EXHIBIT 10.4
FORM OF
SPECIAL TERMINATION AGREEMENT
This AGREEMENT is made effective as of November 9, 1996 by
and between Granite State Bankshares, Inc. (the "Company"), a corporation
organized under the laws of the State of New Hampshire, with its office at
000 Xxxx Xxxxxx, Xxxxx, Xxx Xxxxxxxxx, and ("Executive").
The term "Bank" refers to Granite Bank, the wholly-owned subsidiary of the
Company.
WHEREAS, the Company recognizes the substantial contribution Executive
has made to the Company and the Bank and wishes to provide him with further
incentive by protecting his position therewith for the period and under the
circumstances provided in this Agreement; and
WHEREAS, Executive has been elected to, and has agreed to serve in the
position of ,
positions of substantial responsibility;
NOW, THEREFORE, in consideration of the contribution and
responsibilities of Executive, and upon the other terms and conditions
hereinafter provided, the parties hereto agree as follows:
1. TERM OF AGREEMENT.
The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of thirty-six (36)
full calendar months thereafter. Commencing on the first anniversary date
of this Agreement and continuing at each anniversary date thereafter, the
Agreement shall renew for an additional year such that the remaining term
shall be three (3) years unless written notice is provided to Executive at
least ten (10) days and not more than twenty (20) days prior to any such
anniversary date, in which event this Agreement shall cease at the end of
thirty-six (36) months following such anniversary date.
2. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control of the Company (as
herein defined) followed at any time during the term of this Agreement by
the voluntary or involuntary termination of Executive's employment by the
Bank or the Company, other than for Cause, as defined in Section 2(c)
hereof, the provisions of Section 3 shall apply. Upon the occurrence of a
Change in Control, Executive shall have the right to elect to voluntarily
terminate his employment at any time during the term of this Agreement and
receive the benefits specified in Section 3 of this Agreement.
(b) A "Change in Control" of the Bank or the Company shall mean a
change in control of a nature that: (i) would be required to be reported in
response to Item 1(a) of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a Change in Control of the
Bank or the Company within the meaning of the Change in Bank Control Act and
the Rules and Regulations promulgated by the Board of Governors of the
Federal Reserve System (the "FRB"), as in effect on the date hereof; or
(iii) without limitation, such a Change in Control shall be deemed to have
occurred at such time as (a) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities, or makes an offer to purchase securities, of the Company
representing 20% or more of the combined voting power of the Company's
outstanding securities, except for any securities purchased by an employee
stock ownership plan established by the Company or the Bank and approved by
the Incumbent Board (as defined below); or (b) individuals who constitute
the Board of Directors of the Company on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date hereof
whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by the Company's Nominating
Committee, shall be, for purposes of this clause (b), considered as though
he were a member of the Incumbent Board; or (c) a plan of reorganization,
merger, consolidation or sale of all or substantially all the assets of the
Bank or Company or similar transaction occurs in which the Bank or the
Company is not the resulting entity; or (d) a proxy statement shall be
distributed soliciting proxies from stockholders of the Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of
the Company or Bank with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or
securities not issued by the Bank or the Company shall be distributed; or
(e) a tender offer is made for 20% or more of the voting securities of the
Bank or Company then outstanding.
(c) Executive shall not have the right to receive termination
benefits pursuant to Section 3 hereof upon Termination of Cause. The term
"Termination for Cause" shall mean termination upon intentional failure to
perform stated duties, personal dishonesty which results in loss to the
Company or one of its affiliates, a willful violation of any law, rule,
regulation (other than traffic violations or similar offenses) or final
cease and desist order which results in substantial loss to the Company or
one of its affiliates, or any material breach of this Agreement. For
purposes of this Section, no act, or the failure to act, on Executive's part
shall be "willful" or "intentional" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or omission was
in the best interest of the Company or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not
less than three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice to Executive
and an opportunity for him, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, Executive was
guilty of conduct justifying Termination for Cause and specifying the
particulars thereof in detail. Any stock options or limited rights granted
to the Executive under any stock option plan or any unvested awards granted
under any other stock benefit plan of the Bank, the Company or any
subsidiary thereof, shall become null and void effective upon Executive's
receipt of Notice of Termination for Cause pursuant to Section 4 hereof and
shall not be exercisable by Executive at any time subsequent to such
Termination for Cause, unless it is determined in arbitration pursuant to
Section 4 hereof that Cause for the termination of Executive's did not
exist, in which event such options shall be exercisable by Executive for a
period of not less than three months from the arbitration determination.
3. TERMINATION BENEFITS.
(a) Upon the occurrence of a Change in Control, followed at any time
during the term of this Agreement by the voluntary or involuntary
termination of the Executive's employment, other than for Termination for
Cause, the Company shall pay to Executive, or in the event of his subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be,
as severance pay or liquidated damages, or both, a sum equal to three (3)
times the average of the Executive's three preceding years' annual base
salary from the Bank and the Company, including the amount of any salary
deferred by Executive pursuant to any deferred compensation arrangement. At
the election of the Executive, which election is to be made within thirty
(30) days of the date of this Agreement, and during the month of January in
each year, and which election is irrevocable for the calendar year in which
it is made, payments under Section 3 of this Agreement shall be made in a
lump sum within thirty (30) days of the date of severance of Executive's
employment, or paid in equal monthly installments during the thirty-six (36)
months following the Executive's termination. In the event that no election
is made, payment to the Executive will be made on a monthly basis during the
remaining term of this Agreement.
(b) Upon the occurrence of a Change in Control of the Bank or the
Company followed at any time during the term of this Agreement by the
Executive's voluntary or involuntary termination of employment, other than
for Termination for Cause, the Company shall cause to be continued life,
medical, dental and disability coverage substantially identical to the
coverage maintained by the Bank for the Executive prior to his severance.
Such coverage and payments shall cease upon expiration of thirty-six (36)
months after termination of employment.
(c) Notwithstanding the preceding paragraphs of this Section 3, in
the event that:
(i) the aggregate payments or benefits to be made or afforded to
Executive under said paragraph (the "Termination Benefits")
would be deemed to include an "excess parachute payment" under
Section 280G of the Internal Revenue Code of 1986 (the "Code")
or any successor thereto, and
(ii) if such Termination Benefits were reduced to an amount (the
"Non-Triggering Amount"), the value of which is one dollar
($1.00) less than an amount equal to three (3) times Executive's
"base amount", as determined in accordance with said Section
280G, and the Non-Triggering Amount would be greater than the
aggregate value of the Termination Benefits (without such
reduction) minus the amount of tax required to be paid by
Executive thereon by Section 4999 of the Code, then the
Termination Benefits shall be reduced to the Non-Triggering
Amount. The allocation of the reduction required by the
preceding paragraphs of this Section 3 shall be determined by
the Executive.
(d) Upon the occurrence of a Change in Control followed by the
voluntary or involuntary termination of Executive's employment, other than
for Cause, the Company shall pay, or cause the Bank to pay, Executive an
Accelerated Retirement Benefit. Such benefit shall be the greater of (A)
fifty percent (50%) of the Accelerated Retirement Benefit described below,
or (b) Executive's retirement benefit payable under the qualified pension
plan of the Bank, plus any benefit payable from any qualified or non-
qualified retirement plans or programs maintained by the Bank other than
said qualified pension plan, at his actual age upon severance of employment,
whichever is greater. The Accelerated Retirement Benefit shall be a benefit
calculated pursuant to the provisions of the Bank's qualified pension plan
at the time of severance and shall consist of a benefit payable at age
sixty-five (65) and assuming Executive had attained age sixty-five (65) and
worked for the Bank from his date of hire to age sixty-five (65). At the
discretion of Executive, upon an election pursuant to Section 3(a) hereof,
such payment may be made in a lump sum within 30 days of the date of
severance of Executive's employment, or paid, on a pro rata basis, semi-
monthly during the thirty-six (36) months following Executive's termination.
(e) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 USC
Section 1828(k) and any regulations promulgated thereunder.
4. NOTICE OF TERMINATION.
Any purported termination by the Company, or by the Executive shall be
communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. "Date of Termination" shall
mean the date specified in the Notice of Termination (which, in the case of
a Termination for Cause, shall not be less than thirty (30) days from the
date such Notice of Termination is given). If within thirty (30) days after
any Notice of Termination for Cause is given, the Executive notifies the
Company that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined,
either by written agreement of the parties, by a binding arbitration award,
and provided further that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the Company
will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
annual base salary) and continue him as a participant in all compensation,
benefit and insurance plans in which he was participating when the notice of
dispute was given, until the dispute is finally resolved in accordance with
the Agreement. Amounts and benefits paid under this Section pending
resolution of the dispute in arbitration shall be offset against any amounts
and benefits that are determined to be due Executive under this Agreement as
a result of the termination of his employment. Nothing herein shall be
construed as limiting the right of the Company or the Bank to terminate the
employment of the Executive at any time and for any reason and to pay the
Executive the benefits set forth in Section 3 of this Agreement.
5. SOURCE OF PAYMENTS.
It is intended by the parties hereto that all payments provided in
this Agreement shall be paid in cash or check from the general funds of the
Company.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Company and Executive,
except that this Agreement shall not affect or operate to reduce any benefit
or compensation inuring to Executive of a kind elsewhere provided. No
provision of this Agreement shall be interpreted to mean that Executive is
subject to receiving fewer benefits than those available to him without
reference to this Agreement.
7. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation, or to
execution, attachment, levy, or similar process or assignment by operation
of law, and any attempt, voluntary or involuntary, to affect any such action
shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit
of, Executive, the Company and their respective successors and assigns.
8. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party
charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each such
waiver shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or as
to any act other than that specifically waived.
9. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of
any provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full
extent consistent with law continue in full force and effect.
10. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
11. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of New Hampshire,
unless otherwise specified herein.
12. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by the employee
within fifty (50) miles from Keene, New Hampshire, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court having jurisdiction;
provided, however, that Executive 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.
13. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to
any dispute or question of interpretation relating to this Agreement shall
be paid or reimbursed by the Company if Executive is successful pursuant to
arbitration or settlement.
14. INDEMNIFICATION.
The Company shall provide the Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense, and shall indemnify the
Executive (and his heirs, executors and administrators) to the fullest
extent permitted under New Hampshire law and as provided in the Company's
certificate of incorporation against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a
director or officer at the time of incurring such expenses or liabilities),
such expenses and liabilities to include, but not be limited to, judgments,
court costs and attorneys' fees and the cost of reasonable settlements.
15. SIGNATURES.
IN WITNESS WHEREOF, Granite State Bankshares, Inc. has caused this
Agreement to be executed by its duly authorized officer, and Executive has
signed this Agreement, as of the date first above written.
Granite State Bankshares, Inc.
By: /s/ Xxxxxxx Xxxxxxx
/s/ Executive
Executive
