[DESCRIPTION] EMPLOYMENT AGREEMENT
EXHIBIT H
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of the effective date of Flagship Bank and
Trust Company's acquisition by Xxxxxxxxxx Corporation, by and between Flagship
Bank, a Massachusetts trust company and wholly-owned subsidiary of Xxxxxxxxxx
Corporation, a bank holding company organized under the laws of Vermont (the
"Bank"), and Xxxxxx X. XxXxxxx, an individual residing at 0 Xxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Executive").
WITNESSETH
WHEREAS, the Bank desires to employ the Executive as its President and Chief
Executive Officer; and
WHEREAS, the Executive desires to be employed by the Bank as its President and
Chief Executive Officer upon the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the parties hereto, intending to be legally bound,
agree as follows:
ss1. EMPLOYMENT. The Bank agrees to employ the Executive and the
Executive agrees to enter the employ of the Bank for the period stated in
Section 2 hereof.
ss2. TERM. The Executive shall perform the services specified in Section
3 hereof. The term of the Executive's employment by the Bank hereunder shall
be for three (3) years from and upon the effective date of the acquisition of
Flagship Bank * Trust Company by Xxxxxxxxxx Corporation, unless terminated
prior to such time in accordance with the provisions of this Agreement. The
last day of such three (3) year term is herein sometimes referred to as the
"EXPIRATION DATE".
ss3. POSITION, RESPONSIBILITIES AND DUTIES. During the period of his
employment hereunder, the Executive agrees to serve as President and Chief
Executive Officer of the Bank and to be responsible for the general management
of the affairs of the Bank, reporting directly to the Board of the Bank.
During said period and without additional compensation, the Executive agrees
to serve on the Board of Directors of the Bank or as an officer or director of
any subsidiary of the Bank.
During his employment hereunder, the Executive shall, subject to the
direction and supervision of the Board of Directors, devote his full business
time, best efforts and business judgment, skill and knowledge to the
advancement of the Bank's interests and to the discharge of his duties and
responsibilities hereunder. He shall not engage in any other business
activity, except as may be approved by the Board of Directors, PROVIDED,
HOWEVER, that nothing herein shall be construed as preventing the Executive
from:
(a) investing his assets in a manner not prohibited
by Section 15 hereof, and in such form or
manner as shall not require any material
services on his part in the operations or
affairs of the companies or other entities in
which such investments are made;
(b) serving on the board of directors of any
company, subject to the prohibitions set forth
in Section 15, provided the Board of Directors
of the Bank shall have approved such service in
writing; or
(c) engaging in religious, charitable or other
community or non-profit activities which do not
impair his ability to fulfill his duties and
responsibilities under this Agreement.
ss4. COMPENSATION. For all services rendered by the Executive in any
capacity during his employment by the Bank, including without limitation,
services as president and Chief Executive Officer and as Director of the Bank
and as an officer or director of any subsidiary of the Bank, the Bank shall
pay the Executive as compensation a per annum base salary of Two Hundred
Thousand Dollars ($200,000). Such base salary shall be payable in accordance
with the Bank's customary payroll practices, but in no event less frequently
than once monthly. During the period of this Agreement, the Executive's base
salary shall be reviewed at least annually. The salary review shall be
conducted by the Bank's Board of Directors, or a committee thereof, which will
make adjustments to the Executive's base salary in its or their discretion,
except that in no event may the Executive's per annum salary be reduced to
less than Two Hundred Thousand Dollars ($200,000).
ss5. REIMBURSEMENT OF EXPENSES. The Bank shall reimburse the Executive
for all reasonable travel and other business expenses incurred in connection
with his services to the Bank pursuant to the terms of this Agreement.
Inasmuch as the duties of the Executive require frequent and extensive travel,
the Bank shall arrange to furnish the Executive with an automobile of the
make, model, and year of manufacture suitable to his position and pay all
related operating expenses (including fuel), upkeep, and insurance expense
related to the operation of such automobile.
ss6. PARTICIPATION IN BENEFIT PLANS. The Executive will be entitled to
participate in all employee benefit programs to be provided by the Bank, if
any, on the same basis as other persons employed by the Bank, including, but
not limited to, pension plan, profit-sharing plans, medical insurance
programs, group life insurance, thrift plans, disability plans, deferred
compensation plans, stock option plans, education programs, and general bonus
payments as may from time to time be in effect. Nothing contained herein
shall be deemed to exclude the Executive from (a) any supplemental
compensation or other benefits he might become entitled to as an employee of
the Bank and (b) any special incentive compensation programs of the Bank
devoted solely to the Executive.
ss7. INCENTIVE BONUS. As additional compensation for services rendered
by the Executive during the period of his employment by the Bank under this
Agreement, the Executive may be paid, in addition to the base salary provided
in Section 4 hereof, an incentive bonus in an amount based upon the attainment
of certain performance objectives during the preceding fiscal year pursuant to
the Bank's Incentive Bonus Plan as same may be administered from time to time
by the Board of Directors of the Bank with the approval of the Bank's
shareholders.
ss8. LIFE INSURANCE. The Bank shall continue to purchase one or more
term or other life insurance policies in sufficient amount to pay to the
Executive's designated beneficiary or beneficiaries or their legal
representatives a lump sum benefit equal to five (5) times the Executive's per
annum base salary as in effect a the time of the Executive's death.
ss9. VACATION. The Executive shall be entitled to four (4) weeks
vacation per year. However, such vacation time is not cumulative and the
Executive's failure to take the entire four (4) week vacation period during a
given year will not entitle him to more vacation time in any succeeding year,
except if otherwise approved by the Bank's Board of Directors.
ss10. CLUB MEMBERSHIPS. The Bank shall pay the membership fees, if
any are required, and membership dues incurred by the Executive in connection
with his membership in the Worcester Country Club, the Worcester Club and any
other clubs and civic organizations approved by the Bank's Board of Directors.
ss11. WITHHOLDING. All payments made by the Bank under this Agreement
shall be net of any tax or other amounts required to be withheld by the Bank
under applicable law.
ss12. TERMINATION AND TERMINATION BENEFITS. Notwithstanding the
provisions of Section 2, the Executive's employment hereunder by the Bank
shall terminate under the following circumstances:
ss12.1. DEATH. In the event of the Executive's death during the
Executive's employment hereunder, the Executive's employment shall terminate
on the date of his death; PROVIDED, HOWEVER, that the Bank shall continue to
pay an amount equal to the Executive's monthly base salary to the Executive's
beneficiary designated in writing to the Bank prior to his death (or to his
estate, if he fails to make such designation) for a period of three (3) months
after the date of the Executive's death, as the base salary rate in effect on
the date of his death, said payments to be made on the same periodic dates as
salary payments would have been made to the Executive had he not died.
ss12.2. TERMINATION FOR CAUSE. The Executive's employment hereunder may
be terminated without further liability on the part of the Bank for cause by
written notice to the Executive setting forth in reasonable detail the nature
of such cause. Only the following shall constitute "CAUSE" for purposes of
such termination:
(a) Deliberate dishonesty of the Executive with respect to the Bank or
any subsidiary or affiliate thereof which materially and adversely affects the
Bank or any such subsidiary or affiliate.
(b) Conviction of the Executive of a felony or his willful violation of
any provision of federal or state banking or securities laws.
(c) Gross and willful failure to perform a substantial portion of his
duties and responsibilities hereunder, which failure continues for more than
thirty (30) days after written notice given to the Executive by the Bank, such
notice to set forth in reasonable detail the nature of such failure.
For purposes of this Section 12.2, any action taken by the Bank shall
first require a two-thirds vote of all the members of the Board of Directors.
Should the Executive be terminated for any of the reasons set forth in
this Section 12.2, he shall be paid his base salary, earned incentive bonus
and other fringe benefits payable hereunder through the date of termination,
but shall forfeit his rights to any unvested compensation, benefits,
securities or other consideration under this Agreement as of the date of such
termination.
ss12.3. TERMINATION BY THE EXECUTIVE. The Executive's employment
hereunder may be terminated effective immediately by the Executive by written
notice to the Board of Directors in the event of the failure by the Bank to
comply with provisions of Section 4 or material breach by the Bank of any
other provisions of this Agreement.
ss12.4. TERMINATION BY THE BANK WITHOUT CAUSE. The Executive;s
employment with the Bank may be terminated without cause by a two-thirds vote
of all of the members of the Board of Directors on written notice to the
Executive, such termination to be effective upon the date set forth in such
notice.
ss12.5. CERTAIN TERMINATION BENEFITS. In the event of termination
pursuant to Sections 12.3 or 12.4, the Executive shall be entitled to the
following benefits:
(a) For the period subsequent to the date of termination until the
Expiration Date, the Bank shall continue to pay the Executive a base salary at
the rate in effect on the date of termination.
(b) For the period subsequent to the date of termination until the
Expiration Date, the Executive shall continue to receive all benefits
described in Sections 6, 8 and 10 hereof existing on the date of termination
(except for any cash bonus plans which shall be pro-rated through the date of
termination). For purposes of application of such benefits the Executive
shall be treated as if he had remained in the employ of the Bank, with an
annual base salary at the rate in effect on the date of termination with
service credits to continue to accrue during such period as if the Executive
had remained in the employ of the Bank.
(c) If, in spite of the provisions of Section 12.5(b) above, benefits or
service credits under any benefit plan shall not be payable or provided under
any such plan to the Executive, or to the Executive's dependents,
beneficiaries or estate, because the Executive is no longer deemed to be an
employee of the Bank, the Bank itself shall pay or provide for payment of such
benefits and service credits to the Executive, or to the Executive's
dependents, beneficiaries or estate.
(d) Any incentive bonus earned by the Executive for such fiscal year, as
determined by the formula established for such fiscal year pursuant to Section
7 hereof.
ss12.6. NO SET-OFF. The Bank shall not be entitled to set off against
any cash compensation to be provided to the Executive under Section 12.5(a).
ss12.7. TERMINATION BY THE EXECUTIVE UNDER CERTAIN CIRCUMSTANCES. In
addition, notwithstanding anything to the contrary in this Agreement, the
Executive's employment hereunder may be terminated effectively immediately by
the Executive by written notice to the Board of Directors at his unilateral
election if the Executive concludes that the circumstances make such
resignation advisable. In the event of termination pursuant to this to the
Section 12.7, Executive shall be entitled to be paid his base salary, earned
incentive bonus and other fringe benefits payable hereunder through the date
of termination, but shall forfeit his rights to any unvested compensation,
benefits, securities or other consideration under this Agreement as of the
date of such termination. In the event of an election by the Executive under
this Section 12.7, the restrictions contained in Section 15.1 shall continue
to apply for their period remaining before the Expiration Date.
ss13. DISABILITY. If, due to physical or mental illness, the Executive
shall be disabled so as to be unable to perform substantially all of his
duties and responsibilities hereunder, (a) the Board of Directors may
designate another executive to act in his place during the period of such
disability, and (b) the Bank shall pay monthly disability benefits to the
Executive, as follows:
(i) COMMENCEMENT OF PAYMENT OF DISABILITY BENEFITS. If the Executive
becomes disabled, the Bank shall make its next regularly scheduled payment of
base salary to the Executive. Subject to Section 13(v) (concerning a
determination of disability), the payment of disability benefits shall
commence one (1) month after such base salary payment and shall continue until
terminated in accordance with this Section 13. This Agreement shall not be
construed to require the Bank to pay both base salary and disability benefits
to the Executive for the same period.
(ii) TERMINATION OF PAYMENT OF DISABILITY BENEFITS. The Bank's payment
of disability benefits shall terminate on the earlier of (A) the Expiration
Date or (B) the date on which the Executive is no longer disabled. The
Executive shall be considered no longer disabled when he is able to resume the
performance of the duties and responsibilities outlined in Section 4 of this
Agreement.
(iii) AMOUNT OF DISABILITY BENEFITS. While the Executive remains
disabled the Bank shall make equal monthly payments to him at an annual rate
equal to sixty percent (60%) of the Executive 's annual base salary determined
as of the Bank's last payment of base salary before the commencement of the
disability, less the amount of any payments made to the Executive from any
disability insurance policies maintained by the Bank.
(iv) EFFECT ON EMPLOYMENT COMPENSATION. During any period in which the
Executive is employed by the Bank and receives disability benefits under this
Section 13, the Bank shall not be obligated to pay the Executive the base
salary described in Section 4 of this Agreement, but all other payments and
benefits provided hereunder (including without limitation the payment of any
incentive bonus earned in accordance with the formula established pursuant to
Section 7 hereof) shall be continued.
(V) DETERMINATION OF DISABILITY. If the Bank and the Executive disagree
as to whether the provisions of this Section 13 are applicable, the Bank and
the Executive (or his personal representative) each shall select a physician,
which physicians shall in turn select a third physician. All three physicians
shall be permitted to examine the Executive and the diagnosis determined by
the majority of such physicians as to the extent of the Executive's disability
shall be deemed conclusive and binding on the parties hereto. Regardless of
the outcome of this procedure, the Bank shall reimburse the Executive (or his
spouse or beneficiary, as the case may be) for fifty percent (50%) of the
reasonable and necessary fees and costs directly attributable to such
procedure. During the pendency of any such proceeding the Bank shall continue
to make the same payments to the Executive of base salary or disability
benefits, as the case may be, which the Bank was making at the time such
procedure was initiated. If the result of the foregoing proceeding is such
that a greater or lesser amount was paid to the Executive than was otherwise
due under this Agreement (without giving regard to the reimbursement
provisions of this Section), then (A) the Bank shall deduct from or add to, as
the case may be, any further payments to the Executive the amount of such
overpayment or underpayment, or (B) if no further payments are due the
Executive, either the Bank shall pay the Executive the amount of any
underpayment or the Executive shall pay the Bank the amount of any
overpayment.
ss14. CHANGE OF CONTROL.
(a) In the event that during the term of this Agreement there shall have
occurred a "CHANGE OF CONTROL" (as hereinafter defined), the person or persons
so acquiring control of the Bank shall assume the Bank's obligations under
this Agreement.
(b) In addition, upon such a Change of Control, the Executive shall be
entitled to terminate this Agreement by a written notice to the Bank or its
successor, and in such event (in addition to whatever entitlements the
Executive shall then have under this Agreement for any benefits other than
base salary, incentive bonus or fringe benefits not yet earned), the Executive
shall be entitled to receive a severance payment equal to the Executive's
"base amount" (as such term is defined in Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended) for the calendar year ended prior to the
year in which such termination occurs, which severance shall be payable in one
lump sum in cash on the date of termination.
(c) In addition, in the event that, subsequent to such a Change of
Control, (i) the Bank or its successor terminates the Executive's employment
(other than for the causes specified in Section 12.2 hereof), (ii) the Bank
or its successor otherwise breaches this Agreement, or (iii) the successor to
the Bank does not expressly assume the Bank's obligations under this
Agreement, then the Executive shall have the option either to elect as
liquidated damages the payment referred to in Section 14(b) above (in addition
to whatever other entitlements the Executive shall then have under this
Agreement for any benefits other than base salary, incentive bonus or fringe
benefits not yet earned) or to elect to pursue his legal rights for damages
for a breach of this Agreement. For these purposes, any diminution in the
rights, benefits or entitlements of the Executive or positions or authorities
occupied by the Executive prior to the Change of Control shall be conclusively
deemed to be a breach of this Agreement.
(d) For purposes of this Section 14, the term "CHANGE IN CONTROL" shall
mean: the direct or indirect acquisition after the date hereof by any person
or group (as such terms are defined in the Securities and Exchange Act of
1934, as amended, and the rules and regulations thereunder) other than
Xxxxxxxxxx Corporation or any corporate affiliate of beneficial ownership of
or the right to acquire such beneficial ownership or to vote at least twenty-
five percent (25%) of the then outstanding shares of Common Stock of the Bank.
ss15. NONCOMPETITION AND CONFIDENTIAL INFORMATION.
ss15.1. NONCOMPETITION. During (a) a period of three (3) years
following the effective date of the Executive's employment with the Bank: the
Executive will not engage directly, whether as consultant, agent, employee, or
otherwise, or through any individual, corporation, association, partnership,
estate, trust or any other entity or organization (a "Person"), in Worcester
County, Massachusetts,in any of the activities of the Bank conducted during
the Employee's employment under this Agreement (i) in the lending, deposit or
mortgage business or (ii) in other products and/or services of the Bank as
contribute 5% or more of the gross revenue of the Bank for any fiscal quarter
during such employment nor will the Executive attempt to hire any employee of
the Bank, assist in such hiring by any other Person, or encourage any such
employee to terminate his or her relationship with the Bank. Notwithstanding
anything else to the contrary in this Agreement, all obligations under this
Section 15 shall cease upon the occurrence of a Change in Control as defined
in Section 14(d) hereof or termination of employment under this Agreement
pursuant to Sections 12.3 or 12.4 hereof.
ss15.2. CONFIDENTIAL INFORMATION. The Executive will not disclose to any
other Person (except as required by applicable law or in connection with the
performance of his duties and responsibilities hereunder), or use for his own
benefit or gain, any confidential information of the Bank obtained by him
incident to his employment with the Bank. The term "confidential information"
includes, without limitation, financial information, business plans, prospects
and opportunities (such as lending relationships, financial product
developments, or possible acquisitions or dispositions of businesses or
facilities) which have been discussed or considered by the Bank's management
but does not include any information which has become part of the public
domain by means other than the Executive's non-observance of his obligations
hereunder.
ss15.3. RELIEF; INTERPRETATION. The Executive agrees that the Bank shall
be entitled to injunctive relief for any breach by him of the covenants
contained in Sections 15.1 or 15.2. In the event that any provision of this
Section 15 shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a period of time,
too large a geographic area, or too great a range of activities, it shall be
interpreted to extend only over the maximum period of time, geographic area,
or range of activities as to which it may be enforceable. For purposes of
this Section 15, the term "Bank" shall mean the Bank and any of its
subsidiaries.
ss16. ARBITRATION OF DISPUTES. Any controversy or claim arising out of
or relating to this Agreement or the breach thereof shall be settled by
arbitration in accordance with the laws of the Commonwealth of Massachusetts
by three arbitrators, one of whom shall be appointed by the Bank, one of whom
shall be appointed by the Executive and the third of which shall be appointed
by the first two arbitrators. If the first two arbitrators cannot agree on
the appointment of a third arbitrator, then the third arbitrator shall be
appointed by the American Arbitration Association in the City of Worcester.
Such arbitration shall be conducted in the City of Worcester in accordance
with the rules of the American Arbitration Association, except with respect to
the selection of arbitrators which shall be provided in this Section 16.
Judgement upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. In the event that it shall be necessary or
desirable for the Executive to retain legal counsel and/or incur other costs
and expenses in connection with the enforcement of any or all of the
Executive's rights under this Agreement, the Bank shall pay (or the Executive
shall be entitled to recover from the Bank, as the case may be) the
Executive's reasonable attorneys fees and other reasonable costs and expenses
in connection with the enforcement of said rights (including the enforcement
of any arbitration award in court) regardless of the final outcome, unless and
to the extent the arbitrators shall determine that under the circumstances
recovery by the Executive of all or a part of any such fees and costs and
expenses would be unjust.
ss17. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. Neither the Bank nor the
Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; PROVIDED, HOWEVER, that the Bank may assign its rights under this
Agreement without the consent of the Executive in the event the Bank shall
hereafter effect a reorganization, consolidate with or merge into any other
Person, or transfer all or substantially all of its properties or assets to
any other Person subject to the rights of the Executive as provided in Section
14 hereof. This Agreement shall inure to the benefit of and be binding upon
the Bank and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
ss18. ENFORCEABILITY. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or enforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
ss19. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the Bank
or, in the case of the Bank, at its main office, attention of the Clerk.
ss20. HEADINGS FOR REFERENCES ONLY. The headings of 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.
ss21. ENTIRE AGREEMENT; WAIVER. This Agreement and all other documents
incorporated or referred to herein, contain the entire agreement of all the
parties, and there are no representations, inducements or other provisions
other than those expressed in writing. No Amendment, modification, waiver or
discharge of any provision or breach of this Agreement shall be effective
unless it is executed in writing by all of the parties. As used herein words
in the singular include the plural.
ss22. COUNTERPARTS. Any number of counterparts of this Agreement may be
signed and delivered and each shall be considered an original and together
they shall constitute one agreement.
ss23. GOVERNING LAW. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an
instrument under seal as of the day and year first above written.
THE BANK:
FLAGSHIP BANK
By: s/Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Title: Chairman of the Board
THE EXECUTIVE:
s/ Xxxxxx X. XxXxxxx
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Xxxxxx X. XxXxxxx
