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EXHIBIT 10.1
SEVERANCE AGREEMENT
This AGREEMENT, made and entered into as of the 10th day of April 1998,
between PEOPLES HERITAGE FINANCIAL GROUP, INC. (the "Company") and
____________________ (the "Executive");
W I T N E S S E T H:
WHEREAS, the Executive is employed by the Company in a key executive
capacity and possesses intimate knowledge of the business and affairs of the
Company; and
WHEREAS, the Company desires to ensure, insofar as possible, that it
will continue to have the benefit of the Executive's services and to protect its
confidential information and goodwill; and
WHEREAS, the Company recognizes that circumstances may arise in which a
change in the control of the Company occurs, thereby causing uncertainty of
employment without regard to the Executive's competence or past contributions;
and
WHEREAS, the Company and the Executive wish to provide reasonable
security to the Executive against changes in the Executive's relationship with
the Company in the event of such change in control;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. DEFINITIONS
(a) ACCRUED BENEFIT MEANS:
(i) All salary earned or accrued through the date the
Executive's employment is terminated;
(ii) reimbursement for any and all monies advanced in
connection with the Executive's employment for
reasonable and necessary expenses incurred by the
Executive through the date the Executive's
employment is terminated;
(iii) any and all other compensation previously earned
and deferred at the election of the Executive or
pursuant to any deferred
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compensation plans then in effect together with any
interest or desired earnings thereon;
(iv) annual bonus, if any, accrued for a Year prior to
the Year in which employment terminates, but not
yet paid to the Executive, under any bonus or
incentive compensation plan or plans in which the
Executive is a participant;
(v) a pro rata portion of the maximum bonus payable to
the Executive for the Year in which employment
terminates under any bonus or incentive
compensation plan or plans in which the Executive
is a participant, determined as if the Executive
had remained in employment for the full Year and
prorated based upon weeks, including partial weeks,
of employment during that Year;
(vi) all other payments and benefits to which the
Executive may be entitled under the terms of any
applicable compensation arrangement or benefit plan
or program of the Company.
(b) ACT means the Securities Exchange Act of 1934, as amended.
(c) AFFILIATE of any specified persons means any other person
that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under direct or indirect common
control with such specified person. For the purposes of this
definition, "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies
of a person, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
(d) ANNUAL COMPENSATION. Annual compensation shall mean the
sum of:
(i) the Executive's annual salary at the rate in effect
on the date of a termination of employment as
described in Section 3 or in Section 7(d) (or, in
the event of a termination for Good Reason under
Section 1(k)(i)(A) below, the annual salary as in
effect immediately before the actions giving rise
to Good Reason); plus
(ii) the greatest of the bonuses either paid or accrued
in either the Year of the Change in Control or the
immediately preceding Year.
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(e) BASE AMOUNT means an amount equal to the Executive's
Annualized Includable Compensation for the Base Period as
defined in Section 280G(d)(1) and (2) of the Code (as
hereinafter defined).
(f) CAUSE means (i) the executive's conviction of, or plea of
NOLO CONTENDERE to, a felony; or (ii) willful and intentional
misconduct, willful neglect, or gross negligence, in the performance of
the Executive's duties, which has caused a demonstrable and serious
injury to the Company, monetary or otherwise.
The Executive shall be given written notice that the
Company intends to terminate his employment for Cause. Such
written notice shall specify the particular acts, or failures to
act, on the basis of which the decision to so terminate
employment was made.
In the case of a termination for Cause as described in
Clause (ii), above, the Executive shall be given the opportunity
within 30 days of the receipt of such notice to meet with the
Board to defend such acts, or failures to act, prior to
termination. The Company may suspend the Executive's title and
authority pending such meeting, and such suspension shall not
constitute "Good Reason," as defined in subsection (k) below.
(g) CHANGE IN CONTROL OF THE COMPANY shall mean a Change in
Control of a nature that would be required to be reported in response
to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Act or any successor thereto, provided that without limiting the
foregoing, a Change in Control of the Company also shall be deemed to
have occurred if:
(i) any "person" (as defined under Section 3(a)(9) of
the Act) or "group" of persons (as provided under
Rule 13d-3 of the Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 or
otherwise under the Act), directly or indirectly
(including as provided in Rule 13d-3(d)(1) of the
Act), of capital stock of the Company the holders
of which are entitled to vote for the election of
directors ("voting stock") representing that
percentage of the Company's then outstanding voting
stock (giving effect to the deemed ownership of
securities by such person or group, as provided in
Rule 13d-3(d)(1) of the Act, but not giving effect
to any such deemed ownership of securities by
another person or group) equal to or greater than
thirty-five percent (35%) of all such voting stock;
(ii) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason
to constitute at least a majority thereof. Any
person becoming a director subsequent
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to such date
whose election, or nomination for election, is, at
any time, approved by a vote of at least a majority
of the directors comprising the Incumbent Board
shall be considered as though he were a member of
the Incumbent Board;
(iii) The Company combines with another person or entity,
whether through a merger, asset sale,
reorganization or otherwise, and (A) any person or
group of persons holds at any time after such
combination, voting stock equal to or greater than
thirty-five percent (35%) determined by reference
to the voting securities of the surviving entity,
or (B) the Company's directors, as of the date
immediately before such combination, constitute
less than a majority of the Board of Directors of
the combined entity.
(h) CODE means the Internal Revenue Code of 1986, including
any amendments thereto.
(i) EFFECTIVE DATE means the date this Agreement is executed
by the parties.
(j) EMPLOYMENT PERIOD means a period commencing on the date of
a Change in Control of the Company and ending on the earlier of (i) the
last day of the twenty-four months following the month in which the
Change in Control occurs, or (ii) the Executive's Normal Retirement
Date.
(k) GOOD REASON means:
(i) any breach of this Agreement by the Company,
including without limitation (A) any reduction
during the employment period in the amount of the
Executive's base salary or aggregate benefits as in
effect from time to time, (B) failure to provide
the Executive with the same fringe benefits that
were provided to the Executive immediately prior to
a Change in Control of the Company, or with a
package of fringe benefits (including paid
vacations) that, though one or more of such
benefits may vary from those in effect immediately
prior to such a Change in Control, is substantially
comparable in all material respects to such fringe
benefits taken as a whole, or (C) any other breach
by the Company of its obligations contained in
Section 6 below;
(ii) without the Executive's express written consent,
the assignment to the Executive of any duties which
are materially inconsistent with the Executive's
positions, duties, responsibilities and status
immediately prior to the Change in Control of the
Company, a
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material change in the Executive's reporting
responsibilities, titles or offices as an employee
and as in effect immediately prior to the Change in
Control, or a significant reduction, in the
Executive's title, duties or responsibilities, or
in the level of his support services;
(iii) the relocation of the Executive's principal place
of employment, without the Executive's written
consent, to a location outside the same
metropolitan area in which the Executive was
employed at the time of such Change in Control, or
the imposition of any requirement that the
Executive spend more than ninety business days per
year at a location other than such principal place
of employment;
(iv) any purported termination of the Executive's
employment for Cause, Disability or Retirement
which is not effected pursuant to a Notice of
Termination satisfying the requirements of
paragraph (m) below.
Upon the occurrence of any of the events described in (i), (ii),
(iii) or (iv) above, the Executive shall give the Company written
notice that such event constitutes Good Reason, and the Company shall
thereafter have thirty (30) days in which to cure. If the Company has
not cured in that time, the event shall constitute Good Reason.
(l) NORMAL RETIREMENT DATE means Normal Retirement Date as
defined in the Peoples Heritage Financial Group, Inc. Retirement Plan.
(m) NOTICE OF TERMINATION. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the
specific termination provision relied upon in this Agreement and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the
provision so indicated.
(n) PERSON or GROUP means a "person" or "group," as defined in
Section 1(g)(i) hereof.
(o) YEAR means a calendar year unless otherwise specifically
provided.
2. TERM OF AGREEMENT. This Agreement shall begin on the date first
set forth above and shall continue until January 1, 2001, provided that, on such
January 1, and each succeeding January 1, the term shall be renewed for an
additional period of one year unless either party has given written notice that
the term is not so renewed, which notice must be delivered to the other party at
least one year prior to the date of any such renewal, and
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further provided that if a Change in Control of the Company occurs during such
term, the term shall in all events continue through the last day of the
Employment Period. This Agreement is also subject to earlier termination as
provided in Section 3 below. All rights and obligations hereunder shall survive
to the extent necessary to the intended enforcement thereof.
3. TERMINATION OF EMPLOYMENT PRIOR TO A CHANGE IN CONTROL.
(a) The Company and the Executive shall each retain the right
to terminate the employment of the Executive at any time prior to a
Change in Control of the Company. In the event the Executive's
employment is terminated prior to a Change in Control of the Company,
this Agreement shall, except as provided in Subsection (b) and Section
20 below, be terminated and of no further force and effect, and any and
all rights and obligations of the parties hereunder shall cease.
(b) If the Executive's employment is terminated by the Company
prior to the occurrence of a Change in Control of the Company, and if
it can be shown that the Executive's termination (i) was at the
direction or request of a third party that had taken steps reasonably
calculated to effect the Change in Control of the Company thereafter,
or (ii) otherwise occurred in connection with, or in anticipation of,
the Change in Control of the Company, the Executive shall have the
rights described in Section 7(d) below, as if a Change in Control of
the Company had occurred on the date immediately preceding such
termination.
4. EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. If a Change in Control
of the Company occurs when the Executive is employed by the Company, the Company
will continue thereafter to employ the Executive, and the Executive will remain
in the employ of the Company, during the Employment Period, in accordance with
the terms and provisions of this Agreement.
5. DUTIES. During the Employment Period, the Executive shall serve
in such capacities and positions as may be assigned by the Company consistent
with the Executive's capacities and positions on the Effective Date and shall
devote the Executive's best efforts and all of the Executive's business time,
attention and skill to the business and affairs of the Company, as such business
and affairs now exist and as they may hereafter be conducted.
6. COMPENSATION. During the Employment Period, the Executive shall
be compensated by the Company as follows:
(a) the Executive shall receive, at such intervals and in
accordance with such standard policies as in effect on the date of the
Change in Control of the Company, an annual salary not less than the
Executive's annual salary as in effect on the date of the Change in
Control of the Company, subject to adjustment as hereinafter provided;
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(b) the Executive shall be included in all plans providing
incentive compensation to executives, including but not limited to
bonus, deferred compensation, annual or other incentive compensation,
supplemental pension, stock ownership, stock option, stock
appreciation, stock bonus and similar or comparable plans as any such
plans are extended by the Company from time to time to senior corporate
officers, key employees and other employees of comparable status;
(c) the Executive shall be reimbursed, at such intervals and
in accordance with such standard policies as may be in effect on the
date of the Change in Control of the Company, for any and all monies
advanced in connection with the Executive's employment for reasonable
and necessary expenses incurred by the Executive on behalf of the
Company, including travel expenses;
(d) the Executive shall be included, to the extent eligible
thereunder, in any and all plans providing but not limited to, group
life insurance, hospitalization, disability, medical, dental, pension,
profit sharing and stock bonus plans, and shall be provided any and all
other benefits and perquisites made available to other employees of
comparable status and position at the expense of the Company on a
comparable basis;
(e) the Executive shall receive annually not less than the
amount of paid vacation and not fewer than the number of paid holidays
received annually immediately prior to the Change in Control of the
Company or available annually to other employees of comparable status
and position with the Company; and
(f) During the Employment Period the Board of Directors of the
Company, or an appropriate committee thereof, will consider and
appraise, at least annually, the contributions of the Executive to the
Company's operating efficiency, growth, production and profits and, in
accordance with past practice, due consideration shall be given to the
upward adjustment of the Executive's compensation rate, at least
annually, commensurate with increases generally given to other senior
corporate officers and key employees and as the scope of the
Executive's duties expands.
7. TERMINATION OF EMPLOYMENT. Any termination by the Company or the
Executive of the Executive's employment during the Employment Period shall be
communicated by written Notice of Termination to the Executive if such notice is
delivered by the Company and to the Company if such notice is delivered by the
Executive. The Notice of Termination shall comply with the requirements of
Section 17 below.
(a) TERMINATION FOR DISABILITY. If during the Employment
Period, the Executive's employment is terminated on account of the
Executive's disability, as determined under the Company's long-term
disability plan (as in effect on the date of a Change in Control of the
Company), the Executive shall receive any Accrued
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Benefits, and shall remain eligible for all benefits as provided
pursuant to the terms of any long-term disability programs of the
Company in effect at the time of such termination.
(b) TERMINATION ON THE EXECUTIVE'S DEATH. If, during the
Employment Period, the Executive's employment is terminated on account
of the Executive's death, the Executive's estate or his designated
beneficiary (or beneficiaries), as applicable, shall receive all the
Executive's Accrued Benefits.
(c) VOLUNTARY TERMINATION OR TERMINATION FOR CAUSE. If, during
the Employment Period, (i) the Executive shall terminate employment
with the Company other than for Good Reason, or (ii) the Executive's
employment is terminated for Cause, the Executive shall receive from
the Company his Accrued Benefits.
(d) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY THE
EXECUTIVE FOR GOOD REASON. If, during the Employment Period, the
Executive's employment with the Company is terminated by the Company
other than for Cause, or by the Executive for Good Reason, then:
(i) the Executive shall be entitled to receive from the
Company his Accrued Benefit, except that, for this
purpose, Accrued Benefit shall not include any
entitlement to severance under any Company
severance policy generally applicable to the
Company's salaried employees;
(ii) the Executive shall receive from the Company, no
less than ten days following termination of his
employment, a lump sum payment (the "Termination
Payment") equal to three times the Executive's
Annual Compensation;
(iii) all rights under any equity or long-term incentive
plan shall be fully vested;
(iv) rights, if any, to supplemental pension shall be
fully vested; and
(v) the Executive shall continue to be covered at the
expense of the Company by the same or equivalent
hospital, medical, dental, accident, disability and
life insurance coverage as in effect for the
Executive immediately prior to termination of his
employment, until the earlier of (A) thirty-six
months following termination of employment, or (B)
the date the Executive has commenced new employment
and has thereby become eligible for comparable
benefits.
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8. CERTAIN SUPPLEMENTAL PAYMENTS BY THE COMPANY.
(a) In the event the Executive's employment is terminated
pursuant to Section 7(d) above, and if in connection therewith it is
determined that (A) part or all of the compensation and benefits to be
paid to the Executive constitute "parachute payments" under Section
280G of the Code, and (B) the payment thereof will cause the Executive
to incur excise tax under Section 4999 of the Code, the Company, on or
before the date for payment of such excise tax, shall pay the
Executive, in lump sum, an amount (the "Gross-Up Amount") such that,
after payment of all federal, state and local income tax and any
additional excise tax under Section 4999 of the Code in respect of the
Gross-Up Amount payment, the Executive will be fully reimbursed for the
amount of such excise tax.
(b) The determination of the Parachute Amount, the Base Amount
and the Gross-Up Amount, as well as any other calculations necessary to
implement this Section 8 shall be made by a nationally recognized
accounting or benefits consulting firm selected by the Executive and
reasonably satisfactory to the Company and which has not performed
services, other than minor indirect or incidental services, for either
the Company or the Executive for three years prior to the date the
Consultant is retained for this purpose. The Consultant's fee shall be
paid by the Company.
(c) As promptly as practicable following such determination
and the elections hereunder, the Company shall pay to or distribute to
or for the benefit of the Executive such amounts as are then due to the
Executive under this Agreement and shall promptly pay to or distribute
for the benefit of the Executive in the future such amounts as become
due to the Executive under this Agreement.
(d) As a result of the uncertainty in the application of
Section 280G of the Code at the time of an initial determination
hereunder, it is possible that payments will not have been made by the
Company which should have been made under clause (a) of this Section 8
("Underpayment"). In the event that there is a final determination by
the Internal Revenue Service, or a final determination by a court of
competent jurisdiction, that an Underpayment has been made and the
Executive thereafter is required to make any payment of an excise tax,
income tax, any interest or penalty, the accounting or benefits
consulting firm selected under clause (b) above shall determine the
amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the
Executive.
9. FURTHER OBLIGATIONS OF THE EXECUTIVE. During and following the
Executive's employment by the Company, the Executive shall hold in confidence
and not directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company, except to the
extent authorized in writing by the Board of Directors of the Company or
required by any court or administrative agency, other than to an
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employee of the Company or a person to whom disclosure is reasonably necessary
or appropriate in connection with the performance by the Executive of duties as
an executive of the Company. Confidential information shall not include any
information known generally to the public or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that of the Company. All records, files, documents and
materials or copies thereof, relating to the Company's business which the
Executive shall prepare, or use, or come into contact with, shall be and remain
the sole property of the Company and shall be promptly returned to the Company
upon termination of employment with the Company.
10. EXPENSES AND INTEREST. If, after a Change in Control of the
Company, a good faith dispute arises with respect to the enforcement of the
Executive's rights under this Agreement, or if any legal or arbitration
proceeding shall be brought in good faith to enforce or interpret any provision
contained herein, or to recover damages for breach hereof, the Executive shall
recover from the Company any reasonable attorney's fees and necessary costs and
disbursements incurred as a result of such dispute, and prejudgment interest on
any money judgment or arbitration award obtained by the Executive calculated at
the rate of interest announced by Peoples Heritage Bank, or the successor
thereto, from time to time as its prime rate from the date that payments to him
should have been made under this Agreement.
11. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and
after the Employment Period to pay the Executive the compensation and to make
the arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right which the Company may have
against him or anyone else. All amounts payable by the Company hereunder shall
be paid without notice or demand. Each and every payment made hereunder by the
Company shall be final and the Company will not seek to recover all or any part
of such payment from the Executive or from whomsoever may be entitled thereto,
for any reason whatever except as provided in Section 8(d) above.
12. SUCCESSORS.
(a) (i) If the Company sells, assigns, or transfers all or
substantially all of its business and assets to any
Person, excluding Affiliates of the Company, or if
the Company merges into or consolidates or
otherwise combines with any Person which is a
continuing or successor entity, then the Company
shall assign all of its rights, title and interest
in this Agreement as of the date of such event to
the Person which is either the acquiring or
successor Company, and such Person shall assume in
writing and perform from and after the date of such
written assignment all of the terms, conditions and
provisions imposed by this Agreement upon the
Company. Failure of the Company to obtain such
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written assignment shall be a breach of this
Agreement. In case of such assignment by the
Company and of written assumption and agreement by
such Person, all further rights as well as all
other obligations of the Company under this
Agreement thenceforth shall cease and terminate and
thereafter the expression "the Company" wherever
used herein shall be deemed to mean such Person or
Persons.
(ii) This Agreement and all rights of the Executive
shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives,
estates, executors, administrators, heirs and
beneficiaries. All amounts payable to the Executive
hereunder shall be paid, in the event of the
Executive's death, to the Executive's estate, heirs
and representatives. This Agreement shall inure to
the benefit of, be binding upon and be enforceable
by, any successor, surviving or resulting Company
or other entity to which all or substantially all
of the Company's business and assets shall be
transferred. This Agreement shall not be terminated
by the voluntary or involuntary dissolution of the
Company.
13. ENFORCEMENT. The provisions of this Agreement shall be regarded
as divisible, and if any such provisions or any part hereof are declared invalid
or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
14. AMENDMENT. This Agreement may not be amended or modified at any
time except by a written instrument executed by the Company and the Executive if
such amendment or modification occurs before any Change in Control, or by the
Executive and the Company after any Change in Control.
15. WITHHOLDING. The Company shall be entitled to withhold from
amounts to be paid to the Executive hereunder any federal, state or local
withholding or other taxes, or charge which it is from time to time required to
withhold. The Company shall be entitled to rely on an opinion of counsel if any
question as to the amount or requirement of any such withholding shall arise.
16. GOVERNING LAW: ARBITRATION. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Maine. Any dispute arising out of this Agreement shall be
determined by arbitration in the State of Maine under the rules of the American
Arbitration Association then in effect and judgment upon any award pursuant to
such arbitration may be enforced in any court having jurisdiction thereof.
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17. NOTICE. Notices given pursuant to this Agreement shall be in
writing and shall be deemed given when received and, if mailed, shall be mailed
by United States registered or certified mail, return receipt requested,
addressee only postage prepaid, to the Company at:
Peoples Heritage Financial Group, Inc.
X.X. Xxx 0000
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Clerk
or if to the Executive, at the address set forth below the Executive's signature
line of this Agreement, or to such other address as the party to be notified
shall have given to the other.
18. NO WAIVER. No waiver by any party at any time of any breach by
another party of, or compliance with, any condition or provision of this
Agreement to be performed by another party shall be deemed a waiver of similar
or dissimilar provisions or conditions at any time.
19. HEADINGS. The headings herein contained are for reference only
and shall not affect the meaning or interpretation of any provision of this
Agreement.
20. RIGHTS UNDER EXISTING EMPLOYMENT AGREEMENT. The Company
acknowledges that it has assumed all the obligations of CFX Corporation ("CFX"),
as predecessor in interest to the Company by merger, under the Employment
Agreement, dated August ___, 1997,(1) by and between CFX and the Executive
(the "Employment Agreement"). Notwithstanding any provision of this Agreement
or the Employment Agreement to the contrary, in the event the Executive's
employment with the Company is terminated for any reason within one year of the
date of this Agreement, the Executive's employment with the Company shall be
deemed to have been terminated upon the occurrence of or within one year after a
"Triggering Event," as that term is defined in the Employment Agreement and the
Executive shall (i) be entitled to receive the payments and benefits set forth
in Section 7 of the Employment Agreement and not this Agreement, it being agreed
that in no event shall the Executive be entitled to receive benefits under both
this Agreement and the Employment Agreement, and (ii) comply with the
requirements of Sections 10 and 11 of the Employment Agreement. After such
one-year period, and provided that the Executive has not become entitled to
receive benefits under the Employment Agreement, the Employment Agreement shall
terminate and be of no further force and effect without any action on the part
of the Company, as successor to CFX, and the Executive, and the Executive
thereafter shall be entitled to receive such severance benefits as he may be
entitled to receive in accordance with the terms of this Agreement. In the event
the Company enters into an
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(1) August 12 and 14 in the case of Xxxxx X. Xxxxxx and Xxxxxxxxxxx X. Xxxxxxx,
respectively.
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employment or severance agreement with any other executive officer at the same
job range level at the Company on terms more favorable than those set forth in
this Agreement (other than in connection with an acquisition by the Company),
the Executive shall be entitled to enter into a contract on such more favorable
terms. The parties agree that this Agreement shall constitute a written
modification to the Employment Agreement which satisfies the requirements of
Section 19 thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
PEOPLES HERITAGE FINANCIAL GROUP, INC.
By: ______________________________________________
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and Chief Executive
Officer
__________________________________________________
Executive:
Address:
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