EXHIBIT 10.3
GRANITE STATE BANKSHARES, INC.
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
WHEREAS, Xxxxxxx X. Xxxxx ("Executive") and the Granite State
Bankshares, Inc. (the "Holding Company") are parties to an employment
agreement made effective as of June 30, 1986 (the "Agreement"); and
WHEREAS, there is an accelerating trend of consolidation among
companies within the banking industries; and
WHEREAS, the Agreement is intended to provide certain benefits to
Executive in the event of a change in control of the Holding Company; and
WHEREAS, tax law provisions relating to "golden parachute payments"
could have the effect of reducing the benefits otherwise provided to
Executive under the Agreement as a result of a change in control of the
Holding Company; and
WHEREAS, the Board believes that it is in the best interests of the
Holding Company and its shareholders that the Agreement be amended in order
to provide the benefits originally intended to be provided under the
Agreement to Executive in the event of a change in control of the Holding
Company, without any reduction because of tax code "penalties" or excise
taxes relating to a change in control; and
WHEREAS, the Holding Company and the Executive also desire to amend
the Agreement in the manner set forth herein for the purpose of providing
further incentive to the Executive to achieve successful results in the
management and the operation of the Holding Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree to the following amendment to the Agreement:
1. Paragraph (j) of Section 5 shall be added to read as follows:
(h) Notwithstanding any other provisions contained in this
Agreement, in each calendar year that Executive is entitled
to receive payments or benefits under the provisions of
this Section 5, the independent accountants of the Holding
Company shall determine if an excess parachute payment (as
defined in Section 4999 of the Internal Revenue Code of
1986, as amended, and any successor provision thereto, (the
"Code")) exists. Such determination shall be made after
taking any reductions permitted pursuant to Section 280G of
the Code and the regulations thereunder. Any amount
determined to be an excess parachute payment after taking
into account such reductions shall be hereafter referred to
as the "Initial Excess Parachute Payment". As soon as
practicable after a Change in Control, the Initial Excess
Parachute Payment shall be determined. Upon the Date of
Termination following a Change in Control, the Holding
Company shall pay Executive, subject to applicable
withholding requirements under applicable state or federal
law an amount equal to:
(i) twenty (20) percent of the Initial Excess
Parachute Payment (or such other amount equal to
the tax imposed under Section 4999 of the Code),
and
(ii) such additional amount (tax allowance) as may be
necessary to compensate Executive for the payment
by Executive of state and federal income and
excise taxes on the payment provided under Clause
(i) and on any payments under this Clause (ii).
In computing such tax allowance, the payment to be
made under Clause (i) shall be multiplied by the
"gross up percentage" ("GUP"). The GUP shall be
determined as follows:
Tax Rate
GUP = ---------------
1- Tax Rate
The Tax Rate for purposes of computing the GUP
shall be the highest marginal federal and state
income and employment-related tax rate applicable
to the Executive in the year in which the payment
under Clause (i) is made.
Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final
administrative settlement to which Executive is a party
that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is different
from the Initial Excess Parachute Payment (such different
amount being hereafter referred to as the "Determinative
Excess Parachute Payment") then the Holding Company's
independent accountants shall determine the amount (the
"Adjustment Amount") the Executive must pay to the Holding
Company or the Holding Company must pay to the Executive in
order to put the Executive (or the Holding Company, as the
case may be) in the same position as the Executive (or the
Holding Company, as the case may be) would have been if the
Initial Excess Parachute Payment had been equal to the
Determinative Excess Parachute Payment. In determining the
Adjustment Amount, the independent accountants shall take
into account any and all taxes (including any penalties and
interest) paid by or for Executive or refunded to Executive
or for Executive's benefit. As soon as practicable after
the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive or the
Executive shall repay the Adjustment Amount to the Holding
Company, as the case may be.
In each calendar year that Executive receives payments or
benefits under the provisions of this Section 5, Executive
shall report on his state and federal income tax returns
such information as is consistent with the determination
made by the independent accountants of the Holding Company
as described above. The Holding Company shall indemnify
and hold Executive harmless from any and all losses, costs
and expenses (including without limitation, reasonable
attorney's fees, interest, fines and penalties) which
Executive incurs as a result of so reporting such
information. Executive shall promptly notify the Holding
Company in writing whenever the Executive receives notice
of the institution of a judicial or administrative
proceeding, formal or informal, in which the federal tax
treatment under Section 4999 of the Code of any amount paid
or payable under this Agreement is being reviewed or is in
dispute. The Holding Company shall assume control at its
expense over all legal and accounting matters pertaining to
such federal tax treatment (except to the extent necessary
or appropriate for Executive to resolve any such proceeding
with respect to any matter unrelated to amounts paid or
payable pursuant to this contract) and Executive shall
cooperate fully with the Holding Company in any such
proceeding. The Executive shall not enter into any
compromise or settlement or otherwise prejudice any rights
the Holding Company may have in connection therewith
without prior consent to the Holding Company.
2. All other terms and provisions of the Agreement shall remain
unchanged and in full force and effect.
IN WITNESS WHEREOF, Granite State Bankshares, Inc. has caused this
Amendment No. 1 to the Agreement to be executed and its seal to be affixed
hereunto by its duly authorized officer, and Executive has signed this
Amendment No. 1, on the 12th day of August, 1996.
ATTEST: [SEAL] GRANITE STATE BANKSHARES, INC.
/s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxx
[SEAL]
WITNESS:
/s/ Xxxxxx X. Xxxx /s/ Xxxxxxx X. Xxxxx
Executive
