subsequent death, to his estate) the following
severance benefits for the period beginning on the date that his employment
terminates and ending on either (i) the last day of the Employment Period or
(ii) 24 months subsequent to the date of termination, whichever period is
greater (the “Severance Benefits Period”):
(i) his
earned but unpaid Base Salary (including, without limitation, all items which
constitute wages under applicable law and the payment of which is not otherwise
provided for in this Section 9(b)) as of the date of the termination of his
employment, with such payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages but in no event later than
30 days after termination of employment;
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(ii) the
benefits, if any, to which he is entitled under the employee benefit plans and
programs and compensation plans and programs maintained for the benefit of the
Employers’ officers and employees (such benefits not to include the expense
allowance provided by Section 5(b)) through the date of the termination of his
employment;
(iii) continued
group life, health, dental and accident insurance benefits, in addition to that
provided pursuant to Section 9(b)(ii), and after taking into account the
coverage provided by any subsequent employer, if and to the extent necessary to
provide for the Executive, for the Severance Benefits Period, coverage
equivalent to the coverage to which he would have been entitled under such plans
if he had continued to be employed during such period; provided that any
insurance premiums payable by the Employers or any successors pursuant to this
Section 9(b)(iii) shall be payable at such times and in such amounts as if the
Executive was still an employee of the Employers, subject to any increases in
such amounts imposed by the insurance company or COBRA, and the amount of
insurance premiums required to be paid by the Employers in any taxable year
shall not affect the amount of insurance premiums required to be paid by the
Employers in any other taxable year;
(iv) a
lump sum cash amount equal to the projected cost to the Employers of providing
group long-term disability insurance benefits to the Executive for the Severance
Benefits Period, with the projected cost to the Employers to be based on the
costs incurred as of the date of termination as determined on an annualized
basis;
(v) a
lump sum cash amount, payable within 30 days following termination of
employment, equal to the present value of (A) the Executive’s Annual
Compensation (as hereinafter defined) multiplied by (B) a fraction which is
either (1) the number of days left in the Employment Period if the Executive had
not been terminated or (2) 730, whichever is greater, divided by 365, using a
discount rate equal to the short-term applicable federal rate (determined under
Section 1274(d) of the Code) as published by the Internal Revenue Service (the
“IRS”) for the month in which the termination of employment occurs, compounded
monthly;
(vi) a
lump sum cash amount equal to the present value, determined by using a discount
rate equal to the short-term applicable federal rate (determined under Section
1274(d) of the Code) as published by the IRS for the month in which the
termination of employment occurs, of the pro rata portion of any target bonus
awarded to the Executive under the Bank’s EIP (or such other short-term
incentive compensation plan(s) that the Employers may adopt subsequent to the
date hereof as a replacement therefor) which relates to the calendar year in
which such termination occurs; provided that such pro rata portion will be
calculated by multiplying the amount of the target bonus by a fraction the
numerator of which is the number of days elapsed in the calendar year as of the
date of termination and the denominator is 365; provided, further, that such pro
rated target bonus shall be paid within 30 days following termination of
employment;
(vii) a
lump sum cash amount, payable within 30 days following termination of
employment, equal to the present value, determined by using a discount rate
equal to the short-term applicable federal rate (determined under Section
1274(d) of the Code) as published by the IRS for the month in which the
termination of employment occurs, to which he would have been entitled under any
and all qualified defined contribution plans and non-qualified plans
related
8
thereto
maintained by, or covering employees of, the Employers as if he were 100% vested
thereunder and had continued to be employed during the Severance Benefits Period
at the highest annual rate of Base Salary achieved during the Employment Period
and making the maximum amount of employee contributions, if any, required or
permitted under such plan or plans, provided that no payments shall be made
pursuant to this subsection (vii) with respect to the Company’s ESOP if the ESOP
is terminated effective as of a date within one year of the date of the
termination of the Executive’s employment, with the Executive to reimburse the
Employers for any such payments previously made within 30 days of the
Executive’s receipt of a request for reimbursement from the
Employers.
The Executive’s “Annual Compensation”
for purposes of this Agreement shall be deemed to mean the sum of (i) the
Executive’s Base Salary in effect as of the date of termination of his
employment and (ii) the greater of (A) the average of the cash incentive
compensation earned by the Executive from the Employers or any subsidiary or
affiliate thereof during the three calendar years immediately preceding the
calendar year in which the date of termination occurs or (B) the amount of the
Executive’s target bonus under the EIP (or such other short-term incentive
compensation plan(s) that the Employers may adopt subsequent to the date hereof
as a replacement therefor) for the calendar year in which the termination
occurs.
The Employers and the Executive further
agree that the Employers may condition the payments and benefits (if any) due
under Sections 9(b) (iii), (iv), (v), (vi) and (vii) on the receipt of the
Executive’s resignation from any and all positions which he holds as an officer,
director or committee member with respect to the Employers or any of its
subsidiaries or affiliates and to the execution of a full release of all
employment-related claims, including without limitation claims relating to
termination of employment, by the Executive.
(c) The
Executive shall not be required to mitigate the amount of any benefits provided
pursuant to the provisions of Section 9(b) by seeking other employment or
otherwise. However, if the Executive becomes or is employed by another employer
subsequent to the first year following termination, any compensation received by
the Executive subsequent to the first year following termination through the end
of the Severance Benefits Period shall be offset dollar for dollar against the
Employers’ obligations set forth in Section 9(b) except with respect to Section
9(b)(iii), with the Executive to reimburse the Employers the amount of the
offset with respect to amounts previously paid by the Employers within 30 days
of the Executive’s receipt of a request for reimbursement from the
Employers. In addition, if the Executive becomes employed by another
entity subsequent to termination hereunder, and under the terms of such
employment is entitled to benefits substantially similar to those provided in
Section 9(b) (iii), the Employers will not be required to continue provision of
the benefits set forth in said Section 9(b) (iii) for the remainder of the
Severance Benefits Period.
(d) Notwithstanding
anything to the contrary above or otherwise in this Agreement, the parties agree
that, should the Employers determine by no later than October 1, 2009 that they
do not want to continue to employ Executive, in their discretion, written notice
of same shall be made to the Executive and Executive shall be entitled to the
benefits described in Section 9(b)(i) –(iv) provided the Severance Benefits
Period shall be only twelve (12) months subsequent to the date of termination,
and an exclusive, one-time cash severance payment of
$430,000. Executive
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shall not
be entitled to any cash or non-cash incentive payments that have not been fully
vested or earned as of the date of termination under this Section
9(d). The Employers and the Executive further agree that the
Employers may condition the payments and benefits (if any) due under this
sub-Section on the receipt of the Executive’s resignation from any and all
positions which he holds as an officer, director or committee member with
respect to the Employers or any of its subsidiaries or affiliates and to the
execution of a general release by the Executive.
SECTION
10. TERMINATION
WITHOUT ADDITIONAL EMPLOYER LIABILITY.
(a) In
the event that the Executive’s employment with the Employers shall terminate
during the Employment Period on account of:
(i) the
discharge of the Executive for “cause,” which, for purposes of this Agreement,
shall mean a discharge because the Executive has: (A) willfully failed to
perform his assigned duties under this Agreement, other than any failure
resulting from the Executive’s incapacity due to physical or mental injury or
illness; (B) committed an act involving moral turpitude in the course of his
employment with the Employers and its subsidiaries or affiliates; (C) engaged in
willful misconduct; (D) breached his fiduciary duties for personal profit; (E)
willfully violated, in any material respect, any law, rule or regulation (other
than traffic violations or similar offenses), written agreement or final
cease-and-desist order with respect to his performance of services for the
Employers, as determined by the Board of Directors of the Employers; or (F)
materially breached the terms of this Agreement and failed to cure such material
breach during a 15-day period following the date on which the Board gives
written notice to the Executive of the material breach;
(ii) the
Executive’s voluntary resignation from employment (including voluntary
retirement) with the Employers for reasons other than Good Reason as specified
in Section 9(a)(i); or
(iii) the
death of the Executive while employed by the Bank, or the termination of the
Executive’s employment because of “Disability” as defined in Section 10(c)
below;
then in
any of the foregoing events, the Employers shall have no further obligations
under this Agreement, other than (A) the payment to the Executive of his earned
but unpaid compensation as of the date of the termination of his employment, (B)
the payment to the Executive of the benefits to which he is entitled under all
applicable employee benefit plans and programs and compensation plans and
programs as of the date of termination of his employment, and (C) the provision
of such other benefits, if any, to which he is entitled as a former employee
under the Bank’s and/or the Company’s employee benefit plans and programs and
compensation plans and programs.
(b) For
purposes of this Section 10, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the
Employers. Any act, or failure to act, based upon authority given
pursuant to a
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resolution
duly adopted by the Board of Directors of the Employers or based upon the
written advice of counsel for the Employers shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Employers.
(c) “Disability”
shall be deemed to have occurred if the Executive: (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) is,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Employers.
(d) During
any period in which the Executive is absent due to physical or mental
impairment, the Employers may, without breaching this Agreement, appoint another
person or persons to act as interim President and/or Executive Vice President
pending the Executive’s return to his duties on a full-time basis hereunder or
his termination as a result of such Disability. Prior to the
Executive’s employment being terminated due to Disability under Section 10(e)
hereof, the Executive shall continue to receive his full Base Salary, bonuses
and other benefits to which he is entitled under this Agreement, including
continued participation in all employee benefit plans and programs.
(e) The
Employers may provide notice to the Executive in writing that it intends to
terminate the Executive’s employment under this Agreement, with the termination
date to be on or after the date that the Executive is deemed to have a
Disability. At the time his employment hereunder is terminated due to
Disability, (i) the Executive shall not be entitled to any payments or benefits
pursuant to Sections 4 and 5 hereof for periods subsequent to such date of
termination, and (ii) the Executive shall become entitled to receive the
Disability payments that may be available under any applicable long-term
disability plan or other benefit plan.
SECTION
11. PAYMENTS
UPON A CHANGE IN CONTROL.
(a) The
term “Change in Control” shall mean a change in the ownership of the Company or
the Bank, a change in the effective control of the Company or the Bank or a
change in the ownership of a substantial portion of the assets of the Company or
the Bank, in each case as provided under Section 409A of the Code and the
regulations thereunder. In no event, however, shall a Change in
Control be deemed to have occurred as a result of any acquisition of securities
or assets of the Company, the Bank, or a subsidiary of either of them, by the
Company, the Bank, or any subsidiary of either of them, or by any employee
benefit plan maintained by any of them.
(b) If
the Executive’s employment by the Employers shall be terminated subsequent to a
Change in Control and during the Employment Term by (i) the Employers for other
than Cause, Disability, Retirement or the Executive’s death or (ii) the
Executive for Good Reason as defined in Section 9(a)(i) hereof, then the
Employers shall pay to the Executive a severance benefit in a lump sum payment,
within five (5) days after the effective time of such termination
11
of
employment, equal to the sum of (i) three times his Base Salary as of the date
of termination of his employment, (ii) three times the highest level of cash
incentive compensation earned by the Executive from the Employers or any
subsidiary thereof in any one of the three calendar years immediately preceding
the year in which the termination occurs and (iii) the amounts specified in
Sections 9(b)(i), (ii), (iv), (vi) and (vii) (notwithstanding any contrary
language contained therein with respect to payment being over a longer time
period) except in calculating the amount of such benefits, to the extent
applicable, the Severance Benefits Period will be for a period of three years
commencing on the date of the termination of the Executive’s
employment. In addition, the Employers shall provide the Executive
with the benefits provided for in Section 9(b)(iii) for the Severance Benefits
Period, as adjusted above to be for a period of three years subsequent to
termination of employment, subject to compliance with the last proviso clause
contained in such subsection. In the event that the Employers are
unable to provide the benefits set forth in said Section 9(b)(iii) due to the
change in the Executive’s status to that of a non-employee, the Employers shall
include in the lump sum payment due pursuant to the terms of this Section 11(b)
the value of the benefits required to be provided by said Section 9(b)(iii) for
the Severance Benefits Period as amended by this Section 11(b). The
severance and other benefits payable pursuant to this Section 11(b) shall not be
subject to reduction pursuant to the provisions of Section 9(c).
SECTION
12. LIMITATION
ON CHANGE IN CONTROL PAYMENT.
In the event that:
(i) the
aggregate payments or benefits to be made or afforded to the Executive pursuant
to this Agreement, together with other payments and benefits which the Executive
has a right to receive from the Employers, which are deemed to be parachute
payments as defined in Section 280G of the Code, or any successor thereof (the
“Termination Benefits”), would be deemed to include an “excess parachute
payment” under Section 280G of the Code; and
(ii) if
such Termination Benefits were reduced to an amount (the “Non-Triggering
Amount”), the value of which is one dollar ($1.00) less than an amount equal to
three (3) times the Executive’s “base amount,” as determined in accordance with
said Section 280G and the Non-Triggering Amount less the product of the marginal
rate of any applicable state, local and federal income tax and the
Non-Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus (i) the amount of tax
required to be paid by the Executive thereon by Section 4999 of the Code and
further minus (ii) the product of the Termination Benefits and the marginal rate
of any applicable state, local and federal income tax,
then the
Termination Benefits shall be reduced to the Non-Triggering
Amount. If the Termination Benefits are required to be reduced, the
cash severance shall be reduced first, followed by a reduction in the fringe
benefits to be provided in kind.
SECTION
13. SOURCE
OF PAYMENTS.
12
All payments provided in this Agreement
shall be timely paid in cash or check from the general funds of the
Bank.
SECTION
14. COVENANT
NOT TO COMPETE.
In the event the Executive’s employment
with the Employers is terminated for any reason prior to the expiration of the
Employment Period (except as set forth below), the Executive hereby covenants
and agrees that for a period of two years following the date of his termination
of employment with the Employers (or, if less, for the Severance Benefits
Period), he shall not, without the written consent of the Employers, become an
officer, employee, consultant, director or trustee of any savings bank, savings
and loan association, savings and loan holding company, bank or bank holding
company, or any direct or indirect subsidiary or affiliate of any such entity,
that entails working within any county in which the Company or the Bank
maintains an office as of the date of termination of the Executive’s employment.
In addition, in the event of a breach by the Executive of any of the provisions
of this Section 14, the Employers may avail themselves of such remedies that may
be available to it as a result of such breach by the Executive, with such
remedies to be cumulative and not mutually exclusive. This section
shall not be applicable if the Executive is terminated upon or within one year
subsequent to a Change in Control, provided that such termination is for reasons
other than Cause as defined in Section 10(a)(i) hereof.
SECTION
15. CONFIDENTIALITY.
Unless he obtains the prior written
consent of the Employers, the Executive shall at all times keep confidential and
shall refrain from using for the benefit of himself, or any person or entity
other than the Employers or its subsidiaries or affiliates, any material
document or information obtained from the Employers or its subsidiaries or
affiliates, in the course of his employment with any of them concerning their
properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of his own)
until the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this Section 15 shall prevent the Executive,
with or without the Employers’ consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding or the Company’s public reporting
requirements to the extent that such participation or disclosure is required
under applicable law.
SECTION
16. SOLICITATION.
The Executive hereby covenants and
agrees that, for a period of two years following his termination of employment
with the Employers for any reason, he shall not, without the written consent of
the Employers, either directly or indirectly:
(a) solicit,
offer employment to, or take any other action intended, or that a reasonable
person acting in like circumstances would expect, to have the effect of causing
any officer or employee of the Employers or any of their subsidiaries or
affiliates to terminate his employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, any savings bank, savings and loan association,
13
bank,
bank holding company, savings and loan holding company, or other institution
engaged in the business of accepting deposits, making loans or doing business
within the counties specified in Section 14;
(b) provide
any information, advice or recommendation with respect to any such officer or
employee to any savings bank, savings and loan association, bank, bank holding
company, savings and loan holding company, or other institution engaged in the
business of accepting deposits, making loans or doing business within the
counties specified in Section 14, that is intended, or that a reasonable person
acting in like circumstances would expect, to have the effect of causing any
officer or employee of the Employers or any of its subsidiaries or affiliates to
terminate his employment and accept employment or become affiliated with, or
provide services for compensation in any capacity whatsoever to, any savings
bank, savings and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of accepting
deposits, making loans or doing business within the counties specified in
Section 14; or
(c) solicit,
provide any information, advice or recommendation or take any other action
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any customer of the Company or the Bank to
terminate an existing business or commercial relationship with the Company or
the Bank.
SECTION
17. NO
EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of the Executive’s
employment during the Employment Period or thereafter, whether by the Employers
or by the Executive, shall have no effect on the vested rights of the Executive
under the Bank’s qualified or non-qualified retirement, savings, ESOP or stock
bonus plans, group life, health (including hospitalization, medical and major
medical), dental, accident and long term disability insurance plans, or other
employee benefit plans or programs, or compensation plans or programs in which
the Executive was a participant.
SECTION
18. SUCCESSORS
AND ASSIGNS.
(a) This
Agreement is personal to each of the parties hereto, and no party may assign or
delegate any of its rights or obligations hereunder without first obtaining the
written consent of the other parties; provided, however, that the Employers will
require any successor or assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Employers, by an assumption agreement in form and
substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Employers would be required to perform it if no such succession or
assignment had taken place. Failure of the Employers to obtain such
an assumption agreement prior to the effectiveness of any such succession or
assignment shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Employers in the same amount and on the same terms as
the compensation pursuant to Sections 9 or 11 hereof. For purposes of
implementing the provisions of this Section 18(a), the date which any such
succession without an assumption agreement becomes effective shall be deemed the
date of termination of the Executive’s employment.
14
(b) This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal and legal representatives,
executors, administrators, successors, heirs, distributees, devises and
legatees.
SECTION
19. NOTICES.
Any communication required or permitted
to be given under this Agreement, including any notice, direction, designation,
consent, instruction, objection or waiver, shall be in writing and shall be
deemed to have been given at such time as it is delivered personally, or five
days after mailing if mailed, postage prepaid, by registered or certified mail,
return receipt requested, addressed to such party at the address listed below or
at such other address as one such party may by written notice specify to the
other party:
If to the
Executive:
Xxxxx
Xxxxxx Xxxxx, Xx.
At the
address last appearing
on the
personnel records of
the
Employers
with a
copy, in the case of a notice to the Executive, to:
Xxxxxx X.
Xxxxx
Xxxxxxx
& Xxxxx, LLP
0000 Xxxx
Xxxxxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
XX 00000
(or such
other counsel as Executive may subsequently designate
in
accordance with this provision)
If to the
Employers:
NewAlliance
Bancshares, Inc.
NewAlliance
Bank
000
Xxxxxx Xxxxxx
Xxx
Xxxxx, XX 00000
(or the
address of the Bank’s principal executive office, if different)
Attention:
Chief Executive Officer
with a
copy, in the case of a notice to the Employers, to:
Xxxxxxx
X. Xxxxxx, III Esq.
Xxxxxxxx,
Xxxxx & Xxxxxx LLP
000
Xxxxxx Xxxxxx
XxxxXxxxx
I, 00xx Xxxxx
00
Xxxxxxxx,
XX 00000
SECTION
20. INDEMNIFICATION
FOR ATTORNEYS’ FEES.
(a) The
Employers shall indemnify, hold harmless and defend the Executive against
reasonable costs, including legal fees and expenses, incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement. For purposes of this Agreement, any
settlement agreement which provides for payment of any amounts in settlement of
the Employers’ obligations hereunder shall be conclusive evidence of the
Executive’s entitlement to indemnification hereunder, and any such
indemnification payments shall be in addition to amounts payable pursuant to
such settlement agreement, unless such settlement agreement expressly provides
otherwise.
(b) The
Employers’ obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Employers may have against the Executive or others. Unless it is
determined that a claim made by the Executive was either frivolous or made in
bad faith, the Employers agrees to pay as incurred (and in any event no later
than March 15 of the year immediately following the year in which incurred), to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of or in connection with his
consultation with legal counsel or arising out of any action, suit, proceeding
or contest (regardless of the outcome thereof) by the Employers, the Executive
or others regarding the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by the Executive about the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable federal rate provided for in Section 7872(f)(2)(A) of the
Code. This Section 20(b) shall apply whether such consultation,
action, suit, proceeding or contest arises before, on, after or as a result of a
Change in Control.
SECTION
21. SEVERABILITY.
A determination that any provision of
this Agreement is invalid or unenforceable shall not affect the validity or
enforceability of any other provision hereof.
SECTION
22. WAIVER.
Failure to insist upon strict
compliance with any of the terms, covenants or conditions hereof shall not be
deemed a waiver of such term, covenant or condition. A waiver of any
provision of this Agreement must be made in writing, designated as a waiver, and
signed by the party against whom its enforcement is sought. Any
waiver or relinquishment of any right or power hereunder at any one or more
times shall not be deemed a waiver or relinquishment of such right or power at
any other time or times.
16
SECTION
23. COUNTERPARTS.
This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same Agreement.
SECTION
24. GOVERNING
LAW.
This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Connecticut
applicable to contracts entered into and to be performed entirely within the
State of Connecticut, except to the extent that federal law
controls.
SECTION
25. HEADINGS
AND CONSTRUCTION.
The headings of sections in this
Agreement are for convenience of reference only and are not intended to qualify
the meaning of any section. Any reference to a section number shall
refer to a section of this Agreement, unless otherwise stated.
SECTION
26. ENTIRE
AGREEMENT; MODIFICATIONS.
This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and supersedes
in its entirety any and all prior agreements, understandings or representations
relating to the subject matter hereof. No modifications of this
Agreement shall be valid unless made in writing and signed by the parties
hereto; provided, however, that if the Employers determine, after a review of
the final regulations issued under Section 409A of the Code and all applicable
IRS guidance, that this Agreement should be further amended to avoid triggering
the tax and interest penalties imposed by Section 409A of the Code, the
Employers may amend this Agreement to the extent necessary to avoid triggering
the tax and interest penalties imposed by Section 409A of the Code.
SECTION
27. REQUIRED
REGULATORY PROVISIONS.
Notwithstanding anything herein
contained to the contrary, any payments to the Executive by the Employers,
whether pursuant to this Agreement or otherwise, are subject to and conditioned
upon their compliance with Section 18(k) of the Federal Deposit Insurance Act,
12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12
C.F.R. Part 359.
SECTION
28. DISPUTE
RESOLUTION.
(a) In
the event of any dispute, claim, question or disagreement arising out of or
relating to this Agreement or the breach hereof, the parties hereto shall use
their best efforts to settle such dispute, claim, question or
disagreement. To this effect, they shall consult and negotiate with
each other, in good faith, and, recognizing their mutual interests, attempt to
reach a just and equitable solution satisfactory to both parties.
(b) If
they do not reach such a solution within a period of thirty (30) days, then the
parties agree first to endeavor in good faith to amicably settle their dispute
by mediation under
17
the
Commercial Mediation Rules of the American Arbitration Association (the “AAA”),
before resorting to arbitration.
(c) Thereafter,
any unresolved controversy or claim arising out of or relating to this Agreement
or the breach thereof, upon notice by any party to the other, shall be submitted
to and finally settled by arbitration in accordance with the Commercial
Arbitration Rules (the “Rules”) of the AAA in effect at the time demand for
arbitration is made by any such party. The parties shall mutually
agree upon a single arbitrator within thirty (30) days of such
demand. In the event that the parties are unable to so agree within
such thirty (30) day period, then within the following thirty (30) day period,
one arbitrator shall be named by each party. A third arbitrator shall
be named by the two arbitrators so chosen within ten (10) days after the
appointment of the first two arbitrators. In the event that the third
arbitrator is not agreed upon, he shall be named by the
AAA. Arbitration shall occur in New Haven, Connecticut or such other
location as may be mutually agreed to by the parties.
(d) The
award made by all or a majority of the panel of arbitrators shall be final and
binding, and judgment may be entered based upon such award in any court of law
having competent jurisdiction. The award is subject to confirmation,
modification, correction or vacation only as explicitly provided in Title 9 of
the United States Code. The prevailing party shall be entitled to
receive any award of pre- and post-award interest as well as attorney’s fees
incurred in connection with the arbitration and any judicial proceedings related
thereto. The parties acknowledge that this Agreement evidences a
transaction involving interstate commerce. The United States
Arbitration Act and the Rules shall govern the interpretation, enforcement, and
proceedings pursuant to this Section. Any provisional remedy which
would be available from a court of law shall be available from the arbitrators
to the parties to this Agreement pending arbitration. Either party
may make an application to the arbitrators seeking injunctive relief to maintain
the status quo, or may seek from a court of competent jurisdiction any interim
or provisional relief that may be necessary to protect the rights and property
of that party, until such times as the arbitration award is rendered or the
controversy otherwise resolved.
IN WITNESS WHEREOF, the Bank has caused
this Agreement to be executed by its duly authorized officers and the Executive
has hereunto set his hand, all as of the date of the restatement of this
Agreement.
THIS AGREEMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
[SIGNATURES
APPEAR ON FOLLOWING PAGE]
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/s/ Xxxxx Xxxxxx
Xxxxx, Xx.
|
|
Xxxxx
Xxxxxx Xxxxx, Xx., Executive
|
|
ATTEST:
NEWALLIANCE BANK
|
|
/s/ Xxxxxx X.
Xxxxxxxxx
|
|
By: Xxxxxx
X. Xxxxxxxxx
|
|
Chairman
and Chief Executive Officer
|
|
ATTEST:
NEWALLIANCE BANCSHARES, INC
|
|
/s/ Xxxxxx X.
Xxxxxxxxx
|
|
By: Xxxxxx
X. Xxxxxxxxx
|
|
Chairman,
President and Chief Executive Officer
|
|
19