EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 17th day of January, 1996, by
and between THE NEW MILFORD BANK & TRUST COMPANY, a Connecticut bank and trust
company with its principal office and place of business at 00 Xxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxxx 00000 (the "Bank"), and XXXXX X. XXXXX, residing at 000
Xxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000-0000 ("Employee").
W I T N E S S E T H:
WHEREAS, Employee has been and continues to be employed by the Bank in
a management capacity;
WHEREAS, Employee is willing to continue to work for the Bank on the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the mutual terms herein contained,
the parties hereto, intending to be legally bound, do hereby mutually covenant
and agree as follows:
I. EMPLOYMENT.
The Bank agrees to employ Employee for the Term of Employment, as such
term is defined in Section 2.6 hereof, in the same position that Employee holds
on the date of this Agreement, and Employee accepts such employment and agrees
to serve in such capacity upon the terms and conditions hereinafter set forth.
II. DEFINITIONS.
The following terms shall have the following meanings:
2.1 "Cause," shall mean:
(a) Employee's breach of his obligations under this Agreement,
if such breach shall not have been cured by Employee within
thirty (30) days after Employee's receipt from the Bank of
written notice of a claimed breach; or
(b) willful misconduct by Employee, including, but not limited
to, the commission by Employee of a felony or the
perpetration by Employee of common law fraud upon the Bank;
or
(c) violation by Employee of one or more federal or state
banking laws, including regulations promulgated thereunder,
which, considered separately or together, is deemed to be a
significant violation, the existence and significance of
such violation or violations to be determined in good faith
by the Board of Directors of the Bank (the "Board") after
consultation with counsel; such determination need not await
final adjudication of an alleged violation or violations by
the applicable federal or state bank regulatory agency
(collectively, "Bank Regulators"); or
(d) conduct by Employee which is subject to criticism by Bank
Regulators and which criticism the Board, after consultation
with counsel, deems in good faith to adversely affect the
Bank, including the Bank's standing with Bank Regulators; or
(e) Failure To Adhere To Performance and Conduct Criteria, as
defined below; or
(f) prior to a Change-in-Control, as defined below, such other
conduct as may constitute cause under the laws of
Connecticut.
2.2 A "Change-in-Control" shall be deemed to have occurred with
respect to the Bank if any "Person," as defined in Section 2.5, has acquired
beneficial ownership or effective control of the Bank. A Person shall be deemed
to have acquired beneficial ownership or effective control if:
(a) the Person directly or indirectly or acting through one (1)
or more other Persons beneficially owns, controls, or has
power to vote twenty-five percent (25%) or more of the
voting common stock of the Bank; or
(b) the Person acquires or agrees to acquire all or
substantially all of the assets and business of the Bank; or
(c) the Person controls the election of a majority of the
directors of the Bank; or
(d) the Board of Directors of the Bank determines that the
Person directly or indirectly exercises a controlling
influence over the management or policies of the Bank; or
(e) the Person (i) is a party to a merger, consolidation, or any
other form of reorganization having substantially the same
effect as a merger or consolidation with the Bank, and (ii)
immediately prior to such transaction the Person had total
assets as of the end of its most recent fiscal year equal to
or greater than twenty percent (20%) of the total assets of
the Bank as of the end of its most recent fiscal year.
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Notwithstanding the foregoing, a "Change-in-Control" shall not be
deemed to have occurred if (i) a majority of the directors of the Bank in office
prior to the events described in (a), (b),or (c) above shall so vote not later
than thirty (30) days following the event, and (ii) Employee shall so agree in
writing. Beneficial ownership shall be determined under the provisions of
Securities Exchange Act Rule 13d-3, (17 C.F.R. & 240. 13d-3) as in effect on the
date of this Agreement.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "Failure To Adhere To Performance and Conduct Criteria" shall mean
failure by Employee to adhere to performance and conduct guidelines set forth by
the CEO and/or the Board, from time to time; and further that the Employee, in
the sole and good faith opinion of the Board, had not adequately corrected such
failure within 30 days after Employee's receipt from the Board and/or the CEO of
written notice that he has failed to adhere to such guidelines.
2.5 A "Person" shall mean a natural person, corporation, or other
entity. When two (2) or more Persons act as a partnership, limited partnership,
syndicate, or other group for the purpose of acquiring, holding, or disposing of
the Bank common stock, such partnership, syndicate, or group shall be considered
a Person.
2.6 "Term of Employment" shall mean the period commencing as of the
date of this Agreement and ending on December 31, 1996; provided, however, the
Term of Employment shall automatically be extended to the next subsequent 31st
day of December if the Board has not advised Employee in writing prior to 30
days of the expiration date of each such Term of Employment that the Term of
Employment shall not be so extended. For example, if the Board of Directors has
not advised Employee by November 30, 1996 that the Term of Employment will not
be extended beyond December 31, 1996; then the Term of Employment shall
automatically be extended until December 31, 1997; if the Board of Directors has
not advised Employee by November 30, 1997 that the Term of Employment will not
be extended beyond December 31 1997, then the Term of Employment shall
automatically be extended until December 31, 1998. Notwithstanding anything to
the contrary, the term of employment shall not be extended beyond December 31,
1998.
III. DUTIES OF EMPLOYMENT.
3.1 The Bank hereby employs Employee and Employee hereby accepts such
employment as Executive Vice President and Chief Lending Officer of the Bank
during the Term of Employment upon the terms and conditions set forth herein.
During the Term of Employment Employee will serve as Executive Vice President
and Chief Lending Officer of the Bank and will perform such other duties
commensurate with his position as Executive Vice President and Chief Lending
Officer as the CEO and/or the Board may assign to him. Employee agrees that
during the Term of Employment, he will apply, in good faith and on a full-time
basis (allowing for usual vacations and absence due to sickness), all of his
skill and experience to the performance of his duties in such employment, and
will adhere, in good faith, to the laws and regulations of federal
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and state banking regulatory agencies which may be promulgated from time to
time. It is understood that Employee may have other business investments or
directorships which may, from time to time, require minor portions of his time,
but which shall not interfere or be inconsistent with his duties hereunder.
IV. COMPENSATION AND BENEFITS DURING TERM OF EMPLOYMENT.
4.1 The Bank shall pay Employee during the Term of Employment
$100,000.00 per annum paid on a monthly basis, with such increases as provided
in Section 4.2 below, as salary (the "Salary"). The Bank may also pay such bonus
compensation ("Bonus Compensation") as may be determined by the Board of
Directors of the Bank in its sole discretion.
4.2 If this Agreement is extended pursuant to Section 2.6 above, the
Salary for such extension period, or periods, as the case may be, will be
determined by the Board of Directors in its sole discretion.
4.3 Employee shall be entitled to participate in any plan of the Bank
relating to stock options, stock purchases, pensions, thrift, profit sharing,
group life insurance, health, dental and disability coverage, education, or
other retirement or employee benefits that the Bank has adopted or may adopt for
the benefit of its employees. Employee shall also be entitled to participate in
any other fringe benefits which are now or may become applicable to the Bank's
employees and any other benefits which are commensurate with the duties and
responsibilities to be performed by Employee under this Agreement.
4.4 The Bank will reimburse Employee for necessary and reasonable
business expenses related to the business of the Bank incurred by him in the
performance of his duties hereunder. Employee will be entitled to such
reimbursement upon providing to the Bank appropriate documentation or receipts
reflecting any such business expenses.
4.5 Employee will be entitled to four weeks of paid vacation during
each calendar year during the Term of Employment hereof, to be taken at such
times as shall not unreasonably interfere with or impede the operation of the
Bank.
4.6 During the Term of this Agreement, the Bank will provide Employee
with the use of a 1995 Ford Explorer. When the vehicle is 36 months old or has
been driven 50,000 miles whichever comes first, the Bank will eliminate the use
of the vehicle. Instead, the Employee will be given a car allowance, pursuant to
the car policy then in effect.
V. TERMINATION OF EMPLOYMENT.
5.1 If Employee's employment is unilaterally terminated by the Bank
during the Term of Employment for any reason other than (i) Cause, (ii)
permanent and total disability (as defined in Section 22(e) of the Code) or
death, or (in) in connection with or within one year after a Change-In-Control,
Employee shall be entitled to receive, and the Bank shall be obligated to pay
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to Employee, severance pay in an amount equal to the greater of (A) Employee's
Salary as defined in Section 4.1 for the number of months remaining in the Term
of Employment, or (B) an amount equal to the then current monthly portion of
Employee's Salary multiplied by the number (not to exceed 12) of years, or part
thereof, Employee has been employed by the Bank, or (C) Employee's Salary for a
period of six months.
5.2 In addition to the severance payment described in Section 5.1 that
is payable to Employee, the following shall apply in the event of any
termination without Cause or in the event of any termination subject to Section
5.3 hereof: (1) Employee shall continue to receive life, health, dental and
disability coverage substantially equivalent to the coverage maintained by the
Bank for Employee prior to termination for a period of six months; provided the
Bank continues to provide such coverage to its executive officers; (2) and all
insurance or other provisions for indemnification or defense of officers or
directors of the Bank which are in effect on the date of termination of Employee
shall continue for the benefit of Employee with respect to all of his acts and
omissions while an officer or director as fully and completely as if such
termination had not occurred, and until the final expiration or running of all
periods of limitation which may be applicable to such acts or omissions,
provided the Bank continues to provide such coverage to its executive officers
and directors.
5.3 If during the Term of Employment there is a Change-In-Control and
Employee's employment is terminated voluntarily for Good Reason, as defined in
Section 5.4, or involuntarily for a reason other than Cause, in connection with
or within one year after a Change-In-Control, Employee shall be entitled to
receive a cash severance as provided for in this Section unless such termination
occurs by virtue of normal retirement, permanent and total disability (as
defined in Section 22(e) of the Code) or death. Subject to Section 5.4 below,
the amount of the severance payment shall equal (i) one times Employee's average
annual Salary which was payable by the Bank and was includable by Employee in
his gross income for federal income tax purposes with respect to the five most
recent taxable years of Employee ending prior to such Change-In-Control (or such
portion of such period during which Employee was a full-time employee of the
Bank), less (II) one dollar. In addition, Section 5.2 shall apply in the case of
any termination of employment within the scope of this Section 5.3.
5.4 "Good Reason" shall be deemed to have occurred if Employee
terminates any of the following reasons:
(a) without Employee's express written consent, the assignment
to Employee of any duties inconsistent with Employee's
positions, duties, responsibilities and status with the Bank
immediately before a Change-In-Control, or a change in
Employee's reporting, responsibilities, titles or offices as
in effect immediately before a Change-In-Control, or any
removal of Employee from, or any failure to re-elect
Employee to, any of such positions, except in connection
with the termination of Employee's employment as a result of
permanent and total disability (as defined in Section 22(e)
of the Code) or death;
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(b) a reduction in Employee's Salary in effect immediately
before a Change-In-Control;
(c) the failure of the Person substantially to maintain and to
continue Employee's participation in the benefit plans as in
effect immediately before a Change-In-Control, of the taking
of any action which would materially reduce the Employee's
benefits under any of such plans or deprive Employee of any
material fringe benefit enjoyed by Employee immediately
before a Change-In-Control;
(d) the change of Employee's principal place of employment to a
location more than 25 miles from Employee's current
principal place of employment.
5.5 Notwithstanding any other provisions of this Agreement or of any
other agreement, contract, or understanding heretofore or hereafter entered into
by Employee with the Bank (the "Other Agreements"), and notwithstanding any
formal or informal plan or other arrangement heretofore or hereafter adopted by
the Bank for the direct or indirect provision of compensation to Employee
(including groups or classes of participants or beneficiaries of which Employee
is a member), whether or not such compensation is deferred, is in cash, or is in
the form of a benefit to or for Employee (a "Benefit Plan"), Employee shall not
have any right to receive any payment or other benefit under this Agreement, any
Other Agreement, and all Benefit Plans, which would cause any such payment to
Employee to be considered a "parachute payment" within the meaning of Section
28OG(b)(2) of the Code (a "Parachute Payment"). In the event that the receipt of
any such payment or benefit under this Agreement, any Other Agreement, or any
Benefit Plan would cause Employee to be considered to have received a Parachute
Payment, then Employee shall have the right, in Employee's sole discretion to
designate those payments or benefits under this Agreement, any Other Agreements,
and/or any Benefit Plans, which should be reduced or eliminated so as to avoid
having the payment to Employee under this Agreement be deemed to be a Parachute
Payment. In the event that there is a dispute between the parties as to whether
a reduction in such payments to Employee is required to prevent such payment
from constituting a Parachute Payment, the parties agree that they shall be
bound by the determination of such matter by a partner resident in Hartford or
Stamford, Connecticut of one of the following accounting firms selected by the
Bank (or such other firm as shall be mutually agreed upon by the parties):
Coopers & Xxxxxxx LLP; Deloitte & Touche LLP; Ernst & Young LLP; or Price
Waterhouse LLP. In the event that Employee would otherwise be deemed to have
received an amount that would constitute a Parachute Payment, the amount paid to
him that exceeds the maximum amount permissible under this Section 5 shall be
treated as a loan to him and shall be repaid, with interest, to the extent
necessary to reduce the amount paid to the maximum permissible amount. The
interest rate and other terms of any such loan shall conform to terms that would
be applicable to loans of similar unsecured type made by the Bank to third
parties and to all regulatory requirements. Any such loan shall be repaid in
full six months after the date on which the Bank notifies Employee that a loan
relationship exists, and may be repaid by Employee without prepayment penalty at
any time during such six month period.
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5.6 Employee shall have no duty to mitigate damages in the event of a
termination under the terms of Sections 5.1 and 5.4, and, if he voluntarily
obtains other employment (including self-employment), any compensation or
profits received or accrued, directly or indirectly, from such other employment
shall not reduce or otherwise affect the obligations of the Bank to make
payments hereunder, except as provided in Section 5.3.
5.7 If the employment of Employee shall terminate at a time other than
during the Term of Employment, or is said employment shall terminate for Cause,
as defined in Section 2.1 hereof, or if Employee shall unilaterally terminate
his employment other than in connection with a Change-In-Control for Good
Reason, all payments that would have been due to Employee under the Agreement on
or after the date of such termination shall cease, and the Bank shall have no
further obligations under this Agreement other than for amounts accrued but not
paid as of the date of such termination.
5.8 As a condition of receiving any severance payments or benefits in
this Section 5.1 through 5.5, Employee must enter into a "release agreement"
with terms acceptable to the Bank or Person, releasing any and all legal claims
the Employee had, has or may have against the Bank or Person.
VI. OTHER BENEFITS.
6.1 If Employee shall become disabled or incapacitated to the extent
that Employee is unable to perform Employee's duties and responsibilities
hereunder, Employee shall be entitled to receive disability benefits of the type
provided for other executive employees of the Bank.
VII. EXPENSES.
7.1 Employee shall be entitled to recover any and all reasonable fees
and costs and expenses, including but not limited to, attorneys' fees in the
event employee is successful in asserting or defending any claim, arising out of
Employee's efforts to enforce any and all of the provisions of this Agreement.
7.2 Employer shall be entitled to recover any and all reasonable fees
and costs and expenses, including but not limited to, attorneys' fees in the
event Employer is successful in asserting or defending any claim, arising out of
Employer's efforts to enforce any and all of the provisions of this Agreement.
VIII CONFIDENTIAL INFORMATION.
Employee understands that in the course of his employment by the Bank,
Employee will receive Confidential Information (as hereafter defined) concerning
the business of the Bank which the Bank desires to protect. Employee agrees that
he will not at any time during or after the Term of Employment reveal to anyone
(except for the Bank employees who have a need to know such information in the
course of their employment) or use for his own benefit any
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Confidential Information, without specific written authorization by the Bank.
This Section applies to all information obtained by Employee in the course of
his employment unless such information is or becomes publicly known or known in
the banking community generally prior to any disclosure thereof by Employee.
Upon termination of employment for any reason, Employee shall return promptly to
the Bank at its direction and expense any and all copies, either prepared by the
Bank or Employee, of the records, materials, memorandums and other data
constituting Confidential Information. As used in this Agreement, the term
"Confidential Information" shall mean all business information of any nature and
in any form which at the time or times concerned is proprietary to the Bank and
regarded as such by it and which is not generally known to persons not employed
by the Bank or who are members of its Board (except for information disclosed by
the act or acts of a person not authorized by the Bank to disclose such
information) and which relates to any one or more of the aspects of the present
or past business of the Bank including, but not limited to, proposed
acquisitions, proposed branches, development projects, policies or other facts
relating to financial matters, customers , customers' lists and customers'
financial needs.
IX PROPRIETARY RIGHTS.
9.1 Employee acknowledges that his services and responsibilities are
of particular significance to the Bank and that his position with Bank has
given, and will give him a close knowledge of its policies and trade secrets.
Employee covenants and agrees that he will not, for a period of twelve months
from the date of the termination of his employment with the Bank (i) solicit or
accept as customers or otherwise provide services to any present customer or
former customer of the Bank, (ii) in any manner attempt to induce any customers
of the Bank to withdraw their accounts or business from the Bank or to induce
any prospective customer to not become a customer, (iii) induce or encourage any
employee of the Bank to terminate such employee's employment, or (iv) make any
disparaging comment or statement, orally or in writing, regarding the Bank or
its employees or take any action or make any other comment or statement that may
harm the reputation or business of the Bank.
9.2 For purposes of this Agreement, "present customer", "former
customer" shall be defined in the following manner:
A "present customer" of the Bank is a Person with whom the Bank has a
business relationship on the date of termination of Employee's employment.
A "former customer" of the Bank is a Person with whom the Bank has no
business relationship at the time of the termination of Employee's employment,
but has had such a relationship within the one-year period ending on the date of
termination of Employee's employment.
9.3 Employee agrees that he shall not, for a period of one year
following his employment with the Bank, either directly or indirectly as agent,
stockholder, employee, officer, director, trustee, partner, proprietor or
otherwise engage in, render advice or assistance to or be employed on a
compensation basis by any person, firm or entity which is in competition with
the
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Bank. This paragraph shall only apply where such person, firm or entity has its
principal office within 15 miles of New Milford, Connecticut, or Danbury,
Connecticut; or where the office of Employee is situated, or Employee's primary
geographic areas of responsibility will be located within 15 miles of New
Milford, Connecticut, or Danbury, Connecticut.
9.4 The time periods referred to in Sections 9(1) and (2) above shall
each be extended by the amount of time that Employee fails to comply with his
obligations under Section 9, whether due to the issuance of a temporary
restraining order or injunction or otherwise.
9.5 In addition to any damages or other remedies to which the Bank may
be entitled by virtue of any breach of the covenants and agreements in Section 8
or 9 hereof, Employee acknowledges that any such breach would cause irreparable
harm to the Bank and consents to the granting of injunctive and other equitable
relief to the Bank. Employee shall also pay all costs, including reasonable
attorney's fees, incurred by the Bank in seeking any such remedy or in
connection with the Bank otherwise enforcing its rights under this Agreement.
Any damages against Employee, which shall include, without limitation, any
amounts received as compensation or in any other capacity by Employee from any
third party as a result of or in connection with the breach of Employee's
obligations under this Agreement, may be applied as a set-off against any amount
owed to Employee by the Bank.
X. OTHER DUTIES OF EMPLOYEE DURING AND AFTER THE TERM OF EMPLOYMENT.
Both during and after the Term of Employment, Employee shall, upon
reasonable notice furnish such information as may be in his possession to, and
cooperate with, the Bank as may reasonably be requested by the Bank in
connection with any litigation in which the Bank is, or may become, a party. The
Bank shall reimburse Employee for all of the reasonable expenses incurred by him
in fulfilling his obligation under this Section 10 (except that no such expenses
shall be paid to Employee with respect to any litigation or proceeding commenced
by Employee or as to which Employee is otherwise a party).
XI. NOTICES.
All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person to Employee or if the Bank, to the
Chairman of the Board of the Bank or CEO, or if sent, postage prepaid, certified
mail, return receipt requested, or by recognized overnight delivery service, as
follows:
If to Employee, as follows: Xxxxx X. Xxxxx
000 Xxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
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If to the Bank, as follows: The New Milford Bank & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Chairman or
Xxxxxxx X. Xxxxxxxx, President & CEO
or to such other address or addresses as hereafter shall be designated by notice
given in accordance with this Section by either of the parties hereto to the
other party.
XII. SUCCESSORS AND ASSIGNS.
The rights and obligations of the Bank under this Agreement shall
inure to the benefit of and shall be binding upon the Bank's successors and
assigns, including, without limitation, any Person which may acquire all or
substantially all of the assets and business of the Bank, or with or into which
the Bank may be consolidated or merged or any surviving corporation in any
merger involving the Bank. All references in this Agreement to the Bank shall be
deemed to include all of its successors and assigns.
XIII. ARBITRATION.
If any dispute arises between the parties hereto, the Employee's sole
recourse will be to submit such claim to binding arbitration in the City of
Waterbury, Connecticut in accordance with the Commercial Rules of the American
Arbitration Association.
Prior to submitting a dispute to arbitration, the Employee shall first
submit such dispute to the Bank's Board of Directors for a period of up to three
months in an effort to resolve such dispute without resort to arbitration.
During such three month period, both the Employee and the Bank agree to make a
good faith effort to resolve the dispute amicably and to make arbitration
unnecessary.
If the dispute concerns the termination of the Employee's employment,
or the severance and benefits to which the Employee is entitled upon the
termination, at arbitration, the only issue before the arbitrator will be to
determine the nature of the Employee's termination (i.e., whether for cause,
without cause, or in a situation subject to Section 5.3, whether Employee had
Good Reason to voluntarily terminate his employment). Based on the arbitrator's
determination of the nature of the Employee's termination, the arbitrator may
award the appropriate severance payments and, if applicable, benefits, provided
under this Agreement.
XIV. SEVERABILITY.
If any of the terms and conditions of this Agreement shall be declared
void or unenforceable by any court or administrative body of competent
jurisdiction, such term or condition shall be deemed severable from the
remainder of this Agreement, and the other terms and conditions of this
Agreement shall continue to be valid and enforceable except that if any
provision of the release agreement is declared illegal or unenforceable as the
result of efforts by
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the Employee, or his agent, or Employee brings a claim against any of the
released entities released in that release agreement, Employee will return to
the Bank any consideration he has received in exchange for entering into the
release agreement.
XV. OTHER AGREEMENTS.
This Agreement supersedes any and all prior written or oral employment
agreements between the Bank and Employee or between Employee and any predecessor
of the Bank.
XVI. CONSTRUCTION.
This Agreement shall be construed under the laws of the State of
Connecticut. Section headings are for convenience only and shall not be
considered a part of the terms and provisions of this Agreement. No
modifications of or amendments to this Agreement may be made' except in writing
signed by the Bank and Employee. All references to gender shall, as the case may
be, refer to either the male or female gender.
XVII. MISCELLANEOUS PROVISIONS.
17.1 The waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed a waiver of any subsequent breach
thereof.
17.2 Employee hereby acknowledges that the services to be rendered
hereunder are of a unique, special and extraordinary character which would be
difficult or impossible for the Bank to replace, and by reason thereof, Employee
hereby agrees that for violation of any of the provisions of this Agreement, the
Bank shall, in addition to any other rights and remedies available hereunder, at
law or otherwise, be entitled to an injunction to be issued by any court of
competent jurisdiction enjoining and restraining Employee from committing any
violation of this Agreement, and Employee hereby consents to the issuance of
such injunction.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed
by a duly authorized officer and Employee has executed this Agreement as of the
day and year first above written.
THE NEW MILFORD BANK & TRUST COMPANY
Dated: 1/19/96 By: /s/ Xxxx Xxxxxx
--------------------------- ---------------------------------
Its: Chairman
Dated: 1/19/96 /s/ Xxxxx X. Xxxxx
---------------------------- ---------------------------------
Xxxxx X. Xxxxx
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