Exhibit 10.1
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") is made as of
September 30, 1997 (the "Effective Date"), by and between Northway
Financial, Inc., a New Hampshire chartered corporation
("Northway"), The Berlin City Bank, a New Hampshire chartered bank
and wholly owned subsidiary of Northway with its principal offices
located in Berlin, New Hampshire (Northway and The Berlin City Bank
shall hereinafter collectively be referred to as the "Employer"),
and William J. Woodward (the "Executive"). In consideration of the
mutual covenants contained in this Agreement, the Employer and the
Executive agree as follows:
1. Employment. The Employer agrees to employ the
Executive and the Executive agrees to be employed by the Employer
on the terms and conditions set forth in this Agreement.
2. Capacity. The Executive shall serve the
Employer as Chairman, President and Chief Executive Officer,
subject to election by the Board of Directors of Northway or The
Berlin City Bank, as the case may be (the "Board of Directors"),
and as a member of the Board of Directors, subject to election by
the shareholders of the Employer. The Executive shall also serve
the Employer in such other or additional offices as the Executive
may be requested to serve by the Board of Directors. In such
capacity or capacities, the Executive shall perform such services
and duties in connection with the business, affairs and operations
of the Employer as may be assigned or delegated to the Executive
from time to time by or under the authority of the Board of
Directors.
3. Term. Subject to the provisions of Section 6,
the term of employment pursuant to this Agreement (the "Term")
shall be for three (3) years from the Effective Date and shall be
renewed automatically for periods of one (1) year commencing at the
first anniversary of the Effective Date and on each subsequent
anniversary thereafter, unless either the Executive or the Employer
gives written notice to the other not less than sixty (60) days
prior to the date of any such anniversary of such party's election
not to extend the Term.
4. Compensation and Benefits. The regular
compensation and benefits payable to the Executive under this
Agreement shall be as follows:
(a) Salary. For all services rendered by the
Executive under this Agreement, the Employer shall pay the
Executive a salary (the "Salary") at an annual rate consistent with
the letter agreement, dated March 14, 1997, by and between Fletcher
W. Adams and William J. Woodward and attached hereto as Exhibit A,
subject to increase from time to time in the discretion of the
Board of Directors. The Salary shall be payable in periodic
installments in accordance with the Employer's usual practice for
its senior executives.
(b) Bonus or Similar Incentive Programs. The
Executive shall be entitled to participate in any incentive or
bonus program established by the Board of Directors with such terms
as may be established in the sole discretion of the Board of
Directors; or
(c) Regular Benefits. The Executive shall also
be entitled to participate in any employee benefit plans, medical
insurance plans, life insurance plans, disability income plans,
retirement plans, vacation plans, expense reimbursement plans and
other benefit plans which the Employer may from time to time have
in effect for all or most of its senior executives. Such
participation shall be subject to the terms of the applicable plan
documents, generally applicable policies of the Employer,
applicable law and the discretion of the Board of Directors or any
administrative or other committee provided for in or contemplated
by any such plan. Nothing contained in this Agreement shall be
construed to create any obligation on the part of the Employer to
establish any such plan or to maintain the effectiveness of any
such plan which may be in effect from time to time.
(d) Taxation of Payments and Benefits. The
Employer shall undertake to make deductions, withholdings and tax
reports with respect to payments and benefits under this Agreement
to the extent that it reasonably and in good faith believes that it
is required to make such deductions, withholdings and tax reports.
Payments under this Agreement shall be in amounts net of any such
deductions or withholdings. Nothing in this Agreement shall be
construed to require the Employer to make any payments to
compensate the Executive for any adverse tax effect associated with
any payments or benefits or for any deduction or withholding from
any payment or benefit.
(e) Exclusivity of Salary and Benefits. Unless
approved by the Board of Directors, the Executive shall not be
entitled to any payments or benefits other than those provided
under this Agreement.
5. Extent of Service. During the Executive's
employment under this Agreement, the Executive shall, subject to
the direction and supervision of the Board of Directors, devote the
Executive's, best efforts and business judgment, skill and
knowledge to the advancement of the Employer's interests and to the
discharge of the Executive's duties and responsibilities under this
Agreement. The Executive shall not engage in any other business
activity, except as may be approved by the Board of Directors;
provided that nothing in this Agreement shall be construed as
preventing the Executive from:
(a) investing the Executive's assets in any
company or other entity in a manner not prohibited by Section 7(d)
and in such form or manner as shall not require any material
activities on the Executive's part in connection with the
operations or affairs of the companies or other entities in which
such investments are made; or
(b) engaging in religious, charitable or other
community or non-profit activities that do not impair the
Executive's ability to fulfill the Executive's duties and
responsibilities under this Agreement; or
(c) continuing to advise and consult regularly
the activities of Vaillancourt & Woodward, Inc. in his current
positions with the same, provided that such advice and consultation
does not unreasonably interfere with the performance of the
Executive's duties hereunder.
6. Termination and Termination Benefits.
Notwithstanding the provisions of Section 3, the Executive's
employment under this Agreement shall terminate under the following
circumstances set forth in this Section 6.
(a) Termination by the Employer for Cause. The
Executive's employment under this Agreement may be terminated for
cause without further liability on the part of the Employer
effective immediately upon a two-thirds (2/3) vote of the Board of
Directors and written notice to the Executive. Only the following
shall constitute "cause" for such termination:
(i) dishonest statements or acts of the
Executive with respect to the business of the Employer or any
affiliate of the Employer;
(ii) the commission by or indictment of the
Executive for (A) a felony or (B) any misdemeanor involving moral
turpitude, deceit, dishonesty or fraud ("indictment," for these
purposes, meaning an indictment, probable cause hearing or any
other procedure pursuant to which an initial determination of
probable or reasonable cause with respect to such offense is
made);
(iii) material failure to perform to the
reasonable satisfaction of the Board of Directors a substantial
portion of the Executive's duties and responsibilities assigned or
delegated under this Agreement, which failure continues, in the
reasonable judgment of the Board of Directors, for sixty (60) days
after written notice given to the Executive by the Board of
Directors;
(iv) gross negligence, willful misconduct or
insubordination of the Executive with respect to the Employer or
any affiliate of the Employer; or
(v) material breach by the Executive of any of
the Executive's obligations under this Agreement.
(b) Termination by the Executive. The
Executive's employment under this Agreement may be terminated by
the Executive by written notice to the Board of Directors at least
thirty (30) days prior to such termination.
(c) Termination by the Employer Without Cause.
Subject to the payment of Termination Benefits pursuant to Section
6(d), the Executive's employment under this Agreement may be
terminated by the Employer without cause upon written notice to the
Executive by a two-thirds (2/3) vote of the Board of
Directors.
(d) Certain Termination Benefits. Unless
otherwise specifically provided in this Agreement or otherwise
required by law, all compensation and benefits payable to the
Executive under this Agreement shall terminate on the date of
termination of the Executive's employment under this Agreement.
Notwithstanding the foregoing, in the event of termination of the
Executive's employment with the Employer pursuant to Section 6(c)
above, the Employer shall provide to the Executive the following
termination benefits ("Termination Benefits"):
(i) continuation of the Executive's Salary at
the rate then in effect pursuant to Section 4(a); and
(ii) continuation of group health plan benefits
to the extent authorized by and consistent with 29 U.S.C. ss. 1161
et seq. (commonly known as "COBRA"), with the cost of the regular
premium for such benefits shared in the same relative proportion by
the Employer and the Executive as in effect on the date of
termination.
The Termination
Benefits set forth in (i) and (ii) above shall continue effective
until the expiration of the Term; provided that in the event that
the Executive commences any employment or self-employment during
the period during which the Executive is entitled to receive
Termination Benefits (the "Termination Benefits Period"), the
remaining amount of Salary due pursuant to Section 6(d)(i) for the
period from the commencement of such employment (other than in
connection with the activities of Vaillancourt & Woodward,
Inc.) or self-employment to the end of the Termination Benefits
Period shall be reduced by one-half of the salary the Executive
receives from such employment or self-employment and, if the
Executive receives benefits from such employment or self-employment
comparable to those benefits provided by the Employer, the payments
provided under Section 6(d)(ii) shall cease effective as of the
date of commencement of such employment or self-employment. The
Employer's liability for Salary continuation pursuant to Section
6(d)(i) shall be reduced by the amount of any severance pay due or
otherwise paid to the Executive pursuant to any severance pay plan
or stay bonus plan of the Employer. Notwithstanding the foregoing,
nothing in this Section 6(d) shall be construed to affect the
Executive's right to receive COBRA continuation entirely at the
Executive's own cost to the extent that the Executive may continue
to be entitled to COBRA continuation after the Executive's right to
cost sharing under Section 6(d)(ii) ceases. The Executive shall be
obligated to give prompt notice of the date of commencement of any
employment or self-employment during the Termination Benefits
Period and shall respond promptly to any reasonable inquiries
concerning any employment or self-employment in which the Executive
engages during the Termination Benefits Period.
(e) Disability. If the Executive shall be
disabled so as to be unable to perform the essential functions of
the Executive's then existing position or positions under this
Agreement with or without reasonable accommodation, the Board of
Directors of Northway by a two-thirds (2/3) vote may remove the
Executive from any responsibilities and/or reassign the Executive
to another position with the Employer for the remainder of the Term
or during the period of such disability. Notwithstanding any such
removal or reassignment, the Executive shall continue to receive
the Executive's full Salary (less any disability pay or sick pay
benefits to which the Executive may be entitled under the
Employer's policies) and benefits under Section 4 of this Agreement
(except to the extent that the Executive may be ineligible for one
or more such benefits under applicable plan terms) for a period of
time equal to the lesser of (i) one (1) year; or (ii) the remainder
of the Term. If any question shall arise as to whether during any
period the Executive is disabled so as to be unable to perform the
essential functions of the Executive's then existing position or
positions with or without reasonable accommodation, the Executive
may, and at the request of the Employer shall, submit to the
Employer a certification in reasonable detail by a physician
selected by the Employer to whom the Executive or the Executive's
guardian has no reasonable objection as to whether the Executive is
so disabled or how long such disability is expected to continue,
and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any
reasonable request of the physician in connection with such
certification. If such question shall arise and the Executive shall
fail to submit such certification, the Employer's determination of
such issue shall be binding on the Executive. Nothing in this
Section 6(e) shall be construed to waive the Executive's rights, if
any, under existing law including, without limitation, the Family
and Medical Leave Act of 1993, 29 U.S.C. ss.2601 et seq. and the
Americans with Disabilities Act, 42 U.S.C. ss.12101 et
seq.
(f) Termination Following a Change of Control.
If there is a Change of Control, as defined in Section 6(f)(i)
below, during the Term, the provisions of this S
