Exhibit 10.9
CHANGE IN CONTROL SEVERANCE AGREEMENT
SIMSBURY BANK AND TRUST COMPANY
This
Agreement is made and entered into, effective as of the 23rd day
of
December, 2005, by and between Simsbury Bank and Trust Company, a
state bank and
trust company with its principal office and place of business at
981 Hopmeadow
Street, Simsbury, Connecticut 06070 ("Bank") and Terry L. Boulton,
a resident of
Simsbury, Connecticut ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is employed by Bank as Senior Vice President and
Chief
Retail Banking Officer;
WHEREAS, the Board of Directors of Bank considers it to be in the
best
interests of Bank and the stockholders of Bank to foster the
continued
employment of Executive in the event of a Potential
Change-in-Control (as
hereinafter defined), although no such event is now contemplated or
foreseen;
WHEREAS, Bank desires to assure Executive of what it considers to
be fair
and reasonable terms in the event of a Change-in-Control (as
hereinafter
defined);
NOW
THEREFORE, in consideration of the promises and mutual covenants
herein
contained, the parties hereto, intending to be legally bound, do
hereby mutually
covenant and agree as follows:
1.
Term of Agreement.
(a)
Generally. Except as provided in Section 1(b) hereof, (i) this
Agreement shall be effective as of the date and year first above
written, and
shall continue in effect through December 31, 2005, and (ii)
commencing on
January 1, 2006, and each January 1 thereafter, this Agreement
shall be
automatically extended for one additional year unless, not later
than September
30th of the preceding year, either party to this Agreement gives
notice to the
other that the Agreement shall not be extended under this Section
1(a);
provided, however, that no such notice by Bank shall be effective
if prior to
the date of such notice (i) a "Potential Change in Control" shall
have occurred
and the event giving rise thereto has not been terminated,
abandoned or
rescinded or (ii) a "Change in Control" shall have occurred.
(b)
Upon a Change in Control. If a Change in Control shall have
occurred at
any time during the period in which this Agreement is effective,
this Agreement
shall continue in effect for (i) the remainder of the month in
which the Change
in Control occurred and (ii) a term of 12 months beyond the month
in which such
Change in Control occurred (such entire period hereinafter referred
to as the
"Protected Period").
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2.
Definitions.
For
purposes of this Agreement, the following terms shall have the
following meanings:
(a)
A "Change in Control" shall be deemed to have occurred if, during
the
term of this Agreement:
(i) any Person directly or indirectly or acting through one or
more
other Persons owns, controls, or has power to vote 25% or more of
the voting
common stock of Bank or a Controlling Person; or
(ii) any Person acquires or agrees to acquire all or substantially
all
of the assets and business of Bank or a Controlling Person; or
(iii) any Person (A) is a party to a merger, consolidation, or any
other
form of reorganization having substantially the same effect as a
merger or
consolidation, with Bank or a Controlling Person and (B)
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 100% of the total assets of
Bank or the
Controlling Person, as applicable, as of the end of its most recent
fiscal year;
or
(iv) during any period of twenty-four (24) consecutive months,
individuals who at the beginning of such period constitute the
Board of
Directors of Bank cease for any reason to constitute a majority of
such Board,
unless the election, or the nomination for election of each new
Director was
approved by a vote of at least two-thirds (2/3) of the Directors
then still in
office who were Directors at the beginning of such period; or
(v) the Board of Directors of Bank, by vote of a majority of all
the
Directors (excluding Executive if Executive is a Director), adopts
a resolution
to the effect that a "Change in Control" has occurred for purposes
of this
Agreement.
(b)
A "Potential Change in Control" shall be deemed to have occurred
if:
(i) Bank or any Controlling Person enters into a letter of
intent,
memorandum of understanding, or definitive agreement providing for,
or publicly
announces that it is considering, one or more transactions, the
consummation of
which would result in the occurrence of a Change in Control;
(ii) any Person (including Bank) publicly announces an intention to
take
or to consider taking actions which if consummated would constitute
a Change in
Control; or
(iii) the Board adopts a resolution to the effect that, for
purposes of
this Agreement, a Potential Change in Control has occurred.
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(c)
A "Person" shall include a natural person, corporation, or
other
entity. When two or more persons act as a partnership, limited
partnership,
syndicate, or other group for the purpose of acquiring, holding, or
disposing of
Bank common stock, such partnership, syndicate, or group shall be
considered a
Person. Beneficial ownership shall be determined under the then
current
provisions of Securities Exchange Act Rule 13d-3; 17 C.F.R. ss.
240.13d-3.
(d)
A "Controlling Person" shall mean a Person who directly or
indirectly
or acting through one or more other Persons owns, controls or has
power to vote
50% or more of the voting common stock of Bank.
(e)
Notwithstanding the definitions contained in Section 2 hereof,
the
formation by Bank of a bank holding company that is approved by the
Board and
the shareholders of Bank shall not constitute either a Change in
Control or a
Potential Change in Control.
3.
Duties Upon Potential Change-in-Control.
In
the event that a Potential Change-in-Control shall occur while
Executive
is employed by Bank, Executive agrees to remain in the employ of
Bank, at the
request of Bank, and in such event Bank agrees to continue to
employ Executive
in the offices then held by Executive with Bank and on the terms of
employment
then in effect until the earlier to occur of the following: (i) the
event giving
rise to the Potential Change-in-Control shall have been abandoned
or terminated;
(ii) a Change-in-Control has occurred; or (iii) the Board of
Directors of Bank
shall have determined by vote of at least two-thirds (2/3) of all
the Directors
(excluding Executive if Executive is a Director) that Executive's
obligations
under this Section 3 shall cease. During the period covered by the
preceding
sentence, Executive shall render, to the best of Executive's
ability, such
services as shall be required of Executive in order to explore and
pursue fully
the Potential Change-in-Control in accordance with directions,
policies and
determinations from time to time made by the Board of Directors of
Bank and
communicated to Executive. During said period, Executive shall use
reasonable
best efforts to fulfill Executive's responsibilities to Bank in the
interests of
Bank and the shareholders of Bank and as reasonably requested of
Executive for
such purposes. The employment of Executive pursuant to the first
sentence of
this Section 3 may be terminated, without breach of this Agreement,
either by
Bank for Cause, Disability or Material Breach, or by Executive for
Good Reason
(as such terms are defined in Section 4(f) below).
4.
Termination.
(a)
Termination by Bank for Cause, by Executive Without Good Reason, or
by
Reason of Death, Disability or Retirement. If during the Protected
Period
Executive's employment by Bank is terminated by Bank for Cause, by
Executive
without Good Reason, or because of Executive's death, Disability or
Retirement,
Bank shall not be obligated to make any payments to Executive by
reason of this
Agreement other than (i) payment of amounts otherwise accrued and
owing but not
yet paid and (ii) any amounts payable under then-existing employee
benefit
programs at the time such amounts are due.
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(b)
Termination by Bank Without Cause or by Executive for Good Reason.
If
during the Protected Period Executive's employment by Bank is
terminated by Bank
without Cause or by Executive for Good Reason, subject to the
provisions of
Section 6 hereof, Executive shall be entitled to the compensation
and benefits
described in this Section 4(b). If Executive's employment by Bank
is terminated
prior to a Change in Control at the request of a Person engaging in
a
transaction or series of transactions that would result in a Change
in Control,
the Protected Period shall commence upon the subsequent occurrence
of a Change
in Control, Executive's actual termination shall be deemed a
termination
occurring during the Protected Period and covered by this Section
4(b),
Executive's Date of Termination shall be deemed to have occurred
immediately
following the Change in Control, and Notice of Termination shall be
deemed to
have been given by Bank immediately prior to Executive's actual
termination.
Executive's continued employment shall not constitute consent to,
or a waiver of
rights with respect to, any circumstances constituting Good Reason
hereunder.
The
compensation and benefits provided under this Section 4(b) are
as
follows:
(i) Bank shall pay Executive's full base salary through the Date
of
Termination at the rate in effect at the time Notice of Termination
is given, no
later than the fifth day following the Date of Termination, and
Executive shall
receive all other amounts to which Executive is entitled under any
benefit plan
of Bank, at the time such payments are due.
(ii) At the time specified in Section 4(d) hereof, Bank shall pay
to
Executive, in lieu of amounts which may otherwise be payable to
Executive under
any bonus plan for the year in which the Date of Termination
occurs, an amount
in cash equal to Executive's annual target bonus that would be
payable in cash
for such year multiplied by a fraction, (A) the numerator of which
equals the
number of full or partial days in such annual performance period
during which
Executive was employed by Bank and (B) the denominator of which is
365.
(iii) At the time specified in Section 4(d) hereof, Bank shall
pay
Executive, in lieu of any further salary, bonus or severance
payments for
periods subsequent to the Date of Termination, a lump sum amount in
cash equal
to two times the sum of:
(A) the greater of (I) Executive's annual base salary in effect
immediately prior to the Change in Control of Bank or (II)
Executive's annual
base salary in effect at the time Notice of Termination is given;
and
(B) the greater of (I) Executive's annual target bonus for the year
in
which the Change in Control occurs or, (II) if no such target bonus
has yet been
determined for such year, Executive's annual target bonus actually
earned by
Executive in the year immediately preceding the year in which the
Change in
Control occurs.
(iv) Stock options or restricted stock held by Executive at the
time of
Executive's termination, the vesting of which is service based, if
not then
vested and exercisable, will become fully vested and exercisable at
the date of
such termination, and, in other respects (including the period
following
termination during which such options may be exercised), such
options or
restricted stock shall be governed by the plans and programs and
the agreements
and other documents pursuant to which such options or restricted
stock were
granted.
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(v) Any performance objectives upon which the earning of
performance-based restricted stock or deferred stock awards,
including
outstanding stock plan awards, and other long-term incentive awards
is
conditioned shall be deemed to have been met at target level at the
date of
termination, and restricted stock and deferred stock awards,
including
outstanding stock plan awards, and other long-term incentive awards
(to the
extent then or previously earned, in the case of performance-based
awards) shall
become fully vested and non-forfeitable at the date of such
termination, and, in
other respects, such awards shall be governed by the plans and
programs and the
agreements and other documents pursuant to which such awards were
granted.
(vi) For a 24month period following Executive's termination of
employment, Bank shall arrange to provide Executive with health
insurance
benefits no less favorable than those which Executive was receiving
immediately
prior to the Notice of Termination. If Executive elects after
termination of
employment continued coverage under Bank's health plan in
accordance with the
applicable provisions of the Consolidated Omnibus Reconciliation
Act of 1985
("COBRA"), Executive shall continue to receive such individual
and/or family
health benefits coverage as Executive was receiving at the time of
termination
of employment with Bank with Executive paying the same portion of
the cost of
such coverage as existed at the time of Executive's termination,
for so long
during the continuation period as Executive elects to continue
coverage and pays
Executive's portion of the costs of coverage.
(vii) (vii) At the time specified in Section 4(d) hereof, an
amount
equal to the aggregate amounts that Bank would have contributed on
behalf of
Executive under Bank's 401(k) Plan, or similar qualified plan if
any such plan
shall be in effect, for a 24-month period following Executive's
termination of
employment (plus estimated earnings thereon) had Executive
continued in the
employ of Bank until the end of said period and made contributions
under said
plan at a rate, as a percentage of salary, equal to the rate at
which Executive
had made contributions to said plan in the plan year immediately
preceding
Executive's termination.
(viii) At the time specified in Section 4(d) hereof, a cash
allowance
for outplacement and job search activities (including, but not
limited to,
office and secretarial expenses) not to exceed $10,000, provided
that such cash
allowance shall apply only to those costs or obligations that are
incurred by
Executive during the 24-month period following Executive's
termination of
employment.
(ix) Bank shall not be obligated to continue any disability or
disability income insurance on behalf of Executive following the
date of
Executive's termination of employment. To the extent permitted
under any
contracts, programs or policies of such nature in effect at the
time of such
termination, Executive may continue at Executive's sole cost and
expense
coverage thereunder for a period of up to 24 months.
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(x) For a 24-month period following Executive's termination of
employment, Executive shall continue to receive such perquisites,
other than
those specified in the preceding subparagraphs above, as Executive
was receiving
at the time of termination of employment with, to the extent
applicable, the
same cost sharing with Bank as was in effect immediately prior to
Executive's
termination of employment.
(xi) Bank shall reimburse Executive for the amount of any
reasonable
legal fees and expenses incurred by Executive in any successful
action (whether
or not arbitration or litigation shall be involved) to obtain or
enforce any
right or benefit provided to Executive by Bank hereunder or as
confirmed or
acknowledged hereunder.
(c)
Section 280G Limit. Notwithstanding any other provision of this
Agreement, in the event that any payment or benefit received or to
be received
by Executive, whether payable pursuant to the terms of this
Agreement or any
other plan, arrangement or agreement with Bank, its successors, or
any person
affiliated with Bank ("Affiliate") within the meaning of Section
1504 of the
Internal Revenue Code of 1986, as amended (the "Code")
(collectively "Total
Payments") would, in the determination of the independent certified
public
accounting firm then retained by Bank (the "Tax Advisor"), not be
deductible (in
whole or in part) by Bank, an affiliate of Bank or other person
making such
payment or providing such benefit as a result of Section 280G of
the Code, or
any successor to such Section, payments and benefits pursuant to
this Agreement
shall be reduced until no portion of the Total Payments is not
deductible as a
result of Section 280G of the Code, or payments and benefits
pursuant to this
Agreement are reduced to zero. At the time of Executive's
termination, Bank
shall obtain from the Tax Advisor an appraisal of the then current
present value
of the covenants by Executive set forth in Sections 7 and 8 of this
Agreement,
an amount of the total payments to be made to Executive under
clause (ii) of
Section 4(b) equal to said amount shall be for all purposes treated
as a payment
to Executive in consideration of such covenants and the remainder,
if any, shall
be treated as supplemental wage payments to Executive. For purposes
of the
limitation contained in this Section 4(c), (i) no portion of the
Total Payments
the receipt of which Executive, in the determination of the Tax
Advisor, shall
have effectively waived prior to the date which is fifteen (15)
days following
termination of employment and prior to the earlier of the date of
constructive
receipt and the date of payment thereof shall be taken into
account; and (ii)
any reduction in the payments and benefits pursuant to Section 4(b)
above shall
be made from the payments and benefits to be made pursuant to
clauses (i)
through (xi) of Section 4(b) hereof, in such order as may be
determined by
Executive, except to the extent that such payments and benefits, in
the
determination of the Tax Advisor, are reasonable compensation
within the meaning
of Section 280G of the Code. The determination of the Tax Advisor
as to the
deductibility of the Total Payments shall be completed not later
than forty-five
(45) days following Executive's termination of employment, and
such
determination shall be communicated in writing to Bank, with a copy
to
Executive, within said forty-five (45) day period. The
determination of the Tax
Advisor as to the deductibility of the Total Payments shall be
deemed conclusive
and binding on Bank and Executive and shall not be subject to the
arbitration
provisions of this Agreement. Bank shall pay the fees and other
costs of the Tax
Advisor hereunder. In the event that the independent certified
public accounting
firm then retained by Bank is unable or declines to serve as Tax
Advisor for
purposes of making the foregoing determinations, Bank shall appoint
another
accounting firm of national reputation to serve as Tax Advisor.
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(d)
Time of Payment. The payments provided for in clauses (ii),
(iii),
(vii) and (viii) of Section 4(b) hereof shall be made not later
than the
fifteenth day following the Date of Termination; provided, however,
that if the
amount of such payments cannot be finally determined on or before
such day, Bank
shall pay to Executive on such day an estimate, as determined in
good faith by
Bank, of the minimum amount of such payments and shall pay the
remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B)
of the Code) as soon as the amount thereof can be determined but in
no event
later than the thirtieth day after the Date of Termination.
(e)
Notice. During the Protected Period, any purported termination
of
Executive's employment by Bank or by Executive shall be
communicated by written
Notice of Termination to the other party hereto.
