EMPLOYMENT AGREEMENT
Exhibit 10.7.13
This EMPLOYMENT AGREEMENT (this
“Agreement”) is made and entered into as of October 12, 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 X. XxxXxxxx (the
“Executive”).
W I T N E
S S E T H:
WHEREAS, the Bank desires to employ the
Executive, and the Executive desires to be employed by the Bank, as an Executive
Vice President and the Chief Financial Officer under the terms and conditions
herein; and
WHEREAS, the Company desires to employ
the Executive, and the Executive desires to be employed by the Company, as an
Executive Vice President and the Chief Financial Officer 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
November 2, 2009, or such earlier date as may be mutually agreed to by the
parties (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 April 1st
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
on April 1st of
each year (beginning with April 1, 2010) if the Board of Directors so approves
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 by
the Executive not less than ninety (90) days prior to any such April 1st. 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
immediately prior to the April 1st
renewal 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. All
actions to be taken by the Board of Directors under this Section 2(b) may be
taken by the Compensation Committee of the Board of Directors.
(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 an Executive Vice President and the Chief Financial
Officer of both the Company and the Bank, 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 the Executive's job and/or reporting responsibilities as she
deems appropriate to the effective management of the Employers, provided,
however, that the Executive shall at all times have duties, responsibilities and
job and/or reporting obligations consistent with those of a Chief Financial
Officer of a publicly held bank holding company and shall 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 three hundred fifty thousand dollars
($350,000) 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
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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 the
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 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 the Executive
shall be 60% of the Executive’s Base Salary at the “Target” level, and the
Executive shall be eligible to receive a bonus for the year ending December 31,
2009 on a pro rata basis, subject to the satisfaction of the applicable
performance objectives. 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.
(c) The
Bank shall pay to the Executive a signing bonus of $75,000 in a single lump sum
payment within 30 days following the Effective Date, provided that the Executive
continues to remain employed by the Employers during such 30-day
period. In addition, the Bank shall pay to the Executive a retention
bonus of $150,000 in a single lump sum payment by March 31, 2010, provided that
the Executive continues to remain employed through and including at least March
15, 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
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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 $750 per
month to pay for the costs of an automobile. 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 the Employers and wishes to seek
reimbursement as provided herein for such excess, then 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 the 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,
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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”). Reimbursement of the Executive for the
Annual Cost 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 be reviewed annually by the
Compensation Committee and, if increased, shall be reflected in an addendum
hereto.
(f) The
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 eighty percent (80%) of the 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 Executive
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) reimburse the
Executive for eighty percent (80%) of the reasonable moving, packing and
unpacking costs associated with moving the Executive’s household goods from New
Jersey to a permanent or temporary residence in the New Haven area, subject to a
budget approved by the Chief Executive Officer of the Employers (the Executive
will be reimbursed only for one move); (iii) provided the Executive purchases a
primary residence in the New Haven area within one year following the Effective
Date, reimburse the Executive for eighty percent (80%) of the 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 Executive Officer of the Employers; and (iv) provided the
Executive purchases a primary residence in the New Haven area within one year
following the Effective Date, the Employers will facilitate the Executive’s
purchase of a new home in Connecticut by purchasing the Executive’s primary
residence in New Jersey (if such residence has not already been sold at the
time) for an amount equal to the average appraised value (as determined below)
of such residence minus estimated resale costs, including closing costs and
broker’s commission. In determining the average appraised value, the
Employers shall determine whether to obtain two or three appraisals, each of
which shall be paid for by or on behalf of the Employers, and the average
appraised value shall be the mean average of the appraisals
obtained. The 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) Subject
to approval by the Compensation Committee of the Board of Directors of the
Company, the Company shall make the following grants to the Executive under the
Company’s 2005 Long-Term Compensation Plan on the first Monday following the
first
5
quarterly
earnings release after the Effective Date: (i) a stock option for
30,000 shares of common stock of the Company, which shall vest at the rate of
25% per year on each annual anniversary of the date of grant; and (ii) a
restricted stock award for 30,000 shares of common stock of the Company, which
shall vest at the rate of 33.3% per year on each annual anniversary of the date
of grant. The per share exercise price for the stock option grant
will be the per share closing price of the Company’s common stock on the date of
grant. If stock-based, long-term incentive awards are made generally
by the Company to other executive officers in 2010, then the Executive will be
considered for such grants as well.
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 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
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location
within 50 miles of the address of such principal executive office as may be
approved by the Chief Executive Officer of the Employers, 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.
SECTION
9. TERMINATION
OF EMPLOYMENT WITH BENEFITS.
(a) Subject
to Sections 9(b), 9(c) and 9(d) hereof, 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).
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(b) Subject
to Sections 9(c) and 9(d) hereof, 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;
(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 pro rata portion of any annual performance
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
8
replacement
therefor) and earned with respect to the calendar year in which the termination
of employment occurs, provided that (a) the amount of the bonus earned shall be
determined based on the extent to which the performance objectives with respect
to the bonus were met during the calendar year in which such termination of
employment occurs; (b) the amount of the bonus earned shall be pro rated by
multiplying the amount of the earned bonus by a fraction, the numerator of which
is the number of days elapsed in the calendar year as of the date of termination
of the Executive’s employment and the denominator is 365; and (c) such earned
pro rated target bonus shall be paid no later than March 15th of
the year following the year in which the termination of employment occurs;
and
(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, of all Employer contributions to which he
would have been entitled to receive during the Severance Benefits Period under
any and all qualified defined contribution plans and non-qualified plans related
thereto maintained by, or covering employees of, the Employers as if he 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 (a) the Executive’s vested percentage in such
additional Employer contributions shall be calculated as if he had continued to
be employed during the Severance Benefits Period, and (b) 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 ESOP-related 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) (a) $210,000 prior to the time that the Executive receives
cash incentive compensation from the Employers or any subsidiary or affiliate
thereof attributable to his performance over a period of one full year or (b)
subsequent to the time specified in clause (a), the highest amount of
annual cash incentive compensation earned by the Executive from the Employers or
any subsidiary or affiliate thereof during any of the three calendar years
immediately preceding the calendar year in which the date of 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.
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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 in their sole discretion prior to the
six-month anniversary of the Effective Date that they no longer desire to
continue to employ the Executive, then the Employers shall provide written
notice of such decision to the Executive and the Executive shall be entitled to
the benefits described in Sections 9(b)(i) through 9(b)(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
$350,000. The Executive 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 subsection 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) committed
a willfully dishonest act intended to result in substantial personal enrichment
of himself or others at the expense of either the Company or the Bank; (D)
engaged in willful misconduct or fraud; (E) breached his fiduciary duties for
personal profit; (F) 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; (G) 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; (H) been
convicted of a felony; or (I) become the subject of any proceeding initiated by
a federal or state banking agency to remove him from office.
10
(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 Employers, 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 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 Executive Vice President and/or Chief
Financial Officer 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
11
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 subject to
Section 12 hereof 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 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, (iii) the amounts
specified in Sections 9(b)(i), (ii), (iv) 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, and
(iv) unless the EIP or any successor plan provides otherwise with respect to the
payment of bonuses upon a Change in Control, the amount specified in Section
9(b)(vi) hereof at the time specified in such section. 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).
12
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.
All payments provided in this Agreement
shall be timely paid in cash or check from the general funds of the Company or
the Bank. Payments pursuant to this Agreement shall be allocated
between the Company and the Bank in proportion to the level of activity and the
time expended on such activities by the Executive as determined by the Company
and the Bank on a quarterly basis, unless the applicable provision of
this Agreement specifies that the payment shall be made by either the Company or
the Bank. In no event shall the Executive receive duplicate payments
or benefits from the Company and 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
13
the
Executive of any of the provisions of this Section 14, the Employers may avail
themselves of such remedies that may be available to them 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 their subsidiaries or affiliates, any material
document or information obtained from the Employers or their 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, 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 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, bank, bank holding company, savings and loan
holding company, or other
14
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
reasonably 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 on which any such
succession without an assumption agreement becomes effective shall be the date
of termination of the Executive’s employment.
(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:
15
If to the
Executive:
Xxxxx X.
XxxXxxxx
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:
Xxxx X.
Xxxxxxxx, Esq.
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 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:
Xxxxxx X.
Xxxxxx, Xx., Esq.
Elias,
Matz, Xxxxxxx & Xxxxxxx L.L.P.
000
00xx
Xxxxxx, X.X., 00xx
Xxxxx
Xxxxxxxxxx,
X.X. 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.
16
(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 agree 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.
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.
17
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.
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 any 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 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
18
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.
[signature
page follows]
19
IN WITNESS WHEREOF, the Company and the
Bank have caused this Agreement to be executed by their duly authorized officers
and the Executive has hereunto set his hand, all as of the date of this
Agreement.
THIS AGREEMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
| /s/ Xxxxx X. XxxXxxxx | |
|
Xxxxx
X. XxxXxxxx, Executive
|
|
|
ATTEST:
|
NEWALLIANCE
BANK
|
|
By:
/s/ Xxxxxxx X. Xxxxxx
III
|
By:
/s/ Xxxxxx X.
Xxxxxxxxx
|
|
Name:
Xxxxxxx X. Xxxxxx III
|
Xxxxxx
X. Xxxxxxxxx
|
|
Title:
Counsel
|
Chairman
and Chief Executive Officer
|
|
ATTEST:
|
NEWALLIANCE
BANCSHARES, INC
|
|
By:
/s/ Xxxxxxx X. Xxxxxx
III
|
By:
/s/ Xxxxxx X.
Xxxxxxxxx
|
|
Name:
Xxxxxxx X. Xxxxxx III
|
Xxxxxx
X. Xxxxxxxxx
|
|
Title:
Counsel
|
Chairman,
President and Chief
|
|
Executive
Officer
|
20
