EXHIBIT 10.44
EMPLOYEE CHANGE IN CONTROL AGREEMENT
NOT TO BE CONSTRUED AS AN EMPLOYMENT AGREEMENT
THE FIRST NATIONAL BANK OF LITCHFIELD
FIRST LITCHFIELD FINANCIAL CORPORATION
FIRST LITCHFIELD LEASING
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx
WHEREAS, First Litchfield Leasing Corporation (the "Leasing Company")
and its parent, The First National Bank of Litchfield (the "Bank"), and its
parent bank holding company, First Litchfield Financial Corporation (the
"Holding Company"), wish to continue to employ Xxxxx X. Xxxxxx, ("Employee") of
New Hartford, Connecticut, as Senior Vice-President of the Leasing Company.
WHEREAS, the Leasing Company, the Bank, and the Holding Company expect
that Employee's contributions and knowledge will continue to be of significant
benefit to the future growth and success of the Bank and the Holding Company;
WHEREAS, the Boards of Directors of the Leasing Company, the Bank, and
the Holding Company recognize that a change in control of the Bank and/or the
Holding Company may occur and that the threat of such change in control may
create uncertainty and may result in the distraction or departure of long term
personnel to the detriment of the Leasing Company, the Bank, and the Holding
Company and their stockholders;
WHEREAS, the Boards have determined that appropriate steps should be
taken to reinforce and encourage the continued dedication of employees of the
Leasing Company's management, including Employee, to their assigned duties in
the face of potential circumstances involving the possibility of such a change
in control; and
NOW THEREFORE, in addition to one dollar ($1.00) and other good and
valuable consideration paid by the Leasing Company to Employee and in order to
induce Employee to continue employment with the Leasing Company and to continue
to perform Employee's duties in a manner which is in the best interests of the
Leasing Company, the Bank, and the Holding Company hereby agree to provide
Employee with certain benefits in the event her employment with the Leasing
Company terminates or is reassigned subsequent to a Change in Control (as
defined in Section 2 hereof) under the circumstances described below.
1. Term of Agreement; Employment Status. This Agreement shall take
effect when signed by all parties and shall remain in full force and effect
until June 1, 2010. All employees of the Leasing Company, the Bank, and the
Holding Company, including Employee, are employees at will. The terms of this
Agreement, therefore, do not and are not intended to create either an express
and/or implied contract of employment with the Leasing Company, the Bank, and/or
the Holding Company. This Agreement simply provides certain potential benefits
to Employee in the event that a Change in Control occurs prior to June 1, 2010.
2. Change in Control. No benefits shall be payable hereunder unless
prior to June 1, 2010, there shall have been a Change in Control as set forth
below, and thereafter within twelve (12) months of such Change in Control
Employee's employment with the Leasing Company and/or its successor terminates
or Employee is reassigned in accordance with Section 3, below. For purposes of
this Agreement, a "Change in Control" shall mean a change in the ownership or
effective control of the Bank or the Holding Company, or in the ownership of a
substantial portion of the assets of the Bank or the Holding Company and shall
occur upon the occurrence of any of the following:
82
(a) The date that any one person, or more than one person acting as a
group, acquires ownership of stock that, together with stock previously
acquired, constitutes more than 50% of the total fair market value or total
voting power of the stock of the Bank (other than by the Holding Company), or
the Holding Company;
(b) The date that any one person, or more than one person acting as a
group, acquires (or has acquired in the preceding 12-month period) ownership of
stock possessing 50% or more of the total voting power of the Bank (other than
by the Holding Company), or the Holding Company;
(c) The date that a majority of members of the Board of Directors of
the Bank or the Holding Company is replaced during any 12-month period by
directors whose appointment or election was not endorsed by a majority of the
members of the Board before the appointment or election; or
(d) The date that any one person, or more than one person acting as a
group, acquires ownership (or has acquired in the preceding 12-month period) of
assets from the Bank or the Holding Company that have a total gross fair market
value of 50% or more of the total gross fair market value of all of the assets
immediately before such acquisition or acquisitions. Gross fair market value of
assets means the fair value of the assets without regard to any liability
associated with such assets.
With respect to the above description of a "Change in Control," all terms shall
have the meaning set forth as defined in Section 409A of the Internal Revenue
Code and Treasury Reg. ss.409A-3(i)(5) thereunder, as amended from time to time.
3. Termination Following Change in Control. If any of the events
described in Section 2 hereof constituting a Change in Control shall have
occurred, Employee shall be entitled to the benefits provided for in Section
4(a) hereof upon the Termination of Employment or Reassignment (as defined in
this Section 3) of Employee's employment duties or responsibilities as an
employee of the Leasing Company and/or its successor as provided in this Section
3, within twelve (12) months after such event, unless such Termination of
Employment or Reassignment is: (i) by any regulatory authority (acting with
proper jurisdiction); or (ii) by the Board of Directors of the Leasing Company,
the Bank, or the Holding Company for cause; or (iii) because of Employee's
death, retirement or disability. Such benefits shall be reduced by the amount of
any severance paid to Employee by the Leasing Company, the Bank, or the Holding
Company, or its successor.
(a) Retirement; Disability.
(i) Termination of Employment by the Leasing Company based on
retirement shall mean the termination of employment in accordance with the
retirement policy of the Leasing Company, as approved by the Bank, including (at
Employee's sole election and as set forth in writing) early retirement,
generally applicable to its salaried employees or in accordance with any
retirement arrangement established with Employee's consent with respect to
Employee.
83
(ii) Termination of employment by the Leasing Company based on
disability shall mean the Employee (i) 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 (ii) is
receiving income replacement benefits for a period of not less than three (3)
months under an accident and health plan, as approved by the Bank, and covering
the employees of the Leasing Company by reason of any 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. The Employee shall be
deemed disabled if determined to be totally disabled by the Social Security
Administration.
(b) Notice of Termination. The Leasing Company agrees that in the event
of a Termination of Employment it will promptly furnish Employee with a written
Notice of Termination. Any purported Reassignment of Employee shall be
communicated by written Notice of Termination to the Leasing Company. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall include the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under the provision so
indicated.
(c) Date of Termination. "Date of Termination" shall mean the date
on which a Notice of Termination is given; provided that, if within five (5)
days after any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
(d) Reassignment. "Reassignment" shall mean a reduction in base
salary or an involuntary reassignment of Employee's duties, responsibilities, or
benefits materially inconsistent with those of Employee prior to the Change in
Control or the involuntary relocation of Employee's primary duties and
responsibilities to an office or location greater than fifty (50) miles from
Litchfield, Connecticut or action which results in a significant worsening of
the Employee's work conditions (including, but not limited to, a significant
change in employment duties, responsibilities, required work hours or
otherwise).
84
4. Compensation Upon Termination or Reassignment.
(a) If, within twelve (12) months after a Change in Control, as
defined in Section 2 hereof, shall have occurred, there is a Termination of
Employment or Reassignment of Employee as defined in Section 3 (except by an
agency acting with proper jurisdiction, or by a board of directors for cause or
as a result of death, retirement or disability), then the Bank and/or its
successor shall pay Employee (i) if Employee is a "Specified Employee" as
defined in Section 409A(a)(2)(B)(i) of the Internal Revenue Code, on the date
which is six (6) months after the Date of Termination or (ii) if Employee is not
a Specified Employee as defined, within five (5) days after the Date of
Termination, or in each case as soon thereafter as is practicable, an amount
equal to the sum of:
(i) Twelve (12) months of Employee's annual compensation based
upon the most recent aggregate base salary paid to Employee in the twelve (12)
month period immediately preceding his/her termination or reassignment less
amounts previously paid to Employee from the date of Change in Control; plus
(ii) Reasonable legal fees and expenses incurred by Employee
as a result of such Termination of Employment or Reassignment (including all
such fees and expenses, if any, incurred in contesting or disputing any such
Termination of Employment or Reassignment or in seeking to obtain or enforce any
right or benefit provided for by this Agreement).
(b) Employee shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 4 be reduced by
any compensation earned by Employee as the result of employment by another
employer after the Date of Termination, or otherwise.
(c) It is the intention of the parties to this Agreement that no
payments by the Leasing Company, the Bank, or the Holding Company, to or for
Employee's benefit under this Agreement shall be non-deductible to the Leasing
Company, the Bank, or the Holding Company, by reason of the operation of Section
280G of the Internal Revenue Code. Accordingly, notwithstanding any other
provision hereof, if by reason of the operation of said Section 280G of the
Internal Revenue Code, any such payments exceed the amount which can be deducted
by the Leasing Company, the Bank, or the Holding Company, the amount of such
payments shall be reduced to the maximum which can be deducted by the Leasing
Company, the Bank, or the Holding Company. To the extent that payments in excess
of the amount which can be deducted by the Leasing Company, the Bank, or the
Holding Company have been made to and for Employee's benefit, they shall be
refunded with interest at the applicable rate provided under Section 1274(d) of
the Internal Revenue Code, or at such other rate as may be required in order
that no such payment to or for Employee's benefit shall be non-deductible,
pursuant to Section 280G of the Internal Revenue Code. Any payments made
hereunder which are not deductible by the Leasing Company, the Bank, or the
Holding Company, as a result of losses which have been carried forward by the
Leasing Company, the Bank, or the Holding Company, for Federal tax purposes
shall not be deemed a non-deductible amount for purposes of this Section 4(c).
85
5. Continuation of Insurance Benefits. Notwithstanding any other
provision in this Agreement to the contrary, the Leasing Company, the Bank,
and/or its successor shall maintain in full force and effect for Employee's
continued benefit, for the twelve (12) month period beginning upon a Change in
Control, all life insurance, medical, health and accident and disability
policies, plans, programs or arrangements which were in effect immediately prior
to the Change in Control.
6. Successors; Binding Agreement.
(a) The Bank and the Holding Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, acquisition of
assets or assumption of liabilities or otherwise) to all or substantially all of
the business and/or assets and/or deposits of the Bank, or the Holding Company,
by agreement, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Bank would be required to perform it
if no such succession had taken place. Failure of the Bank and/or the Holding
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Employee to
compensation from the Bank in the same amount and on the same terms as he would
be entitled to hereunder if his/her employment had terminated as a result of a
Termination of Employment or Reassignment, as provided in Section 3 hereof,
after a Change in Control, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Bank" shall mean the
Bank as hereinbefore defined and any successor to the business, assets and/or
deposits as aforesaid which executes and delivers the agreement provided for in
this Section 6 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of Law.
(b) This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Employee should die
after any rights to receive the amounts contemplated hereby have accrued to
Employee but before such amounts have been paid, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to his/her devisee, legatee or other designee or, if there be no such
designee, to Employee's estate.
7. Notices. All notices and other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notices to the Leasing Company, the
Bank, and the Holding Company shall be directed to the attention of the Board
with a copy to the Chairman of the Board of the Leasing Company, Chairman of the
Board of the Bank, and the Chairman of the Board of the Holding Company or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Employee and such other officer as may be specifically
86
designated by the Board of the Leasing Company, the Bank, or the Holding
Company. No waiver by either party hereto at any time of any breach by the other
or failure to comply with any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Connecticut and of the United States of America.
9. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. Administration and Interpretation. This Agreement shall be
administered in a manner, and all provisions of this Agreement shall be
interpreted to be, compliant with the provisions of Section 409A of the Internal
Revenue Code, and regulations and rulings issued thereunder, so as not to
subject the benefits accruing hereunder to taxation pursuant to Section
409A(a)(1) of the Internal Revenue Code.
11. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Litchfield, Connecticut, in accordance with the rules of the American
Arbitration Association then in effect. Notwithstanding the pendency of any such
dispute or controversy, the Bank or the Holding Company will pay Employee
promptly an amount equal to Employee's full scheduled compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, base salary) and provide Employee with all scheduled compensation, benefits
and insurance plans in which he/she was participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 3 hereof. Amounts paid under this Section 12 are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Employee shall be entitled to seek specific performance of
Employee's right to be paid until the Date of Termination during the pendency of
any dispute or controversy arising under or in connection with this Agreement.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the Bank, the Holding Company, and the Executive on the subject matter
hereof. No rights are granted to the Employee by virtue of this Agreement other
than those specifically set forth herein.
87
Agreed to this 9th day of February, 2009, by and among Employee, The First
National Bank of Litchfield, and First Litchfield Financial Corporation.
THE FIRST NATIONAL BANK OF LITCHFIELD
/s/ XXXXXX X. XXXXX
By: Xxxxxx X. Xxxxx
Its: President
Duly Authorized
FIRST LITCHFIELD FINANCIAL CORPORATION
/s/ XXXXXX X. XXXXX
By: Xxxxxx X. Xxxxx
Its: President
Duly Authorized
FIRST LITCHFIELD LEASING CORPORATION
/s/ XXXXX X. XXXXX
By: Xxxxx X. Xxxxx
Its: President
Duly Authorized
EMPLOYEE
/s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
88
STATE OF CONNECTICUT )
) ss: Litchfield
COUNTY OF LITCHFIELD )
On the 11th day of February, 2009, before me, the undersigned,
personally appeared XXXXXX X. XXXXX, who acknowledged himself to be the
President of FIRST NATIONAL BANK OF LITCHFIELD and FIRST LITCHFIELD FINANCIAL
CORPORATION, and that he, as such President, being authorized so to do, executed
the foregoing instrument for the purposes therein contained by signing his name.
In Witness Whereof, I hereunto set my hand.
/s/ XXXXXXXX X. XXXXXXX
Notary Public
My Commission Expires: March 31, 0000
XXXXX XX XXXXXXXXXXX )
) ss: Torrington
COUNTY OF LITCHFIELD )
On the 9th day of February, 2009, before me, the undersigned,
personally appeared XXXXX XXXXX, who acknowledged himself to be the President of
FIRST LITCHFIELD LEASING CORPORATION, and that he, as such President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained by signing his name.
In Witness Whereof, I hereunto set my hand.
/s/ XXX X. XXXXXXXXX
Notary Public
My Commission Expires: January 31, 2013
89
STATE OF CONNECTICUT )
) ss.: Torrington
COUNTY OF LITCHFIELD )
On this the 9th day of February, 2009, before me, the undersigned
officer, personally appeared, XXXXX X. XXXXXX, known to me or satisfactorily
proven to be the person signing the foregoing document and acknowledged that
he/she executed the same for the purposes therein contained as his free act and
deed.
In Witness Whereof, I hereunto set my hand.
/s/ XXX X. XXXXXXXXX
Notary Public
My Commission Expires: January 31, 2013
90
