Exhibit 10.24
CHANGE IN CONTROL/NONCOMPETITION AGREEMENT
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This Change in Control/Noncompetition Agreement (this "Agreement") is
entered into as of the 20th day of April, 2003 by and among Enterprise Bancorp,
Inc., a Massachusetts corporation (the "Company"), and its wholly owned
subsidiary, Enterprise Bank and Trust Company, a Massachusetts bank and trust
company with its main office in Lowell, Massachusetts (the "Bank") (the Bank and
the Company shall be hereinafter collectively referred to as the "Employers"),
and Christopher W. McCarthy of Holden, Massachusetts (the "Executive").
1. Purpose. In order to allow the Executive to consider the prospect of
a Change in Control (as defined in Section 2 hereof) in an objective manner and
in consideration of the Executive's agreement to abide by the confidentiality
and noncompetition provisions set forth in Section 8 hereof and the services to
be rendered by the Executive to the Bank, and in order to protect the ongoing
business interests and competitiveness of the Employers and in consideration of
the Employers' agreement to provide the severance benefits to protect the
Executive in the event of a Change in Control as set forth in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the Executive and the Employers, the parties
have entered into this Agreement and have mutually agreed to be bound by the
terms and conditions hereof.
2. Change in Control. For purposes of this Agreement, the term "Change
in Control" shall have the same meaning as defined in the Company's Amended and
Restated 1998 Stock Incentive Plan, as the same may be further amended and
continue in effect from time to time hereafter.
3. Terminating Event. For purposes of this Agreement, the term
"Terminating Event" shall mean any termination of the employment of the
Executive with the Bank for any reason, whether or not such termination is
initiated by the Bank, including without limitation termination for cause or by
reason of the Executive's death or disability, or by the Executive, including
without limitation resignation by reason of retirement or for no reason at all.
4. Severance Payments.
(a) If a Terminating Event occurs within two (2) years after the date
on which a Change in Control has occurred, then the Executive shall be entitled
to receive the following:
(i) an aggregate amount equal to 1.5 times the Executive's
"Highest Annual Compensation" (as defined in paragraph (c) of this
Section 4), such amount to be paid out in equal periodic installments
in accordance with the Bank's ordinary payroll practices over the
eighteen-month period commencing on the first payroll payment date
after the date on which the Executive's employment with the Bank
terminates (the "Date of Termination");
(ii) any base salary, commissions or other compensation
accrued or earned, but not yet paid, as of the Date of Termination and
any annual or other bonus actually awarded, but not yet paid, as of the
Date of Termination, such amounts to be paid on the Date of
Termination;
(iii) reimbursement for all business expenses for which the
Executive would ordinarily be reimbursed by the Employers in the
ordinary course of business in accordance with the Employers' policies,
programs, procedures or practices incurred, but not yet paid, as of the
Date of Termination, such amount to be paid on the Date of Termination;
(iv) payment of the per diem value of any unused vacation
days, whether deemed to be accrued or unaccrued, that would be
available to the Executive through the end of the calendar year (but
not beyond) in which the Date of Termination occurs;
(v) continuation of the Employers' employee welfare benefit
plans, programs and practices in which the Executive and his spouse and
any other eligible dependents participate or are eligible to
participate as of the Date of Termination or, if more favorable to the
Executive, as of the date of a Change in Control, at the levels in
effect on, and at the same out-of-pocket costs to the Executive as of,
the Date of Termination or, if more favorable to the Executive, as of
the date of a Change in Control, for the eighteen-month period
commencing on the Date of Termination (or, if such continuation is not
permitted by applicable law or if the Bank's Board of Directors so
determines in its sole discretion, the Bank shall pay to the Executive
a cash amount equal to the difference between (A) the aggregate amount
that would be required to be paid by the Executive in order for the
Executive to obtain a continuation of such benefits and coverages for
such eighteen-month period for himself, his spouse and any other
eligible dependents under or through one or more plans, programs or
other arrangements provided by one or more unaffiliated third parties
and (B) the out-of-pocket costs that would be incurred by the Executive
in accordance with the terms hereof if such continuation of benefits
and coverages were provided under the Employers' employee welfare
benefit plans, programs and practices);
(vi) reimbursement for the reasonable fees of a professional
out-placement service selected by the Executive within ninety (90) days
after the Date of Termination, such amount to be paid promptly after
the expense is incurred; and
(vii) any other compensation and benefits as may be provided
in accordance with the terms of any applicable plans, programs,
policies, procedures or practices of the Employers.
(b) If a Terminating Event occurs within one (1) year prior to the date
on which a Change in Control occurs, then the Executive shall be entitled to
receive, as provided in this paragraph (b), all of the payments and benefits
that he would have been entitled to receive under paragraph (a) of this Section
4 if such Terminating Event had occurred within two (2) years after the date on
which a Change in Control has occurred, unless such Terminating Event occurs as
a result of a termination for Cause (as such term is defined in paragraph (f) of
Section 8 below), in which case no increase or adjustments to the amounts paid
or benefits provided to the Executive in connection with such Terminating Event
shall be made under this paragraph (b). If required in accordance with the
immediately preceding sentence, the amounts paid and benefits provided to the
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Executive in connection with a Terminating Event that occurs within one (1) year
prior to the date on which a Change in Control occurs shall be increased or
otherwise adjusted to ensure that the Executive receives the full payments and
benefits contemplated by paragraph (a) of this Section 4, as if such Terminating
Event had occurred within two (2) years after the date on which a Change in
Control has occurred. If the payments and/or benefits to be received by the
Executive in connection with a Terminating Event that has occurred within one
(1) year prior to the date on which a Change in Control occurs are required to
be increased or adjusted under this paragraph (b), then the Executive shall be
paid on the first ordinary payroll payment date of the Bank following the
occurrence of such Change in Control the cash amount necessary to ensure that as
of such date the Executive shall have received the full amounts of the payments
and benefits that the Executive would have received as of such date under
paragraph (a) of this Section 4 if such Terminating Event had occurred within
two (2) years after the date on which a Change in Control has occurred
(including without limitation the economic equivalent of any noncash benefits
that have not been provided to the Executive during the period from the date on
which such Terminating Event occurred and the date on which such Change in
Control occurred) and from and after such payroll payment date the Executive
shall receive the full amounts of the remaining payments and benefits that the
Executive is required to receive under paragraph (a) of this Section 4 in
accordance with the terms thereof (including without limitation, to the extent
that reimbursement for the reasonable fees of a professional out-placement
service selected by the Executive has not already then been paid hereunder, such
reimbursement with respect to a professional out-placement service selected by
the Executive within ninety (90) days after the occurrence of such Change in
Control).
(c) For purposes of this Section 4, the Executive's "Highest Annual
Compensation" shall mean, as determined as of any Date of Termination, the sum
of (i) the highest per annum rate of base salary paid by the Employers to the
Executive at any time during the three-year period prior to such Date of
Termination, (ii) the highest amount of commission or other compensation (which
is not otherwise included in the base salary and bonus amounts referred in
clauses (i) and (iii) of this paragraph (c)) paid by the Employers to the
Executive with respect to any of the three most recently completed fiscal years
of the Bank prior to such Date of Termination, and (iii) the highest annual
incentive compensation or other bonus amount paid by the Employers to the
Executive (or which would have been paid but for an election by the Executive to
defer payment to a later period) with respect to any of the three most recently
completed fiscal years of the Bank prior to such Date of Termination.
(d) In the event of any dispute concerning payments or other benefits
to be received by the Executive under this Section 4, the Executive shall be
entitled until the resolution of such dispute to be paid in accordance with the
Bank's ordinary payroll practices his then current base salary and to continue
to receive all other welfare benefits then being provided to him by the
Employers, and there shall be no reduction whatsoever of any amounts
subsequently paid to the Executive upon resolution of such dispute as a result
of, or in respect to, such interim payments or coverage.
(e) In the event that any payments or benefits are to be received by
the Executive under this Section 4, the Executive shall be under no obligation
to seek other employment or to mitigate damages and there shall be no offset
against any amount due the Executive under this Agreement for any reason,
including, without limitation, on account of any remuneration or benefits
attributable to any subsequent employment that the Executive may obtain.
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(f) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Employers
to or for the benefit of the Executive, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
paragraph (f) (collectively, the "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then 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.
5. Employment Status. This Agreement is not an agreement for the
employment of the Executive and shall confer no rights on the Executive except
as herein expressly provided.
6. Term. This Agreement shall take effect on and as of the date hereof
and shall terminate, subject to the applicability of paragraph (b) of Section 4
above, upon the earlier of (a) termination of the employment of the Executive
for reason of the Executive's death or permanent disability, in which case any
amounts due to the Executive or his estate or legal representative, as the case
may be, shall be determined in accordance with Section 4 of this Agreement, if
applicable, or otherwise in accordance with the Employers' applicable plans,
programs, policies, procedures or practices then in effect, (b) the resignation
or termination of the Executive for any reason prior to a Change in Control, or
(c) the second anniversary of the date on which a Change in Control shall have
occurred; provided, however, that in any event the provisions of Section 8
hereof shall remain in full force and effect in accordance with their terms.
7. Withholding. All payments made by the Employers under this Agreement
shall be net of any tax or other amounts required to be withheld by the
Employers under applicable law.
8. Confidential Information; Noncompetition.
(a) Confidentiality. The Executive shall not, during or after the
period during which he is employed by the Bank, disclose any Confidential
Information (as defined herein) to any natural person or entity, other than the
Employers or any of their affiliates or any of the Employers' or their
affiliates' employees, consultants, advisors, agents or other representatives
who have a need to know any such information, for any reason or purpose
whatsoever. The term "Confidential Information" shall mean all confidential
information of or relating to the Employers and any of their affiliates,
including without limitation financial information and data, business plans and
information regarding prospects and opportunities (such as, by way of example
only, client and customer lists and acquisition, disposition, expansion, product
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development and other strategic plans), but does not include any information
that is or becomes public knowledge by means other than the Executive's breach
or nonobservance of his obligations described in this paragraph (a).
Notwithstanding the foregoing, the Executive may disclose such Confidential
Information as he may be legally required to do so on the advice of counsel in
connection with any legal or regulatory proceeding; provided, however, that the
Executive shall provide the Employers with prior written notice of any such
required or potentially required disclosure and shall cooperate with the
Employers and use his best efforts under such circumstances to obtain
appropriate confidential treatment of any such Confidential Information that may
be so required to be disclosed in connection with any such legal or regulatory
proceeding. The Executive's obligation to refrain from disclosing any
Confidential Information under this paragraph (a) shall continue in effect in
accordance with its terms following any termination of this Agreement pursuant
to Section 6 above.
(b) Noncompetition. If the Executive's employment with the Bank is
terminated for any reason prior to a Change in Control (whether or not such
termination is initiated by the Bank or by the Executive), then during the
period of one (1) year following the date of such termination (and assuming no
Change in Control occurs at any time during such one-year period), the Executive
shall not: (i) directly or indirectly, whether as owner, partner, shareholder
(other than the holder of 1% or less of the common stock of any company the
common stock of which is listed on a national stock exchange or quoted on the
NASDAQ National Market System or NASDAQ SmallCap Market), consultant, agent,
employee or otherwise, engage in competition with the Employers or any of their
affiliates within a ten (10) mile radius of any city or town in which the Bank
or any affiliate has a branch or other office; or (ii) hire or attempt to hire,
or assist in hiring, any employees of the Employers or any of their affiliates,
or solicit, encourage or induce any such employee to terminate his or her
relationship with the Employers or any such affiliate; or (iii) solicit,
encourage or induce any customer or client of the Employers or any of their
affiliates to terminate his or its relationship with the Employers or any such
affiliate or to do business with anyone other than the Employers and their
affiliates. Notwithstanding any of the foregoing provisions contained in this
paragraph (b), none of the restrictions contained herein shall apply to the
Executive's conduct following any termination of employment with the Bank during
any period following the occurrence of a Change in Control.
(c) Payments During Noncompetition Period. During the period of
restriction on the Executive's conduct following a termination of employment
with the Bank, as set forth in paragraph (b) of this Section 8, if such
employment has been terminated by the Bank (as distinguished from a termination
initiated by the Executive) for any reason other than a termination for Cause
(as defined in paragraph (f) of this Section 8), then the Executive shall be
paid in equal periodic installments in accordance with the Bank's ordinary
payroll practices, commencing on the first payroll payment date after the date
on which the Executive's employment with the Bank shall have been terminated, an
amount equal, on an annualized basis, to seventy-five percent (75%) of the sum
of (i) the per annum rate of base salary paid by the Employers to the Executive
as of the date on which the Executive's employment with the Bank is terminated,
(ii) the amount of commission or other compensation (which is not otherwise
included in the base salary and bonus amounts referenced in clauses (i) and
(iii) of this paragraph (c)) paid by the Employers to the Executive with respect
to the most recently completed fiscal year prior to such date on which the
Executive's employment with the Bank is terminated, and (iii) the annual
incentive or other bonus amount paid by the Employers to the Executive (or which
would have been paid but for an election by the Executive to defer payment to a
later period) with respect to the most recently completed fiscal year prior to
such date on which the Executive's employment with the Bank is terminated.
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(d) Injunctive Relief. The Executive acknowledges and agrees that the
Employers will have no adequate remedy at law, and would be irreparably harmed,
if the Executive breaches or threatens to breach any of the provisions of this
Section 8. The Executive agrees that the Employers shall be entitled to
equitable and/or injunctive relief to prevent any breach or threatened breach of
this Section 8, and to specific performance of each of the terms of this Section
8 in addition to any other legal or equitable remedies that the Employers may
have. The Executive further agrees that he shall not, in any equity proceeding
relating to the enforcement of the terms of this Section 8, raise the defense
that the Employers have an adequate remedy at law.
(e) Special Severability. The terms and provisions of this Section 8
are intended to be separate and divisible provisions and if, for any reason, any
one or more of them is held to be invalid or unenforceable, neither the validity
nor the enforceability of any other provision of this Agreement shall thereby be
affected.
(f) Cause Defined. Termination by the Bank of the Executive's
employment for "Cause" shall mean termination on the basis of (i) the
Executive's willful and continued failure to substantially perform his
employment duties (other than any such failure resulting from the Executive's
death or incapacity due to physical or mental illness) after (A) a written
demand for substantial performance is delivered to the Executive by the Bank's
Chief Executive Officer, which demand specifically identifies the manner in
which the Chief Executive Officer believes that the Executive has not
substantially performed his employment duties, and (B) the Executive has been
afforded a reasonable opportunity to meet with the Chief Executive Officer
regarding such assertions of nonperformance, or (ii) the Executive's willfully
engaging in conduct which is demonstrably and materially injurious to the Bank,
monetarily or otherwise. For purposes of this paragraph (f), no act, or failure
to act, on the part of the Executive shall be deemed "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interests of the Bank. The
Executive shall be deemed to have been terminated for Cause only at such time as
there shall have been delivered to him a written notice of termination by the
Bank, which specifies in detail the particulars of the Executive's conduct that
serve as the basis for such termination for Cause.
9. Arbitration Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach hereof, other than an action brought by
the Employers for injunctive or other equitable relief in the enforcement of the
Employers' rights under Section 8 above, in which case such action may be
brought in any court of competent jurisdiction, shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston, Massachusetts. Such arbitration shall be conducted in the
City of Boston, Massachusetts in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
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which shall be as provided in this Section 9. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof. In
the event that it shall be necessary or desirable for the Executive to retain
legal counsel and/or incur other costs and expenses in connection with the
enforcement of any or all of Executive's rights under this Agreement, the
Employers shall pay (or the Executive shall be entitled to recover from the
Employers, as the case may be) the Executive's reasonable attorneys' fees and
other reasonable costs and expenses in connection with the enforcement of said
rights (including the enforcement of any arbitration award in court) regardless
of the final outcome, unless and to the extent that the arbitrators shall
determine that the Executive has not acted in good faith or that under the
circumstances recovery by the Executive of all or part of any such fees and
costs and expenses would be inequitable or otherwise unjust.
10. Successors.
(a) Each of the Company and the Bank will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of its businesses and/or assets to assume expressly and
agree to perform this Agreement in the same manner and to the same extent as if
no such succession had taken place. Failure of either the Company or the Bank to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation in the same amount and on the same terms as he would be entitled
to hereunder if a Terminating Event were to occur within two (2) years after a
Change in Control, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed to be the
date of such Terminating Event. As used in this Agreement, "Company," "Bank" and
"Employers" shall mean the Company, the Bank and the Employers as hereinbefore
defined and any successor to the business and/or assets of either the Company or
the Bank as aforesaid which successor assumes and agrees to perform this
Agreement by operation of law or otherwise.
(b) This Agreement shall inure to the benefit of and be binding upon
the Employers and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death prior to the completion by the Employers of all payments due him under
this Agreement, the Employers shall continue such payments to the Executive's
beneficiary designated in writing to the Employers prior to his death (or to his
estate, if he fails to make such designation).
11. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any terms or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such terms or obligation or be deemed a waiver of any
subsequent breach.
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13. Notices. Any notices, requests, demands and other communication
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Employers, at their executive offices,
attention of the Chief Executive Officer.
14. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by duly authorized
representatives of each of the Employers.
15. Governing Law. This is a Massachusetts contract and shall be
construed under and is governed in all respect by the laws of the Commonwealth
of Massachusetts.
16. Captions. The captions of this Agreement are for convenience of
reference only, are not part of the terms of this Agreement and shall have no
force or effect in the application or interpretation thereof.
17. Entire Agreement. This Agreement contains the entire agreement
between the parties to this Agreement concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto.
18. Bank Regulatory Limitations. 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. ss. 1828(k) and any applicable regulations
promulgated thereunder. In addition, to the extent required by applicable law,
regulation, regulatory policy or other regulatory requirement, the aggregate
amount and/or value of the compensation paid as a result of any termination of
the Executive's employment with the Employers, regardless of the reason for any
such termination of employment, shall not exceed the limit prescribed by such
applicable law, regulation, regulatory policy or other regulatory requirement.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument on behalf of the Employers by their duly authorized officers and by
the Executive as of the date first above written.
ATTEST: ENTERPRISE BANCORP, INC.
/s/ Arnold S. Lerner By: /s/ George L. Duncan
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Arnold S. Lerner George L. Duncan
Clerk Chairman and Chief Executive Officer
ATTEST: ENTERPRISE BANK AND TRUST COMPANY
/s/ Arnold S. Lerner By: /s/ George L. Duncan
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Arnold S. Lerner George L. Duncan
Clerk Chairman and Chief Executive Officer
WITNESS: EXECUTIVE
/s/ John P. Clancy, Jr. /s/ Christopher W. McCarthy
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