Exhibit 10.2.3
CHANGE IN
CONTROL/NONCOMPETITION AGREEMENT
This Change in
Control/Noncompetition Agreement (this “Agreement”)
entered into on the 18th day of March 2009 (the
“Effective Date”) 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 Steven R.
Larochelle of Dracut, Massachusetts (the
“Executive”).
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;
Version December 2008
(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
2
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)
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
3
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 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 such benefit
or payment is deemed to not comply with Section 409A of the
Code, Employer and Executive agree that this Agreement may be
amended (and that any such amendment
4
