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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of report (Date of earliest event reported): December 21, 2007
FIRST IPSWICH BANCORP
(Exact name of registrant as specified in its charter)
Massachusetts 333-114018 04-2955061
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
31 Market Street, Ipswich, Massachusetts 01938
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 356-3700
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communication pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
On December 24, 2007, First Ipswich Bancorp (the "Company") entered into a
line of credit with Bankers Bank Northeast ("Bankers Bank"), pursuant to which
Bankers Bank agreed to lend the Bancorp up to $1,000,000 to make interest
payments on the Company's trust preferred obligations (the "Loan"). The Loan
will mature on January 1, 2013.
The amounts drawn under the Loan will bear interest at an annual rate
equal to the Wall Street Journal Prime Rate minus 0.5%. Interest payments are
due monthly. Principal payments will begin in year three of the loan at the rate
of $5,000 per month in year three, $6,000 per month in year four, and $7,000 per
month in year five.
The Loan is secured by all of the common stock of the First National Bank
of Ipswich (the "Bank"). The Loan includes the following covenants, among
others: (1) the Bank must maintain a Tier 1 leverage ratio of at least 7% and
(2) the Bank must maintain a debt coverage ratio of 1.25 to 1 with respect to
the Loan. The Bank was in compliance with these debt covenants as of December
24, 2007.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information under Item 1.01 of this report is incorporated herein by
reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Russell G. Cole's Employment Agreement
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On December 21, 2007, The First National Bank of Ipswich, a national bank
(the "Bank") and the wholly-owned subsidiary of the Company, entered into an
Employment Agreement with Russell G. Cole, President and Chief Executive Officer
of the Bank and the Company, effective as of March 1, 2007. The agreement
provides for an initial term through February 28, 2010 unless Mr. Cole's
employment terminates earlier in accordance with the terms therein.
Under the agreement, the Bank will pay Mr. Cole an initial annual base
salary of $210,000, which amount is subject to annual review by the board of
directors and may be increased. Mr. Cole will be eligible for discretionary
bonuses and certain perquisites, including the use of an automobile, term life
insurance, and the opportunity to participate in certain other benefit programs
available to senior management and employees generally.
Mr. Cole may resign upon ninety days prior written notice to the Bank. If
the term of the agreement expires without renewal, Mr. Cole will be entitled to
receive a lump sum payment equal to one times his annual base salary as then in
effect and the opportunity to purchase at book value any bank owned automobile
then being used by him. If Mr. Cole is terminated without "cause" (as defined in
the agreement) or voluntarily for "good reason" (as defined in the agreement),
he will be entitled to (i) a lump sum payment equal to between twelve and
eighteen months (depending on the number of months remaining under the term of
the agreement) of his annual base salary then in effect, (ii) continuation of
group insurance and other executive benefit programs for between twelve and
eighteen months (depending on the numbers of months remaining under the term of
the agreement), (iii) the opportunity to purchase any Bank owned automobile then
being used by him, and (iv) all of his outstanding options and other benefits
accrued will immediately vest. If Mr. Cole's employment terminates on account of
death, the Bank will pay his estate an amount equal to three months of his
annual base salary. If Mr. Cole's employment terminates on account of
disability, he will be entitled to payments under the Bank's disability
insurance program.
In addition, the agreement provides for the payment of a lump sum equal to
two times Mr. Cole's annual base salary if his employment terminates within
twelve months following a "change in control" of the Bank (as defined in the
agreement) for "good reason" (as defined in the agreement) or without "cause"
(as defined in the agreement). The Bank will also cover the cost of Mr. Cole's
health insurance for two-years following any such change in control.
While employed by the Bank and for a period of one-year thereafter, Mr.
Cole may not (i) solicit or induce any employee of the Bank or any subsidiary or
affiliate of the Bank to leave his or her employment, or (ii) compete with the
Bank or any subsidiary or affiliate of the Bank in any city or town in which the
Bank or any subsidiary or affiliate operates, or within any contiguous city or
town. Mr. Cole will also have an ongoing duty to protect the Bank's confidential
information.
Timothy L. Felter's Change in Control Agreement
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On December 21, 2007, the Bank entered into a Change in Control Agreement
with Timothy L. Felter, Senior Vice President and Chief Financial Officer of the
Bank and the Company. The agreement provides for the payment of two years of Mr.
Felter's annual base salary if within twelve months following a "change in
control" of the Bank (as defined in the agreement), Mr. Felter (i) leaves for
"good reason" (as defined in the agreement), (ii) is terminated for any reason
other than on account of "cause" (as defined in the agreement), or (iii) Mr.
Felter's employment terminates on account of death, disability or retirement.
While employed by the Bank and for a period of one-year thereafter or the
period of the severance payments, whichever is longer, Mr. Felter may not
solicit or induce any employee of the Bank or any subsidiary or affiliate of the
Bank to leave his or her employment. Mr. Felter will also have an ongoing duty
to protect the Bank's confidential information.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST IPSWICH BANCORP
By: /s/ Timothy L. Felter
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Timothy L. Felter
Senior Vice President and C.F.O.
Date: December 26, 2007