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EXHIBIT 10(c)
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SEVERANCE AGREEMENT
This AGREEMENT, made and entered into as of the __________________, by
and among PEOPLES HERITAGE FINANCIAL GROUP, INC. (the "Company") and
_______________________ (the "Executive");
W I T N E S S E T H:
WHEREAS, the Executive is employed by the Company in a key executive
capacity and possesses intimate knowledge of the business and affairs of the
Company; and
WHEREAS, the Company desires to ensure, insofar as possible, that it
will continue to have the benefit of the Executive's services and to protect its
confidential information and goodwill; and
WHEREAS, the Company recognizes that circumstances may arise in which a
change in the control of the Company occurs, thereby causing uncertainty of
employment without regard to the Executive's competence or past contributions;
and
WHEREAS, the Company and the Executive wish to provide reasonable
security to the Executive against changes in the Executive's relationship with
the Company in the event of such change in control;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
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1. Definitions
(a) Accrued Benefit means:
(i) All salary earned or accrued through the
date the Executive's employment is
terminated;
(ii) reimbursement for any and all monies
advanced in connection with the Executive's
employment for reasonable and necessary
expenses incurred by the Executive through
the date the Executive's employment is
terminated;
(iii) any and all other compensation previously
earned and deferred at the election of the
Executive or pursuant to any deferred
compensation plans then in effect together
with any interest or desired earnings
thereon;
(iv) annual bonus, if any, accrued for a Year
prior to the Year in which employment
terminates, but not yet paid to the
Executive, under any bonus or incentive
compensation plan or plans in which the
Executive is a participant;
(v) a pro rata portion of the maximum bonus
payable to the Executive for the Year in
which employment terminates under any bonus
or incentive compensation plan or plans in
which the Executive is a participant,
determined as if the Executive had remained
in employment for the full Year and prorated
based upon weeks, including partial weeks,
of employment during that Year;
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(vi) all other payments and benefits to which the
Executive may be entitled under the terms of
any applicable compensation arrangement or
benefit plan or program of the Company.
(b) Act means the Securities Exchange Act of 1934, as amended.
(c) Affiliate of any specified persons means any other person
that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under direct or indirect common
control with such specified person. For the purposes of this
definition, "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies
of a person, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
(d) Annual Compensation. Annual compensation shall mean the
sum of:
(i) the Executive's annual salary at the rate in
effect on the date of a termination of
employment as described in Section 3 or in
Section 7(d) (or, in the event of a
termination for Good Reason under Section
1(k)(i)(A) below, the annual salary as in
effect immediately before the actions giving
rise to Good Reason); plus
(ii) the greatest of the bonuses either paid or
accrued in either the Year of the Change in
Control or the immediately preceding Year.
(e) Base Amount means an amount equal to the Executive's
Annualized Includable Compensation for the Base Period as defined in
Section 280G(d)(1) and (2) of the Code (as hereinafter defined).
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(f) Cause means (i) the executive's conviction of, or plea of
nolo contendere to, a felony; or (ii) willful and intentional
misconduct, willful neglect, or gross negligence, in the performance of
the Executive's duties, which has caused a demonstrable and serious
injury to the Company, monetary or otherwise.
The Executive shall be given written notice that the
Company intends to terminate his employment for Cause. Such written
notice shall specify the particular acts, or failures to act, on the
basis of which the decision to so terminate employment was made.
In the case of a termination for Cause as described
in Clause (ii), above, the Executive shall be given the opportunity
within 30 days of the receipt of such notice to meet with the Board to
defend such acts, or failures to act, prior to termination. The Company
may suspend the Executive's title and authority pending such meeting,
and such suspension shall not constitute "Good Reason," as defined in
subsection (k) below.
(g) Change in Control of the Company shall mean a Change in
Control of a nature that would be required to be reported in response
to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Act or any successor thereto, provided that without limiting the
foregoing, a Change in Control of the Company also shall be deemed to
have occurred if:
(i) any "person" (as defined under Section
3(a)(9) of the Act) or "group" of persons
(as provided under Rule 13d-3 of the Act) is
or becomes the "beneficial owner" (as
defined in Rule 13d-3 or otherwise under the
Act), directly or indirectly (including as
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provided in Rule 13d-3(d)(1) of the Act), of
capital stock of the Company the holders of
which are entitled to vote for the election
of directors ("voting stock") representing
that percentage of the Company's then
outstanding voting stock (giving effect to
the deemed ownership of securities by such
person or group, as provided in Rule
13d-3(d)(1) of the Act, but not giving
effect to any such deemed ownership of
securities by another person or group) equal
to or greater than thirty-five percent (35%)
of all such voting stock;
(ii) individuals who constitute the Board on the
date hereof (the "Incumbent Board") cease
for any reason to constitute at least a
majority thereof. Any person becoming a
director subsequent to such date whose
election, or nomination for election, is, at
any time, approved by a vote of at least a
majority of the directors comprising the
Incumbent Board shall be considered as
though he were a member of the Incumbent
Board;
(iii) The Company combines with another person or
entity, whether through a merger, asset
sale, reorganization or otherwise, and (A)
any person or group of persons holds at any
time after such combination, voting stock
equal to or greater than thirty-five percent
(35%) determined by reference to the voting
securities of the surviving entity, or (B)
the Company's directors, as of the date
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immediately before such combination,
constitute less than a majority of the Board
of Directors of the combined entity.
(h) Code means the Internal Revenue Code of 1986, including
any amendments thereto.
(i) Effective Date means the date this Agreement is executed
by the parties.
(j) Employment Period means a period commencing on the date of
a Change in Control of the Company and ending on the earlier of (i) the
last day of the twenty-fourth month following the month in which the
Change in Control occurs, or (ii) the Executive's Normal Retirement
Date.
(k) Good Reason means:
(i) any breach of this Agreement by the Company,
including without limitation (A) any
reduction during the employment period in
the amount of the Executive's base salary or
aggregate benefits as in effect from time to
time, (B) failure to provide the Executive
with the same fringe benefits that were
provided to the Executive immediately prior
to a Change in Control of the Company, or
with a package of fringe benefits (including
paid vacations) that, though one or more of
such benefits may vary from those in effect
immediately prior to such a Change in
Control, is substantially comparable in all
material respects to such fringe benefits
taken as a whole, or (C) any other breach by
the Company of its obligations contained in
Section 6 below;
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(ii) without the Executive's express written
consent, the assignment to the Executive of
any duties which are materially inconsistent
with the Executive's positions, duties,
responsibilities and status immediately
prior to the Change in Control of the
Company, a material change in the
Executive's reporting responsibilities,
titles or offices as an employee and as in
effect immediately prior to the Change in
Control, or a significant reduction, in the
Executive's title, duties or
responsibilities, or in the level of his
support services;
(iii) the relocation of the Executive's principal
place of employment, without the Executive's
written consent, to a location outside the
same metropolitan area in which the
Executive was employed at the time of such
Change in Control, or the imposition of any
requirement that the Executive spend more
than ninety business days per year at a
location other than such principal place of
employment;
(iv) any purported termination of the Executive's
employment for Cause, Disability or
Retirement which is not effected pursuant to
a Notice of Termination satisfying the
requirements of paragraph (m) below.
Upon the occurrence of any of the events described in (i),
(ii), (iii) or (iv) above, the Executive shall give the Company written
notice that such event constitutes Good
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Reason, and the Company shall thereafter have thirty (30) days in which
to cure. If the Company has not cured in that time, the event shall
constitute Good Reason.
(l) Normal Retirement Date means Normal Retirement Date as
defined in the Peoples Heritage Financial Group, Inc. Retirement Plan.
(m) Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the
specific termination provision relied upon in this Agreement and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the
provision so indicated.
(n) Person or Group means a "person" or "group," as defined in
Section 1(g)(i) hereof.
(o) Year means a calendar year unless otherwise specifically
provided.
2. Term of Agreement. This Agreement shall begin on the date first set
forth above and shall continue until the third anniversary of such date,
provided that, on such third anniversary, and each succeeding anniversary, the
term shall be renewed for an additional period of one year unless either party
has given written notice that the term is not so renewed, which notice must be
delivered to the other party at least one year prior to the date of any such
renewal, and further provided that if a Change in Control of the Company occurs
during such term, the term shall in all events continue through the last day of
the Employment Period. This Agreement is also subject to earlier termination as
provided in Section 3 below. All rights and obligations hereunder shall survive
to the extent necessary to the intended enforcement thereof.
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3. Termination of Employment Prior to a Change in Control.
(a) The Company and the Executive shall each retain the right
to terminate the employment of the Executive at any time prior to a
Change in Control of the Company. In the event the Executive's
employment is terminated prior to a Change in Control of the Company,
this Agreement shall, except as provided in Subsection (b) below, be
terminated and of no further force and effect, and any and all rights
and obligations of the parties hereunder shall cease.
(b) If the Executive's employment is terminated by the Company
prior to the occurrence of a Change in Control of the Company, and if
it can be shown that the Executive's termination (i) was at the
direction or request of a third party that had taken steps reasonably
calculated to effect the Change in Control of the Company thereafter,
or (ii) otherwise occurred in connection with, or in anticipation of,
the Change in Control of the Company, the Executive shall have the
rights described in Section 7(d) below, as if a Change in Control of
the Company had occurred on the date immediately preceding such
termination.
4. Employment Following a Change in Control. If a Change in Control of
the Company occurs when the Executive is employed by the Company, the Company
will continue thereafter to employ the Executive, and the Executive will remain
in the employ of the Company, during the Employment Period, in accordance with
the terms and provisions of this Agreement.
5. Duties. During the Employment Period, the Executive shall serve in
such capacities and positions as may be assigned by the Company consistent with
the Executive's capacities and positions on the Effective Date and shall devote
the Executive's best efforts and all
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of the Executive's business time, attention and skill to the business and
affairs of the Company, as such business and affairs now exist and as they may
hereafter be conducted.
6. Compensation. During the Employment Period, the Executive shall be
compensated by the Company as follows:
(a) the Executive shall receive, at such intervals and in
accordance with such standard policies as in effect on the date of the
Change in Control of the Company, an annual salary not less than the
Executive's annual salary as in effect on the date of the Change in
Control of the Company, subject to adjustment as hereinafter provided;
(b) the Executive shall be included in all plans providing
incentive compensation to executives, including but not limited to
bonus, deferred compensation, annual or other incentive compensation,
supplemental pension, stock ownership, stock option, stock
appreciation, stock bonus and similar or comparable plans as any such
plans are extended by the Company from time to time to senior corporate
officers, key employees and other employees of comparable status;
(c) the Executive shall be reimbursed, at such intervals and
in accordance with such standard policies as may be in effect on the
date of the Change in Control of the Company, for any and all monies
advanced in connection with the Executive's employment for reasonable
and necessary expenses incurred by the Executive on behalf of the
Company, including travel expenses;
(d) the Executive shall be included, to the extent eligible
thereunder, in any and all plans providing but not limited to, group
life insurance, hospitalization, disability, medical, dental, pension,
profit sharing and stock bonus plans, and shall be provided any
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and all other benefits and perquisites made available to other
employees of comparable status and position at the expense of the
Company on a comparable basis;
(e) the Executive shall receive annually not less than the
amount of paid vacation and not fewer than the number of paid holidays
received annually immediately prior to the Change in Control of the
Company or available annually to other employees of comparable status
and position with the Company; and
(f) During the Employment Period the Board of Directors of the
Company, or an appropriate committee thereof, will consider and
appraise, at least annually, the contributions of the Executive to the
Company's operating efficiency, growth, production and profits and, in
accordance with past practice, due consideration shall be given to the
upward adjustment of the Executive's compensation rate, at least
annually, commensurate with increases generally given to other senior
corporate officers and key employees and as the scope of the
Executive's duties expands.
7. Termination of Employment. Any termination by the Company or the
Executive of the Executive's employment during the Employment Period shall be
communicated by written Notice of Termination to the Executive if such notice is
delivered by the Company and to the Company if such notice is delivered by the
Executive. The Notice of Termination shall comply with the requirements of
Section 17 below.
(a) Termination for Disability. If during the Employment
Period, the Executive's employment is terminated on account of the
Executive's disability, as determined under the Company's long-term
disability plan (as in effect on the date of a Change in Control of the
Company), the Executive shall receive any Accrued Benefits,
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and shall remain eligible for all benefits as provided pursuant to the
terms of any long-term disability programs of the Company in effect at
the time of such termination.
(b) Termination on the Executive's Death. If, during the
Employment Period, the Executive's employment is terminated on account
of the Executive's death, the Executive's estate or his designated
beneficiary (or beneficiaries), as applicable, shall receive all the
Executive's Accrued Benefits.
(c) Voluntary Termination or Termination for Cause. If, during
the Employment Period, (i) the Executive shall terminate employment
with the Company other than for Good Reason, or (ii) the Executive's
employment is terminated for Cause, the Executive shall receive from
the Company his Accrued Benefits.
(d) Termination by the Company Without Cause or by the
Executive for Good Reason. If, during the Employment Period, the
Executive's employment with the Company is terminated by the Company
other than for Cause, or by the Executive for Good Reason, then:
(i) the Executive shall be entitled to receive
from the Company his Accrued Benefit, except
that, for this purpose, Accrued Benefit
shall not include any entitlement to
severance under any Company severance policy
generally applicable to the Company's
salaried employees;
(ii) the Executive shall receive from the
Company, no less than ten days following
termination of his employment, a lump sum
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payment (the "Termination Payment") equal to
one and one half times the Executive's
Annual Compensation;
(iii) all rights under any equity or long-term
incentive plan shall be fully vested;
(iv) rights, if any, to supplemental pension
shall be fully vested; and
(v) the Executive shall continue to be covered
at the expense of the Company by the same or
equivalent hospital, medical, dental,
accident, disability and life insurance
coverage as in effect for the Executive
immediately prior to termination of his
employment, until the earlier of (A)
eighteen months following termination of
employment, or (B) the date the Executive
has commenced new employment and has thereby
become eligible for comparable benefits.
8. Certain Supplemental Payments by the Company.
(a) In the event the Executive's employment is terminated
pursuant to Section 7(d) above, and if in connection therewith it is
determined that (A) part or all of the compensation and benefits to be
paid to the Executive constitute "parachute payments" under Section
280G of the Code, and (B) the payment thereof will cause the Executive
to incur excise tax under Section 4999 of the Code, the Company, on or
before the date for payment of such excise tax, shall pay the
Executive, in lump sum, an amount (the "Gross-Up Amount") such that,
after payment of all federal, state and local income tax and any
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additional excise tax under Section 4999 of the Code in respect of the
Gross-Up Amount payment, the Executive will be fully reimbursed for the
amount of such excise tax.
(b) The determination of the Parachute Amount, the Base Amount
and the Gross-Up Amount, as well as any other calculations necessary to
implement this Section 8 shall be made by a nationally recognized
accounting or benefits consulting firm selected by the Executive and
reasonably satisfactory to the Company and which has not performed
services, other than minor indirect or incidental services, for either
the Company or the Executive for three years prior to the date the
Consultant is retained for this purpose. The Consultant's fee shall be
paid by the Company.
(c) As promptly as practicable following such determination
and the elections hereunder, the Company shall pay to or distribute to
or for the benefit of the Executive such amounts as are then due to the
Executive under this Agreement and shall promptly pay to or distribute
for the benefit of the Executive in the future such amounts as become
due to the Executive under this Agreement.
(d) As a result of the uncertainty in the application of
Section 280G of the Code at the time of an initial determination
hereunder, it is possible that payments will not have been made by the
Company which should have been made under clause (a) of this Section 8
("Underpayment"). In the event that there is a final determination by
the Internal Revenue Service, or a final determination by a court of
competent jurisdiction, that an Underpayment has been made and the
Executive thereafter is required to make any payment of an excise tax,
income tax, any interest or penalty, the accounting or benefits
consulting firm selected under clause (b) above shall determine the
amount of the
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Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
9. Further Obligations of the Executive. During and following the
Executive's employment by the Company, the Executive shall hold in confidence
and not directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company, except to the
extent authorized in writing by the Board of Directors of the Company or
required by any court or administrative agency, other than to an employee of the
Company or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of duties as an executive of
the Company. Confidential information shall not include any information known
generally to the public or any information of a type not otherwise considered
confidential by persons engaged in the same business or a business similar to
that of the Company. All records, files, documents and materials or copies
thereof, relating to the Company's business which the Executive shall prepare,
or use, or come into contact with, shall be and remain the sole property of the
Company and shall be promptly returned to the Company upon termination of
employment with the Company.
10. Expenses and Interest. If, after a Change in Control of the
Company, a good faith dispute arises with respect to the enforcement of the
Executive's rights under this Agreement, or if any legal or arbitration
proceeding shall be brought in good faith to enforce or interpret any provision
contained herein, or to recover damages for breach hereof, the Executive shall
recover from the Company any reasonable attorney's fees and necessary costs and
disbursements incurred as a result of such dispute, and prejudgment interest on
any money judgment or arbitration award obtained by the Executive calculated at
the rate of interest announced by Peoples Heritage Bank,
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or the successor thereto, from time to time as its prime rate from the date that
payments to him should have been made under this Agreement.
11. Payment Obligations Absolute. The Company's obligation during and
after the Employment Period to pay the Executive the compensation and to make
the arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right which the Company may have
against him or anyone else. All amounts payable by the Company hereunder shall
be paid without notice or demand. Each and every payment made hereunder by the
Company shall be final and the Company will not seek to recover all or any part
of such payment from the Executive or from whomsoever may be entitled thereto,
for any reason whatever except as provided in Section 8(d) above.
12. Successors.
(a) (i) If the Company sells, assigns, or transfers
all or substantially all of its business and
assets to any Person, excluding Affiliates
of the Company, or if the Company merges
into or consolidates or otherwise combines
with any Person which is a continuing or
successor entity, then the Company shall
assign all of its rights, title and interest
in this Agreement as of the date of such
event to the Person which is either the
acquiring or successor Company, and such
Person shall assume in writing and perform
from and after the date of such written
assignment all of the terms, conditions and
provisions imposed by this Agreement upon
the
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Company. Failure of the Company to obtain
such written assignment shall be a breach of
this Agreement. In case of such assignment
by the Company and of written assumption and
agreement by such Person, all further rights
as well as all other obligations of the
Company under this Agreement thenceforth
shall cease and terminate and thereafter the
expression "the Company" wherever used
herein shall be deemed to mean such Person
or Persons.
(ii) This Agreement and all rights of the
Executive shall inure to the benefit of and
be enforceable by the Executive's personal
or legal representatives, estates,
executors, administrators, heirs and
beneficiaries. All amounts payable to the
Executive hereunder shall be paid, in the
event of the Executive's death, to the
Executive's estate, heirs and
representatives. This Agreement shall inure
to the benefit of, be binding upon and be
enforceable by, any successor, surviving or
resulting Company or other entity to which
all or substantially all of the Company's
business and assets shall be transferred.
This Agreement shall not be terminated by
the voluntary or involuntary dissolution of
the Company.
13. Enforcement. The provisions of this Agreement shall be regarded as
divisible, and if any such provisions or any part hereof are declared invalid or
unenforceable by a court of
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competent jurisdiction, the validity and enforceability of the remainder of such
provisions or parts hereof and the applicability thereof shall not be affected
thereby.
14. Amendment. This Agreement may not be amended or modified at any
time except by a written instrument executed by the Company and the Executive if
such amendment or modification occurs before any Change in Control, or by the
Executive and the Company after any Change in Control.
15. Withholding. The Company shall be entitled to withhold from amounts
to be paid to the Executive hereunder any federal, state or local withholding or
other taxes, or charge which it is from time to time required to withhold. The
Company shall be entitled to rely on an opinion of counsel if any question as to
the amount or requirement of any such withholding shall arise.
16. Governing law: Arbitration. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Maine. Any dispute arising out of this Agreement shall be
determined by arbitration in the State of Maine under the rules of the American
Arbitration Association then in effect and judgment upon any award pursuant to
such arbitration may be enforced in any court having jurisdiction thereof.
17. Notice. Notices given pursuant to this Agreement shall be in
writing and shall be deemed given when received and, if mailed, shall be mailed
by United States registered or certified mail, return receipt requested,
addressee only postage prepaid, to the Company at:
Peoples Heritage Financial Group, Inc.
P.O. Box 9540
One Portland Square
Portland, ME 04112
Attn: Clerk
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or if to the Executive, at the address set forth below the Executive's signature
line of this Agreement, or to such other address as the party to be notified
shall have given to the other.
18. No Waiver. No waiver by any party at any time of any breach by
another party of, or compliance with, any condition or provision of this
Agreement to be performed by another party shall be deemed a waiver of similar
or dissimilar provisions or conditions at any time.
19. Headings. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
PEOPLES HERITAGE FINANCIAL GROUP, INC.
By: ____________________________
Attest: ________________________
Secretary
________________________________
Executive
Address:________________________
________________________
________________________
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