10.14 TRUST AGREEMENT ("RABBI TRUST")
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THIS AGREEMENT made this 21st day of November, 2000, by and between THE FIRST
NATIONAL BANK OF LITCHFIELD ("Company") and SALISBURY BANK & TRUST COMPANY
("Trustee").
W I T N E S S E T H:
WHEREAS, Company has adopted the nonqualified deferred compensation
Plan as listed in Appendix A (the "Plan");
WHEREAS, Company has incurred or expects to incur liability under the
terms of the Plan with respect to the individual participating in the Plan;
WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for the purposes of Title I of the Employee Retirement Income Security Act of
1974; and
WHEREAS, it is the intent of Company to make contributions to the Trust
to provide itself with a source of funds to assist it in the meeting of its
liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
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a. Company hereby deposits with Trustee in trust an amount determined
in accordance with Section (b) hereof, which shall become the principal of the
Trust to be held, administered and disposed of by Trustee as provided in this
Trust Agreement.
b. Prior to the establishment of this Trust, and annually thereafter,
an independent actuarial or pension consulting firm retained by the Company (the
"Trust Actuary") shall determine with respect to each Participant the annual
amount which, if made each year through the year in which the Participant is
assumed to retire (which assumed date will be the later of age 65 or the
attained age of the Participant), will fully fund such Participant's benefits
under the Plan. Such amount shall be determined, and contributed by the Company,
upon the establishment of this Trust, pursuant to Section 1(a) hereof, and
annually thereafter on or around the anniversary of the establishment of the
Trust.
c. The Trust hereby established shall be irrevocable.
d. The Trust is intended to be a grantor trust, of which Company is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
e. The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan participants and general creditors as herein set
forth. Plan participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the trust. Any rights
created under the Plan and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Company.
Any assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
f. Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with Trustees
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
g. Upon a Change of Control, Company shall, as soon as possible, but in
no event longer than ninety (90) days following the Change of Control, as
defined herein, make an irrevocable contribution to the Trust in an amount that
is sufficient to pay each Plan participant or beneficiary the benefits to which
Plan participants or their beneficiaries would be entitled pursuant to the terms
of the Plan as of the date on which the Change of Control occurred. For purposes
of this Trust, Change of Control shall mean the purchase or other acquisition by
any person, entity or group of persons, within the meaning of section 13(d) or
14(d) of the Securities Exchange Act of 1934 ("Act"), or any comparable
successor provisions, of beneficial ownership
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(within the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or
more of either the outstanding shares of common stock or the combined voting
power of Company's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of Company of a reorganization
merger, or consolidation, in each case, with respect to which persons who were
stockholders of Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of directors of
the reorganize, merged or consolidated Company's then outstanding securities, or
a liquidation or dissolution of Company or of the sale of all or substantially
all of the Company's assets. For purposes of this Trust, any "Change of Control"
(as such term is defined herein) of First Litchfield Financial Corp., the
holding company of Company, shall be deemed a Change of Control of Company.
Section 2. Payments to Plan Participants and Their Beneficiaries.
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a. Company shall deliver to Trustee, and periodically update where
necessary to maintain accuracy, a schedule (the "Payment Schedule") that
indicates the amounts payable in respect of each Plan participant (and his or
her beneficiaries) that provides a formula or other instructions acceptable to
Trustee for determining the amounts so payable, the form in which such amount is
to be paid as provided for or available under the Plan, and the time of
commencement for payment of such amounts. Except as otherwise provided herein,
Trustee shall make payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make provisions for the
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid
by Company.
b. The entitlement of a Plan participant or his or her beneficiaries to
benefits under the Plan shall be determined by Company or such party as it shall
designate under the Plan, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan.
c. Company may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan. Company
shall notify Trustee of its decision to make payment of benefits directly prior
to the time amounts are payable to participants or their beneficiaries. In
addition, if the principal of the Trust and earnings thereon are not sufficient
to make payments of benefits in accordance with the terms of the Plan, Company
shall make the balance of each such payment as it falls due. Trustee shall
notify Company where principal and earnings are not sufficient.
Section 3. Trustee Responsibility Regarding Payments to Trust Beneficiary When
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Company Is Insolvent
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a. Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. Company shall be considered
"insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a pending proceeding
as s debtor under the United States Bankruptcy Code, or (iii) Company is
determined to be insolvent by the Connecticut Banking Commissioner or such other
bank regulatory or bank insurance agency having jurisdiction over the Company's
affairs.
b. At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
1. The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
insolvency. If a person claiming to be a creditor of Company alleges in writing
to Trustee that Company has become insolvent, Trustee shall determine whether
Company is Insolvent and, pending such determination, Trustees shall discontinue
payment of benefits to Plan participants of their beneficiaries.
2. Unless Trustee has actual knowledge of Company's
insolvency, or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty to
inquire whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Company's solvency.
3. If at any time Trustee has determined that Company is
insolvent, Trustee shall discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of Plan participants or their beneficiaries to pursue their
rights as general creditors of Company with respect to benefits due under the
Plan or otherwise.
4. Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that Company is not insolvent (or is
no longer insolvent).
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c. Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Company in lieu of the payments provided
for hereunder during any such period of discontinuance.
Section 4. Payments to Company. Except as provided in Section 3 hereof,
Company shall have no right or power to direct Trustee to return to Company or
to divert to others any of the Trust assets before all payment of benefits have
been made to Plan participants and their beneficiaries pursuant to the terms of
the Plan.
Section 5. Investment Authority.
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a. In no event may Trustee invest in securities (including stock or
rights to acquire stock) or obligations issued by Company, other than a de
minimis amount held in common investment vehicles in which Trustee invests. All
rights associated with assets of the Trust shall be exercised by Trustee or the
person designated by Trustee, and shall in no event be exercisable by or rest
with Plan participants.
Company shall have the right, at any time, and from time to time in its
sole discretion, to substitute assets of equal fair market value for any asset
held by the Trust.
Section 6. Disposition of Income. During the term of this Trust, all
income received by the Trust, net of expenses and taxes, shall be accumulated
and reinvested.
Section 7. Accounting by Trustee. Trustee shall keep accurate and
detailed records of all investments, receipts, disbursements, and all other
transactions required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. Within sixty (60) days
following the close of each calendar year and within ninety (90) days after the
removal or resignation of Trustee, Trustee shall deliver to Company a written
account of its administration of the Trust during such year or during the period
from the close of the last preceding year to the date of such removal or
resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable being shown separately), and
showing all cash, securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
Section 8. Responsibility of Trustee.
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a. Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims, provided, however, that Trustee shall incur
no liability to any person for any action taken pursuant to a direction, request
or approval given by Company which is contemplated by, and in conformity with,
the terms of the Plan of this Trust and is given in writing by Company. In the
event of a dispute between Company and a party, Trustee may apply to a court of
competent jurisdiction to resolve the dispute.
b. If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
c. Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
d. Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist in performing
any of its duties or obligations hereunder.
e. Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.
f. However, notwithstanding the provisions of Section 8(e) above,
Trustee may loan to the Company the proceeds of any borrowing against an
insurance policy held as an asset of the Trust.
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g. Notwithstanding any powers granted to Trustee pursuant to this Trust
Agreement or to applicable law, Trustee shall not have any power that could give
this Trust the objective or carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
Section 9. Compensation and Expenses of Trustee. Company shall pay all
administrative and Trustee's fees and expenses. If not so paid, the fees and
expenses shall be paid from the Trust.
Section 10. Resignation and Removal of Trustee.
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a. Trustee may resign at any time by written notice to Company, which
shall be effective ninety (90) days after receipt of such notice unless Company
and Trustee agree otherwise.
b. Trustee may be removed by Company on thirty (30) days notice or upon
shorter notice accepted by Trustee.
c. Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within thirty (30) days after receipt
of notice of resignation, removal or transfer, unless Company extends the time
limit.
d. If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph(s) (a) or (b) of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
Section 11. Appointment of Successor.
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a. If Trustee resigns or is removed in accordance with Section 10(a) or
(b) hereof, Company may appoint any third party, such as a bank trust department
or other party that may be granted corporate trustee powers under state law, as
a successor to replace Trustee upon resignation or removal. The appointment
shall be effective when accepted in writing by the new Trustee, who shall have
all of the rights and powers of the former Trustee, including ownership rights
of the Trust assets. The former Trustee shall execute any instrument necessary
or reasonably requested by Company or the successor Trustee to evidence the
transfer.
b. The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
Section 12. Amendment or Termination.
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a. This Trust may be amended by a written instrument executed by
Trustee and Company. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan or shall make the Trust revocable after it
has become irrevocable in accordance with Section 1(c) hereof.
b. The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan. Upon termination of the Trust any assets remaining in
the Trust shall be returned to Company.
c. Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, Company may terminate
this Trust prior to the time all benefit payments under the Plan have been made.
All assets in the Trust at termination shall be returned to the Company.
Section 13. Miscellaneous.
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a. Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
b. Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
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c. This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
Section 14. Effective Date. The effective date of this Trust Agreement
shall be November 21, 2000.
IN WITNESS WHEREOF, the Parties hereunto have executed this Trust
Agreement the 21st day of November, 2000.
ATTEST: COMPANY:
THE FIRST NATIONAL BANK OF LITCHFIELD
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇ ▇. Clock
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. Clock
Its
Duly Authorized Chairman
TRUSTEE:
SALISBURY BANK & TRUST
COMPANY
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Senior Vice President
Duly Authorized
APPENDIX A
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Executive Supplemental Compensation Agreement between The First National Bank of
Litchfield and ▇▇▇▇▇▇ ▇▇▇▇▇▇ dated November 21, 2000.
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