8-K

UNITED STATES

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): February 11, 2013

SALISBURY BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Connecticut	000-24751	06-1514263
(State or Other Jurisdiction of Incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)

5 Bissell Street, Lakeville, CT	06039
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:  860-435-9801

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)           Severance Agreement.  On February 11, 2013, Salisbury Bank and Trust (the “Bank”), the wholly owned subsidiary of Salisbury Bancorp, Inc. (the “Registrant”), and Richard J. Cantele, Jr., President and Chief Executive Officer (the “Executive”) of the Bank entered into a Severance Agreement (the “Agreement”), to provide benefits to the Executive in the event of the Executive’s termination of employment for the reasons set forth in the Agreement.  The Severance Agreement is effective as of January 1, 2013.  The Agreement’s term is two years, automatically renewable annually.  In the event of the Executive’s involuntary termination of employment by the Bank for reasons other than “cause” (as defined in the Agreement) or the Executive’s death or disability, or a voluntary termination of employment for “good reason” (as defined in the Agreement), in either case, other than on or after a change in control, the Executive will be entitled to a severance benefit equal to two times the greater of his annual base salary rate in effect on the date of termination or his average annual base salary rate for the twelve-month period ending on the last day of the calendar month immediately before the date of termination.  Such benefit will be paid in a lump sum within 60 days following the Executive’s separation from service.  In addition, the Executive generally will be entitled to continued participation in the Bank’s group health plan for two years following separation from service, subject to the Executive’s payment of a premium portion substantially equal to the premium portion paid by executive employees of the Bank for comparable coverage.  Payment of the severance benefits will be conditioned upon the execution of a general release within 60 days of the date of termination of the Executive’s employment.  Further, the Agreement requires the Executive to comply with non-compete, non-solicitation and non-disclosure provisions for a period of one year following the Executive’s separation from service.

In the event of the Executive’s involuntary termination of employment for reasons other than cause or a voluntary termination of employment for good reason occurring on or after a change in control, the Executive will be entitled to a lump sum cash payment equal to 2.9 times the greater of his annual base salary rate in effect on the date of termination or his average annual base salary rate for the twelve-month period ending on the last day of the month preceding the date of termination, payable within 60 days following termination.  The Bank will also provide the Executive with life insurance coverage and non-taxable medical and dental coverage, at no cost to the Executive, substantially comparable to the coverage maintained by the Bank for the Executive prior to his date of termination, for a period of three years.  In addition, the Executive will be entitled to the payment of unpaid compensation and benefits and unused vacation accrued through the date of the Executive’s termination of employment.  The Executive will also receive reimbursement for expenses incurred on behalf of the Bank prior to the Executive’s termination of employment within 60 days following his date of termination.

Non-qualified Deferred Compensation Plan.   On February 11, 2013, the Executive also entered into a participation agreement with the Bank evidencing his participation in a nonqualified deferred compensation plan (the “Plan”).  The Plan, which was approved by the Bank’s board of directors (“Board”) on January 25, 2013, permits the Board to select certain key employees of the Bank to participate in the Plan, provided that such employees also evidence their participation by execution of a participation agreement.  The only named executive officer participating in the Plan at this time is the Executive.  The Plan is effective as of January 1, 2013.

At the end of each Plan year, if the Board of Directors of the Bank has approved a discretionary contribution for the Executive, the Plan administrator will credit the Executive’s account under the Plan with a discretionary contribution (as defined in the Plan).  As of the last day of each Plan year, the Plan administrator will credit each Executive’s account with interest equal to the Bank’s highest certificate of deposit rate for that year, compounded annually.  Additional earnings may be credited based on the achievement of performance metrics established by the Board on the first business day of the calendar year.  The Executive’s benefits under the Plan will be subject to the vesting schedule set forth in the Executive’s participation agreement.  Notwithstanding the vesting schedule, the Executive’s account balance will become automatically 100% vested upon involuntary termination without cause, death, disability or a change in control.

In the event the Executive has a separation from service other than due to “cause” (as defined in the Plan), death, disability or a change in control, the Executive will be entitled to the amount of his vested account balance under the Plan, payable within 60 days after the Executive’s separation from service.  In the event a change in control occurs and the Executive has an involuntary separation from service other than for cause or resigns for “good reason” (as defined in the Plan), the Executive will be entitled to benefits under the Plan, payable in a lump sum within 60 days after the termination of employment.  In the event the change in control benefits would constitute a “parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended, the benefits will be reduced accordingly, unless a participant’s participation agreement provides otherwise.  If the Executive dies while employed at the Bank, the Executive’s beneficiary will be paid a death benefit in a lump sum payment within 30 days after the Executive’s death.  The death benefit will be equal to the Executive’s account balance as of the date of death or, if the Executive dies following a separation from service but prior to receiving all payments under the Plan, the beneficiary will be paid all remaining payments in a lump sum no later than 30 days after the Executive’s date of death.  In the event the Executive becomes disabled while employed at the Bank, the Executive will be paid a disability benefit in a lump sum within 30 days after the determination of the Executive’s disability unless the Executive elects another form of payment in the Executive’s participation agreement.  The disability benefit will be equal to the Executive’s account balance as of the date of disability.  Payment of benefits under the Plan are conditioned on the Executive’s covenant to comply with non-compete, non-solicitation and non-disclosure provisions for a period of one year following the Executive’s separation from service.

The foregoing description of the Agreement and the Plan is qualified in its entirety by reference to the Agreement and the Plan attached hereto as Exhibits 10.1 and 10.2.

Item 9.01.                      Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired:  None.

(b) Pro Form Financial Information:  None.

(c) Shell Company Transaction:  None.

(d) Exhibits:

Exhibit No. Description

Exhibit 10.1 Severance Agreement between Salisbury Bank and Trust and Mr. Richard J. Cantele, Jr., effective as of January 1, 2013

Exhibit 10.2 Non-qualified Deferred Compensation Plan effective as of January 1, 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

		SALISBURY  BANCORP, INC.
DATE:  February 15, 2013	By:	Shelly L. Humeston
		Shelly L. Humeston
		Corporate Secretary

EX-10.1

 SEVERANCE AGREEMENT

by and between

SALISBURY BANK AND TRUST COMPANY

and

RICHARD J. CANTELE, JR.

This Severance Agreement (this “Agreement”) is made and entered into effective as of January 1, 2013 (the “Effective Date”), by and between Salisbury Bank and Trust Company, a Connecticut-chartered commercial bank with its principal administrative office at 5 Bissell Street, Lakeville, CT 06039-1868 (together with its successors and assigns, the “Bank”) and Richard J. Cantele, Jr. (“Executive”).  Any reference to the “Company” hereunder shall mean Salisbury Bancorp, Inc. (together with its successors and assigns), the parent of the Bank that owns 100% of the Bank.

RECITALS

A.           Executive possesses unique and valued experience with, and essential knowledge about, financial institutions and their operation and the Connecticut banking community;

B.           In order to induce Executive to remain employed with the Bank, the Bank and Executive desire to set forth in writing the severance benefits that are payable to Executive as a result of Executive’s termination of employment for the reasons set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and obligations herein contained, it is mutually agreed between the parties hereto as follows:

1.           Term. This Agreement shall continue for a term commencing on the Effective Date and ending on the second anniversary of the Effective Date (the “Term”).  On each annual anniversary of the Effective Date (each an “Anniversary Date”) this Agreement shall automatically renew for an additional year (each succeeding two year period shall also be referred to herein as the “Term”), unless at least thirty (30) days prior to such Anniversary Date, either party gives written notice of non-renewal to the other.  If such notice of non-renewal is given as permitted hereunder, the Agreement will expire at the conclusion of such Term. Notwithstanding any provision of this Agreement to the contrary, Executive’s employment may be terminated at any time prior to the expiration of the Term, as provided in Section 2 hereof and subject to the provisions of this Agreement, including, without limitation, Sections 4, 5, 6, 9, 10, 11 and 12.  Notwithstanding the foregoing, in the event that at any time during the Term of this Agreement, the Company or the Bank has entered into an agreement to effect a transaction which would be a Change in Control (as defined in Section 3 hereof), then the Term of this Agreement shall be automatically extended through the date that is twelve (12) months following the date on which the Change in Control occurs, provided, however, that if the Change in Control does not occur as contemplated, then the Agreement shall automatically renew on the next Anniversary Date, unless a notice of non-renewal is given by either party hereto in the manner set forth above.

2.           At-Will Status. Notwithstanding any provision of this Agreement, Executive is employed at-will, such that Executive or the Bank may terminate Executive’s employment at any time, for any or no reason, subject to the remaining provisions of this Agreement.

3.           Definitions. As used in this Agreement, the following terms shall have the meanings set forth herein.

“Cause” shall mean (i) the conviction of the Executive of a felony or of any lesser criminal offense involving moral turpitude; (ii) the willful commission by the Executive of any act that, in the judgment of the Board will likely cause substantial economic damage to the Bank or substantial injury to the business reputation of the Bank; (iii) the commission by the Executive of an act of fraud in the performance of his duties on behalf of the Bank; (iv) the continuing willful failure of the Executive to perform his duties to the Bank after written notice thereof (specifying the particulars thereof in reasonable detail) and a reasonable opportunity to cure such failure are given to the Executive; or (v) an order of a federal or state regulatory agency or a court of competent jurisdiction requiring the termination of the Executive’s employment by the Bank.  For this purpose, no act, or failure to act, on the part of Executive shall be deemed “willful” unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best interests of the Bank. Without limiting the foregoing, in no event shall Executive be deemed to be acting in good faith or in the best interests of the Bank for purposes of the preceding sentence with respect to acts of omission or commission taken in contravention of any direction(s), rule(s) or requirement(s) issued, authorized, approved or ratified by the Board.

Notwithstanding the foregoing provisions, in no event shall Cause be deemed to exist unless (i) the Bank shall provide Executive with written notice making reference to this Agreement, stating that the Bank intends to terminate Executive for Cause within the meaning of this Agreement, and setting forth in reasonable detail the facts and circumstances allegedly constituting Cause, and (ii) the Bank affords Executive a period of two (2) weeks after issuance of such notice either to demonstrate, through written rebuttal, that Cause does not exist under this Section 3, or to cure the circumstances constituting such Cause; provided, however, that the determination of whether Cause exists or whether Executive has sufficiently cured any Cause, shall be made in the reasonable discretion of the Board, as evidenced by the affirmative vote of not less than three-fourths of the entire membership of the Board (excluding Executive) at a meeting of the Board (excluding Executive) called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel, to be heard before the Board).  Nothing in this Section 3 shall prevent the Bank from terminating Executive for Cause prior to the issuance of the above-referenced notice or expiration of the above-referenced two (2) week rebuttal/cure period; provided however that if, upon the expiration of such two (2) week period, it is determined that facts or circumstances sufficient to constitute Cause did not (or, if applicable, do not) exist or has/have been cured, then such earlier termination of Executive by the Bank shall be deemed to be without Cause. Without limiting the foregoing, the Bank may suspend Executive, with or without pay, during the above-referenced two (2) week rebuttal/cure period, and such suspension shall not constitute either a termination of employment by the Bank under this Agreement or Good Reason for separation by Executive.

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“Change in Control” shall mean (i) a change in the ownership of the Company or Bank, (ii) a change in the effective control of the Company or Bank, or (iii) a change in the ownership of a substantial portion of the assets of the Company or Bank, as described below.

(i)A change in the ownership of a corporation occurs on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Company or Bank that, together with stock held by such person or group, constitutes more than fifty (50) percent of the total fair market value or total voting power of the stock of such corporation.  For these purposes, a change in ownership will not be deemed to have occurred if no stock of the Company or Bank is outstanding.

(ii)A change in the effective control of the Company or Bank occurs on the date that either (A) any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vi)(D)) acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company or Bank possessing thirty (30) percent or more of the total voting power of the stock of the Company or Bank, or (B) a majority of the members of the Company’s or Bank’s board of directors is replaced during any twelve (12)-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s or Bank’s board of directors prior to the date of the appointment or election, provided that this subsection “(B)” is inapplicable where a majority shareholder of the entity that experiences the change in control is another corporation.

(iii)A change in a substantial portion of the Company’s or Bank’s assets occurs on the date that any one person or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company or Bank that have a total gross fair market value equal to or more than forty (40) percent of the total gross fair market value of (A) all of the assets of the Company or Bank, or (B) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets.

For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury Regulation 1.409A-3(i)(5), except to the extent that such regulations are superseded by subsequent guidance.

“Good Reason” shall mean any of the following circumstances if they occur without the Executive’s consent:(i) a material reduction in the Executive’s Base Salary not warranted by general across the board reductions due to economic necessity; (ii) a material reduction in the Executive’s incentive bonus and other benefits generally provided to executives generally (except due to general across the board reductions due to economic necessity); (iii) a material reduction in Executive’s authority, duties or responsibilities such that Executive no longer holds a position with Executive level responsibilities consistent with Executive’s training and experience; or (iv) the permanent relocation of Executive’s principal place of business to a location that is more than 35 miles from Executive’s workplace at the initial effective date of this Agreement; provided that for a termination to be deemed for Good Reason, Executive must give, within the ninety (90) day period commencing on the initial existence of the condition(s) constituting Good Reason, written notice of the intention to terminate for Good Reason, and, upon receipt of such notice, the Bank shall have a thirty (30) day period within which to cure such condition(s); and provided further that the Bank may waive such right to notice and opportunity to cure.  In no event may facts or circumstances constituting “Good Reason” arise after the occurrence of facts or circumstances that the Bank relies upon, in whole or in material part, in terminating Executive for Cause.

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4.           Effect of Involuntary Termination or Voluntary Termination for Good Reason other than on or after a Change in Control.  In the event of Executive’s involuntary termination of employment by the Bank for reasons other than Cause (or Executive’s death or disability) or a voluntary termination of the employment for Good Reason, in either case, other than on or after a Change in Control, Executive shall be entitled to the following:

(a)           A severance benefit in an amount equal to two (2) times the Executive’s annual base salary rate in effect on the date of such termination, or, if greater, Executive’s average annual base salary rate for the twelve (12) month period ending on the last day of the calendar month immediately before such date of such termination.  Any severance benefit to which the Executive is entitled under this Section 4(a) shall be distributed in a lump sum within sixty  (60) days following Executive’s separation from service.

(b)           Subject to Executive’s payment of a premium portion equal or substantially equal to the premium portion paid by executive employees of the Bank for comparable coverage, for two years following separation from service, Executive may continue Executive’s participation (and, if applicable, that of Executive’s beneficiaries) in the Bank’s group health plan in which Executive participated immediately prior to separation from service; provided, however, that this sub-section is not intended to reduce the amount of time that Executive may obtain coverage at his own expense under the provision of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and comparable state law; except that Executive’s coverage for such two year period shall be counted against and deducted from the maximum COBRA period (if the applicable maximum COBRA period is 18 months, then following Executive’s coverage hereunder, Executive shall be entitled to no further health care coverage under the Bank’s group health plan).  Notwithstanding anything herein to the contrary, if as the result of any change in, or interpretation of, the laws applicable to the continued welfare benefits hereunder, such benefits are deemed illegal or subject to penalties, then the Bank shall, to the extent permitted under such laws, pay to the Executive a cash lump sum payment reasonably estimated to be equal to the amount of welfare benefits (or the remainder of such amount) that the Executive is no longer permitted to receive in-kind.  Such lump sum payment shall be required to be made within sixty (60) days following the Executive’s separation from service, or if later, within sixty (60) days following a determination that such payment would be illegal or subject to penalties.

(c)           Executive shall also be entitled to be reimbursed by the Bank for final expenses that Executive reasonably and necessarily incurred on behalf of the Bank prior to Executive’s termination of employment, provided that Executive submits expense reports and supporting documentation of such expenses in accordance with the Bank’s expense reimbursement policies in effect at that time.  Such reimbursement payment or payments shall be made no later than the time required by applicable law (or, if earlier, by Bank or Company policy, practice or rule), but in no event later than the sixtieth (60th) day following Executive’s date of the termination.

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5.           Termination in Connection with a Change in Control.  In the event of Executive’s involuntary termination of employment for reasons other than Cause or a voluntary termination of employment for Good Reason occurring on or after a Change in Control, Executive shall be entitled to the following:

(a)           A lump sum cash payment equal to two and nine-tenths (2.9) timesthe Executive’s annual rate of base salary in effect on Executive’s date of termination or, if greater, Executive’s average annual base salary rate for the twelve (12) month period ending on the last day of the calendar month immediately prior to the date of such termination.  Such amount shall be paid to Executive within sixty (60) days following Executive’s separation from service.

(b)           Life insurance coverage and non-taxable medical and dental coverage, at no cost to Executive, that is substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to his date of termination.  Such life insurance and non-taxable medical and dental coverage shall be provided by the Bank to the Executive for three (3) years following Executive’s separation from service and subject to the same terms and conditions as the benefits provided under Section 4(b).  Notwithstanding anything herein to the contrary, if as the result of any change in, or interpretation of, the laws applicable to the continued welfare benefits hereunder, such benefits are deemed illegal or subject to penalties, then the Bank shall, to the extent permitted under such laws, pay to the Executive a cash lump sum payment reasonably estimated to be equal to the amount of welfare benefits (or the remainder of such amount) that the Executive is no longer permitted to receive in-kind.  Such lump sum payment shall be required to be within sixty (60) days following the Executive’s separation from service, or if later, within sixty (60) days following a determination that such payment would be illegal or subject to penalties.

(c)            Unpaid compensation and benefits, and unused vacation, accrued through the date of Executive’s termination of employment. Executive shall also be entitled to be reimbursed by the Bank for final expenses that Executive reasonably and necessarily incurred on behalf of the Bank prior to Executive’s termination of employment, provided that Executive submits expense reports and supporting documentation of such expenses in accordance with the Bank’s expense reimbursement policies in effect at that time.  Such reimbursement payment or payments shall be made no later than the time required by applicable law (or, if earlier, by Bank or Company policy, practice or rule), but in no event later than the sixtieth (60th) day following Executive’s date of the termination.

(d)            Notwithstanding the foregoing, no compensation and benefits shall be payable pursuant to both Sections 4 and 5 of this Agreement.

6.           Conditions of Severance Benefits; Effect on Executive’s Post-Employment Obligations.

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(a)           Notwithstanding the foregoing, in no event shall any compensation payable to the Executive pursuant to the provisions of Section 4(a), 4(b), 5(a) and (b) above that is subject to Section 409A of the Internal Revenue Code (“Code”) be paid to the Executive unless and until the Executive has incurred a “separation from service” as defined in Code Section 409A and in regulations and guidance issued thereunder, unless such payment is required by applicable law.  For purposes of this Agreement, a “separation from service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after his date of the termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination.  For all purposes hereunder, the definition of separation from service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

(b)           Executive shall receive the severance benefits set forth in Section 4(a) and 4(b) hereof only if Executive (a) executes a general release, in a form acceptable to the Bank, within sixty (60) days of the date of the termination of the Executive’s employment in accordance with the provisions of Section 4 hereof; (b) presents satisfactory evidence to the Bank that Executive has returned all Bank property; and (c) provides the Bank with a signed, written resignation of Executive’s status as an officer and/or director of the Bank and/or any holding company, subsidiary or affiliate as applicable.  In the event the Bank reasonably believes that Executive has breached, or has threatened to breach, any provision of the Agreement, the Executive shall no longer be entitled to such benefits and further shall be required to reimburse all severance benefits, including payments under Section 4(a), previously made by the Bank. Such termination of benefits shall be in addition to any and all legal and equitable remedies available to the Bank, including injunctive relief.  Without limiting the foregoing, Executive acknowledges and agrees that the provisions of Sections 11, 12, 15, 17, 18, and 19 of this Agreement (i) are supported by adequate consideration in addition to the severance benefits provided under Section 4(a) and 4(b) and all other amounts and things of value to which Executive would be entitled if Executive did not enter into this Agreement, and (ii) shall be enforceable notwithstanding Executive’s failure of refusal to satisfy, in whole or in part, the conditions for the severance benefits set forth under this Section 6.  Notwithstanding the foregoing, the conditions set forth in this Section 6 shall not apply in the event that any compensation or benefits are payable pursuant to Section 5 of this Agreement.

7.           Taxes. All payments and benefits described in this Agreement shall be subject to any and all applicable federal, state and local income, employment and other taxes, and the Bank will deduct from each payment to be made to Executive under this Agreement such amounts, if any, required to be deducted or withheld under applicable law.  Executive hereby acknowledges and agrees that the Bank makes no representations or warranties regarding the tax treatment or tax consequences of any compensation, benefits or other payments under the Agreement, or under any statute, or regulation or guidance thereunder, or under any successor statute, regulation and guidance thereunder.

8.           Code Section 409A.   The cash severance payments under this Agreement are intended to be exempt from Section 409A of the Code under the “short term deferral” rule set forth in Treasury Regulation Section 1.409A-1(b)(4).  If and to the extent this Agreement provides for a deferral of compensation subject to Section 409A of the Code, it is the intent of the parties that this Agreement, and all payments of deferred compensation subject to Code Section 409A made hereunder, shall be in compliance with such requirements and the regulations and other guidance thereunder. Notwithstanding any other provision with respect to the timing of payments under Sections 4(a) or 5(a), if, at the time of Executive’s separation from service, Executive is a “specified employee” (meaning a key employee as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank (or a Bank affiliate), then to the extent necessary to comply with the requirements of Code Section 409A, any payments to which Executive is entitled under Sections 4(a) or 5(a) during the six (6) month period commencing on the Executive’s separation from service which are subject to Code Section 409A (and not otherwise exempt from its application, including, without limitation, by operation of Treasury Regulation Section 1.409A-1(n)) will be withheld until the first business day of the seventh (7th) month following Executive’s separation from service, at which time such withheld amount shall be paid in a lump sum distribution. The Bank and Executive agree that they will negotiate in good faith and jointly execute an amendment to modify this Agreement to the extent necessary to comply with the requirements of Code Section 409A, or any successor statute, regulation and guidance thereunder.

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9.           Limitation on Benefits.  In no event shall the Bank be obligated to make any payment pursuant to this Agreement that is prohibited by Section 18(k) of the Federal Deposit Insurance Act (codified at 12 U.S.C. §1828(k)), 12 C.F.R. Part 359, or any other applicable law.

10.           No Mitigation. The Bank agrees that Executive is not required to use reasonable good faith efforts to seek other employment and to reduce any amounts payable to Executive by the Bank pursuant to this Agreement.

11.           Non-Competition; Non-Solicitation; Non-Disclosure.

(a)           The benefits provided to Executive under Section 4 of this Agreement are specifically conditioned on Executive’s covenant that, for a period of one (1) year following the Executive’s separation from service with the Bank, the Executive will not, without the written consent of the Bank, either directly or indirectly:

(i)           solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Bank or any of its affiliates to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business or other entity;

(ii)           become an officer, employee, consultant, director, independent contractor, agent, sole proprietor, joint venturer, greater than 5% equity-owner or stockholder, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity that has headquarters or offices within fifteen (15) miles of the locations in which the Bank or its affiliates has business operations or has filed an application for regulatory approval to establish an office as of the date of Executive’s termination; provided, however,that this restriction shall not apply if the Executive’s employment is terminated following a Change in Control; or

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(iii)           solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Bank or its affiliates to terminate an existing business or commercial relationship with the Bank or its affiliates; or

 (b)           Executive further agrees that Executive shall not at any time or in any manner, directly or indirectly, use or disclose Confidential Information (as hereinafter defined) to any party other than the Bank either during or after Executive’s termination of employment or  the termination of this Agreement for any reason, except for purposes consistent with the administration and performance of Executive’s obligations hereunder, or as required by law, provided that written notice of any legally required disclosure shall be given to the Bank promptly prior to any such disclosure and Executive shall reasonably cooperate with the Bank to protect the confidentiality thereof pursuant to applicable law or regulation.  For purposes of this Agreement, the term “Confidential Information” includes any confidential or proprietary information furnished or provided by the Bank to Executive after Executive first became employed by the Bank, under this Agreement or otherwise (whether before or after the Execution Date) (and without regard to whether such information is conveyed directly or on the Bank’s behalf), or otherwise acquired by Executive as a consequence of Executive’s employment with the Bank and that is not generally known in the industry in which the Bank is engaged and that in any way relates to the products, services, purchasing, marketing, names of customers, vendors or suppliers, merchandising and selling, plans, data, specifications or any other confidential and proprietary information of the Bank or any affiliate.  Any Confidential Information supplied to Executive by the Bank prior to the Execution Date shall be considered in the same manner and be subject to the same treatment as the Confidential Information made available after the execution of this Agreement. The term “Confidential Information” does not include information (i) which was already in the public domain, (ii) which is disclosed as a matter of right by a third party source after the execution of this Agreement, provided such third party source is not bound by a confidentiality agreement with the Bank or (iii) which passes into the public domain by acts other than the unauthorized acts of Executive, whether acting alone or in concert; provided, however, that any disclosure of Confidential Information may be made by Executive if the Bank expressly consents thereto in writing prior to such disclosure.

12.           Exclusive Remedy. Except as expressly set forth herein or otherwise required by law, Executive shall not be entitled to any compensation, benefits, or other payments from the Bank as a result of, or in connection with, Executive’ s separation from service at any time, for any reason.  The payments and benefits set forth in Sections 4 or 5 hereof shall constitute Executive’s sole and exclusive remedy for any claims, causes of action or demands arising under or in connection with this Agreement or its alleged breach, or the termination of Executive’s employment relationship with the Bank.

13.           Governing Law/Interpretation. Executive and the Bank agree that this Agreement and any claims arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut, without giving effect to the principles of conflicts of laws thereof.

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14.           Entire Agreement. This Agreement shall constitute the sole and entire agreement between the parties with respect to the subject matter hereof, and supersedes and cancels all prior, concurrent and/or contemporaneous arrangements, understandings, promises, offers, agreements and/or discussions, including, but not limited to, those concerning employment agreements and/or severance benefits, whether written or oral, by or between the parties, regarding the subject matter hereof; provided, however, that this Agreement is not intended to, and shall not, supersede, affect, limit, modify or terminate any written agreement or arrangement between Executive and the Bank that does not relate to the subject matter hereof.

15.           Assignment. Executive acknowledges that the services to be rendered hereunder are unique and personal in nature.  Accordingly, Executive may not assign any rights or delegate any duties or obligations under this Agreement.  The rights and obligations of the Bank under this Agreement shall automatically be assigned to the successors and assigns of the Bank (including, but not limited to, any successor in the event of a Change in Control, as well as any other entity that controls, is controlled by, or is under common control with, any such successor), and shall inure to the benefit of, and be binding upon, such successors and assigns. This Agreement shall be binding upon Executive, as well as, Executive’s heir, executors and administrators of Executive or Executive’s estate and property.

16.           Notices. All notices required hereunder shall be in writing and shall be delivered in person, by facsimile or by certified or registered mail, return receipt requested, and shall be effective upon sending if by facsimile, or upon receipt if by personal delivery, or upon the fourth (4th) business day after being sent by certified or registered mail. All notices shall be addressed as follows or to such other address as the parties may later provide in writing:

if to the Bank:

Salisbury Bank and Trust Company

5 Bissell Street,

P.O. Box 1868

Lakeville, CT 06039-1868

ATTN: Chairperson of the Board

and, if to Executive:

at the address set in the human resources files of the Bank.

17.           Severability/Reformation. If any one or more of the provisions (or any part thereof) of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions (or any part thereof) shall not in any way be affected or impaired thereby, and this Agreement shall be construed and reformed to the maximum extent permitted by law. The language of all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either of the parties.

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18.           Modification. This Agreement and the rights, remedies and obligations contained in any provision hereof, may be modified or waived only in accordance with this Section 18. No waiver by either party of any breach by the other or any provision hereof shall be deemed to be a waiver of any later or other breach thereof or as a waiver of any other provision of this Agreement.  This Agreement and its terms may not be waived, changed, discharged or terminated orally or by any course of dealing between the parties, but only by a written instrument signed by the party against whom any waiver, change, discharge or termination is sought.  No modification or waiver by the Bank is effective without written consent of the Board.

19.           Arbitration. Subject to the mutual agreement of the parties hereto at the time a dispute exists between such parties, any dispute, controversy or claim arising out of, or in connection with, this Agreement shall be exclusively subject to arbitration before the American Arbitration Association (“AAA”).  Such arbitration shall take place in Hartford, Connecticut, before a single arbitrator in accordance with AAA’s then current National Rules for the Resolution of Employment Disputes.  Judgment upon any arbitration award may be entered in any court of competent jurisdiction. All parties shall cooperate in the process of arbitration for the purpose of expediting discovery and completing the arbitration proceedings. Notwithstanding any provision in this Agreement to the contrary, nothing contained in this Section 19 or elsewhere in this Agreement shall in any way deprive the Bank of its right to obtain injunctive relief, specific performance or other legal or equitable relief in a court of competent jurisdiction for purposes of enforcing the provisions of Section 11 hereof.

20.           Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

21.           Section Headings. The descriptive section headings herein have been inserted for convenience only and shall not be deemed to define, limit, or otherwise affect the construction of any provision hereof.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal effective as of the date and year first written above.

	SALISBURY BANK AND TRUST COMPANY
	By: /s/ Michael A. Varet
Date: February 1, 2013	Michael A. Varet
	Chairman of the Board
	EXECUTIVE
Date:February 11, 2013	/s/ Richard J. Cantele, Jr.
	Richard J. Cantele, Jr.

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EX-10.2

SALISBURY BANK AND TRUST COMPANY

NON-QUALIFIED DEFERRED COMPENSATION PLAN

This Non-Qualified Deferred Compensation Plan (the “Plan”) is effective January 1, 2013.  This Plan is adopted by SALISBURY BANK AND TRUST COMPANY (the “Bank”) for the benefit of certain key employees, (“Executive” or “Executives”), who have been selected and approved by the Bank to participate in this Plan and who have evidenced their participation by execution of a Non-Qualified Deferred Compensation Plan Participation Agreement (“Participation Agreement”) in a form provided by the Bank. This Plan is intended to comply with Internal Revenue Code (“Code”) Section 409A and any regulatory or other guidance issued under such Section.

WHEREAS, the Bank recognizes the valuable services performed for it by the Executives and wishes to encourage their continued employment and to provide them with additional incentive to achieve corporate objectives; and

WHEREAS, the Bank intends this Plan to be considered an unfunded arrangement, maintained primarily to provide supplemental retirement income for the Executives, who are members of a select group of management or highly compensated employees of the Bank, for tax purposes and for purposes of the Employee Retirement Income Security Act of 1974, as amended; and

WHEREAS, the Bank has adopted this Non-Qualified Deferred Compensation Plan which controls all issues relating to benefits as described herein, and which replaces in its entirety all other agreements and representations, oral or written, between the Bank and each Executive with respect to any supplemental executive retirement benefits to be provided to the Executive by the Bank.

NOW, THEREFORE, the Bank has adopted this Plan as follows:

SECTION I

DEFINITIONS

When used herein, the following words and phrases shall have the meanings below unless the context clearly indicates otherwise:

1.1   “Account Balance” means the amount credited to the Executive hereunder, including Discretionary Contributions and earnings thereon.

1.2   “Administrator” means the Board.

1.3    “Beneficiary” means the person or persons (and their heirs) designated as Beneficiary by the Executive to whom the deceased Executive’s benefits are payable. Such beneficiary designation shall be made on the form attached hereto as Exhibit A and filed with the Plan Administrator.  If no Beneficiary is so designated, then the Executive’s spouse, if living, will be deemed the Beneficiary. If the Executive’s spouse is not living, then the Executive’s children (both natural and legally adopted) will be deemed the Beneficiaries and will take on a per stirpes basis. If there are no such living children, then the estate of the Executive will be deemed the Beneficiary.

1.4   “Benefit Age” means the date set forth in each Executive’s Participation Agreement

1.5   “Board” shall mean the Board of Directors of the Bank.

1.6   “Cause” shall mean (i) the conviction of the Executive of a felony or of any lesser criminal offense involving moral turpitude; (ii) the willful commission by the Executive of any act that, in the judgment of the Board will likely cause substantial economic damage to the Bank or substantial injury to the business reputation of the Bank; (iii) the commission by the Executive of an act of fraud in the performance of his duties on behalf of the Bank; (iv) the continuing willful failure of the Executive to perform his duties to the Bank after written notice thereof (specifying the particulars thereof in reasonable detail) and a reasonable opportunity to cure such failure are given to the Executive; or (v) an order of a federal or state regulatory agency or a court of competent jurisdiction requiring the termination of the Executive’s employment by the Bank.  For this purpose, no act, or failure to act, on the part of Executive shall be deemed “willful” unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best interests of the Bank. Without limiting the foregoing, in no event shall Executive be deemed to be acting in good faith or in the best interests of the Bank for purposes of the preceding sentence with respect to acts of omission or commission taken in contravention of any direction(s), rule(s) or requirement(s) issued, authorized, approved or ratified by the Board.  Any termination for Cause shall be subject to the same formalities required in a for Cause termination under any severance or change in control agreement between the Executive and the Bank.  If the Executive is not a  party to such an agreement, then a termination for Cause shall not occur unless the Bank provides Executive with written notice stating that the Bank intends to terminate Executive for Cause (as defined herein) and setting forth in reasonable detail the facts and circumstances allegedly constituting Cause, and the Bank affords Executive a period of two (2) weeks after issuance of such notice either to demonstrate, through written rebuttal, that Cause does not exist or to cure the circumstances constituting such Cause; provided, however, that the determination of whether Cause exists or whether Executive has sufficiently cured any Cause, shall be made in the reasonable discretion of the Board, as evidenced by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel, to be heard before the Board).  Nothing in this definition shall prevent the Bank from terminating Executive for Cause prior to the issuance of the above-referenced notice or expiration of the above-referenced two (2) week rebuttal/cure period; provided however that if, upon the expiration of such two (2) week period, it is determined that facts or circumstances sufficient to constitute Cause did not (or, if applicable, do not) exist or has/have been cured, then such earlier termination of Executive by the Bank shall be deemed to be without Cause.

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1.7   “Change in Control” means (a) a change in ownership of the Company or the Bank under paragraph (i) below, or (b) a change in effective control of the Company or the Bank under paragraph (ii) below, or (c) a change in the ownership of a substantial portion of the assets of the Company or the Bank under paragraph (iii) below:

(a)           Change in ownership of the Company or Bank.  A change in ownership of the Company or Bank shall occur on the date that any one person or more than one person acting as a group acquires ownership of stock of that corporation that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation; or

(b)           Change in the effective control of the Company or Bank.A change in the effective control of the Company or Bank shall occur on the date that either (i) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company or Bank possessing 30% or more of the total voting power of the stock of the Company or Bank; or (ii) a majority of members of the Company’s or Bank’s Board of Directors is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of Directors prior to the date of the appointment or election, provided that this sub-section (ii) is inapplicable where a majority shareholder of the Company or Bank is another corporation; or

(c)           Change in the ownership of a substantial portion of the Company’s or Bank’s assets.  A change in the ownership of a substantial portion of the Company’s or Bank’s assets shall occur on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company or Bank that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions.  For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.  There is no Change in Control event under this paragraph (iii) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer; or

(d)           For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury Regulation Section 1.409A-3(i)(5), except to the extent modified herein.

1.8   “Code” means the Internal Revenue Code of 1986, as amended.

1.9   “Company” shall mean Salisbury Bancorp, Inc., the holding company of the Bank.

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1.10   “Compensation Committee” means the Compensation Committee of the Board.

1.11    “Death Benefit” shall mean a lump sum payment equal to the Account Balance as of the date of death.

1.12   “Disability” means that Executive is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that 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) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under the disability insurance, if any, covering employees of the Bank, or (iii) determined to be totally disabled by the Social Security Administration.

1.13   “Disability Benefit” shall mean a lump sum payment equal to the Account Balance as of the date of Disability.

1.14   “Discretionary Contribution” shall mean a contribution made in the sole discretion of the Board from time to time, to one or more Executives participating in the Plan.  Such Discretionary Contribution may be made in the same or differing amounts or percentages to the Executives and may be made to fewer than all Executives participating in the Plan in any year.

1.15   “Executive” means an employee who has been selected and approved by the Administrator to participate in the Plan and who has agreed to participation by completing a Participation Agreement.

1.16   “Good Reason” shall constitute any of the following circumstances if they occur without the Executive’s express written consent:  (i) a material reduction in the Executive’s Base Salary not warranted by general across the board reductions due to economic necessity; (ii) a material reduction in the Executive’s incentive bonus and other benefits generally provided to executives generally (except due to general across the board reductions due to economic necessity); (iii) a material reduction in Executive’s authority, duties or responsibilities such that Executive no longer holds a position with Executive level responsibilities consistent with Executive’s training and experience; or (iv) the permanent relocation of Executive’s principal place of business to a location that is more than 35 miles from Executive’s workplace at his initial participation in this Plan; provided that for a termination to be deemed for Good Reason, Executive must give, within the ninety (90) day period commencing on the initial existence of the condition(s) constituting Good Reason, written notice of the intention to terminate for Good Reason, and, upon receipt of such notice, the Bank shall have a thirty (30) day period within which to cure such condition(s); and provided further that the Bank may waive such right to notice and opportunity to cure.  In no event may facts or circumstances constituting “Good Reason” arise after the occurrence of facts or circumstances that the Bank relies upon, in whole or in material part, in terminating Executive for Cause.

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1.17   “Participation Agreement” means the agreement between Executive and the Bank which sets forth the particulars of Executive’s benefits under the Plan.  The Participation Agreement may allow the Executive to elect an alternative form of benefit, if such election occurs upon initial participation or in accordance with Section 2.7 hereof.

1.18   “Plan Year” shall mean the calendar year.

1.19   “Separation from Service” means Executive’s death, retirement or other termination of employment with the Bank within the meaning of Code Section 409A.  No Separation from Service shall be deemed to occur due to military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months or, if longer, so long as Executive’s right to reemployment is provided by law or contract.  If the leave exceeds six months and Executive’s right to reemployment is not provided by law or by contract, then Executive shall have a Separation from Service on the first date immediately following such six-month period.

Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the employer and employee reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the employee would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to less than 50% of the average level of bona fide services performed over the immediately preceding 36 months (or such lesser period of time in which Executive performed services for the Bank).  The determination of whether an Executive has had a Separation from Service shall be made by applying the presumptions set forth in the Treasury Regulations under Code Section 409A.

1.20   “Specified Employee” means, in the event the Bank or any corporate parent is or becomes publicly traded, a “Key Employee” as such term is defined in Code Section 416(i) without regard to paragraph 5 thereof.  Notwithstanding anything to the contrary herein, in the event an Executive is a Specified Employee and becomes entitled to a payment hereunder due to Separation from Service for any reason (other than death or Disability), the payments to such Executive shall not commence until the first day of the seventh month following such Separation from Service.  Whether and the extent to which a person is a Specified Employee shall be determined on the “Specified Employee Determination Date” which shall be December 31 of each calendar year and shall be applicable commencing on the following April 1, in accordance with the rules set forth in the Treasury Regulations under Code Section 409A.

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SECTION II

CONTRIBUTIONS; EARNINGS; BENEFIT PAYMENTS

2.1   Benefit Credits.

(a) Crediting of Discretionary Contributions.  As of the last day of a Plan Year, if the Board has approved a Discretionary Contribution for an Executive for the Plan Year, the Administrator shall credit such Executive’s accounts under this Plan with such Discretionary Contribution.  In the sole discretion of the Board, an Executive may receive an additional Discretionary Contribution from time to time.

(b) Earnings.  As of the last day of each Plan Year, the Administrator shall credit each Executive’s account hereunder with interest equal to the Bank’s highest certificate of deposit rate for that year, compounded annually.  Additional earnings may be credited based on the achievement of performance metrics established by the Board on the first business day of the calendar year.  The achievement of such metrics shall be determined and certified by the Board on or within 60 business days of the end of the calendar year.

(c) Vesting.  The Executive’s benefits hereunder shall be subject to the vesting schedule set forth on the Executive’s Participation Agreement.  Notwithstanding the vesting schedule, the Executive’s Account Balance shall automatically become 100% vested upon involuntary termination without Cause, death, Disability or Change in Control.

2.2   Separation from Service.  If the Executive has a Separation from Service other than due to (i) Cause; (ii) death; (iii) Disability, or (iv) Change in Control, the Executive shall be entitled to benefits as set forth in this Section. The Executive’s benefit shall be equal to the Executive’s vested Account Balance, which shall continue to be credited with earnings until paid to the Executive.  Such amount shall be paid no later than sixty (60) days after the Executive’s Separation from Service date (but may be delayed 6 months after Separation from Service if the Executive is a Specified Employee, as described above under “Specified Employee,” such that the benefit will commence on the first day of the seventh month following Separation from Service).  The benefits shall be payable in a lump sum unless the Executive elects another form of payment in his Participation Agreement.

2.3   Benefit Payable Following a Change in Control.

(a)   If a Change in Control occurs and Executive has an involuntary Separation from Service other than for Cause or resigns for Good Reason, the Executive shall be entitled to a payment of his entire Account Balance hereunder.

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(b)   Notwithstanding the foregoing, and unless otherwise specified in an Executive’s Participation Agreement, if the benefit provided under this Section, either alone or when aggregated with other payments to or for the benefit of an Executive that are contingent on a Change in Control, would cause an Executive to have an “excess parachute payment” under Code Section 280G, the benefit and/or such other payments shall be reduced to an amount that is one dollar ($1.00) less than the amount that would trigger an excess parachute payment in order to avoid this result.  In the event a reduction is necessary, the Executive shall be entitled to determine which benefits or payments shall be reduced or eliminated so the total parachute payments do not result in an excess parachute payment.  If an Executive does not make this determination within 10 business days after receiving a written request form the Bank, the Bank may make such determination, and shall notify the Executive promptly thereof.  In the event it is determined that permitting the Executive or the Bank to make the determination regarding the form or manner of reduction would violate Code Section 409A, such reduction shall be made pro rata.

(c)   Any payment under this Section 2.3 will be paid in a lump sum no later than sixty (60) days after such termination of employment (or, if Executive is a Specified Employee, payment will be made on the first day of the seventh month following Separation from Service).

2.4   Termination for Cause.  If Executive is terminated for Cause, all benefits under this Plan shall be forfeited (even if vested) and Executive’s participation in this Plan shall become null and void.

2.5   Death Benefit.

(a)   If an Executive dies while employed at the Bank, Executive’s Beneficiary shall be entitled to the Death Benefit. The Death Benefit shall be paid in a lump sum no later than 30 days after the Executive’s Date of Death.

(b)   If an Executive dies following Separation from Service but prior to the receiving all payments under the Plan, the Executive’s Beneficiary shall be paid all remaining payments as a lump sum no later than 30 days after the Executive’s Date of Death.

2.6   Disability Benefit.  Notwithstanding any other provision hereof, if Executive becomes Disabled while employed at the Bank, Executive shall be entitled to receive the Disability Benefit hereunder.  The Disability Benefit shall be calculated at time of the Disability determination and shall be payable in a lump sum within 30 days of the Disability determination unless the Executive elects another form of payment in the Executive’s Participation Agreement.

2.7   Change in Form or Timing of Benefit.  In the event the Executive desires to change the form or time of payment of a benefit and such alternate form or time is permitted by the applicable subsection of this Section II, such change in election may be made provided the following conditions are satisfied:

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(a)   any change in the form or timing must be elected at least 12 months before the benefit would otherwise be paid or commence, and

(b)   any change in form or timing of a benefit must result in a minimum five (5) year delay in the commencement of the effected payment.

SECTION III

BENEFICIARY DESIGNATION

The Executive shall make an initial designation of primary and secondary Beneficiaries upon execution of his or her Participation Agreement and shall have the right to change such designation, at any subsequent time, by submitting to the Administrator, in substantially the form attached as Exhibit A, a written designation of primary and secondary Beneficiaries. Any Beneficiary designation made subsequent to execution of the Participation Agreement shall become effective only when receipt thereof is acknowledged in writing by the Administrator.

SECTION IV

EXECUTIVE’S RIGHT TO ASSETS:

ALIENABILITY AND ASSIGNMENT PROHIBITION

At no time shall Executive be deemed to have any lien, right, title or interest in or to any specific investment or asset of the Bank. The rights of Executive, any Beneficiary, or any other person claiming through Executive under this Plan, shall be solely those of an unsecured general creditor of the Bank. Executive, the Beneficiary, or any other person claiming through Executive, shall only have the right to receive from the Bank those payments so specified under this Plan. Neither Executive nor any Beneficiary under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by Executive or his Beneficiary, nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.

SECTION V

ADMINISTRATIVE PROCEDURES

5.1   Named Fiduciary and Administrator.  The Board shall be the Named Fiduciary and Administrator of this Plan, provided that the Board may delegate its authority hereunder to the Compensation Committee. The Administrator shall be responsible for the management, control and administration of the Plan.  The Administrator shall have discretionary authority to construe and interpret the terms of the Plan and to determine benefit eligibility.  The Administrator may delegate to others certain aspects of the management and operational responsibilities of the Plan, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

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5.2   Claims Procedure and Arbitration.  In the event that benefits under this Plan are not paid to  Executive (or to his Beneficiary in the case of Executive’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Administrator within sixty (60) days from the date payments are refused. The Administrator shall review the written claim and, if the claim is denied, in whole or in part, they shall provide in writing, within thirty (30) days of receipt of such claim, their specific reasons for such denial, reference to the provisions of this Plan or the Participation Agreement upon which the denial is based, and any additional material or information necessary to perfect the claim. Such writing by the Administrator shall further indicate the additional steps which must be undertaken by claimants if an additional review of the claim denial is desired.

If claimants desire a second review, they shall notify the Administrator in writing within thirty (30) days of the first claim denial. Claimants may review this Plan, the Participation Agreement or any documents relating thereto and submit any issues and comments, in writing, they may feel appropriate. In its sole discretion, the Administrator shall then review the second claim and provide a written decision within thirty (30) days of receipt of such claim. This decision shall state the specific reasons for the decision and shall include reference to specific provisions of this Plan or the Participation Agreement upon which the decision is based.

SECTION VI

MISCELLANEOUS

6.1   No Effect on Employment Rights.  Nothing contained herein will confer upon Executive the right to be retained in the service of the Bank nor limit the right of the Bank to discharge or otherwise deal with Executive without regard to the existence of the Plan.

6.2   Governing Law.  The Plan is established under, and will be construed according to, the laws of the State of Connecticut, to the extent such laws are not preempted by the ERISA or the Code and regulations published thereunder.

6.3   Severability and Interpretation of Provisions.  In the event that any of the provisions of this Plan or portion hereof are held to be inoperative or invalid by any court of competent jurisdiction, or in the event that any provision is found to violate Code Section 409A and would subject Executive to additional taxes and interest on the amounts deferred hereunder, or in the event that any legislation adopted by any governmental body having jurisdiction over the Bank would be retroactively applied to invalidate this Plan or any provision hereof or cause the benefits hereunder to be taxable, then: (1) insofar as is reasonable, effect will be given to the intent manifested in the provisions held invalid or inoperative, and (2) the validity and enforceability of the remaining provisions will not be affected thereby.  In the event that the intent of any provision shall need to be construed in a manner to avoid taxability, such construction shall be made by the Administrator in a manner that would manifest to the maximum extent possible the original meaning of such provisions.

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6.4   Incapacity of Recipient.  In the event Executive is declared incompetent and a conservator or other person legally charged with the care of his person or estate is appointed, any benefits under the Plan to which such Executive is entitled shall be paid to such conservator or other person legally charged with the care of his person or estate.

6.5   Unclaimed Benefit.  Executive shall keep the Bank informed of his or her current address and the current address of his or her Beneficiaries. If the location of Executive is not made known to the Bank, the Bank shall delay payment of Executive’s benefit payment(s) until the location of Executive is made known to the Bank; however, the Bank shall only be obligated to hold such benefit payment(s) for Executive until the expiration of three (3) years. Upon expiration of the three (3) year period, the Bank may discharge its obligation by payment to Executive’s Beneficiary. If the location of Executive’s Beneficiary is not known to the Bank, Executive and his Beneficiary(ies) shall thereupon forfeit any rights to the balance, if any, of any benefits provided for such Executive and/or Beneficiary under this Plan.

6.6   Limitations on Liability.  Notwithstanding any of the preceding provisions of the Plan, no individual acting as an employee or agent of the Bank, or as a member of the Board of the Bank shall be personally liable to Executive or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

6.7   Gender.  Whenever in this Plan words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply.

6.8   Inurement.  This Plan shall be binding upon and shall inure to the benefit of the Bank, its successors and assigns, and Executives, their successors, heirs, executors, administrators, and Beneficiaries.

6.9   Acceleration of Payments.  Except as specifically permitted herein or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made hereunder.  Notwithstanding the foregoing, payments may be accelerated hereunder by the Bank, in accordance with the provisions of Treasury Regulation Section 1.409A-3(j)(4) and any subsequent guidance issued by the United States Treasury Department.  Accordingly, payments may be accelerated, in accordance with requirements and conditions of the Treasury Regulations (or subsequent guidance) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the federal government; (iii) in compliance with ethics laws or conflicts of interest laws; (iv) in limited cash-outs (but not in excess of the limit under Code Section 402(g)(1)(B)); (v) in the case of certain distributions to avoid a non-allocation year under Code Section 409(p); (vi) to apply certain offsets in satisfaction of a debt of Executive to the Bank; (vii) in satisfaction of certain bona fide disputes between Executive and the Bank; or (viii) for any other purpose set forth in the Treasury Regulations and subsequent guidance.

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6.10   Headings.  Headings and sub-headings in this Plan are inserted for reference and convenience only and shall not be deemed a part of this Plan.

6.11   12 U.S.C. § 1828(k).  Any payments made to Executive pursuant to this Plan or otherwise are subject to and conditioned upon compliance with 12 U.S.C. § 1828(k) and 12 C.F.R. Part 359 Golden Parachute and Indemnification Payments or any other rules and regulations promulgated thereunder.

6.12   Payment of Employment and Code Section 409A Taxes.  Any distribution under this Plan shall be reduced by the amount of any taxes required to be withheld from such distribution.  This Plan shall permit the acceleration of the time or schedule of a payment to pay employment-related taxes as permitted under Treasury Regulation Section 1.409A-3(j) or to pay any taxes that may become due at any time that the arrangement fails to meet the requirements of Code Section 409A and the regulations and other guidance promulgated thereunder.  In the latter case, such payments shall not exceed the amount required to be included in income as the result of the failure to comply with the requirements of Code Section 409A.

6.13   Non-competition, Non-solicitation and Nondisclosure.  In the event Executive has a vested Account Balance under this Plan, the benefits provided to Executives under this Plan are specifically conditioned on each Executive’s covenant that, for a period of one (1) year following the Executive’s Separation from Service with the Bank, the Executive will not, without the written consent of the Bank, either directly or indirectly:

(a) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Bank or any of its affiliates to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business or other entity;

(b) become an officer, employee, consultant, director, independent contractor, agent, sole proprietor, joint venturer, greater than 5% equity-owner or stockholder, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity that has headquarters or offices within fifteen (15) miles of the locations in which the Bank or its affiliates has business operations or has filed an application for regulatory approval to establish an office as of the date of Executive’s termination; provided, however,that this restriction shall not apply if the Executive’s employment is terminated following a Change in Control; or

(c)   solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Bank or its affiliates to terminate an existing business or commercial relationship with the Bank or its affiliates;

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(d)   at any time or in any manner, directly or indirectly, use or disclose Confidential Information (as hereinafter defined) to any party other than the Bank either during or after Executive’s termination of employment for any reason, except for purposes consistent with the administration and performance of Executive’s obligations hereunder, or as required by law, provided that written notice of any legally required disclosure shall be given to the Bank promptly prior to any such disclosure and Executive shall reasonably cooperate with the Bank to protect the confidentiality thereof pursuant to applicable law or regulation.  For these purposes, the term “Confidential Information” includes any confidential or proprietary information furnished or provided by the Bank to Executive after Executive first became employed by the Bank (without regard to whether such information is conveyed directly or on the Bank’s behalf), or otherwise acquired by Executive as a consequence of Executive’s employment with the Bank and that is not generally known in the industry in which the Bank is engaged and that in any way relates to the products, services, purchasing, marketing, names of customers, vendors or suppliers, merchandising and selling, plans, data, specifications or any other confidential and proprietary information of the Bank or any affiliate.  Any Confidential Information supplied to an Executive by the Bank prior to the Executive’s participation in this Plan shall be considered in the same manner and be subject to the same treatment as the Confidential Information made available after Executive’s participation in this Plan. The term “Confidential Information” does not include information (i) which was already in the public domain, (ii) which is disclosed as a matter of right by a third party source after Executive’s participation in this Plan, provided such third party source is not bound by a confidentiality agreement with the Bank or (iii) which passes into the public domain by acts other than the unauthorized acts of Executive, whether acting alone or in concert; provided, however, that any disclosure of Confidential Information may be made by Executive if the Bank expressly consents thereto in writing prior to such disclosure.

In the event that the Executive violates any of this provision of this Section 6.13, all benefits payable to Executive shall cease and any benefits previously paid shall be reimbursed to the Bank within thirty (30) days of the Bank’s notification to Executive that this provision has been violated.  Notwithstanding anything in this Section 6.13 to the contrary, in the event of Executive’s termination of employment following a Change in Control, Executive shall not be subject to the requirements of Sections 6.13(a), (b) or (c) above.

SECTION VII

AMENDMENT/TERMINATION

7.1   Amendment or Modification.  This Plan may be amended or modified at any time, provided, however, that no such amendment may serve to reduce the vested benefits of any Executive, and provided further, that no amendment or modification shall be valid if it violates Code Section 409A, as in effect at the time of such amendment or modification.

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7.2   Termination of Plan.  Subject to the requirements of Code Section 409A, in the event of complete termination of the Plan, the Plan shall cease to operate and the Bank shall pay out to Executives their benefits as if the Executive had terminated employment as of the effective date of the complete termination.  Such complete termination of the Plan shall occur only under the following circumstances and conditions:

(a) The Board may terminate the Plan within 12 months of a corporate dissolution taxed under Code Section 331, or with approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under the Plan are included in Executive’s gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.

(b) The Board may terminate the Plan by Board action taken within the 30 days preceding a Change in Control (but not following a Change in Control), provided that the Plan shall only be treated as terminated if all substantially similar arrangements sponsored by the Bank are terminated so that the Executives and all participants under substantially similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within 12 months of the date of the termination of the arrangements.  Following the termination of the Plan, the amount payable to each Executive shall be the amount to which the Executive is entitled upon a Change in Control, as set forth in the Executive’s Participation Agreement.

SECTION VIII

EXECUTION

This Plan sets forth the entire understanding of the parties hereto with respect to the supplemental executive retirement benefits to be provided by the Bank, and any previous agreements or understandings between the parties hereto regarding the subject matter hereof are superseded by this Plan.

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IN WITNESS WHEREOF, the Bank executed this Plan on the date set forth below.

		SALISBURY BANK AND TRUST COMPANY
Date February 1, 2013	By:	/s/ Michael A. Varet
		Michael A. Varet
		Chairman of the Board

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Salisbury Bank and Trust Company

Non-Qualified Deferred Compensation Plan

Participation Agreement

January 1, 2013

I, Richard J. Cantele, Jr., and Salisbury Bank and Trust Company hereby agree, for good and valuable consideration, the value of which is hereby acknowledged, that I shall participate in the Non-Qualified Deferred Compensation Plan (“Plan”) established as of January 1, 2013, by Salisbury Bank and Trust Company, as such Plan may now exist or hereafter be modified, and do further agree to the terms and conditions thereof.

I understand that I must execute this Non-Qualified Deferred Compensation Plan Participation Agreement (“Participation Agreement”) as well as notify the Administrator of such execution in order to participate in the Plan.  The provisions of the Plan are incorporated herein by reference.  In the event of an inconsistency between the terms of this Participation Agreement and the Plan, the terms of the Plan shall control.  Any elections that I may make in this Participation Agreement must be made on my initial entry into the Plan.

The following provisions relate to a determination of my Account Balance under the Plan.

Benefit AgeMy Benefit Age is 65.

Discretionary Contribution   In the sole discretion of the Board, a Discretionary Contribution may be allocated to my account from time to time.  Any Discretionary Contribution allocated to my account shall become a part of my Account Balance and shall be subject to the vesting rate set forth below.

Vesting Rate   12.5% per year.

Separation from Service On or After Benefit Age  I understand that if I retire on or after attainment of my Benefit Age, I shall be entitled to my Account Balance, calculated in accordance with all relevant provisions of the Plan.  My Account Balance will be paid within 60 days after my retirement (unless I am a “Specified Employee” as defined in the Plan) in a Lump Sum payment unless I elect otherwise by checking the box below.

q   In lieu of a lump sum payment, I elect Annual Installments for _____Years (not to exceed 10 years)

Separation from Service Prior to Benefit Age  If I have a vested Account Balance at the time of my voluntary or involuntary Separation from Service without Cause (as defined in the Plan) prior to attainment of my Benefit Age (other than due to Death or Disability), I shall be entitled to the vested portion of my Account Balance, calculated in accordance with all relevant provisions of the Plan.  My Account Balance will be paid within 60 days after my Separation from Service (unless I am a “Specified Employee” as defined in the Plan) in a Lump Sum payment unless I elect otherwise by checking the box below.

q   In lieu of a lump sum payment, I elect Annual Installments for _____Years (not to exceed 10 years)

Termination for Cause  I understand that if I have a Termination for Cause, my entire Account Balance under this Plan shall be forfeited.

Death Benefit  In the event of my death prior to Separation from Service, my Beneficiary shall be entitled to a Death Benefit equal to my entire Account Balance, calculated in accordance with the Plan and payable in a Lump Sum payment within 60 days after my death.

Following a Change-in-Control

a)   Change-in-Control Occurs Before Separation from Service.  I understand that if there is a Change-in-Control and I have an involuntary Separation from Service or resign for Good Reason, I will be entitled to my entire Account Balance calculated as set forth in the Plan, without regard to Section 2.3(b).  My Account Balance shall be paid within 60 days after my Separation from Service (unless I am a “Specified Employee” as defined in the Plan) in a Lump Sum payment.  I understand that if there is a Change in Control and I voluntarily terminate employment (other than for Good Reason), I will be entitled only to the vested portion of my Account Balance, calculated without regard to the Change in Control.

b)   Change-in-Control Occurs After Separation from Service.  In the event a Change-in-Control occurs following my Separation from Service and while I am receiving my Account Balance in the form of Installment Payments, I can elect to have the remaining payments paid in the form of a Lump Sum Payment by checking the box below.

q   I elect to have the remaining payments paid in a Lump Sum.

If I am a “Specified Employee” (as defined in the Plan) at the time of my Separation from Service (for reasons other than death or Disability), my Account Balance hereunder shall be held by the Company and distributed to me commencing on the first day of the seventh month following my Separation from Service.

Disability While Employed  I understand that in the event of my Disability prior to my Benefit Age, I will be entitled to the Disability Benefit equal to my entire Account Balance calculated as set forth in the Plan.  My Disability Benefit will be paid in a Lump Sum Payment within 60 days after my Disability determination unless I elect otherwise by checking the box below.

q   I elect Annual Installments for _____Years (not to exceed 10 years)

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My Disability Benefit shall be payable:

X   Upon the determination of my Disability

q   Upon the attainment of my Benefit Age

This Participation Agreement shall become effective upon execution below by me as the Executive and by a duly authorized officer of Salisbury Bank and Trust Company.

Dated this 11 day of February, 2013.

EXECUTIVE	Salisbury Bank and Trust Company
/s/ Richard J. Cantele, Jr.	By: /s/ Michael A. Varet
Richard J. Cantele, Jr.	Michael A. Varet
	Chairman of the Board

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Exhibit A

SALISBURY BANK AND TRUST COMPANY

NON-QUALIFIED DEFERRED COMPENSATION PLAN

BENEFICIARY DESIGNATION

The undersigned Executive, under the terms of the Non-Qualified Deferred Compensation Plan executed by the Salisbury Bank and Trust Company and effective January 1, 2013, hereby designates the following Beneficiary to receive any guaranteed payments or death benefits under such Plan, following his or her death:

PRIMARY BENEFICIARY:

______________________________________________________________________________

In the event the Primary Beneficiary set forth above has predeceased me, I designate the person set forth below as my Secondary Beneficiary.

SECONDARY  BENEFICIARY:

______________________________________________________________________________

This Beneficiary Designation hereby revokes any prior Beneficiary Designation which may have been in effect. Such Beneficiary Designation is revocable.

Date                                                                           Richard J. Cantele, Jr.