Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into on December 21, 2022 (“Effective Date”), by and between ECB Bancorp, Inc. (the “Company”), a Maryland corporation, Everett Co-operative Bank (the “Bank”) and Richard J. O’Neil, Jr. (the “Executive”) (collectively the “Parties”).
Background
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Agreement agree as follows:
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Notwithstanding the foregoing, in the event that the Company or the Bank has entered into an agreement to effect a transaction which would be considered a Change in Control as defined herein, then the term of this Agreement shall be extended and shall terminate twenty four (24) months following the date on which the Change in Control occurs. The initial term and all renewals thereafter shall be referred to as the “Term” under this Agreement.
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(a) Base Salary. The Bank shall pay the Executive an annual base salary at the rate of $425,000 payable in substantially equal installments in accordance with the Bank’s customary payroll practices regarding the payment of base salary to executives, but no less frequently than monthly (except to the extent the Executive has properly deferred such base salary pursuant to a Bank deferred compensation plan or arrangement, if any). The Executive’s base salary shall be reviewed at least annually by the Committee. The Committee may recommend that the Board increase, but not decrease the Executive’s base salary during the Term. In the absence of action by the Committee or the Board, the Executive shall continue to receive an annual base salary at the rate specified above on the Effective Date or, if another rate has been established under this Section 3(a), the rate last properly established by action of the Committee or the Board under this Section 3(a). The Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as “Base Salary.”
(b) Annual Bonuses. For each completed fiscal year of the Bank (“Fiscal Year”) during the Term, the Executive shall have the opportunity to earn an annual cash bonus pursuant to the Everett Co-operative Bank Annual Incentive Plan or any successor plan thereto (the “AIP”), as the terms of the AIP may be revised from time to time, based on achievement of annual performance goals established by the Bank Board of Directors (“Bank Board”) in its discretion (an “Annual Bonus”) with a target amount determined annually by the Committee based on review of market data for similarly situated executives.
(c) Long-Term Equity Incentive Awards. If the Company or the Bank adopts an equity plan, the Executive shall be eligible for a long-term equity incentive award (“Equity Awards”). The Committee shall determine the composition and size of the Executive’s Equity Awards granted during the Term, in its discretion. The Executive agrees and acknowledges that the actual value of any performance-based Equity Award will be based upon performance in relation to the performance goals used for the award. The terms and conditions of each Equity Award granted to the Executive shall be governed by the terms and conditions of the equity plan, as it may be amended or replaced from time to time, and the applicable award agreement evidencing the Equity Award.
(d) Employee Benefits. During the Term, the Executive will be eligible to participate in or receive benefits under all employee benefit plans, programs, arrangements and practices in which Executive was participating or otherwise deriving benefit immediately prior to the Effective Date, including but not limited to the Bank’s tax-qualified pension plan, tax-qualified 401(k) plan, supplemental executive retirement plan, medical plan, dental plan, vision plan, life insurance plan, short-term and long-term disability plans, fringe benefit arrangements, and executive perquisite arrangements (collectively, the “Benefit Plans”). During the Term, and to the extent consistent with applicable law, the Bank will not, without the Executive’s prior written consent, make any
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changes to any material Benefit Plan that would be materially adversely affect the Executive’s rights or benefits under such Benefit Plan, unless an equitable arrangement (embodied in an ongoing or substitute arrangement) is made with respect to such change. During the Term, the Executive also will be entitled to participate in or receive benefits under any employee benefit plan, program, arrangement or practice made available by the Company or the Bank in the future, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements.
4. Termination of Employment.
(a) Subject to its payment obligations under this Section and Sections 5 or 6, if applicable, the Company and the Bank may terminate the Executive’s employment with the Company and the Bank and this Agreement at any time, with or without Cause (as defined in subsection (b) below), by providing at least thirty (30) days prior written notice (with the exception of a termination for Cause, for which no prior written notice is required) setting forth the provision of the Agreement under which the Company and the Bank intend to terminate the Executive’s employment and that satisfies any additional specific notice provisions under such provision. The Executive may voluntarily terminate his employment with the Company and the Bank and this Agreement at any time, with or without Good Reason (as defined in subsection (c) below), by
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providing at least thirty (30) days prior written notice to the Company and the Bank setting forth the provision of the Agreement under which the Executive intends to terminate the Executive’s employment and that satisfies any additional specific notice provisions under such provision. Upon termination of the Executive’s employment and this Agreement during the Term, the Executive shall be entitled to the following in addition to any benefits payable under Sections 5 or 6, as applicable, and shall have no further rights to any compensation or any other benefits from the Company or the Bank or any other affiliate of the Company:
Paragraphs 4(a)(i)-(iii) are herein referred to as the Executive’s “Accrued Obligations”.
In addition, Executive is entitled to all rights to indemnification and directors and officers liability insurance provided under Section 3(g).
Upon termination of the Executive’s employment hereunder for any reason, the Executive shall be deemed to have resigned from all positions that the Executive holds as an officer or member of the Board or of any other affiliate of the Company.
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Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Executive a notice of termination.
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Confidential Information also includes, but is not limited to: (1) information about Company or Bank employees; (2) information about the Company’s or the Bank’s compensation
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policies, structure, and implementation; (3) hardware, software, and computer programs and technology used by the Company or the Bank; (4) Customer and Prospective Customer identities, lists, and databases, including private information related to customer history, loan activity, account balances, and financial information; (5) strategic, operating, and marketing plans; (6) lists and databases and other information related to the Company’s or the Bank’s vendors; (7) policies, procedures, practices, and plans related to pricing of products and services; and (8) information related to the Company’s or the Bank’s acquisition and divestiture strategy. Information or documents that are generally available or accessible to the public shall be deemed Confidential Information, if the information is retrieved, gathered, assembled, or maintained by the Company or the Bank in a manner not available to the public or for a purpose beneficial to the Company or the Bank.
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13. Ownership of Documents and Return of Materials At Termination of Employment.
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16. Remedies. The Executive agrees that the Company and the Bank will suffer irreparable damage and injury and will not have an adequate remedy at law if the Executive breaches any provision of the restrictions contained in Sections 11, 12, 13, 14 and 15 (the “Restrictive Covenants”). Accordingly, if the Executive breaches or threatens or attempts to breach the Restrictive Covenants, in addition to all other available remedies, the Company and the Bank shall be entitled to seek injunctive relief, and no or minimal bond or other security shall be required in connection therewith. The Executive acknowledges and agrees that in the event of termination of this Agreement for any reason whatsoever, the Executive can obtain employment not competitive with the Company’s Business (or, if competitive, outside of the geographic and customer-specific scope described herein) and that the issuance of an injunction to enforce the provisions of the Restrictive Covenants shall not prevent the Executive from earning a livelihood. The Restrictive Covenants are essential terms and conditions to the Company entering into this Agreement, and they shall be construed as independent of any other provision in this Agreement or of any other agreement between the Executive and the Company or the Bank. The existence of any claim or cause of action that the Executive has against the Company or the Bank, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company or the Bank of the Restrictive Covenants.
17. Periods of Noncompliance and Reasonableness of Periods. The Company, the Bank and the Executive acknowledge and agree that the restrictions and covenants contained in Sections 14 and 15 are reasonable in view of the nature of the Company’s Business and the Executive’s advantageous knowledge of and familiarity with the Company’s Business, operations, affairs, and Customers. Notwithstanding anything contained herein to the contrary, if the scope of any restriction or covenant contained in Sections 14 and 15 is found by a court of competent jurisdiction to be too broad to permit enforcement of such restriction or covenant to its full extent, then such restriction or covenant shall be enforced to the maximum extent permitted by law. The
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parties hereby acknowledge and agree that a court of competent jurisdiction may reform or blue pencil the Agreement to the fullest extent permitted by law to enforce this Agreement.
18. Release. For and in consideration of the foregoing covenants and promises made by the Company and the Bank, and the performance of such covenants and promises, the sufficiency of which is hereby acknowledged, the Executive understands that, as a condition of the payment of amounts under Section 5 of this Agreement, Executive will be required to execute a general release of all then existing claims against the Company, the Bank, their affiliates, shareholders, directors, officers, employees and agents in relation to claims relating to or arising out of the Executive’s employment with the Company and the Bank in a form substantially consistent with the Bank’s standard form of general release used for officers and not inconsistent with the terms of this Agreement (the “Release”), and the Executive shall not receive any payments or benefits to which he may be entitled hereunder that are subject to the execution of a Release unless the Executive satisfies this release requirement. THE EXECUTIVE’S RIGHT TO BENEFITS UNDER SECTION 5 OF THIS AGREEMENT SHALL BE CONTINGENT ON HIS SIGNING AND FILING THE RELEASE WITHIN THE PERIOD SPECIFIED IN THE RELEASE, WHICH PERIOD WILL NOT EXCEED 45 DAYS FROM THE DATE THE BANK PROVIDES THE RELEASE TO THE EXECUTIVE, AND NOT REVOKING THE RELEASE WITHIN THE PERIOD SPECIFIED IN THE RELEASE, WHICH PERIOD WILL NOT EXCEED 7 DAYS FROM THE DATE THE EXECUTIVE SIGNS THE RELEASE.
19. Cooperation. The parties agree that certain matters in which the Executive will be involved during the Term may necessitate the Executive’s cooperation in the future. Accordingly, following the termination of the Executive’s employment with the Company and the Bank for any reason, to the extent reasonably requested by the Company or the Bank and subject to the Executive’s professional commitments, the Executive shall cooperate with the Company and the Bank in connection with matters arising out of the Executive’s service to the Company and the Bank, such cooperation to include without limitation the providing of truthful testimony in any hearing or trial as requested by the Company or the Bank or any other affiliate of the Company; provided, however, that the Company and the Bank shall make reasonable efforts to minimize disruption of the Executive’s other activities. The Bank shall reimburse the Executive for reasonable expenses incurred or compensation not received by the Executive due to such cooperation.
20. Publicity. During the Term, the Executive hereby consents to any and all reasonable and customary uses and displays, by the Company, the Bank and their agents, representatives and licensees, of the Executive’s name, voice, likeness, image, appearance and biographical information in, on or in connection with any pictures, photographs, audio and video recordings, digital images, websites, television programs and advertising, other advertising and publicity, sales and marketing brochures, books, magazines, other publications, CDs, DVDs, tapes and all other printed and electronic forms and media throughout the world, at any time during the period of the Executive’s employment with the Company and the Bank, for all legitimate commercial and business purposes of the Company and the Bank, without royalty, payment or other compensation to Executive.
21. Reimbursement of Certain Costs.
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22. No Reliance. The Executive represents and acknowledges that in executing this Agreement, the Executive does not rely and has not relied upon any representation or statement by the Company or the Bank or their agents, other than statements contained in this Agreement.
23. Required Provisions. Any payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.
24. Section 409A. To the extent necessary to ensure compliance with Code Section 409A (“Section 409A”), the provisions of this Section 24 shall govern in all cases over any contrary or conflicting provision in this Agreement.
(a) It is intended that this Agreement comply with the requirements of Section 409A and all guidance issued thereunder by the U.S. Internal Revenue Service with respect to any nonqualified deferred compensation subject to Section 409A. This Agreement shall be interpreted and administered to maximize the exemptions from Section 409A and, to the extent this Agreement provides for deferred compensation subject to Section 409A, to comply with Section 409A and to avoid the imposition of tax, interest and/or penalties upon Executive under Section 409A. The Company and the Bank do not, however, assume any economic burdens associated with Section 409A. Although the Company and the Bank intend to administer this Agreement to prevent taxation under Section 409A, they do not represent or warrant that this Agreement complies with any provision of federal, state, local, or non-United States law. The Company, the Bank, other affiliates of the Bank, and their respective directors, officers, employees and advisers will not be liable to the Executive (or any other individual claiming a benefit through the Executive) for any tax, interest, or penalties the Executive may owe as a result of this Agreement. Neither the Company, the Bank nor any other affiliate of the Company has any obligation to indemnify or otherwise protect the Executive from any obligation to pay taxes under Section 409A.
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Section 409A as a short-term deferral within the meaning of the final regulations under Section 409A. Each payment under this Agreement that is made later than 2-1⁄2 months following the end of the year that contains the Termination Date is intended to be exempt from Section 409A under the two-times exception of Treasury Reg. § 1.409A-1(b)(9)(iii), up to the limitation on the availability of that exception specified in the regulation. Then, each payment that is made after the two-times exception ceases to be available shall be subject to delay, as necessary, as specified below.
Section 409A(a)(2)(A), will become payable on the first business day after six months following the date of the Executive’s Separation from Service or, if earlier, the date of the Executive’s death.
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25. Miscellaneous Provisions.
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If to the Executive: At the address maintained in the personnel records of the Bank.
If to the Company: Attn: Board of Directors of ECB Bancorp, Inc.
419 Broadway
Everett, MA 02149
If to the Bank: Attn: Board of Directors of Everett Bank (same address as Company)
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IN WITNESS WHEREOF, each of the Company and the Bank has caused this Agreement to be executed by its duly authorized representative, and the Executive has signed this Agreement.
/s/Richard J. O’Neil, Jr.
Richard J. O’Neil, Jr.
Date: December 21, 2022
ECB BANCORP, INC.
By: /s/Dennis J. Leonard
Name: Dennis J. Leonard
Title: Chairman of the Board of Directors
Date: December 21, 2022
EVERETT CO-OPERATIVE BANK:
By: /s/Dennis J. Leonard
Name: Dennis J. Leonard
Title: Chairman of the Board of Directors
Date: December 21, 2022
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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”) is made and entered into on the 29th day of March, 2023, by and between ECB Bancorp, Inc. (the “Company”), a Maryland corporation, Everett Co-operative Bank (the “Bank”) and Richard J. O’Neil, Jr. (the “Executive”).
WHEREAS, Company, Bank and Executive are parties to an employment agreement, entered into on the 21st day of December, 2022 (the “Employment Agreement”); and
WHEREAS, the parties desire to amend the Employment Agreement to clarify the scope of the restriction set forth in Section 15(a).
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:
“(b) Notwithstanding the foregoing, in the event Executive’s employment terminates for reasons not supported by severance, garden leave or other mutually agreed upon consideration during the Restriction Period, Section 15(a) shall not apply.”
IN WITNESS WHEREOF, parties have executed this Amendment as of the date first written above.
/s/Richard J. O’Neil, Jr.
Richard J. O’Neil, Jr.
ECB BANCORP, INC.
By: /s/Dennis J. Leonard
EVERETT CO-OPERATIVE BANK:
By: /s/Dennis J. Leonard
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