Exhibit 10.60
FIRST NATIONAL BANK OF LITCHFIELD
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This Supplemental Executive Retirement Agreement (the "Agreement") is
dated as of and is effective the 1st day of January, 2006, by and between FIRST
NATIONAL BANK OF LITCHFIELD, a bank organized and existing under the national
banking laws of the States of America with its main office located at 00 Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx, 00000 (the "Bank") and Xxxxxx X. Xxxxx, whose
mailing address is X.X. Xxx 0000, Xxxxxxxxxx, Xxxxxxxxxxx 00000 (the
"Executive").
Whereas, the Executive has been and continues to be a valued executive of
the Bank; and whereas, the Executive has performed his duties as Senior Vice
President in a capable and efficient manner; and
Whereas, the Bank wishes to ensure the continued loyalty and services of
the Executive by providing him with deferred compensation
Now, therefore, in consideration of the foregoing premises and the
services to be performed in the future as well as the mutual covenants and
promises herein contained, it is agreed that the Supplemental Executive
Retirement Agreement dated January 1, 2006, is hereby entered into as follows:
In consideration of the mutual covenants herein contained and implied, the
sufficiency of which is acknowledged by each party, the Bank and the Executive
agree as follows:
1. Definitions
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(a) "Accrued Benefit" means the gross annual payment equal to
twenty-five percent (25%) of the Executive's Final Average Compensation
multiplied by (i) the Executive's Non-forfeitable Percentage set forth in
Section 2(b).
(b) "Actuarial Equivalent" means a benefit of equivalent value when
computed on the basis of the applicable interest rate, for purposes of Code
Section 417(e)(3)(A)(ii)(II), for November of the calendar year preceding the
year in which the Executive separates from service, and the mortality table set
forth in Treas. reg. 1.401(a)(9)-9.
(c) "Cause" means the following:
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(i) the commission by the Executive of any crime involving
deceit, dishonesty or fraud with regard to the Bank or its business, or moral
turpitude of such a nature as would adversely affect the reputation of the Bank;
(ii) the commission by the Executive of a material act or acts
of dishonesty in connection with the performance of the Executive's duties to
the Bank including, without limitation, misappropriation of funds or property;
(iii) an act or acts of misconduct (including sexual
harassment) by the Executive;
(iv) continued, willful non-performance by the Executive of
duties (other than by reason of illness or disability) which has continued
for more than five (5) days following written notice of non-performance
from the Board of Directors (or Executive Committee); or
(v) the entry of a final cease and desist order with respect
to safety and soundness violations by any federal or state regulatory agency
having jurisdiction over the Bank, or the suspension, removal or termination of
the employment of the Executive pursuant to an order by any federal or state
regulatory agency having jurisdiction over the Bank, so long as any such order
is determined in the sole discretion of the Board of Directors to relate to
matters within the conduct or sphere of supervisory authority of the Executive.
The determination of whether the Executive's employment shall be
terminated for Cause shall be made at a meeting of the Board of Directors called
and held for such purpose, at which meeting the Board of Directors makes a
finding that in the good faith opinion of the Board of Directors an event set
forth in subclauses (i) through (v) has occurred and specifying the particulars
thereof in detail.
(d) "100% Non-forfeitable Benefit" means the Accrued Benefit,
determined with a non-forfeitable interest equal to 100%.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Final Average Compensation" means the average of the
Executive's annual base salary (prior to any salary reduction contributions to
any Section 401(k), 125 or 132 plan) and bonuses received by the Executive
during the thirty-six (36) month period ending on December 31 of the calendar
year immediately preceding the Executive's separation from employment with the
Bank. Without limiting the foregoing, salary and bonus payments received during
such 36 month period but attributable to an earlier period shall be considered
under the preceding sentence; and amounts received after such period but
attributable to services rendered during such period shall not be considered.
(g) "Hour of Service" means each hour for which the Executive is
paid or entitled to be paid for the performance of duties for the Bank or for
non-performance of duties (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity, jury duty,
military duty or approved paid leave of absence.
(h) "Normal Form" means a lump sum distribution.
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(i) "Year of Service" means each period of twelve (12) consecutive
months commencing January 1, 2004 and each anniversary thereof during which the
Executive is credited with at least 1,000 Hours of Service, including all such
twelve (12) month periods prior to the effective date of this Agreement. The
Executive shall accrue a Year of Service for all purposes hereunder if, in the
Executive's final year of employment with the Bank, the Executive is credited
with at least 1,000 Hours of Service.
2. Payments to Executive.
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(a) If the Executive remains continuously employed by the Bank until
his termination of employment on or after completion of eleven (11) Years of
Service, the Bank will pay to the Executive a gross amount equal to the
Actuarial Equivalent of (i) the Accrued Benefit, multiplied by (ii) the number
of whole years by which the Executive's life expectancy in years upon
termination from employment (determined under the 1994 Group Annuity Reserving
Table) exceeds the Executive's age in years as of such employment termination
date. Said gross benefit amount will be paid in the Normal Form, subject to
applicable withholding, and shall be payable within one hundred eighty (180)
days of the date the Executive's employment with the Bank terminates or as soon
as practicable thereafter.
(b) The Executive's benefits under the Agreement shall become
non-forfeitable in accordance with the following schedule, subject to the
possible adjustments referenced in Sections 2(c) and Section 15 of this
Agreement; provided, however, that all benefits payable hereunder shall be
forfeited upon a termination from employment for Cause:
Years of Service Non-forfeitable Percentage
---------------- --------------------------
1 or less 0%
2 10%
3 20%
4 30%
5 40%
6 50%
7 60%
8 70%
9 80%
10 90%
11 or more 100%
(c) If the Executive's benefits under this Agreement become payable
upon the Executive's separation from service before the Executive's 62nd
birthday for reasons other than Cause, Change in Control, death or disability
pursuant to Sections 3 or 4 hereof, as applicable, then the gross amount of the
Executive's benefit under shall be determined in accordance with Section 2(a),
provided that the Accrued Benefit shall be reduced by 3.0% for each year
benefits commence before the Executive's 62nd birthday. The foregoing 3.0%
reduction shall be pro-rated for a partial year.
(d) In lieu of the Normal Form provided by Section 2(a), with the
written consent of the Board of Directors of the Bank, the Executive may elect
at least twelve (12) months prior to the date on which payments are to commence
an optional form of payment which is the Actuarial Equivalent of the Normal Form
to which the Executive is entitled; provided, however, in the case of an
election related to a payment not made on account of the Executive's disability
(as defined in Section 4 hereof) or death, the payment(s) to be made with
respect to such election must be deferred for a period of not less than five (5)
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years from the date such payment(s) would otherwise have been made and may not
be made less than twelve (12) months prior to the date that the scheduled
payment(s) would have been made in the Normal Form.
(e) Notwithstanding anything to the contrary herein contained or
implied, in no event shall the Executive be entitled to receive any benefits
under this Agreement if he is terminated by the Bank for Cause.
3. Death of the Executive.
----------------------
(a) If the Executive dies while employed by the Bank, the Bank will
pay to the Executive's surviving spouse the Executive's Accrued Benefit assuming
that the Executive had retired the day before his death with a 100%
Non-forfeitable Benefit. The surviving spouse shall receive the death benefit in
a lump sum within thirty (30) days of the death of the Executive or as soon as
practicable thereafter. If the Executive leaves no surviving spouse, his estate
shall receive the present value of the Executive's Accrued Benefit in a lump sum
as soon as practicable after the Executive's death.
(b) If the Executive dies following the commencement of the payment
of benefits under this Agreement, death benefits, if any, will be determined
pursuant to the form of benefit payment in effect at the time of death.
4. Disability Benefits.
--------------------
If the Executive shall be disabled as defined in this Section 4 while in
the employ of the Bank and resigns from employment with the Bank on the basis of
such disability, the Executive shall be entitled to receive the benefit amount
to which he would be entitled under Section 2(a) determined as if the Executive
had a one hundred percent (100%) Non-forfeitable Benefit. For the purposes of
this Section 4, the Executive shall be considered disabled if he (1) is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months; or (2) is receiving income replacement benefits for a period of at
least three (3) months under an accident and health plan covering the employees
of the Bank by reason of a medically determinable physical or mental impairment
which can be expected to result in death or last for a continuous period of at
least twelve (12) months.
5. Termination Without Cause.
-------------------------
If the Executive is terminated without Cause, the Executive shall be
entitled to receive his Accrued Benefit payable pursuant to Section 2 above as
if the Executive had terminated his employment with a 100% Non-forfeitable
Benefit, subject to the possible adjustments discussed in Section 2(c).
6. Re-employment.
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If the Executive is rehired by the Bank after he has begun receiving
payments hereunder but before he has received all payments due hereunder, such
payments shall be discontinued until the Executive's subsequent retirement,
whereupon the amount of the Executive's benefit shall be recalculated as of that
time.
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7. Claims Procedure.
----------------
(a) In the event the Executive or his beneficiary in the case of the
Executive's death or their authorized representative (hereinafter, the
"Claimant") asserts a right to a benefit under this Agreement which has not been
received, in whole or in part, the Claimant must file with the Bank a claim for
such benefit on forms provided by the Bank. The Bank shall render its decision
on the claim within ninety (90) days after receipt of the claim. If special
circumstances apply, the ninety (90) day period may be extended by an additional
ninety (90) days, provided written notice of the extension is given to the
Claimant during the initial ninety (90) day period and such notice indicates the
special circumstances requiring an extension of time and the date by which the
Bank expects to render its decision on the claim. If the Bank wholly or
partially denies the claim, the Bank shall provide written notice to the
Claimant within the time limitations of this Section. Such notice shall set
forth:
(i) the specific reasons for the denial of the claim;
(ii) specific reference to pertinent provisions of the Agreement on
which the denial is based;
(iii) a description of any additional material or information
necessary to perfect the claim and an explanation of why such material or
information is necessary;
(iv) a description of the Agreement's claims procedures, and the
time limitations applicable to such procedures; and
(v) a statement of the Claimant's right to bring a civil action
under Section 502(a) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") if the claim denial is appealed to the Bank and the Bank fully
or partially denies the claim pursuant to Section 7(c).
(b) A Claimant whose application for benefits is denied in whole or in
part may request a full and fair review of the decision denying the claim by
filing, in accordance with such procedures as the Bank may reasonably establish,
a written appeal which sets forth the documents, records and other information
relating to the claim within sixty (60) days after receipt of the notice of the
denial by the Bank. In connection with such appeal and upon request by the
Claimant, a Claimant may review (or receive free copies of) all documents,
records or other information relevant to the Claimant's claim for benefit, all
in accordance with such procedures as the Bank may reasonably establish. If a
Claimant fails to file an appeal within such sixty (60) day period, he shall
have no further right to appeal.
(c) A decision on the appeal by the Bank shall include a review by the
Bank that takes into account all comments, documents, records and other
information submitted by the Claimant relating to the claim, without regard to
whether such information was submitted or considered in the initial claim
determination. The Bank shall render its decision on the appeal no later than
sixty (60) days after the receipt by the Bank of the appeal. If special
circumstances apply, the sixty (60) day period may be extended by an additional
sixty (60) days, provided written notice of the extension is given to the
Claimant during the initial sixty (60) day period and such notice indicates the
special circumstances requiring an extension of time and the date by which the
Bank expects to render its decision on the claim on appeal. If
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the Bank wholly or partly denies the claim on appeal, the Bank shall provide
written notice to the Claimant within the time limitations of this Section. Such
notice shall set forth:
(i) the specific reasons for the denial of the claim;
(ii) specific reference to pertinent provisions of the Agreement on
which the denial is based;
(iii) a statement of the Claimant's right to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records,
and other information relevant to the Claimant's claim for benefits; and
(iv) a Statement of the Claimant's right to bring a civil action
under Section 502(a) of ERISA,
(d) The Bank shall be the Plan Administrator with respect to this
Agreement.
(e) As Plan Administrator, the Bank shall have complete authority, in its
sole and absolute discretion, to interpret the provisions of this Agreement and
make determinations regarding eligibility. Without limiting the foregoing, it is
the Bank's intent that the Agreement be administered in a manner compliant with
the provisions of Section 409A of the Code, and regulations and rulings issued
thereunder so as not to subject the benefits accruing hereunder to taxation
pursuant to said Section 409A(a)(1).
8. Provision for Incapacity.
------------------------
If the Board of Directors (or Executive Committee) reasonably deems the
Executive incapable of receiving his benefits by reason of illness, infirmity or
incapacity of any kind, the Bank may make payments to any one or more persons or
representatives as provided in a written direction received from the Executive
while competent and, in the absence of any such written direction, to the
following persons and representatives in the order set forth, i.e., first to the
Executive's spouse and then to his children. The making of any such payment
shall fully discharge the Bank from all obligations and liability under this
Agreement.
9. Violation of Agreement.
----------------------
In the event of any violation of any terms of the Agreement by the
Executive, the Bank, in addition to any other rights which it may have, shall be
relieved of the liability to make any payments under the Agreement to, or on
behalf of, the Executive so long as such violation continues (and may recover
all payments made prior to such violation) and shall have the right to specific
enforcement at the Agreement by proceedings in equity. All costs, including
attorney's fees, incurred by the Bank pursuant to this Section shall be
reimbursed by the Executive upon entry of an order, decree, judgment or other
pronouncement from the court, arbitrator or mediator to whom the matter is
submitted that the Executive violated this Agreement.
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10. Non-assignable Rights.
---------------------
Except as otherwise provided by the Agreement, neither the Executive nor
his surviving spouse shall have any right to commute, sell, assign, transfer or
otherwise convey the right to receive any payments hereunder, which payments and
the right thereto are expressly declared to be non-assignable and
non-transferable.
11. Independence of Agreement.
-------------------------
The benefits payable under the Agreement shall be independent of, and in
addition to, any employment agreement that may exist from time to time between
the parties hereto, or any other compensation payable by the Bank to the
Executive, whether as salary, bonus or otherwise. The Agreement shall not be
deemed to constitute a contract of employment between the parties hereto, and no
provision hereof shall restrict the right of the Bank to discharge the Executive
with or without Cause, or restrict the right of the Executive to terminate his
employment.
12. General Obligation of the Bank
------------------------------
The benefits provided under the Agreement constitute a mere promise by the
Bank to make payments in the future, and the rights of the Executive hereunder
shall be those of a general unsecured creditor of the Bank. Nothing contained
herein shall be construed to create a trust of any kind or to render the Bank a
fiduciary with respect to the Executive. The Bank shall not be required to
maintain any fund or segregate any amount or in any other way currently fund the
future payment of any benefit provided under the Agreement, and nothing
contained herein shall be construed to give the Executive or any other person
any right to any specific assets of the Bank or of any other person. This
Agreement is intended to be, and shall in all events be construed and treated
as, a deferred compensation arrangement for a "select group of management and
highly compensated employees," within the meaning of Title I of ERISA.
13. Establishment of Trust; Cooperation of Executive.
------------------------------------------------
(a) The provisions of Section 12 notwithstanding, the Bank may, in its
sole and absolute discretion, establish a trust to which funds earmarked for
payment under this Agreement may be transferred and from which benefits arising
hereunder, and subject to the provisions and limitations hereof, may be paid.
Any such trust would contain provisions making it irrevocable by the Bank unless
and until all benefits hereunder which are funded through such trust have been
paid or provided for, except in the case of bankruptcy or insolvency of the
Bank, in which event benefit payments from the trust would cease and assets
thereof would revert to the Bank or be paid to its creditors.
(b) The Bank may, for its corporate purposes, choose to obtain a policy or
policies of life insurance on the Executive. The Executive agrees to fully
cooperate in connection with the securing of any such policy or policies or the
election of any options thereunder which the Bank may wish and to make himself
available for medical examinations if necessary.
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14. Governing Law.
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The Agreement shall be construed under and governed by the laws of the
State of Connecticut except to the extent pre-empted by ERISA.
15. Change of Control.
------------------
This Agreement shall be binding upon any successor to the Bank following a
Change in Control.
(a) "Change in Control" means a change in the ownership or effective
control of the Bank, or in the ownership of a substantial portion of the assets
of the Bank, as such change is defined in Section 409A of the Code and
regulations thereunder.
(b) Upon a Change in Control followed within twenty-four (24) months by
the Executive's termination for reasons other than death, disability or cause,
the Executive shall be entitled to receive the benefit amount to which he would
be entitled to under Section 2(a) and determined as if the Executive had a one
hundred percent (100%) non-forfeitable benefit.
(c) Notwithstanding any provision of this Agreement to the contrary, to
the extent any distribution(s), if made, under this Section 15 of this Agreement
would result in "an excess parachute payment" under 280G of the Code, the Bank
shall reduce or delay such distribution(s) to the extent necessary so that the
distributions would not result in an excess parachute payment.
EXECUTED under seal as of the day and year first above written, and in the
case of the Bank by its duly authorized representative.
FIRST NATIONAL BANK OF LITCHFIELD
DIRECTOR
ATTEST: /s/ Xxxxxxx X. Xxxxxxx By: /s/Xxxxxxx X. Xxx
(duly authorized)
EXECUTIVE
ATTEST /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
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