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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 29, 1997
CFX CORPORATION
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(Exact name of registrant as specified in its charter)
New Hampshire 1-10633 02-0402421
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(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
102 Main Street, Keene, New Hampshire 03431
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (603) 352-2502
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
Consummation of Acquisitions
On August 29, 1997, CFX Corporation ("CFX")
consummated the following previously announced transactions:
(1) the acquisition of Portsmouth Bank Shares,
Inc., a New Hampshire corporation ("Portsmouth"), and its
subsidiary, Portsmouth Savings Bank, a New Hampshire state-
chartered savings bank ("Portsmouth Bank"), through (a) an
exchange of shares of CFX common stock, par value $0.66 2/3
per share ("CFX Common Stock"), for issued and outstanding
shares of Portsmouth common stock, par value $0.10 per share,
including any shareholders' rights attached thereto
("Portsmouth Common Stock"), (b) the merger of Portsmouth with
and into CFX, and (c) the merger of Portsmouth Bank with and
into CFX Bank, a New Hampshire state-chartered savings bank
subsidiary of CFX (collectively, the "Portsmouth
Acquisition"); and
(2) the acquisition of Community Bankshares, Inc.,
a New Hampshire corporation ("Community"), and its bank
subsidiaries, Concord Savings Bank, a New Hampshire state-
chartered savings bank, and Centerpoint Bank, a New Hampshire
state-chartered commercial bank (collectively, the "Community
Banks") through (a) an exchange of shares of CFX Common Stock
for issued and outstanding shares of Community common stock,
par value $1.00 per share, including any shareholders' rights
attached thereto ("Community Common Stock"), (b) the merger of
Community with and into CFX, and (c) the merger of the
Community Banks with and into CFX Bank (collectively, the
"Community Acquisition" and, together with the Portsmouth
Acquisition, the "Acquisitions").
The consummation of the Acquisitions is discussed in
a press release filed herewith as Exhibit 99.1.
Portsmouth Acquisition
In the Portsmouth Acquisition, each of the
5,907,242 outstanding shares of Portsmouth Common Stock was
exchanged for 0.9314 shares of CFX Common Stock and cash in
lieu of fractional shares. At June 30, 1997, Portsmouth had
total assets of approximately $259 million and total deposits
of approximately $190 million. The transaction was accounted
for as a pooling of interests.
Upon the closing, in accordance with the Agreement
and Plan of Reorganization dated as of February 13, 1997
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by and among CFX, CFX Bank, Portsmouth and Portsmouth Bank
(the "Portsmouth Reorganization Agreement"), Robert W.
Simpson, Mark E. Simpson and Timothy J. Connors, formerly
directors of Portsmouth, were appointed to CFX's board of
directors (the "CFX Board"), and Mark E. Simpson and Harry P.
Jarvis, formerly directors of Portsmouth Bank, were appointed
to CFX Bank's board of trustees (the "CFX Bank Board").
The Portsmouth Reorganization Agreement was
previously filed as Exhibit 2 to CFX's Schedule 13D filed on
February 21, 1997 with respect to Portsmouth Common Stock, and
was previously incorporated by reference to such Schedule 13D
in CFX's Current Report on Form 8-K filed on February 21,
1997.
Community Acquisition
In the Community Acquisition, each of the
2,510,314 outstanding shares of Community Common Stock was
exchanged for 2.113 shares of CFX Common Stock and cash in
lieu of fractional shares. At June 30, 1997, Community had
total assets of approximately $616 million and total deposits
of approximately $429 million. The transaction was accounted
for as a pooling of interests.
Upon the closing, in accordance with the Agreement
and Plan of Reorganization dated as of March 24, 1997 by and
among CFX, CFX Bank, Community and the Community Banks (the
"Community Reorganization Agreement"), Douglas Crichfield,
John N. Buxton and Seth A. Resnicoff, formerly directors of
Community, were appointed to the CFX Board, Douglas
Crichfield, Robert A. Hill and Lucia T. Kittredge, formerly
directors of Community, were appointed to the CFX Bank Board,
and Douglas Crichfield was appointed an Executive Vice
President of CFX and the President and Chief Executive Officer
of CFX Bank.
The Community Reorganization Agreement was
previously filed as Exhibit 2.2 to CFX's Annual Report on
Form 10-K for the year ended December 31, 1996.
Item 5. Other Events.
As previously reported in CFX's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997, in connection
with the Acquisitions, the shareholders of CFX, at the annual
meeting held on July 30, 1997, approved an amendment to CFX's
Articles of Incorporation (the "CFX Articles") to increase the
number of authorized shares of CFX Common Stock from
22,500,000 to 50,000,000 (the "Charter Amendment"). To
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implement the Charter Amendment, CFX filed Articles of
Amendment to the CFX Articles with the New Hampshire Secretary
of State on August 20, 1997. The Articles of Amendment are
filed herewith as Appendix 3.1. The CFX Articles, reflecting
the Charter Amendment, are filed herewith as Exhibit 3.2.
In connection with the Community Acquisition, CFX entered
into a three-year employment contract with Douglas Crichfield
which is filed herewith as Exhibit 10.1. CFX also entered
into new three-year employment contracts with Peter J. Baxter,
President and Chief Executive Officer of CFX, Mark A. Gavin,
Executive Vice President and Chief Operating Officer of CFX,
and Christopher W. Bramley, Executive Vice President of CFX,
which are filed herewith as Exhibits 10.2 through 10.4,
respectively.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Financial Statements.
(1) Audited consolidated financial statements of
Portsmouth (File No. 0-16510) as of
December 31, 1996 and 1995 and for each of the
years ended December 31, 1996, 1995 and 1994,
and the independent auditor's report thereon,
included in Portsmouth's Annual Report on
Form 10-K for the year ended December 31, 1996,
are incorporated herein by reference to such
Portsmouth Annual Report on Form 10-K.
(2) Unaudited consolidated interim financial
statements of Portsmouth as of June 30, 1997
and for the six months ended June 30, 1997 and
1996 are incorporated herein by reference to
Portsmouth's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1997.
(3) Audited consolidated financial statements of
Community (File No. 0-14620) as of December 31,
1996 and 1995 and June 30, 1995, and the related
consolidated statements of income, changes in
stockholders' equity and cash flows for the year
ended December 31, 1996, the six months ended
December 31, 1995 and for each of the years in
the two-year period ended June 30, 1995, and the
independent auditor's report thereon, included
in Community's Annual Report on Form 10-K for
the year ended December 31, 1996, are
incorporated herein by reference to such
Community Annual Report on Form 10-K.
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(4) Unaudited consolidated interim financial
statements of Community as of June 30, 1997 and
for the six months ended June 30, 1997 and 1996
are incorporated herein by reference to
Community's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1997.
(b) Pro Forma Financial Information.
(1) Unaudited pro forma combined financial
information as of December 31, 1996 and for
each of the years ended December 31, 1996, 1995
and 1994, giving effect to the Acquisitions,
included on pages 44-50 of the definitive proxy
statement for the CFX annual meeting of
shareholders held on July 30, 1997 filed under
cover of CFX's definitive Schedule 14A filed on
June 16, 1997 is incorporated herein by
reference to such CFX Schedule 14A.
(2) Unaudited pro forma combined financial
information as of June 30, 1997 and for the six
months ended June 30, 1997 and 1996, giving
effect to the Acquisitions, is filed herewith
as Exhibit 99.2.
(c) Exhibits.
The exhibits listed in the Exhibit Index are filed
herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, CFX has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CFX CORPORATION
Date: September 15, 1997 By: /s/ Gregg R. Tewksbury
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Gregg R. Tewksbury
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Location in
Sequentially
Numbered Copy
-------------
<S> <C> <C>
3.1 Articles of Amendment to CFX's 8
Articles of Incorporation.
3.2 Articles of Incorporation of CFX, 11
as amended.
10.1 Employment Agreement dated as of 22
August 29, 1997 by and between CFX
and Douglas Crichfield.
10.2 Employment Agreement dated as of 37
August 12, 1997 by and between CFX
and Peter J. Baxter.
10.3 Employment Agreement dated as of 53
August 11, 1997 by and between CFX
and Mark A. Gavin.
10.4 Employment Agreement dated as of 69
August 14, 1997 by and between CFX
and Christopher W. Bramley.
23.1 Consent of Shatswell, MacLeod & Co. 85
23.2 Consent of KPMG Peat Marwick LLP. 86
23.3 Consent of Wolf & Company, P.C. 87
99.1 Press Release dated August 29, 1997. 88
99.2 Unaudited pro forma combined financial 89
information as of June 30, 1997 and for
the six months ended June 30, 1997
and 1996, giving effect to the
Acquisitions.
</TABLE>
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EXHIBIT 3.1
STATE OF NEW HAMPSHIRE
Filing fee: $ 35.00 Form No. 14
Use black print or type. RSA 293-A:10.06
Leave 1" margins both sides.
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
PURSUANT TO THE PROVISIONS OF THE NEW HAMPSHIRE BUSINESS
CORPORATION ACT, THE UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING
ARTICLES OF AMENDMENT TO ITS ARTICLES OF INCORPORATION:
FIRST: The name of the corporation is CFX Corporation.
SECOND: The text of each amendment adopted is:
RESOLVED: That, in order to increase the number of authorized
shares of the Company's Common Stock $.66 2/3 par
value, from 22,500,000 shares to 50,000,000 shares,
the Board of Directors hereby proposes and
recommends for the approval of the shareholders of
the Company the amendment of Article Four of the
Company's Articles of Incorporation to read as
follows:
"FOURTH: The aggregate number of shares which the
corporation shall have the authority to issue is:
Fifty-three million (53,000,000), consisting of
1. Three Million (3,000,000) shares of preferred
stock, one dollar ($1.00) par value per share;
and
2. Fifty Million (50,000,000) shares of common
stock, sixty-six and two thirds cents ($.66
2/3) par value per share.
(See Also Appendix I)"
THIRD: The amendment does not provide for an exchange,
reclassification, or cancellation of issued shares.
FOURTH: The amendments were adopted on July 30, 1997.
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FIFTH: (Check one)
A. _____ The amendments were adopted by the incorporators or
board of directors without shareholder action and
shareholder action was not required.
B. X The amendments were approved by the shareholders.
_____
<TABLE>
<CAPTION>
Designation Number of Votes
(class or series) Number of indisputably
of voting Number of votes entitled represented at
group shares outstanding to be cast the meeting
- ---------------- ------------------- ---------------- ---------------
<S> <C> <C> <C>
Common Stock 13,005,793 13,005,793 11,023,641
$.66 2/3 par value
<CAPTION>
Designation
(class or series) Total number of
of voting Total number of votes cast:* OR undisputed
group FOR AGAINST votes cast FOR
- ----------------- --- ------- ---------------
<S> <C> <C> <C>
Common Stock 10,225,941 705,875 ---
$.66 2/3 par value
</TABLE>
*Abstained: 91,825
SIXTH: The number cast for the amendments by each voting group
was sufficient for approval by each voting group.
Dated: August 20, 1997
CFX CORPORATION
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By /s/ Peter J. Baxter
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Signature of its President
Peter J. Baxter
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Print or type name
Notes: 1. All sections under "B." must be completed. If any
voting group is entitled to vote separately, give
respective information for each voting group. (see RSA
293-A:1.40 for definition of voting group.)
2. Exact corporate name of corporation adopting articles
of amendment.
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3. Signature and title of person signing for the
corporation. Must be signed by the chairman of the
board of directors, president or another officer; or
see RSA 293-A:1.20(f) for alternative signatures.
Mail fee and ORIGINAL and ONE EXACT OR CONFORMED COPY to:
Secretary of State, State House, Room 204, 107 North Main Street,
Concord, NH 03301-4989
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EXHIBIT 3.2
ARTICLES OF INCORPORATION OF
CFX CORPORATION
THE UNDERSIGNED, ACTING AS INCORPORATOR(S) OF A CORPORATION UNDER
THE NEW HAMPSHIRE BUSINESS CORPORATION ACT, ADOPT(S) THE FOLLOWING
ARTICLES OF INCORPORATION FOR SUCH CORPORATION:
FIRST: The name of the corporation is CFX Corporation.
SECOND: The period of its duration if such period is other
than perpetual: _________.
THIRD: The corporation is empowered to transact any and all
lawful business for which corporations may be incorporated under
RSA 293-A and the principal purpose or purposes for which the
corporation is organized are:
1. Generally conducting the business and carrying on the
activities of a bank holding company, as defined in the Bank
Holding Company Act of 1956, as amended.
2. Acquiring an interest in or control of banks, savings
banks, financial institutions and other corporations or
associations of every kind and description through ownership of
stock; acquiring such stock by purchase, exchange for its own
securities or otherwise; exercising all of the rights, powers and
privileges of such stock.
FOURTH: The aggregate number of shares which the corporation
shall have the authority to issue is:
Fifty-three million (53,000,000), consisting of
1. Three Million (3,000,000), shares of preferred stock,
one dollar ($1.00) par value per share (hereinafter the "Preferred
Stock"); and
2. Fifty Million (50,000,000), shares of common stock,
sixty-six and two thirds cents (66 2/3 ) par value per share
(hereinafter the "Common Stock").
[The following portion of Article FOURTH appears in
Appendix I to the Articles of Incorporation.]
Shares of Preferred Stock may be issued from time to time in
one or more series as may be determined by the Board of Directors.
Each series is to be distinctly designated to distinguish the
shares in the series from the shares of all other series and
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classes. The relative rights and preferences of the Preferred
Stock and the variations of rights and preferences between
different series of Preferred Stock may be fixed and determined by
the Board of Directors by resolution or resolutions adopted prior
to the issuance of any shares of a particular series of Preferred
Stock. All shares of Preferred shall be identical except as to
the following relative rights and preferences, as to which there
may be variations between different series:
(a) The rate of dividend;
(b) Whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
(c) The amount payable upon shares in event of voluntary and
involuntary liquidation;
(d) Sinking fund provisions, if any, for the redemption or
purchase of shares;
(e) The terms and conditions, if any, on which shares may be
converted; or
(f) Voting rights, if any.
The authorized shares of Common Stock may be issued by the
Corporation from time to time by vote of the Board without
approval of the holders of the Common Stock. Upon payment of
lawful consideration, such shares shall be deemed to be fully paid
and nonassessable. Except as the Board shall have otherwise
specified or except as otherwise provided by law, voting power
shall be vested exclusively in the Common Stock. The holders of
the Common Stock shall be entitled to one vote for each share of
Common Stock owned. Dividends, as declared by the Board out of
lawfully available funds, shall be payable on the Common Stock
subject to any rights or preferences of the Preferred Stock. Upon
any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, holders of Common
Stock are entitled to receive pro rata the remaining assets of the
Corporation after the holders of Preferred Stock have been paid in
full any sums to which they may be entitled.
There shall be no cumulative voting for Directors or
otherwise.
FIFTH: The capital stock will be sold or offered for sale
within the meaning of RSA 421-B. (New Hampshire Securities Act)
SIXTH: Provisions, if any, for the limitation or denial of
preemptive rights:
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None of the shares of the Corporation shall carry any
preemptive or preferential rights of subscription with respect to
any shares of any class or series of stock of the Corporation or
any warrants to purchase such shares or securities convertible
into such shares, whether now or hereafter authorized.
SEVENTH: Provisions for the regulation of the internal
affairs of the corporation are:
[The following portion of Article SEVENTH appears in
Appendix II to the Articles of Incorporation.]
Section 1.
(a) Number, Qualifications and Term of Office. Subject to
the provisions hereof relating to the initial Board, the number of
directors of the Corporation shall be no less than 9 and no more
than 21. The exact number of Directors within the minimum and
maximum limitations specified in the preceding sentence shall be
fixed from time to time by the Board pursuant to a resolution
adopted by a majority of the entire Board. No decrease in the
number of directors constituting the Board shall shorten the term
of any incumbent director. At the 1987 annual meeting of
Shareholders, the Directors shall be divided into three classes as
nearly equal in number as possible with the term of office of the
first class to expire at the 1988 annual meeting of Shareholders,
the term of office of the second class to expire at the 1989
annual meeting of Shareholders and the term of office of the third
class to expire at the 1990 annual meeting of the Shareholders.
At each annual meeting of Shareholders following such initial
classification and election, Directors elected to succeed those
Directors whose terms expire shall be elected for a three year
term of office to expire at the third succeeding annual meeting of
Shareholders after their election. Directors need not be
Shareholders or residents of the Sate of New Hampshire.
(b) Vacancies. Any vacancy in the Board caused by death,
resignation, retirement, disqualification, removal, or other
cause, shall be filled by a majority vote of the remaining
Directors, though less than a quorum. A Director so chosen shall
hold office for the unexpired term of their predecessors in
office. Any Directorship to be filled by reason of an increase in
the authorized number of directors may be filled by the Board for
a term of office continuing only until the next election of
Directors by the Shareholders.
(c) Removal of Directors. At any meeting of Shareholders
called expressly for the purpose, any Director may be removed from
office by the affirmative vote of holders of seventy-five percent
(75%) of the shares entitled to vote or if removal is for cause,
then by a majority of the shares then entitled to vote. For
"cause" shall mean a final adjudication by a court of competent
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jurisdiction that the Director (i) is liable for negligence for
misconduct in the performance of his duty, (ii) guilty of a felony
conviction, or (iii) has failed to act or has acted in a manner
which is in derogation of the Director's duties.
(d) Nomination of Directors. In addition to the right of
the Board to make nominations for the election of Directors,
nominations for the election of Directors may be made by any
Shareholder entitled to vote for the election of Directors if that
Shareholder complies with all of the following provisions:
a. Advance notice of such proposed nomination shall be
received by the Secretary of the Corporation, not
less than thirty (30) days nor more than sixty (60)
days prior to any meeting of the Shareholders called
for the election of Directors; provided, however,
that if fewer than fourteen (14) days' notice of the
meeting is given to Shareholders, such written notice
of a proposed nomination shall be received not later
than the close of the tenth day following the day on
which the notice of the meeting was mailed to
Shareholders.
b. Each notice shall set forth (i) the name, age,
business address and, if known, residence address of
each nominee proposed in such notice, (ii) the
principal occupation or employment of each such
nominee; and (iii) the number of shares of stock of
the Corporation which are beneficially owned by each
such nominee. In addition, the Shareholder making
such nomination shall promptly provide any other
information reasonably requested by the Corporation.
c. The nomination made by a Shareholder may only be made
in a meeting of the Shareholders of the Corporation
called for the election of Directors at which such
Shareholder is present in person or by proxy, and can
only be made by a Shareholder who has complied with
the notice provisions of (a) and (b) above.
d. The Chairman of the meeting may in his discretion
determined and declare to the meeting that a
nomination was not made in accordance with the
foregoing procedures, and if he should so determine,
he shall so declare to the meeting and the defective
nomination shall be disregarded.
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Section 2. Voting For Business Combinations
(a) Neither the Corporation nor any subsidiary of which the
Corporation owns at least a majority of the equity securities
ordinarily entitled to vote for the election of Directors,
("Subsidiary") shall be a party to any of the transactions speci-
fied herein (a "Business Combination") or enter into any agreement
providing for any Business Combination unless the conditions
specified in (b), (c) and (d) below shall have been satisfied:
(i) any merger or consolidation (whether in a single
transaction or a series of related transactions)
other than a merger or consolidation of the
Corporation and any of its subsidiaries or a merger
or consolidation of any subsidiaries of the
Corporation; or
(ii) any sale, lease, exchange, transfer or distribution
of all or substantially all or a substantial
portion of the property or assets of the
Corporation or any of its subsidiaries, including
its goodwill; or
(iii) the issuance of any securities, or of any rights
warrants or options to acquire any securities of
the Corporation or any of its subsidiaries, to any
Shareholders other than by stock dividend declared
and paid to all Shareholders of the Corporation or
pursuant to an employee stock ownership plan or an
employee stock option plan established by the
Corporation; or
(iv) any reclassification of the stock of the Corpo-
ration or any of its subsidiaries or any
recapitalization or other transaction (other than a
redemption of stock) which has the effect, directly
or indirectly, of increasing the proportionate
share of stock of the Corporation or any of its
subsidiaries held by any person; or
(v) the dissolution of the Corporation or any subsidiary
thereof or any partial or complete liquidation of
the Corporation or any subsidiary thereof.
(b) The vote of the holders of at least eighty percent (80%)
of the outstanding shares entitled to vote for the election of
Directors shall be required to approve or authorize any Business
Combination to which the Corporation or any Subsidiary is a party
unless the aggregate of the cash and fair market value of the
consideration to be paid to all the holders of the Common Stock of
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the Corporation in connection with the Business Combination (when
adjusted for stock splits, stock dividends, reclassification of
shares or otherwise) shall be equal to the highest price per share
paid by the other party or parties to the Business Combination
(the "Acquiring Party") in acquiring any of the Corporation's
Common Stock; provided, however, that the consideration to be paid
to the holders of the Common Stock of the Corporation shall be in
the same form as that paid by the Acquiring Party in acquiring the
shares of the Common Stock held by it except to the extent that
any Stockholder of the Corporation shall otherwise agree.
(c) Subject to the provisions in (b) above, the vote of the
holders of at least seventy-five percent (75%) of the outstanding
shares entitled to vote for the election of Directors shall be
required to approve or authorize any Business Combination to which
the Corporation or any Subsidiary is a party unless the Business
Combination shall have been approved by at least two-thirds (2/3)
of the Directors of the Corporation who are not affiliated with,
or Shareholders of, the Acquiring Party.
In connection with the exercise of its judgment in determin-
ing what is in the best interests of the Corporation and of the
Shareholders, when evaluating a Business Combination or a proposal
by another person or persons to make a Business Combination or a
tender or exchange offer, the Board may, in addition to
considering the adequacy of the amount to be paid in connection
with any such transaction, consider all of the following factors
and any other factors which it deems relevant: (i) the social and
economic effects of the transaction on the Corporation and its
subsidiaries, employees, depositors, loan and other customers,
creditors and other elements of the communities in which the
Corporation and its subsidiaries operate or are located; (ii) the
business and financial condition and earnings prospects of the
acquiring person or persons, including, but not limited to, debt
service and other existing financial obligations, financial
obligations to be incurred in connection with the acquisition, and
other likely financial obligations of the acquiring person or
persons, and the possible effect of such conditions upon the
Corporation and its subsidiaries and the other elements of the
communities in which the Corporation and its subsidiaries operate
or are located; and (iii) the competence, experience and integrity
of the acquiring person or persons and its or their management.
(d) In the event that all of the conditions set forth in (b)
and (c) above are met, the Corporation or any Subsidiary may enter
into any Business Combination under the terms and conditions
specified in the New Hampshire Business Corporation Act.
(e) The affirmative vote of the holders of at least eighty
percent (80%) of all of the shares of the Corporation entitled to
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vote for the election of Directors shall be required to amend or
repeal, or to adopt any provision in contravention of or incon-
sistent with this Section 2, notwithstanding the fact that a
lesser percentage may be specified by law.
Section 3. Special Meetings and Consent Meetings
Special meetings of the Shareholders may be called by the
Chairman, President, the Board, or by the Secretary upon written
request of the holders of not less than ten percent (10%) of all
the shares entitled to vote.
Section 4. Acquisition of Stock
(a) Restrictions on Offers and Acquisitions. For a period
of five (5) years from the effective date of the conversion, no
person shall directly or indirectly offer to acquire or acquire
the beneficial ownership of (i) more than ten percent (10%) of the
issued and outstanding shares of any class of an equity security
of the Corporation; (ii) more than ten percent (10%) of any class
of securities convertible into, or exercisable for, any class of
an equity security of the Corporation; (iii) any securities
convertible into, or exercisable for, any equity securities of the
Corporation if assuming conversion or exercise by such person of
all securities of which such person is the beneficial owner which
are convertible into, or exercisable for, such equity securities
(but of no securities convertible into, or exercisable for, such
equity securities of which such person is not the beneficial
owner), such person would be the beneficial owner of more than ten
percent (10%) of any class of an equity security of the
Corporation.
For the same five year period, each share beneficially owned
in violation of the foregoing percentage limitation, as determined
by the Board, shall not be voted by any person or counted as
voting shares in connection with any matter submitted to the
shareholders for a vote.
For the purposes of this Section 4:
(i) The term "person" shall mean and include any in-
dividual, group acting in concert, corporation,
partnership, or other organization or entity,
together with its affiliates and associates; and
(ii) The term "offer" includes every offer to buy or
acquire, solicitation of an offer to sell, tender
offer for, or request or invitation for tenders of,
a security (including, without limitation, shares
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of any class of capital stock of the Corporation)
or interest in a security for value.
(iii) The term "conversion" shall mean the completed
process whereby Cheshire County Savings Bank will
be converted from a New Hampshire-chartered mutual
savings bank to a New Hampshire-chartered stock
savings bank and Cheshire Financial Corporation
shall become the holding company for Cheshire
County Savings Bank.
(b) Exclusion for Underwriters, Directors, Officers and
Employees. The restriction contained in this Section 4 shall not
apply to any offer with a view toward public resale made exclu-
sively to the Corporation or the underwriters or a selling group
acting on its behalf. In addition, the Directors, Officers and
employees of the Corporation or any subsidiary thereof shall not
be deemed to be a group with respect to their individual acquisi-
tion of equity stock of the Corporation.
(c) Readoption of Restriction by Shareholders. This Section
4 may be readopted for additional one-year or longer periods by
vote of the holders of a majority of the outstanding voting shares
present or represented at a duly convened annual or special
meeting of Shareholders of the Corporation.
(d) Exception in Cases of Advance Approval. This Section 4
shall not apply to any offer or acquisition referred to in (a)
above if such offer or acquisition was approved in advance of such
offer or acquisition by two-thirds (2/3) of the entire Board
utilizing the standard set forth in Section 2(c).
(e) Enforcement of this Section 4. The Corporation may by
law or by resolution of the Directors adopt such provisions or
resolutions as are necessary to provide for the enforcement of
this Section 4.
(f) Amendments of this Section 4. Notwithstanding any other
provisions of these Articles of Incorporation or the By-Laws of
the Corporation, and notwithstanding the fact that some lesser
percentage may be specified by law, this Section 4 shall not be
amended, altered, changed or repealed without:
a. the affirmative vote of two-thirds (2/3) of the
Board; and
b. the affirmative vote by the holders of at least
two-thirds (2/3) of the outstanding shares entitled
to vote.
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<PAGE> 9
This vote shall be in addition to any vote of the Preferred Stock
as may be required by the provisions of any series thereof or by
applicable law.
The readoption of Section 4 for additional one-year or longer
periods, as provided in (c) above, shall not be an amendment,
alteration or change for the purposes of this paragraph.
Section 5. Amendments
(a) Amendments to Articles of Incorporation. Except as
otherwise provided for in the Articles above, the affirmative vote
of the holders of at least two-thirds of all of the shares of the
Corporation entitled to vote for the election of Directors, shall
be required to amend or repeal, or to adopt any provision in
contravention of or inconsistent with these Articles
notwithstanding the fact that a lesser percentage may be specified
by law.
(b) Amendments to By-Laws. The By-Laws of the Corporation
may be amended at any time by the affirmative vote of a majority
of the entire Board, subject to repeal, change or adoption of any
contravening or inconsistent provision only by vote of the holders
of at least two-thirds (2/3) of all the shares entitled to vote on
the matter at a meeting expressly called for that purpose.
Section 6. Liability Limitations for Officers and Directors.
No person who serves the Corporation as a director, an officer, or
both, shall have any personal liability to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as
such director, officer, or both, except with respect to:
(1) any breach of the director's and/or officer's duty of
loyalty to the Corporation or its shareholders;
(2) acts or omissions which are not in good faith or which
involve intentional misconduct or a knowing violation of
law;
(3) actions for which a director may be liable under New
Hampshire RSA 293-A:48, as amended; or
(4) any transaction from which the director, officer, or
both, derived an improper personal benefit.
The foregoing provision shall not be construed to eliminate
or limit the liability of a director, an officer, or both, for any
act or omission occurring prior to the date on which the Articles
of Incorporation of the Corporation were amended to include this
Section. Any repeal or modification of this section by the
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<PAGE> 10
shareholders of the Corporation shall be prospective only, and
shall not adversely affect any limitation on the personal
liability of a director or officer of the Corporation for acts or
omissions occurring prior to the effective date of such repeal or
modification.
EIGHTH: The address of the initial registered office of the
corporation is 194 West Street, Keene, New Hampshire 03431 and the
name of its initial registered agent at such address is Howard B.
Lane, Jr., Esq.
NINTH: The number of directors constituting the initial
board of directors of the corporation is 12, and the names and
addresses of the persons who are to serve as directors until the
first annual meeting of shareholders or until their successors are
elected and shall qualify are:
Name Address
Richard B. Baybutt 664 West Street
Keene, NH 03431
Mario G. Farina 133 School Street
Keene, NH 03431
Calvin L. Frink West Surry Road
Keene, NH 03431
Eugene E. Gaffey 225 Pear Street
Chairman Keene, NH 03431
Kenneth W. Hazen 15 West Surry Road
Keene, NH 03431
Philip D. Koerner P.O. Box 338
Dublin, NH 03444
Howard B. Lane, Jr., 61 Park Avenue
Vice Chairman Keene, NH 03431
Emerson H. O'Brien Four Seasons
Spofford, NH 03462
Howard A. Roberts 99 Jordan Road
Keene, NH 03431
L. William Slanetz 471 Chapman Road
Keene, NH 03431
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<PAGE> 11
David B. Walters 12 Greenbriar Road
Keene, NH 03431
William H. Dennison 23 Shadow Lane
Keene, NH 03431
TENTH: The name and address of each incorporator is:
Howard B. Lane, Jr., 61 Park Avenue, Keene, New Hampshire
03431.
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<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made as of the
29th day of August, 1997 (the "Effective Date"), is by and between
CFX Corporation (the "Company"), a New Hampshire corporation with
principal executive offices at 102 Main Street, Keene,
New Hampshire 03431, and Douglas Crichfield, residing at 20 Stark
Hill Highway North, Dunbarton, New Hampshire 03045 (the
"Executive").
RECITALS
WHEREAS, the Company, through its Board of Directors (the
"Board"), considers the maintenance of competent and experienced
executive officers to be essential to its long-term success;
WHEREAS, in this regard, the Company has determined that it
is in its best interests that the Executive continue to serve as
Executive Vice President of the Company, pursuant to a written
employment agreement;
NOW, THEREFORE, in furtherance of the interests described
above and in consideration of the respective covenants and
agreements herein contained, the parties hereto agree as follows:
1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
(a) "Applicable Interest" means interest at the rate
provided in Section 1274(b)(2)(B) of the Code.
(b) "Cause" means the occurrence of any of the
following:
(i) the willful and continued failure of the
Executive to substantially perform the Executive's duties with the
Company (other than any such failure resulting from incapacity due
to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the
President which specifically identifies the manner in which the
President believes that the Executive has not substantially
performed the Executive's duties;
(ii) the willful engaging by the Executive
in illegal conduct (excluding traffic violations, minor
misdemeanors or similar offenses) or gross misconduct that, in the
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<PAGE> 2
Board's reasonable opinion, may reflect adversely on the business
or reputation of the Company;
(iii) the removal and/or permanent prohibition of
the Executive from participation in the conduct of the affairs of
the Company or any of its subsidiary banks by an order issued
under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance
Act, 12 U.S.C. 1818(e)(4) or 1818(g)(1);
(iv) the issuance by any court having appropriate
jurisdiction of an order under Section 21(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), 15 U.S.C.
78u(d)(2), prohibiting the Executive from acting as an officer or
director of the Company; or
(v) the conviction of the Executive for commission
of a felony.
(c) "Change in Control" means the occurrence of any of
the following events:
(i) there shall be consummated any consolidation,
merger, stock-for-stock exchange or similar transaction
(collectively, "Merger Transactions") involving securities of the
Company in which the holders of voting securities of the Company
immediately prior to such consummation own, as a group,
immediately after such consummation, voting securities of the
Company (or, if the Company does not survive the Merger
Transaction, voting securities of the corporation surviving such
transaction) having less than 50% of the total voting power in an
election of directors of the Company (or such other surviving
corporation), excluding securities received by any members of such
group which represent disproportionate percentage increases in
their shareholdings vis-a-vis the other members of such group;
(ii) any individual, corporation (other than the
Company), partnership, trust, association, pool, syndicate, or any
other entity or any group or persons acting in concert (other than
an employee benefit plan of the Company or one of its affiliates)
becomes the beneficial owner (as that concept is defined in
Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Exchange Act) as a result of any one or more securities
transactions, including gifts and stock repurchases but excluding
any Merger Transactions, of securities of the Company possessing
one-third or more of the voting power for the election of
directors of the Company;
(iii) during any period of twenty-four consecutive
months, individuals who at the beginning of such period
constituted the Board (including for this purpose any new director
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<PAGE> 3
whose election or nomination for election by the Company's
shareholders was approved by a vote of at least a majority of the
directors then still in office who were directors at the beginning
of such period) cease for any reason to constitute at least a
majority of the Board (excluding any Board seat that is vacant or
otherwise unoccupied); or
(iv) there shall be consummated any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions, excluding any Merger Transactions), of all,
or substantially all, of the assets of the Company to a party
which is not controlled by or under common control with the
Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Company Bonus Plan" means any bonus, stock option,
profit-sharing or other cash- or equity-based incentive plan
offered by the Company.
(f) "Company Benefit Plan" means any pension (including
without limitation tax-qualified), thrift, deferred compensation,
stock purchase, life insurance, medical, dental, education,
accident, disability, welfare, retirement or other employee
benefit plan offered by the Company other than a Company Bonus
Plan.
(g) "Designated Office" means 102 Main Street, Keene,
New Hampshire 03431, or such other office of the Company
designated by the President from time to time other than in
anticipation of, or following a Change in Control.
(h) "President" means the President of the Company.
(i) "Triggering Event" means the occurrence of any of
the following events:
(i) the termination by the Company of the
employment of the Executive for any reason other than Cause;
(ii) the assignment to the Executive without his
consent of any duties inconsistent in any material respect with
the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities, or
any other action by the Company which results in a diminution in
any material respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that
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<PAGE> 4
is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) in anticipation of, or following a Change in
Control, the requirement by the Company that the Executive be
based at any office or location that is more than 75 miles from
the Designated Office;
(iv) after the Effective Date, the failure of the
Company without the Executive's consent to:
(A) continue in effect any Company Bonus Plan
in which the Executive participates that is material to the
Executive's total compensation, unless a substantially equivalent
arrangement, embodied in an ongoing substitute or alternative
plan, has been made with respect to such Company Bonus Plan;
(B) continue the Executive's participation in
any Company Bonus Plan and eligibility for bonuses thereunder, or
in any substitute or alternative plan, on a basis at least as
favorable as that existing at the date hereof, both in terms of
the amount of benefits provided and the level of the Executive's
participation relative to other participants; or
(C) continue to provide the Executive with
benefits comparable to those received by the Executive under any
Company Benefit Plan in which the Executive was participating, at
participation costs substantially similar to those paid by the
Executive;
provided, however, that it shall not be deemed a Triggering Event
if the Board, for bona fide business purposes and not in
anticipation of or following a Change in Control, modifies the
terms or conditions of any Company Bonus Plan or Company Benefit
Plan, so long as such modifications have or would have a
substantially similar effect upon all executive employees or all
employees of the Company who participate or who are eligible to
participate in the plan.
(v) the Company issues a Non-Renewal Notice to the
Executive as provided in Section 2 of this Agreement;
(vi) the Company shall have materially breached
any provision of this Agreement and such breach shall not have
been cured within 15 days after delivery of written notice thereof
to the President by the Executive, identifying the breach with
reasonable particularity; or
(vii) a reduction by the Company in the
Executive's base annual salary as in effect on the date hereof, as
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<PAGE> 5
the same may be increased from time to time as provided for in
this Agreement.
(j) "Willful" means that an action, conduct or deed is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon the instructions or prior approval of the Board or
the President or based upon the advice of counsel for the Company,
shall be conclusively presumed to be done, or omitted to be done,
by the Executive in good faith and in the best interests of the
Company.
2. Employment Term. The initial term of employment under
this Agreement shall be for a period of three years commencing on
the Effective Date. This Agreement shall be extended
automatically for one additional year on each annual anniversary
date of the Effective Date unless either the Company, through the
President, or the Executive gives contrary written notice (the
"Non-Renewal Notice") to the other not less than three months in
advance of such anniversary date. References herein to the term
of this Agreement shall refer both to such initial term and such
successive terms.
3. Employment. During the term of employment provided for
in this Agreement, the Company agrees to employ the Executive in
the office or position set forth in the second Recital of this
Agreement, and the Executive agrees to serve in such office or
position and to perform the duties and discharge the
responsibilities associated therewith or such other duties and
responsibilities as may reasonably be assigned to the Executive
from time to time by the President. The Executive shall devote
all his working time and efforts to the business and affairs of
the Company and its subsidiaries, provided, however, that the
Executive may, with the approval of the President, serve as a
director or officer of any non-competing business or engage in any
other activity, including without limitation charitable or
community activity, to the extent that it does not inhibit the
performance of his duties hereunder.
4. Office and Services. In connection with the Executive's
employment hereunder, the Executive shall be based at the
Designated Office, except for required travel on the Company's
business. The Company shall furnish the Executive with office
space, stenographic assistance, and such other facilities and
services as shall be suitable to the Executive's position and
adequate for the performance of his duties hereunder.
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<PAGE> 6
5. Compensation. The regular compensation and benefits
payable to the Executive under this Agreement shall include the
following:
(a) Salary. The Company shall pay the Executive a base
annual salary hereunder of not less than $185,000, payable in
equal semimonthly installments or at such other intervals as shall
be agreed upon by the parties. The Executive's base annual salary
may be increased from time to time as determined by the President
and, if so increased, such base annual salary shall not thereafter
during the Executive's employment under this Agreement be
decreased and the obligation of the Company hereunder to pay the
Executive's base annual salary shall thereafter relate to such
increased base annual salary.
(b) No Separate Board Compensation. The Executive
shall not be entitled to receive any fees or additional payments
for serving as a member of the Board, as a member of any committee
of the Board, or as a member of any board of directors (or the
equivalent thereof) or any committee thereof of any subsidiary of
the Company.
(c) Discretionary Bonuses. During the term of this
Agreement, the Executive shall be eligible to participate in an
equitable manner with other executive employees of the Company and
its subsidiaries in any Company Bonus Plan or in other
discretionary bonuses authorized and declared by the Board, and
the board of directors (or the equivalent thereof) of the
Company's subsidiaries, or by their respective delegees.
(d) Participation in Benefit Plans. In addition to any
compensation and benefits provided for in this Agreement, the
Executive shall be eligible to participate in any Company Benefit
Plan or any other employee fringe benefits offered by the Company
or its subsidiaries for the benefit of executive employees or all
employees generally in which the Executive is eligible to
participate. The Executive's participation in any such Company
Benefit Plan shall be subject to all generally applicable
eligibility requirements thereof and shall not in any way limit or
reduce the obligation of the Company to pay the Executive's base
annual salary hereunder (except pursuant to, in accordance with,
or as required by the generally applicable terms of participation
of any such Company Benefit Plan).
(e) Vacation. The Executive shall be entitled to a
minimum annual paid vacation during the term of this Agreement of
four weeks per year or such longer period as the President may
approve.
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<PAGE> 7
(f) Reimbursement of Business Expenses. The Company
shall promptly reimburse the Executive for all reasonable travel
and other business expenses incurred by him in the performance of
his duties and responsibilities, subject to such reasonable
requirements with respect to substantiation and documentation as
may be specified by the Company.
6. Termination Procedures.
(a) Termination Notice. If the Executive's employment
by the Company is terminated for any reason during the term of
this Agreement (other than by reason of the Executive's death or
as a result of a consensual termination as provided in Section
8(c) of this Agreement), the terminating party shall provide the
other party with written notice (the "Termination Notice")
specifying: (i) the effective date of the termination (the
"Termination Date"), (ii) the specific provisions of this
Agreement upon which the termination is based and that are
applicable to the termination, and (iii) a reasonably detailed
discussion of the facts and circumstances providing the basis for
the termination under the specified provisions of this Agreement.
(b) Termination Date. If the Executive's employment is
terminated by the Executive, the Termination Date shall not be
less than two weeks after the date the Termination Notice is
tendered to the Company. If the Executive's employment is
terminated by the Company, the Termination Date shall not be less
than 30 days after the date the Termination Notice is tendered to
the Executive. Termination of the Executive's employment shall
occur on the Termination Date even if there is a dispute between
the parties relating to the provisions of this Agreement
applicable to such termination (a "Termination Dispute").
(c) Termination Dispute. If, prior to the Termination
Date, the party receiving the Termination Notice provides written
notice to the other party of the existence of a Termination
Dispute (which notice shall provide a reasonably detailed
discussion of the nature of the dispute, including the specific
provisions of this Agreement that the disputing party believes are
applicable to the termination), the Termination Dispute shall be
resolved by: (i) mutual written agreement of the parties hereto
or (ii) a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been
perfected). The parties hereto shall pursue the resolution of any
Termination Dispute with reasonable diligence.
(d) Termination Payments. If there is no Termination
Dispute, any amount owed by the Company to the Executive as a
result of the termination of the Executive's employment under this
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<PAGE> 8
Agreement shall be payable in immediately available funds on the
Termination Date. If there is a Termination Dispute, any amount
owed by the Company to the Executive as a result of the
termination of the Executive's employment under this Agreement
that is not in dispute shall be paid on the Termination Date, and
all other amounts shall be paid within five business days of the
resolution of the Termination Dispute as provided for in Section
6(c) of this Agreement, together with Applicable Interest.
7. Termination Due to a Triggering Event.
(a) If, during the term of this Agreement, the
Executive's employment by the Company is terminated (whether by
the Company or by the Executive) upon the occurrence of or within
12 months after a Triggering Event, (i) the Company shall make a
lump sum cash payment to the Executive in an amount equal to 299%
of the Executive's base annual salary at the time the Triggering
Event occurs plus the amount of any discretionary bonuses paid by
the Company to the Executive within the 12 months immediately
preceding the occurrence of the Triggering Event, (ii) the Company
shall continue to provide to the Executive for a three-year period
the Executive's then-existing coverage under the Company's health,
dental and life insurance plans or, if continued coverage under
such plans cannot be provided, substantially equivalent coverage
under alternative arrangements, and (iii) any restrictions
remaining on any restricted shares issued to the Executive under
the Company's restricted stock plans shall immediately lapse, any
performance shares issued to the Executive under the Company's
incentive stock plans shall immediately vest, any stock options
and stock appreciation rights granted to the Executive shall
become immediately exercisable, and the Executive may exercise any
such option or stock appreciation right until the later of the
expiration of its original term or one year after the effective
date of the Executive's termination, provided that this
Section 7(a)(iii) shall be inoperative to the extent that its
operation would preclude the application of the pooling of
interests accounting method to a business combination in which the
Company intends to use such method (subject to the foregoing
proviso, in the event of any conflict between the terms of this
Section 7(a)(iii) and the terms of any applicable stock or
incentive plan or implementing agreement between the Company and
the Executive, the terms of this Section 7(a)(iii) shall govern
unless prohibited by any applicable law in which case the Company
shall take all reasonable steps to ensure that the Executive
receives all the economic and financial benefits intended to be
conferred by this Section 7(a)(iii)).
(b) In the event that the Executive becomes entitled to
receive any benefit or payment in connection with a Triggering
Event or the Company's termination of the Executive's employment,
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<PAGE> 9
whether pursuant to the terms of this Agreement or otherwise
(collectively, the "Total Benefits"), and any of the Total
Benefits will be subject to any excise tax (the "Excise Tax")
imposed under Section 4999 of the Code, the Company shall pay to
the Executive an additional amount (the "Gross-Up Payment") such
that the net amount retained by the Executive from the Gross-Up
Payment, after deduction of any federal, state and local income
taxes, Excise Tax, and FICA and Medicare withholding taxes on the
Gross-Up Payment, shall be equal to the Excise Tax on the Total
Benefits. For purposes of determining the amount of such Excise
Tax on the Total Benefits, the amount of the Total Benefits that
shall be treated as subject to the Excise Tax shall be equal to
(i) the Total Benefits, minus (ii) the amount of such Total
Benefits that, in the opinion of tax counsel selected by the
Company and reasonably acceptable to the Executive ("Tax
Counsel"), are not excess parachute payments (within the meaning
of Section 280G(b)(1) of the Code).
(c) For purposes of Section 7(b), the Executive shall
be deemed to pay federal income taxes at the highest marginal rate
of federal income taxation in the calendar year in which the
Excise Tax is payable and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the
Executive's residence on the effective date of his termination,
net of the reduction in federal income taxes which could be
obtained from deduction of such state and local taxes (calculated
by assuming that any reduction under Section 68 of the Code in the
amount of itemized deductions allowable to the Executive applies
first to reduce the amount of such state and local income taxes
that would otherwise be deductible by the Executive). Except as
otherwise provided herein, all determinations required to be made
under this Section 7 shall be made by Tax Counsel, which
determinations shall be conclusive and binding on the Executive
and the Company absent manifest error.
(d) In the event that the Excise Tax on the Total
Benefits is subsequently determined to be less than the amount
taken into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the Company,
at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax, federal, state and local
income taxes and FICA and Medicare withholding taxes imposed on
the Gross-Up Payment being repaid by the Executive to the extent
that such repayment results in a reduction in any such taxes and/
or a federal, state or local income tax deduction) plus Applicable
Interest. In the event that the Excise Tax on the Total Benefits
is finally determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive's
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employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment,
which shall be calculated by Tax Counsel in the same manner and
using the same assumptions as set forth in Sections 7(b) and 7(c),
to the Executive in respect of such excess (plus any interest,
penalties or additions payable by the Executive to the Internal
Revenue Service or any other federal, state, local or foreign
taxing authority with respect to such excess or with respect to
the additional Gross-Up Payment) at the time that the amount of
such excess is finally determined.
(e) Following the occurrence of a Triggering Event, if
the Company or the Executive brings any action, suit or proceeding
for the enforcement, performance or construction of this
Agreement, the Company agrees to reimburse the Executive for all
reasonable costs and expenses incurred by him in such action, suit
or proceeding, including reasonable attorneys' and accountants'
fees and expenses.
8. Other Termination. Notwithstanding any other provision
of this Agreement, the Executive's employment hereunder shall
terminate under the following circumstances with the following
consequences:
(a) Termination By Company for Cause. The Company may
terminate the Executive's employment under this Agreement for
Cause. The termination of the Executive's employment under this
Agreement shall not be deemed for Cause unless and until (1) the
Company, through the President, delivers reasonable notice to the
Executive that it intends to terminate the Executive for Cause,
(2) the Executive is given an opportunity, together with counsel,
to be heard before the Board, (3) the Executive's termination is
approved by the affirmative vote of at least two-thirds of the
Board, and (4) the Company provides the Executive with a copy of
the resolutions duly adopted by the Board finding that, in the
good faith opinion of the Board, the Executive should be
terminated for Cause and specifying the particulars thereof in
detail. Upon termination for Cause, the Executive will not be
entitled to any further compensation for any period subsequent to
the effective date of such termination, except for pay or
benefits, if any, in accordance with the then existing severance
policies of the Company and the terms of the Company Bonus Plans
and Company Benefit Plans.
(b) Termination By Company for Disability. If, as a
result of the Executive's incapacity due to physical or mental
illness, the Executive shall not have performed his duties
hereunder on a full-time basis for six consecutive months, the
Executive's employment under this Agreement may be terminated by
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<PAGE> 11
the Company upon written notice. Such termination for disability
shall require the affirmative vote of a majority of the entire
Board. The Executive's compensation during any period of
disability prior to the effective date of such termination shall
be the amounts normally payable to him in accordance with his then
current base annual salary, reduced by the sum of the amounts, if
any, paid to the Executive under disability benefit plans
maintained by the Company or its subsidiaries. The Executive
shall not be entitled to any further compensation from the Company
or its subsidiaries for any period subsequent to the effective
date of such termination, except for pay or benefits, if any, in
accordance with then existing severance policies of the Company or
its subsidiaries and the terms of the Company Bonus Plans and
Company Benefit Plans.
(c) Consensual Termination. The parties hereto may
agree at any time to terminate both this Agreement and the
Executive's employment hereunder upon such terms and conditions as
the parties may mutually agree.
(d) Termination By Reason of Death. In the event of
the death of the Executive during the term of his employment
hereunder, the Company shall pay to the Executive's spouse, or if
the Executive leaves no spouse, to the estate of the Executive, a
lump sum cash payment in an amount equal to 100% of the
Executive's base annual salary as of the date of death, and upon
payment of such amount and any other amounts due and owing
hereunder and unpaid as of the date of death, this Agreement shall
thereupon terminate and no further amounts shall be payable
hereunder; provided, however, that nothing hereunder shall impair
the Executive's rights, if any, to pay or benefits under the
Company Bonus Plans and the Company Benefit Plans.
(e) Termination By Executive. If the Executive
terminates his employment with the Company for any reason other
than the occurrence of a Triggering Event as provided for in
Section 7 hereof or a consensual termination as provided for in
Section 8(c) hereof, the Executive will not be entitled to any
further compensation for any period subsequent to the effective
date of such termination, except for pay or benefits, if any, in
accordance with the then existing severance policies of the
Company and the Company Bonus Plans and the Company Benefit Plans.
9. Supervisory Suspension. In the event the Executive is
suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Company or any
of its subsidiary banks by a notice served under Section 8(e)(3)
or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(3) or 1818(g)(1), the Company's obligations under this
Agreement shall be suspended effective as of the service date of
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the notice of suspension or temporary prohibition, unless stayed
by appropriate proceedings. If the charges in the notice are
dismissed, the Company shall (a) pay the Executive all
compensation withheld while its obligations under this Agreement
were suspended, together with Applicable Interest and
(b) reinstate all obligations under this Agreement that were
suspended.
10. Confidential Information. During the Executive's
employment with the Company and thereafter, the Executive shall
not disclose or use in any way any confidential business or
technical information or any trade secret acquired in the course
of such employment, other than (i) information that is generally
known in the Company's industry or acquired from public sources,
(ii) as required in the course of such employment, (iii) as
required by any court, supervisory authority, administrative
agency or applicable law, or (iv) with the prior written consent
of the Company. This Section 10 shall survive termination of this
Agreement.
11. No-Raid. The Executive agrees that, in the event the
Executive's employment with the Company is terminated for any
reason whatsoever and as a result of such termination the
Executive is entitled to receive compensation, benefits or
payments hereunder or under the Company's then existing severance
policies that, in the aggregate, equal or exceed 100% of the
Executive's base annual salary at the time of termination plus the
amount of any discretionary bonuses paid by the Company to the
Executive within the 12 months immediately preceding the
termination, the Executive shall not, for a period of one year (or
such lesser period as may be determined by the President and
disclosed to the Executive in writing) after the effective date of
the Executive's termination, solicit, actively interfere with the
Company's or any Company affiliate's relationship with, or attempt
to divert or entice away, any officer of the Company or its
affiliates.
12. Payment Obligation Absolute. The obligation of the
Company to pay the Executive the compensation, benefits or
payments provided herein during the term hereof shall be absolute
and unconditional and shall not be affected by any circumstances,
including without limitation any set-off, counterclaim,
recoupment, defense or other right which the Company may have
against the Executive. 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 whosoever may be entitled thereto, for
any reason whatsoever except as provided in Section 7(d) hereof.
The Executive shall not be obligated to seek other employment in
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mitigation of the amounts payable under any provision of this
Agreement and the obtaining of any such other employment shall in
no event limit or reduce the obligations of the Company to make
the payments required to be made under this Agreement.
13. No Right to Continued Employment. Nothing in this
Agreement shall be deemed to give the Executive the right to be
retained in the employ of the Company, or to interfere with the
right of the Company to discharge the Executive at any time,
subject in all cases to the terms of this Agreement.
14. Withholding. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal,
state or local law and any additional withholding to which the
Executive has agreed.
15. Successors and Assigns. This Agreement is a personal
services contract which may not be assigned by the Company, or
assumed from the Company by, any other party without the prior
written consent of the Executive. Subject to the foregoing
limitation, all rights hereunder shall inure to the benefit of the
parties hereto, their personal or legal representatives, heirs,
successors and assigns. The Company will require any successor
(whether direct or indirect, by purchase, assignment, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company expressly to assume this
Agreement and to agree to perform hereunder in the same manner and
to the same extent that the Company would be required to perform
if no such succession had taken place. References herein to the
Company will be understood to refer to the successor or successors
of the Company, respectively.
16. Notices. Any notice required or desired to be given
hereunder shall be in writing and shall be deemed given when
delivered personally or sent by certified or registered mail,
postage prepaid, to the address of the other party set forth in
the first paragraph of this Agreement, provided that any notice to
the Company shall be directed to the President, unless the notice
is by such person in which case the notice shall be directed to
both the Secretary of the Company and the most senior ranking Vice
President of the Company.
17. Waiver of Breach. Waiver by any party of a breach of
any provision shall not operate as or be construed a waiver by
such party of any subsequent breach hereof.
18. Entire Agreement. This agreement contains the entire
agreement among the parties concerning the employment of the
Executive by the Company, and supersedes any employment or change
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<PAGE> 14
in control agreements between the Executive and the Company or any
of its predecessors, subsidiaries or predecessors of subsidiaries.
19. Written Modification, Amendment or Waiver. No
modification, amendment or waiver of any provision hereof shall be
effective unless in writing specifically referring hereto and
signed by the party against whom such provision as modified or
amended or such waiver is sought to be enforced.
20. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party hereto and delivered to the other party, it
being understood that all parties need not sign the same
counterpart.
21. Governing Law. This Agreement is governed by and is to
be construed and enforced in accordance with the laws of the State
of New Hampshire applicable to contracts made and to be performed
entirely therein.
22. Consent to Jurisdiction. Each party hereto irrevocably
consents to the exclusive jurisdiction of the courts of the State
of New Hampshire and the federal courts situated in the State of
New Hampshire in connection with any action to enforce the
provisions of this Agreement, to recover damages or other relief
for breach or default under this Agreement, to enforce any
decision or award of any arbitrators, or otherwise arising under
or by reason of this Agreement.
23. Construction.
(a) The section headings of this Agreement have been
inserted for convenience of reference only and shall not be deemed
to be a part of this Agreement.
(b) All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall
include all other genders where the context so requires.
(c) The singular shall include the plural, and vice
versa, where the context so requires.
(d) All references to sections of, or regulations
promulgated under, the Exchange Act, the Code or other statutes
shall be deemed also to refer to such sections or regulations as
amended from time to time and to any successor provisions to such
sections or regulations. All references to employee benefit plans
of the Company shall be deemed also to refer to such plans as
amended from time to time and to any successor plans thereto.
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<PAGE> 15
24. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without affecting the validity or
enforceability of any other term or provision hereof in that or
any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted
so as to be enforceable.
25. Authorization. The Company represents and warrants that
the execution of this Agreement has been duly authorized by
resolution of the Board.
IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement as of the date first above written.
CFX CORPORATION
By:
-----------------------------
Name: Peter J. Baxter
Title: President
----------------------------------
Douglas Crichfield
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<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made as
of the 12th day of August, 1997 (the "Effective Date"), is
by and between CFX Corporation (the "Company"), a
New Hampshire corporation with principal executive offices
at 102 Main Street, Keene, New Hampshire 03431, and
Peter J. Baxter, residing at 19 Pheasant Hill Road, Keene,
New Hampshire 03431 (the "Executive").
RECITALS
WHEREAS, the Company, through its Board of Directors
(the "Board"), considers the maintenance of competent and
experienced executive officers to be essential to its
long-term success;
WHEREAS, in this regard, the Company has determined
that it is in its best interests that the Executive continue
to serve as President and Chief Executive Officer of the
Company, pursuant to a written employment agreement;
NOW, THEREFORE, in furtherance of the interests
described above and in consideration of the respective
covenants and agreements herein contained, the parties
hereto agree as follows:
1. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
(a) "Applicable Interest" means interest at the
rate provided in Section 1274(b)(2)(B) of the Code.
(b) "Cause" means the occurrence of any of the
following:
(i) the willful and continued failure of the
Executive to substantially perform the Executive's duties
with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to
the Executive by the Board which specifically identifies the
manner in which the Board believes that the Executive has
not substantially performed the Executive's duties;
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<PAGE> 2
(ii) the willful engaging by the Executive
in illegal conduct (excluding traffic violations, minor
misdemeanors or similar offenses) or gross misconduct that,
in the Board's reasonable opinion, may reflect adversely on
the business or reputation of the Company;
(iii) the removal and/or permanent
prohibition of the Executive from participation in the
conduct of the affairs of the Company or any of its
subsidiary banks by an order issued under Section 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or 1818(g)(1);
(iv) the issuance by any court having
appropriate jurisdiction of an order under Section 21(d)(2)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), 15 U.S.C. 78u(d)(2), prohibiting the
Executive from acting as an officer or director of the
Company; or
(v) the conviction of the Executive for
commission of a felony.
(c) "Change in Control" means the occurrence of
any of the following events:
(i) there shall be consummated any
consolidation, merger, stock-for-stock exchange or similar
transaction (collectively, "Merger Transactions") involving
securities of the Company in which the holders of voting
securities of the Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of the Company (or, if the
Company does not survive the Merger Transaction, voting
securities of the corporation surviving such transaction)
having less than 50% of the total voting power in an
election of directors of the Company (or such other
surviving corporation), excluding securities received by any
members of such group which represent disproportionate
percentage increases in their shareholdings vis-a-vis the
other members of such group;
(ii) any individual, corporation (other than
the Company), partnership, trust, association, pool,
syndicate, or any other entity or any group or persons
acting in concert (other than an employee benefit plan of
the Company or one of its affiliates) becomes the beneficial
owner (as that concept is defined in Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Exchange
Act) as a result of any one or more securities transactions,
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<PAGE> 3
including gifts and stock repurchases but excluding any
Merger Transactions, of securities of the Company possessing
one-third or more of the voting power for the election of
directors of the Company;
(iii) during any period of twenty-four
consecutive months, individuals who at the beginning of such
period constituted the Board (including for this purpose any
new director whose election or nomination for election by
the Company's shareholders was approved by a vote of at
least a majority of the directors then still in office who
were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board
(excluding any Board seat that is vacant or otherwise
unoccupied); or
(iv) there shall be consummated any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions, excluding any Merger
Transactions), of all, or substantially all, of the assets
of the Company to a party which is not controlled by or
under common control with the Company.
(d) "Code" means the Internal Revenue Code of
1986, as amended.
(e) "Company Bonus Plan" means any bonus, stock
option, profit-sharing or other cash- or equity-based
incentive plan offered by the Company.
(f) "Company Benefit Plan" means any pension
(including without limitation tax-qualified), thrift,
deferred compensation, stock purchase, life insurance,
medical, dental, education, accident, disability, welfare,
retirement or other employee benefit plan offered by the
Company other than a Company Bonus Plan.
(g) "Designated Office" means 102 Main Street,
Keene, New Hampshire 03431, or such other office of the
Company designated by the Board from time to time other than
in anticipation of, or following a Change in Control.
(h) "Triggering Event" means the occurrence of
any of the following events:
(i) the termination by the Company of the
employment of the Executive for any reason other than Cause;
(ii) the assignment to the Executive without
his consent of any duties inconsistent in any material
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<PAGE> 4
respect with the Executive's position (including status,
offices, titles and reporting requirements), authority,
duties or responsibilities, or any other action by the
Company which results in a diminution in any material
respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith
that is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) in anticipation of, or following a
Change in Control, the requirement by the Company that the
Executive be based at any office or location that is more
than 75 miles from the Designated Office;
(iv) after the Effective Date, the failure
of the Company without the Executive's consent to:
(A) continue in effect any Company
Bonus Plan in which the Executive participates that is
material to the Executive's total compensation, unless a
substantially equivalent arrangement, embodied in an ongoing
substitute or alternative plan, has been made with respect
to such Company Bonus Plan;
(B) continue the Executive's
participation in any Company Bonus Plan and eligibility for
bonuses thereunder, or in any substitute or alternative
plan, on a basis at least as favorable as that existing at
the date hereof, both in terms of the amount of benefits
provided and the level of the Executive's participation
relative to other participants; or
(C) continue to provide the Executive
with benefits comparable to those received by the Executive
under any Company Benefit Plan in which the Executive was
participating, at participation costs substantially similar
to those paid by the Executive;
provided, however, that it shall not be deemed a Triggering
Event if the Board, for bona fide business purposes and not
in anticipation of or following a Change in Control,
modifies the terms or conditions of any Company Bonus Plan
or Company Benefit Plan, so long as such modifications have
or would have a substantially similar effect upon all
executive employees or all employees of the Company who
participate or who are eligible to participate in the plan.
(v) the Company issues a Non-Renewal Notice
to the Executive as provided in Section 2 of this Agreement;
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<PAGE> 5
(vi) the Company shall have materially
breached any provision of this Agreement and such breach
shall not have been cured within 15 days after delivery of
written notice thereof to the Board by the Executive,
identifying the breach with reasonable particularity; or
(vii) a reduction by the Company in the
Executive's base annual salary as in effect on the date
hereof, as the same may be increased from time to time as
provided for in this Agreement.
(i) "Willful" means that an action, conduct or
deed is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company.
Any act, or failure to act, based upon the instructions or
prior approval of the Board or based upon the advice of
counsel for the Company, shall be conclusively presumed to
be done, or omitted to be done, by the Executive in good
faith and in the best interests of the Company.
2. Employment Term. The initial term of employment
under this Agreement shall be for a period of three years
commencing on the Effective Date. This Agreement shall be
extended automatically for one additional year on each
annual anniversary date of the Effective Date unless either
the Company, through the Board, or the Executive gives
contrary written notice (the "Non-Renewal Notice") to the
other not less than three months in advance of such
anniversary date. References herein to the term of this
Agreement shall refer both to such initial term and such
successive terms.
3. Employment. During the term of employment
provided for in this Agreement, the Company agrees to employ
the Executive in the office or position set forth in the
second Recital of this Agreement, and the Executive agrees
to serve in such office or position and to perform the
duties and discharge the responsibilities associated
therewith or such other duties and responsibilities as may
reasonably be assigned to the Executive from time to time by
the Board. The Executive shall devote all his working time
and efforts to the business and affairs of the Company and
its subsidiaries, provided, however, that the Executive may,
with the approval of the Board, serve as a director or
officer of any non-competing business or engage in any other
activity, including without limitation charitable or
community activity, to the extent that it does not inhibit
the performance of his duties hereunder.
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<PAGE> 6
4. Office and Services. In connection with the
Executive's employment hereunder, the Executive shall be
based at the Designated Office, except for required travel
on the Company's business. The Company shall furnish the
Executive with office space, stenographic assistance, and
such other facilities and services as shall be suitable to
the Executive's position and adequate for the performance of
his duties hereunder.
5. Compensation. The regular compensation and
benefits payable to the Executive under this Agreement shall
include the following:
(a) Salary. The Company shall pay the Executive
a base annual salary hereunder of not less than $294,000,
payable in equal semimonthly installments or at such other
intervals as shall be agreed upon by the parties. The
Executive's base annual salary may be increased from time to
time as determined by the Board and, if so increased, such
base annual salary shall not thereafter during the
Executive's employment under this Agreement be decreased and
the obligation of the Company hereunder to pay the
Executive's base annual salary shall thereafter relate to
such increased base annual salary.
(b) No Separate Board Compensation. The
Executive shall not be entitled to receive any fees or
additional payments for serving as a member of the Board, as
a member of any committee of the Board, or as a member of
any board of directors (or the equivalent thereof) or any
committee thereof of any subsidiary of the Company.
(c) Discretionary Bonuses. During the term of
this Agreement, the Executive shall be eligible to
participate in an equitable manner with other executive
employees of the Company and its subsidiaries in any Company
Bonus Plan or in other discretionary bonuses authorized and
declared by the Board, and the board of directors (or the
equivalent thereof) of the Company's subsidiaries, or by
their respective delegees.
(d) Participation in Benefit Plans. In addition
to any compensation and benefits provided for in this
Agreement, the Executive shall be eligible to participate in
any Company Benefit Plan or any other employee fringe
benefits offered by the Company or its subsidiaries for the
benefit of executive employees or all employees generally in
which the Executive is eligible to participate. The
Executive's participation in any such Company Benefit Plan
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<PAGE> 7
shall be subject to all generally applicable eligibility
requirements thereof and shall not in any way limit or
reduce the obligation of the Company to pay the Executive's
base annual salary hereunder (except pursuant to, in
accordance with, or as required by the generally applicable
terms of participation of any such Company Benefit Plan).
(e) Vacation. The Executive shall be entitled to
a minimum annual paid vacation during the term of this
Agreement of four weeks per year or such longer period as
the Board may approve.
(f) Reimbursement of Business Expenses. The
Company shall promptly reimburse the Executive for all
reasonable travel and other business expenses incurred by
him in the performance of his duties and responsibilities,
subject to such reasonable requirements with respect to
substantiation and documentation as may be specified by the
Company.
6. Termination Procedures.
(a) Termination Notice. If the Executive's
employment by the Company is terminated for any reason
during the term of this Agreement (other than by reason of
the Executive's death or as a result of a consensual
termination as provided in Section 8(c) of this Agreement),
the terminating party shall provide the other party with
written notice (the "Termination Notice") specifying:
(i) the effective date of the termination (the "Termination
Date"), (ii) the specific provisions of this Agreement upon
which the termination is based and that are applicable to
the termination, and (iii) a reasonably detailed discussion
of the facts and circumstances providing the basis for the
termination under the specified provisions of this
Agreement.
(b) Termination Date. If the Executive's
employment is terminated by the Executive, the Termination
Date shall not be less than two weeks after the date the
Termination Notice is tendered to the Company. If the
Executive's employment is terminated by the Company, the
Termination Date shall not be less than 30 days after the
date the Termination Notice is tendered to the Executive.
Termination of the Executive's employment shall occur on the
Termination Date even if there is a dispute between the
parties relating to the provisions of this Agreement
applicable to such termination (a "Termination Dispute").
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<PAGE> 8
(c) Termination Dispute. If, prior to the
Termination Date, the party receiving the Termination Notice
provides written notice to the other party of the existence
of a Termination Dispute (which notice shall provide a
reasonably detailed discussion of the nature of the dispute,
including the specific provisions of this Agreement that the
disputing party believes are applicable to the termination),
the Termination Dispute shall be resolved by: (i) mutual
written agreement of the parties hereto or (ii) a final
judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no
appeal has been perfected). The parties hereto shall pursue
the resolution of any Termination Dispute with reasonable
diligence.
(d) Termination Payments. If there is no
Termination Dispute, any amount owed by the Company to the
Executive as a result of the termination of the Executive's
employment under this Agreement shall be payable in
immediately available funds on the Termination Date. If
there is a Termination Dispute, any amount owed by the
Company to the Executive as a result of the termination of
the Executive's employment under this Agreement that is not
in dispute shall be paid on the Termination Date, and all
other amounts shall be paid within five business days of the
resolution of the Termination Dispute as provided for in
Section 6(c) of this Agreement, together with Applicable
Interest.
(e) Notwithstanding any other provision of this
Agreement to the contrary, the Executive's employment under
this Agreement may be terminated by the Company for reasons
other than Cause only with the affirmative vote of at least
two-thirds of the entire Board.
7. Termination Due to a Triggering Event.
(a) If, during the term of this Agreement, the
Executive's employment by the Company is terminated (whether
by the Company or by the Executive) upon the occurrence of
or within 12 months after a Triggering Event, (i) the
Company shall make a lump sum cash payment to the Executive
in an amount equal to 299% of the Executive's base annual
salary at the time the Triggering Event occurs plus the
amount of any discretionary bonuses paid by the Company to
the Executive within the 12 months immediately preceding the
occurrence of the Triggering Event, (ii) the Company shall
continue to provide to the Executive for a three-year period
the Executive's then-existing coverage under the Company's
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<PAGE> 9
health, dental and life insurance plans or, if continued
coverage under such plans cannot be provided, substantially
equivalent coverage under alternative arrangements, and
(iii) any restrictions remaining on any restricted shares
issued to the Executive under the Company's restricted stock
plans shall immediately lapse, any performance shares issued
to the Executive under the Company's incentive stock plans
shall immediately vest, any stock options and stock
appreciation rights granted to the Executive shall become
immediately exercisable, and the Executive may exercise any
such option or stock appreciation right until the later of
the expiration of its original term or one year after the
effective date of the Executive's termination, provided that
this Section 7(a)(iii) shall be inoperative to the extent
that its operation would preclude the application of the
pooling of interests accounting method to a business
combination in which the Company intends to use such method
(subject to the foregoing proviso, in the event of any
conflict between the terms of this Section 7(a)(iii) and the
terms of any applicable stock or incentive plan or
implementing agreement between the Company and the
Executive, the terms of this Section 7(a)(iii) shall govern
unless prohibited by any applicable law in which case the
Company shall take all reasonable steps to ensure that the
Executive receives all the economic and financial benefits
intended to be conferred by this Section 7(a)(iii)).
(b) In the event that the Executive becomes
entitled to receive any benefit or payment in connection
with a Triggering Event or the Company's termination of the
Executive's employment, whether pursuant to the terms of
this Agreement or otherwise (collectively, the "Total
Benefits"), and any of the Total Benefits will be subject to
any excise tax (the "Excise Tax") imposed under Section 4999
of the Code, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive from the Gross-Up Payment,
after deduction of any federal, state and local income
taxes, Excise Tax, and FICA and Medicare withholding taxes
on the Gross-Up Payment, shall be equal to the Excise Tax on
the Total Benefits. For purposes of determining the amount
of such Excise Tax on the Total Benefits, the amount of the
Total Benefits that shall be treated as subject to the
Excise Tax shall be equal to (i) the Total Benefits, minus
(ii) the amount of such Total Benefits that, in the opinion
of tax counsel selected by the Company and reasonably
acceptable to the Executive ("Tax Counsel"), are not excess
parachute payments (within the meaning of Section 280G(b)(1)
of the Code).
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<PAGE> 10
(c) For purposes of Section 7(b), the Executive
shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar
year in which the Excise Tax is payable and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the
effective date of his termination, net of the reduction in
federal income taxes which could be obtained from deduction
of such state and local taxes (calculated by assuming that
any reduction under Section 68 of the Code in the amount of
itemized deductions allowable to the Executive applies first
to reduce the amount of such state and local income taxes
that would otherwise be deductible by the Executive).
Except as otherwise provided herein, all determinations
required to be made under this Section 7 shall be made by
Tax Counsel, which determinations shall be conclusive and
binding on the Executive and the Company absent manifest
error.
(d) In the event that the Excise Tax on the Total
Benefits is subsequently determined to be less than the
amount taken into account hereunder at the time of
termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of
such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax, federal, state and local
income taxes and FICA and Medicare withholding taxes imposed
on the Gross-Up Payment being repaid by the Executive to the
extent that such repayment results in a reduction in any
such taxes and/or a federal, state or local income tax
deduction) plus Applicable Interest. In the event that the
Excise Tax on the Total Benefits is finally determined to
exceed the amount taken into account hereunder at the time
of the termination of the Executive's employment (including
by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment, which
shall be calculated by Tax Counsel in the same manner and
using the same assumptions as set forth in Sections 7(b) and
7(c), to the Executive in respect of such excess (plus any
interest, penalties or additions payable by the Executive to
the Internal Revenue Service or any other federal, state,
local or foreign taxing authority with respect to such
excess or with respect to the additional Gross-Up Payment)
at the time that the amount of such excess is finally
determined.
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<PAGE> 11
(e) Following the occurrence of a Triggering
Event, if the Company or the Executive brings any action,
suit or proceeding for the enforcement, performance or
construction of this Agreement, the Company agrees to
reimburse the Executive for all reasonable costs and
expenses incurred by him in such action, suit or proceeding,
including reasonable attorneys' and accountants' fees and
expenses.
8. Other Termination. Notwithstanding any other
provision of this Agreement, the Executive's employment
hereunder shall terminate under the following circumstances
with the following consequences:
(a) Termination By Company for Cause. The
Company may terminate the Executive's employment under this
Agreement for Cause. The termination of the Executive's
employment under this Agreement shall not be deemed for
Cause unless and until (1) the Company, through the Board
delivers reasonable notice to the Executive that it intends
to terminate the Executive for Cause, (2) the Executive is
given an opportunity, together with counsel, to be heard
before the Board, (3) the Executive's termination is
approved by the affirmative vote of at least two-thirds of
the Board, and (4) the Company provides the Executive with a
copy of the resolutions duly adopted by the Board finding
that, in the good faith opinion of the Board, the Executive
should be terminated for Cause and specifying the
particulars thereof in detail. Upon termination for Cause,
the Executive will not be entitled to any further
compensation for any period subsequent to the effective date
of such termination, except for pay or benefits, if any, in
accordance with the then existing severance policies of the
Company and the terms of the Company Bonus Plans and Company
Benefit Plans.
(b) Termination By Company for Disability. If,
as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall not have performed his
duties hereunder on a full-time basis for six consecutive
months, the Executive's employment under this Agreement may
be terminated by the Company upon written notice. Such
termination for disability shall require the affirmative
vote of a majority of the entire Board. The Executive's
compensation during any period of disability prior to the
effective date of such termination shall be the amounts
normally payable to him in accordance with his then current
base annual salary, reduced by the sum of the amounts, if
any, paid to the Executive under disability benefit plans
maintained by the Company or its subsidiaries. The
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<PAGE> 12
Executive shall not be entitled to any further compensation
from the Company or its subsidiaries for any period
subsequent to the effective date of such termination, except
for pay or benefits, if any, in accordance with then
existing severance policies of the Company or its
subsidiaries and the terms of the Company Bonus Plans and
Company Benefit Plans.
(c) Consensual Termination. The parties hereto
may agree at any time to terminate both this Agreement and
the Executive's employment hereunder upon such terms and
conditions as the parties may mutually agree.
(d) Termination By Reason of Death. In the event
of the death of the Executive during the term of his
employment hereunder, the Company shall pay to the
Executive's spouse, or if the Executive leaves no spouse, to
the estate of the Executive, a lump sum cash payment in an
amount equal to 100% of the Executive's base annual salary
as of the date of death, and upon payment of such amount and
any other amounts due and owing hereunder and unpaid as of
the date of death, this Agreement shall thereupon terminate
and no further amounts shall be payable hereunder; provided,
however, that nothing hereunder shall impair the Executive's
rights, if any, to pay or benefits under the Company Bonus
Plans and the Company Benefit Plans.
(e) Termination By Executive. If the Executive
terminates his employment with the Company for any reason
other than the occurrence of a Triggering Event as provided
for in Section 7 hereof or a consensual termination as
provided for in Section 8(c) hereof, the Executive will not
be entitled to any further compensation for any period
subsequent to the effective date of such termination, except
for pay or benefits, if any, in accordance with the then
existing severance policies of the Company and the Company
Bonus Plans and the Company Benefit Plans.
9. Supervisory Suspension. In the event the
Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the affairs
of the Company or any of its subsidiary banks by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. 1818(e)(3) or 1818(g)(1),
the Company's obligations under this Agreement shall be
suspended effective as of the service date of the notice of
suspension or temporary prohibition, unless stayed by
appropriate proceedings. If the charges in the notice are
dismissed, the Company shall (a) pay the Executive all
compensation withheld while its obligations under this
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Agreement were suspended, together with Applicable Interest
and (b) reinstate all obligations under this Agreement that
were suspended.
10. Confidential Information. During the Executive's
employment with the Company and thereafter, the Executive
shall not disclose or use in any way any confidential
business or technical information or any trade secret
acquired in the course of such employment, other than
(i) information that is generally known in the Company's
industry or acquired from public sources, (ii) as required
in the course of such employment, (iii) as required by any
court, supervisory authority, administrative agency or
applicable law, or (iv) with the prior written consent of
the Company. This Section 10 shall survive termination of
this Agreement.
11. No-Raid. The Executive agrees that, in the event
the Executive's employment with the Company is terminated
for any reason whatsoever and as a result of such
termination the Executive is entitled to receive
compensation, benefits or payments hereunder or under the
Company's then existing severance policies that, in the
aggregate, equal or exceed 100% of the Executive's base
annual salary at the time of termination plus the amount of
any discretionary bonuses paid by the Company to the
Executive within the 12 months immediately preceding the
termination, the Executive shall not, for a period of one
year (or such lesser period as may be determined by the
Board and disclosed to the Executive in writing) after the
effective date of the Executive's termination, solicit,
actively interfere with the Company's or any Company
affiliate's relationship with, or attempt to divert or
entice away, any officer of the Company or its affiliates.
12. Payment Obligation Absolute. The obligation of
the Company to pay the Executive the compensation, benefits
or payments provided herein during the term hereof shall be
absolute and unconditional and shall not be affected by any
circumstances, including without limitation any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive. 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 whosoever may be entitled thereto, for any reason
whatsoever except as provided in Section 7(d) hereof. The
Executive shall not be obligated to seek other employment in
mitigation of the amounts payable under any provision of
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<PAGE> 14
this Agreement and the obtaining of any such other
employment shall in no event limit or reduce the obligations
of the Company to make the payments required to be made
under this Agreement.
13. No Right to Continued Employment. Nothing in this
Agreement shall be deemed to give the Executive the right to
be retained in the employ of the Company, or to interfere
with the right of the Company to discharge the Executive at
any time, subject in all cases to the terms of this
Agreement.
14. Withholding. Any payments provided for hereunder
shall be paid net of any applicable withholding required
under federal, state or local law and any additional
withholding to which the Executive has agreed.
15. Successors and Assigns. This Agreement is a
personal services contract which may not be assigned by the
Company, or assumed from the Company by, any other party
without the prior written consent of the Executive. Subject
to the foregoing limitation, all rights hereunder shall
inure to the benefit of the parties hereto, their personal
or legal representatives, heirs, successors and assigns.
The Company will require any successor (whether direct or
indirect, by purchase, assignment, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company expressly to assume this
Agreement and to agree to perform hereunder in the same
manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
References herein to the Company will be understood to refer
to the successor or successors of the Company, respectively.
16. Notices. Any notice required or desired to be
given hereunder shall be in writing and shall be deemed
given when delivered personally or sent by certified or
registered mail, postage prepaid, to the address of the
other party set forth in the first paragraph of this
Agreement, provided that any notice to the Company shall be
directed to the Chairman of the Board, unless the notice is
by such person in which case the notice shall be directed to
both the Secretary of the Company and the most senior
ranking Vice President of the Company.
17. Waiver of Breach. Waiver by any party of a breach
of any provision shall not operate as or be construed a
waiver by such party of any subsequent breach hereof.
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<PAGE> 15
18. Entire Agreement. This agreement contains the
entire agreement among the parties concerning the employment
of the Executive by the Company, and supersedes any
employment or change in control agreements between the
Executive and the Company or any of its predecessors,
subsidiaries or predecessors of subsidiaries.
19. Written Modification, Amendment or Waiver. No
modification, amendment or waiver of any provision hereof
shall be effective unless in writing specifically referring
hereto and signed by the party against whom such provision
as modified or amended or such waiver is sought to be
enforced.
20. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts
have been signed by each party hereto and delivered to the
other party, it being understood that all parties need not
sign the same counterpart.
21. Governing Law. This Agreement is governed by and
is to be construed and enforced in accordance with the laws
of the State of New Hampshire applicable to contracts made
and to be performed entirely therein.
22. Consent to Jurisdiction. Each party hereto
irrevocably consents to the exclusive jurisdiction of the
courts of the State of New Hampshire and the federal courts
situated in the State of New Hampshire in connection with
any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default under
this Agreement, to enforce any decision or award of any
arbitrators, or otherwise arising under or by reason of this
Agreement.
23. Construction.
(a) The section headings of this Agreement have
been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement.
(b) All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender,
shall include all other genders where the context so
requires.
(c) The singular shall include the plural, and
vice versa, where the context so requires.
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<PAGE> 16
(d) All references to sections of, or regulations
promulgated under, the Exchange Act, the Code or other
statutes shall be deemed also to refer to such sections or
regulations as amended from time to time and to any
successor provisions to such sections or regulations. All
references to employee benefit plans of the Company shall be
deemed also to refer to such plans as amended from time to
time and to any successor plans thereto.
24. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
affecting the validity or enforceability of any other term
or provision hereof in that or any other jurisdiction. If
any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted so as to
be enforceable.
25. Authorization. The Company represents and
warrants that the execution of this Agreement has been duly
authorized by resolution of the Board.
IN WITNESS WHEREOF, the parties have executed or caused
to be executed this Agreement as of the date first above
written.
CFX CORPORATION
By:
----------------------------------
Name: Eugene E. Gaffey
Title: Chairman of the Board
--------------------------------
Peter J. Baxter
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<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made as
of the 11th day of August, 1997 (the "Effective Date"), is
by and between CFX Corporation (the "Company"), a
New Hampshire corporation with principal executive offices
at 102 Main Street, Keene, New Hampshire 03431, and
Mark A. Gavin, residing at 11 Morgan Lane, Keene,
New Hampshire 03431 (the "Executive").
RECITALS
WHEREAS, the Company, through its Board of Directors
(the "Board"), considers the maintenance of competent and
experienced executive officers to be essential to its
long-term success;
WHEREAS, in this regard, the Company has determined
that it is in its best interests that the Executive continue
to serve as Executive Vice President and Chief Operating
Officer of the Company, pursuant to a written employment
agreement;
NOW, THEREFORE, in furtherance of the interests
described above and in consideration of the respective
covenants and agreements herein contained, the parties
hereto agree as follows:
1. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
(a) "Applicable Interest" means interest at the
rate provided in Section 1274(b)(2)(B) of the Code.
(b) "Cause" means the occurrence of any of the
following:
(i) the willful and continued failure of the
Executive to substantially perform the Executive's duties
with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to
the Executive by the President which specifically identifies
the manner in which the President believes that the
Executive has not substantially performed the Executive's
duties;
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<PAGE> 2
(ii) the willful engaging by the Executive
in illegal conduct (excluding traffic violations, minor
misdemeanors or similar offenses) or gross misconduct that,
in the Board's reasonable opinion, may reflect adversely on
the business or reputation of the Company;
(iii) the removal and/or permanent
prohibition of the Executive from participation in the
conduct of the affairs of the Company or any of its
subsidiary banks by an order issued under Section 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or 1818(g)(1);
(iv) the issuance by any court having
appropriate jurisdiction of an order under Section 21(d)(2)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), 15 U.S.C. 78u(d)(2), prohibiting the
Executive from acting as an officer or director of the
Company; or
(v) the conviction of the Executive for
commission of a felony.
(c) "Change in Control" means the occurrence of
any of the following events:
(i) there shall be consummated any
consolidation, merger, stock-for-stock exchange or similar
transaction (collectively, "Merger Transactions") involving
securities of the Company in which the holders of voting
securities of the Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of the Company (or, if the
Company does not survive the Merger Transaction, voting
securities of the corporation surviving such transaction)
having less than 50% of the total voting power in an
election of directors of the Company (or such other
surviving corporation), excluding securities received by any
members of such group which represent disproportionate
percentage increases in their shareholdings vis-a-vis the
other members of such group;
(ii) any individual, corporation (other than
the Company), partnership, trust, association, pool,
syndicate, or any other entity or any group or persons
acting in concert (other than an employee benefit plan of
the Company or one of its affiliates) becomes the beneficial
owner (as that concept is defined in Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Exchange
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<PAGE> 3
Act) as a result of any one or more securities transactions,
including gifts and stock repurchases but excluding any
Merger Transactions, of securities of the Company possessing
one-third or more of the voting power for the election of
directors of the Company;
(iii) during any period of twenty-four
consecutive months, individuals who at the beginning of such
period constituted the Board (including for this purpose any
new director whose election or nomination for election by
the Company's shareholders was approved by a vote of at
least a majority of the directors then still in office who
were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board
(excluding any Board seat that is vacant or otherwise
unoccupied); or
(iv) there shall be consummated any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions, excluding any Merger
Transactions), of all, or substantially all, of the assets
of the Company to a party which is not controlled by or
under common control with the Company.
(d) "Code" means the Internal Revenue Code of
1986, as amended.
(e) "Company Bonus Plan" means any bonus, stock
option, profit-sharing or other cash- or equity-based
incentive plan offered by the Company.
(f) "Company Benefit Plan" means any pension
(including without limitation tax-qualified), thrift,
deferred compensation, stock purchase, life insurance,
medical, dental, education, accident, disability, welfare,
retirement or other employee benefit plan offered by the
Company other than a Company Bonus Plan.
(g) "Designated Office" means 102 Main Street,
Keene, New Hampshire 03431, or such other office of the
Company designated by the President from time to time other
than in anticipation of, or following a Change in Control.
(h) "President" means the President of the
Company.
(i) "Triggering Event" means the occurrence of
any of the following events:
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<PAGE> 4
(i) the termination by the Company of the
employment of the Executive for any reason other than Cause;
(ii) the assignment to the Executive without
his consent of any duties inconsistent in any material
respect with the Executive's position (including status,
offices, titles and reporting requirements), authority,
duties or responsibilities, or any other action by the
Company which results in a diminution in any material
respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith
that is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) in anticipation of, or following a
Change in Control, the requirement by the Company that the
Executive be based at any office or location that is more
than 75 miles from the Designated Office;
(iv) after the Effective Date, the failure
of the Company without the Executive's consent to:
(A) continue in effect any Company
Bonus Plan in which the Executive participates that is
material to the Executive's total compensation, unless a
substantially equivalent arrangement, embodied in an ongoing
substitute or alternative plan, has been made with respect
to such Company Bonus Plan;
(B) continue the Executive's
participation in any Company Bonus Plan and eligibility for
bonuses thereunder, or in any substitute or alternative
plan, on a basis at least as favorable as that existing at
the date hereof, both in terms of the amount of benefits
provided and the level of the Executive's participation
relative to other participants; or
(C) continue to provide the Executive
with benefits comparable to those received by the Executive
under any Company Benefit Plan in which the Executive was
participating, at participation costs substantially similar
to those paid by the Executive;
provided, however, that it shall not be deemed a Triggering
Event if the Board, for bona fide business purposes and not
in anticipation of or following a Change in Control,
modifies the terms or conditions of any Company Bonus Plan
or Company Benefit Plan, so long as such modifications have
or would have a substantially similar effect upon all
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<PAGE> 5
executive employees or all employees of the Company who
participate or who are eligible to participate in the plan.
(v) the Company issues a Non-Renewal Notice
to the Executive as provided in Section 2 of this Agreement;
(vi) the Company shall have materially
breached any provision of this Agreement and such breach
shall not have been cured within 15 days after delivery of
written notice thereof to the President by the Executive,
identifying the breach with reasonable particularity; or
(vii) a reduction by the Company in the
Executive's base annual salary as in effect on the date
hereof, as the same may be increased from time to time as
provided for in this Agreement.
(j) "Willful" means that an action, conduct or
deed is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company.
Any act, or failure to act, based upon the instructions or
prior approval of the Board or the President or based upon
the advice of counsel for the Company, shall be conclusively
presumed to be done, or omitted to be done, by the Executive
in good faith and in the best interests of the Company.
2. Employment Term. The initial term of employment
under this Agreement shall be for a period of three years
commencing on the Effective Date. This Agreement shall be
extended automatically for one additional year on each
annual anniversary date of the Effective Date unless either
the Company, through the President, or the Executive gives
contrary written notice (the "Non-Renewal Notice") to the
other not less than three months in advance of such
anniversary date. References herein to the term of this
Agreement shall refer both to such initial term and such
successive terms.
3. Employment. During the term of employment
provided for in this Agreement, the Company agrees to employ
the Executive in the office or position set forth in the
second Recital of this Agreement, and the Executive agrees
to serve in such office or position and to perform the
duties and discharge the responsibilities associated
therewith or such other duties and responsibilities as may
reasonably be assigned to the Executive from time to time by
the President. The Executive shall devote all his working
time and efforts to the business and affairs of the Company
and its subsidiaries, provided, however, that the Executive
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<PAGE> 6
may, with the approval of the President, serve as a director
or officer of any non-competing business or engage in any
other activity, including without limitation charitable or
community activity, to the extent that it does not inhibit
the performance of his duties hereunder.
4. Office and Services. In connection with the
Executive's employment hereunder, the Executive shall be
based at the Designated Office, except for required travel
on the Company's business. The Company shall furnish the
Executive with office space, stenographic assistance, and
such other facilities and services as shall be suitable to
the Executive's position and adequate for the performance of
his duties hereunder.
5. Compensation. The regular compensation and
benefits payable to the Executive under this Agreement shall
include the following:
(a) Salary. The Company shall pay the Executive
a base annual salary hereunder of not less than $160,000,
payable in equal semimonthly installments or at such other
intervals as shall be agreed upon by the parties. The
Executive's base annual salary may be increased from time to
time as determined by the President and, if so increased,
such base annual salary shall not thereafter during the
Executive's employment under this Agreement be decreased and
the obligation of the Company hereunder to pay the
Executive's base annual salary shall thereafter relate to
such increased base annual salary.
(b) No Separate Board Compensation. The
Executive shall not be entitled to receive any fees or
additional payments for serving as a member of the Board, as
a member of any committee of the Board, or as a member of
any board of directors (or the equivalent thereof) or any
committee thereof of any subsidiary of the Company.
(c) Discretionary Bonuses. During the term of
this Agreement, the Executive shall be eligible to
participate in an equitable manner with other executive
employees of the Company and its subsidiaries in any Company
Bonus Plan or in other discretionary bonuses authorized and
declared by the Board, and the board of directors (or the
equivalent thereof) of the Company's subsidiaries, or by
their respective delegees.
(d) Participation in Benefit Plans. In addition
to any compensation and benefits provided for in this
Agreement, the Executive shall be eligible to participate in
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<PAGE> 7
any Company Benefit Plan or any other employee fringe
benefits offered by the Company or its subsidiaries for the
benefit of executive employees or all employees generally in
which the Executive is eligible to participate. The
Executive's participation in any such Company Benefit Plan
shall be subject to all generally applicable eligibility
requirements thereof and shall not in any way limit or
reduce the obligation of the Company to pay the Executive's
base annual salary hereunder (except pursuant to, in
accordance with, or as required by the generally applicable
terms of participation of any such Company Benefit Plan).
(e) Vacation. The Executive shall be entitled to
a minimum annual paid vacation during the term of this
Agreement of four weeks per year or such longer period as
the President may approve.
(f) Reimbursement of Business Expenses. The
Company shall promptly reimburse the Executive for all
reasonable travel and other business expenses incurred by
him in the performance of his duties and responsibilities,
subject to such reasonable requirements with respect to
substantiation and documentation as may be specified by the
Company.
6. Termination Procedures.
(a) Termination Notice. If the Executive's
employment by the Company is terminated for any reason
during the term of this Agreement (other than by reason of
the Executive's death or as a result of a consensual
termination as provided in Section 8(c) of this Agreement),
the terminating party shall provide the other party with
written notice (the "Termination Notice") specifying:
(i) the effective date of the termination (the "Termination
Date"), (ii) the specific provisions of this Agreement upon
which the termination is based and that are applicable to
the termination, and (iii) a reasonably detailed discussion
of the facts and circumstances providing the basis for the
termination under the specified provisions of this
Agreement.
(b) Termination Date. If the Executive's
employment is terminated by the Executive, the Termination
Date shall not be less than two weeks after the date the
Termination Notice is tendered to the Company. If the
Executive's employment is terminated by the Company, the
Termination Date shall not be less than 30 days after the
date the Termination Notice is tendered to the Executive.
Termination of the Executive's employment shall occur on the
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<PAGE> 8
Termination Date even if there is a dispute between the
parties relating to the provisions of this Agreement
applicable to such termination (a "Termination Dispute").
(c) Termination Dispute. If, prior to the
Termination Date, the party receiving the Termination Notice
provides written notice to the other party of the existence
of a Termination Dispute (which notice shall provide a
reasonably detailed discussion of the nature of the dispute,
including the specific provisions of this Agreement that the
disputing party believes are applicable to the termination),
the Termination Dispute shall be resolved by: (i) mutual
written agreement of the parties hereto or (ii) a final
judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no
appeal has been perfected). The parties hereto shall pursue
the resolution of any Termination Dispute with reasonable
diligence.
(d) Termination Payments. If there is no
Termination Dispute, any amount owed by the Company to the
Executive as a result of the termination of the Executive's
employment under this Agreement shall be payable in
immediately available funds on the Termination Date. If
there is a Termination Dispute, any amount owed by the
Company to the Executive as a result of the termination of
the Executive's employment under this Agreement that is not
in dispute shall be paid on the Termination Date, and all
other amounts shall be paid within five business days of the
resolution of the Termination Dispute as provided for in
Section 6(c) of this Agreement, together with Applicable
Interest.
7. Termination Due to a Triggering Event.
(a) If, during the term of this Agreement, the
Executive's employment by the Company is terminated (whether
by the Company or by the Executive) upon the occurrence of
or within 12 months after a Triggering Event, (i) the
Company shall make a lump sum cash payment to the Executive
in an amount equal to 299% of the Executive's base annual
salary at the time the Triggering Event occurs plus the
amount of any discretionary bonuses paid by the Company to
the Executive within the 12 months immediately preceding the
occurrence of the Triggering Event, (ii) the Company shall
continue to provide to the Executive for a three-year period
the Executive's then-existing coverage under the Company's
health, dental and life insurance plans or, if continued
coverage under such plans cannot be provided, substantially
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<PAGE> 9
equivalent coverage under alternative arrangements, and
(iii) any restrictions remaining on any restricted shares
issued to the Executive under the Company's restricted stock
plans shall immediately lapse, any performance shares issued
to the Executive under the Company's incentive stock plans
shall immediately vest, any stock options and stock
appreciation rights granted to the Executive shall become
immediately exercisable, and the Executive may exercise any
such option or stock appreciation right until the later of
the expiration of its original term or one year after the
effective date of the Executive's termination, provided that
this Section 7(a)(iii) shall be inoperative to the extent
that its operation would preclude the application of the
pooling of interests accounting method to a business
combination in which the Company intends to use such method
(subject to the foregoing proviso, in the event of any
conflict between the terms of this Section 7(a)(iii) and the
terms of any applicable stock or incentive plan or
implementing agreement between the Company and the
Executive, the terms of this Section 7(a)(iii) shall govern
unless prohibited by any applicable law in which case the
Company shall take all reasonable steps to ensure that the
Executive receives all the economic and financial benefits
intended to be conferred by this Section 7(a)(iii)).
(b) In the event that the Executive becomes
entitled to receive any benefit or payment in connection
with a Triggering Event or the Company's termination of the
Executive's employment, whether pursuant to the terms of
this Agreement or otherwise (collectively, the "Total
Benefits"), and any of the Total Benefits will be subject to
any excise tax (the "Excise Tax") imposed under Section 4999
of the Code, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive from the Gross-Up Payment,
after deduction of any federal, state and local income
taxes, Excise Tax, and FICA and Medicare withholding taxes
on the Gross-Up Payment, shall be equal to the Excise Tax on
the Total Benefits. For purposes of determining the amount
of such Excise Tax on the Total Benefits, the amount of the
Total Benefits that shall be treated as subject to the
Excise Tax shall be equal to (i) the Total Benefits, minus
(ii) the amount of such Total Benefits that, in the opinion
of tax counsel selected by the Company and reasonably
acceptable to the Executive ("Tax Counsel"), are not excess
parachute payments (within the meaning of Section 280G(b)(1)
of the Code).
(c) For purposes of Section 7(b), the Executive
shall be deemed to pay federal income taxes at the highest
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marginal rate of federal income taxation in the calendar
year in which the Excise Tax is payable and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the
effective date of his termination, net of the reduction in
federal income taxes which could be obtained from deduction
of such state and local taxes (calculated by assuming that
any reduction under Section 68 of the Code in the amount of
itemized deductions allowable to the Executive applies first
to reduce the amount of such state and local income taxes
that would otherwise be deductible by the Executive).
Except as otherwise provided herein, all determinations
required to be made under this Section 7 shall be made by
Tax Counsel, which determinations shall be conclusive and
binding on the Executive and the Company absent manifest
error.
(d) In the event that the Excise Tax on the Total
Benefits is subsequently determined to be less than the
amount taken into account hereunder at the time of
termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of
such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax, federal, state and local
income taxes and FICA and Medicare withholding taxes imposed
on the Gross-Up Payment being repaid by the Executive to the
extent that such repayment results in a reduction in any
such taxes and/or a federal, state or local income tax
deduction) plus Applicable Interest. In the event that the
Excise Tax on the Total Benefits is finally determined to
exceed the amount taken into account hereunder at the time
of the termination of the Executive's employment (including
by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment, which
shall be calculated by Tax Counsel in the same manner and
using the same assumptions as set forth in Sections 7(b) and
7(c), to the Executive in respect of such excess (plus any
interest, penalties or additions payable by the Executive to
the Internal Revenue Service or any other federal, state,
local or foreign taxing authority with respect to such
excess or with respect to the additional Gross-Up Payment)
at the time that the amount of such excess is finally
determined.
(e) Following the occurrence of a Triggering
Event, if the Company or the Executive brings any action,
suit or proceeding for the enforcement, performance or
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construction of this Agreement, the Company agrees to
reimburse the Executive for all reasonable costs and
expenses incurred by him in such action, suit or proceeding,
including reasonable attorneys' and accountants' fees and
expenses.
8. Other Termination. Notwithstanding any other
provision of this Agreement, the Executive's employment
hereunder shall terminate under the following circumstances
with the following consequences:
(a) Termination By Company for Cause. The
Company may terminate the Executive's employment under this
Agreement for Cause. The termination of the Executive's
employment under this Agreement shall not be deemed for
Cause unless and until (1) the Company, through the
President, delivers reasonable notice to the Executive that
it intends to terminate the Executive for Cause, (2) the
Executive is given an opportunity, together with counsel, to
be heard before the Board, (3) the Executive's termination
is approved by the affirmative vote of at least two-thirds
of the Board, and (4) the Company provides the Executive
with a copy of the resolutions duly adopted by the Board
finding that, in the good faith opinion of the Board, the
Executive should be terminated for Cause and specifying the
particulars thereof in detail. Upon termination for Cause,
the Executive will not be entitled to any further
compensation for any period subsequent to the effective date
of such termination, except for pay or benefits, if any, in
accordance with the then existing severance policies of the
Company and the terms of the Company Bonus Plans and Company
Benefit Plans.
(b) Termination By Company for Disability. If,
as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall not have performed his
duties hereunder on a full-time basis for six consecutive
months, the Executive's employment under this Agreement may
be terminated by the Company upon written notice. Such
termination for disability shall require the affirmative
vote of a majority of the entire Board. The Executive's
compensation during any period of disability prior to the
effective date of such termination shall be the amounts
normally payable to him in accordance with his then current
base annual salary, reduced by the sum of the amounts, if
any, paid to the Executive under disability benefit plans
maintained by the Company or its subsidiaries. The
Executive shall not be entitled to any further compensation
from the Company or its subsidiaries for any period
subsequent to the effective date of such termination, except
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for pay or benefits, if any, in accordance with then
existing severance policies of the Company or its
subsidiaries and the terms of the Company Bonus Plans and
Company Benefit Plans.
(c) Consensual Termination. The parties hereto
may agree at any time to terminate both this Agreement and
the Executive's employment hereunder upon such terms and
conditions as the parties may mutually agree.
(d) Termination By Reason of Death. In the event
of the death of the Executive during the term of his
employment hereunder, the Company shall pay to the
Executive's spouse, or if the Executive leaves no spouse, to
the estate of the Executive, a lump sum cash payment in an
amount equal to 100% of the Executive's base annual salary
as of the date of death, and upon payment of such amount and
any other amounts due and owing hereunder and unpaid as of
the date of death, this Agreement shall thereupon terminate
and no further amounts shall be payable hereunder; provided,
however, that nothing hereunder shall impair the Executive's
rights, if any, to pay or benefits under the Company Bonus
Plans and the Company Benefit Plans.
(e) Termination By Executive. If the Executive
terminates his employment with the Company for any reason
other than the occurrence of a Triggering Event as provided
for in Section 7 hereof or a consensual termination as
provided for in Section 8(c) hereof, the Executive will not
be entitled to any further compensation for any period
subsequent to the effective date of such termination, except
for pay or benefits, if any, in accordance with the then
existing severance policies of the Company and the Company
Bonus Plans and the Company Benefit Plans.
9. Supervisory Suspension. In the event the
Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the affairs
of the Company or any of its subsidiary banks by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. 1818(e)(3) or 1818(g)(1),
the Company's obligations under this Agreement shall be
suspended effective as of the service date of the notice of
suspension or temporary prohibition, unless stayed by
appropriate proceedings. If the charges in the notice are
dismissed, the Company shall (a) pay the Executive all
compensation withheld while its obligations under this
Agreement were suspended, together with Applicable Interest
and (b) reinstate all obligations under this Agreement that
were suspended.
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10. Confidential Information. During the Executive's
employment with the Company and thereafter, the Executive
shall not disclose or use in any way any confidential
business or technical information or any trade secret
acquired in the course of such employment, other than
(i) information that is generally known in the Company's
industry or acquired from public sources, (ii) as required
in the course of such employment, (iii) as required by any
court, supervisory authority, administrative agency or
applicable law, or (iv) with the prior written consent of
the Company. This Section 10 shall survive termination of
this Agreement.
11. No-Raid. The Executive agrees that, in the event
the Executive's employment with the Company is terminated
for any reason whatsoever and as a result of such
termination the Executive is entitled to receive
compensation, benefits or payments hereunder or under the
Company's then existing severance policies that, in the
aggregate, equal or exceed 100% of the Executive's base
annual salary at the time of termination plus the amount of
any discretionary bonuses paid by the Company to the
Executive within the 12 months immediately preceding the
termination, the Executive shall not, for a period of one
year (or such lesser period as may be determined by the
President and disclosed to the Executive in writing) after
the effective date of the Executive's termination, solicit,
actively interfere with the Company's or any Company
affiliate's relationship with, or attempt to divert or
entice away, any officer of the Company or its affiliates.
12. Payment Obligation Absolute. The obligation of
the Company to pay the Executive the compensation, benefits
or payments provided herein during the term hereof shall be
absolute and unconditional and shall not be affected by any
circumstances, including without limitation any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive. 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 whosoever may be entitled thereto, for any reason
whatsoever except as provided in Section 7(d) hereof. The
Executive shall not be obligated to seek other employment in
mitigation of the amounts payable under any provision of
this Agreement and the obtaining of any such other
employment shall in no event limit or reduce the obligations
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<PAGE> 14
of the Company to make the payments required to be made
under this Agreement.
13. No Right to Continued Employment. Nothing in this
Agreement shall be deemed to give the Executive the right to
be retained in the employ of the Company, or to interfere
with the right of the Company to discharge the Executive at
any time, subject in all cases to the terms of this
Agreement.
14. Withholding. Any payments provided for hereunder
shall be paid net of any applicable withholding required
under federal, state or local law and any additional
withholding to which the Executive has agreed.
15. Successors and Assigns. This Agreement is a
personal services contract which may not be assigned by the
Company, or assumed from the Company by, any other party
without the prior written consent of the Executive. Subject
to the foregoing limitation, all rights hereunder shall
inure to the benefit of the parties hereto, their personal
or legal representatives, heirs, successors and assigns.
The Company will require any successor (whether direct or
indirect, by purchase, assignment, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company expressly to assume this
Agreement and to agree to perform hereunder in the same
manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
References herein to the Company will be understood to refer
to the successor or successors of the Company, respectively.
16. Notices. Any notice required or desired to be
given hereunder shall be in writing and shall be deemed
given when delivered personally or sent by certified or
registered mail, postage prepaid, to the address of the
other party set forth in the first paragraph of this
Agreement, provided that any notice to the Company shall be
directed to the President, unless the notice is by such
person in which case the notice shall be directed to both
the Secretary of the Company and the most senior ranking
Vice President of the Company.
17. Waiver of Breach. Waiver by any party of a breach
of any provision shall not operate as or be construed a
waiver by such party of any subsequent breach hereof.
18. Entire Agreement. This agreement contains the
entire agreement among the parties concerning the employment
of the Executive by the Company, and supersedes any
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<PAGE> 15
employment or change in control agreements between the
Executive and the Company or any of its predecessors,
subsidiaries or predecessors of subsidiaries.
19. Written Modification, Amendment or Waiver. No
modification, amendment or waiver of any provision hereof
shall be effective unless in writing specifically referring
hereto and signed by the party against whom such provision
as modified or amended or such waiver is sought to be
enforced.
20. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts
have been signed by each party hereto and delivered to the
other party, it being understood that all parties need not
sign the same counterpart.
21. Governing Law. This Agreement is governed by and
is to be construed and enforced in accordance with the laws
of the State of New Hampshire applicable to contracts made
and to be performed entirely therein.
22. Consent to Jurisdiction. Each party hereto
irrevocably consents to the exclusive jurisdiction of the
courts of the State of New Hampshire and the federal courts
situated in the State of New Hampshire in connection with
any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default under
this Agreement, to enforce any decision or award of any
arbitrators, or otherwise arising under or by reason of this
Agreement.
23. Construction.
(a) The section headings of this Agreement have
been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement.
(b) All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender,
shall include all other genders where the context so
requires.
(c) The singular shall include the plural, and
vice versa, where the context so requires.
(d) All references to sections of, or regulations
promulgated under, the Exchange Act, the Code or other
statutes shall be deemed also to refer to such sections or
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regulations as amended from time to time and to any
successor provisions to such sections or regulations. All
references to employee benefit plans of the Company shall be
deemed also to refer to such plans as amended from time to
time and to any successor plans thereto.
24. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
affecting the validity or enforceability of any other term
or provision hereof in that or any other jurisdiction. If
any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted so as to
be enforceable.
25. Authorization. The Company represents and
warrants that the execution of this Agreement has been duly
authorized by resolution of the Board.
IN WITNESS WHEREOF, the parties have executed or caused
to be executed this Agreement as of the date first above
written.
CFX CORPORATION
By:
----------------------------------
Name: Peter J. Baxter
Title: President
-------------------------------
Mark A. Gavin
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<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made as
of the 14th day of August, 1997 (the "Effective Date"), is
by and between CFX Corporation (the "Company"), a
New Hampshire corporation with principal executive offices
at 102 Main Street, Keene, New Hampshire 03431, and
Christopher W. Bramley, residing at 199 West Main Street,
Westborough, Massachusetts 01581 (the "Executive").
RECITALS
WHEREAS, the Company, through its Board of Directors
(the "Board"), considers the maintenance of competent and
experienced executive officers to be essential to its
long-term success;
WHEREAS, in this regard, the Company has determined
that it is in its best interests that the Executive continue
to serve as Executive Vice President of the Company,
pursuant to a written employment agreement;
NOW, THEREFORE, in furtherance of the interests
described above and in consideration of the respective
covenants and agreements herein contained, the parties
hereto agree as follows:
1. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
(a) "Applicable Interest" means interest at the
rate provided in Section 1274(b)(2)(B) of the Code.
(b) "Cause" means the occurrence of any of the
following:
(i) the willful and continued failure of the
Executive to substantially perform the Executive's duties
with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to
the Executive by the President which specifically identifies
the manner in which the President believes that the
Executive has not substantially performed the Executive's
duties;
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<PAGE> 2
(ii) the willful engaging by the Executive
in illegal conduct (excluding traffic violations, minor
misdemeanors or similar offenses) or gross misconduct that,
in the Board's reasonable opinion, may reflect adversely on
the business or reputation of the Company;
(iii) the removal and/or permanent
prohibition of the Executive from participation in the
conduct of the affairs of the Company or any of its
subsidiary banks by an order issued under Section 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or 1818(g)(1);
(iv) the issuance by any court having
appropriate jurisdiction of an order under Section 21(d)(2)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), 15 U.S.C. 78u(d)(2), prohibiting the
Executive from acting as an officer or director of the
Company; or
(v) the conviction of the Executive for
commission of a felony.
(c) "Change in Control" means the occurrence of
any of the following events:
(i) there shall be consummated any
consolidation, merger, stock-for-stock exchange or similar
transaction (collectively, "Merger Transactions") involving
securities of the Company in which the holders of voting
securities of the Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of the Company (or, if the
Company does not survive the Merger Transaction, voting
securities of the corporation surviving such transaction)
having less than 50% of the total voting power in an
election of directors of the Company (or such other
surviving corporation), excluding securities received by any
members of such group which represent disproportionate
percentage increases in their shareholdings vis-a-vis the
other members of such group;
(ii) any individual, corporation (other than
the Company), partnership, trust, association, pool,
syndicate, or any other entity or any group or persons
acting in concert (other than an employee benefit plan of
the Company or one of its affiliates) becomes the beneficial
owner (as that concept is defined in Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Exchange
Act) as a result of any one or more securities transactions,
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<PAGE> 3
including gifts and stock repurchases but excluding any
Merger Transactions, of securities of the Company possessing
one-third or more of the voting power for the election of
directors of the Company;
(iii) during any period of twenty-four
consecutive months, individuals who at the beginning of such
period constituted the Board (including for this purpose any
new director whose election or nomination for election by
the Company's shareholders was approved by a vote of at
least a majority of the directors then still in office who
were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board
(excluding any Board seat that is vacant or otherwise
unoccupied); or
(iv) there shall be consummated any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions, excluding any Merger
Transactions), of all, or substantially all, of the assets
of the Company to a party which is not controlled by or
under common control with the Company.
(d) "Code" means the Internal Revenue Code of
1986, as amended.
(e) "Company Bonus Plan" means any bonus, stock
option, profit-sharing or other cash- or equity-based
incentive plan offered by the Company.
(f) "Company Benefit Plan" means any pension
(including without limitation tax-qualified), thrift,
deferred compensation, stock purchase, life insurance,
medical, dental, education, accident, disability, welfare,
retirement or other employee benefit plan offered by the
Company other than a Company Bonus Plan.
(g) "Designated Office" means 470 Main Street,
Fitchburg, Massachusetts 01420, or such other office of the
Company designated by the President from time to time other
than in anticipation of, or following a Change in Control.
(h) "President" means the President of the
Company.
(i) "Triggering Event" means the occurrence of
any of the following events:
(i) the termination by the Company of the
employment of the Executive for any reason other than Cause;
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<PAGE> 4
(ii) the assignment to the Executive without
his consent of any duties inconsistent in any material
respect with the Executive's position (including status,
offices, titles and reporting requirements), authority,
duties or responsibilities, or any other action by the
Company which results in a diminution in any material
respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith
that is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) in anticipation of, or following a
Change in Control, the requirement by the Company that the
Executive be based at any office or location that is more
than 75 miles from the Designated Office;
(iv) after the Effective Date, the failure
of the Company without the Executive's consent to:
(A) continue in effect any Company
Bonus Plan in which the Executive participates that is
material to the Executive's total compensation, unless a
substantially equivalent arrangement, embodied in an ongoing
substitute or alternative plan, has been made with respect
to such Company Bonus Plan;
(B) continue the Executive's
participation in any Company Bonus Plan and eligibility for
bonuses thereunder, or in any substitute or alternative
plan, on a basis at least as favorable as that existing at
the date hereof, both in terms of the amount of benefits
provided and the level of the Executive's participation
relative to other participants; or
(C) continue to provide the Executive
with benefits comparable to those received by the Executive
under any Company Benefit Plan in which the Executive was
participating, at participation costs substantially similar
to those paid by the Executive;
provided, however, that it shall not be deemed a Triggering
Event if the Board, for bona fide business purposes and not
in anticipation of or following a Change in Control,
modifies the terms or conditions of any Company Bonus Plan
or Company Benefit Plan, so long as such modifications have
or would have a substantially similar effect upon all
executive employees or all employees of the Company who
participate or who are eligible to participate in the plan.
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<PAGE> 5
(v) the Company issues a Non-Renewal Notice
to the Executive as provided in Section 2 of this Agreement;
(vi) the Company shall have materially
breached any provision of this Agreement and such breach
shall not have been cured within 15 days after delivery of
written notice thereof to the President by the Executive,
identifying the breach with reasonable particularity; or
(vii) a reduction by the Company in the
Executive's base annual salary as in effect on the date
hereof, as the same may be increased from time to time as
provided for in this Agreement.
(j) "Willful" means that an action, conduct or
deed is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company.
Any act, or failure to act, based upon the instructions or
prior approval of the Board or the President or based upon
the advice of counsel for the Company, shall be conclusively
presumed to be done, or omitted to be done, by the Executive
in good faith and in the best interests of the Company.
2. Employment Term. The initial term of employment
under this Agreement shall be for a period of three years
commencing on the Effective Date. This Agreement shall be
extended automatically for one additional year on each
annual anniversary date of the Effective Date unless either
the Company, through the President, or the Executive gives
contrary written notice (the "Non-Renewal Notice") to the
other not less than three months in advance of such
anniversary date. References herein to the term of this
Agreement shall refer both to such initial term and such
successive terms.
3. Employment. During the term of employment
provided for in this Agreement, the Company agrees to employ
the Executive in the office or position set forth in the
second Recital of this Agreement, and the Executive agrees
to serve in such office or position and to perform the
duties and discharge the responsibilities associated
therewith or such other duties and responsibilities as may
reasonably be assigned to the Executive from time to time by
the President. The Executive shall devote all his working
time and efforts to the business and affairs of the Company
and its subsidiaries, provided, however, that the Executive
may, with the approval of the President, serve as a director
or officer of any non-competing business or engage in any
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<PAGE> 6
other activity, including without limitation charitable or
community activity, to the extent that it does not inhibit
the performance of his duties hereunder.
4. Office and Services. In connection with the
Executive's employment hereunder, the Executive shall be
based at the Designated Office, except for required travel
on the Company's business. The Company shall furnish the
Executive with office space, stenographic assistance, and
such other facilities and services as shall be suitable to
the Executive's position and adequate for the performance of
his duties hereunder.
5. Compensation. The regular compensation and
benefits payable to the Executive under this Agreement shall
include the following:
(a) Salary. The Company shall pay the Executive
a base annual salary hereunder of not less than $230,464,
payable in equal semimonthly installments or at such other
intervals as shall be agreed upon by the parties. The
Executive's base annual salary may be increased from time to
time as determined by the President and, if so increased,
such base annual salary shall not thereafter during the
Executive's employment under this Agreement be decreased and
the obligation of the Company hereunder to pay the
Executive's base annual salary shall thereafter relate to
such increased base annual salary.
(b) No Separate Board Compensation. The
Executive shall not be entitled to receive any fees or
additional payments for serving as a member of the Board, as
a member of any committee of the Board, or as a member of
any board of directors (or the equivalent thereof) or any
committee thereof of any subsidiary of the Company.
(c) Discretionary Bonuses. During the term of
this Agreement, the Executive shall be eligible to
participate in an equitable manner with other executive
employees of the Company and its subsidiaries in any Company
Bonus Plan or in other discretionary bonuses authorized and
declared by the Board, and the board of directors (or the
equivalent thereof) of the Company's subsidiaries, or by
their respective delegees.
(d) Participation in Benefit Plans. In addition
to any compensation and benefits provided for in this
Agreement, the Executive shall be eligible to participate in
any Company Benefit Plan or any other employee fringe
benefits offered by the Company or its subsidiaries for the
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<PAGE> 7
benefit of executive employees or all employees generally in
which the Executive is eligible to participate. The
Executive's participation in any such Company Benefit Plan
shall be subject to all generally applicable eligibility
requirements thereof and shall not in any way limit or
reduce the obligation of the Company to pay the Executive's
base annual salary hereunder (except pursuant to, in
accordance with, or as required by the generally applicable
terms of participation of any such Company Benefit Plan).
(e) Vacation. The Executive shall be entitled to
a minimum annual paid vacation during the term of this
Agreement of four weeks per year or such longer period as
the President may approve.
(f) Reimbursement of Business Expenses. The
Company shall promptly reimburse the Executive for all
reasonable travel and other business expenses incurred by
him in the performance of his duties and responsibilities,
subject to such reasonable requirements with respect to
substantiation and documentation as may be specified by the
Company.
6. Termination Procedures.
(a) Termination Notice. If the Executive's
employment by the Company is terminated for any reason
during the term of this Agreement (other than by reason of
the Executive's death or as a result of a consensual
termination as provided in Section 8(c) of this Agreement),
the terminating party shall provide the other party with
written notice (the "Termination Notice") specifying:
(i) the effective date of the termination (the "Termination
Date"), (ii) the specific provisions of this Agreement upon
which the termination is based and that are applicable to
the termination, and (iii) a reasonably detailed discussion
of the facts and circumstances providing the basis for the
termination under the specified provisions of this
Agreement.
(b) Termination Date. If the Executive's
employment is terminated by the Executive, the Termination
Date shall not be less than two weeks after the date the
Termination Notice is tendered to the Company. If the
Executive's employment is terminated by the Company, the
Termination Date shall not be less than 30 days after the
date the Termination Notice is tendered to the Executive.
Termination of the Executive's employment shall occur on the
Termination Date even if there is a dispute between the
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<PAGE> 8
parties relating to the provisions of this Agreement
applicable to such termination (a "Termination Dispute").
(c) Termination Dispute. If, prior to the
Termination Date, the party receiving the Termination Notice
provides written notice to the other party of the existence
of a Termination Dispute (which notice shall provide a
reasonably detailed discussion of the nature of the dispute,
including the specific provisions of this Agreement that the
disputing party believes are applicable to the termination),
the Termination Dispute shall be resolved by: (i) mutual
written agreement of the parties hereto or (ii) a final
judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no
appeal has been perfected). The parties hereto shall pursue
the resolution of any Termination Dispute with reasonable
diligence.
(d) Termination Payments. If there is no
Termination Dispute, any amount owed by the Company to the
Executive as a result of the termination of the Executive's
employment under this Agreement shall be payable in
immediately available funds on the Termination Date. If
there is a Termination Dispute, any amount owed by the
Company to the Executive as a result of the termination of
the Executive's employment under this Agreement that is not
in dispute shall be paid on the Termination Date, and all
other amounts shall be paid within five business days of the
resolution of the Termination Dispute as provided for in
Section 6(c) of this Agreement, together with Applicable
Interest.
7. Termination Due to a Triggering Event.
(a) If, during the term of this Agreement, the
Executive's employment by the Company is terminated (whether
by the Company or by the Executive) upon the occurrence of
or within 12 months after a Triggering Event, (i) the
Company shall make a lump sum cash payment to the Executive
in an amount equal to 299% of the Executive's base annual
salary at the time the Triggering Event occurs plus the
amount of any discretionary bonuses paid by the Company to
the Executive within the 12 months immediately preceding the
occurrence of the Triggering Event, (ii) the Company shall
continue to provide to the Executive for a three-year period
the Executive's then-existing coverage under the Company's
health, dental and life insurance plans or, if continued
coverage under such plans cannot be provided, substantially
equivalent coverage under alternative arrangements, and
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<PAGE> 9
(iii) any restrictions remaining on any restricted shares
issued to the Executive under the Company's restricted stock
plans shall immediately lapse, any performance shares issued
to the Executive under the Company's incentive stock plans
shall immediately vest, any stock options and stock
appreciation rights granted to the Executive shall become
immediately exercisable, and the Executive may exercise any
such option or stock appreciation right until the later of
the expiration of its original term or one year after the
effective date of the Executive's termination, provided that
this Section 7(a)(iii) shall be inoperative to the extent
that its operation would preclude the application of the
pooling of interests accounting method to a business
combination in which the Company intends to use such method
(subject to the foregoing proviso, in the event of any
conflict between the terms of this Section 7(a)(iii) and the
terms of any applicable stock or incentive plan or
implementing agreement between the Company and the
Executive, the terms of this Section 7(a)(iii) shall govern
unless prohibited by any applicable law in which case the
Company shall take all reasonable steps to ensure that the
Executive receives all the economic and financial benefits
intended to be conferred by this Section 7(a)(iii)).
(b) In the event that the Executive becomes
entitled to receive any benefit or payment in connection
with a Triggering Event or the Company's termination of the
Executive's employment, whether pursuant to the terms of
this Agreement or otherwise (collectively, the "Total
Benefits"), and any of the Total Benefits will be subject to
any excise tax (the "Excise Tax") imposed under Section 4999
of the Code, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive from the Gross-Up Payment,
after deduction of any federal, state and local income
taxes, Excise Tax, and FICA and Medicare withholding taxes
on the Gross-Up Payment, shall be equal to the Excise Tax on
the Total Benefits. For purposes of determining the amount
of such Excise Tax on the Total Benefits, the amount of the
Total Benefits that shall be treated as subject to the
Excise Tax shall be equal to (i) the Total Benefits, minus
(ii) the amount of such Total Benefits that, in the opinion
of tax counsel selected by the Company and reasonably
acceptable to the Executive ("Tax Counsel"), are not excess
parachute payments (within the meaning of Section 280G(b)(1)
of the Code).
(c) For purposes of Section 7(b), the Executive
shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar
- 77 -
<PAGE> 10
year in which the Excise Tax is payable and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the
effective date of his termination, net of the reduction in
federal income taxes which could be obtained from deduction
of such state and local taxes (calculated by assuming that
any reduction under Section 68 of the Code in the amount of
itemized deductions allowable to the Executive applies first
to reduce the amount of such state and local income taxes
that would otherwise be deductible by the Executive).
Except as otherwise provided herein, all determinations
required to be made under this Section 7 shall be made by
Tax Counsel, which determinations shall be conclusive and
binding on the Executive and the Company absent manifest
error.
(d) In the event that the Excise Tax on the Total
Benefits is subsequently determined to be less than the
amount taken into account hereunder at the time of
termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of
such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax, federal, state and local
income taxes and FICA and Medicare withholding taxes imposed
on the Gross-Up Payment being repaid by the Executive to the
extent that such repayment results in a reduction in any
such taxes and/or a federal, state or local income tax
deduction) plus Applicable Interest. In the event that the
Excise Tax on the Total Benefits is finally determined to
exceed the amount taken into account hereunder at the time
of the termination of the Executive's employment (including
by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment, which
shall be calculated by Tax Counsel in the same manner and
using the same assumptions as set forth in Sections 7(b) and
7(c), to the Executive in respect of such excess (plus any
interest, penalties or additions payable by the Executive to
the Internal Revenue Service or any other federal, state,
local or foreign taxing authority with respect to such
excess or with respect to the additional Gross-Up Payment)
at the time that the amount of such excess is finally
determined.
(e) Following the occurrence of a Triggering
Event, if the Company or the Executive brings any action,
suit or proceeding for the enforcement, performance or
construction of this Agreement, the Company agrees to
- 78 -
<PAGE> 11
reimburse the Executive for all reasonable costs and
expenses incurred by him in such action, suit or proceeding,
including reasonable attorneys' and accountants' fees and
expenses.
8. Other Termination. Notwithstanding any other
provision of this Agreement, the Executive's employment
hereunder shall terminate under the following circumstances
with the following consequences:
(a) Termination By Company for Cause. The
Company may terminate the Executive's employment under this
Agreement for Cause. The termination of the Executive's
employment under this Agreement shall not be deemed for
Cause unless and until (1) the Company, through the
President, delivers reasonable notice to the Executive that
it intends to terminate the Executive for Cause, (2) the
Executive is given an opportunity, together with counsel, to
be heard before the Board, (3) the Executive's termination
is approved by the affirmative vote of at least two-thirds
of the Board, and (4) the Company provides the Executive
with a copy of the resolutions duly adopted by the Board
finding that, in the good faith opinion of the Board, the
Executive should be terminated for Cause and specifying the
particulars thereof in detail. Upon termination for Cause,
the Executive will not be entitled to any further
compensation for any period subsequent to the effective date
of such termination, except for pay or benefits, if any, in
accordance with the then existing severance policies of the
Company and the terms of the Company Bonus Plans and Company
Benefit Plans.
(b) Termination By Company for Disability. If,
as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall not have performed his
duties hereunder on a full-time basis for six consecutive
months, the Executive's employment under this Agreement may
be terminated by the Company upon written notice. Such
termination for disability shall require the affirmative
vote of a majority of the entire Board. The Executive's
compensation during any period of disability prior to the
effective date of such termination shall be the amounts
normally payable to him in accordance with his then current
base annual salary, reduced by the sum of the amounts, if
any, paid to the Executive under disability benefit plans
maintained by the Company or its subsidiaries. The
Executive shall not be entitled to any further compensation
from the Company or its subsidiaries for any period
subsequent to the effective date of such termination, except
for pay or benefits, if any, in accordance with then
- 79 -
<PAGE> 12
existing severance policies of the Company or its
subsidiaries and the terms of the Company Bonus Plans and
Company Benefit Plans.
(c) Consensual Termination. The parties hereto
may agree at any time to terminate both this Agreement and
the Executive's employment hereunder upon such terms and
conditions as the parties may mutually agree.
(d) Termination By Reason of Death. In the event
of the death of the Executive during the term of his
employment hereunder, the Company shall pay to the
Executive's spouse, or if the Executive leaves no spouse, to
the estate of the Executive, a lump sum cash payment in an
amount equal to 100% of the Executive's base annual salary
as of the date of death, and upon payment of such amount and
any other amounts due and owing hereunder and unpaid as of
the date of death, this Agreement shall thereupon terminate
and no further amounts shall be payable hereunder; provided,
however, that nothing hereunder shall impair the Executive's
rights, if any, to pay or benefits under the Company Bonus
Plans and the Company Benefit Plans.
(e) Termination By Executive. If the Executive
terminates his employment with the Company for any reason
other than the occurrence of a Triggering Event as provided
for in Section 7 hereof or a consensual termination as
provided for in Section 8(c) hereof, the Executive will not
be entitled to any further compensation for any period
subsequent to the effective date of such termination, except
for pay or benefits, if any, in accordance with the then
existing severance policies of the Company and the Company
Bonus Plans and the Company Benefit Plans.
9. Supervisory Suspension. In the event the
Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the affairs
of the Company or any of its subsidiary banks by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. 1818(e)(3) or 1818(g)(1),
the Company's obligations under this Agreement shall be
suspended effective as of the service date of the notice of
suspension or temporary prohibition, unless stayed by
appropriate proceedings. If the charges in the notice are
dismissed, the Company shall (a) pay the Executive all
compensation withheld while its obligations under this
Agreement were suspended, together with Applicable Interest
and (b) reinstate all obligations under this Agreement that
were suspended.
- 80 -
<PAGE> 13
10. Confidential Information. During the Executive's
employment with the Company and thereafter, the Executive
shall not disclose or use in any way any confidential
business or technical information or any trade secret
acquired in the course of such employment, other than
(i) information that is generally known in the Company's
industry or acquired from public sources, (ii) as required
in the course of such employment, (iii) as required by any
court, supervisory authority, administrative agency or
applicable law, or (iv) with the prior written consent of
the Company. This Section 10 shall survive termination of
this Agreement.
11. No-Raid. The Executive agrees that, in the event
the Executive's employment with the Company is terminated
for any reason whatsoever and as a result of such
termination the Executive is entitled to receive
compensation, benefits or payments hereunder or under the
Company's then existing severance policies that, in the
aggregate, equal or exceed 100% of the Executive's base
annual salary at the time of termination plus the amount of
any discretionary bonuses paid by the Company to the
Executive within the 12 months immediately preceding the
termination, the Executive shall not, for a period of one
year (or such lesser period as may be determined by the
President and disclosed to the Executive in writing) after
the effective date of the Executive's termination, solicit,
actively interfere with the Company's or any Company
affiliate's relationship with, or attempt to divert or
entice away, any officer of the Company or its affiliates.
12. Payment Obligation Absolute. The obligation of
the Company to pay the Executive the compensation, benefits
or payments provided herein during the term hereof shall be
absolute and unconditional and shall not be affected by any
circumstances, including without limitation any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive. 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 whosoever may be entitled thereto, for any reason
whatsoever except as provided in Section 7(d) hereof. The
Executive shall not be obligated to seek other employment in
mitigation of the amounts payable under any provision of
this Agreement and the obtaining of any such other
employment shall in no event limit or reduce the obligations
of the Company to make the payments required to be made
under this Agreement.
- 81 -
<PAGE> 14
13. No Right to Continued Employment. Nothing in this
Agreement shall be deemed to give the Executive the right to
be retained in the employ of the Company, or to interfere
with the right of the Company to discharge the Executive at
any time, subject in all cases to the terms of this
Agreement.
14. Withholding. Any payments provided for hereunder
shall be paid net of any applicable withholding required
under federal, state or local law and any additional
withholding to which the Executive has agreed.
15. Successors and Assigns. This Agreement is a
personal services contract which may not be assigned by the
Company, or assumed from the Company by, any other party
without the prior written consent of the Executive. Subject
to the foregoing limitation, all rights hereunder shall
inure to the benefit of the parties hereto, their personal
or legal representatives, heirs, successors and assigns.
The Company will require any successor (whether direct or
indirect, by purchase, assignment, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company expressly to assume this
Agreement and to agree to perform hereunder in the same
manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
References herein to the Company will be understood to refer
to the successor or successors of the Company, respectively.
16. Notices. Any notice required or desired to be
given hereunder shall be in writing and shall be deemed
given when delivered personally or sent by certified or
registered mail, postage prepaid, to the address of the
other party set forth in the first paragraph of this
Agreement, provided that any notice to the Company shall be
directed to the President, unless the notice is by such
person in which case the notice shall be directed to both
the Secretary of the Company and the most senior ranking
Vice President of the Company.
17. Waiver of Breach. Waiver by any party of a breach
of any provision shall not operate as or be construed a
waiver by such party of any subsequent breach hereof.
18. Entire Agreement. This agreement contains the
entire agreement among the parties concerning the employment
of the Executive by the Company, and supersedes any
employment or change in control agreements between the
- 82 -
<PAGE> 15
Executive and the Company or any of its predecessors,
subsidiaries or predecessors of subsidiaries.
19. Written Modification, Amendment or Waiver. No
modification, amendment or waiver of any provision hereof
shall be effective unless in writing specifically referring
hereto and signed by the party against whom such provision
as modified or amended or such waiver is sought to be
enforced.
20. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts
have been signed by each party hereto and delivered to the
other party, it being understood that all parties need not
sign the same counterpart.
21. Governing Law. This Agreement is governed by and
is to be construed and enforced in accordance with the laws
of the State of New Hampshire applicable to contracts made
and to be performed entirely therein.
22. Consent to Jurisdiction. Each party hereto
irrevocably consents to the exclusive jurisdiction of the
courts of the State of New Hampshire and the federal courts
situated in the State of New Hampshire in connection with
any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default under
this Agreement, to enforce any decision or award of any
arbitrators, or otherwise arising under or by reason of this
Agreement.
23. Construction.
(a) The section headings of this Agreement have
been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement.
(b) All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender,
shall include all other genders where the context so
requires.
(c) The singular shall include the plural, and
vice versa, where the context so requires.
(d) All references to sections of, or regulations
promulgated under, the Exchange Act, the Code or other
statutes shall be deemed also to refer to such sections or
regulations as amended from time to time and to any
- 83 -
<PAGE> 16
successor provisions to such sections or regulations. All
references to employee benefit plans of the Company shall be
deemed also to refer to such plans as amended from time to
time and to any successor plans thereto.
24. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
affecting the validity or enforceability of any other term
or provision hereof in that or any other jurisdiction. If
any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted so as to
be enforceable.
25. Authorization. The Company represents and
warrants that the execution of this Agreement has been duly
authorized by resolution of the Board.
IN WITNESS WHEREOF, the parties have executed or caused
to be executed this Agreement as of the date first above
written.
CFX CORPORATION
By:
----------------------------------
Name: Peter J. Baxter
Title: President
-----------------------------------
Christopher W. Bramley
- 84 -
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference herein, in the Registration
Statement on Form S-8 pertaining to the CFX Corporation 1986 Stock Option Plan
(File No. 33-17071), in the Registration Statement on Form S-8 pertaining to
the CFX Corporation 1992 Stock Purchase Plan (File No. 33-52598), in the
Registration Statement on Form S-8 pertaining to the CFX Corporation 1995 Stock
Option Plan (File No. 33-61787), and in the Registration Statement on Form S-3
pertaining to the CFX Corporation Dividend Reinvestment and Stock Purchase Plan
(File No. 33-54363) of our report dated January 13, 1997, except for Note 20 as
to which the date is February 13, 1997, included in the Annual Report of
Portsmouth Bank Shares, Inc. and Subsidiary for the year ended December 31,
1996.
/s/ Shatswell, MacLeod & Company, P.C.
--------------------------------------
Shatswell, MacLeod & Company, P.C.
West Peabody, Massachusetts
September 11, 1997
- 85 -
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the by reference herein, in the Registration Statement on
Form S-8 pertaining to the CFX Corporation 1986 Stock Option Plan (File No.
33-17071), in the Registration Statement on Form S-8 pertaining to the CFX
Corporation 1992 Stock Purchase Plan (File No. 33-52598), in the Registration
Statement on Form S-8 pertaining to the CFX Corporation 1995 Stock Option Plan
(File No. 33-61787), and in the Registration Statement on Form S-3 pertaining
to the CFX Corporation Dividend Reinvestment and Stock Purchase Plan (File No.
33-54363) of our report dated January 22, 1997, relating to the consolidated
balance sheets of Community Bankshares, Inc. and subsidiaries as of December
31, 1996 and 1995 and June 30, 1995, and related consolidated statements of
income, changes in stockholders' equity and cash flows for the year ended
December 31, 1996, the six months ended December 31, 1995, and for each of the
years in the two year period ended June 30, 1995, which report appears in the
December 31, 1996 annual report on Form 10-K of Community Bankshares, Inc.
/s/ KPMG Peat Marwick LLP
--------------------------
KPMG Peat Marwick LLP
Boston, Massachusetts
September 11, 1997
- 86 -
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-3 pertaining to the CFX Corporation Dividend Reinvestment
and Stock Purchase Plan (File No. 33-54363) of our report dated January 29,
1997, except for Note W as to which the date is March 24, 1997, with respect to
the consolidated financial statements of CFX Corporation as of December 31,
1996, and for the year then ended, incorporated by reference in the Annual
Report on Form 10-K of CFX Corporation for the year ended December 31, 1996.
/s/ Wolf & Company, P.C.
--------------------------
Wolf & Company, P.C.
Boston Massachusetts
September 12, 1997
<PAGE> 1
EXHIBIT 99.1
[CFX NEWS RELEASE LETTERHEAD]
CFX CORPORATION COMPLETES
COMMUNITY BANKSHARES AND
PORTSMOUTH BANK SHARES MERGERS
Keene, NH, August 29, 1997 -- CFX Corporation (AMEX: CFX) announced that it
is completing its mergers with Community Bankshares, Inc. ("Community") and
Portsmouth Bank Shares, Inc. ("Portsmouth").
Pursuant to the definitive agreements, each of Community's 2,489,000
outstanding and Portsmouth's 5,907,000 outstanding shares of common stock were
converted into 2.113 shares and .9314 shares, respectively, of the Company's
Common Stock, resulting in the issuance of 5,259,000 shares and 5,502,000
shares, respectively, of the Company's Common Stock to Community and Portsmouth
shareholders. Cash will be paid in lieu of issuing fractional shares.
Community's two banking subsidiaries, Concord Savings Bank and Centerpoint
Bank, headquartered in Concord, New Hampshire and Bedford, New Hampshire,
respectively, were merged into CFX's New Hampshire subsidiary, CFX Bank in the
merger. Similarly, Portsmouth's banking subsidiary, Portsmouth Savings Bank,
headquartered in Portsmouth, New Hampshire, was merged into CFX Bank in the
merger.
Both the Community and Portsmouth mergers will be accounted for by the
pooling-of-interests method of accounting.
Peter J. Baxter, President and Chief Executive Officer of CFX Corporation
said, "We welcome the shareholders, customers, employees, and communities of
Community and Portsmouth to the CFX family of community banks. As a combined
company, all customers will share in the many benefits of a larger and more
diversified community banking company."
Mr. Baxter added, "We also welcome Douglas Crichfield to our company who
will assume the position of President and Chief Executive Officer of CFX Bank.
Mr. Crichfield was the President and Chief Executive Officer of Community and
comes to us with many years of community banking experience and a philosophy
which blends well with our existing franchise. In addition, Mark E. Simpson,
President of Portsmouth Savings Bank will continue to be a leading
representative of CFX in the seacoast region."
CFX Corporation is a multi-bank holding company with total assets of $2.8
billion. The Company's three banking subsidiaries are CFX Bank, headquartered in
Keene, New Hampshire, Orange Savings Bank, headquartered in Orange,
Massachusetts, and The Safety Fund National Bank, headquartered in Fitchburg,
Massachusetts. CFX Mortgage, Inc., CFX Bank's mortgage banking subsidiary,
services approximately $895 million in mortgage loans for others. In addition,
CFX Funding L.L.C., a 51% owned subsidiary of CFX Bank that engages in the
facilitation of lease financing and rated securitizations, now services over
$117 million in leases for others. The Company operates 58 full service offices,
3 loan production offices, and 88 automated teller and remote service banking
locations in New Hampshire and central Massachusetts, and operates a trust
division with $405 million in assets.
###
-88-
<PAGE> 1
EXHIBIT 99.2
CFX Corporation - Portsmouth Bank Shares, Inc. - Communty Bankshares, Inc. --
Pooling Accounting
Pro Forma Combined Condensed Balance Sheet
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CFX PORTSMOUTH Pro Forma
(In thousands, except per share data) (Historical) (Historical) Adjustments
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks $58,846 $7,161
Interest bearing deposits with other banks (5) 10,211 39,858
Securities available for sale 364,360 87,201
Securities held to maturity 30,247 29,302
Mortgage loans held for sale 14,089 0
Loans and leases 1,286,669 90,049
Less allowance for loan and lease losses 16,042 687
---------------- ------------------- ----------------
Net Loans and Leases 1,270,627 89,362 0
Premises and equipment 28,553 887
Mortgage servicing rights 5,937 0
Goodwill and deposit base intangibles 8,925 0
Foreclosed real estate 5,631 96
Bank-owned life insurance 32,120 0
Other assets 29,484 5,586
---------------- ------------------- ----------------
$1,859,030 $259,453 $0
---------------- ------------------- ----------------
Liabilities and Shareholders' Equity
Deposits:
Interest bearing $1,099,236 $185,444
Noninterest bearing 159,124 4,425
---------------- ------------------- ----------------
Total Deposits 1,258,360 189,869 0
Advances from FHLBB 326,754 0
Other borrowed funds (5) 117,919 0
Other liabilities 17,672 2,293
---------------- ------------------- ----------------
Total Liabilities 1,720,705 192,162 0
Shareholders' Equity
Preferred stock 0 0
Common stock (1)(2)(3) 8,788 669 3,486
Paid-in capital 99,269 35,577 (9,850)
Retained earnings 32,023 36,598
Net unrealized gains (losses) on securities available
for sale, after tax effects (1,164) 811
Cost of common stock in treasury (591) (6,364) 6,364
---------------- ------------------- ----------------
Total Shareholders' Equity 138,325 67,291 0
---------------- ------------------- ----------------
$1,859,030 $259,453 $0
---------------- ------------------- ----------------
Number of common shares outstanding (1) 13,144 5,907
---------------- -------------------
Common shareholders' equity per share (4) $10.52 $11.39
---------------- -------------------
<CAPTION>
CFX
Pro Forma
Combined w/ COMMUNITY Pro Forma
(In thousands, except per share data) PORTSMOUTH (Historical) Adjustments
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks $66,007 $25,708
Interest bearing deposits with other banks (5) 50,069 12 (10,000)
Securities available for sale 451,561 115,494
Securities held to maturity 59,549 37,737
Mortgage loans held for sale 14,089 3,668
Loans and leases 1,376,718 416,523
Less allowance for loan and lease losses 16,729 4,224
------------------ ------------------ -----------------
Net Loans and Leases 1,359,989 412,299 0
Premises and equipment 29,440 9,833
Mortgage servicing rights 5,937 1,750
Goodwill and deposit base intangibles 8,925 0
Foreclosed real estate 5,727 1,001
Bank-owned life insurance 32,120 0
Other assets 35,070 8,372
------------------ ------------------ -----------------
$2,118,483 $615,874 ($10,000)
------------------ ------------------ -----------------
Liabilities and Shareholders' Equity
Deposits:
Interest bearing $1,284,680 $362,805
Noninterest bearing 163,549 65,755
------------------ ------------------ -----------------
Total Deposits 1,448,229 428,560 0
Advances from FHLBB 326,754 87,667
Other borrowed funds (5) 117,919 51,208 (10,000)
Other liabilities 19,965 5,346
------------------ ------------------ -----------------
Total Liabilities 1,912,867 572,781 (10,000)
Shareholders' Equity
Preferred stock 0 0
Common stock (1)(2)(3) 12,943 2,489 1,016
Paid-in capital 124,996 22,514 (1,016)
Retained earnings 68,621 18,002
Net unrealized gains (losses) on securities available
for sale, after tax effects (353) 88
Cost of common stock in treasury (591) 0
------------------ ------------------ -----------------
Total Shareholders' Equity 205,616 43,093 0
------------------ ------------------ -----------------
$2,118,483 $615,874 ($10,000)
------------------ ------------------ -----------------
Number of common shares outstanding (1) 18,646 2,489
------------------ ------------------ -----------------
Common shareholders' equity per share (4) $11.03 $17.32
------------------ ------------------
<CAPTION>
CFX
Pro Forma CFX Fully
Combined w/ Pro Forma
(In thousands, except per share data) COMMUNITY Combined
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks $84,554 $91,715
Interest bearing deposits with other banks (5) 223 40,081
Securities available for sale 479,854 567,055
Securities held to maturity 67,984 97,286
Mortgage loans held for sale 17,757 17,757
Loans and leases 1,703,192 1,793,241
Less allowance for loan and lease losses 20,266 20,953
----------------- ---------------
Net Loans and Leases 1,682,926 1,772,288
Premises and equipment 38,386 39,273
Mortgage servicing rights 7,687 7,687
Goodwill and deposit base intangibles 8,925 8,925
Foreclosed real estate 6,632 6,728
Bank-owned life insurance 32,120 32,120
Other assets 37,856 43,442
----------------- ---------------
$2,464,904 $2,724,357
----------------- ---------------
Liabilities and Shareholders' Equity
Deposits:
Interest bearing $1,462,041 $1,647,485
Noninterest bearing 224,879 229,304
----------------- ---------------
Total Deposits 1,686,920 1,876,789
Advances from FHLBB 414,421 414,421
Other borrowed funds (5) 159,127 159,127
Other liabilities 23,018 25,311
----------------- ---------------
Total Liabilities 2,283,486 2,475,648
Shareholders' Equity
Preferred stock 0 0
Common stock (1)(2)(3) 12,293 16,448
Paid-in capital 120,767 146,494
Retained earnings 50,025 86,623
Net unrealized gains (losses) on securities available
for sale, after tax effects (1,076) (265)
Cost of common stock in treasury (591) (591)
----------------- ---------------
Total Shareholders' Equity 181,418 248,709
----------------- ---------------
$2,464,904 $2,724,357
----------------- ---------------
Number of common shares outstanding (1) 18,402 23,904
----------------- ---------------
Common shareholders' equity per share (4) $9.86 $10.40
----------------- ---------------
</TABLE>
<PAGE> 2
CFX CORPORATION-- PORTSMOUTH BANK SHARES, INC. -- COMMUNITY BANKSHARES, INC.
PRO FORMA COMBINED CONDENSED INCOME STATEMENT
For the Six Months Ended June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CFX
Pro Forma
CFX PORTSMOUTH Combined
(In thousands, except per share data) (Historical) (Historical) w/ PORTSMOUTH
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest on loans and leases $ 49,992 $ 3,828 $ 53,820
Interest and dividends on securities 11,438 3,387 14,825
Other interest income (5) 336 1,991 2,327
------------------- ----------------------- ---------------------
Total Interest and Dividend Income 61,766 9,206 70,972
Interest expense:
Interest on deposits 22,159 4,021 26,180
Interest on borrowings (5) 8,823 0 8,823
------------------- ----------------------- ---------------------
Total Interest Expense 30,982 4,021 35,003
------------------- ----------------------- ---------------------
Net Interest and Dividend Income 30,784 5,185 35,969
Provision for loan and lease losses 1,404 0 1,404
------------------- ----------------------- ---------------------
Net Interest and Dividend Income after
Provision for Loan and Lease Losses 29,380 5,185 34,565
Other income 8,578 509 9,087
Other expense 24,771 1,703 26,474
------------------- ----------------------- ---------------------
Income before Income Taxes 13,187 3,991 17,178
Income taxes 3,638 955 4,593
------------------- ----------------------- ---------------------
Net Income 9,549 3,036 12,585
Preferred stock dividends 0 0 0
------------------- ----------------------- ---------------------
Net Income Available to Common Stock $ 9,549 $ 3,036 $ 12,585
------------------- ----------------------- ---------------------
------------------- ----------------------- ---------------------
Weighted average common shares outstanding (6) 13,058 5,838 18,496
------------------- ----------------------- ---------------------
Earnings per share $ 0.73 $ 0.52 $ 0.68
<CAPTION>
CFX
Pro Forma
COMMUNITY Pro Forma Combined
(In thousands, except per share data) (Historical) Adjustments w/ COMMUNITY
- -------------------------------------------------------------------------- ------------------- ---------------------
<S> <C> <C> <C>
Interest income:
Interest on loans and leases $ 18,251 $ 68,243
Interest and dividends on securities 4,160 15,598
Other interest income (5) 57 (58) 335
-------------------- ------------------- ---------------------
Total Interest and Dividend Income 22,468 (58) 84,176
Interest expense:
Interest on deposits 7,549 29,708
Interest on borrowings (5) 3,201 (58) 11,966
-------------------- ------------------- ---------------------
Total Interest Expense 10,750 (58) 41,674
-------------------- ------------------- ---------------------
Net Interest and Dividend Income 11,718 0 42,502
Provision for loan and lease losses 558 1,962
-------------------- ------------------- ---------------------
Net Interest and Dividend Income after
Provision for Loan and Lease Losses 11,160 0 40,540
Other income 2,586 11,164
Other expense 9,211 33,982
-------------------- ------------------- ---------------------
Income before Income Taxes 4,535 0 17,722
Income taxes 1,688 5,326
-------------------- ------------------- ---------------------
Net Income 2,847 0 12,396
Preferred stock dividends 0 0
-------------------- ------------------- ---------------------
Net Income Available to Common Stock $ 2,847 $ - $ 12,396
-------------------- ------------------- ---------------------
-------------------- ------------------- ---------------------
Weighted average common shares outstanding (6) 2,523 18,389
-------------------- ------------------- ---------------------
Earnings per share $ 1.13 $ 0.67
<CAPTION>
CFX Fully
Pro Forma
(In thousands, except per share data) Combined
- ------------------------------------------------ --------------------
<S> <C>
Interest income:
Interest on loans and leases $ 72,071
Interest and dividends on securities 18,985
Other interest income (5) 2,326
--------------------
Total Interest and Dividend Income 93,382
Interest expense:
Interest on deposits 33,729
Interest on borrowings (5) 11,966
--------------------
Total Interest Expense 45,695
--------------------
Net Interest and Dividend Income 47,687
Provision for loan and lease losses 1,962
--------------------
Net Interest and Dividend Income after
Provision for Loan and Lease Losses 45,725
Other income 11,673
Other expense 35,685
--------------------
Income before Income Taxes 21,713
Income taxes 6,281
--------------------
Net Income 15,432
Preferred stock dividends 0
--------------------
Net Income Available to Common Stock $ 15,432
--------------------
--------------------
Weighted average common shares outstanding (6) 23,827
--------------------
Earnings per share $ 0.65
</TABLE>
<PAGE> 3
CFX CORPORATION-- PORTSMOUTH BANK SHARES, INC. -- COMMUNITY BANKSHARES, INC.
PRO FORMA COMBINED CONDENSED INCOME STATEMENT
For the Six Months Ended June 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
CFX PORTSMOUTH
(In thousands, except per share data) (Historical) (Historical)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income:
Interest on loans and leases $ 42,427 $ 3,561
Interest and dividends on securities 9,532 3,474
Other interest income 673 1,998
-------------------- --------------------
Total Interest and Dividend Income 52,632 9,033
Interest expense:
Interest on deposits 20,008 4,028
Interest on borrowings 4,604 0
-------------------- --------------------
Total Interest Expense 24,612 4,028
-------------------- --------------------
Net Interest and Dividend Income 28,020 5,005
Provision for loan and lease losses 1,655 0
-------------------- --------------------
Net Interest and Dividend Income after
Provision for Loan and Lease Losses 26,365 5,005
Other income 7,824 874
Other expense 23,027 1,789
-------------------- --------------------
Income before Income Taxes 11,162 4,090
Income taxes 3,594 1,194
-------------------- --------------------
Net Income 7,568 2,896
Preferred stock dividends 0 0
-------------------- --------------------
Net Income Available to Common Stock $ 7,568 $ 2,896
-------------------- --------------------
-------------------- --------------------
Weighted average common shares outstanding (6) 12,726 5,792
-------------------- --------------------
Earnings per share $ 0.59 $ 0.50
<CAPTION>
CFX CFX
Pro Forma Pro Forma
Combined COMMUNITY Combined
(In thousands, except per share data) w/ PORTSMOUTH (Historical) w/ COMMUNITY
- ------------------------------------------------------------------------ ------------------ ---------------------
<S> <C> <C> <C>
Interest income:
Interest on loans and leases $ 45,988 $ 15,603 $ 58,030
Interest and dividends on securities 13,006 4,042 13,574
Other interest income 2,671 225 898
--------------- ------------------ -------------------
Total Interest and Dividend Income 61,665 19,870 72,502
Interest expense:
Interest on deposits 24,036 7,432 27,440
Interest on borrowings 4,604 2,254 6,858
--------------- ------------------ -------------------
Total Interest Expense 28,640 9,686 34,298
--------------- ------------------ -------------------
Net Interest and Dividend Income 33,025 10,184 38,204
Provision for loan and lease losses 1,655 575 2,230
--------------- ------------------ -------------------
Net Interest and Dividend Income after
Provision for Loan and Lease Losses 31,370 9,609 35,974
Other income 8,698 2,129 9,953
Other expense 24,816 8,006 31,033
--------------- ------------------ -------------------
Income before Income Taxes 15,252 3,732 14,894
Income taxes 4,788 1,328 4,922
--------------- ------------------ -------------------
Net Income 10,464 2,404 9,972
Preferred stock dividends 0 0 0
--------------- ------------------ -------------------
Net Income Available to Common Stock $ 10,464 $ 2,404 $ 9,972
--------------- ------------------ -------------------
--------------- ------------------ -------------------
Weighted average common shares outstanding (6) 18,121 2,480 17,966
--------------- ------------------ -------------------
Earnings per share $ 0.58 $ 0.97 $ 0.56
<CAPTION>
CFX Fully
Pro Forma
(In thousands, except per share data) Combined
- -------------------------------------------------------------------------
<S> <C>
Interest income:
Interest on loans and leases $ 61,591
Interest and dividends on securities 17,048
Other interest income 2,896
------------------
Total Interest and Dividend Income 81,535
Interest expense:
Interest on deposits 31,468
Interest on borrowings 6,858
------------------
Total Interest Expense 38,326
------------------
Net Interest and Dividend Income 43,209
Provision for loan and lease losses 2,230
------------------
Net Interest and Dividend Income after
Provision for Loan and Lease Losses 40,979
Other income 10,827
Other expense 32,822
------------------
Income before Income Taxes 18,984
Income taxes 6,116
------------------
Net Income 12,868
Preferred stock dividends 0
------------------
Net Income Available to Common Stock $ 12,868
------------------
------------------
Weighted average common shares outstanding (6) 23,361
------------------
Earnings per share $ 0.55
</TABLE>
<PAGE> 4
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(1) Common Stock at June 30, 1997:
CFX, $0.66 2/3 par value, 22,500,000 authorized shares, of which
13,181,500 shares have been issued and 13,143,623 are outstanding. At the
annual meeting held on July 30, 1997, the shareholders of CFX approved an
amendment to CFX's Articles of Incorporation to increase the number of
authorized shares of CFX Common Stock from 22,500,000 to 50,000,000. The
amendment became effective on August 20, 1997 upon filing of Articles of
Amendment to CFX's Articles of Incorporation with the New Hampshire
Secretary of State.
Portsmouth, $0.10 par value, 25,000,000 authorized shares, of which
6,692,092 shares have been issued and 5,907,242 are outstanding.
Community, $1.00 par value, 4,500,000 authorized shares, of which 2,488,737
shares have been issued and are outstanding.
(2) The pro forma financial statements reflect the exchange of Portsmouth and
Community common stock for CFX common stock in connection with the
acquisitions at the exchange ratios of .9314 and 2.113, respectively.
In combining the companies, a pro forma adjustment at June 30, 1997 was
made to reflect the issuance of 5,502,005 shares of CFX common stock to
Portsmouth shareholders and 5,258,701 shares of CFX common stock to
Community shareholders in exchange for the outstanding shares of Portsmouth
and Community common stock.
(3) The Acquisition Agreements provide that each holder of Portsmouth and
Community Common Stock, who would otherwise have been entitled to a
fraction of CFX common stock, will receive cash in lieu of such fractional
share. Such cash payments have not been reflected in the pro forma
information.
(4) Pro forma common shareholders' equity per share was computed by dividing
combined historical common shareholders' equity by the sum of the common
shares outstanding at period end, adjusted to give effect to one or both of
the acquisitions, the exchange ratios of .9314 and 2.113, respectively.
(5) Pro forma adjustment is for Federal Funds sold to Community by CFX totaling
$10,000,000 at June 30, 1997. Interest associated with the Federal Funds
sold during the period between the Companies was $58,000.
(6) Pro forma weighted average common shares outstanding represent the
historical weighted average common shares outstanding of CFX during the
periods, plus the historical weighted average common shares outstanding of
Portsmouth (as restated to reflect the 2% stock dividend paid on March 15,
1997) and Community, adjusted to give effect to one or both of the
acquisitions, the exchange ratios of .9314 and 2.113, respectively.
(7) The unaudited pro forma combined condensed income statements do not reflect
material nonrecurring charges, totaling approximately $7.7 million in the
aggregate, net of related tax effects, attributable to the Portsmouth
Acquisition and the Community Acquisition.
