10.2 Form of Employee Change in Control Agreement
FIRST AMENDED AND RESTATED
EMPLOYEE CHANGE IN CONTROL AGREEMENT
NOT TO BE CONSTRUED AS AN EMPLOYMENT AGREEMENT
THE FIRST NATIONAL BANK OF LITCHFIELD
FIRST LITCHFIELD FINANCIAL CORPORATION
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WHEREAS, 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 (insert employee name)
("Employee"), [address], as [insert employee's title] of the Bank.
WHEREAS, 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;
WHEREAS, the Boards of Directors of 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 Bank and 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
Bank including Employee, to their assigned duties in the face of potential
circumstances involving the possibility of such a change in control; and
WHEREAS, the Bank, the Holding Company and the Employee have previously
entered an Employee Change in Control Agreement dated ___________ __, 2006 wish
to enter this First Amended and Restated Employee Change in Control Agreement
(this "Agreement") to reflect changes required by Section 409A of the Internal
Revenue Code;
NOW THEREFORE, in addition to one dollar ($1.00) and other good and
valuable consideration paid by the Bank to Employee and in order to induce
Employee to continue employment with the Bank and to continue to perform
Employee's duties in a manner which is in the best interests of the Bank, the
Bank and Holding Company hereby agree to provide Employee with certain benefits
in the event his/her employment with the Bank 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 Bank and 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 Bank and/or the Holding Company. This Agreement simply
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provides certain potential benefits to Employee in the event that a Change in
Control, as hereinafter defined, 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 six (6) months of such Change in Control Employee's
employment with the Bank 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 Company and shall occur upon the occurrence of
any of the following:
(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 of 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 in 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 Bank and/or its successor as provided in this Section 3, within
six (6) 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 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 Bank or its successor.
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(a) Retirement; Disability.
(i) Termination of Employment by the Bank based on retirement
shall mean the mandatory termination of employment in accordance with the
retirement policy of 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.
(ii) Termination of Employment by the Bank 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 covering the employees of the Bank 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 Bank 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 Bank. 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).
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4. Compensation Upon Termination or Reassignment.
(a) If, within six (6) 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) Six (6) months of Employee's annual compensation based
upon the most recent aggregate base salary paid to Employee in the six (6) 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 Bank to or for Employee's benefit under this Agreement shall be
non-deductible to the Bank 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 Bank, the
amount of such payments shall be reduced to the maximum which can be deducted by
the Bank. To the extent that payments in excess of the amount which can be
deducted by the Bank 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 Bank as a result of losses which have
been carried forward by the Bank for Federal tax purposes shall not be deemed a
non-deductible amount for purposes of this Section 4(c).
5. Continuation of Insurance Benefits. Notwithstanding any other
provision in this Agreement to the contrary, the Bank and/or its successor shall
maintain in full force and effect for Employee's continued benefit, for the six
(6) 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.
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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 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 Employee's 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 Employee's 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 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 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
designated by the Board of 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.
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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 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 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 supersedes the prior agreement
between the Bank, the Holding Company and the Employee on the subject matter
hereof dated May 26, 2006 and constitutes the entire agreement between the Bank,
the Holding Company and the Executive on the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
[Signatures on next page.]
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Agreed to this _______ day of ______________, 2008, by and among
Employee, The First National Bank of Litchfield, and First Litchfield Financial
Corporation.
THE FIRST NATIONAL BANK OF LITCHFIELD
By: _______________________________
[Name of Employee]
Its: President and CEO
Duly Authorized
FIRST LITCHFIELD FINANCIAL CORPORATION
By: _______________________________
[Name of President and CEO]
Its: President and CEO
Duly Authorized
EMPLOYEE
Signature: _________________________
[Name]
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) ss. Litchfield
COUNTY OF LITCHFIELD )
On this the _______ day of ___________, 2008, before me, the
undersigned, personally appeared [Name of President and CEO], who acknowledged
himself to be the President and CEO of THE 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.
----------------------------
Notary Public
My Commission Expires: ____________________
STATE OF CONNECTICUT )
) ss. Litchfield
COUNTY OF LITCHFIELD )
On this, the _______ day of ___________, 2008, before me, the
undersigned officer, personally appeared [Name], 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/her free act
and deed.
In Witness Whereof, I hereunto set my hand.
----------------------------
Notary Public
My Commission Expires: ____________________
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