EXHIBIT 10.12
CHANGE IN
CONTROL/NONCOMPETITION AGREEMENT
This Change in
Control/Noncompetition Agreement (this “Agreement”)
entered into on the 18TH day of December, 2008, 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 Stephen J. Irish
of Humarock, Massachusetts (the “Executive”), amends
and restates the Change In Control/Noncompetition Agreement dated
as of April, 2002, as amended. The provisions of this
Restatement are effective as of January 1, 2008 (the
“Effective Date”).
1.
Purpose . 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, a
“Change in Control event” means any event that may
qualify as a “Change in Control” under Company’s
2003 Stock Incentive Plan, as the same may be 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) (hereinafter “Lump Sum
Payment”), payable within thirty (30) days of 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;
and
(vi)
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, unless
such Terminating Event occurs as a result of a termination for
Cause (as such term is defined in paragraph (k) 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
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. 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 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.
(c)
Highest Annual Compensation Defined . 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
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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)
Payments Pending Resolution of Dispute . 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)
No Obligation to Mitigate . 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.
(f)
Code Section 280G Reduction . Anything in this
Agreement or in any other agreement, contract, understanding, plan
or program entered into or maintained by the Employers 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
(collectively, the “Payments”), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), and/or any
successor provision or section thereto (such excise tax, together
with any interest or penalties incurred by the Executive with
respect to such excise tax, collectively, the “Excise
Tax”), and if the Payments less the Excise Tax would be less
than the amount of the Payments that would otherwise be payable to
the Executive without imposition of the Excise Tax, then, to the
extent necessary to eliminate the imposition of the Excise Tax (and
taking into account any reduction in the Payments provided by
reason of Section 280G of the Code in any such other
agreement, contract, understanding, plan or program), the cash and
non-cash payments and benefits payable to the Executive shall be
reduced (with the executive being provided with the amount of each
payment and benefit as calculated by the Employers and given ten
(10) business days in which to prioritize the order of
reduction of each such payment or benefit); but only if, by reason
of any such reduction, the Payments with any such reduction shall
exceed the Payments less the Excise Tax without any such
reduction. For purposes of this Section 4(f),
(i) no portion of the Payments, the receipt or enjoyment of
which the Executive shall have effectively waived in writing prior
to the Date of Termination, shall be taken into account,
(ii) no portion of the Payments shall be taken into account
that, in the opinion of tax counsel selected in good faith by the
Employers, does not constitute a “parachute payment”
within the meaning of Section 280G(b)(2) of the Code,
including without limitation by reason of
Section 280G(b)(4)(A) of the Code, (iii) any
payments and/or benefits under this Agreement or otherwise for
services to be rendered on or after the effective date of a Change
in Control shall be reduced only to the extent necessary so that
such payments and/or benefits in their entirety constitute
reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions, in
the
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opinion of the tax counsel referred to in the
immediately preceding clause (ii) of this sentence, and
(iv) the value of any non-cash payment or benefit or any
deferred payment or benefit included in the Payments shall be
determined by the Employers’ independent auditors in
accordance with the principles of Sections 280G(d)(3) and
280G(d)(4) of the Code and the applicable regulations or
proposed regulations under the Code. Except as otherwise
provided in this Section 4(f), the foregoing calculations and
determinations shall be made in good faith by the Employers and
shall be conclusive and binding upon the parties. The
Employers shall pay all costs and expenses incurred in connection
with any such calculations or determinations.
(g)
Section 409A . Payments to which Executive shall
be entitled to under this Section 4 shall be made subject to
the following:
(i)
Payments to Executive under this Section 4 shall be bifurcated
into two portions, consisting of a portion that does not constitute
“nonqualified deferred compensation” within the meaning
of Section 409A of the Code and a portion that does constitute
nonqualified deferred compensation. Payments hereunder shall first
be made from the portion, if any, that does not consist of
nonqualified deferred compensation until it is exhausted and then
shall be made from the portion that does constitute nonqualified
deferred compensation. However, anything in this Agreement to the
contrary notwithstanding, if at the time of Executive’s
termination of employment, Executive is considered a
“specified employee” as defined in
Section 409A(a)(2)(B)(i) of the Code, then to the extent
required by Section 409A of the Code, no payments that
constitute nonqualified deferred compensation shall be payable
prior to the date that is the earlier of (i) six months and a
day after Executive’s date of termination, or
(ii) Executive’s death (“Earliest Payment
Date”). Any payments that are delayed pursuant to the
preceding sentence shall be paid on the Earliest Payment Date. The
determination of whether, and the extent to which, any of the
payments to be made to Executive hereunder are nonqualified
deferred compensation shall be made after the application of all
applicable exclusions under Treas. Reg. § 1.409A-1(b)(9). Any
payments that are intended to qualify for the exclusion for
separation pay due to involuntary separation from service set forth
in Treas. Reg. § 1.409A-1(b)(9)(iii) must be paid no
later than the last day of the second taxable year of Executive
following the taxable year of Executive in which the Date of
Termination occurs.
(ii)
The intent of the parties is that payments and benefits under this
Agreement comply with Section 409A and, accordingly, to the
maximum extent permitted, this Agreement shall be interpreted to be
in compliance therewith. The parties acknowledge and agree that the
interpretation of Section 409A of the Code and its application
to the terms of this Agreement is uncertain and may be subject to
change as additional guidance and interpretations become available.
Anything to the contrary herein notwithstanding, all benefits or
payments provided by Employer to Executive that would be deemed to
constitute “nonqualified deferred compensation” within
the meaning of Section 409A of the Code are intended to comply
with Section 409A of the Code. If, however, any
