Attached files
NEW
ENGLAND BANCSHARES, INC.
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment
Agreement (the “Agreement”) by and between New England Bancshares, Inc., a
Maryland corporation (the “Company”) and David J. O’Connor (the “Executive”) is
made effective as of July 13, 2009. References to the “Bank” herein shall mean
New England Bank, a wholly owned subsidiary of the Company.
W
I T N E S S E T H
WHEREAS, the Company and the
Executive are currently parties to an amended and restated employment agreement
originally entered into as of December 28, 2005 and further amended on November
12, 2008 (the “Employment Agreement”);
WHEREAS, Enfield Federal
Savings and Loan Association, a former subsidiary of the Company, has merged
into Valley Bank, a subsidiary of the Company, and pursuant to the merger Valley
Bank changed its name to New England Bank; and
WHEREAS, the Company and the
Executive desire to amend and restate the Employment Agreement in order to
reflect the new name of the Bank.
NOW, THEREFORE, in
consideration of the promises and mutual covenants herein contained, the parties
hereby agree as follows:
1.
Employment. Executive is
employed as the President and Chief Executive Officer of the
Company. Executive shall perform all duties and shall have all powers
which are commonly incident to the offices of President and Chief Executive
Officer of the Company or which, consistent with those offices, are delegated to
him by the Board of Directors of the Company. During the term of this
Agreement, Executive also agrees to serve, if elected, as an officer and/or
director of any subsidiary of the Company and in such capacity carry out such
duties and responsibilities reasonably appropriate to that office.
2.
Location
and Facilities. The Executive
will be furnished with the working facilities and staff customary for executive
officers with the title and duties set forth in Section 1 and as are necessary
for him to perform his duties. The location of such facilities and
staff shall be at the principal administrative offices of the Company, or at
such other site or sites customary for such offices.
3.
Term.
The
period of Executive’s employment under this Agreement shall be deemed to have
commenced as of the date written above and shall continue for a period of
thirty-six (36) full calendar months, provided, however, that all changes
intended to comply with Code Section 409A shall be effective retroactively to
December 28, 2005; and provided further, that no retroactive changes shall
affect the
compensation
or benefits previously provided to the Executive. The term of this Agreement
shall be extended for one day each day so that a constant thirty-six (36)
calendar month term shall remain in effect, until such time as the Board of
Directors of the Company (the “Board”) or Executive elects not to extend the
term of the Agreement by giving written notice to the other party in accordance
with the terms of this Agreement, in which case the term of this Agreement shall
be fixed and shall end on the third anniversary of the date of such written
notice.
4. Base
Compensation.
|
|
a.
|
The
Company agrees to pay the Executive during the term of this Agreement a
base salary at the rate of $310,500 per year, payable
in accordance with customary payroll
practices.
|
|
|
b.
|
The
Board shall review annually the rate of the Executive’s base salary based
upon factors they deem relevant, and may maintain or increase his salary,
provided that no such action shall reduce the rate of salary below the
rate in effect on the Effective
Date.
|
|
|
c.
|
In
the absence of action by the Board, the Executive shall continue to
receive salary at the annual rate specified on the Effective Date or, if
another rate has been established under the provisions of this Section 4,
the rate last properly established by action of the Board under the
provisions of this Section 4.
|
5. Bonuses. The Executive
shall be entitled to participate in discretionary bonuses or other incentive
compensation programs that the Company may award from time to time to senior
management employees pursuant to bonus plans or otherwise. Any
bonuses or other payments made pursuant to this Section 5 shall be paid promptly
by the Company and in any event no later than March 15 of the year immediately
following the end of the calendar year for which such amounts were
payable.
6. Benefit
Plans. The Executive
shall be entitled to participate in such life insurance, medical, dental,
pension, profit sharing, retirement and stock-based compensation plans and other
programs and arrangements as may be approved from time to time by the Company
and the Company for the benefit of their employees.
7. Vacation and
Leave.
|
|
a.
|
The
Executive shall be entitled to vacation and other leave in accordance with
policy for senior executives, or otherwise as approved by the
Board.
|
|
|
b.
|
In
addition to paid vacation and other leave, the Executive shall be
entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment for such additional periods of time and for
such valid and legitimate
|
2
reasons
as the Board may in its discretion determine. Further, the Board may
grant to the Executive a leave or leaves of absence, with or without pay, at
such time or times and upon such terms and conditions as the Board in its
discretion may determine.
8.
Expense
Payments and Reimbursements. The Executive
shall be reimbursed for all reasonable out-of-pocket business expenses that he
shall incur in connection with his services under this Agreement upon
substantiation of such expenses in accordance with applicable policies of the
Company. Such reimbursements shall be paid promptly by the Company
and in any event not later than March 15 of the year immediately following the
end of the calendar year in which the Executive incurred such
expense.
9.
Automobile
Allowance. During the term
of this Agreement, the Executive shall be entitled to an automobile allowance on
terms no less favorable that those in effect immediately prior to the execution
of this Agreement. Executive shall comply with reasonable reporting
and expense limitations on the use of such automobile as may be established by
the Company or the Bank from time to time, and the Company or the Bank shall
annually include on Executive’s Form W-2 any amount of income attributable to
Executive’s personal use of such automobile. Payments, if any, made
under this Section 9 shall be paid promptly by the Company and in any event not
later than March 15 of the year immediately following the end of the calendar
year in which the expense was incurred.
10. Loyalty and
Confidentiality.
|
|
a.
|
During
the term of this Agreement Executive: (i) shall devote all his
time, attention, skill, and efforts to the faithful performance of his
duties hereunder; provided, however, that from time to time, Executive may
serve on the boards of directors of, and hold any other offices or
positions in, companies or organizations which will not present any
conflict of interest with the Company or any of their subsidiaries or
affiliates, unfavorably affect the performance of Executive’s duties
pursuant to this Agreement, or violate any applicable statute or
regulation and (ii) shall not engage in any business or activity
contrary to the business affairs or interests of the
Company.
|
|
|
b.
|
Nothing
contained in this Agreement shall prevent or limit Executive’s right to
invest in the capital stock or other securities of any business dissimilar
from that of the Company, or, solely as a passive, minority investor, in
any business.
|
|
|
c.
|
Executive
agrees to maintain the confidentiality of any and all information
concerning the operation or financial status of the Company and the
Company; the names or addresses of any of its borrowers, depositors and
other customers; any information concerning or obtained from such
customers; and any other information concerning the Company and the
Company to which he may be exposed during the course of his
employment. The Executive further agrees
that,
|
3
unless
required by law or specifically permitted by the Board in writing, he will not
disclose to any person or entity, either during or subsequent to his employment,
any of the above-mentioned information which is not generally known to the
public, nor shall he employ such information in any way other than for the
benefit of the Company and the Company.
11. Termination
and Termination Pay. Subject to
Section 12 of this Agreement, Executive’s employment under this Agreement may be
terminated in the following circumstances:
|
|
a.
|
Death. Executive’s
employment under this Agreement shall terminate upon his death during the
term of this Agreement, in which event Executive’s estate shall be
entitled to receive the compensation due to the Executive through the last
day of the calendar month in which his death
occurred.
|
|
|
b.
|
Retirement. This
Agreement shall be terminated upon Executive’s retirement under the
retirement benefit plan or plans in which he participates pursuant to
Section 6 of this Agreement or
otherwise.
|
|
|
c.
|
Disability.
|
|
|
i.
|
The
Board or Executive may terminate Executive’s employment after having
determined Executive has a Disability. For these purposes, the
Executive shall be deemed to have a “Disability” in any case in which it
is determined that the Executive (a) 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
last for a continuous period of not less than 12 months; (b) by reason of
any medically determinable physical or mental impairment which can be
expected to result in death, or last for a continuous period of not less
than 12 months, is receiving income replacement benefits for a period of
not less than three months under an accident and health plan covering
employees of the Bank; or (c) is totally disabled by the Social Security
Administration.
|
|
|
ii.
|
In
the event of such Disability, Executive’s obligation to perform services
under this Agreement will terminate. The Company or the Bank
will pay Executive, as Disability pay, an amount equal to 100% of
Executive’s bi-weekly rate of base salary in effect as of the date of his
termination of employment due to Disability. Disability
payments will be made on a monthly basis and will commence on the first
day of the month following the effective date of Executive’s termination
of employment for Disability and end on the earlier of: (A) the date he
returns to full-time employment at the Company in the same capacity as he
was employed prior to his
|
4
termination
for Disability; (B) his death; or (C) upon attainment of age 65. Such
payments shall be reduced by the amount of any short- or long-term disability
benefits payable to the Executive under any other disability programs sponsored
by the Company or the Bank. In addition, during any period of
Executive’s Disability, Executive and his dependents shall, to the greatest
extent possible, continue to be covered under all benefit plans (including,
without limitation, non-taxable medical, dental and life insurance plans) of the
Company or the Bank, in which Executive participated prior to his Disability on
the same terms as if Executive were actively employed by the
Company.
|
|
d.
|
Termination for
Cause.
|
|
|
i.
|
The
Board may, by written notice to the Executive in the form and manner
specified in this paragraph, terminate his employment at any time, for
“Cause”. The Executive shall have no right to receive
compensation or other benefits for any period after termination for
Cause. Termination for “Cause” shall mean termination because
of, in the good faith determination of the Board,
Executive’s:
|
|
|
(1)
|
Personal
dishonesty;
|
|
|
(2)
|
Incompetence;
|
|
|
(3)
|
Willful
misconduct;
|
|
|
(4)
|
Breach
of fiduciary duty involving personal
profit;
|
|
|
(5)
|
Intentional
failure to perform stated duties;
|
|
|
(6)
|
Willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) that reflects adversely on the reputation of the Company
and the Company, any felony conviction, any violation of law involving
moral turpitude or any violation of a final cease-and-desist order;
or
|
|
|
(7)
|
Material
breach by Executive of any provision of this
Agreement.
|
|
|
ii.
|
Notwithstanding
the foregoing, Executive shall not be deemed to have been terminated for
Cause by the Company unless there shall have been delivered to Executive a
copy of a resolution duly adopted at a meeting of such Board where in the
good faith opinion of the Board, Executive was guilty of the conduct
described above and specifying the particulars
thereof.
|
5
|
|
e.
|
Voluntary Termination
by Executive. In addition to his other rights to
terminate under this Agreement, Executive may voluntarily terminate
employment during the term of this Agreement upon at least sixty (60) days
prior written notice to the Boards, in which case Executive shall receive
only his compensation, vested rights and employee benefits up to the date
of his termination.
|
|
|
f.
|
Without Cause or With
Good Reason.
|
|
|
i.
|
In
addition to termination pursuant to Sections 11(a) through 11(e) the
Boards, may, by written notice to Executive, immediately terminate his
employment at any time for a reason other than Cause (a termination
“Without Cause”) and Executive may, by written notice to the Board,
immediately terminate this Agreement at any time for “Good Reason” as
defined below.
|
|
|
ii.
|
Subject
to Section 12 of this Agreement, in the event of termination under this
Section 11(f), Executive shall be entitled to receive an amount equal to
(i) his base salary for the remaining term of the Agreement, and (ii) the
value of the benefits he would have received during the remaining term of
the Agreement under any retirement programs (whether tax-qualified or
non-qualified) in which Executive participated prior to his termination
(with the amount of the benefits determined by reference to the benefits
received by the Executive or accrued on his behalf under such programs
during the twelve (12) months preceding his termination), payable as a
single cash lump sum distribution within ten (10) calendar days following
such termination. In addition, the Executive shall continue to
participate in any benefit plans of the Company or Bank that provide life
insurance and non-taxable medical and dental insurance, or similar
coverage upon terms no less favorable than the most favorable terms
provided to senior executives of the Company during such
period. In the event that the Company or the Bank is unable to
provide such coverage by reason of Executive no longer being an employee,
the Company shall pay the Executive the value of such benefits in a single
cash lump sum distribution within ten (10) calendar days following his
termination.
|
|
|
iii.
|
“Good
Reason” shall exist if, without Executive’s express written consent, the
Company materially breach any of their respective obligations under this
Agreement. Without limitation, such a material breach shall be
deemed to occur upon any of the
following:
|
|
|
(1)
|
A
material reduction in Executive’s responsibilities or authority in
connection with his employment with the
Company;
|
6
|
|
(2)
|
Assignment
to Executive of duties of a non-executive nature or duties for which he is
not reasonably equipped by his skills and
experience;
|
|
|
(3)
|
Failure
of the Executive to be nominated or re-nominated to the
Board
|
|
|
(4)
|
A
material reduction in Executive’s salary or benefits contrary to the terms
of this Agreement, or, following a Change in Control as defined in Section
12 of this Agreement, any reduction in salary or material reduction in
benefits below the amounts to which he was entitled prior to the Change in
Control;
|
|
|
(5)
|
Termination
of incentive and benefit plans, programs or arrangements, or reduction of
Executive’s participation to such an extent as to materially reduce their
aggregate value below their aggregate value as of the Effective
Date;
|
|
|
(6)
|
A
requirement that Executive relocate his principal business office or his
principal place of residence outside of the area consisting of a
twenty-five (25) mile radius from the current main office and any branch
of the Company, or the assignment to Executive of duties that would
reasonably require such a relocation;
or
|
|
|
(7)
|
Liquidation
or dissolution of the Company or the Company, other than liquidations or
dissolutions that are caused by reorganizations that do not negatively
affect the status of the Executive,
|
provided,
however, that prior to any termination of employment for Good Reason (a
termination “With Good Reason”), the Executive must first provide written notice
to the Company within ninety (90) days following the initial existence of the
condition, describing the existence of such condition, and the Company shall
thereafter have the right to remedy the condition within thirty (30) days of the
date the Company received the written notice from the Executive. If
the Company remedies 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 Company does 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.
|
|
iv.
|
Notwithstanding
the foregoing, a reduction or elimination of the Executive’s benefits
under one or more benefit plans maintained by the Company or the Company
as part of a good faith, overall reduction
or
|
7
elimination
of such plans or plans or benefits thereunder applicably to all participants in
a manner that does not discriminate against Executive (except as such
discrimination may be necessary to comply with law) shall not constitute an
event of Good Reason or a material breach of this Agreement, provided that
benefits of the type or to the general extent as those offered under such plans
prior to such reduction or elimination are not available to other officers of
the Company or any company that controls the Company under a plan or plans in or
under which Executive is not entitled to participate.
|
|
v.
|
For
purposes of this Agreement, any termination of Executive’s employment
shall be construed to require a “Separation from Service” in accordance
with Code Section 409A and the regulations promulgated thereunder, such
that the Company and Executive reasonably anticipate that the level of
bona fide services Executive would perform after termination would
permanently decrease to a level that is less than 50% of the average level
of bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding thirty-six (36) month
period.
|
|
|
g.
|
Continuing Covenant
Not to Compete or Interfere with
Relationships. Regardless of anything herein to the
contrary, following a termination by the Company or Executive pursuant to
Section 11(f):
|
|
|
i.
|
Executive’s
obligations under Section 10(c) of this Agreement will continue in effect;
and
|
|
|
ii.
|
During
the period ending on the first anniversary of such termination, the
Executive shall not serve as an officer, director or employee of any bank
holding company, bank, savings bank, savings and loan holding company, or
mortgage company (any of which, a “Financial Institution”) which Financial
Institution offers products or services competing with those offered by
the Company from any office within fifty (50) miles from the main office
or any branch of the Company and shall not interfere with the relationship
of the Company and the Company and any of its employees, agents, or
representatives.
|
12. Termination in Connection
with a Change in Control.
|
|
a.
|
For
purposes of this Agreement, a Change in Control means any of the following
events:
|
|
|
(i)
|
Merger: The
Company merges into or consolidates with another corporation, or merges
another corporation into the Company, and as
a
|
8
result
less than a majority of the combined voting power of the resulting corporation
immediately after the merger or consolidation is held by persons who were
stockholders of the Company immediately before the merger or
consolidation.
|
|
(ii)
|
Acquisition of
Significant Share Ownership: There is filed or required
to be filed a report on Schedule 13D or another form or schedule (other
than Schedule 13G) required under Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934, if the schedule discloses that the filing
person or persons acting in concert has or have become the beneficial
owner of 25% or more of a class of the Company’s voting securities, but
this clause (b) shall not apply to beneficial ownership of Company voting
shares held in a fiduciary capacity by an entity of which the Company
directly or indirectly beneficially owns 50% or more of its outstanding
voting securities.
|
|
|
(iii)
|
Change in Board
Composition: During any period of two consecutive years,
individuals who constitute the Company’s Board of Directors at the
beginning of the two-year period cease for any reason to constitute at
least a majority of the Company’s Board of Directors; provided, however,
that for purposes of this clause (iii), each director who is first elected
by the board (or first nominated by the board for election by the
stockholders) by a vote of at least two-thirds (2/3) of the directors who
were directors at the beginning of the two-year period shall be deemed to
have also been a director at the beginning of such period;
or
|
|
|
(iv)
|
Sale of
Assets: The Company sells to a third party all or
substantially all of its assets.
|
Notwithstanding
anything in this Agreement to the contrary, in no event shall reorganization of
the Company from the mutual holding company form or organization to the full
stock holding company form of organization (including the elimination of the
mutual holding company) constitute a “Change in Control” for purposes of this
Agreement.
|
|
b.
|
Termination. If
within the period ending two (2) years after a Change in Control, (i) the
Company and the Company shall terminate the Executive’s employment Without
Cause, or (ii) Executive voluntarily terminates his employment With Good
Reason, the Company and the Company shall, within ten calendar days
following the termination of Executive’s employment, make a single
lump-sum cash payment to him equal to three (3) times the Executive’s
average Annual Compensation (as defined in this Section 12(b)) over the
five (5) most recently completed calendar years ending with the year
immediately preceding the effective date of the Change in
Control. In determining Executive’s
average
|
9
|
|
Annual
Compensation, Annual Compensation shall include base salary and any other
taxable income, including but not limited to amounts related to the
granting, vesting or exercise of restricted stock or stock option awards,
commissions, bonuses (whether paid or accrued for the applicable period),
as well as, retirement benefits, director or committee fees and fringe
benefits paid or to be paid to Executive or paid for Executive’s benefit
during any such year, profit sharing, employee stock ownership plan and
other retirement contributions or benefits, including to any tax-qualified
plan or arrangement (whether or not taxable) made or accrued on behalf of
Executive of such year. The cash payment made under this
Section 12(b) shall be made in lieu of any payment also required under
Section 11(f) of this Agreement because of a termination in such
period. Executive’s rights under Section 11(f) are not
otherwise affected by this Section 12. Also, in such event, the
Executive shall, for a thirty-six (36) month period following his
termination of employment, receive the value of the benefits he would have
received over such period under any retirement programs
(whether tax-qualified or nonqualified) in which the Executive
participated prior to his termination (with the amount of the benefits
determined by reference to the benefits received by the Executive or
accrued on his behalf under such programs during the twelve (12) months
preceding the Change in Control), payable as a single cash lump sum
distribution within ten (10) calendar days following such
termination. In addition, the Executive shall continue to
participate in any benefit plans of the Company and the Company that
provide life insurance and non-taxable medical and dental insurance, or
similar coverage upon terms no less favorable than the most favorable
terms provided to senior executives of the Company during such
period. In the event that the Company and the Company are
unable to provide such coverage by reason of the Executive no longer being
an employee, the Company shall pay the Executive the value of such
benefits in a single lump sum within ten (10) calendar days following his
termination.
|
|
|
c.
|
The
provisions of Section 12 and Sections 14 through 25, including the defined
terms used is such sections, shall continue in effect until the later of
the expiration of this Agreement or two (2) years following a Change in
Control.
|
13. Indemnification
and Liability Insurance. Subject to, and
limited by Section 27(b) of this Agreement, the Company shall provide the
following:
|
|
a.
|
Indemnification. The
Company and the Company agree to indemnify the Executive (and his heirs,
executors, and administrators), and to advance expenses related thereto,
to the fullest extent permitted under applicable law and regulations
against any and all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which
he may be involved by reason of his having been a director or Executive of
the Company, the Company or any of their subsidiaries (whether or not he
continues to be a
|
10
|
|
director
or Executive at the time of incurring any such expenses or liabilities)
such expenses and liabilities to include, but not be limited to,
judgments, court costs, and attorney’s fees and the cost of reasonable
settlements, such settlements to be approved by the Board, if such action
is brought against the Executive in his capacity as an Executive or
director of the Company and the Company or any of their
subsidiaries. Indemnification for expense shall not extend to
matters for which the Executive has been terminated for
Cause. Nothing contained herein shall be deemed to provide
indemnification prohibited by applicable law or
regulation. Notwithstanding anything herein to the contrary,
the obligations of this Section 13 shall survive the term of this
Agreement by a period of six (6)
years.
|
|
|
b.
|
Insurance. During
the period in which indemnification of the Executive is required under
this Section, the Company and the Company shall provide the Executive (and
his heirs, executors, and administrators) with coverage under a directors’
and Executives’ liability policy at the expense of the Company and the
Company, at least equivalent to such coverage provided to directors and
senior Executives of the Company and the
Company.
|
14. Reimbursement
of Executive’s Expenses to Enforce this Agreement. The Company shall
reimburse the Executive for all reasonable out-of-pocket expenses, including,
without limitation, reasonable attorney’s fees, incurred by the Executive in
connection with successful enforcement by the Executive of the obligations of
the Company to the Executive under this Agreement. The Company shall
make such payments promptly and, in any event, not later than March 15 of the
year immediately following the year in which such expense was incurred by
Executive. Successful enforcement shall mean the grant of an award of
money or the requirement that the Company take some action specified by this
Agreement: (i) as a result of court order; or (ii) otherwise by
the Company following an initial failure of the Company to pay such money or
take such action promptly after written demand therefor from the Executive
stating the reason that such money or action was due under this Agreement at or
prior to the time of such demand.
15. Adjustment of Certain
Payments and Benefits.
|
|
a.
|
Tax
Indemnification. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it
shall be determined that any payment, benefit or distribution made or
provided by the Company or the Bank to or for the benefit of the Executive
(whether made or provided pursuant to the terms of this Agreement or
otherwise) (each referred to herein as a “Payment”), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”) or any interest or penalties are incurred by
the Executive with respect to such excise tax (the excise tax, together
with any such interest and penalties, are hereinafter collectively
referred to as the
|
11
“Excise
Tax”), the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that, after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
|
|
b.
|
Determination of
Gross-Up Payment. Subject to the provisions of Section
15(c), all determinations required to be made under this Section 15,
including whether and when a Gross-Up Payment is required, the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by a certified public accounting firm or
independent tax counsel reasonably acceptable to the Company and the Bank
as may be designated by the Executive (the “Consulting Firm”) which shall
provide detailed supporting calculations to the Company, the Bank and the
Executive within fifteen (15) business days of the receipt of notice from
the Executive that there has been or will be a Payment, or such earlier
time as is requested by the Company and the Bank. All fees and
expenses of the Consulting Firm shall be borne solely by the Company and
the Bank. Any Gross-Up Payment, as determined pursuant to this
Section 15, shall be paid by the Company to the Executive at the same time
a cash payment is made pursuant to Section 12(b) of this Agreement. Any
determination by the Consulting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code, at the time of the initial
determination by the Consulting Firm hereunder, it is possible that a
Gross-Up Payment will not have been made by the Company and the Bank which
should have been made (an “Underpayment”), consistent with the
calculations required to be made hereunder. In the event that
the Company and the Bank exhaust their remedies pursuant to Section 15(c)
and the Executive thereafter is required to make a payment of any Excise
Tax, the Consulting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company or the Bank to or for the benefit of the
Executive.
|
|
|
c.
|
Treatment of
Claims. The Executive shall notify the Company and the
Bank in writing of any claim by the Internal Revenue Service that, if
successful, would require a Gross-Up Payment to be made. Such
notification shall be given as soon as practicable, but no later than ten
business days, after the Executive is informed in writing of such claim
and shall apprise the Company and the Bank of the nature of such claim and
the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it gives such notice to the
Company and the Bank (or any shorter period ending on the date that
payment of taxes with respect
|
12
to such
claim is due). If the Company or the Bank notifies the Executive in
writing prior to the expiration of this period that it desires to contest such
claim, the Executive shall:
|
|
i.
|
give
the Company and the Bank any information reasonably requested by the
Company and the Bank relating to such
claim;
|
|
|
ii.
|
take
such action in connection with contesting such claim as the Company and
the Bank shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company and the
Bank;
|
|
|
iii.
|
cooperate
with the Company and the Bank in good faith in order to effectively
contest such claim; and
|
|
|
iv.
|
permit
the Company and the Bank to participate in any proceedings relating to
such claim; provided, however, that the Company and the Bank shall bear
and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and indemnity and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
related taxes, interest or penalties imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 15(c), the Company
and the Bank shall control all proceedings taken in connection with such
contest and, at their option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority with respect to such claim and may, at their option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner. Further, the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company and the Bank shall determine;
provided, however, that if the Company directs the Executive to pay such
claim and sue for a refund, the Company and the Bank shall advance the
amount of such payment to the Executive, on an interest-free basis
(including interest or penalties with respect
thereto). Furthermore, the Company’s and the Bank’s control of
the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issues raised by the
Internal Revenue Service or any other taxing
authority.
|
13
|
|
d.
|
Adjustments to the
Gross-Up Payment. If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 15(c), the
Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company’s compliance with the
requirements of Section 15(c)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after
applicable taxes). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 15(c), a determination
is made that the Executive shall not be entitled to any refund with
respect to such claim and such denial of refund occurs prior to the
expiration of thirty (30) days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of the
Gross-Up Payment required to be
paid.
|
16. Injunctive
Relief. If there is a
breach or threatened breach of Section 11(g) of this Agreement or the
prohibitions upon disclosure contained in Section 10(c) of this Agreement, the
parties agree that there is no adequate remedy at law for such breach, and that
the Company shall be entitled to injunctive relief restraining the Executive
from such breach or threatened breach, but such relief shall not be the
exclusive remedy hereunder for such breach. The parties hereto
likewise agree that the Executive, without limitation, shall be entitled to
injunctive relief to enforce the obligations of the Company under this
Agreement.
|
|
17.
|
Successors and
Assigns.
|
|
|
a.
|
This
Agreement shall inure to the benefit of and be binding upon any corporate
or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Company and the
Company.
|
|
|
b.
|
Since
the Company is contracting for the unique and personal skills of
Executive, Executive shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of
the Company.
|
18. No
Mitigation. Executive shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise and no such payment shall be
offset or reduced by the amount of any compensation or benefits provided to
Executive in any subsequent employment.
19. Notices. All notices,
requests, demands and other communications in connection with this Agreement
shall be made in writing and shall be deemed to have been given when delivered
by hand or 48 hours after mailing at any general or branch United States Post
Office, by registered or certified mail, postage prepaid, addressed to the
Company at their principal
14
business
offices and to Executive at his home address as maintained in the records of the
Company.
20. No Plan
Created by this Agreement. Executive and the
Company expressly declare and agree that this Agreement was negotiated among
them and that no provision or provisions of this Agreement are intended to, or
shall be deemed to, create any plan for purposes of the Employee Retirement
Income Security Act or any other law or regulation, and each party expressly
waives any right to assert the contrary. Any assertion in any
judicial or administrative filing, hearing, or process that such a plan was so
created by this Agreement shall be deemed a material breach of this Agreement by
the party making such an assertion.
21. Amendments. No amendments or
additions to this Agreement shall be binding unless made in writing and signed
by all of the parties, except as herein otherwise specifically
provided.
22. Applicable
Law. Except to the
extent preempted by Federal law, the laws of the State of Connecticut shall
govern this Agreement in all respects, whether as to its validity, construction,
capacity, performance or otherwise.
23. Severability. The provisions of
this Agreement shall be deemed severable and the invalidity or unenforceability
of any provision shall not affect the validity or enforceability of the other
provisions hereof.
24. Headings. Headings
contained herein are for convenience of reference only.
25. Entire
Agreement. This Agreement,
together with any understanding or modifications thereof as agreed to in writing
by the parties, shall constitute the entire agreement among the parties hereto
with respect to the subject matter hereof, other than written agreements with
respect to specific plans, programs or arrangements described in Sections 5 and
6. Upon execution of this Agreement, the employment agreement entered
into between the parties on June 4, 2002, will become null and
void.
26. Source of
Payments. Notwithstanding any provision in this Agreement to
the contrary, to the extent payments and benefits, as provided for under this
Agreement, are paid or received by Executive under the Employment Agreement in
effect between Executive and the Bank, the payments and benefits paid by the
Bank will be subtracted from any amount or benefit due simultaneously to
Executive under similar provisions of this Agreement.
27. Required
Provision. In the event any
of the foregoing provisions of this Section 27 are in conflict with the terms of
this Agreement, this Section 27 shall prevail.
|
|
a.
|
The
Company’s board of directors may terminate Executive’s employment at any
time, but any termination by the Company, other than Termination for
Cause, shall not prejudice Executive’s right to compensation or other
benefits under this Agreement. Executive shall not have the
right to receive compensation or
other
|
15
benefits
for any period after Termination for Cause as defined in Section 11(d)
hereinabove.
|
|
b.
|
Any
payments made to employees pursuant to this Agreement, or otherwise, are
subject to and conditioned upon their compliance with 12 U.S.C. §1828(k)
and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and
Indemnification Payments.
|
|
|
c.
|
Notwithstanding
anything in this Agreement to the contrary, in the event the Executive is
a Specified Employee (as defined herein), then, solely, to the extent
required to avoid penalties under Code Section 409A, the Executive’s
payments shall be delayed until the first day of the seventh month
following the Executive’s Separation from Service. A “Specified
Employee” shall be interpreted to comply with Code Section 409A and shall
mean a key employee within the meaning of Code Section 416(i) (without
regard to paragraph 5 thereof).
|
16
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date first set forth
above.
|
Attest:
|
NEW
ENGLAND BANCSHARES, INC.
|
||
|
/s/ Nancy L. Grady
|
By:
|
/s/Thomas O. Barnes
|
|
|
Chairman
of the Board of Directors
|
|||
|
Witness:
|
EXECUTIVE
|
||
|
/s/ Nancy L. Grady
|
/s/ David J. O’Connor
|
||
|
David
J. O’Connor
|
|||
|
President
and Chief Executive Officer
|
|||
17