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Peter J. Verrill Severance Agreement

This is an actual contract by Banknorth Group.
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Sectors: Banking
Governing Law: Maine, View Maine State Laws
Effective Date: January 01, 1996
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This AGREEMENT, made and entered into as of the 1st day of January, 1996, by and among PEOPLES HERITAGE FINANCIAL GROUP, INC. (the "Company") and PETER J. VERRILL (the "Executive");

W I T N E S S E T H:

WHEREAS, the Executive is employed by the Company in a key executive capacity and possesses intimate knowledge of the business and affairs of the Company; and

WHEREAS, the Company desires to ensure, insofar as possible, that it will continue to have the benefit of the Executive's services and to protect its confidential information and goodwill; and

WHEREAS, the Company recognizes that circumstances may arise in which a change in the control of the Company occurs, thereby causing uncertainty of employment without regard to the Executive's competence or past contributions; and

WHEREAS, the Company and the Executive wish to provide reasonable security to the Executive against changes in the Executive's relationship with the Company in the event of such change in control;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 2
1. Definitions

(a) Accrued Benefit means:

(i) All salary earned or accrued through
the date the Executive's employment
is terminated;

(ii) reimbursement for any and all monies
advanced in connection with the
Executive's employment for
reasonable and necessary expenses
incurred by the Executive through
the date the Executive's employment
is terminated;

(iii) any and all other compensation
previously earned and deferred at
the election of the Executive or
pursuant to any deferred
compensation plans then in effect
together with any interest or
desired earnings thereon;

(iv) annual bonus, if any, accrued for a
Year prior to the Year in which
employment terminates, but not yet
paid to the Executive, under any
bonus or incentive compensation plan
or plans in which the Executive is a

(v) a pro rata portion of the maximum
bonus payable to the Executive for
the Year in which employment
terminates under any bonus or
incentive compensation plan or plans
in which the Executive is a
participant, determined

2 3
as if the Executive had remained in
employment for the full Year and
prorated based upon weeks, including
partial weeks, of employment during
that Year;

(vi) all other payments and benefits to
which the Executive may be entitled
under the terms of any applicable
compensation arrangement or benefit
plan or program of the Company.

(b) Act means the Securities Exchange Act of 1934, as amended.

(c) Affiliate of any specified persons means any other person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under direct or indirect common control with such specified person. For the purposes of this definition, "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

(d) Annual Compensation. Annual compensation shall mean the sum of:

(i) the Executive's annual salary at the
rate in effect on the date of a
termination of employment as
described in Section 3 or in Section
7(d) (or, in the event of a
termination for Good Reason under
Section l (k) (i) (A) below, the
annual salary as in effect
immediately before

3 4
the actions giving rise to Good
Reason); plus

(ii) the greatest of the bonuses either
paid or accrued in either the Year
of the Change in Control or the
immediately preceding Year.

(e) Base Amount means an amount equal to the Executive's Annualized Includable Compensation for the Base Period as defined in Section 28OG (d) (1) and (2) of the Code (as hereinafter defined).

(f) Cause means (i) the executive's conviction of, or plea of nolo contendere to, a felony; or (ii) willful and intentional misconduct, willful neglect, or gross negligence, in the performance of the Executive's duties, which has caused a demonstrable and serious injury to the Company, monetary or otherwise.

The Executive shall be given written notice that the Company intends to terminate his employment for Cause. Such written notice shall specify the particular acts, or failures to act, on the basis of which the decision to so terminate employment was made.

In the case of a termination for Cause as described in Clause (ii), above, the Executive shall be given the opportunity within 30 days of the receipt of such notice to meet with the Board to defend such acts, or failures to act, prior to termination. The Company may suspend the Executive's title and authority pending such meeting, and such suspension shall not constitute "Good Reason," as defined in subsection (k) below.

(g) Change in Control of the Company shall mean a Change in Control of a nature that would be required to be reported in response to Item 5(f) of

4 5 Schedule 14A of Regulation 14A promulgated under the Act or any successor thereto, provided that without limiting the foregoing, a Change in Control of the Company also shall be deemed to have occurred if:

(i) any "person" (as defined under
Section 3 (a) (9) of the Act) or
"group" of persons (as provided
under Rule 13d- 3 of the Act) is or
becomes the "beneficial owner" (as
defined in Rule 13d-3 or otherwise
under the Act), directly or
indirectly (including as provided in
Rule 13d- 3 (d) (1) of the Act), of
capital stock of the Company the
holders of which are entitled to
vote for the election of directors
("voting stock") representing that
percentage of the Company's then
outstanding voting stock (giving
effect to the deemed ownership of
securities by such person or group,
as provided in Rule 13d-3 (d) (1) of
the Act, but not giving effect to
any such deemed ownership of
securities by another person or
group) equal to or greater than
thirty-five percent (35%) of all
such voting stock;

(ii) individuals who constitute the Board
on the date hereof (the "Incumbent
Board") cease for any reason to
constitute at least a majority
thereof. Any person becoming a
director subsequent to such date

5 6
election, or nomination for
election, is, at any time, approved
by a vote of at least a majority of
the directors comprising the
Incumbent Board shall be considered
as though he were a member of the
Incumbent Board;

(iii) The Company combines with another
person or entity, whether through a
merger, asset sale, reorganization
or otherwise, and (A) any person or
group of persons holds at any time
after such combination, voting stock
equal to or greater than thirty-five
percent (35%) determined by
reference to the voting securities
of the surviving entity, or (B) the
Company's directors, as of the date
immediately before such combination,
constitute less than a majority of
the Board of Directors of the
combined entity.

(h) Code means the Internal Revenue Code of 1986, including any amendments thereto.

(i) Effective Date means the date this Agreement is executed by the parties.

(j) Employment Period means a period commencing on the date of a Change in Control of the Company and ending on the earlier of (i) the last day of the twenty-fourth month following the month in which the Change in Control occurs, or (ii) the Executive's Normal Retirement Date.

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(k) Good Reason means:

(i) any breach of this Agreement by the
Company, including without
limitation (A) any reduction during
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