Document:

exv4w2

Exhibit 4.2

LOCAL.COM CORPORATION

2008 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

I.
 NOTICE OF STOCK OPTION GRANT

	 	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 	 	 
	Optionee:
	 	 	 	 
	Address:

	 	 

	 	 
	 

	 	 

	 	 
	 
	 

	 	 

	 	 

Dear Optionee:

Pursuant to the terms and conditions of the company’s 2008 Equity Incentive Plan (the ‘Plan’), you
have been granted (     ) an Incentive (     ) Non-Qualified Stock Option to purchase                     
shares (the ‘Option’) of stock as outlined below.

	 	 	 	 	 	 	 	 	 	 	 
	Granted To:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Grant Date:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Options Granted:
	 	 	 	 	 	 	 	 	 	 
	Option Price per Share:

	 	$	 	 	 	Total Cost to Exercise:
	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Expiration Date:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Vesting Schedule:
	 	 	 	 	 	 	 	 	 	 

By my signature below, I hereby acknowledge receipt of this Option granted on the date shown above,
which has been issued to me under the terms and conditions of the Plan. I further acknowledge
receipt of the copy of the Plan and agree to conform to all of the terms and conditions of the
Option
and the Plan.

	 	 	 	 	 	 	 	 	 
	Signature: 
	 	 	 	 	 	Date: 	 	 
	 

	 
	 	 	 	 	 

 

 

     Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings in this Stock Option Agreement.

     Termination Period:

     Except as otherwise provided herein, this Option may be exercised, to the extent vested, for
three (3) months after Optionee ceases to be a “Service Provider” (as defined in the Plan), but in
no event later than the Term/Expiration Date as provided above.

          II. AGREEMENT

     1. Grant of Option. The Company hereby grants to the Optionee an Option to purchase
the Common Stock (the “Shares”) set forth in the Notice of Grant, at the exercise price per share
set forth in the Notice of Grant (the “Exercise Price”). Notwithstanding anything to the contrary
anywhere else in this Option Agreement, this grant of an Option is subject to the terms,
definitions and provisions of the Local.com Corporation 2008 Equity Incentive Plan (the “Plan”)
adopted by the Company, which is incorporated herein by reference.

     If designated in the Notice of Grant as an Incentive Stock Option, this Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Code; provided, however, that
to the extent that the aggregate Fair Market Value of stock with respect to which Incentive Stock
Options (within the meaning of Code Section 422, but without regard to Code Section 422(d)),
including the Option, are exercisable for the first time by the Optionee during any calendar year
(under the Plan and all other incentive stock option plans of the Company or any Subsidiary)
exceeds $100,000, such options shall be treated as not qualifying under Code Section 422, but
rather shall be treated as Non-Qualified Stock Options to the extent required by Code Section 422.
The rule set forth in the preceding sentence shall be applied by taking options into account in the
order in which they were granted. For purposes of these rules, the Fair Market Value of stock
shall be determined as of the time the option with respect to such stock is granted.

     2. Exercise of Option.

          2.1
Right to Exercise. This Option is exercisable as
follows:

               a. This Option shall be exercisable cumulatively according to the vesting schedule set out in
the Notice of Grant. For purposes of this Stock Option Agreement, Shares subject to this Option
shall vest based on Optionee’s continued status as a Service Provider, unless provided for
otherwise.

               b. This Option may not be exercised for a fraction of a Share.

               c. In the event of Optionee’s death, disability or other termination of the Optionee’s status
as a Service Provider, the exercisability of the Option is governed by Section 3 below.

 

 

               d. In no event may this Option be exercised after the date of expiration of the term of this
Option as set forth in the Notice of Grant.

          2.2 Method of Exercise. 

               a. This Option shall be exercisable by written Notice (in the form attached as Exhibit
A). The Notice must state the number of Shares for which the Option is being exercised, and
such other representations and agreements with respect to such shares of Common Stock as may be
required by the Company pursuant to the provisions of the Plan. The Notice must be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary of the Company.
The Notice must be accompanied by payment of the Exercise Price, including payment of any
applicable withholding tax. This Option shall be deemed to be exercised upon receipt by the
Company of such written Notice accompanied by the Exercise Price and payment of any applicable
withholding tax.

               b. No Shares shall be issued pursuant to the exercise of an Option unless such issuance and
such exercise comply with all relevant provisions of law and the requirements of any stock exchange
upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on which the Option is exercised
with respect to such Shares.

          2.3
Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

               a. cash;

               b. check;

               c. with the consent of the Administrator, a full recourse promissory note bearing interest (at
no less than such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Administrator;

               d. with the consent of the Administrator, surrender of other shares of Common Stock of the
Company which (A) in the case of shares acquired pursuant to the exercise of a Company option, have
been owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a
Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which
the Option is being exercised;

               e. with the consent of the Administrator, surrendered Shares issuable upon the exercise of the
Option having a Fair Market Value on the date of exercise equal to the aggregate Exercise Price of
the Option or exercised portion thereof;

               f. with the consent of the Administrator, property of any kind which constitutes good and
valuable consideration; or

               g. with the consent of the Administrator, delivery of a notice that the Optionee has placed a
market sell order with a broker with respect to Shares then issuable upon exercise of the Option
and that the broker has been directed to pay a sufficient portion of the net

 

 

proceeds of the sale
to the Company in satisfaction of the aggregate Exercise Price; provided, that payment of such
proceeds is then made to the Company upon settlement of such sale.

     3. Termination of Relationship.

          3.1 Cessastion of Service. If Optionee ceases to be a Service Provider (other than
for cause or by reason of the Optionee’s death or the total and permanent disability of the
Optionee as defined in Code Section 22(e)(3)), Optionee may exercise this Option during the
Termination Period set out in the Notice of Grant, to the extent the Option was vested at the date
of such termination. However, the Option shall terminate: (i) immediately upon termination if the
Optionee is terminated for cause; (ii) upon the expiration of the Termination Period, and (iii)
immediately upon termination to the extent that Optionee was not vested in this Option at the date
on which Optionee ceases to be a Service Provider.

          3.2 Disability of Optionee. If Optionee ceases to be a Service Provider as a result
of his or her total and permanent disability as defined in Code Section 22(e)(3), Optionee may
exercise the Option to the extent the Option was vested at the date on which Optionee ceases to be
a Service Provider, but only within twelve (12) months from such date (and in no event later than
the expiration date of the term of this Option as set forth in the Notice of Grant). To the extent
that the Option is not vested at the date on which Optionee ceases to be a Service Provider, or if
Optionee does not exercise such Option within the time specified herein, the Option shall
terminate.

          3.3 Death of Optionee. If Optionee ceases to be a Service Provider as a result of the
death of Optionee, the vested portion of the Option may be exercised at any time within twelve (12)
months following the date of death (and in no event later than the expiration date of the term of
this Option as set forth in the Notice of Grant) by Optionee’s estate or by a person who acquires
the right to exercise the Option by bequest or inheritance. To the extent that Optionee is not
vested in the Option at the date of death, or if the Option is not exercised within the time
specified herein, the Option shall terminate.

     4. Non-Transferability of Option. This Option may not be transferred in any manner
except by will or by the laws of descent or distribution. It may be exercised during the lifetime
of Optionee only by Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

     5. Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant.

     6. Restrictions on Shares. Optionee hereby agrees that Shares purchased upon the
exercise of the Option shall be subject to such terms and conditions as the Administrator shall
determine in its sole discretion, including, without limitation, restrictions on the
transferability of Shares, the right of the Company to repurchase Shares, and a right of first
refusal in favor of the Company with respect to permitted transfers of Shares. Such terms and
conditions may, in the Administrator’s sole discretion, be contained in the Exercise Notice with
respect to the Option or in such other agreement as the Administrator shall determine and which the
Optionee hereby agrees to enter into at the request of the Company.10.1. Form of Executive Change in Control Agreement

                            FIRST AMENDED & RESTATED
                      EXECUTIVE CHANGE IN CONTROL AGREEMENT
                 NOT TO BE CONSTRUED AS AN EMPLOYMENT AGREEMENT

                      THE FIRST NATIONAL BANK OF LITCHFIELD
                     FIRST LITCHFIELD FINANCIAL CORPORATION
                                 13 North Street
                             Litchfield, Connecticut

         WHEREAS,  The First  National Bank of  Litchfield  (the "Bank") and its
parent  bank  holding  company,  First  Litchfield  Financial  Corporation  (the
"Holding  Company"),  wish  to  continue  to  employ  __________________________
("Employee"),   of  ___________________,   _________________,   Connecticut,  as
_____________ of the Bank.

         WHEREAS,  the Bank  and the  Holding  Company  expect  that  Employee's
contributions  and knowledge will continue to be of  significant  benefit to the
future growth and success of the Bank;

         WHEREAS,  the Boards of Directors  of the Bank and the Holding  Company
recognize  that a change in control of the Bank and/or the  Holding  Company may
occur and that the threat of such change in control may create  uncertainty  and
may result in the  distraction or departure of key personnel to the detriment of
the Bank and Holding Company and their stockholders;

         WHEREAS,  the Boards have determined that  appropriate  steps should be
taken to reinforce  and  encourage  the  continued  dedication of members of the
Bank's management,  including Employee,  to their assigned duties in the face of
potential  circumstances  involving the possibility of such a change in control;
and

         WHEREAS, the Bank, the Holding Company and the Employee have previously
entered an  Executive  Change in Control  Agreement  dated May 26,  2006 wish to
enter this First  Amended and  Restated  Executive  Change in Control  Agreement
(this  "Agreement") to reflect changes  required by Section 409A of the Internal
Revenue Code;

         NOW  THEREFORE,  in addition  to one dollar  ($1.00) and other good and
valuable  consideration  paid by the Bank to  Employee  and in  order to  induce
Employee  to  continue  employment  with  the Bank and to  continue  to  perform
Employee's  duties in a manner which is in the best  interests of the Bank,  the
Bank and Holding Company hereby agree to provide  Employee with certain benefits
in the  event  his/her  employment  with the Bank  terminates  or is  reassigned
subsequent  to a Change in Control  (as  defined in Section 2 hereof)  under the
circumstances described below.

         1. Term of Agreement;  Employment  Status.  This  Agreement  shall take
effect  when  signed by all  parties  and shall  remain in full force and effect
until  June 1,  2010.  All  employees  of Bank and  Holding  Company,  including
Employee, are employees at will. The terms of this Agreement,  therefore, do not
and are not  intended to create  either an express  and/or  implied  contract of
employment  with the Bank  and/or the Holding  Company.  This  Agreement  simply

                                       4
<PAGE>

provides  certain  potential  benefits to Employee in the event that a Change in
Control, as hereinafter defined, occurs prior to June 1, 2010.

         2. Change in Control.  No benefits  shall be payable  hereunder  unless
prior to June 1, 2010  there  shall  have been a Change in  Control as set forth
below, and thereafter  within  twenty-four (24) months of such Change in Control
Employee's  employment with the Bank and/or its successor terminates or Employee
is  reassigned  in  accordance  with  Section 3,  below.  For  purposes  of this
Agreement,  a  "Change  in  Control"  shall  mean a change in the  ownership  or
effective  control of the Bank or the Holding Company,  or in the ownership of a
substantial  portion of the assets of the Bank or the  Company  and shall  occur
upon the occurrence of any of the following:

                  (a) The date  that any one  person,  or more  than one  person
         acting as a group,  acquires  ownership  of stock that,  together  with
         stock previously acquired,  constitutes more than 50% of the total fair
         market value or total voting power of the stock of the Bank (other than
         by the Holding Company) or the Holding Company;

                  (b) The date  that any one  person,  or more  than one  person
         acting as a group,  acquires (or has acquired in the preceding 12-month
         period)  ownership of stock  possessing 50% or more of the total voting
         power of the Bank (other  than by the  Holding  Company) or the Holding
         Company;

                  (c) The  date  that a  majority  of  members  of the  Board of
         Directors  of the Bank or the Holding  Company is  replaced  during any
         12-month  period by  directors  whose  appointment  or election was not
         endorsed  by a  majority  of  the  members  of  the  Board  before  the
         appointment or election; or

                  (d) The date  that any one  person,  or more  than one  person
         acting as a group, acquires ownership (or has acquired in the preceding
         12-month  period) of assets from the of the Bank or the Holding Company
         that have a total gross fair  market  value of 50% or more of the total
         gross fair market  value of all of the assets  immediately  before such
         acquisition  or  acquisitions.  Gross fair market value of assets means
         the fair value of the assets without regard to any liability associated
         with such assets.

         With respect to the above  description  of a "Change in  Control,"  all
terms  shall  have the  meaning  set forth in  defined  in  Section  409A of the
Internal Revenue Code and Treasury Reg. ss.409A-3(i)(5)  thereunder,  as amended
from time to time.

         3.  Termination  Following  Change  in  Control.  If any of the  events
described  in  Section 2 hereof  constituting  a Change in  Control  shall  have
occurred,  Employee  shall be entitled to the  benefits  provided for in Section
4(a) hereof upon the  Termination of Employment or  Reassignment  (as defined in
this Section 3) of Employee as a senior executive officer of the Bank and/or its
successor  as provided in this Section 3, within  twenty-four  (24) months after
such event,  unless such  Termination of Employment or  Reassignment is : (i) by
any regulatory authority (acting with proper jurisdiction); or (ii) by the Board
of Directors of the Bank or the Holding  Company for cause;  or (iii) because of
Employee's  death,  retirement or disability.  Such benefits shall be reduced by
the amount of any severance paid to Employee by the Bank or its successor.

                                       5
<PAGE>

         (a) Retirement; Disability.

                  (i)  Termination of Employment by the Bank based on retirement
shall mean the  mandatory  termination  of  employment  in  accordance  with the
retirement policy of the Bank, including (at Employee's sole election and as set
forth  in  writing)  early  retirement,  generally  applicable  to its  salaried
employees or in accordance  with any  retirement  arrangement  established  with
Employee's consent with respect to Employee.

                  (ii) Termination of Employment by the Bank based on disability
shall  mean the  Employee  (i) is unable to  engage in any  substantial  gainful
activity by reason of any medically  determinable  physical or mental impairment
which  can be  expected  to  result  in death or can be  expected  to last for a
continuous  period of not less than twelve  (12)  months;  or (ii) is  receiving
income replacement benefits for a period of not less than three (3) months under
an accident and health plan  covering the employees of the Bank by reason of any
medically  determinable  physical or mental  impairment which can be expected to
result in death or last for a continuous  period of at least twelve (12) months.
The Employee  shall be deemed  disabled if determined to be totally  disabled by
the Social Security Administration.

         (b)  Notice  of  Termination.  The Bank  agrees  that in the event of a
Termination  of  Employment  it will  promptly  furnish  Employee with a written
Notice  of  Termination.   Any  purported  Reassignment  of  Employee  shall  be
communicated  by written Notice of Termination to the Bank. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall include the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances  claimed to provide a basis for
termination of Employee's employment under the provision so indicated.

         (c) Date of Termination.  "Date of Termination"  shall mean the date on
which a Notice of Termination  is given;  provided that, if within five (5) days
after any Notice of  Termination  is given,  the party  receiving such Notice of
Termination  notifies  the other  party  that a dispute  exists  concerning  the
termination,  the Date of Termination  shall be the date on which the dispute is
finally  determined,  either by mutual  written  agreement of the parties,  by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent  jurisdiction  (the time for appeal  therefrom having expired
and no appeal having been perfected).

         (d) Reassignment.  "Reassignment" shall mean a reduction in base salary
or an  involuntary  reassignment  of  Employee's  duties,  responsibilities,  or
benefits  inconsistent with those of a senior executive officer of a bank or the
involuntary  relocation of Employee's primary duties and  responsibilities to an
office or location greater than fifty (50) miles from Litchfield, Connecticut or
action  which  results  in  a  significant  worsening  of  the  Employee's  work
conditions  (including,  but not limited to, a significant  change in employment
duties, responsibilities, required hours or otherwise).

                                       6
<PAGE>

         4. Compensation Upon Termination or Reassignment.

         (a) If, within  twenty-four  (24) months after a Change in Control,  as
defined in Section 2 hereof,  shall have  occurred,  there is a  Termination  of
Employment  or  Reassignment  of  Employee as defined in Section 3 (except by an
agency acting with proper jurisdiction,  or by a board of directors for cause or
as a result  of death,  retirement  or  disability),  then the Bank  and/or  its
successor  shall pay  Employee  (i) if Employee  is a  "Specified  Employee"  as
defined in Section  409A(a)(2)(B)(i)  of the Internal  Revenue Code, on the date
which is six (6) months after Employee's Date of Termination or (ii) if Employee
is not a Specified  Employee as defined,  within five (5) days after  Employee's
Date of Termination,  or in each case as soon  thereafter as is practicable,  an
amount equal to the sum of:

                  (i) Two (2) years of Employee's annual compensation based upon
the most recent  aggregate base salary paid to Employee in the twelve (12) month
period  immediately  preceding his/her  termination or reassignment less amounts
previously paid to Employee from the date of Change in Control; plus

                  (ii) Reasonable  legal fees and expenses  incurred by Employee
as a result of such  Termination  of Employment or  Reassignment  (including all
such fees and  expenses,  if any,  incurred in  contesting or disputing any such
Termination of Employment or Reassignment or in seeking to obtain or enforce any
right or benefit provided for by this Agreement).

         (b)  Employee  shall not be  required  to  mitigate  the  amount of any
payment provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 4 be reduced by
any  compensation  earned by  Employee  as the result of  employment  by another
employer after the Date of Termination, or otherwise.

         (c) It is the  intention  of the  parties  to  this  Agreement  that no
payments by the Bank to or for Employee's  benefit under this Agreement shall be
non-deductible  to the Bank by reason of the  operation  of Section  280G of the
Internal Revenue Code. Accordingly,  notwithstanding any other provision hereof,
if by reason of the operation of said Section 280G of the Internal Revenue Code,
any such  payments  exceed the amount  which can be  deducted  by the Bank,  the
amount of such payments shall be reduced to the maximum which can be deducted by
the Bank.  To the extent  that  payments  in excess of the  amount  which can be
deducted by the Bank have been made to and for Employee's benefit, they shall be
refunded with interest at the applicable  rate provided under Section 1274(d) of
the  Internal  Revenue  Code,  or at such other rate as may be required in order
that no such  payment  to or for  Employee's  benefit  shall  be  non-deductible
pursuant  to Section  280G of the  Internal  Revenue  Code.  Any  payments  made
hereunder  which are not deductible by the Bank as a result of losses which have
been carried  forward by the Bank for Federal tax purposes shall not be deemed a
non-deductible amount for purposes of this Section 4(c).

         5.  Continuation  of  Insurance  Benefits.  Notwithstanding  any  other
provision in this Agreement to the contrary, the Bank and/or its successor shall
maintain in full force and effect for Employee's  continued benefit, for the two
(2) year period beginning upon a Change in Control, all life insurance, medical,
health and accident and disability  policies,  plans,  programs or  arrangements
which were in effect immediately prior to the Change in Control.

                                       7
<PAGE>

         6. Successors; Binding Agreement.

         (a) The  Bank  and the  Holding  Company  will  require  any  successor
(whether direct or indirect, by purchase, merger, consolidation,  acquisition of
assets or assumption of liabilities or otherwise) to all or substantially all of
the business and/or assets and/or  deposits of the Bank or the Holding  Company,
by  agreement,  to expressly  assume and agree to perform this  Agreement in the
same manner and to the same extent that the Bank would be required to perform it
if no such  succession  had taken  place.  Failure  of the Bank  and/or  Holding
Company  to  obtain  such  agreement  prior  to the  effectiveness  of any  such
succession  shall be a breach of this  Agreement and shall  entitle  Employee to
compensation  from the Bank in the same amount and on the same terms as he would
be entitled to hereunder if Employee's  employment had terminated as a result of
a Termination  of Employment or  Reassignment,  as provided in Section 3 hereof,
after a  Change  in  Control,  except  that for  purposes  of  implementing  the
foregoing,  the date on which any such  succession  becomes  effective  shall be
deemed the Date of Termination. As used in this Agreement, "Bank" shall mean the
Bank as  hereinbefore  defined and any successor to the business,  assets and/or
deposits as aforesaid which executes and delivers the agreement  provided for in
this Section 6 or which otherwise  becomes bound by all the terms and provisions
of this Agreement by operation of law.

         (b) This Agreement  shall inure to the benefit of and be enforceable by
Employee's  personal  or  legal  representatives,   executors,   administrators,
successors,  heirs, distributees,  devisees and legatees. If Employee should die
after any rights to receive  the  amounts  contemplate  hereby  have  accrued to
Employee  but before  such  amounts  have been paid,  all such  amounts,  unless
otherwise  provided  herein,  shall be paid in accordance with the terms of this
Agreement to Employee's  devisee,  legatee or other  designee or, if there be no
such designee, to Employee's estate.

         7. Notices. All notices and other  communications  provided for in this
Agreement  shall be in writing  and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt  requested,
postage  prepaid,  addressed to the respective  addresses set forth on the first
page of this  Agreement,  provided  that all notices to the Bank and the Holding
Company  shall be  directed  to the  attention  of the Board  with a copy to the
Chairman  of the Board of the Bank and the  Chairman of the Board of the Holding
Company or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.

         8.  Miscellaneous.  No  provision  of this  Agreement  may be modified,
waived or discharged unless such waiver,  modification or discharge is agreed to
in writing and signed by Employee and such other officer as may be  specifically
designated by the Board of the Bank or the Holding Company.  No waiver by either
party  hereto at any time of any breach by the other or  failure to comply  with
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or  dissimilar  provisions  or conditions at
the same or at any prior or subsequent  time. No agreements or  representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have  been  made by  either  party  which  are not  expressly  set forth in this
Agreement.  The validity,  interpretation,  construction and performance of this
Agreement  shall be governed by the laws of the State of Connecticut  and of the
United States of America.

                                       8
<PAGE>

         9.  Validity.  The invalidity or  unenforceability  of any provision of
this  Agreement  shall not affect the  validity or  enforceability  of any other
provision of this Agreement, which shall remain in full force and effect.

         10.   Administration  and  Interpretation.   This  Agreement  shall  be
administered  in a  manner,  and all  provisions  of  this  Agreement  shall  be
interpreted to be, compliant with the provisions of Section 409A of the Internal
Revenue  Code,  and  regulations  and rulings  issued  thereunder,  so as not to
subject  the  benefits  accruing  hereunder  to  taxation  pursuant  to  Section
409A(a)(1) of the Internal Revenue Code.

         11.   Counterparts.   This   Agreement   may  be  executed  in  several
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same instrument.

         12.  Arbitration.  Any  dispute  or  controversy  arising  under  or in
connection  with this Agreement  shall be settled  exclusively by arbitration in
Litchfield,   Connecticut,   in  accordance  with  the  rules  of  the  American
Arbitration Association then in effect. Notwithstanding the pendency of any such
dispute or controversy,  the Bank will pay Employee  promptly an amount equal to
Employee's full scheduled  compensation in effect when the notice giving rise to
the dispute was given  (including,  but not limited to, base salary) and provide
Employee with all scheduled compensation,  benefits and insurance plans in which
he was participating when the notice giving rise to the dispute was given, until
the dispute is finally  resolved in  accordance  with Section 3 hereof.  Amounts
paid under this  Section 12 are in addition to all other  amounts due under this
Agreement and shall not be offset  against or reduce any other amounts due under
this Agreement.  Judgment may be entered on the arbitrator's  award in any court
having jurisdiction;  provided, however, that Employee shall be entitled to seek
specific  performance  of  Employee's  right  to  be  paid  until  the  Date  of
Termination  during the pendency of any dispute or controversy  arising under or
in connection with this Agreement.

         13. Entire  Agreement.  This Agreement  supersedes the prior  agreement
between the Bank,  the Holding  Company and the  Employee on the subject  matter
hereof dated May 26, 2006 and constitutes the entire agreement between the Bank,
the Holding  Company and the Executive on the subject matter  hereof.  No rights
are  granted  to the  Executive  by virtue of this  Agreement  other  than those
specifically set forth herein.

                           [Signatures on next page.]

                                       9
<PAGE>

         Agreed to this _____ day of _________, 2008, by and among Employee, The
First National Bank of Litchfield, and First Litchfield Financial Corporation.

                                     THE FIRST NATIONAL BANK OF LITCHFIELD

                                     ------------------------------
                                     By:      [Chairman's Name]
                                     Its:     Chairman
                                              Duly Authorized

                                     FIRST LITCHFIELD FINANCIAL CORPORATION

                                     ------------------------------
                                     By:      [Chairman's Name]
                                     Its:     Chairman
                                              Duly Authorized

                                     EMPLOYEE

                                     Signature:  ______________________________
                                     [Employee's Name]

                                       10
<PAGE>

STATE OF CONNECTICUT       )
                           ) ss: Litchfield
COUNTY OF LITCHFIELD       )

         On this the __th day of __________,  2008,  before me, the undersigned,
personally appeared [Name of Chairman],  who acknowledged  himself/herself to be
the  Chairman of THE FIRST  NATIONAL  BANK OF  LITCHFIELD  and FIRST  LITCHFIELD
FINANCIAL CORPORATION,  and that he/she as such Chairman, being authorized so to
do,  executed the foregoing  instrument  for the purposes  therein  contained by
signing his name.

                                     In Witness Whereof, I hereunto set my hand.

                                     ------------------------------
                                     Notary Public
                                     My Commission Expires: _________

STATE OF CONNECTICUT       )
                           ) ss.: Litchfield
COUNTY OF LITCHFIELD       )

         On this  the __th day of  ______,  2008,  before  me,  the  undersigned
officer,  personally appeared, [Name of Employee], known to me or satisfactorily
proven to be the person  signing the foregoing  document and  acknowledged  that
he/she executed the same for the purposes therein  contained as his free act and
deed.

                                     In Witness Whereof, I hereunto set my hand.

                                     ------------------------------
                                     Notary Public
                                     My Commission Expires: __________

                                       11

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