EXHIBIT 10.6
EMPLOYMENT AGREEMENT BETWEEN NMBT AND XXX X. XXXX DATED JANUARY 1, 1999
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of January,
1999, by and between NMBT, 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 Xxx X. Xxxx, residing at 00 Xxxxx Xxxxx
Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000 ("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 all or substantially all of the
assets and businesses 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.
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 amended and in
effect on the date
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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, 1999; 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, 1999 that the Term of
Employment will not be extended beyond December 31, 1999; then the Term of
Employment shall automatically be extended until December 31, 2000; if the Board
of Directors has not advised Employee by November 30, 2000 that the Term of
Employment will not be extended beyond December 31, 2000, then the Term of
Employment shall automatically be extended until December 31, 2001.
Notwithstanding anything to the contrary, the term of employment shall not be
extended beyond December 31, 2001.
III. DUTIES OF EMPLOYMENT.
3.1 The Bank hereby employs Employee and Employee hereby
accepts such employment as Executive Vice President and Chief Financial 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 Financial Officer of the Bank and will perform such
other duties commensurate with his position as Executive Vice President and
Chief Financial 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 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.
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IV. COMPENSATION AND BENEFITS DURING TERM OF EMPLOYMENT.
4.1 The Bank shall pay Employee during the Term of Employment
$135,000 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 1998 vehicle. When the vehicle is 36 months old or
has been driven 50,000 miles, whichever comes first, the Bank will review this
policy and in its discretion furnish Employee with a new vehicle, allow Employee
to continue to use the vehicle noted above, or provide Employee with an
automobile allowance.
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 (iii) 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 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
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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) two 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. Notwithstanding the
foregoing, Employee shall be required, at the sole option of the Bank, to
continue his employment hereunder through the occurrence of any such
Change-In-Control and a reasonable transition period thereafter. 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 his employment for 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 any removal of Employee from,
or any failure to re-elect Employee to, any 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;
(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
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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 280G(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):
Pricewaterhouse Coopers 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.
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
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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, 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
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
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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 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.
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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: Xxx X. Xxxx
00 Xxxxx Xxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
If to the Bank, as follows: NMBT
00 Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxx, Xx., Chairman or
Xxxxxxx X. Xxxxxxxx, President
and 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.
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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 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.
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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.
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.
NMBT
By: s/ Xxxxx X. Xxxx, Xx.
--------------------------
Xxxxx X. Xxxx, Xx.
Its Chairman
s/ Xxx X. Xxxx
--------------------------
Xxx X. Xxxx
