Exhibit 10.3 - Termination, Release & Non-Compete - Lilly


    Exhibit
      10.3

    TERMINATION,
      RELEASE AND NONCOMPETITION AGREEMENT

    


    This
      Termination, Release and Noncompetition Agreement (the “Agreement”) is entered
      into as of July 18, 2006 by and among John M. Lilly (the “Executive”), Westbank
      Corporation (“WBC”), a Massachusetts corporation, Westbank, a Massachusetts
      chartered bank and trust company and a wholly-owned subsidiary of WBC, and
      NewAlliance Bancshares, Inc. (“NewAlliance”), a Delaware
      corporation.

    


    RECITALS:

    


    WHEREAS,
      NewAlliance, NewAlliance Bank, WBC and Westbank are entering into an Agreement
      and Plan of Merger, dated as of July 18, 2006 (the “Merger Agreement”);
      and

    


    WHEREAS,
      Section 7.5.7 of the Merger Agreement provides that NewAlliance, WBC, Westbank
      and the Executive shall enter into this Agreement, which shall terminate the
      change of control agreement between WBC, Westbank and the Executive dated
      December 17, 2003 (the “Change of Control Agreement”) as of the Effective Time
      of the Merger, and in lieu of any rights and payments under the Change of
      Control Agreement, the Executive shall be entitled to the rights and payments
      set forth herein;

    


    NOW
      THEREFORE, in consideration of the foregoing and other good and valuable
      consideration the receipt and sufficiency of which is hereby acknowledged,
      the
      Executive, WBC, Westbank and NewAlliance agree as follows:

    


    1. Actions
      to be Taken in 2006.

    


    (a) The
      Executive hereby agrees to take the following actions between the date hereof
      and December 29, 2006, it being the intention of the parties hereto that all
      of
      such actions shall be fully effective and consummated no later than December
      29,
      2006 (or such other date as may be specified below):

    


    (i) consent,
      to the extent any such consent is required by the Executive, to the accelerated
      vesting as of the date the shareholders of WBC approve the Merger Agreement
      of
      all unvested restricted stock awards granted to the Executive with respect
      to
      the common stock of WBC, provided that any unvested restricted stock awards
      scheduled to vest prior to such date shall vest on their originally scheduled
      vesting date;

    


    (ii) accept
      on
      or before December 29, 2006 such prepayment, if any, of the dollar amount
      specified in Section 2(a) below that may be mutually agreed to by WBC and
      NewAlliance in order to avoid the potential reduction in payments under Section
      2(c) below; and

    


    (iii) cooperate
      with NewAlliance and WBC and take such other steps as may in good faith be
      requested of the Executive by NewAlliance in order to avoid the potential
      reduction in payments under Section 2(c) below.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) WBC
      shall
      take all steps necessary to accelerate as of the date the shareholders of WBC
      approve the Merger Agreement the vesting of all of the unvested restricted
      stock
      awards granted to the Executive.

    


    (c) In
      the
      event the above actions are taken but are insufficient to avoid the potential
      reduction in payments under Section 2(c) below, then WBC or Westbank shall
      prepay to the Executive on or before December 29, 2006 such portion of the
      dollar amount specified in Section 2(a) below as shall be mutually agreed to
      by
      WBC and NewAlliance (which agreement shall not be unreasonably withheld or
      delayed).

    


    2. Payments
      to Be Made as of the Effective Time of the Merger.

    


    (a) As
      of the
      Effective Time of the Merger, provided the Executive is still employed by WBC
      immediately prior to such date and provided that the Executive and WBC have
      taken all of the actions required to be taken pursuant to Section 1 hereof,
      and
      in consideration of the obligations and commitments of the Executive under
      this
      Agreement, WBC or Westbank shall pay to the Executive a lump sum cash amount
      equal to $773,510, subject to adjustment as set forth in Section 2(c) below
      (the
“Maximum Amount”), less applicable tax withholdings and less any portion thereof
      that is prepaid in December 2006 pursuant to Sections 1(a)(ii) and 1(c) above.
      In consideration of such payment and the other provisions of this Agreement,
      the
      Executive, WBC, Westbank and NewAlliance hereby agree that the Change of Control
      Agreement and the Executive’s employment with WBC shall be terminated without
      any further action of any of the parties hereto, effective immediately prior
      to
      the Effective Time of the Merger, except as set forth in Section 4 hereof.
      The
      Executive agrees that the above payment shall be in complete satisfaction of
      all
      of his rights to payments or benefits under the Change of Control Agreement,
      except as set forth in Section 4 hereof.

    


    (b) WBC
      and
      the Executive represent and warrant that the information with respect to the
      Executive contained in Section 4.14.8 of the WBC Disclosure Schedule to the
      Merger Agreement accurately reflects the Executive’s taxable Form W-2 income for
      each of the four years ended December 31, 2005 and contains a complete listing
      of all payments or benefits to the Executive that could be deemed to be a
      parachute payment under Section 280G of the Internal Revenue Code of 1986,
      as
      amended (the “Code”), based on the assumptions set forth in such
      schedule.

    


    (c) Each
      of
      the parties hereto agrees that if the actions specified in Section 1 above
      are
      taken as required, then based on Section 2(b) above the payments and benefits
      to
      be provided to the Executive should not trigger any tax reimbursement payments
      pursuant to Section 13 of the Change of Control Agreement. In the event any
      of
      the actions specified in Section 1 above is not taken as required, or if any
      of
      the representations in Section 2(b) is not correct, and if such failure results
      in the Maximum Amount, either alone or together with other payments and benefits
      which the Executive has the right to receive from NewAlliance, WBC or Westbank,
      whether pursuant to this Agreement or otherwise, being a “parachute payment”
under Section 280G of the Code, then the Maximum Amount payable by WBC or
      Westbank pursuant to Section 2(a) hereof shall be reduced by the amount which
      is
      the minimum necessary to result in 

    
      
        
        

      

      
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    no
      portion of the payment payable by WBC or Westbank under Section 2(a) being
      non-deductible to WBC, Westbank or NewAlliance (or any successors thereto)
      pursuant to Section 280G of the Code and subject to the excise tax imposed
      under
      Section 4999 of the Code. If any of the payments or benefits to be provided
      by
      WBC, Westbank or NewAlliance are subject to the excise tax imposed by Section
      4999 of the Code but are not required to be reduced by this Section 2(c), then
      the indemnity under Section 13 of the Change of Control Agreement (which section
      remains in full force and effect pursuant to Section 4 of this Agreement) shall
      be provided to the Executive by NewAlliance; provided, however, that if the
      amount of the indemnity is known as of the Effective Time of the Merger, then
      such indemnity shall be provided by either WBC or Westbank at the request of
      NewAlliance.

    


    (d) As
      of the
      Business Day immediately prior to the Effective Date of the Merger, provided
      the
      Executive is still employed by WBC immediately prior to such date, WBC or
      Westbank shall pay to the Executive an additional lump sum cash amount equal
      to
      $408,817, less applicable tax withholdings, in complete satisfaction of all
      of
      the Executive’s rights to payments or benefits under the Executive Supplemental
      Retirement Plan Agreement between the Executive and Westbank (formerly Park
      West
      Bank and Trust Company) dated July 2, 2001 (the “SERP Agreement”). In
      consideration of such payment, the parties hereto agree that the SERP Agreement
      shall be terminated without any further action of any of the parties hereto
      on
      or before the date of such payment in accordance with the terms of the Merger
      Agreement.

    


    (e) As
      of the
      Effective Time of the Merger, the Executive shall be given the opportunity
      to
      purchase the automobile currently provided to him by Westbank at its then fair
      market value if he wishes to do so, provided that in no event shall such fair
      market value be less than the greater of (i) the Kelley blue book value of
      such
      automobile as of the Effective Time, or (ii) WBC’s book value or residual
      leasehold interest in such automobile as of the Effective Time.

    


    (f) The
      parties hereto agree that the payment pursuant to Section 1(a)(ii) above should
      not trigger any of the excise taxes or interest penalties under Section 409A
      of
      the Code based on the current provisions of such section and the proposed
      regulations issued under Section 409A of the Code. However, in the event the
      final regulations issued under Section 409A are construed so as to impose the
      excise tax and interest penalties specified under Section 409A of the Code
      on
      the payment under Section 1(a)(ii) of this Agreement, then NewAlliance shall
      provide a tax indemnification to the Executive so that the Executive is in
      the
      same after-tax position he would have been in if the excise tax and interest
      penalties under Section 409A of the Code had not been imposed on such payment;
      provided, however, that if the amount of the indemnity is known as of the
      Effective Time of the Merger, then such indemnity shall be provided by either
      WBC or Westbank at the request of NewAlliance.

    


    3. Payment
      of Fringe Benefits.

    


    (a) NewAlliance
      agrees to provide the Executive with continued health, dental, life and
      disability coverage, pursuant to either the policies currently offered by WBC
      and Westbank or the policies to be offered by NewAlliance to the Continuing
      Employees of WBC, until the earlier of thirty (30) calendar months following
      the
      Effective Time of the Merger or the 

    
      
        
        

      

      
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    Executive’s
      commencement of full-time employment with a new employer, subject to the terms
      and conditions of such policies, with the Executive responsible for paying
      the
      same share of any premiums, copayments or deductibles as if he was an employee
      and with the disability and life insurance coverage subject to the maximum
      coverage limits in the current policies of WBC or Westbank, except as set forth
      below in this Section 3(a). The health and dental coverage shall include any
      dependents of the Executive who are covered by WBC or Westbank as of the date
      of
      this Agreement and who remain covered by WBC or Westbank as of the Effective
      Time of the Merger. In the event the Executive’s participation in any such plan
      is barred, NewAlliance shall arrange to provide the Executive with benefits
      substantially similar to those which the Executive would otherwise have received
      under such plans from which his continued participation is barred or pay to
      the
      Executive a cash amount equal to the amount NewAlliance would have paid for
      such
      coverage if the Executive was still an employee. In addition, notwithstanding
      the foregoing, if the provision of any of the benefits covered by this Section
      3(a) would trigger the 20% tax and interest penalties under Section 409A of
      the
      Code either due to the nature of such benefit or the length of time it is being
      provided, then the benefit(s) that would trigger such tax and interest penalties
      due to the nature of the benefit shall not be provided at all and the benefit(s)
      that would trigger the tax and interest penalties if provided beyond the
“limited period of time” set forth in the regulations under Section 409A shall
      not be provided beyond such limited period of time (collectively, the “Excluded
      Benefits”), and in lieu of the Excluded Benefits NewAlliance shall pay to the
      Executive, in a lump sum within 30 days following termination of employment
      or
      within 30 days after such determination should it occur after termination of
      employment, a cash amount equal to the amount NewAlliance would have paid for
      such Excluded Benefits in the absence of Section 409A of the Code.

    


    (b) In
      calculating the value of the benefits to be provided pursuant to Section 3(a)
      above, the parties agree to assume that the premiums in effect as of August
      31,
      2006 will increase by 15% per year to cover anticipated premium increases over
      the 30 month period specified in Section 3(a) above.

    


    4. Releases.
      Upon
      payment of the amounts set forth in Section 2(a) hereof (as such amount may
      be
      adjusted pursuant to Section 2(c) hereof) and in Section 2(d) hereof, the
      Executive, for himself and for his heirs, successors and assigns, does hereby
      release completely and forever discharge WBC, Westbank and their successors
      from
      any obligation under the Change of Control Agreement, except for the provisions
      of Section 13 of the Change of Control Agreement which shall remain in full
      force and effect, and under the SERP Agreement. The obligations of NewAlliance
      to provide benefits pursuant to Section 3 above shall continue for the period
      specified therein. This Agreement shall not release WBC or NewAlliance from
      any
      of the following: (a) obligations to pay to the Executive wages earned up to
      the
      Effective Time of the Merger; (b) the payment of any of the Executive’s vested
      benefits, or honoring any of the Executive’s rights, under the WBC Employee
      Plans, excluding any bonus plans, employment agreement or other severance
      agreement or plan, (c) the payment of the Merger Consideration with respect
      to
      the Executive’s common stock of WBC or stock options or restricted stock awards
      with respect to the common stock of WBC, or (d) the obligations of NewAlliance
      under Section 7.6 of the Merger Agreement.


    
      
        
        

      

      
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    5. Non-Competition
      Provisions.
      The
      Executive agrees that during the 12-month period immediately following the
      Effective Date of the Merger (the “Non-Competition Period”), the Executive will
      not (i) 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 either Hampden County in the Commonwealth of Massachusetts
      or
      Windham County in the State of Connecticut (collectively, the “Counties” and
      individually a “County”), which proprietorship, partnership, corporation,
      enterprise or other entity is engaged in any line of business conducted by
      NewAlliance, NewAlliance Bank or any of their subsidiaries immediately following
      the Effective Time of the Merger, 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 Executive 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 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.

    


    6. Enforcement.

    


    (a) This
      Agreement shall be construed, enforced and interpreted in accordance with and
      governed by the laws of the State of Connecticut, without reference to its
      principles of conflict of laws, except to the extent that federal law shall
      be
      deemed to preempt such state laws.

    


    (b) It
      is the
      intention of the parties hereto that the provisions of this Agreement shall
      be
      enforced to the fullest extent permissible under all applicable laws and public
      policies, but that the unenforceability or the modification to conform with
      such
      laws or public policies of any provision hereof shall not render unenforceable
      or impair the remainder of the Agreement. The covenants in Section 5 of this
      

    
      
        
        

      

      
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    Agreement
      with respect to the Counties shall be deemed to be separate covenants with
      respect to each County, and should any court of competent jurisdiction conclude
      or find that this Agreement or any portion is not enforceable with respect
      to a
      County, such conclusion or finding shall in no way render invalid or
      unenforceable the covenants herein with respect to the other County.
      Accordingly, if any provision shall be determined to be invalid or unenforceable
      either in whole or in part, this Agreement shall be deemed amended to delete
      or
      modify as necessary the invalid or unenforceable provisions to alter the balance
      of this Agreement in order to render the same valid and
      enforceable.

    


    (c) The
      Executive acknowledges that NewAlliance and NewAlliance Bank would not have
      entered into the Merger Agreement or intend to consummate the Merger unless
      the
      Executive had, among other things, entered into this Agreement. Any breach
      of
      Section 5 of this Agreement will result in irreparable damage to NewAlliance
      and
      NewAlliance Bank for which NewAlliance and NewAlliance Bank will not have an
      adequate remedy at law. In addition to any other remedies and damages available
      to NewAlliance and NewAlliance Bank, the Executive further acknowledges that
      NewAlliance and NewAlliance Bank shall be entitled to seek injunctive relief
      hereunder to enjoin any breach of Section 5 of this Agreement, and the parties
      hereby consent to any injunction issued in favor of NewAlliance and NewAlliance
      Bank by any court of competent jurisdiction, without prejudice to any other
      right or remedy to which NewAlliance and NewAlliance Bank may be entitled.
      The
      Executive represents and acknowledges that, in light of his experience and
      capabilities, the Executive can obtain employment with other than a Competing
      Business or in a business engaged in other lines and/or of a different nature
      than those engaged in by NewAlliance or its subsidiaries or affiliates, and
      that
      the enforcement of a remedy by way of injunction will not prevent the Consultant
      from earning a livelihood. Each of the remedies available to NewAlliance and
      NewAlliance Bank in the event of a breach by the Consultant shall be cumulative
      and not mutually exclusive.

    


    7. General.

    


    (a) Heirs,
      Successors and Assigns.
      The
      terms
      of this Agreement shall be binding upon the parties hereto and their respective
      heirs, successors and assigns.

    


    (b) Final
      Agreement. This
      Agreement represents the entire understanding of the parties with respect to
      the
      subject matter hereof and supersedes all prior understandings, written or oral.
      The terms of this Agreement may be changed, modified or discharged only by
      an
      instrument in writing signed by each of the parties hereto. In the event the
      Internal Revenue Service issues final regulations under Section 409A of the
      Code
      prior to the Effective Time of the Merger and such regulations are deemed to
      result in the imposition of the excise taxes and/or interest penalties under
      Section 409A of the Code on any of the payments or benefits to be provided
      under
      this Agreement, then the parties hereto agree to negotiate in good faith an
      amendment to this Agreement to avoid such excise taxes and/or interest penalties
      to the extent possible, provided that the amounts payable to the Executive
      under
      Sections 1, 2(a) and 2(d) of this Agreement shall not be delayed beyond the
      Effective Time of the Merger or reduced in the aggregate.

    


    (c) Withholdings.
      WBC,
      Westbank and NewAlliance may withhold from any amounts payable under this
      Agreement such federal, state, local or foreign taxes as may be required to
      be
      withheld pursuant to applicable law or regulation.

    


    (d) Defined
      Terms. Any
      capitalized terms not defined in this Agreement shall have as their meaning
      the
      definitions contained in the Merger Agreement.

    


    (e) Voluntary
      Action and Waiver. The
      Executive acknowledges that by his free and voluntary act of signing below,
      the
      Executive agrees to all of the terms of this Agreement and intends to be legally
      bound thereby. The Executive acknowledges that he has been advised to consult
      with an attorney prior to executing this Agreement. 


    
      
        
        

      

      
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    (f) Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original but all of which together shall constitute one and
      the
      same instrument.

    


    8. Effectiveness.
      Notwithstanding anything to the contrary contained herein, this Agreement shall
      be subject to consummation of the Merger in accordance with the terms of the
      Merger Agreement, as the same may be amended by the parties thereto in
      accordance with its terms. In the event the Merger Agreement is terminated
      for
      any reason, this Agreement shall be deemed null and void with respect to all
      actions not yet taken pursuant to this Agreement.

    


    [Signature
      page follows]


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, NewAlliance, WBC and Westbank have each caused this Agreement
      to be executed by their duly authorized officers, and the Executive has signed
      this Agreement, effective as of the date first above written.

    


    

      
        	
                WITNESS:

              	
                EXECUTIVE:

              
	 	 
	 	 
	
                /s/
                  Robert J. Perlak

              	/s/
                John M. Lilly 
	
                Name:
                  Robert J. Perlak

              	
                Name:
                  John M. Lilly

              
	 	 
	 	 
	 	 
	
                ATTEST:

              	
                WESTBANK
                  CORPORATION

              
	 	 
	 	 
	 	 
	
                
                  /s/
                    Robert J. Perlak

                

              	
                By: 
                  /s/ Ernest N. Laflamme, Jr.

              
	
                Name:
                  Robert J. Perlak

              	
                Name:
                  Ernest N. Laflamme, Jr.

              
	 	
                Title:
                  Chairman of the Board

              
	 	 
	 	 
	
                ATTEST:

              	
                WESTBANK

              
	 	 
	 	 
	 	 
	
                
                  /s/
                    Robert J. Perlak

                

              	
                By: 
                  /s/ Ernest N. Laflamme, Jr.

              
	
                Name:
                  Robert J. Perlak

              	
                Name:
                  Ernest N. Laflamme, Jr.

              
	 	
                Title:
                  Chairman of the Board

              
	 	 
	 	 
	
                ATTEST:

              	
                NEWALLIANCE
                  BANCSHARES, INC.

              
	 	 
	 	 
	 	 
	
                /s/
                  Brian Arsenault

              	
                By: 
                  /s/ Merrill B. Blanksteen

              
	
                Name:
                  Brian Arsenault

              	
                Name:
                  Merrill B. Blanksteen

              
	 	
                Title:  
                  Executive Vice President and Chief

              
	 	
                Financial
                  Officer

              


      

    

     

    
      
        
        

      

      
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