TERMINATION, RELEASE AND NONCOMPETITION AGREEMENT
Exhibit
10.1
This
Termination, Release and Noncompetition Agreement (the “Agreement”) is entered
into as of July 18, 2006 by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the “Executive”),
Westbank Corporation (“WBC”), a Massachusetts corporation, Westbank, a
Massachusetts chartered bank and trust company and a wholly-owned subsidiary
of
WBC, and NewAlliance Bancshares, Inc. (“NewAlliance”), a Delaware
corporation.
RECITALS:
WHEREAS,
NewAlliance, NewAlliance Bank, WBC and Westbank are entering into an Agreement
and Plan of Merger, dated as of July 18, 2006 (the “Merger Agreement”);
and
WHEREAS,
Section 7.5.7 of the Merger Agreement provides that NewAlliance, WBC, Westbank
and the Executive shall enter into this Agreement, which shall terminate the
employment agreement between WBC and the Executive dated December 17, 2003
(the
“Employment Agreement”) as of the Effective Time of the Merger, and in lieu of
any rights and payments under the Employment Agreement, the Executive shall
be
entitled to the rights and payments set forth herein;
NOW
THEREFORE, in consideration of the foregoing and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
the
Executive, WBC, Westbank and NewAlliance agree as follows:
1. Actions
to be Taken in 2006.
(a) The
Executive hereby agrees to take the following actions between the date hereof
and December 29, 2006, it being the intention of the parties hereto that all
of
such actions shall be fully effective and consummated no later than December
29,
2006 (or such other date as may be specified below):
(i) consent,
to the extent any such consent is required by the Executive, to the accelerated
vesting as of the date the shareholders of WBC approve the Merger Agreement
of
all unvested restricted stock awards granted to the Executive with respect
to
the common stock of WBC, provided that any unvested restricted stock awards
scheduled to vest prior to such date shall vest on their originally scheduled
vesting date;
(ii) exercise
on or before December 22, 2006 all non-qualified stock options held by the
Executive to purchase the common stock of WBC;
(iii) accept
a
lump sum cash payment from WBC or Westbank on December 22, 2006 in the amount
of
$300,000 (with applicable withholding taxes to be subtracted from such amount),
representing a partial prepayment of the cash severance the Executive is
entitled to under Section 9(b)(iv) of the Employment Agreement;
(iv) accept
a
lump sum cash payment from WBC or Westbank on December 22, 2006 in the amount
of
$2,824,777 (with applicable withholding taxes to be subtracted from such
amount), in full satisfaction of both WBC’s obligations under Section 9(b)(vii)
of the Employment Agreement and NewAlliance’s agreement to extend such benefits
to cover the years 2010 and 2011;
(v) accept
on
or before December 29, 2006 such prepayment, if any, of the dollar amount
specified in Section 2(a) below that may be mutually agreed to by WBC and
NewAlliance in order to avoid the potential reduction in payments under Section
2(c) below; and
(vi) cooperate
with NewAlliance and WBC and take such other steps as may in good faith be
requested of the Executive by NewAlliance in order to avoid the potential
reduction in payments under Section 2(c) below.
(b) WBC
shall
take all steps necessary to accelerate as of the date the shareholders of WBC
approve the Merger Agreement the vesting of all of the unvested restricted
stock
awards granted to the Executive, and WBC or Westbank shall pay to the Executive
on December 22, 2006 the amounts specified in Sections 1(a)(iii) and (iv)
above.
(c) In
the
event the above actions are taken but are insufficient to avoid the potential
reduction in payments under Section 2(c) below, then WBC or Westbank shall
prepay to the Executive on or before December 29, 2006 such portion of the
dollar amount specified in Section 2(a) below as shall be mutually agreed to
by
WBC and NewAlliance (which agreement shall not be unreasonably withheld or
delayed).
2. Payments
to Be Made as of the Effective Time of the Merger.
(a) As
of the
Effective Time of the Merger, provided the Executive is still employed by WBC
immediately prior to such date and provided that the Executive and WBC have
taken all of the actions required to be taken pursuant to Section 1 hereof,
and
in consideration of the obligations and commitments of the Executive under
this
Agreement, WBC or Westbank shall pay to the Executive a lump sum cash amount
equal to $1,627,169, subject to adjustment as set forth in Section 2(c) below
(the “Maximum Amount”), less applicable tax withholdings and less any portion
thereof that is prepaid in December 2006 pursuant to Sections 1(a)(v) and 1(c)
above. In consideration of such payment and the other provisions of this
Agreement, the Executive, WBC, Westbank and NewAlliance hereby agree that the
Employment Agreement and the Executive’s employment with WBC shall be terminated
without any further action of any of the parties hereto, effective immediately
prior to the Effective Time of the Merger, except as set forth in Section 4
hereof. The Executive agrees that the above payment shall be in complete
satisfaction of all of his rights to payments or benefits under the Employment
Agreement, except as set forth in Section 4 hereof.
(b) WBC
and
the Executive represent and warrant that the information with respect to the
Executive contained in Section 4.14.8 of the WBC Disclosure Schedule to the
Merger Agreement accurately reflects the Executive’s taxable Form W-2 income for
each of the four years ended December 31, 2005 and contains a complete listing
of all payments or benefits to the Executive that could be deemed to be a
parachute payment under Section 280G of the Internal Revenue Code of 1986,
as
amended (the “Code”), based on the assumptions set forth in such
schedule.
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(c) Each
of
the parties hereto agrees that if the actions specified in Section 1 above
are
taken as required, then based on Section 2(b) above the payments and benefits
to
be provided to the Executive should not trigger any tax reimbursement payments
pursuant to Section 12 of the Employment Agreement. In the event any of the
actions specified in Section 1 above is not taken as required, or if any of
the
representations in Section 2(b) is not correct, and if such failure results
in
the Maximum Amount, either alone or together with other payments and benefits
which the Executive has the right to receive from NewAlliance, WBC or Westbank,
whether pursuant to this Agreement or otherwise, being a “parachute payment”
under Section 280G of the Code, then the Maximum Amount payable by WBC or
Westbank pursuant to Section 2(a) hereof shall be reduced by the amount which
is
the minimum necessary to result in no portion of the payment payable by WBC
or
Westbank under Section 2(a) being non-deductible to WBC, Westbank or NewAlliance
(or any successors thereto) pursuant to Section 280G of the Code and subject
to
the excise tax imposed under Section 4999 of the Code. If any of the payments
or
benefits to be provided by WBC, Westbank or NewAlliance are subject to the
excise tax imposed by Section 4999 of the Code but are not required to be
reduced by this Section 2(c), then the indemnity under Section 12 of the
Employment Agreement (which section remains in full force and effect pursuant
to
Section 4 of this Agreement) shall be provided to the Executive by NewAlliance;
provided, however, that if the amount of the indemnity is known as of the
Effective Time of the Merger, then such indemnity shall be provided by either
WBC or Westbank at the request of NewAlliance.
(d) As
of the
Business Day immediately prior to the Effective Date of the Merger, provided
the
Executive is still employed by WBC immediately prior to such date, WBC or
Westbank shall pay to the Executive an additional lump sum cash amount equal
to
$1,093,302, less applicable tax withholdings, in complete satisfaction of all
of
the Executive’s rights to payments or benefits under the Executive Supplemental
Retirement Plan Agreement between the Executive and Westbank (formerly Park
West
Bank and Trust Company) dated July 2, 2001 (the “SERP Agreement”). In
consideration of such payment, the parties hereto agree that the SERP Agreement
shall be terminated without any further action of any of the parties hereto
on
or before the date of such payment in accordance with the terms of the Merger
Agreement.
(e) As
of the
Effective Time of the Merger, the Executive shall be given the opportunity
to
purchase the automobile currently provided to him by Westbank at the purchase
price specified in the motor vehicle lease agreement covering such automobile
if
he wishes to do so, provided that in no event shall such fair market value
be
less than the greater of (i) the ▇▇▇▇▇▇ blue book value of such automobile
as of
the Effective Time, or (ii) WBC’s book value or residual leasehold interest in
such automobile as of the Effective Time.
(f) The
parties hereto agree that the payments pursuant to Sections 1(a)(iii), (iv)
and
(v) above should not trigger any of the excise taxes or interest penalties
under
Section 409A of the Code based on the current provisions of such section and
the
proposed regulations issued under Section 409A of the Code. However, in the
event the final regulations issued under Section 409A are construed so as to
impose the excise tax and interest penalties specified under Section 409A of
the
Code on any of the payments under Sections 1(a)(iii), (iv) or (v) of this
Agreement, then NewAlliance shall provide a tax indemnification to the Executive
so that the Executive is in the same after-tax position he would have been
in if
the excise tax and interest
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penalties
under Section 409A of the Code had not been imposed on such payments; provided,
however, that if the amount of the indemnity is known as of the Effective Time
of the Merger, then such indemnity shall be provided by either WBC or Westbank
at the request of NewAlliance.
3. Payment
of Fringe Benefits.
(a) NewAlliance
agrees to provide the Executive with continued health, dental, life and
disability coverage, pursuant to either the policies currently offered by WBC
and Westbank or the policies to be offered by NewAlliance to the Continuing
Employees of WBC, until the earlier of thirty-six (36) calendar months following
the Effective Time of the Merger or the Executive’s commencement of full-time
employment with a new employer, subject to the terms and conditions of such
policies, with the Executive responsible for paying the same share of any
premiums, copayments or deductibles as if he was an employee and with the
disability and life insurance coverage subject to the maximum coverage limits
in
the current policies of WBC or Westbank, except as set forth below in this
Section 3(a). The health and dental coverage shall include any dependents of
the
Executive who are covered by WBC or Westbank as of the date of this Agreement
and who remain covered by WBC or Westbank as of the Effective Time of the
Merger. In the event the Executive’s participation in any such plan is barred,
NewAlliance shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have received under such
plans from which his continued participation is barred or pay to the Executive
a
cash amount equal to the amount NewAlliance would have paid for such coverage
if
the Executive was still an employee. In addition, notwithstanding the foregoing,
if the provision of any of the benefits covered by this Section 3(a) would
trigger the 20% tax and interest penalties under Section 409A of the Code either
due to the nature of such benefit or the length of time it is being provided,
then the benefit(s) that would trigger such tax and interest penalties due
to
the nature of the benefit shall not be provided at all and the benefit(s) that
would trigger the tax and interest penalties if provided beyond the “limited
period of time” set forth in the regulations under Section 409A shall not be
provided beyond such limited period of time (collectively, the “Excluded
Benefits”), and in lieu of the Excluded Benefits NewAlliance shall pay to the
Executive, in a lump sum within 30 days following termination of employment
or
within 30 days after such determination should it occur after termination of
employment, a cash amount equal to the amount NewAlliance would have paid for
such Excluded Benefits in the absence of Section 409A of the Code.
(b) In
calculating the value of the benefits to be provided pursuant to Section 3(a)
above, the parties agree to assume that the premiums in effect as of August
31,
2006 will increase by 15% per year to cover anticipated premium increases over
the 36 month period specified in Section 3(a) above.
4. Releases.
Upon
payment of the amounts set forth in Section 2(a) hereof (as such amount may
be
adjusted pursuant to Section 2(c) hereof) and in Section 2(d) hereof, the
Executive, for himself and for his heirs, successors and assigns, does hereby
release completely and forever discharge WBC and its successors from any
obligation under the Employment Agreement, except for the provisions of Sections
12, 13(b) and 13(c) of the Employment Agreement which shall remain in full
force
and effect, and under the SERP Agreement. The obligations of NewAlliance to
provide benefits pursuant to Section 3 above shall continue for the
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period
specified therein. This Agreement shall not release WBC or NewAlliance from
any
of the following: (a) obligations to pay to the Executive wages earned up to the
Effective Time of the Merger; (b) the payment of any of the Executive’s vested
benefits, or honoring any of the Executive’s rights, under the WBC Employee
Plans, excluding any bonus plans, employment agreement or other severance
agreement or plan, (c) the payment of the Merger Consideration with respect
to
the Executive’s common stock of WBC or stock options or restricted stock awards
with respect to the common stock of WBC, or (d) the obligations of NewAlliance
under Section 7.6 of the Merger Agreement.
5. Non-Competition
Provisions.
The
Executive agrees that during the 12-month period immediately following the
Effective Date of the Merger (the “Non-Competition Period”), the Executive will
not (i) engage in, become interested in, directly or indirectly, as a sole
proprietor, as a partner in a partnership, or as a shareholder in a corporation,
or become associated with, in the capacity of employee, director, officer,
principal, agent, trustee or in any other capacity whatsoever, any enterprise
or
entity located in either Hampden County in the Commonwealth of Massachusetts
or
▇▇▇▇▇▇▇ County in the State of Connecticut (collectively, the “Counties” and
individually a “County”), which proprietorship, partnership, corporation,
enterprise or other entity is engaged in any line of business conducted by
NewAlliance, NewAlliance Bank or any of their subsidiaries immediately following
the Effective Time of the Merger, including but not limited to entities which
lend money and take deposits (in each case, a “Competing Business”), provided,
however, that this provision shall not prohibit the Executive from owning bonds,
non-voting preferred stock or up to five percent (5%) of the outstanding common
stock of any Competing Business if such common stock is publicly traded, (ii)
solicit or induce, or cause others to solicit or induce, any employee of
NewAlliance or any of its subsidiaries to leave the employment of such entities,
or (iii) solicit (whether by mail, telephone, personal meeting or any other
means, excluding general solicitations of the public that are not based in
whole
or in part on any list of customers of NewAlliance or any of its subsidiaries)
any customer of NewAlliance or any of its subsidiaries to transact business
with
any Competing Business, or to reduce or refrain from doing any business with
NewAlliance or its subsidiaries, or interfere with or damage (or attempt to
interfere with or damage) any relationship between NewAlliance or its
subsidiaries and any such customers.
6. Enforcement.
(a) This
Agreement shall be construed, enforced and interpreted in accordance with and
governed by the laws of the State of Connecticut, without reference to its
principles of conflict of laws, except to the extent that federal law shall
be
deemed to preempt such state laws.
(b) It
is the
intention of the parties hereto that the provisions of this Agreement shall
be
enforced to the fullest extent permissible under all applicable laws and public
policies, but that the unenforceability or the modification to conform with
such
laws or public policies of any provision hereof shall not render unenforceable
or impair the remainder of the Agreement. The covenants in Section 5 of this
Agreement with respect to the Counties shall be deemed to be separate covenants
with respect to each County, and should any court of competent jurisdiction
conclude or find that this Agreement or any portion is not enforceable with
respect to a County, such conclusion or finding shall in no way render invalid
or unenforceable the covenants herein with respect to the other County.
Accordingly, if any provision shall be determined to be invalid or unenforceable
either in whole or in part, this Agreement shall be deemed amended to delete
or
modify as necessary the invalid or unenforceable provisions to alter the balance
of this Agreement in order to render the same valid and
enforceable.
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(c) The
Executive acknowledges that NewAlliance and NewAlliance Bank would not have
entered into the Merger Agreement or intend to consummate the Merger unless
the
Executive had, among other things, entered into this Agreement. Any breach
of
Section 5 of this Agreement will result in irreparable damage to NewAlliance
and
NewAlliance Bank for which NewAlliance and NewAlliance Bank will not have an
adequate remedy at law. In addition to any other remedies and damages available
to NewAlliance and NewAlliance Bank, the Executive further acknowledges that
NewAlliance and NewAlliance Bank shall be entitled to seek injunctive relief
hereunder to enjoin any breach of Section 5 of this Agreement, and the parties
hereby consent to any injunction issued in favor of NewAlliance and NewAlliance
Bank by any court of competent jurisdiction, without prejudice to any other
right or remedy to which NewAlliance and NewAlliance Bank may be entitled.
The
Executive represents and acknowledges that, in light of his experience and
capabilities, the Executive can obtain employment with other than a Competing
Business or in a business engaged in other lines and/or of a different nature
than those engaged in by NewAlliance or its subsidiaries or affiliates, and
that
the enforcement of a remedy by way of injunction will not prevent the Consultant
from earning a livelihood. Each of the remedies available to NewAlliance and
NewAlliance Bank in the event of a breach by the Consultant shall be cumulative
and not mutually exclusive.
7. General.
(a) Heirs,
Successors and Assigns.
The
terms
of this Agreement shall be binding upon the parties hereto and their respective
heirs, successors and assigns.
(b) Final
Agreement. This
Agreement represents the entire understanding of the parties with respect to
the
subject matter hereof and supersedes all prior understandings, written or oral.
The terms of this Agreement may be changed, modified or discharged only by
an
instrument in writing signed by each of the parties hereto. In the event the
Internal Revenue Service issues final regulations under Section 409A of the
Code
prior to the Effective Time of the Merger and such regulations are deemed to
result in the imposition of the excise taxes and/or interest penalties under
Section 409A of the Code on any of the payments or benefits to be provided
under
this Agreement, then the parties hereto agree to negotiate in good faith an
amendment to this Agreement to avoid such excise taxes and/or interest penalties
to the extent possible, provided that the amounts payable to the Executive
under
Sections 1, 2(a) and 2(d) of this Agreement shall not be delayed beyond the
Effective Time of the Merger or reduced in the aggregate.
(c) Withholdings.
WBC,
Westbank and NewAlliance may withhold from any amounts payable under this
Agreement such federal, state, local or foreign taxes as may be required to
be
withheld pursuant to applicable law or regulation.
(d) Defined
Terms. Any
capitalized terms not defined in this Agreement shall have as their meaning
the
definitions contained in the Merger Agreement.
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(e) Voluntary
Action and Waiver. The
Executive acknowledges that by his free and voluntary act of signing below,
the
Executive agrees to all of the terms of this Agreement and intends to be legally
bound thereby. The Executive acknowledges that he has been advised to consult
with an attorney prior to executing this Agreement.
(f) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together shall constitute one and
the
same instrument.
8. Effectiveness.
Notwithstanding anything to the contrary contained herein, this Agreement shall
be subject to consummation of the Merger in accordance with the terms of the
Merger Agreement, as the same may be amended by the parties thereto in
accordance with its terms. In the event the Merger Agreement is terminated
for
any reason, this Agreement shall be deemed null and void with respect to all
actions not yet taken pursuant to this Agreement.
[Signature
page follows]
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IN
WITNESS WHEREOF, NewAlliance, WBC and Westbank have each caused this Agreement
to be executed by their duly authorized officers, and the Executive has signed
this Agreement, effective as of the date first above written.
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WITNESS:
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EXECUTIVE:
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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ATTEST:
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WESTBANK
CORPORATION
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Title:
Chairman of the Board
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ATTEST:
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WESTBANK
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Title:
Chairman of the Board
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ATTEST:
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NEWALLIANCE
BANCSHARES, INC.
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/s/
▇▇▇▇▇ Arsenault_______________________________
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By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title:
Executive Vice President and Chief
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Financial
Officer
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