Exhibit 10.31
EARLY RETIREMENT AGREEMENT
This Early Retirement Agreement (hereinafter "Agreement") dated the 2nd
day of April, 2002, is made by and among XXXXXX X. XXXXXX (hereinafter "XXXXXX")
and THE FIRST NATIONAL BANK OF LITCHFIELD, its parent FIRST LITCHFIELD FINANCIAL
CORPORATION, their subsidiary and affiliated entities, and all of their
respective past, present and future directors, officers, administrators, agents,
servants, representatives, employees, and any person acting through or in
concert with any of them (hereinafter collectively the "BANK"), in light of the
following circumstances:
WHEREAS, XXXXXX is employed as President and CEO of The First National
Bank of Litchfield and President of First Litchfield Financial Corporation, and
serves as a director of both entities; and
WHEREAS, in connection with his proposed retirement, XXXXXX and the BANK
now wish to compromise and finally settle on an amicable basis any and all
potential claims related to his employment at the BANK or his separation
therefrom;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, XXXXXX and the BANK, acting of their own free will, hereby
agree as follows:
1. (a) XXXXXX will continue to serve as President, and the BANK will
continue to pay XXXXXX his regular gross weekly salary at the annual rate of One
Hundred Ninety-Five Thousand One Hundred Thirty-Eight and 16/100 Dollars
($195,138.16) less all applicable deductions required by law and/or described in
this Agreement, through his separation date of May 1, 2002 or such later date as
the BANK and XXXXXX mutually agree upon, but in no event beyond June 30, 2002 as
set out in Section 1(b) below. The foregoing payments shall coincide with the
BANK's regular payroll payment dates. The BANK shall also continue to provide to
XXXXXX such fringe benefits as he is entitled as an employee of the BANK up to
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his separation date as determined under Section 1(b) below. During this period,
XXXXXX shall remain a member of the BANK's board of directors of the First
National Bank of Litchfield, but shall not participate in the process leading to
the selection of his successor or in any board governance issues. XXXXXX shall
participate in all operating issues. XXXXXX will not be renominated a director
of First Litchfield Financial Corporation, and his term will expire on May 22,
2002 or the date of his separation from employment, as determined under Section
1(b) below, whichever shall first occur.
(b) XXXXXX agrees to and hereby does resign from any position
he may hold as an officer, director or employee of the BANK effective May 1,
2002 or such later date as the BANK and XXXXXX mutually agree upon, but in no
event shall XXXXXX'x separation from employment and all directorships be later
than June 30, 2002. XXXXXX agrees not to seek employment with the BANK at any
time thereafter.
(c) The BANK will pay WHALEN a severance benefit equal to his
regular gross weekly salary at the annual rate of One Hundred Ninety-Five
Thousand One Hundred Thirty-Eight and 16/100 Dollars ($195,138.16) less all
applicable deductions required by law and/or described in this Agreement, for
the period beginning immediately after his separation date as determined under
Section 1(b) above, and continuing until June 30, 2003 (hereinafter the
"severance period"). Such severance payments shall be paid to XXXXXX in weekly
installments, such installments to coincide with the BANK's regular payroll
payment dates occurring after XXXXXX'x separation from employment.
(d) During the severance period, the BANK shall continue to
provide to XXXXXX and his spouse the same group health and dental insurance
benefits that it provided on the effective date of this Agreement. During the
severance period XXXXXX shall continue to timely pay to the BANK any and all
contributions, co-payments or other payments for such group health and dental
insurance benefits at the same rate as may be required of active employees in
executive positions. At the expiration of the severance period, the BANK shall
provide such notice of access to continuation of benefits as is required by
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COBRA or other applicable law. Insurance carrier(s) permitting, XXXXXX and his
spouse shall be permitted to remain on the BANK's group health insurance plan at
COBRA rates until XXXXXX reaches age sixty-five (65), provided XXXXXX pays the
full cost thereof after June 30, 2003. The BANK will use commercially reasonable
efforts to obtain the continuation of benefits described in the preceding
sentence, but does not guarantee the success of these efforts.
(e) The parties agree that XXXXXX'x Supplemental Employee
Retirement Plan (hereinafter "SERP") benefits include (i) XXXXXX'x 401k
contributions and other miscellaneous non-taxable compensation together totaling
approximately Ten Thousand and 00/100 Dollars ($10,000.00) per year, and (ii)
XXXXXX'x five (5) year average earnings for SERP purposes to include XXXXXX'x
earnings from the BANK for the period from July 1, 1997 through June 30, 2002.
XXXXXX hereby elects to receive his SERP benefits during early retirement, and
to receive SERP benefits in a lump sum in lieu of a life annuity or other
periodic payment, and the Bank hereby consents to the same. The parties further
agree that XXXXXX'x SERP lump sum Benefit shall be in the amount of Two Hundred
Ten Thousand and 00/100 Dollars ($210,000.00), which shall be paid by the BANK
to XXXXXX on January 15, 2003.
(f) The BANK acknowledges that XXXXXX is the owner of a life
insurance policy in the amount of Two Hundred Thousand and 00/100 Dollars
($200,000.00). Effective July 1, 2002, and thereafter, he shall be responsible
for any premiums or other costs related to said policy. The BANK represents and
warrants that it has paid all premiums on the policy through June 30, 2002. The
BANK shall retain all rights under a separate life insurance policy maintained
for the purpose of funding the SERP referred to in Section 1(e).
(g) Upon his separation date, the BANK shall transfer to
XXXXXX title to the 1999 Buick automobile that the BANK owns and which XXXXXX
currently uses for business purposes. Upon such transfer XXXXXX shall thereafter
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be fully liable for all insurance, taxes, registration fees and any and all
other costs associated with its ownership.
(h) Regarding certain stock options owned by XXXXXX, the BANK
is in the process of amending the underlying plan to permit eligible employees
to exercise their options within twelve (12) months after early retirement
(defined as age 59.5 or later) and the BANK will use its best efforts to obtain
shareholder approval of such amendment at the next shareholder meeting, to be
held on May 22, 2002, so that XXXXXX will be covered by such amendment, if
approved.
(i) The BANK will refrain from contesting any claim for
Unemployment Compensation Benefits that XXXXXX may file based on the reasons for
his separation from employment. Upon the request of any interested party, the
BANK may provide a copy of this agreement to the appropriate division of the
Connecticut State Labor Department.
(j) XXXXXX shall be entitled to the vested benefits of the
BANK's Long-Term Incentive Plan as set forth in Section 2.3(iv) of the Executive
Incentive Retirement Agreement (termination without cause), including vesting of
any benefits that accrue prior to his separation date, determined in accordance
with Section 1(b) above. As of this date, such vested benefits total
Twenty-Three Thousand Six Hundred and Eleven and 96/100 Dollars ($23,611.96).
The benefit will be paid in a lump sum by June 30, 2002.
(k) The BANK shall issue a W-2 Form and/or a 1099 MISC Form to
XXXXXX in connection with the various payments, benefits, transfers and other
consideration described here in Section 1 or as otherwise required in light of
the terms of this Agreement.
2. With exception of the payments, benefits, transfers and other
consideration described in Section 1 of this Agreement XXXXXX expressly
acknowledges that he is not entitled to any other payments, benefits, paid
leave, transfers or compensation, in any form for any reason, from the BANK.
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3. XXXXXX acknowledges that he would not be entitled to all of the
payments, benefits, transfers and other consideration described in Section 1 of
this Agreement if he did not enter into this Agreement. The BANK acknowledges
that XXXXXX would not otherwise release the potential claims hereinafter set
forth but for his receipt of such payments, benefits, transfers and other
consideration.
4. (a) For and in consideration of the payments, benefits, transfers and
other consideration described in this Agreement, XXXXXX, for himself and for his
heirs, executors, administrators, successors and assigns knowingly releases and
forever discharges the BANK from any and all claims, demands, obligations,
damages, liabilities and causes of action, in law or in equity, known or
unknown, including, but not limited to claims and causes of action for wrongful
discharge, tort, defamation, breach of any contract whether express or implied,
misrepresentation, breach of the duty of good faith and fair dealing, the
negligent or intentional infliction of emotional distress, and causes of action
and claims under the Connecticut Workers' Compensation Act, Conn. Gen.
Stat.ss.ss.31-275 et. seq., Title VII of the Civil Rights Act of 1964, 42
U.S.C.ss.ss.2000e et. seq., the Civil Rights Act of 1991, 42 U.S.C.ss.ss.1981,
et. seq., Section 1983 of the Civil Rights Act, 42 U.S.C.ss.1983, the
Connecticut Discriminatory Practices Act, Conn. Gen. Stat.ss.ss.46a-58 et. seq.,
the Americans with Disabilities Act, 42 U.S.C.ss.ss.12101 et. seq., the Age
Discrimination in Employment Act, 29 U.S.C.ss.ss.621 et. seq., the Employee
Retirement Income Security Act, 29 U.S.C.ss.ss.1132, et seq., the Family and
Medical Leave Act of 1993, 29 U.S.C.ss.ss.2601 et seq., the Connecticut Family
and Medical Leave Act, Conn. Gen. Stat.ss.ss.31-51kk, et seq., the Fair Credit
Reporting Act, 15 U.S.C.ss.ss.1681, et seq., the Connecticut Whistle Blowers'
Act, Conn. Gen. Stat.ss.31-51m, the provisions of the Connecticut General
Statutes concerning the payment of wages (Conn. Gen. Stat.ss.ss.31-58 et seq.
and Conn. Gen. Stat.ss.ss.31-70 et seq.), the Fair Labor Standards Act, 29
U.S.C.ss.ss.201 et seq., and all other federal, state and local laws, ordinances
or regulations, which XXXXXX now has or ever had against the BANK, for any
losses, injuries or damages (including but not limited to back pay,
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front pay, liquidated, compensatory or punitive damages, attorneys' fees and
litigation costs), resulting from and/or arising out of or in any way connected
with XXXXXX'x employment by the BANK or his separation from such employment;
provided, however, that the release described in this section 4 shall not apply
to any claim or cause of action (a) which arises after the execution of this
Agreement by XXXXXX; (b) which seeks to enforce any of XXXXXX'x rights or
remedies set forth in this Agreement; or (c) which may not be waived or released
as a matter of law.
5. The parties agree that they will not publish, publicize or
disseminate, or cause to be published, publicized or disseminated, in any
manner, the terms or contents of this Agreement to any third person, including
but not limited to any current or former BANK employee, except XXXXXX'x
attorney, spouse, tax preparer and financial planner, and except the BANK's
auditors, directors, and attorney, or as permitted by Section 1(i), or as
otherwise required either to effectuate the terms of this Agreement or to comply
with the BANK's disclosure obligations pursuant to applicable law.
6. XXXXXX and the BANK further understand and agree that this Agreement
does not constitute any admission by either party that it is in any way liable
to the other party or that either party harmed or damaged the other party or
violated any rights the other party may have or in any respect treated the other
party unfairly or unlawfully.
7. (a) XXXXXX recognizes and agrees that in the course of his employment
with the BANK he has been exposed to confidential information concerning the
BANK including but not limited to existing and contemplated products, trade
secrets, formulas, compilations, business and financial methods or practices,
strategic plans, pricing, marketing, merchandising and selling techniques and
information, customer lists, supplier lists and confidential information
relating to policies and/or business strategies (hereinafter referred to as
"Confidential Information"). XXXXXX agrees that all such Confidential
Information is and shall forever remain the sole property of the BANK. XXXXXX
shall keep all such Confidential Information strictly confidential, and he shall
not disclose to any third party in any manner, either directly or indirectly,
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any of such Confidential Information at any time for any purpose. Further,
XXXXXX shall not use in any manner, either directly or indirectly, any of such
Confidential Information for his own benefit or for the benefit of any third
party, or for any other purpose at any time.
(b) XXXXXX acknowledges and agrees that, for a twelve-month period (the
"Non-Compete Period") following his separation date as determined by Section
1(b) above, without the prior written consent of the BANK, XXXXXX may not
directly or indirectly be employed by or provide services of any kind to any
other bank that maintains one or more offices in Litchfield County, Connecticut.
Furthermore, during the Non-Compete period, XXXXXX acknowledges and agrees that
he will not directly or indirectly solicit or recruit any of the BANK's
employees to leave employment with the BANK. XXXXXX also acknowledges and agrees
that during the Non-Compete period he will not directly or indirectly solicit or
service any client or customer or prospective client or customer of the BANK to
become a client or customer of any other bank that maintains one or more offices
in Litchfield County, Connecticut. The parties acknowledge and agree that
Section 7(b) shall be the only noncompetition and non-solicitation provision
applicable to XXXXXX, and all such other prior provisions (including those
contained in the SERP) are superseded and replaced by this Section 7(b).
(c) XXXXXX understands and agrees that violation by him of any
portion of this Section 7 may cause the BANK to suffer immediate, substantial
and irreparable injury, and will be a sufficient basis to award injunctive
relief and monetary damages to the BANK without affecting the remainder of this
Agreement.
8. The BANK and XXXXXX expressly acknowledge that they will not make any
claim or demand and each of them hereby waives any rights any of them may now
have or may hereafter have or claim to have, based upon any alleged oral
alteration, amendment, modification or any other alleged change in this
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Agreement; that the validity, effect and operation of this Agreement shall be
determined by the laws of the State of Connecticut; and that there is no oral
understanding or agreement between them that is not recited herein.
9. Except as provided otherwise in this Agreement, if any of the
provisions, terms or clauses of this Agreement are declared illegal,
unenforceable or ineffective in a legal forum or by operation of law, those
provisions, terms and clauses shall be deemed severable, such that all other
provisions, terms and clauses of this Agreement shall remain valid and binding
upon both parties, except that the Bank's obligation to provide the payments,
benefits, transfers and other consideration referenced in Sections 1(c), 1(d),
1(e), and 1(g) are contingent upon the validity and enforceability of the
release set forth in Section 4 in its entirety, and on compliance by XXXXXX with
the provisions of Section 7(b) above, and XXXXXX'x obligations under Section 7
are conditioned upon compliance by the BANK with the provisions of Section 1(c),
1(d), 1(e), and 1(g).
10. XXXXXX affirmatively states that he has been advised of his right to
consult with an attorney in order to consider the provisions of this Agreement,
and, specifically with reference to his release of any and all claims under the
Age Discrimination in Employment Act, 29 U.S.C. ss.ss.621 et. seq., that he was
afforded up to twenty-one (21) days to consult with an attorney and to consider
this Agreement, and that if he signs the Agreement prior to the expiration of
such twenty-one (21) days, he does so voluntarily and of his own free will.
11. (a) Should either party commence or prosecute any action or
proceeding contrary to the provisions of this Agreement, such party agrees to
indemnify the other party for all costs, including court costs and reasonable
attorneys' fees, incurred by the other party in the defense of such action or in
establishing or maintaining the application or validity of this Agreement or the
provisions thereof, to the extent allowed by applicable law.
(b) Except as otherwise prohibited by any applicable state, federal or
local law, the BANK agrees to indemnify XXXXXX for all costs, including court
costs and reasonable attorneys' fees incurred by XXXXXX in the defense of any
action against him arising out of acts or omissions undertaken by XXXXXX in good
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faith and in the exercise of reasonable business judgment in his capacity as
President of the BANK up to his separation date as determined under Section 1(b)
above. Additionally, for a period of six (6) years from the retirement date, the
BANK shall afford XXXXXX the same indemnification rights and the same insurance
coverage, if any, that the BANK provides to its other officers and directors
during such period.
12. The BANK represents and warrants to XXXXXX that the BANK is not
directly or indirectly engaged in discussions or negotiations involving a
merger, consolidation, sale, or other transfer of the BANK, and that no such
discussions or negotiations are contemplated as of the date of this Agreement.
Regarding the Executive Change of Control Agreement dated July 1, 1997,
currently in effect and expiring by its terms on June 1, 2002, and attached to
this Agreement as Exhibit A and expressly made part of this Agreement, the BANK
and XXXXXX hereby agree that should a Change in Control (as defined in that
Agreement) occur before June 1, 2002, XXXXXX shall receive all compensation and
all other benefits set forth in the Change of Control Agreement. Such
compensation and benefits shall be paid to XXXXXX within five (5) days of the
date of the Change in Control, and no other triggering event (including no
termination and no reassignment) is necessary for such payments to XXXXXX. Upon
payment of such compensation and benefits to XXXXXX, the Bank shall not be
obligated to provide the payments, benefits, and other consideration set forth
in Section 1(c), 1(d) and 1(g). This section shall be deemed to be an amendment
pursuant to Section 8 of the Change in Control Agreement.
13. XXXXXX shall have up to twenty-one (21) days to decide whether or not
to enter into this Agreement. If he elects to do so and executes this Agreement
within such twenty-one (21) day period, this Agreement shall not become
effective or enforceable until seven (7) days following its execution by XXXXXX.
Prior to the end of this seven (7) day period, XXXXXX may revoke his assent to
this Agreement.
14. BANK and XXXXXX affirmatively state that they have a full
understanding of the contents of the Agreement and the effects thereof, that
each has been represented by competent counsel, and that they have executed the
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same voluntarily and of their own free will, without any coercion.
15. Neither party may assign its rights or delegate its duties under this
Agreement without the prior written consent of the other party, and any attempt
to so assign or delegate without such consent shall be void. This Agreement
shall be binding upon, and inure to the benefit of, the heirs, legal
representatives, successors, and permitted assigns of the parties. [Remainder of
page left intentionally blank.]
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IN WITNESS WHEREOF, the aforementioned parties, intending to be legally bound
hereby, have executed this Agreement.
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
-----------------------
Xxxxxx X. Xxxxxx
STATE OF CONNECTICUT )
: ss: Litchfield Date: 4/2/02
COUNTY OF LITCHFIELD )
Personally appeared XXXXXX X. XXXXXX, Signer of the foregoing
Instrument, and acknowledged the same to be her free act and deed before me.
/s/ Xxxx Xxxxxxx
---------------------------------
Xxxx Xxxxxxx
Notary Public/Commissioner of the
Superior Court
THE FIRST NATIONAL BANK OF
LITCHFIELD
By: /s/ Xxxxxx X. Clock
---------------------------------
Xxxxxx X. Clock
Its Chairman of the Board
STATE OF CONNECTICUT )
: ss: Litchfield Date: Xxxxx 0, 0000
XXXXXX XX XXXXXXXXXX )
Personally appeared Xxxxxx X. Clock, Chairman of the Board (title) of
THE FIRST NATIONAL BANK OF LITCHFIELD, Signer of the foregoing Instrument, and
acknowledged the same to be his/her free act and deed on behalf of the THE FIRST
NATIONAL BANK OF LITCHFIELD.
/s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx
Notary Public/Commissioner of
the Superior Court
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FIRST LITCHFIELD FINANCIAL
CORPORATION
By: /s/ Xxxxxx X. Clock
---------------------------------
Xxxxxx X. Clock
Its Chairman of the Board
STATE OF CONNECTICUT )
: ss: Litchfield Date: Xxxxx 0, 0000
XXXXXX XX XXXXXXXXXX )
Personally appeared Xxxxxx X. Clock, Chairman of the Board (title) of
FIRST LITCHFIELD FINANCIAL CORPORATION, Signer of the foregoing Instrument, and
acknowledged the same to be his/her free act and deed on behalf of the FIRST
LITCHFIELD FINANCIAL CORPORATION.
/s/ Xxxxx X. Xxxxx
-----------------------------
Xxxxx X. Xxxxx
Notary Public/Commissioner of
the Superior Court
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Schedule A
THE FIRST NATIONAL BANK OF LITCHFIELD
FIRST LITCHFIELD FINANCIAL CORPORATION
EXECUTIVE CHANGE IN CONTROL AGREEMENT
NOT TO BE CONSTRUED AS AN EMPLOYMENT AGREEMENT
August 6, 1997
EXECUTIVE CHANGE IN CONTROL AGREEMENT
NOT TO BE CONSTRUED AS AN EMPLOYMENT AGREEMENT
THE FIRST NATIONAL BANK OF LITCHFIELD
FIRST LITCHFIELD FINANCIAL CORPORATION
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx
WHEREAS, The First National Bank of Litchfield (the "Bank") and its parent
bank holding company, First Litchfield Financial Corporation (the "Holding
Company"), wish to continue to employ Xxxxxx X. Xxxxxx ("Employee") as President
of the Bank. The Bank and the Holding Company expect that Employee's
contributions and knowledge will continue to be of significant benefit to the
future growth and success of the Bank;
WHEREAS, the Boards of Directors of the Bank and the Holding Company
recognize that a change in control of the Bank and/or the Holding Company may
occur and that the threat of such change in control may create uncertainty and
may result in the distraction or departure of key personnel to the detriment of
the Bank and Holding Company and their stockholders;
WHEREAS, the Boards have determined that appropriate steps should be taken
to reinforce and encourage the continued dedication of members of the Bank's
management, including Employee, to their assigned duties in the face of
potential circumstances involving the possibility of such a change in control;
NOW THEREFORE, in addition to one dollar ($1.00) and other good and
valuable consideration paid by the Bank to Employee and in order to induce
Employee to continue employment with the Bank and to continue to perform
Employee's duties in a manner which is in the best interests of the Bank, the
Bank and Holding Company hereby agree to provide Employee with certain benefits
in the event his employment with the Bank terminates or is reassigned subsequent
to a Change in Control (as defined in Section 2 hereof) under the circumstances
described below.
1. Term of Agreement; Employment Status. This Agreement shall take effect
when signed by all parties and shall remain in full force and effect until June
1, 2002. All employees of Bank and Holding Company, including Employee, are
employees at will. The terms of this Agreement, therefore, do not and are not
intended to create either an express and/or implied contract of employment with
the Bank and/or the Holding Company. This Agreement simply provides certain
potential benefits to Employee in the event that a Change in Control occurs
prior to June 1, 2002 as hereinafter defined.
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2. Change in Control. No benefits shall be payable hereunder unless prior
to June 1, 2002 there shall have been a Change in Control as set forth below,
and thereafter within twenty-four (24) months of such Change in Control
Employee's employment with the Bank and/or its successor terminates or Employee
is reassigned in accordance with Section 3, below. For purposes of this
Agreement, a "Change in Control" shall mean any of the following:
(a) The acquisition of fifty percent (50%) or more of any class of
equity securities of the Holding Company by any person (or persons working
in concert) or entity after the date hereof;
(b) The acquisition of fifty percent (50%) or more of any class of
equity securities of the Bank by any person or entity other than Holding
Company;
(c) A merger, consolidation or reorganization to which the Bank or the
Holding Company is a party, if, as a result thereof, individuals who were
directors of the Bank or Holding Company, immediately before such
transaction shall cease to constitute a majority of the Board of Directors
of the surviving entity;
(d) A sale of all or substantially all of the assets of the Bank or
the Holding Company to another party;
(e) The assumption of all or substantially all of the deposits of the
Bank by another party other than the Federal Deposit Insurance Corporation;
or
(f) During any twenty-four (24) month period, individuals who at the
beginning of such period constitute the Board of Directors of the Bank and
the Holding Company, cease for any reason (other than death or disability)
to constitute at least a majority thereof unless the election or the
nomination for election by the stockholders of the Bank and the
stockholders of Holding Company, respectively, of each new director was
approved by a vote of at least a majority of the directors of the Bank or
of Holding Company as applicable, then still in office who were directors
of the Bank or the Holding Company, as applicable, at the beginning of the
period.
3. Termination Following Change in Control. If any of the events described
in Section 2 hereof constituting a Change in Control shall have occurred,
Employee shall be entitled to the benefits provided for in Section 4(a) hereof
upon the termination or reassignment of his employment as a senior executive
officer of the Bank and/or its successor as provided in this Section 3, within
twenty-four (24) months after such event, unless such employment is terminated
or reassigned: (i) by any regulatory authority (acting with proper
jurisdiction); or (ii) by the Board of Directors for cause; or (iii) because of
Employee's death, retirement or disability. Such benefits shall be reduced by
the amount of any severance paid to Employee by the Bank or its successor.
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(a) Retirement; Disability.
(i) Termination of employment by the Bank based on retirement
shall mean the mandatory termination of employment in accordance with
the retirement policy of the Bank, including (at Employee's sole
election and as set forth in writing) early retirement, generally
applicable to its salaried employees or in accordance with any
retirement arrangement established with Employee's consent with
respect to Employee.
(ii) Termination of employment by the Bank based on disability
shall mean termination because of inability, as a result of incapacity
due to physical or mental illness, to perform the services required as
an employee for a period aggregating six (6) months or more within any
twelve (12) month period, or because Employee becomes or is deemed
disabled under any applicable policy providing disability insurance.
(b) Notice of Termination. The Bank agrees that in the event of termination
it will promptly furnish Employee with a written Notice of Termination. Any
purported termination of Employee shall be communicated by written Notice of
Termination to the Bank. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall include the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated.
(c) Date of Termination. "Date of Termination" shall mean the date on which
a Notice of Termination is given; provided that, if within five (5) days after
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
(d) Reassignment. Reassignment shall mean a reduction in base salary or an
involuntary reassignment of Employee's duties, responsibilities, or benefits
inconsistent with those of a senior executive officer of a bank or the
involuntary relocation of Employee's primary duties and responsibilities to an
office or location greater than fifty (50) miles from Litchfield, Connecticut or
action which results in a significant worsening of the Employee's work
conditions (including, but not limited to, a significant change in employment
duties, responsibilities, required hours or otherwise).
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4. Compensation Upon Termination or Reassignment.
(a) If, within twenty-four (24) months after a Change in Control, as
defined in Section 2 hereof, shall have occurred, Employee's employment
with the Bank terminates or is reassigned as defined in Section 3 (except
by an agency acting with proper jurisdiction, or by a board of directors
for cause or as a result of death, retirement or disability), then the Bank
and/or its successor shall pay Employee within five (5) days after the Date
of Termination an amount equal to the sum of:
(i) Two (2) years of Employee's annual compensation based upon
the most recent aggregate base salary paid to Employee in the twelve
(12) month period immediately preceding his termination or
reassignment less amounts previously paid to Employee from the date of
Change in Control; plus
(ii) Reasonable legal fees and expenses incurred by Employee as a
result of such termination or reassignment (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or reassignment or in seeking to obtain or enforce any
right or benefit provided for by this Agreement).
(b) Employee shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Section 4 be reduced by any
compensation earned by Employee as the result of employment by another employer
after the Date of Termination or Reassignment, or otherwise.
(c) It is the intention of the parties to this Agreement that no payments
by the Bank to or for Employee's benefit under this Agreement shall be
non-deductible to the Bank by reason of the operation of Section 280G of the
Internal Revenue Code. Accordingly, notwithstanding any other provision hereof,
if by reason of the operation of said Section 280G of the Internal Revenue Code,
any such payments exceed the amount which can be deducted by the Bank, the
amount of such payments shall be reduced to the maximum which can be deducted by
the Bank. To the extent that payments in excess of the amount which can be
deducted by the Bank have been made to and for Employee's benefit, they shall be
refunded with interest at the applicable rate provided under Section 1274(d) of
the Internal Revenue Code, or at such other rate as may be required in order
that no such payment to or for Employee's benefit shall be non-deductible
pursuant to Section 280G of the Internal Revenue Code. Any payments made
hereunder which are not deductible by the Bank as a result of losses which have
been carried forward by the Bank for Federal tax purposes shall not be deemed a
non-deductible amount for purposes of this Section 4(c).
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5. Continuation of Insurance Benefits.
Notwithstanding any other provision in this Agreement to the contrary, the
Bank and/or its successor shall maintain in full force and effect for Employee's
continued benefit, for the two (2) year period beginning upon a Change in
Control, all life insurance, medical, health and accident and disability
policies, plans, programs or arrangements which were in effect immediately prior
to the Change in Control.
6. Successors; Binding Agreement.
(a) The Bank and the Holding Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation,
acquisition of assets or assumption of liabilities or otherwise) to all or
substantially all of the business and/or assets and/or deposits of the
Bank, by agreement, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Bank would be required
to perform it if no such succession had taken place. Failure of the Bank
and/or Holding Company to obtain such agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
entitle Employee to compensation from the Bank in the same amount and on
the same terms as he would be entitled to hereunder if his employment had
terminated as a result of a Termination or Reassignment, as provided in
Section 3 hereof, after a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this
Agreement, "Bank" shall mean the Bank as hereinbefore defined and any
successor to the business, assets and/or deposits as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Employee should
die after any rights to receive the amounts contemplated hereby have
accrued to Employee but before such amounts have been paid, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to his devisee, legatee or other designee or,
if there be no such designee, to his estate.
7. Notices. All notices and other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notices to the Bank and the Holding
Company shall be directed to the attention of the Board with a copy to the
Chairman of the Board of the Bank and the Chairman of the Board of the Holding
Company or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
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8. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Employee and such other officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other or failure to comply with any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Connecticut and of the United States of America.
9. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Litchfield,
Connecticut, in accordance with the rules of the American Arbitration
Association then in effect. Notwithstanding the pendency of any such dispute or
controversy, the Bank will pay Employee promptly an amount equal to his full
scheduled compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, base salary) and provide Employee with all
scheduled compensation, benefits and insurance plans in which he was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with Section 3 hereof. Amounts paid
under this Section 11 are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due under
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that Employee shall be entitled to seek
specific performance of his right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
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Agreed to this 6th day of August, 1997 by and among Employee, The First
National Bank of Litchfield, and First Litchfield Financial Corporation.
THE FIRST NATIONAL BANK OF
LITCHFIELD
By: /s/ Xxxxxx X. Clock
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Its: Chairman
Duly Authorized
EMPLOYEE
Signature: /s/ Xxxxxx X. Xxxxxx
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Printed Name: Xxxxxx X. Xxxxxx
