|
Exhibit
10.7
RELEASE, CONSULTING AND
NONCOMPETITION AGREEMENT
This Release, Consulting and
Noncompetition Agreement (this “Agreement”) is entered
into as of April 12, 2005, by and between NewAlliance Bancshares,
Inc., a Delaware corporation (“NewAlliance”),
NewAlliance Bank, a Connecticut savings bank and a wholly-owned
subsidiary of NewAlliance (“NewAlliance Bank”),
Cornerstone Bancorp, Inc., a Connecticut corporation
(“Cornerstone”), Cornerstone Bank, a Connecticut bank
and a wholly-owned subsidiary of Cornerstone (“Cornerstone
Bank”), and Paul H. Reader (the
“Consultant”).
RECITALS:
WHEREAS, the
Consultant is currently the Senior Vice President of Cornerstone
and the Senior Executive Vice President of Cornerstone
Bank;
WHEREAS, pursuant to
an Agreement and Plan of Merger, dated as of April 12, 2005 (the
“Merger Agreement”), by and among NewAlliance,
NewAlliance Bank, Cornerstone and Cornerstone Bank, Cornerstone
will merge with and into NewAlliance, with NewAlliance being the
surviving entity (the “Merger”), and Cornerstone Bank
will merge with and into NewAlliance Bank, with NewAlliance Bank
being the surviving entity;
WHEREAS, the parties
hereto recognize and acknowledge the interest of NewAlliance and
NewAlliance Bank in protecting the business and goodwill associated
with Cornerstone and Cornerstone Bank following the Merger by
having the Consultant enter into this Agreement; and
WHEREAS, NewAlliance
and NewAlliance Bank desire to have the Consultant provide, and the
Consultant is willing to provide NewAlliance and NewAlliance Bank
with, the consulting services on the terms and conditions set forth
herein.
NOW THEREFORE, in
consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Defined
Terms.
Any capitalized terms not
defined in this Agreement shall have as their meanings the
definitions contained in the Merger Agreement.
2.
Consultancy.
(a) Subject to the provisions
of Section 2(d) hereof, the parties hereto agree that, during the
six-month period immediately following the Effective Time of the
Merger (the “Consulting Period”), the Consultant
undertakes to provide his personal advice and counsel to
NewAlliance and its subsidiaries and affiliates (including
NewAlliance Bank) in connection with the business of NewAlliance
and its subsidiaries, including, but not limited to, consulting
with NewAlliance regarding the operations and customer
relationships of
NewAlliance and its subsidiaries,
providing introductions to customers and providing personal
services similar to those the Consultant is currently providing
Cornerstone and Cornerstone Bank (collectively the
“Consulting Services”), subject to the terms and
conditions which are set forth herein. The Consultant shall provide
such Consulting Services as may be requested from time to time by
the Executive Vice President - Business Banking of NewAlliance
Bank, and if he or she is not in the office on the date in
question, then by the President and Chief Executive Officer of
NewAlliance, and if he or she is also not in the office on the date
in question, then by the Executive Vice President and Chief
Operating Officer of NewAlliance. During the Consulting Period, the
Consultant shall be available to devote his full business time,
attention, skills and effort (other than during holidays, vacations
and periods of illness) to the business and affairs of NewAlliance
and its subsidiaries and affiliates and shall use his reasonable
best efforts to promote the interests of NewAlliance and its
subsidiaries and affiliates. Such Consulting Services may be
provided in person, telephonically, electronically or by
correspondence as NewAlliance, NewAlliance Bank and the Consultant
may agree. The Consultant shall be available for meetings at the
principal executive offices of NewAlliance and NewAlliance Bank at
such times as shall be reasonable and appropriate.
(b) During the Consulting
Period, NewAlliance or NewAlliance Bank shall reimburse the
Consultant or otherwise provide for or pay for all reasonable
expenses incurred by the Consultant at the request of NewAlliance
or NewAlliance Bank, subject to such documentation and prior
approval as may be required by NewAlliance or NewAlliance Bank,
including but not limited to payment of club membership dues and
assessments for the Executive (which shall not exceed an aggregate
of $5,000 per year). In addition, during the Consulting Period,
NewAlliance Bank shall provide the Consultant with the continued
use of an automobile of the same make, year and model as provided
by Cornerstone Bank to the Consultant as of the date of this
Agreement, with NewAlliance Bank paying the costs for fuel,
insurance, maintenance and repairs of the automobile during the
Consulting Period.
(c) During the Consulting
Period, the Consultant shall be treated as an independent
contractor and shall not be deemed to be an employee of NewAlliance
or any subsidiary or affiliate of NewAlliance.
(d) The Consultant may
terminate the Consulting Period by providing thirty (30) days
written notice to NewAlliance and NewAlliance Bank. In addition,
the Consulting Period shall automatically terminate by reason of
the death of the Consultant and no notice of termination shall be
required. NewAlliance or NewAlliance Bank may terminate the
Consulting Services for Cause as hereinafter defined, in which
event the Consulting Period will end as of the date the Consulting
Services are terminated.
(e) For purposes of this
Agreement, termination for “Cause” shall mean a
discharge because the Board of Directors of NewAlliance or
NewAlliance Bank (the “NewAlliance Board”) determines
that the Consultant has: (A) willfully failed to perform his
assigned duties under this Agreement, other than any failure
resulting from the Consultant’s incapacity due to physical or
mental injury or illness; (B) committed an act involving moral
turpitude in connection with his Consulting Services; (C) engaged
in willful misconduct; (D) breached
2
his fiduciary duties for personal
profit; (E) willfully violated, in any material respect, any law,
rule or regulation (other than traffic violations or similar
offenses), written agreement or final cease-and-desist order with
respect to his performance of services for NewAlliance or its
subsidiaries and affiliates, as determined by the NewAlliance
Board; or (F) materially breached the terms of this Agreement and
failed to cure such material breach during a 15-day period
following the date on which the NewAlliance Board gives written
notice to the Consultant of the material breach. For purposes of
the definition of Cause, no act or failure to act, on the part of
the Consultant, shall be considered “willful” unless it
is done, or omitted to be done, by the Consultant in bad faith or
without reasonable belief that the Consultant’s action or
omission was in the best interests of NewAlliance or its
subsidiaries and affiliates. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the
NewAlliance Board or based upon the written advice of counsel for
NewAlliance shall be conclusively presumed to be done, or omitted
to be done, by the Consultant in good faith and in the best
interests of NewAlliance or its subsidiaries and affiliates. The
cessation of the Consulting Services shall not be deemed to be for
“Cause” within the meaning of this Section 2(e) unless
and until there shall have been delivered to the Consultant a copy
of a resolution duly adopted by the affirmative vote of
three-fourths of the members of the NewAlliance Board at a meeting
of such Board called and held for such purpose (after reasonable
notice is provided to the Consultant and the Consultant is given an
opportunity, together with counsel, to be heard before such Board),
finding that, in the good faith opinion of such Board, the
Consultant is guilty of the conduct described in this Section 2(e),
and specifying the particulars thereof in detail.
(f) The obligations of
NewAlliance and NewAlliance Bank under this Agreement are subject
to and contingent upon the Consultant continuing to be employed by
Cornerstone and Cornerstone Bank from the date hereof until the
Effective Time of the Merger.
3. Non-Disclosure of
Confidential Information.
Except in the course of his
services to NewAlliance and NewAlliance Bank hereunder, and in the
pursuit of the business of NewAlliance or any of its subsidiaries
or affiliates, the Consultant shall not, except as required by law,
at any time during or following the Consulting Period, disclose or
use any confidential information or proprietary data of NewAlliance
or any of its subsidiaries or affiliates or predecessors, unless
such confidential information or proprietary data become publicly
known through no fault of the Consultant. The Consultant agrees
that all information concerning the identity of the customers of
NewAlliance and its subsidiaries and affiliates and the relations
of such entities with their customers is confidential information.
This Section 3 shall survive the termination or expiration of the
Consulting Period.
4. Non-Competition
Provisions.
The Consultant agrees that
during the 18-month period immediately following the Effective Date
of the Merger (the “Non-Competition Period”), the
Consultant will not (i) without the prior written consent of
NewAlliance Bank, engage in, become interested in, directly or
indirectly, as a sole proprietor, as a partner in a partnership, or
as a shareholder in a corporation, or become associated with, in
the capacity of employee, director, officer, principal, agent,
trustee or in any other capacity whatsoever, any enterprise or
entity located in
3
any of Fairfield, Hartford, Litchfield,
Middlesex, New Haven, New London, Tolland or Windham Counties in
the State of Connecticut or Kent, Providence or Washington Counties
in the State of Rhode Island (collectively, the
“Counties” and individually a “County”) or
in the New York, New York Primary Metropolitan Statistical Area
(“PMSA”), which proprietorship, partnership,
corporation, enterprise or other entity is, or may be deemed to be
by NewAlliance Bank, competitive with any business carried on by
NewAlliance, NewAlliance Bank or any of their subsidiaries,
including but not limited to entities which lend money and take
deposits (in each case, a “Competing Business”),
provided, however, that this provision shall not prohibit the
Consultant from owning bonds, non-voting preferred stock or up to
five percent (5%) of the outstanding common stock of any Competing
Business if such common stock is publicly traded, (ii) solicit or
induce, or cause others to solicit or induce, any employee of
NewAlliance or any of its subsidiaries to leave the employment of
such entities, or (iii) solicit (whether by mail, telephone,
personal meeting or any other means, excluding general
solicitations of the public that are not based in whole or in part
on any list of customers of NewAlliance or any of its subsidiaries)
any customer of NewAlliance or any of its subsidiaries to transact
business with any other entity, whether or not a Competing
Business, or to reduce or refrain from doing any business with
NewAlliance or its subsidiaries, or interfere with or damage (or
attempt to interfere with or damage) any relationship between
NewAlliance or its subsidiaries and any such customers. In the
event the Consultant desires to join a Competing Business and
requests the written consent of NewAlliance Bank to permit him to
do so during the Non-Competition Period, the Consultant shall
provide the President and Chief Executive Officer of NewAlliance
Bank with the identity of the Competing Business, the nature of his
proposed position, duties and responsibilities with such entity,
and such other information as may be reasonably requested by
NewAlliance Bank within fifteen (15) days of receiving such
request. NewAlliance Bank agrees to consider and review any such
request (provided that no more than one request may be submitted
within any 45 day period), and to notify the Consultant of its
determination within thirty (30) days of receiving the information
requested pursuant to the preceding sentence.
5.
Compensation.
(a) On December 30, 2005 and
in consideration for the Consultant executing the General Release
attached hereto as Exhibit A in a timely manner so that it is
effective and irrevocable prior to
|
