Document:

Exhibit 10.1.3

 

ENTERPRISE BANK AND TRUST COMPANY

FIRST AMENDMENT TO SALARY CONTINUATION AGREEMENT

 

THIS FIRST AMENDMENT is adopted this 19th day of
December, 2008 by and between ENTERPRISE BANK AND TRUST COMPANY, a
state-chartered commercial bank located in Lowell, Massachusetts (the “Bank”),
and ROBERT R. GILMAN (the
“Executive”).

 

The Bank and the Executive have previously executed
that certain Salary Continuation Agreement on July 15, 2005 effective as
of January 1, 2005 (the “Agreement”).

 

The
undersigned hereby amend the Agreement for the purpose of bringing the
Agreement into compliance with Section 409A of the Internal Revenue Code
of 1986, as amended.  Therefore, the
following changes shall be made:

 

Sections 1.2 and 1.13 of the Agreement shall be deleted in their
entirety.

 

Section 1.17 of the Agreement shall be deleted in its entirety and
replaced by the following:

 

1.17                           “Separation from Service” means
termination of the Executive’s employment  with the Bank for
reasons other than death or Disability. 
Whether a Separation from Service has occurred is determined in
accordance with the requirements of Code Section 409A based on whether the
facts and circumstances indicate that the Bank and Executive reasonably
anticipated that no further services would be performed after a certain date or
that the level of bona fide services the Executive would perform after such
date (whether as an employee or as an independent contractor) would permanently
decrease to no more than twenty percent (20%)  of
the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding thirty-six (36) month
period (or the full period of services to the Bank if the Executive has been
providing services to the Bank less than thirty-six (36) months).

 

The first sentence of Section 2.1 of the Agreement shall be
deleted in its entirety and replaced by the following:

 

2.1                                 Normal Retirement Benefit. 
If the Executive reaches Normal Retirement Age prior to experiencing a
Separation from Service, the Bank shall distribute the benefit described in
this Section 2.1 in lieu of any other benefit under this Article.

 

The first sentence of Section 2.3 of the Agreement shall be
deleted in its entirety and replaced by the following:

 

2.3                                 Disability Benefit. 
Upon the occurrence of Disability prior to Normal Retirement Age, the
Bank shall distribute the benefit described in this Section 2.3 in lieu of
any other benefit under this Article.

 

 

The first sentence of Section 2.4 and Subsections 2.4.1 and 2.4.2
of the Agreement shall be deleted in their entirety and replaced by the
following:

 

2.4                                 Change of Control Benefit. 
Upon a Change in Control, the Bank shall distribute the benefit
described in this Section 2.4 in lieu of any other benefit under this
Article.

 

2.4.1                        Amount of Benefit. 
The benefit under this Section 2.4 is the Normal Retirement Benefit
amount described in Section 2.1.1. 
The Executive shall be one hundred percent (100%) vested in the Normal
Retirement Benefit upon a Change in Control.

 

2.4.2                        Distribution of Benefit. 
The Bank shall distribute the annual benefit to the Executive in twelve
(12) consecutive equal monthly installments commencing within thirty (30) days
following a Change in Control.  The
annual benefit shall be distributed to the Executive for twenty (20) years.

 

The following Section 2.6 shall be added to the Agreement
immediately following Section 2.5:

 

2.6                                 Change in Form or Timing of
Distributions.  For
distribution of benefits under this Article 2, the Executive and the Bank
may, subject to the terms of Sections 8.1 and 8.2 below, amend this Agreement
to delay the timing or change the form of distributions; provided, however,
that any such amendment:

 

(a)                                  may
not accelerate the time or schedule of any distribution, except as provided in
Code Section 409A;

 

(b)                                 must,
for benefits distributable under Sections 2.1 and 2.3, be made at least twelve
(12) months prior to the first scheduled distribution;

 

(c)                                  must,
for benefits distributable under Sections 2.1, 2.2 and 2.4, delay the
commencement of distributions for a minimum of five (5) years from the
date the first distribution was originally scheduled to be made; and

 

(d)                                 must take effect not less than twelve (12)
months after the amendment is made.

 

The first sentence of Section 3.1 of the Agreement shall be
deleted in its entirety and replaced by the following:

 

3.1                                 Death Benefit. 
If the Executive dies prior to experiencing a Separation from Service
and prior to reaching Normal Retirement Age, the Bank shall distribute to the
Beneficiary the benefit described in this Section 3.1 in lieu of any other
benefit under Article 2 of this Agreement.

 

Section 8.1, including without limitation Subsections 8.1.1 and
8.1.2, of the Agreement shall be deleted in its entirety and replaced by the
following:

 

8.1                                 Amendments.  This Agreement may be amended
only by a written agreement signed by the Bank and the Executive.  However, the Bank may unilaterally amend this
Agreement 

 

2

 

to conform with written directives to the Bank from
its auditors or banking regulators or to comply with legislative or
administrative changes of applicable tax law, including without limitation Section 409A
of the Code and any and all Treasury regulations and guidance promulgated
thereunder.

 

The following Sections 8.3 and 8.4 shall be added to the Agreement
immediately following Section 8.2:

 

8.3                                 Plan Termination Generally.  This
Agreement may be terminated only by a written agreement signed by the Bank and
the Executive.  Any termination of this
Agreement shall not result in any loss of accrued benefits to the Executive,
and the benefit to the Executive hereunder in the event of any such termination
shall be the Account Value as of the date this Agreement is terminated.  Except as provided in Section 8.4 below,
the termination of this Agreement shall not cause a distribution of benefits
under this Agreement.  Rather, after such
termination, benefit distributions will be made at the earliest distribution
event permitted under Article 2 or Article 3 of this Agreement.

 

8.4                                 Plan Terminations Under Section 409A. 
Notwithstanding anything to the contrary in Section 8.3 above, if
this Agreement is terminated under any of the following circumstances, then the
Bank may distribute the Account Value, as determined as of the date of such
termination, to the Executive in a lump sum, subject to the terms set forth
below:

 

(a)                                  Within thirty (30) days before or twelve (12)
months after a Change in Control, provided that all distributions are made no
later than twelve (12) months following such termination of this Agreement and
further provided that all of the Bank’s arrangements that are
substantially similar to this Agreement are likewise terminated so that the
Executive and all participants in such similar arrangements are required
to receive all amounts of compensation deferred under the terminated
arrangements within twelve (12) months of such terminations;

 

(b)                                 Upon the Bank’s dissolution or with the
approval of the Federal Deposit Insurance Corporation or any successor federal
agency, provided that the amounts deferred under this Agreement are included in
the Executive’s gross income in the latest of (i) the calendar year in
which this Agreement is terminated; (ii) the calendar year in which the
amount payable to the Executive under this Agreement is no longer subject to a
substantial risk of forfeiture; or (iii) the first calendar year in which
the distribution is administratively practical; or

 

(c)                                  Upon the Bank’s termination of this Agreement
and all other arrangements that would be aggregated with this Agreement
pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive
participated in such arrangements (“Similar Arrangements”), provided that (i) such
termination and accompanying liquidation of the Account Value does not occur
proximate to a downturn in the financial health of the Bank, (ii) all
termination distributions are made no earlier than twelve (12) months and no
later than twenty-four (24) months following such termination, and (iii) the
Bank does not adopt any new arrangement that would be a Similar Arrangement for
a minimum of three (3) years following the date on 

 

3

 

which the Bank takes all necessary action to
irrevocably terminate this Agreement and liquidate the Account Value.

 

IN WITNESS OF THE ABOVE, the Executive and a duly authorized representative of the Bank have
signed this First Amendment as a sealed instrument.

 

 

	
  Executive:

  	
   

  	
  Enterprise Bank and Trust
  Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Robert R. Gilman

  	
   

  	
  By:

  	
  /s/ John P. Clancy, Jr.

  
	
  Robert R. Gilman

  	
   

  	
  Title: Chief Executive Officer

  

 

4Exhibit 10.2.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT
made and entered into on the 19th day of December, 2008, by and between Enterprise Bancorp, Inc., a
Massachusetts corporation with a principal office at 222 Merrimack Street,
Lowell, Massachusetts 01852  (  “Company”)  and its wholly owned subsidiary, Enterprise Bank and Trust Company,
a Massachusetts trust company with its main office at 222 Merrimack Street,
Lowell, Massachusetts  01852 ( “Bank”)
(Bank and Company being collectively referred to herein as the “Employer”), and
George L. Duncan, who resides at
710 Andover Street, Lowell, Massachusetts 
01852 ( “Executive”), amends and restates the Employment Agreement dated
as of January 1, 2004, as amended. 
The provisions of this Restatement are effective as of April 1,
2008 (“Effective Date”).

 

W  I  T  N  E
S  S  E  T  H :

 

WHEREAS,
Executive has been employed by Employer for a substantial length of time and
the services of Executive, his experience, and his knowledge of the affairs of
Employer are of great value to Employer and Employer desires to continue to
employ Executive as an active employee and to have him serve as Chairman of the
Board of Directors of both Company and Bank under the terms and conditions set
forth below; and

 

WHEREAS, Executive desires to continue to be employed
by Employer as an active employee and to serve as Chairman of the Board of
Directors of both Company and Bank upon the terms and conditions hereinafter
set forth;

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, and intending to be
legally bound hereby, it is hereby agreed as follows:

 

1. Employment; Position; Term.  Employer hereby  employs Executive, and Executive agrees to be
employed as an active employee and to serve in the capacity of Chairman of the
Board of Directors of both Company and Bank for a term commencing as of the Effective
Date and ending on the third anniversary of the Effective Date, April 1, 2011 (“Term of Employment”); provided, however, that,
commencing on the date one year after the Effective Date, and on each annual
anniversary of such date (such date and each annual anniversary thereof, the “Renewal
Date”), unless previously terminated, the Term of Employment shall be
automatically extended so as to terminate three years from such Renewal Date,
unless, at least 60 days prior to the Renewal Date, either Employer or
Executive gives notice to the other that the Term of Employment shall not be so
extended (“Notice of Non-Renewal”).  By
way of example, on April 1, 2009, the Term of Employment shall be extended
from a term ending on April

 

 

GALLAGHER &
CAVANAUGH, LLP, 100 FOOT OF JOHN STREET, LOWELL, MASSACHUSETTS 01852

 

 

1, 2011  to a term ending on April 1, 2012. Upon
the timely delivery by either party of a Notice of Non-Renewal, the Term of
Employment shall no longer be subject to the automatic extension provided for
herein, but rather shall expire upon the conclusion of the then Term of
Employment (“Expiration of Term Due to Non-Renewal”).  By way of example, if a Notice of Non-Renewal
were first delivered on November 1, 2009, the Term of Employment would
expire on April 1, 2012. A Notice of Non-Renewal may not be delivered by
Employer during the two year period immediately following a Change in Control
event (as hereinafter defined).  Executive’s service as a director of Employer and/or any Affiliate (as
hereafter defined) shall be without any further compensation in addition to
that set forth herein.

 

2. Duties; Place of
Employment; Time and Efforts.

 

2.1          Duties.  During the Term of
Employment, Executive shall exercise and assume such duties, responsibilities
and authorities as are provided in the bylaws of Employer with respect to
holding the office of Chairman of the
Board of Directors of the Company and Bank.  Notwithstanding the above, Executive shall
not be required to perform any duties and responsibilities which would result
in Employer’s or Executive’s noncompliance with, or any other violation of, any
applicable law, regulation, regulatory policy or other regulatory requirement.

 

2.2          Place of Employment.  Executive shall render his services primarily
at Employer’s office in Lowell, Massachusetts. Executive shall travel as
reasonably required for the performance of his duties hereunder.

 

2.3          Time and Efforts.  During the Term of Employment, Executive
shall, except for periods of absence occasioned by illness, vacation, and any
other reasonable leaves of absence in accordance with applicable policies,
programs, procedures or practices of Employer, diligently and conscientiously
devote his full business time and attention and best efforts, business skills,
ability and fidelity to the business of Employer and the discharge of his
duties hereunder; provided, however, that Executive may, so long
as such activities (individually and collectively) do not conflict or
materially interfere with the performance of Executive’s duties hereunder (a) continue
to serve on any boards and committees on which Executive is presently serving
or in a position which Executive currently holds provided same has been
disclosed to Employer on a schedule attached to this Agreement; (b) manage
his personal financial affairs, including his personal passive
investments;  (c) serve on boards of
directors or trustees or committees of civic or charitable organizations or
trade associations, and (d) with the written consent of the Board of
Directors, as evidenced by a formally adopted vote or resolution and subject to
such terms and conditions specified in any such vote or resolution, serve as a
non-employee director, trustee, manager or partner of any business entity.

 

2

 

3. Compensation and Other
Benefits.

 

3.1          Base Salary.
In consideration of the services of Executive, Employer shall pay to Executive
a base salary of $203,899.80 per annum, together with such increases as
the Board of Directors of Employer may from time to time approve in its sole
discretion (but such shall be reviewed by the Board at least annually), in
equal installments in accordance with the customary payroll practices of
Employer (“Base Salary”).

 

3.2          Annual Cash Bonus.
During the Term of Employment, Executive shall be entitled to participate in an
equitable manner with other executive officers of Employer in such
discretionary bonus payment or awards as may be authorized, declared and/or paid by the Board of Directors to Employer’s
executive employees.  Nothing in this
Agreement, however, shall be construed to require Employer to establish,
maintain or continue any bonus plan, program or arrangement.  Except as otherwise expressly provided by
their terms, such bonus plan, programs or arrangements are subject to modification
or termination by Employer at any time in its sole discretion.  No other compensation or additional benefits
provided for in this Agreement shall be deemed to be a substitute for
Executive’s right to receive such bonuses if, when and as declared and paid by
the Board of Directors.

 

3.3          Incentive, Retirement, and Savings Plans.  During the Term of Employment, Executive shall be entitled to
participate in all incentive, pension, retirement, savings, stock option and
other stock grant and equity compensation plans, as well as all other
nonseverance related benefits, plans and programs, which may be maintained from
time to time by Employer for the benefit of senior executives and/or
other employees of Employer.

 

3.4          Welfare Benefit Plans.  During the Term of Employment, Executive and
his spouse and other eligible dependents shall be entitled to participate in,
and be covered by, all of the health and other welfare benefit plans and
programs that may be maintained from time to time by Employer for the benefit
of senior executives and/or other employees of Employer.  In the case of any group disability plan
maintained by Employer, Employer shall provide Executive the opportunity to pay
directly by payroll deduction or otherwise all or any portion of the premium on
any policy or policies providing such coverage.

 

3.5          Expense Reimbursement.  During the Term of Employment, Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses,
including reasonable business travel expenses, incurred by Executive in
performing his duties and responsibilities under this Agreement, in accordance with the policies, programs,
procedures and practices of Employer as in effect at the time the expense was
incurred. To the extent necessary to avoid characterizing any reimbursement to
Executive as deferred compensation under Section 409A of the Internal
Revenue Code of 1986, as amended (“Code”) and the United States Treasury
regulations then in effect (“Treas. Regs.”), such 

 

3

 

reimbursements shall be paid
on or before March 1 following the close of the calendar year in which the
expense was incurred by Executive. 
Amounts which are not submitted within the required timeframe shall not
be eligible for reimbursement hereunder.

 

3.6          Fringe Benefits; Automobile.  During the Term of
Employment, Executive shall be eligible to benefit from such fringe benefits
and perquisites, in accordance with the policies, programs, procedures and
practices of Employer, as may be in effect and provided from time to time to
senior executives and/or other employees of Employer, and shall be entitled to
the use of an automobile, of a type commensurate with Executive’s office and
standing, at Employer’s expense.

 

3.7          Vacation.  Executive shall earn and accrue thirty-one
(31) days of vacation for each twelve month period served during the Term of
Employment.  Executive shall be entitled
to the continuation of his Base Salary and benefits during vacations to be
scheduled at the reasonable convenience of the parties hereto.  Vacation will be earned ratably over the
course of each such twelve month period and shall be used in accordance with
Employer’s policies.

 

3.8          Salary Continuation Agreement.  The parties acknowledge that Executive and Bank
are parties to a Salary Continuation Agreement dated as of July 15,
2005.  Each of the Employer and Executive
agrees to fulfill its obligations under such Salary Continuation Agreement in
accordance with the terms thereof.

 

4. Termination. Unless Executive’s employment is terminated pursuant to
this Section 4, Employer will continue to employ Executive and Executive
will continue to serve Employer throughout the Term of Employment. Termination of Executive’s employment will
constitute an automatic termination of all other positions held by Executive
including service as a director, unless otherwise requested by Employer.

 

4.1          Expiration of the Term Due to
Non-Renewal.  Upon
Expiration of Term Due to Non-Renewal, Executive’s employment with Employer
will be terminated (herein “date of termination”) without further action by
Executive or Employer and Executive will be entitled to receive the following:

 

(a)           earned and accrued but previously
unpaid Base Salary through the date of termination,

 

(b)           payment in respect of any vacation
days accrued but unused through the date of termination,

 

(c)           reimbursement of any remaining
expense properly incurred in accordance with Employer’s policy prior to the
date of termination and not yet reimbursed by Employer,

 

4

 

(d)           any bonus actually awarded or earned,
but not yet paid as of the date of termination, 
and

 

(e)           any vested benefits under any
insurance policy, pension, retirement, savings, stock option and other stock grant
and equity compensation plans, together with any other non-severance related
compensation and benefits as may be provided in accordance with the terms and
provisions of any other agreements between Executive and either Company or Bank
and any applicable plans, programs, procedures and practices of Employer.

 

The aggregate benefits payable pursuant to clauses
(a), (b), (c) and (d) are hereafter referred to as the “Accrued
Obligations.”  The vested benefits
referenced in clause (e) are hereafter referred to as the “Additional
Benefits.”

 

4.2          Death. The
employment of Executive hereunder shall terminate immediately upon his death; provided, however,
that in the event of death, the Employer will pay to the beneficiary named on
the Designation of Beneficiary form completed by Executive the following:

 

(a)           the Accrued Obligations,

 

(b)                                 the
Additional Benefits,

 

(c)           a
lump sum amount equal to six month’s of Base Salary at the rate in effect on
the date of death, payable within thirty (30) days of the date of death (“Lump
Sum Payment”), and

 

 (d)          continuation,
at no cost to Executive’s spouse and other eligible dependents, of all health
and other welfare benefits provided under Section 3.4 of this Agreement
for the benefit of Executive’s spouse and other eligible dependents for a
period commencing on the date of death and ending, with respect to Executive’s
spouse, on the earlier of her death or remarriage and, with respect to any
other eligible dependent of Executive, the date such dependent is no longer
eligible for such coverage in accordance with the terms of any applicable plan.

 

4.3          Disability.  Employer
will have the right to suspend Executive’s employment hereunder in the event
Executive becomes disabled (“Disability Suspension”), by giving written notice
of same to Executive (“Notice of Disability Suspension”).  Executive’s Disability Suspension shall
become effective upon the 30th day following the date of the Notice
of Disability Suspension (“Disability Suspension Effective Date”).  For purposes of this Agreement, disability
shall mean (1) Executive is unable to engage in any substantial gainful
activity by reason of any medically determined physical or mental impairment
that can be expected to result in death or to last for a continuous period of
not less than twelve (12) months, or (2) Executive is, by reason of any
medically determinable physical or mental impairment that can be 

 

5

 

expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement or
disability  benefits for a period of not
less than three (3) months under any group long-term disability plan or
accident and health plan then maintained by Employer.  In the event that Executive returns to
full-time employment with Employer following the Notice of Disability
Suspension but prior to the Disability Suspension Effective Date, the Notice of
Disability Suspension shall be deemed automatically withdrawn.  In any event, the period of Disability
Suspension will end on the earliest to occur of the following (“Disability
Termination Date”):  (A) the date on
which Executive returns to full-time employment with Employer; (B) Executive’s
death, in which event the provisions of Section 4.2 shall govern; or (C) the
termination by either party or the expiration of the Term of Employment, in
each case in accordance with the terms of this Agreement.

 

Employer shall pay to Executive, as of the Disability
Suspension Effective Date, the Accrued Obligations.  During the period of Disability Suspension up
until the Disability Termination Date Executive shall:

 

(a)           receive an amount equal, on a per
annum basis, to seventy-five percent (75%) of Executive’s Highest Annual
Compensation, as hereafter defined, as determined on the Disability Suspension
Effective Date.  Such amount shall be
paid by Employer, commencing on the first ordinary payroll payment date
following the Disability Suspension Effective Date, in equal periodic
installments in accordance with Employer’s ordinary payroll practices in effect
at the time of such payments are made. 
The payments made pursuant to this provision shall be in addition to any
payments or other benefits payable to Executive under any qualified or
nonqualified retirement plans or programs maintained by Employer but shall be
reduced by any payments received by Executive during such Disability Suspension
under any group long-term disability plan maintained by Employer;

 

(b)           continue to accrue and participate in
all incentive, pension, retirement, savings, stock option and other stock grant
and equity compensation plans, as well as all other employee benefit plans and
programs, which are referenced in Section 3.3; and

 

(c)           continue to receive all life, health
and other welfare coverage and benefits as set forth in Section 3.4,
including those for the benefit of Executive’s spouse and other eligible
dependents.

 

From and after the Disability Suspension Effective
Date, Employer shall be free to fill Executive’s positions; provided, however,
that if Executive is able to return to full-time employment with Employer at
any time during the period of Disability Suspension prior to the Disability
Termination Date, Executive shall resume his positions and duties with Employer
unless Employer has filled either of those positions and does not reappoint
Executive to both such positions, in 

 

6

 

which event, Executive may, at his option:

 

(i)            assume the position(s) and
duties that Employer may assign to him at the same Base Salary as was in effect
on the Disability Suspension Effective Date and, otherwise, on the same terms
and conditions as set forth herein; or

 

(ii)           in the event that the position and
duties assigned to him would constitute a material diminution in his authority,
duties or responsibilities or otherwise constitute Good Reason, as hereinafter
defined, Executive may exercise his right to terminate this Agreement for Good
Reason pursuant to Section 4.5.

 

In the event that Executive refuses to assume the
position and duties assigned to him pursuant to Clause (i) under
circumstances that do not constitute Good Reason, such shall constitute a
Voluntary Termination by Executive subject to Section 4.6 below.

 

Notwithstanding any other provision contained in this
Agreement to the contrary, the occurrence of a Disability Suspension shall not
in any way prevent or otherwise limit the parties from exercising any of their
respective rights to terminate the Term of Employment at any time in accordance
with the terms of this Agreement or from delivering Notice of Non-Renewal
pursuant to Section 1.

 

Further, nothing in this Section shall be deemed
as a waiver by Executive of his right to unpaid leave under the Family and
Medical Leave Act of 1993, the Americans with Disabilities Act of 1990, or any
analogous provision of state law.

 

4.4          For Cause.  Subject to compliance with the procedure set forth herein, Employer
will have the right to terminate Executive’s employment for Cause.   For purposes of this Agreement, “Cause”
means: (i) Executive’s willful and continued failure to substantially
perform his employment duties (other than any such failure resulting from
Executive’s illness or disability, which shall be subject to the provisions of the
preceding Section), or (ii) Executive’s willfully engaging in conduct
(other than conduct related to the operation of an automobile) which is
demonstrably and materially injurious to Employer, monetarily or otherwise; provided, however,
that no act or failure to act, on the part of Executive shall be deemed “willful”
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive’s act or failure to act, was in the best
interest of Employer. Upon such termination, Executive will thereafter be
entitled to receive only the compensation and benefits set forth in Section 4.1
(a) through (e) hereinabove applicable to Expiration of the Term Due
to Non-Renewal.

 

(a) Procedure.  At a
meeting of the applicable Employer’s Board of Directors, duly called for the
purpose of determining whether Cause exists (“Determination Meeting”), the
alleged acts or omissions of Executive must be found by two-thirds of the
disinterested directors present at the 

 

7

 

meeting to have been
established beyond reasonable doubt.  For
purposes of this Section 4.4, “disinterested” shall mean those directors
other than the Executive and any other directors who are alleged to have been
involved or otherwise to have an interest in any of such alleged acts or
omissions of the Executive.  If said
Board determines, as set forth in the preceding sentence, that Cause exists,
said Employer shall deliver, within ten (10) days of the Determination
Meeting, written notice to Executive of same which shall set forth, in
reasonable detail, the findings of the Board as to the act(s) and/or
omission(s), including the dates, facts and circumstances, constituting Cause (“Notice
of Termination For Cause”).  The Notice
of Termination For Cause shall also advise Executive that unless an Opportunity
Notice, as hereinafter defined, is delivered by Executive as hereinafter
provided, Executive’s employment shall terminate for Cause effective on the
eleventh (11th) day after the
receipt by Executive of the Notice of Termination For Cause.  Executive may, within ten (10) days of
his receipt of the Notice of Termination For Cause, request, by written notice
delivered to said Employer, that a special meeting of the Board be called for
the purpose of providing Executive an opportunity to appear before the Board,
with counsel, to discuss such act(s) or omission(s) (“Opportunity
Notice”).  Upon receipt of the
Opportunity Notice, a special meeting of the Board shall be duly called to take
place on a date selected by the Board, which is not less than ten (10) nor
more than thirty (30) days after Employer’s receipt of the Opportunity Notice,
at the principal office of said Employer or such other locations as has been
mutually agreed upon by Employer and Executive (“Final Meeting”).  If the Board does not, by vote of greater
than one-third of the disinterested directors present at the meeting, rescind
its Notice of Termination For Cause at the Final Meeting or Executive fails to
attend the Final Meeting for any reason other than either a valid medical
reason or a reason that is deemed credible and sufficient by the acting
Chairman of the Board in his or her sole and absolute discretion (in which
event, the Chairman shall reschedule the Final Meeting to a date selected by
him or her that is practical in light of the reason for Executive’s failure to
attend), Executive’s employment shall be terminated for Cause effective
immediately as of the conclusion of the Final Meeting, without further notice.  The procedure set forth herein shall at all
times be subject to the requirements of applicable law, regulation, regulatory
policy or other regulatory requirements.

 

(b) Suspension. 
Notwithstanding anything to the contrary in this Agreement, during the
period commencing on the date on which notice of the Determination Meeting is
duly given to the Board and ending the earliest of the date of (i) the
Determination Meeting, if no determination of Cause is made at said meeting as
hereinabove provided,  (ii) the date
of 

 

8

 

termination (which may be
either the eleventh day following Executive’s receipt of the Notice of
Termination For Cause if an Opportunity Notice is not delivered by Executive as
hereinabove provided or the date of the Final Meeting if an Opportunity Notice
is provided and the Notice of Termination of Cause is not rescinded at such
meeting), or (iii) the date of the Final Meeting if the Notice of
Termination For Cause is rescinded as set forth in Subsection (c) below:

 

(1) Executive,
in the sole discretion of the Board, may be suspended from employment with
Employer and the Board may, during such period, reasonably limit Executive’s
access to the principal offices and any other premises of Employer and/or
Executive’s access to any of Employer’s assets or personnel; and

 

(2) 
Executive shall continue to receive his Base Salary and all benefits in
accordance with Section 3 of this Agreement to the extent such payments
and benefits are not prohibited by applicable law, regulation, regulatory
policy or other regulatory requirement.

 

(c)           Rescission
of Notice of Termination For Cause.  In the event that the Final Meeting is not
called as provided for herein, or a quorum of the Board fails to appear for the
Final Meeting, or the Board votes to rescind its Notice of Termination for
Cause then such Notice shall be deemed rescinded and Executive shall be
returned to his duties as of the date of such rescission.

 

(d)           Timeliness.  No event shall constitute grounds for a “Cause”
termination in the event that Employer fails to take action within 90 days
after Employer’s Chairman or the Chairman of Employer’s Audit Committee obtains
knowledge of the occurrence of such event.

 

(e)           Payment upon
Termination For Cause.  If
Executive’s employment shall be terminated for Cause as set forth herein,
Employer shall pay Executive:

 

(i)            the
Accrued Obligations, and

 

(ii)           the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement.

 

4.5          Involuntary Termination.

 

4.5.1       Termination by Employer Without
Cause.  Employer
may, unilaterally, terminate Executive’s employment for any reason and without
Cause or for no reason at all at any time during the Term of Employment upon
sixty (60) days prior written notice to Executive.  If Employer terminates Executive’s employment
pursuant to this Section 4.5.1, then the Term of Employment shall
thereupon end (“Date of Involuntary Termination”) and Executive shall, subject
to Bank Regulatory Limitations as referenced in 

 

9

 

Section 4.14, only
be entitled to receive the following:

 

(a)           the
Accrued Obligations; provided, however, that in addition to the
payment of the per diem value of any unused vacation days that have accrued
during the Term of Employment prior to the Date of Involuntary Termination,
Executive shall receive the unused, unaccrued portion of any vacation days
available through the end (but not beyond) the calendar year in which the Date of
Involuntary Termination occurs,

 

(b)                                 the
Additional Benefits,

 

(c)           an
aggregate amount equal to three times Executive’s Highest Annual Compensation,
as hereinafter defined (“Severance Payment”), such amount shall be paid no
later than two and one-half (2 1⁄2) months after the close of the taxable year of
Executive or Employer in which the Date of Involuntary Termination occurs,

 

(d)           to
have Employer pay the full premiums (employer and employee portions) for
Executive’s and any covered beneficiary’s coverage under COBRA health
continuation benefits over the eighteen (18) month period immediately following
the date of termination.  Notwithstanding
the foregoing, if Executive accepts post-employment with another entity that
provides comparable healthcare, during such period, Employer shall not provide
Executive with such health continuation benefits, and

 

(e)           reimbursement
for the reasonable fees of a professional out-placement service selected by
Executive; provided, however, that only expenses incurred by Executive no later
than the end of the second taxable year following the year in which the Date of
Involuntary Termination occurs shall be reimbursed and such reimbursement shall
be paid by the end of the third taxable year following the year in which the
Date of Involuntary Termination occurs.

 

4.5.2       Termination by Executive For Good Reason.
Executive may terminate his employment for Good Reason.  Upon a termination by Executive for Good
Reason, Executive shall be entitled to the same payments and benefits as provided
in Section 4.5.1 above.  In no event
shall a termination of Executive’s employment for Good Reason occur unless and
until Executive provides Employer, within ninety (90) calendar days following
the date on which the facts and circumstances underlying the finding of Good
Reason reasonably could have been known by Executive, with written notice
thereof stating with specificity the facts and circumstances underlying the
finding of Good Reason and, if the basis for such finding of Good Reason is
capable of being cured by Employer, providing Employer with an opportunity to
cure the same within thirty (30) calendar days after receipt of such
notice.  If Executive terminates his
employment pursuant to this Section 4.5.2, then the Term of Employment
shall end upon the receipt by Employer of the notice required by this Section 4.5.2;

 

10

 

provided, however, that if the basis for such
finding of Good Reason is capable of being cured but Employer fails to cure as hereinabove
provided, the Term of Employment shall end on the thirty-first calendar day
following such notice (“Date of Involuntary Termination”).

 

“Good Reason” shall mean, without Executive’s prior
written consent, the occurrence of any of the following events or actions:

 

(a)           material
diminution of Base Salary ;

 

(b)           material diminution in Executive’s
authority, duties or responsibilities;

 

(c)           material diminution in the authority,
duties or responsibilities of the supervisor to whom Executive is required to
report, including a requirement that Executive report to a corporate officer or
employee instead of directly to the Board of Directors;

 

(d)           material diminution in the budget
over which Executive retains authority;

 

(e)           material change in geographic location
at which Executive must perform the services; or

 

(f)            any other action or inaction that
constitutes a material breach of the terms of an applicable employment
agreement including, but not limited to Employer’s failure to obtain a
satisfactory agreement from any successor(s) to assume and agree to
perform Employer’s obligations under this Agreement.

 

In order to constitute an Involuntary Termination under this Section 4.5.2,
Executive must actually terminate his employment pursuant to this Section 4.5.2
within six (6) months following the date on which the facts and
circumstances underlying the finding of Good Reason reasonably could have been
known by Executive.

 

4.6          Voluntary Termination. 
Executive shall give Employer not less than sixty
(60) days’ prior written notice of his intention voluntarily to terminate his
employment by Employer other than for Good Reason. If Executive terminates his
employment on his own initiative without Good Reason and under circumstances
other than (i) a termination due to death, (ii) a termination due to
Retirement, or (iii) an Expiration of the Term due to Non-Renewal, then
Executive upon such termination (“Voluntary Termination”), will only be
entitled to receive the following:

 

(a)           the
Accrued Obligations, and

 

(b)           the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement.

 

4.7          Termination Due to Retirement.  During the Term of 

 

11

 

Employment, Executive may, having reached sixty-five (65) years of age,
voluntarily terminate his employment hereunder by giving not less than sixty
(60) days prior written notice to Employer (“Retirement”).  Upon expiration of said sixty (60) day notice
period (“Retirement Effective Date”), Executive will only be entitled to
receive the following:

 

(a)           the
Accrued Obligations,

 

(b)           the
Additional Benefits, in accordance with the terms of the applicable plan,
program or arrangement,

 

(c)           any rights to indemnification in
accordance with Section 6 of this Agreement,

 

(d)           to continue, together with his spouse
and eligible dependents, participation in the welfare benefits described in Section 3.4
(collectively, the “Continuing Benefit Plans”); provided,
however, that coverage (with regard
to medical and dental benefits for the period after the end of the eighteen
(18) month period following the date of termination) shall, unless same is a
nontaxable benefit excludible from income under Section 105 of the Code,
be deemed to be monthly, in-kind payments of the premiums and will be taxable
income to Executive; and provided, further, that the participation by
Executive (and, to the extent applicable, Executive’s spouse and dependents) in
any Continuing Benefit Plan shall cease on the date, if any, on which Executive
becomes eligible for comparable benefits under a similar plan, policy  or program of a subsequent employer (“End
Date”).  Executive’s participation in the
Continuing Benefit Plans will be on the same terms and conditions that would
have applied had Executive continued to be employed by Employer through the End
Date.  To the extent any such benefits
cannot be provided under the terms of the applicable plan, policy or program,
Employer shall provide (or shall cause to be provided) a comparable benefit under
another plan.

 

4.8          Highest Annual Compensation.  “Highest Annual
Compensation” means, as determined as of the date of termination of Executive’s
Term of Employment under the applicable termination provision set forth above,
the sum of (a) the highest per annum rate of base salary paid by Employer
to Executive at any time during the Term of Employment prior to such date of
termination, and (b) the highest annual cash performance bonus or other
annual cash incentive compensation paid by Employer to Executive, including all
such cash amounts paid to Executive individually and as part of an employee or
executive compensation group  (or which
would have been paid but for an election by Executive to defer payment to a later
period) with respect to any fiscal year of Employer during the Term of
Employment prior to such date of termination.

 

12

 

4.9          Change in Control.   A “Change in Control event” means any event that may qualify as a “Change in
Control” under Company’s 2003 Stock Incentive Plan, as may be amended
and in effect from time to time.

 

(a)           Termination pursuant to
certain provisions prior to a Change in Control event.  If the Term of Employment has been terminated
pursuant to Sections 4.2, 4.6 or 4.7 at any time during the twelve month period
prior to a Change in Control event, Executive or the named beneficiary or other
legal representative, as the case may be, shall be entitled  to receive, in addition to payments and
benefits set forth in the applicable Section, the Severance Payment as set
forth in Section 4.5.1(c) above subject to the provisions of Section 4.11
(“Change in Control Payment”); provided, however, that any sums previously
paid to Executive’s named beneficiary or other legal representative pursuant to
Section 4.2(c) providing for a Lump Sum Payment shall reduce the
amount of the Change in Control Payment. 
In any such case, the Change in Control Payment shall be paid on the
earliest date during the first taxable year of Executive following the taxable
year of Executive in which Executive’s employment terminates on which such
payment can be made in compliance with Section 409A of the Code.

 

(b)           Termination pursuant to
certain provisions following a Change in Control event. (i) If,
during the period beginning on the date of the Change in Control event and
ending on the date two (2) years after a Change in Control event, Executive’s
Term of Employment is terminated pursuant to Section 4.2, Executive’s
named beneficiary or other legal representative, as the case may be, shall be
entitled to receive, in addition to payments and benefits set forth in Section 4.2,
the Change in Control Payment; provided, however, that payment of the Change
in Control Payment shall be in lieu of the Lump Sum Payment.  In such case, the Change in Control Payment
will be paid immediately within thirty (30) days of the date of death.  (ii)  If, during the period beginning on
the date of the Change in Control Event and ending on the date that is one (1) year
after a Change in Control Event, Executive either voluntarily terminates his
employment pursuant to Section 4.6, or retires pursuant to Section 4.7,
then Executive shall be entitled to receive the Change in Control Payment, such
Payment to be paid within thirty (30) days following the date Executive
employment terminates.

 

4.10        Release. 
In the event of termination of employment for any
reason, the payments and other benefits (if any) required to be provided to
Executive pursuant to this Section 4 (including those, if any, required
under this Section 4 to be paid pursuant to other sections of this
Agreement) will be in full and complete satisfaction of any and all obligations
owing to Executive pursuant to this Agreement
and, to the fullest extent permitted by law, any other claims 

 

13

 

Executive
may have in respect of Executive’s employment by Employer. Such amounts shall
constitute liquidated damages with respect to any and all such rights and
claims and, upon Executive’s receipt of such amounts, Employer shall be
released and discharged from any and all liability to Executive in connection
with this Agreement or otherwise in connection with Executive’s employment by
Employer. Notwithstanding the foregoing, Executive shall retain all rights (i) with
respect to Employer’s continuing obligations to indemnify Executive as a former
officer or director of Employer as set forth in Section 6,  (ii) matters covered by
provisions of this Agreement that expressly survive the termination of this
Agreement,  (iii) rights to which
Executive is entitled by virtue of his participation in the employee benefit
plans, policies and arrangements of Employer, and (iv) as otherwise
excluded by applicable law.

 

4.11        Code Section 280G Reduction.  Anything in this
Agreement or in any other agreement, contract, understanding, plan or program,
entered into or maintained by Employer to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by Employer to or
for the benefit of 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 Code, and/or any successor provision or section thereto (such excise
tax, together with any interest or penalties incurred by 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 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 Executive
shall be reduced (with Executive being provided with the amount of each payment
and benefit as calculated by Employer 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 4.11,
(i) no portion of the Payments, the receipt or enjoyment of which 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 Employer, 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 

 

14

 

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 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
Employer’s 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 4.11, the foregoing
calculations and determinations shall be made in good faith by Employer and
shall be conclusive and binding upon the parties.  Employer shall pay all costs and expenses
incurred in connection with any such calculations or determinations.

 

4.12        Timing of Payment; Section 409A.  All Accrued Obligations payable under this
Agreement shall be paid in cash in single lump sum within fourteen (14) days
following the date of termination (or at such earlier date required by law). The Additional Benefits shall be paid in
accordance with the terms of the applicable plan, program or arrangement.  Except to the extent prohibited by
applicable law or the terms of this Agreement, all other payments to which
Executive shall be entitled to under this Section 4 shall be made within
thirty (30) days following the date of termination, subject to the following:

 

(a)           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 

 

15

 

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.

 

(b)           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 may be
retroactive to the extent permitted under Section 409A), as reasonably
requested by either party, and as may be necessary to fully comply with Section 409A
of the Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.

 

4.13        No Obligation to Mitigate; Set Off  Under Certain Circumstances.  In the event of any
termination of Executive’s employment under this Section 4, Executive
shall be under no obligation to seek other employment or to mitigate damages,
and no payment provided for in this Agreement shall be reduced by any
compensation earned by Executive as the result of employment by another
employer, or from self-employment, after the termination of his employment with
Employer.  Notwithstanding the foregoing,
nothing herein shall be deemed to prevent Employer from setting off against any
amounts due to Executive under this Agreement any amounts due from Executive to
Employer as of the date of such payment.

 

4.14        Bank Regulatory Limitations.  Any payments made to
Executive pursuant to this Agreement, or otherwise, are subject to and conditioned
upon their compliance with 12 U.S.C. § 1818(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 Executive’s employment
with Employer, 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.

 

16

 

4.15        Option
to Serve as Consultant. 
During the Term of Employment and in lieu of a termination under
Sections 4.5, 4.6 or 4.7, the parties may mutually agree that Executive’s
position under Section 1 and his duties, as well as the time and effort
required, under Section 2 be modified and the compensation set forth in Section 3
be adjusted as set forth in this Section 4.15 and, in such event,
Executive shall continue in the employ of Employer under the same terms and
conditions, including but not limited to benefits under sections 3.3 through
3.7, as is set forth in this Agreement except as specifically modified by this Section 4.15.

 

(a)  Position
and Duties.  Executive shall
serve as a consultant to Employer and shall render such services of an advisory
or consultative nature as Employer may reasonably require of him from time to
time and he shall assist Employer in its relations with its employees and
customers, such that Employer shall have the benefit of Executive’s experience
and knowledge of Employer’s business and operations, his reputation and
contacts in the industry generally as well as Employers’ market area and his
general business experience. In the event that Executive was serving as a
director as referenced in Section 1, there shall be no affirmative
obligation on the part of Executive to serve or continue to serve as such and
service as a director shall be in accordance with the mutual agreement of
Executive and Employer.

 

(b) Time
and Effort.  Executive shall
perform such services at a level of at least fifty percent (50%) of the
services that Executive performed over the 36 month period occurring
immediately prior to the implementation of this Section 4.15.

 

(c) Compensation.  Upon implementation of this Section 4.15,
Executive shall receive, in equal installments in accordance with the customary
payroll practices of Employer, compensation, in lieu of the compensation set
forth in sections 3.1 and 3.2, in an amount equal, on a per annum basis, to
fifty percent (50%) of Executive’s Highest Annual Compensation as determined as
of the day immediately prior to the implementation of this Section 4.15
and such amount shall constitute Executive’s Base Salary amount for all
purposes of this Agreement.

 

5. Confidentiality/Non-competition/Non-solicitation/Intellectual
Property.

 

5.1      Confidentiality.  Executive shall not, during the Employment
Term or anytime thereafter, make use of or disclose any Confidential Information
to any person or entity (including, but not limited to any bank, trust company,
credit union, corporation, firm, unincorporated organization, association,
partnership, limited liability company, trust estate, joint venture or other
business organization or entity) (“Person”) for any reason or purpose
whatsoever other than in furtherance of Employer’s business.  The term “Confidential Information” shall
mean all confidential information of or relating to Employer and any Person
effectively controlling, effectively controlled by or 

 

17

 

effectively under common
control with Employer (“Affiliate”) 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 development and other strategic
plans), but does not include any information that is or becomes public
knowledge by means other than Executive’s breach or nonobservance of his
obligations described in this Section 5.1. 
Notwithstanding the foregoing, 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 Executive shall
provide Employer with prior written notice of any such required or potentially
required disclosure and shall cooperate with Employer 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.  Executive’s obligation to refrain from
disclosing Confidential Information under this Section 5.1 shall continue
in effect in accordance with its terms following any termination of this
Agreement pursuant to Section 4 above.

 

5.2      Non-competition.  Without
prior written consent of the Board of Directors of Employer, Executive agrees
that he will not, at any time during the Term of Employment and for the
two-year period following the Expiration of the Term of Employment for
Non-Renewal as set forth in Section 4.1 or the termination of the Term of
Employment for any reason as set forth above in Sections 4.4 through 4.7,
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 Stock
Market), or as consultant, agent, employee of any other Person or otherwise,
engage in competition (as to any service or product provided by Employer or for
which Employer had made substantial preparation to enter into or offer prior to
the termination of Executive’s employment) with Employer or any of its
Affiliates anywhere within a ten (10) mile radius of any city or town in
which Bank or any Affiliate has a branch or other office (or to such lesser
extent and for such lesser period as may be deemed enforceable, it being the
intention of the parties that this Section 5.2 shall be so enforced); provided, however,  that the restrictive covenant set forth
herein shall automatically terminate or expire upon a Change in Control event
and shall not be of any further force or effect whatsoever following said
Change in Control event.

 

5.3      Non-solicitation.  Without prior written
consent of the Board of Directors of Employer, Executive agrees that he will
not, at any time during the two-year period following the Expiration of the
Term of Employment for Non-Renewal as set forth in Section 4.1 or the
termination of the Term of Employment for any reason as set forth above in
Sections 4.4 through 4.7:

 

18

 

(a)       hire or attempt to hire, or assist in
hiring, any employees of Employer or any of its Affiliates, or solicit,
encourage or induce any such employee to terminate his or her relationship with
Employer or any such Affiliate; or

 

(b)       solicit, encourage or induce any customer
or client of Employer or any of its Affiliates to terminate his or its
relationship with Employer or any such Affiliate or to do business with anyone
other than Employer and its Affiliates.

 

5.4      Intellectual
Property. 
Executive will, during the period of his employment, disclose to
Employer promptly and fully all Intellectual Property (as defined below) made
or conceived by Executive (either solely or jointly with others) including but
not limited to Intellectual Property which relate to the business of Employer
or result from work performed by him for Employer. All Intellectual Property
and all records related to Intellectual Property, whether or not patentable,
shall be and remain the sole and exclusive property of Employer and Employer
shall have the exclusive worldwide and perpetual right to use, make, and sell
products and/or services derived therefrom. 
Intellectual Property means all copyrights, trademarks, trade names,
trade secrets, proprietary information, inventions, designs, developments, and
ideas, and all know-how related thereto. Executive hereby assigns and agrees to
assign to Employer all his rights to Intellectual Property and any patents,
trademarks, or copyrights which may be issued with respect to Intellectual Property.  Executive further acknowledges that all work
shall be work made for hire. During and after the Term of Employment, Executive
agrees to assist Employer, without charge to Employer but at its request and
expense, to obtain and retain rights in Intellectual Property, and will execute
all appropriate related documents at the request of Employer. Executive and
Employer agree that this Section 5.4 shall not apply to any Intellectual
Property for which no equipment, supplies, facilities, trade secret, or other
confidential information of Employer was used and which was developed entirely
on his own time, provided that it does not relate to the business of Employer
or and does not result from any work performed by him for Employer.

 

5.5      Return
of Materials. 
Upon the termination of Executive’s employment, Executive will return to
Employer all Employer property, including all materials furnished to Executive
during the Term of Employment (including but not limited to keys, computers,
automobiles, electronic communication devices, files, electronic storage
devices and identification cards); provided, however, that Executive may retain
copies of materials relating to his compensation or benefits. In addition, upon
termination, Executive will provide Employer with all passwords and similar
information which are reasonably necessary for Employer to access materials on
which Executive worked or to otherwise continue in its business.

 

19

 

5.6          Injunctive Relief.  Executive acknowledges and agrees that the
protections of Employer set forth in this Section 5 are fair and
reasonable and are necessary for Employer to protect its legitimate business
interests, including its Confidential Information and business relationships,
and that Employer will have no adequate remedy at law, and would be irreparably
harmed, if Executive breaches or threatens to breach any of the provisions of
this Section 5.  Executive agrees
that Employer shall be entitled to seek equitable and/or injunctive relief to
prevent any breach of threatened breach of this Section 5, and to specific
performance of each of the terms of this Section 5 in addition to any
other legal or equitable remedies that Employer may have, without posting a
bond.  Executive further agrees that he
shall not, in any equity proceeding relating to the enforcement of the terms of
this Section 5, raise the defense that Employer has an adequate remedy at
law.

 

5.7          Claw-back.   To
the fullest extent permitted by law, in the event that Executive breaches any
of the provisions of Sections 5.1, 5.2, or 5.3:

 

(a)           Employer shall be
entitled to recoup payments made to Executive pursuant to Section 4
hereof, provided, however, that, in the event of a breach of Section 5.1,
such recoupment shall be limited to the reasonable damages incurred by Employer
as a result of such breach and, in the event of a breach of Section 5.2 or
Section 5.3, such recoupment shall be equal to the total payments made to
Executive pursuant to Section 4 multiplied by a fraction, the numerator of
which is the number of months remaining from the date of such breach to the
second anniversary of the Term of Employment or Expiration of the Term of
Employment for Non-Renewal, as the case may be, and the denominator of which is
twenty-four (24) months; and

 

(b)           to the extent that
any other benefits are being provided to Executive pursuant to Section 4,
such will cease immediately, and Executive will not be entitled to any further
compensation and benefits from Employer pursuant to Section 4.

 

5.8          Special Severability.  The terms and provisions of this Section 5
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.

 

6.            Indemnification.  Executive (and his heirs, executors and
administrators) shall be indemnified and held harmless by Employer to the
fullest extent permitted by applicable law, regulation, regulatory policy or
other regulatory requirement, against all expenses, liabilities and losses
(including without limitation, all reasonable attorneys’ fees and all
judgments, fines, excise taxes or penalties and amounts paid or to be paid in
settlement) incurred or suffered by Executive as a consequence of Executive
being or having been made a party to, or being or having been involved in, any
threatened, pending or 

 

20

 

completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Executive
is or was a trustee, director or officer of Employer or is or was serving at
the request of Employer as a trustee, director or officer of Employer or is or
was serving at the request of Employer as a trustee, director or officer of
another corporation or other entity and such indemnification shall continue
after Executive shall cease to be an officer, director or trustee.  The right to indemnification conferred hereby
shall be a contract right and shall also include, to the extent permitted by
applicable law, regulation, regulatory policy or other regulatory requirement, the
right to be paid by Employer the expenses incurred in defending any such
proceeding in advance of the final disposition upon receipt by Employer of an
undertaking by or on behalf of Executive to repay such amount or a portion
thereof, if it shall ultimately be determined that Executive is not entitled to
be indemnified by Employer pursuant hereto or as otherwise authorized by law,
regulation, regulatory policy or other regulatory requirement, but such
repayment by Executive shall only be in an amount ultimately determined to
exceed the amount to which Executive was entitled to be indemnified.  Employer’s acceptance of any such undertaking
by or on behalf of Executive may not be conditioned upon any evidence or
demonstration by or on behalf of Executive of any financial capacity to make
any such repayment at the time such undertaking is delivered.  The provisions of this Section 6 shall
survive any termination of this Agreement.

 

7.            Notices.  Any notice given hereunder shall be in
writing and shall be deemed given when delivered in-hand to the other party, by
facsimile transmission, by overnight courier, or by registered or certified
mail (return receipt requested, postage prepaid) addressed to the appropriate
party at the address first set forth above, or at such other address as the
party shall designate from time to time in a notice.

 

8.            Disputes.
Any dispute, claim or controversy arising out of or relating to this Agreement
or the breach, termination, enforcement, interpretation or validity thereof hereof (other than an action brought by Employer
for injunctive or other equitable relief in the enforcement of Employer’s
rights under Section 5 above, in which case such action may be brought in
any court of competent jurisdiction), including the determination of the
scope or applicability of this Agreement to arbitrate, shall be determined by
arbitration in Boston, Massachusetts, before three neutral arbitrators (one of
whom shall be appointed by Employer, one by Executive and the third by the
first two arbitrators).  The arbitration
shall be administered by JAMS pursuant to its Streamlined Arbitration Rules and
Procedures. Judgment on the Award may be entered in any court having
jurisdiction. This clause shall not preclude parties from seeking provisional
remedies in aid of arbitration from a court of appropriate jurisdiction.  In the event that it shall be necessary or
desirable for Executive to retain legal counsel and/or incur other costs and
expenses in 

 

21

 

connection with the enforcement of any or all of
Executive’s rights under this Agreement, Employer shall pay (or Executive shall
be entitled to recover from Employer, as the case may be) 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 Executive has not acted in
good faith or presented a bona fide claim
or dispute or that under the circumstances recovery by Executive of all or part
of any such fees and costs and expenses would be inequitable or otherwise
unjust.

 

The
parties agree that any and all disputes, claims or controversies arising out of
or relating to this Agreement shall first be submitted to JAMS, or its
successor, for mediation, and if the matter is not resolved through mediation,
then it shall be submitted to JAMS, or its successor, for final and binding
arbitration pursuant to the arbitration clause set forth above. Either party
may commence mediation by providing to JAMS and the other party a written
request for mediation, setting forth the subject of the dispute and the relief
requested. The parties will cooperate with JAMS and with one another in
selecting a mediator from JAMS panel of neutrals, and in scheduling the
mediation proceedings. The parties covenant that they will participate in the
mediation in good faith.  Employer shall
pay (or Executive shall be entitled to recover from Employer, as the case may
be) Executive’s reasonable attorneys’ fees and other reasonable costs of such
mediation.  All offers, promises, conduct
and statements, whether oral or written, made in the course of the mediation by
any of the parties, their agents, employees, experts and attorneys, and by the
mediator or any JAMS employees, are confidential, privileged and inadmissible
for any purpose, including impeachment, in any arbitration or other proceeding
involving the parties, provided that evidence that is otherwise admissible or
discoverable shall not be rendered inadmissible or non-discoverable as a result
of its use in the mediation. Either party may initiate arbitration with respect
to the matters submitted to mediation by filing a written demand for arbitration
at any time following the initial mediation session or 45 days after the date
of filing the written request for mediation, whichever occurs first. The
mediation may continue after the commencement of arbitration if the parties so
desire. Unless otherwise agreed by the parties, the mediator shall be
disqualified from serving as arbitrator in the case. The provisions of this
Clause may be enforced by any Court of competent jurisdiction, and the party
seeking enforcement shall be entitled to an award of all costs, fees and
expenses, including attorneys’ fees, to be paid by the party against whom
enforcement is ordered.

 

In the event that
within thirty (30) calendar days after the date that Executive’s Term of
Employment has been terminated by Employer for Cause or by Executive for Good
Reason, Executive (in the case of termination for Cause), or Employer (in the
case of termination for Good Reason), notifies the other in writing that a
dispute exists concerning the termination of employment either for Cause or for
Good Reason, as the case may be (“Notice of Dispute”),

 

22

 

(1)     Executive shall be entitled, to the extent
not prohibited by applicable law, regulation, regulatory policy or other
regulatory requirement, to be paid his Base Salary pursuant to Section 3.1
and to continue to receive all other benefits set forth in Section 3 until
the earliest to occur of the following: (i) the expiration of the then
current Term of Employment, or (ii) the resolution, pursuant to the
provisions of Section 8, of such dispute; and

 

(2)     there shall be no reduction whatsoever of
any amounts subsequently paid to Executive upon resolution of such dispute as a
result of, or in respect to, such interim payments or coverage;

 

provided,
however, that the Notice of Dispute
is given in good faith, sets forth a bona fide claim
or dispute and Executive pursues the resolution of such dispute with reasonable
diligence.  The Notice of Dispute
hereunder shall in all circumstances constitute (a) a Notice of
Non-Renewal under Section 1 for purposes of determining the expiration of
the then current Term of Employment, and (b) a request for mediation and,
therefore, a copy of such Notice of Dispute shall be provided to JAMS as set
forth above.

 

9.            Binding Effect;
Successors.  This Agreement shall inure to the benefit of
and be binding upon Employer, its successors and assigns, and Executive and his
heirs, legal or personal representatives, but shall not inure to the benefit of
or be enforceable by any third party except as otherwise expressly provided
herein.  Except as otherwise expressly
provided herein, Employer and Executive agree on behalf of themselves and of
any other person or persons claiming any benefits by virtue of this Agreement,
that this Agreement and the rights, interests and benefits under it shall not
be assigned, transferred, pledged, or hypothecated in any way by Employer or
Executive or by any other person claiming under Employer or Executive by virtue
hereof; provided, however, that an assignment may be made to the extent that
the other party has consented to same in writing.

 

9.1          Executive.  This Agreement is personal to Executive and, without the
prior written consent of Employer, shall not be assignable by Executive, except
that Executive’s rights to receive any compensation or benefits under this
Agreement may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a qualified domestic relations
order.  In the event of Executive’s death
prior to the completion by Employer of all payments due to Executive under this
Agreement, Employer shall continue to make such payments to Executive’s
beneficiary(ies) as designated in writing by Executive to Employer prior to his
death (or to his estate, if he fails to make such designation).

 

9.2          Employer. Both  Company and Bank shall 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 

 

23

 

expressly and agree to perform this Agreement in the same
manner and to the same extent as if no sucession had taken place.  Failure of either Company or 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 Executive to compensation
in the same amount and on the same terms as he would be entitled to hereunder
if he terminated this Agreement for Good Reason following 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
termination.  As used in this Agreement, “Company,”
“Bank” and “Employer” shall mean the Company, Bank and Employer as hereinbefore
defined and any sucessor to the business and/or assets of either Company or
Bank as aforesaid which successor assumes and agrees to perform this Agreement
by operation of law or otherwise.

 

10.          Miscellaneous.

 

10.1        Governing Law.  This Agreement is made and delivered in, and
shall be construed in accordance with the substantive laws of, the Commonwealth
of Massachusetts without regard to conflict of law principles.

 

10.2        Amendments;Waiver.  No amendment, waiver or modification of this
Agreement shall be valid unless the same shall be in writing and signed by the
party sought to be charged therewith; provided, however, that no amendment that will
result in a violation of Section 409A of the Code, or any other provision
of applicable law, may be made to this Agreement and any such amendment shall
be void ab initio. Failure to
insist in any one or more instances on strict compliance with the terms of this
Agreement shall not be deemed a waiver. Waiver of a breach of any provision of
this Agreement shall not be construed as a waiver of any subsequent breach.

 

10.3        Entire Agreement. The parties acknowledge and
agree that they are not relying on any representations, oral or written, other
than those expressly contained herein. 
This Agreement supersedes all proposals, oral or written, all
negotiations, conversations or discussions between the parties and all course
of dealing. All prior understandings and agreements between the parties are
hereby merged in this Agreement, which alone is the complete and exclusive
statement of their understanding.

 

10.4        Withholdings;
Reporting.  All payments to be made to Executive by
Employer shall be subject to withholding of such amounts, if any, relating to
tax and other payroll deductions as Employer may reasonably determine it should
withhold pursuant to any applicable law and regulation. Employer may withhold
from any amounts payable under this Agreement such taxes as shall be required
to be withehld pursuant to any applicable law or regulation. Executive
acknowledges that Employer may be required to report amounts deferred by or for
Executive under nonqualified deferred compensation plans on forms W-2 and
agrees that Employer shall comply with all such 

 

24

 

requirements and Executive agrees to pay and be solely
responsible for all taxes, interest and penalties.

 

10.5        Enforceability.  If any portion or provision of this Agreement
shall to any extent to be declared illegal or uneforceable 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 uneforceable, 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.

 

10.6        Captions.  Paragraph headings are for convenience of
reference only and are not intended to create substantive rights or
obligations.

 

10.7        Survivorship.  The respective rights and oblitations of the
parties to this Agreement including, without limitation, any of their
respective rights and obligations under Section 6 of this Agreement, shall
survive any termination of this Agreement or any termination of Executive’s
employment hereunder for any reason to the extent necessary to accomplish the
intended preservation of such rights and obligations.

 

10.8        Construction.  The parties acknowledge that they each
participated in drafting this Agreement, and there shall be no presumption
against any party on the ground that such party was responsible for preparing
this Agreement or any part hereof.

 

[Remainder of Intentionally Blank]

 

25

 

IN WITNESS WHEREOF,
this Agreement has been duly executed by the undersigned as of the day and year
first above written.

 

	
  ATTEST:

  	
   

  	
  ENTERPRISE
  BANCORP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Tanya A.
  Hubanks

  	
   

  	
  By 

  	
  /s/ James F.
  Conway, III

  
	
   

  	
   

  	
  James F.
  Conway, III

  
	
   

  	
   

  	
  Director,
  Chairman of Compensation

  
	
   

  	
   

  	
  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  ENTERPRISE BANK
  AND TRUST 

  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Tanya A.
  Hubanks

  	
   

  	
  By 

  	
  /s/ James F.
  Conway, III

  
	
   

  	
   

  	
  James F.
  Conway, III

  
	
   

  	
   

  	
  Director,
  Chairman of Compensation

  
	
   

  	
   

  	
  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Tanya A.
  Hubanks

  	
   

  	
  /s/ George L.
  Duncan

  
	
   

  	
   

  	
  George L. Duncan

  

 

26

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