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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000.
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ________.
COMMISSION FILE NUMBER 0-14703
NBT BANCORP INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 16-1268674
(State of Incorporation) (I.R.S. Employer Identification No.)
52 SOUTH BROAD STREET, NORWICH, NEW YORK 13815
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (607) 337-2265
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter periods that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
As of April 30, 2000, there were 18,101,302 shares outstanding of the
Registrant's common stock, $0.01 par value. There were no shares of the
Registrant's preferred stock, par value $0.01, outstanding at that date.
An index to exhibits follows the signature page of this FORM 10-Q.
-1-
NBT BANCORP INC.
FORM 10-Q--Quarter Ended March 31, 2000
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1 Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at March 31, 2000, December 31, 1999
(Audited), and March 31, 1999
Consolidated Statements of Income for the three month periods ended
March 31, 2000 and 1999
Consolidated Statements of Stockholders' Equity for the three month
periods ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows for the three month periods
ended March 31, 2000 and 1999
Consolidated Statements of Comprehensive Income for the three month
periods ended March 31, 2000 and 1999
Notes to Interim Consolidated Financial Statements at March 31,
2000
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3 Quantitative and Qualitative Disclosures about Market Risk
Information called for by Item 3 is contained in the Liquidity and
Interest Rate Sensitivity Management section of the Management
Discussion and Analysis.
PART II OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on FORM 8-K
SIGNATURES
INDEX TO EXHIBITS
-2-
NBT BANCORP INC. AND SUBSIDIARY MARCH 31, December 31, March 31,
CONSOLIDATED BALANCE SHEETS 2000 1999 1999
- -----------------------------------------------------------------------------------------------------------------------
(in thousands, except share and per share data) (UNAUDITED) (Unaudited)
ASSETS
Cash $ 60,823 $ 64,431 $ 60,234
Securities available for sale, at fair value 497,528 500,423 491,502
Securities held to maturity (fair value - $75,808, $73,648
and $70,094) 78,772 76,706 70,386
Loans 1,295,651 1,222,654 1,081,971
Less allowance for loan losses 17,543 16,654 15,608
- -----------------------------------------------------------------------------------------------------------------------
Net loans 1,278,108 1,206,000 1,066,363
Premises and equipment, net 40,292 40,830 38,667
Other assets 73,583 73,042 60,356
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $2,029,106 $1,961,432 $1,787,508
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 210,579 $ 223,143 $ 189,659
Savings, NOW, and money market 490,328 487,746 464,058
Time 822,842 766,729 680,428
- -----------------------------------------------------------------------------------------------------------------------
Total deposits 1,523,749 1,477,618 1,334,145
Short-term borrowings 165,445 137,567 119,648
Long-term debt 161,793 172,575 149,887
Other liabilities 15,587 13,195 13,868
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 1,866,574 1,800,955 1,617,548
- -----------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, $0.01 par value at March 31, 2000, no par,
stated value $1.00 at December 31, 1999 and
March 31, 1999; shares authorized-2,500,000 - - -
Common stock, $0.01 par value and 30,000,000 authorized
at March 31, 2000, no par, stated value $1.00 and 15,000,000
authorized at December 31, 1999 and March 31, 1999;
issued 18,623,435, 18,616,992, and
17,963,950 at March 31, 2000,
December 31, 1999 and March 31, 1999, respectively 186 18,617 17,964
Additional paid-in-capital 167,047 148,717 138,146
Retained earnings 24,225 23,060 26,296
Accumulated other comprehensive (loss) income (17,615) (18,252) 598
Common stock in treasury at cost 522,567, 538,936,
and 600,953 shares at March 31, 2000, December 31, 1999
and March 31, 1999, respectively (11,311) (11,665) (13,044)
- -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 162,532 160,477 169,960
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,029,106 $1,961,432 $1,787,508
- -----------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-3-
NBT BANCORP INC. AND SUBSIDIARY Three months ended March 31,
CONSOLIDATED STATEMENTS OF INCOME 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data) (Unaudited)
Interest and fee income:
Loans $27,189 $22,679
Securities - available for sale 8,872 7,625
Securities - held to maturity 993 840
Other 402 458
- -----------------------------------------------------------------------------------------------------------------------
Total interest and fee income 37,456 31,602
- -----------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 13,446 11,006
Short-term borrowings 2,054 1,139
Long-term debt 2,346 1,739
- -----------------------------------------------------------------------------------------------------------------------
Total interest expense 17,846 13,884
- -----------------------------------------------------------------------------------------------------------------------
Net interest income 19,610 17,718
Provision for loan losses 1,334 1,120
- -----------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 18,276 16,598
- -----------------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust 860 835
Service charges on deposit accounts 1,620 1,408
Securities gains - 668
Other 1,135 1,365
- -----------------------------------------------------------------------------------------------------------------------
Total noninterest income 3,615 4,276
- -----------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 7,081 5,970
Office supplies and postage 592 637
Occupancy 1,232 1,024
Equipment 1,137 947
Professional fees and outside services 756 697
Data processing and communications 1,132 972
Amortization of intangible assets 312 329
Merger and acquisition costs 1,122 -
Other operating 1,619 1,240
- -----------------------------------------------------------------------------------------------------------------------
Total noninterest expense 14,983 11,816
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes 6,908 9,058
Income taxes 2,667 3,282
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 4,241 $ 5,776
- -----------------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic $ 0.24 $ 0.32
Diluted $ 0.23 $ 0.32
- -----------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-4-
NBT BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------
Additional Accumulated
Paid-in- Other
Common Capital Retained Comprehensive Treasury
Stock Surplus Earning (Loss)/Income Stock Total
- -----------------------------------------------------------------------------------------------------------------------
(in thousands, except share and per share data) (Unaudited)
BALANCE AT DECEMBER 31, 1998 $17,946 $137,997 $23,132 $ 3,062 $(12,962) $169,175
Net income 5,776 5,776
Cash dividends - $0.162 per share (2,596) (2,596)
Payment in lieu of fractional shares (16) (16)
Issuance of 18,164 shares to stock plan 18 172 190
Purchase of 77,500 treasury shares (1,728) (1,728)
Sale of 76,054 treasury shares to
employee benefit plans and other
stock plans (23) 1,646 1,623
Unrealized loss on securities
available for sale, net of
reclassification adjustment,
and deferred taxes of $1,615 (2,464) (2,464)
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1999 $17,964 $138,146 $26,296 $ 598 $(13,044) $169,960
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 $18,617 $148,717 $23,060 $(18,252) $(11,665) $160,477
Net income 4,241 4,241
Cash dividends - $0.170 per share (3,076) (3,076)
Issuance of 6,468 shares to stock
plan 6 63 69
Sale of 4,937 treasury shares to
employee benefit plans and other
stock plans (29) 107 78
Change $1.00 stated value per
share to $0.01 par value per
share (18,437) 18,437 -
Stock option exercise (141) 247 106
Unrealized loss on securities
available for sale, net of
reclassification adjustment,
and deferred taxes of $458 637 637
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 2000 $ 186 $167,047 $24,225 $(17,615) $(11,311) $162,532
- -----------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-5-
NBT BANCORP INC. AND SUBSIDIARY Three Months Ended March 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
(in thousands) (Unaudited)
OPERATING ACTIVITIES:
Net income $ 4,241 $ 5,776
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 1,334 1,120
Depreciation of premises and equipment 1,007 1,017
Net accretion on securities (516) (182)
Amortization of intangible assets 312 329
Proceeds from sale of loans held for sale 1,943 5,140
Origination and purchases of loans held for sale (1,073) (10,000)
Net gains on sales of loans 122 (69)
Net gain on sale of other real estate owned (28) (188)
Net realized gains on sales of securities - (668)
Net (increase) decrease in other assets (1,518) 1,876
Net increase in other liabilities 2,392 1,096
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 8,216 5,247
- -----------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Securities available for sale:
Proceeds from maturities 7,324 31,233
Proceeds from sales 200 99,510
Purchases (3,027) (125,162)
Securities held to maturity:
Proceeds from maturities 6,885 4,961
Purchases (8,942) (11,986)
Net increase in loans (74,339) (27,070)
Purchase of premises and equipment, net (469) (1,928)
Proceeds from sales of other real estate owned 140 540
- -----------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (72,228) (29,902)
- -----------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits 46,131 (22,802)
Net increase in short-term borrowings 27,878 19,776
Proceeds from issuance of long-term debt 5,000 25,000
Repayments of long-term debt (15,782) (743)
Proceeds from issuance of common stock to stock plan 69 190
Exercise of stock options 106 -
Proceeds from issuance of treasury shares to
employee benefit plans and other stock plans 78 1,623
Purchase of treasury stock - (1,728)
Cash dividends and payment for fractional shares (3,076) (2,612)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 60,404 18,704
- -----------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (3,608) (5,951)
Cash and cash equivalents at beginning of period 64,431 66,185
- -----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 60,823 $ 60,234
- -----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the
period for:
Interest $ 17,443 $ 14,186
Income taxes 320 388
- -----------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-6-
NBT BANCORP INC. AND SUBSIDIARY Three Months Ended March 31,
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2000 1999
- ---------------------------------------------------------------------------------------------------
(in thousands) (Unaudited)
Net Income $ 4,241 $ 5,776
- ---------------------------------------------------------------------------------------------------
Other comprehensive income, net of tax
Unrealized holding gains (losses) arising during
period [pre-tax amounts of $1,095 and $(3,411)] 637 (2,047)
Less: Reclassification adjustment for net gains included
in net income [pre-tax amounts of $- and $(668)] - (417)
- ---------------------------------------------------------------------------------------------------
Total other comprehensive income (loss) 637 (2,464)
- ---------------------------------------------------------------------------------------------------
Comprehensive income $ 4,878 $ 3,312
- ---------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
-7-
NBT BANCORP INC. AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements include the
accounts of NBT Bancorp Inc. (the Registrant) and its wholly-owned subsidiaries,
NBT Bank, N.A. (NBT) and LA Bank, N.A. (LA). All intercompany transactions have
been eliminated in consolidation. Amounts in the prior period financial
statements are reclassified whenever necessary to conform to current period
presentation.
The consolidated balance sheet at December 31, 1999 has been derived from
the audited supplemental consolidated financial statements at that date, which
appear in the Current Report on Form 8-K filed on March 31, 2000. The
accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to FORM 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant's annual
report on FORM 10-K for the year ended December 31, 1999 and the supplemental
consolidated financial statements referred to above. The March 31, 1999 interim
consolidated financial statements have been restated to give effect to the
merger with Lake Ariel Bancorp, Inc., which closed on February 17, 2000 and was
accounted for as a pooling-of-interests.
EARNINGS PER SHARE
Basic earnings per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. All share and per
share data has been adjusted retroactively for stock dividends and splits.
The following is a reconciliation of basic and diluted earnings per share
for the periods presented in the income statement.
- ----------------------------------------------------------------------------------------------------
Three months ended March 31, 2000 1999
- ----------------------------------------------------------------------------------------------------
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding 18,028 17,860
Net income available to common shareholders $ 4,241 $ 5,776
- ----------------------------------------------------------------------------------------------------
Basic EPS $ 0.24 $ 0.32
- ----------------------------------------------------------------------------------------------------
Diluted EPS:
Weighted average common shares outstanding 18,028 17,860
Dilutive common stock options 106 244
- ----------------------------------------------------------------------------------------------------
Weighted average common shares and common
share equivalents 18,134 18,104
Net income available to common shareholders $ 4,241 $ 5,776
- ----------------------------------------------------------------------------------------------------
Diluted EPS $ 0.23 $ 0.32
- ----------------------------------------------------------------------------------------------------
MERGERS AND ACQUISITIONS
On February 17, 2000, the stockholders of NBT Bancorp Inc. and Lake Ariel
Bancorp, Inc. (Lake Ariel) approved a merger whereby Lake Ariel was merged with
and into NBT Bancorp Inc. with each issued and outstanding share of Lake Ariel
exchanged for 0.9961 shares of NBT Bancorp Inc. common stock. The transaction
resulted in the issuance of 5.0 million shares of NBT Bancorp Inc. common stock,
bringing the Company's outstanding shares to 18.1 million after the merger. The
merger results in NBT Bancorp Inc. being the surviving holding company for NBT
Bank, N.A. and LA Bank, N.A., a former subsidiary of Lake Ariel. The merger is
being accounted for as a pooling-of-interests and qualifies as a tax-free
exchange for Lake Ariel shareholders.
-8-
LA Bank, N.A. is a commercial bank headquartered in northeast Pennsylvania
with twenty-two branch offices in five counties and approximately $587 million
in assets at March 31, 2000. The combined company, NBT Bancorp Inc., has
combined assets over $2.0 billion and fifty-eight branch locations.
On December 8, 1999, NBT Bancorp Inc. and Pioneer American Holding Company
Corp., the parent company of Pioneer American Bank, N.A., announced they entered
into a definitive agreement of merger. The merger is subject to the approval of
each company's shareholders and of banking regulators. The merger is expected to
close in the second quarter of 2000 and is intended to be accounted for as a
pooling-of-interests and qualify as a tax-free exchange for Pioneer American
shareholders. Shareholders of Pioneer American will receive a fixed ratio of
1.805 shares of NBT Bancorp Inc. common stock for each share exchanged. NBT
Bancorp Inc. will issue approximately 5.2 million shares and share equivalents
in exchange for all of the Pioneer American common stock and share equivalents
outstanding.
Pioneer American Bank, N.A. is a full service commercial bank with total
assets of approximately $415 million at March 31, 2000 and eighteen branches in
five counties in northeast Pennsylvania. Pioneer American Bank, N.A. will
ultimately be merged together with LA Bank, N.A. to form the largest community
bank headquartered in northeast Pennsylvania.
On March 28, 2000, NBT Bancorp Inc. and M. Griffith, Inc. jointly announced
that a definitive agreement has been signed for NBT Bancorp Inc. to acquire all
of the stock of M. Griffith, Inc. M. Griffith, Inc. is a Utica, New York based
securities firm offering investment, financial advisor and asset-management
services, primarily in the Mohawk Valley region. M. Griffith, Inc., a
full-service broker/dealer and a Registered Investment Advisor, will become a
wholly-owned subsidiary of NBT Financial Services, Inc. NBT Financial Services,
Inc. was created in September of 1999 to concentrate on expanding NBT Bancorp
Inc.'s menu of financial services beyond traditional bank product offerings.
On April 20, 2000, NBT Bancorp Inc. and BSB Bancorp, Inc., the parent
company of BSB Bank and Trust Company, announced the signing of a definitive
agreement to merge. The merger is subject to the approval of each company's
shareholders and of banking regulators. The merger is expected to close in the
fourth quarter of 2000 and is intended to be accounted for as a pooling-of-
interests and qualify as a tax-free exchange for BSB Bancorp, Inc.
shareholders. Shareholders of BSB Bancorp, Inc. will receive a fixed ratio
of 2.0 shares of NBT Bancorp Inc. common stock for each share exchanged.
BSB Bank and Trust Company is a full service commercial bank with total
assets of approximately $2.2 billion at March 31, 2000 and twenty-two branches
in six counties in central New York and the Southern Tier. As a result of the
merger, NBT Bank, N.A. and BSB Bank and Trust Company will be combined to create
one of the largest independent community banks in upstate New York. This
strategic alliance will create a bank holding company with assets of $4.7
billion and proforma market capitalization of approximately $539 million. The
holding company will adopt a new name before the merger occurs. The combined
company will have three direct operating subsidiaries including two community
banks and a financial services company.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes comprehensive
accounting and reporting requirements for derivative instruments and hedging
activities. SFAS No. 133 requires companies to record derivatives on the balance
sheet as assets or liabilities, measured at fair value. The accounting for gains
or losses resulting from changes in the values of those derivatives would be
dependent on the use of the derivative and the type of risk being hedged. During
the second quarter of 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB No. 133". FASB No. 137 defers the effective date of FASB No. 133 by one
year from fiscal quarters of fiscal years beginning after June 15, 1999 to
fiscal quarters of fiscal years beginning after June 15, 2000. At the present
time, the Company has not fully analyzed the effect or timing of the adoption of
SFAS No. 133 on the Company's consolidated financial statements.
-9-
NBT BANCORP INC. AND SUBSIDIARY
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The purpose of this discussion and analysis is to provide the reader with a
concise description of the financial condition and results of operations of NBT
Bancorp Inc. (Bancorp) and its wholly owned subsidiaries, NBT Bank, N.A. (NBT)
and LA Bank N.A. (LA) collectively referred to herein as the Company. This
discussion will focus on Results of Operations, Financial Position, Capital
Resources and Asset/Liability Management. Reference should be made to the
Company's consolidated financial statements and footnotes thereto included in
this FORM 10-Q as well as to the Company's 1999 FORM 10-K for an understanding
of the following discussion and analysis. In December 1999, the Company
distributed a 5% stock dividend, the fortieth consecutive year a stock dividend
has been declared. Throughout this discussion and analysis, amounts per common
share and common shares outstanding have been adjusted retroactively for stock
dividends and splits.
On April 24, 2000, NBT Bancorp Inc. announced the declaration of a regular
quarterly cash dividend of $0.17 per share. The cash dividend will be paid on
June 15, 2000 to stockholders of record as of June 1, 2000.
Certain statements in this release and other public releases by the Company
contain forward-looking information, as defined in the Private Securities
Litigation Reform Act. These statements may be identified by the use of phrases
such as "anticipate," "believe," "expect," "forecasts," "projects," or other
similar terms. Actual results may differ materially from these statements since
such statements involve risks and uncertainties. Factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements include, among others, the following possibilities: (1) an increase
in competitive pressures in the banking industry; (2) changes in the interest
rate environment; (3) changes in the regulatory environment; (4) general
economic environment conditions, either nationally or regionally, may be less
favorable than expected, resulting in, among other things, a deterioration in
credit quality; and (5) changes may incur in business conditions and inflation.
YEAR 2000
Concerns over the arrival of the Year 2000 ("Y2K") and its impact on the
embedded computer technologies used by financial institutions, among others, led
bank regulatory authorities to require substantial advance testing and
preparations by all banking organizations, including the Company. As of the date
of this filing, the Company has experienced no material problems in connection
with the arrival of Y2K, either in connection with the services and products it
provides to its customers or in connection with the services and products it
receives from third party vendors or suppliers. However, while no such
occurrence has developed, Y2K issues may arise that may not become immediately
apparent. Therefore, the Company will continue to monitor and work to remedy any
issues that arise. Although the Company expects that its business will not be
materially impacted, such future events cannot be known with certainty.
OVERVIEW
Net income of $4.2 million ($0.23 per diluted share) was recognized in the first
quarter of 2000, down from first quarter 1999 net income of $5.8 million ($0.32
per diluted share). The decline in net income can be attributed to the $1.1
million in merger related expenses recognized during the first quarter of 2000.
Also contributing to the decline in net income as compared to the first quarter
of 1999 is the $0.7 million in securities gains recognized during the first
quarter of 1999. After taking these items into consideration, the Company's core
earnings remained at the strong level experienced in the first quarter of 1999.
Table 1 depicts several measurements of performance on an annualized basis.
Returns on average assets and equity measure how effectively an entity utilizes
its total resources and capital, respectively. Both the return on average assets
and the return on average equity ratios declined for the quarter compared to the
same period a year previous.
Net interest margin, net federal taxable equivalent (FTE) interest income
divided by average interest-earning assets, is a measure of an entity's ability
to utilize its earning assets in relation to the cost of funding. Interest
income for tax-exempt securities and loans is adjusted to a taxable equivalent
basis using the statutory Federal income tax rate of 35%.
-10-
TABLE 1
PERFORMANCE MEASUREMENTS
- -----------------------------------------------------------------------------------------
FIRST First
QUARTER Quarter
2000 1999
- -----------------------------------------------------------------------------------------
Return on average assets 0.86% 1.35%
Return on average equity 10.59% 13.84%
Net interest margin (FTE) 4.32% 4.52%
- -----------------------------------------------------------------------------------------
NET INTEREST INCOME
Net interest income is the difference between interest income on earning assets,
primarily loans and securities, and interest expense on interest-bearing
liabilities, primarily deposits and borrowings. Net interest income is affected
by the interest rate spread, the difference between the yield on earning assets
and cost of interest-bearing liabilities, as well as the volumes of such assets
and liabilities. Net interest income is one of the major determining factors in
a financial institution's performance as it is the principal source of earnings.
Table 2 represents an analysis of net interest income on a federal taxable
equivalent basis.
Federal taxable equivalent (FTE) net interest income increased $2.1 million
during the first quarter of 2000 compared to the same period of 1999. This
increase can be attributed to a $258.4 million increase in average earning
assets, primarily the result of continued loan growth.
Total FTE interest income increased $6.1 million compared to first quarter
1999, a result of the previously mentioned increase in average earning assets as
well as a 15 basis point increase in the yield earned on those earning assets.
The increase in the yield on earning assets can be primarily attributed to a 16
basis point increase in the yield on the securities available for sale
portfolio. During the same time period, total interest expense increased $4.0
million, primarily the result of a $229.4 million increase in average interest
bearing liabilities between reporting periods. Also contributing to the
increased interest expense was a 38 basis point increase in the cost of interest
bearing liabilities, the result of the rising interest rate environment during
late 1999 and the first quarter of 2000. Driving this increase in the cost of
funds was a 35 basis point increase in the cost of time deposits and an 86 basis
point increase in the cost of short-term borrowings. This increase in the cost
of funds resulted in a 23 basis point decline in the interest rate spread, as
the Company's liabilities repriced faster than the earning assets during the
rising rate environment.
Another important performance measurement of net interest income is the net
interest margin. This is computed by dividing annualized FTE net interest income
by average earning assets for the period. Net interest margin decreased to 4.32%
for first quarter 2000, down from 4.52% for the comparable period in 1999. The
decrease in the net interest margin can be attributed to the previously
mentioned decrease in the interest rate spread as the interest bearing
liabilities repriced faster than the earning assets during the recent rising
interest rate environment.
-11-
TABLE 2
COMPARATIVE ANALYSIS OF FEDERAL TAXABLE EQUIVALENT NET INTEREST INCOME
Three months ended March 31,
ANNUALIZED
YIELD/RATE AMOUNTS VARIANCE
2000 1999 (dollars in thousands) 2000 1999 TOTAL VOLUME RATE
---- ---- ---- ---- ----- ------ ----
5.12% 4.07% Interest bearing deposits $ 6 $ 4 $ 2 $ - $ 2
5.48% 4.62% Federal funds sold 42 131 (89) (119) 30
6.61% 6.77% Other 354 322 32 40 (8)
6.88% 6.72% Securities available for sale 9,043 7,734 1,309 1,111 198
Securities held to maturity:
6.13% 6.12% Taxable 357 371 (14) (14) -
7.11% 6.60% Tax exempt 977 722 255 193 62
8.75% 8.68% LOANS 27,387 22,791 4,596 4,506 90
-------------------------------------------------------------------------------------
8.12% 7.97% Total interest income 38,166 32,075 6,091 5,717 374
3.23% 2.85% Money market deposit accounts 903 793 110 - 110
1.38% 1.47% NOW deposit accounts 562 581 (19) - (19)
2.97% 2.99% Savings deposits 1,561 1,477 84 38 46
5.27% 4.92% Time deposits 10,420 8,155 2,265 178 2,087
5.58% 4.72% Short-term borrowings 2,054 1,139 915 884 31
5.62% 5.56% LONG-TERM DEBT 2,346 1,739 607 605 2
------------------------------------------------------------------------------------
4.49% 4.11% TOTAL INTEREST EXPENSE 17,846 13,884 3,962 1,705 2,257
-------------------------------------------------------------------------------------
Net interest income $20,320 $18,191 $ 2,129 $4,012 $( 1,883)
======================================================================================
3.63% 3.86% Interest rate spread
4.32% 4.52% Net interest margin
FTE adjustment $ 710 $ 473
============== ======= =======
For purposes of the above yield computations, nonaccrual loans are included in
the average loan balances outstanding and average securities are at amortized
cost. Average balances used to calculate the yields are daily averages.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is a valuation allowance established to provide
for the inherent risk of loss in the Company's loan portfolio. The allowance is
maintained at a level considered adequate to provide for loan loss exposure
based on management's estimate of probable losses in the portfolio considering
an evaluation of risk, economic factors, and past loss experience. Management
determines the provision and allowance for loan losses based on a number of
factors including a comprehensive loan review program conducted throughout the
year. The loan portfolio is continually evaluated in order to identify problem
loans, credit concentration, and other risk factors such as economic conditions
and trends. The allowance for loan losses to outstanding loans at March 31, 2000
was 1.35%, compared to 1.44% at March 31, 1999. Management considers the
allowance for loan losses to be adequate based on evaluation and analysis of the
loan portfolio.
Table 3 reflects changes to the allowance for loan losses for the periods
presented. The allowance is increased by provisions for losses charged to
operations and is reduced by net charge-offs. Charge-offs are made when the
collectability of loan principal within a reasonable time is unlikely. Any
recoveries of previously charged-off loans are credited directly to the
allowance for loan losses. Net charge-offs for the first quarter of 2000 were
$0.4 million, or 0.14% of average loans, compared to $0.8 million, or 0.32% of
average loans for the same period of 1999.
-12-
TABLE 3
ALLOWANCE FOR LOAN LOSSES
- -------------------------------------------------------------------------------------------------------------
Three months ended March 31,
(dollars in thousands) 2000 1999
- -------------------------------------------------------------------------------------------------------------
Balance, beginning of period $16,654 $15,322
Recoveries 248 221
Charge-offs (693) (1,055)
- -------------------------------------------------------------------------------------------------------------
Net (charge-offs) (445) (834)
Provision for loan losses 1,334 1,120
- -------------------------------------------------------------------------------------------------------------
Balance, end of period $17,543 $15,608
- -------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET CHARGE-OFFS
Commercial and agricultural $ (97) 22% $ (376) 45%
Real estate mortgage (86) 18% (28) 3%
Consumer (262) 60% (430) 52%
- -------------------------------------------------------------------------------------------------------------
Net charge-offs $ (445) 100% $ (834) 100%
- -------------------------------------------------------------------------------------------------------------
Annualized net charge-offs to average loans 0.14% 0.32%
- -------------------------------------------------------------------------------------------------------------
Net charge-offs to average loans for the year ended
December 31, 1999 0.33%
- -------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Table 4 below presents noninterest income for the first quarter of 2000 and
1999. Total noninterest income for the first quarter of 2000, excluding security
gains, was stable when compared to first quarter 1999. Service charges on
deposit accounts increased $0.2 million in the first quarter of 2000 compared to
the same period of 1999. This improvement can be attributed to an increase in
service fee and overdraft income resulting from growth in demand deposit
accounts. Other income decreased $0.2 million in the first quarter of 2000
compared to the same period of 1999. This decrease can be attributed to a mark
to market adjustment as a result of a decline in the market value of the
Company's mortgage loans held for sale portfolio.
Security gains decreased $0.7 million for the first quarter 2000 as
compared to first quarter 1999.
TABLE 4
NONINTEREST INCOME
- ---------------------------------------------------------------------------------------------------------------
FIRST First
QUARTER Quarter
(dollars in thousands) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
Trust income $ 860 $ 835
Service charges on deposit accounts 1,620 1,408
Securities gains - 668
Other income 1,135 1,365
- ---------------------------------------------------------------------------------------------------------------
Total noninterest income $3,615 $4,276
- ---------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE AND OPERATING EFFICIENCY
Table 5 presents components of noninterest expense as well as selected operating
efficiency ratios. Total noninterest expense increased $3.2 million between the
quarter ended March 31, 2000 and the same period for 1999. Contributing to this
increase in the first quarter of 2000 was $1.1 million in merger and acquisition
related expenses associated with the previously mentioned mergers. It is
anticipated that the Company will incur approximately $11.2 million in
additional merger and acquisition expenses related to the Lake Ariel and Pioneer
American mergers during 2000. In addition, during 2000 and 2001 the Company
anticipates incurring approximately $16.5 million of pre-tax merger and
acquisition expenses related to the BSB Bancorp, Inc. merger.
Salaries and employee benefits for the first quarter of 2000 increased $1.1
million compared to the same period of 1999, primarily the result of increased
salaries and performance based incentives.
Occupancy expense for the first quarter of 2000 experienced a $0.2 million
increase compared to the same period in 1999. This increase can be attributed to
an increase in security expense from a third party contract to enhance the
maintenance of the Company's security equipment. Also contributing to the
-13-
increase in occupancy expense was an increase in rental expense associated with
the addition of branch and ATM locations through out our market areas.
Equipment expense for the quarter ended March 31, 2000 experienced a $0.2
million increase compared to the same period in 1999, primarily attributable to
increased equipment depreciation and maintenance.
Other operating expense for the first quarter of 2000 experienced a $0.4
million increase compared to the first quarter of 1999. Included in the first
quarter 1999 other operating expense was a nonrecurring gain of $0.2 million on
the sale of other real estate owned.
One important operating efficiency measure that the Company closely
monitors is the efficiency ratio. The efficiency ratio is computed as total
noninterest expense (excluding nonrecurring charges) divided by net interest
income plus noninterest income (excluding net security gains and losses and
nonrecurring income). The efficiency ratio increased to 57.24% in the first
quarter of 2000 from 55.16% in the same period of 1999. This increase was a
result of the increase in noninterest expense between reporting periods.
TABLE 5
NONINTEREST EXPENSE AND PRODUCTIVITY MEASUREMENTS
- ---------------------------------------------------------------------------------------------
FIRST First
QUARTER Quarter
(dollars in thousands) 2000 1999
- ---------------------------------------------------------------------------------------------
Salaries and employee benefits 7,081 5,970
Office supplies and postage 592 637
Occupancy 1,232 1,024
Equipment 1,137 947
Professional fees and outside services 756 697
Data processing and communications 1,132 972
Amortization of intangible assets 312 329
Merger and acquisition costs 1,122 -
Other operating 1,619 1,240
- ---------------------------------------------------------------------------------------------
Total noninterest expense $14,983 $11,816
- ---------------------------------------------------------------------------------------------
Efficiency ratio 57.24% 55.16%
Average full-time equivalent
employees 656 661
Average assets per average
full-time equivalent employee
(millions) $ 3.0 $ 2.6
- ---------------------------------------------------------------------------------------------
INCOME TAXES
Income tax expense was $2.7 million for the first quarter of 2000 compared to
$3.3 million for the first quarter of 1999. The decrease in income taxes during
the first quarter of 2000 can be attributed to the decreased income before
income taxes between reporting periods. The effective tax rate was 38.6% for the
first quarter of 2000 and 36.2% for the same period of 1999. The increase in the
effective tax rate can be attributed to non-deductible merger and acquisition
costs.
BALANCE SHEET
The following table highlights the changes in the balance sheet. Since period
end balances can be distorted by one day fluctuations, the discussion and
analysis concentrates on average balances when appropriate to give a better
indication of balance sheet trends.
-14-
TABLE 6
AVERAGE BALANCES
- ----------------------------------------------------------------------------------------------------
Three months ended
March 31,
(dollars in thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 53,078 $ 55,533
Securities available for sale, at fair value 496,279 471,104
Securities held to maturity 78,691 68,977
Loans 1,258,144 1,065,313
Deposits 1,493,278 1,334,062
Short-term borrowings 148,120 97,876
Long-term debt 168,004 126,812
Stockholders' equity 161,042 169,273
Assets 1,983,649 1,741,376
Earning assets 1,890,843 1,632,450
Interest bearing liabilities $1,599,924 $1,370,544
- ----------------------------------------------------------------------------------------------------
SECURITIES
Average total securities were $34.9 million greater for the first quarter of
2000 than for the same period of 1999. The majority of this increase was in the
available for sale portfolio. During the first quarter of 2000, the securities
portfolio represented 32.1% of average earning assets compared to 32.8% for the
first quarter of 1999. At March 31, 2000, the securities portfolio was comprised
of 86% available for sale and 14% held to maturity securities.
LOANS
The Company has continued to experience strong growth in the loan portfolio.
Average loan volume for the first quarter of 2000 was $192.8 million, or 18.1%
greater than the first quarter 1999 average. This growth has been present in all
loan categories, with increases in the average commercial, consumer and mortgage
portfolios of $125.1 million, $53.5 million and $14.2 million, respectively.
The Company has continued to experience an increase in the demand for
commercial loans, primarily in the business and real estate categories. The
Company does not engage in highly leveraged transactions or foreign lending
activities.
NONPERFORMING ASSETS AND PAST DUE LOANS
Nonperforming assets consist of nonaccrual loans and other real estate owned
(OREO). Loans are generally placed on nonaccrual when principal or interest
payments become ninety days past due, unless the loan is well secured and in the
process of collection. Loans may also be placed on nonaccrual when circumstances
indicate that the borrower may be unable to meet the contractual principal or
interest payments. OREO represents property acquired through foreclosure and is
valued at the lower of the carrying amount or fair market value, less any
estimated disposal costs.
Total nonperforming assets were $8.5 million at March 31, 2000 compared to
$7.9 million at March 31, 1999. An increase of $2.0 million in nonaccrual
commercial and agricultural loans was partially offset by a decrease in other
real estate owned of $1.1 million. A significant portion of the increase in
nonaccrual commercial loans can be attributed to two customers. Total assets
containing risk elements were $9.2 million, or 0.45% of assets at March 31, 2000
compared to $8.8 million, or 0.49% of assets at March 31, 1999. The reduction in
assets containing risk elements to assets indicates an improvement in asset
quality.
At March 31, 2000, the recorded investment in impaired loans was $6.4
million. Included in this amount is $3.2 million of impaired loans for which the
specifically allocated allowance for loan loss is $1.0 million. In addition,
included in impaired loans is $3.1 million of impaired loans that, as a result
of the adequacy of collateral values and cash flow analysis, do not have a
specific reserve. At December 31, 1999, the recorded investment in impaired
loans was $4.7 million, of which $0.9 million had a specific allowance
allocation of $0.5 million and $3.8 million for which there was no specific
reserve. At March 31, 1999, the recorded investment in impaired loans was $4.4
million, of which $1.5 million had a specific allowance allocation of $0.5
million and $2.8 million of which there was no specific reserve. The Company
classifies all commercial and small business nonaccrual loans as impaired loans.
-15-
TABLE 7
NONPERFORMING ASSETS AND RISK ELEMENTS
- --------------------------------------------------------------------------------------------------------------
MARCH 31, March 31,
(dollars in thousands) 2000 1999
- --------------------------------------------------------------------------------------------------------------
Commercial and agricultural $6,363 82% $4,385 73%
Real estate mortgage 531 7% 691 11%
Consumer 846 11% 953 16%
- --------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 7,740 100% 6,029 100%
- --------------------------------------------------------------------------------------------------------------
Other real estate owned 789 1,896
- --------------------------------------------------------------------------------------------------------------
Total nonperforming assets 8,529 7,925
- --------------------------------------------------------------------------------------------------------------
Loans 90 days or more past due and still accruing:
Commercial and agricultural 64 10% 21 3%
Real estate mortgage 423 67% 515 61%
Consumer 143 23% 299 36%
- --------------------------------------------------------------------------------------------------------------
Total 630 100% 835 100%
- --------------------------------------------------------------------------------------------------------------
Total assets containing risk elements $9,159 $8,760
- --------------------------------------------------------------------------------------------------------------
Total nonperforming loans to loans 0.60% 0.56%
Total loans containing risk elements to loans 0.65% 0.63%
Total nonperforming assets to assets 0.42% 0.44%
Total assets containing risk elements to assets 0.45% 0.49%
- --------------------------------------------------------------------------------------------------------------
DEPOSITS
Customer deposits represent the greatest source of funding assets. Average total
deposits for the quarter ended March 31, 2000 were $1.5 billion compared to $1.3
billion at March 31, 1999. This growth has been present in all deposit
categories, with increases in the average demand, savings and time deposits of
$21.3 million, $14.4 million and $123.6 million, respectively. As previously
mentioned, the increase in demand deposits has led to an increase in service
charge fee income.
BORROWED FUNDS
The Company's borrowed funds consist of short-term borrowings and long-term
debt. Average short-term borrowings for the first quarter of 2000 were $148.1
million compared to $97.9 million for the same period of 1999. Average long-term
debt for the first quarter of 2000 was $168.0 million compared to $126.8 million
for the same period of 1999. The increase in borrowed funds between reporting
periods can be attributed to the need for funding the strong loan growth.
CAPITAL AND DIVIDENDS
Stockholders' equity of $162.5 million represents 8.0% of total assets at March
31, 2000, compared with $170.0 million, or 9.5% a year previous, and $160.5
million, or 8.2% at December 31, 1999.
In December 1999, the Company distributed a 5% stock dividend, the fortieth
consecutive year a stock dividend has been declared. The Company does not have a
target dividend payout ratio, rather the Board of Directors considers the
Company's earnings position and earnings potential when making dividend
decisions.
Capital is an important factor in ensuring the safety of depositors'
accounts. During both 1999 and 1998, the Company earned the highest possible
national safety and soundness rating from two national bank rating services,
Bauer Financial Services and Veribanc, Inc. Their ratings are based on capital
levels, loan portfolio quality and security portfolio strength.
As the capital ratios in Table 8 indicate, the Company remains well
capitalized. Capital measurements are significantly in excess of regulatory
minimum guidelines and meet the requirements to be considered well capitalized
for all periods presented. Tier 1 leverage, Tier 1 capital and Risk-based
capital ratios have regulatory minimum guidelines of 3%, 4% and 8% respectively,
with requirements to be considered well capitalized of 5%, 6% and 10%,
respectively.
-16-
TABLE 8
CAPITAL MEASUREMENTS
- -------------------------------------------------------------------------------------------------------------
FIRST First
QUARTER Quarter
2000 1999
- -------------------------------------------------------------------------------------------------------------
Tier 1 leverage ratio 8.61% 9.24%
Tier 1 capital ratio 12.93% 14.73%
Total risk-based capital ratio 14.08% 15.90%
Cash dividends as a percentage
of net income 72.53% 44.94%
Per common share:
Book value $ 8.98 $ 9.45
Tangible book value $ 8.53 $ 8.92
- -------------------------------------------------------------------------------------------------------------
The accompanying Table 9 presents the high, low and closing sales price for the
common stock as reported on the NASDAQ Stock Market, and cash dividends declared
per share of common stock. At March 31, 2000, total market capitalization of the
Company's common stock was approximately $262 million compared with $358 million
at March 31, 1999. The Company's price to book value ratio was 1.61 at March 31,
2000 and 2.10 a year ago. The Company's price was 16 times annualized earnings
at March 31, 2000, compared to 15 times a year previous.
TABLE 9
QUARTERLY COMMON STOCK AND DIVIDEND INFORMATION*
- ----------------------------------------------------------------------------------------------------------
Cash
Dividends
Quarter Ending High Low Close Declared
- ----------------------------------------------------------------------------------------------------------
1999
- ----------------------------------------------------------------------------------------------------------
March 31 $23.33 $19.89 $19.89 $0.162
June 30 21.19 19.05 19.52 0.162
September 30 20.90 16.43 16.49 0.162
December 31 17.98 14.63 15.50 0.170
- ----------------------------------------------------------------------------------------------------------
2000
- ----------------------------------------------------------------------------------------------------------
MARCH 31 $16.50 $11.38 $14.50 $0.170
- ----------------------------------------------------------------------------------------------------------
[FN]
*historical NBT Bancorp Inc. only
LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT
The primary objectives of asset and liability management are to provide for the
safety of depositor and investor funds, assure adequate liquidity, and maintain
an appropriate balance between interest sensitive earning assets and interest
bearing liabilities. Liquidity management involves the ability to meet the cash
flow requirements of customers who may be depositors wanting to withdraw funds
or borrowers needing assurance that sufficient funds will be available to meet
their credit needs. The Asset/Liability Management Committee (ALCO) is
responsible for liquidity management and has developed guidelines which cover
all assets and liabilities, as well as off balance sheet items that are
potential sources or uses of liquidity. Liquidity must also provide the
flexibility to implement appropriate strategies and tactical actions.
Requirements change as loans grow, deposits and securities mature, and payments
on borrowings are made. Interest rate sensitivity management seeks to avoid
widely fluctuating net interest margins and to ensure consistent net interest
income through periods of changing economic conditions.
The Company's primary measure of liquidity is called the basic surplus,
which compares the adequacy of cash sources to the amounts of volatile funding
sources. This approach recognizes the importance of balancing levels of cash
flow liquidity from short and long-term securities with the availability of
dependable borrowing sources. Accordingly, the Company has established borrowing
agreements with other banks (Federal Funds), the Federal Home Loan Bank (short
and long-term borrowings which are denoted as advances), and repurchase
agreements with investment companies. The Asset/Liability Management Committee
has determined that liquidity is adequate to meet the cash flow requirements of
the Company.
Interest rate risk is determined by the relative sensitivities of earning
asset yields and interest bearing liability costs to changes in interest rates.
The method by which banks evaluate interest rate risk is to look at the interest
sensitivity gap, the difference between interest sensitive assets and interest
sensitive liabilities repricing during the same period, measured at a specific
point in time. Through analysis of the interest sensitivity gap, the Company
-17-
attempts to position its assets and liabilities to maximize net interest income
in several different interest rate scenarios.
While the static gap evaluation of interest rate sensitivity is useful, it
is not indicative of the impact of fluctuating interest rates on net interest
income. Once the Company determines the extent of gap sensitivity, the next step
is to quantify the potential impact of the interest sensitivity on net interest
income. The Company measures interest rate risk based on the potential change in
net interest income under various rate environments. The Company utilizes an
interest rate risk model that simulates net interest income under various
interest rate environments. The model groups assets and liabilities into
components with similar interest rate repricing characteristics and applies
certain assumptions to these products. These assumptions include, but are not
limited to prepayment estimates under different rate environments, potential
call options of the investment portfolio and forecasted volumes of the various
balance sheet items. The following table presents the impact on net interest
income of a gradual twelve-month increase or decrease in interest rates compared
to a stable interest rate environment. The simulation projects net interest
income over the next year using the March 31, 2000 balance sheet position.
TABLE 10
INTEREST RATE SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
Change in interest rates Percent change in
(in basis points) net interest income
- --------------------------------------------------------------------------------
+200 (3.12%)
+100 (1.80%)
- -100 0.97%
- -200 1.13%
- --------------------------------------------------------------------------------
-18-
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
In the normal course of business, there are various outstanding legal
proceedings. In the opinion of management, the aggregate amount involved in such
proceedings is not material to the financial condition or results of operations
of the Company.
Item 2 -- Changes in Securities
Following are listed changes in the Company's Common Stock outstanding during
the quarter ended March 31, 2000 as well as certain actions which have been
taken which may affect the number of shares of Common Stock (shares) outstanding
in the future. There was no Preferred Stock outstanding during the quarter ended
March 31, 2000.
At a Special Meeting of Stockholders held on February 17, 2000, the
stockholders of NBT Bancorp Inc. approved two amendments to the Company's
Certificate of Incorporation. The first amendment changed the Company's common
and preferred stock from no par value, $1.00 stated value per share to shares
having a par value of $.01 per share. The second amendment increased the number
of authorized shares of NBT Bancorp Inc. common stock from 15 million to 30
million.
Item 3 -- Defaults Upon Senior Securities
This item is omitted because there were no defaults upon the Company's senior
securities during the quarter ended March 31, 2000.
Item 4 -- Submission of Matters to a Vote of Security Holders
The Company held a Special Meeting of Stockholders on February 17, 2000.
Stockholders approved the following proposals:
a. Proposal to approve the amendment to Article Fourth of NBT's Certificate of
Incorporation to change NBT's authorized common stock and preferred stock from
no par value, stated value $1.00 per share to a par value of $.01 per share.
The proposal was approved, with 10,177,577 votes FOR, 489,762 votes
AGAINST, and 363,007 votes ABSTAINING.
b. Proposal to approve the amendment to Article Fourth of NBT's Certificate of
Incorporation to increase the number of authorized shares of common stock from
15 million to 30 million.
The proposal was approved, with 10,255,583 votes FOR, 556,831 votes
AGAINST, and 217,895 votes ABSTAINING.
c. To approve a proposal to ratify a change to Article III, Section 2 of the NBT
Bancorp Inc. Bylaws, relating to the number, classification and qualification of
directors, previously approved by the NBT Bancorp Inc. Board of Directors.
The proposal was approved, with 9,087,635 votes FOR, 929,423 votes AGAINST,
and 242,839 votes ABSTAINING.
d. To approve the Agreement and Plan of Merger, dated as of August 16, 1999, and
amended as of December 13, 1999 and further amended as of December 27, 1999, by
and between NBT Bancorp Inc. and Lake Ariel Bancorp, Inc. which, among other
things, Lake Ariel will merge with and into NBT Bancorp Inc., with NBT Bancorp
Inc. being the surviving corporation and NBT Bancorp Inc. will issue
approximately 4.8 million shares of common stock to the Lake Ariel stockholders
upon completion of the merger.
-19-
The proposal was approved, with 9,588,479 votes FOR, 518,735 votes AGAINST,
and 152,681 votes ABSTAINING.
Item 5 -- Other Information
Not Applicable
Item 6 -- Exhibits and Reports on FORM 8-K
(a) An index to exhibits follows the signature page of this FORM 10-Q.
(b) During the first quarter ended March 31, 2000, the Company filed the
following Current Reports on Form 8-K:
Current report on Form 8K filed with the Securities and Exchange
Commission on February 22, 2000
Current report on Form 8K filed with the Securities and Exchange
Commission on March 3, 2000
Current report on Form 8K filed with the Securities and Exchange
Commission on March 31, 2000
-20-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on FORM 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized, this 15th day of May, 2000.
NBT BANCORP INC.
By: /S/ MICHAEL J. CHEWENS
-------------------------------
Michael J. Chewens, CPA
Executive Vice President
Chief Financial Officer and Treasurer
-21-
INDEX TO EXHIBITS
The following documents are attached as Exhibits to this FORM 10-Q or, if
annotated by the symbol *, are incorporated by reference as Exhibits as
indicated by the page number or exhibit cross-reference to the prior filings of
the Registrant with the Commission.
FORM 10-Q
Exhibit Exhibit
NUMBER CROSS-REFERENCE
- ------ ---------------
3.1 Certificate of Incorporation of NBT Bancorp Inc., as amended
through February 17, 2000 Herein
10.1 NBT Bancorp Inc. 1993 Stock Option Plan as amended through
January 24, 2000 Herein
10.2 Form of Employment Agreement between NBT Bancorp Inc. and
Daryl R. Forsythe made as of January 1, 2000 Herein
10.3 Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Daryl R. Forsythe made as of January 1,
1995 and as revised on April 28, 1998, and on January 1, 2000 Herein
10.4 Form of Employment Agreement between NBT Bancorp Inc. and
Martin A. Dietrich made as of January 1, 2000 Herein
10.5 Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Martin A. Dietrich made as of
January 1, 2000 Herein
10.6 Form of Employment Agreement between NBT Bancorp Inc. and
Joe C. Minor made as of January 1, 2000 Herein
10.7 Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Joe C. Minor made as of
January 1, 2000 Herein
10.8 Form of Employment Agreement between NBT Bancorp Inc. and
John G. Martines made as of February 17, 2000 Herein
10.9 Form of Change-In-Control Agreement between NBT Bancorp Inc.
and the following officers of NBT Bancorp Inc. or one or more of its
subsidiaries: John R. Bradley, Michael J. Chewens, Rita K. DeMarko,
Martin A. Dietrich, Joseph J. Earyes, Daryl R. Forsythe, John G. Martines,
Joe C. Minor, Jane Neal, David E. Raven, Kenneth C. Reilly, and
John D. Roberts Herein
10.10 NBT Bancorp Inc. 2000 Executive Incentive Compensation Plan Herein
27.1 Financial Data Schedule for period ending March 31, 2000 Herein
27.2 Financial Data Schedule for period ending March 31, 1999 Herein
-22-
EXHIBIT 3.1
Certificate of Incorporation of NBT Bancorp Inc.,
as amended through February 17, 2000
CERTIFICATE OF INCORPORATION
OF
NBT BANCORP INC.
AS AMENDED THROUGH
FEBRUARY 17, 2000
FIRST: The name of the corporation (hereinafter called the
Corporation) is NBT BANCORP INC.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 229 South State Street, City of Dover, County of Kent; and
the name of the registered agent of the Corporation in the State of Delaware at
such address is The Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and the purpose to be conducted and
promoted by the Corporation shall be to conduct any lawful business, to promote
any lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
(A) FOURTH: The total number of shares of all classes of capital stock which the
Corporation shall have the authority to issue is Thirty-Two Million Five Hundred
Thousand (32,500,000) shares, consisting of Thirty Million (30,000,000) shares
of Common Stock, par value $.01 per share and Two Million Five Hundred Thousand
(2,500,000) shares of Preferred Stock, par value $.01 per share.
Each share of Common Stock having no par value, stated value $1.00 per
share (`Existing Common Stock') outstanding on the effective date of the
amendment including this paragraph shall be reclassified as and changed into one
share of Common Stock, par value $.01 per share ("New Common Stock"), upon the
effectiveness of such amendment. The certificates that prior to the
effectiveness of such amendment represented Existing Common Stock shall remain
outstanding and shall thereafter represent the shares of New Common Stock into
which the Shares of Existing Common Stock have been reclassified as provided
herein.
FIFTH: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of the Article FOURTH, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include,
but not to be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends shares of that
series;
(c) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such voting
rights;
(A) AS LAST AMENDED FEBRUARY 17, 2000
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provisions for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) The right of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series;
(h) Any other relative rights, preferences and limitations of
that series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment, before any dividends shall be paid or
declared and set apart for payment on the Common Stock with respect to the same
dividend period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to holders
of shares of Preferred Stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
Everett A. Gilmour 52 South Broad Street
Norwich, New York 13815
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
A. The management of the business and the conduct of the
affairs of the Corporation shall be vested in its Board of Directors. The number
of directors shall be fixed by, or in the manner provided in, the By-Laws.
Directors need not be elected by written ballot, unless so required by the
By-Laws of the Corporation.
B. After the original or other By-Laws of the Corporation have
been adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and after the Corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the By-Laws of the Corporation may
be exercised by the Board of Directors of the Corporation.
NINTH: Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statute) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
TENTH: From time to time, any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, all in the manner now or hereafter prescribed by the laws of
the State of Delaware, and all rights and powers at any time conferred upon the
stockholders and the directors of the Corporation by this Certificate of
Incorporation are granted, subject to the provisions of this Article TENTH. The
provisions set forth in Article ELEVENTH may not be repealed or amended in any
respect, unless such action is approved by the affirmative vote of the holders
of not less than eighty percent (80%) of the outstanding shares of Voting Stock
(as defined in Article ELEVENTH) of the Corporation; provided, however, if there
is a Major Stockholder as defined in Article ELEVENTH, such eighty percent (80%)
vote must include the affirmative vote of at least eighty percent (80%) of the
outstanding shares of voting stock held by shareholders other than the Major
Stockholder.
(B) ELEVENTH:
(a) The affirmative vote of the holders of not less than eighty percent
(80%) of the total voting power of all outstanding shares entitled to vote in
the election of any particular Class of Directors (as defined in Section (c) of
this Article ELEVENTH) and held by disinterested shareholders (as defined below)
shall be required for the approval or authorization of any "Business
Combination," as defined and set forth below:
(1) Any merger, consolidation or other business reorganization
or combination of the Corporation or any of its subsidiaries with any other
corporation that is a Major Stockholder of the Corporation;
(2) Any sale, lease or exchange by the Corporation of all or a
substantial part of its assets to or with a Major Stockholder;
(3) Any issue of any stock or other security of the
Corporation or any of its subsidiaries for cash, assets or securities of a Major
Stockholder;
(4) Any reverse stock split of, or exchange of securities,
cash or other properties or assets of any outstanding securities of the
Corporation or any of its subsidiaries or liquidation or dissolution of the
Corporation or any of its subsidiaries in any such case in which a Major
Stockholder receives any securities, cash or other assets whether or not
different from those received or retained by any holder of securities of the
same class as held by such Major Shareholder.
(B) AS AMENDED FEBRUARY 21, 1986
The affirmative vote required by this Article ELEVENTH shall be in addition to
the vote of the holders of any class or series of stock of the Corporation
otherwise required by law, by any other Article of this Certificate of
Incorporation, or as this Certificate of Incorporation may be amended, by any
resolution of the Board of Directors providing for the issuance of a class or
series of stock, or by any agreement between the Corporation and any national
securities exchange.
(b) For the purpose of this Article ELEVENTH:
(1) The term "Major Stockholder" shall mean and
include any person, corporation, partnership, or other person or entity which,
together with its "Affiliates" and "Associates" (as defined at Rule 12b-2 under
the Securities Exchange Act of 1934), "beneficially owns" (as hereinafter
defined) in the aggregate five percent (5%) or more of the outstanding shares of
Voting Stock, and any Affiliates or Associates of any such person, corporation,
partnership, or other person or entity.
(2) The term "Substantial Part" shall mean more
than twenty-five percent (25%) of the fair market value of the total
consolidated assets of the Corporation in question, or more than twenty-five
percent (25%) of the aggregate par value of authorized and issued Voting Stock
of the Corporation in question, as of the end of its most recent fiscal quarter
ending prior to the time the determination is being made.
(3) The term "Voting Stock" shall mean the stock
of Corporation entitled to vote in the election of directors.
(4) The term "Beneficial Owner" shall mean any
person and certain related parties, directly, or indirectly who own shares or
have the right to acquire or vote shares of the company.
(5) The term "Disinterested Shareholder" shall
mean any holder of voting securities of the company other then (i) a Major
Stockholder if it or any of them has a financial interest in the transaction
being voted on (except for a financial interest attributable solely to such
person's interest as a stockholder of the company which is identical to the
interests of all stockholders of the same class) and (ii) in the context of a
transaction described in (a) (4) above, any Major Stockholder (whether or not
having a financial interest described in clause (i) of this sentence) if it or
any of them has directly or indirectly proposed the transaction, solicited
proxies to vote in favor of the transaction, financed any such solicitation of
proxies or entered into any contract, arrangement, or understanding with any
person for the voting of securities of the company in favor of the transaction.
(c) The provisions of this Article shall not apply to a
Business Combination which is approved by sixty-six and two-thirds percent
(66-2/3%) of those members of the Board of Directors who were directors prior to
the time when the Major Stockholder became a Major Stockholder. The provisions
of this Article shall not apply to a Business Combination which (i) does not
change any stockholder's percentage ownership in the shares of stock entitled to
vote in the election of directors of any successor of the Corporation from the
percentage of the shares of Voting Stock owned by such stockholder; (ii)
provides for the provisions of this Article without any amendment, change,
alteration, or deletion, to apply to any successor to the Corporation; and (iii)
does not transfer all or a Substantial Part of the Corporation's assets or
Voting Stock other than to a wholly-owned subsidiary of the Corporation.
(d) Nothing contained in the Article shall be construed to
relieve a Major Stockholder from any fiduciary obligation imposed by law. In
addition, nothing contained in this Article hall prevent any stockholders of the
Corporation from objecting to any Business Combination and from demanding any
appraisal rights which may be available to such stockholder.
(C)
(e) The Board of Directors of the Corporation shall be divided
into three classes: Class 1,Class 2 and Class 3, which shall be as nearly equal
as possible. Each Director shall serve for a term ending on the date of the
third Annual Meeting of Stockholders following the Annual Meeting at which such
Director was elected; provided, however, that each initial Director in Class 1
shall hold office until the Annual Meeting of Stockholders in 1987; each initial
Director in Class 2 shall hold office until the Annual Meeting of Stockholders
in 1988; and each initial Director in Class 3 shall hold office until the Annual
Meeting of Stockholders in 1989. Such initial Directors for each of the three
Classes of Directors shall be as follows: Class 1 - John M. Kolbas and Paul O.
Stillman; Class 2 - Donald E. Stone,
Darryl R. Gregson and Paul R. Enggaard; Class 3 - Everett A. Gilmour, J.K.
Weinman and Thomas J. Mirabito. In the event of any increase or decrease in the
authorized number of Directors, (1) each Director then serving as such
nevertheless continue as a Director of the Class of which he is a member until
the expiration of his current term, or his earlier resignation, removal from
office or death, and (2) the newly created or eliminated directorships resulting
from such increase or decrease shall be appointed by the Board of Directors
among the three Classes of Directors so as to maintain such classes as nearly
equal as possible. Notwithstanding any of the foregoing provisions of this
Article ELEVENTH, each Director shall serve until his successor is elected and
qualified or until his earlier resignation, removal from office or death.
(D) TWELTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as director except for liability (i) for any breach of the director's duty
of loyalty to the Corporation of its stockholders, (ii) for acts of omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, as the
same exists or hereafter may be amended, or (iv) for any transaction from which
the director derived an improper personal benefit. If the Delaware General
Corporation Law hereafter is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended Delaware
General Corporation Law. Any repeal or modification of this paragraph by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
(C) PARAGRAPH (E) ADDED BY AMENDMENT FEBRUARY 21, 1986.
(D) ARTICLE TWELFTH ADDED BY AMENDMENT FEBRUARY 28, 1987.
EXHIBIT 10.1
NBT Bancorp Inc. 1993 Stock Option Plan as amended through
January 24, 2000
NBT BANCORP INC.
1993 STOCK OPTION PLAN
1. Purposes. (a) The purposes of the 1993 Stock Option Plan (the
"Plan") are (a) to attract and retain outstanding key management employees, (b)
to further the growth, development, and financial success of NBT Bancorp Inc.
(the "Company") by recognizing and rewarding those key employees responsible
therefore, (c) to provide an incentive to, and encourage stock ownership in the
Company, by those employees responsible for the policies and operations of the
Company or its subsidiaries, and (d) to revise and amend the Company's stock
option plan dated November 25, 1986, as amended January 12, 1988 (referred to
herein as the "1986 Plan"), in the manner set forth in Section 22, below.
(b) In furtherance of these purposes, all stock options to be granted
pursuant to the Plan shall be non-statutory ("non-qualified") stock options.
2. Administration. (a) This Plan shall be administered by the Board of
Directors of the Company, the Compensation and Benefits Committee of the Board
of Directors of the Company (or successor committee) or a subcommittee thereof
(the "Committee"). The Committee shall consist of not fewer than three members
of the Board of Directors. It is intended that the Committee at all times comply
with the disinterested administration provisions of Rule 16b-3 promulgated under
Section 16(b) of the Securities Exchange Act of 1934, as amended.
(b) The Committee shall have full authority and discretion to
determine, consistent with the provisions of this Plan, the employees to be
granted options; the times at which options will be granted; the option price of
the shares subject to each option (subject to Section 6); the number of options
to be granted to each employee; the period during which each option becomes
exercisable (subject to Section 8); and the terms to be set forth in each option
agreement. The Committee shall also have full authority and discretion to adopt
and revise such rules and procedures as it shall deem necessary for the
administration of this Plan. The Committee shall act by majority vote of all
members taken at a meeting of the Committee or by the written affirmation of a
majority of its members without a meeting.
(c) The Committee's interpretation and construction of any provisions
of this Plan or any option granted hereunder shall be final, conclusive, and
binding.
3. Eligibility. The Committee shall from time to time determine the key
management employees of the Company and its subsidiaries who shall be granted
options under this Plan. For purposes of this Plan, key management employees
shall be deemed to be those employees who are responsible for the policies and
operation of the Company and its subsidiaries, including its president, chief
executive officer, other executive officers, department heads, branch managers,
and division managers of the Company or its subsidiaries. A person who has been
granted an option may be granted additional options under this Plan if the
Committee shall so determine. The granting of an option under this Plan shall
not affect any outstanding stock option previously granted to an optionee under
this Plan or any other plan of the Company.
4. Shares of stock subject to this Plan. The number of shares which may
be issued pursuant to options granted under this Plan shall not exceed 1,100,000
shares of the no par value, stated value $1 .00 per share, common stock of the
Company (the "Common Stock"). Such shares may be authorized and unissued shares
or shares previously acquired or to be acquired by the Company and held in
treasury. The Company shall reserve a sufficient number of shares for options
granted under the Plan. Any shares subject to an option which expires for any
reason or is terminated unexercised as to such shares may again be subject to an
option under this Plan.
5. Issuance and terms of option certificates. Each optionee shall be
entitled to receive an appropriate certificate evidencing his option and
referring to the terms and conditions of this Plan.
6. Granting price of options. (a) The grant of each option shall state
the number of shares to which it pertains and shall state the exercise price,
which shall not be less than 100% of the fair market value of the Common Stock.
"Fair Market Value," as used in this Plan, shall mean the average between the
highest and lowest quoted selling prices of the Common Stock on the National
Market System of NASDAQ on the date of grant and the five preceding trading days
prior to the date of grant. If there is no sale reported on the National Market
System of NASDAQ on the appropriate date, the Fair Market Value shall be
determined by taking the average between the highest and lowest sales for the
five most recent preceding trading days.
(b) The option price shall be payable in United States dollars and be
paid in full upon the exercise of the option and may be paid in cash or by
check, provided, however, that subject to the discretion of the Committee and
provided that all required regulatory approvals, if any, have been obtained, the
optionee may deliver certificates of the Common Stock of the Company in part or
in full payment of the purchase price (including the payment of all applicable
federal and state taxes due upon exercise) in which event such certificates
shall be valued at their Fair Market Value upon exercise of the option.
7. Use of proceeds. The proceeds from the sale of the Common Stock upon
exercise of options shall be added to the general funds of the Company and used
for its corporate purposes.
8. Term and exercise of options. (a) Each option granted under this
Plan shall be exercisable on the dates, for the number of shares and on such
other terms as shall be provided in the agreement evidencing the option granted
by the Committee. An option granted under the Plan shall become exercisable in
installments as follows: to the extent of forty percent (40%) of the number of
shares originally covered thereby with respect to each particular grant of
options, at any time after the expiration of one year from the date of grant,
and to the extent of an additional twenty percent (20%) of such number of shares
upon the expiration of each succeeding year, so that upon the expiration of four
years from the date of grant one hundred percent (100%) of such number of shares
will be eligible for exercise by the optionee; and such installments shall be
cumulative.
(b)An option may be exercised at any time or from time to time during
the term of the option as to any or all full shares which have become
purchasable under the provisions of the option and this Plan. However, no option
shall be exercisable until after one year from the date of grant, nor after the
expiration of ten years from the date of grant.
(c) An option shall be exercised by written notice of intent to
exercise the option with respect to a specified number of shares delivered to
the Company's secretary or treasurer at its principal office in Norwich, New
York and payment in full to the Company at such office of the amount of the
option price for the number of shares of Common Stock with respect to which the
option is then being exercised. In addition to and at the time of payment of the
option price, the optionee shall pay to the Company in cash or in Common Stock
of the Company the full amount of all federal and state withholding or other
taxes applicable to the taxable income of such optionee resulting from such
exercise.
(d) (i) Except as otherwise provided herein, for each share of Common
Stock purchased by an optionee upon the exercise of a stock option pursuant to
the Plan, the optionee upon the approval of the Board or the Committee shall
receive a replacement option (a "Reload Option") to purchase another share of
Common Stock at the Fair Market Value, determined in accordance with Section
6(a). The Board or the Committee shall grant such Reload Options as of the last
business day of the calendar quarter during which the original stock options
were exercised.
(ii) A Reload Option shall become exercisable two years after the date
of its grant, provided the optionee is then an employee or retired employee of
the Company, shall be exercisable for the same number of years that was
originally assigned to the option which such Reload Option replaced, and shall
be subject to such other terms and conditions as the Committee may determine.
(iii) No Reload Option shall be granted upon exercise of a Reload
Option.
(iv) If an optionee shall sell shares of Common Stock without Board or
Committee approval (which approval shall not be withheld in the case of an
optionee's financial hardship) within two years after the grant of a Reload
Option, then the number of shares of Common Stock available for purchase by an
optionee upon the exercise of a Reload Option shall be reduced by that number of
shares of Common Stock that the optionee shall have sold without such approval
within such two-year period after the grant date of the Reload Option.
9. Nontransferability. All options granted under this Plan shall be
nontransferable by the optionee, otherwise than by will or the laws of descent
and distribution, and shall be exercisable during his lifetime, only by him, nor
may any option be assigned, pledged, hypothecated, or otherwise disposed of in
any other way. Upon any attempt to sell, transfer, assign, pledge, hypothecate
or otherwise dispose of an option or any other right or privilege conferred
under this Plan, such option and any other rights or privileges conferred
hereunder shall be deemed forfeited, immediately terminated, and rendered null
and void.
10. Requirements of law. The granting of options and the issuance of
shares of Common Stock upon the exercise of an option shall be subject to all
applicable laws, rules, and regulations and shares shall not be issued except
upon approval of proper government agencies or stock exchanges as may be
required.
11. Termination of employment. (a) Except as otherwise provided herein
and in Section 12, if an optionee's employment with the Company or its
subsidiaries shall terminate for any reason, he may, but only within a period of
30 days beginning the day following the date of such termination of employment,
exercise his option, to the extent that he was entitled to exercise it at the
date of such termination.
(b)(i) If an optionee's employment with the Company or its subsidiaries
shall terminate for "cause," as defined below, all options held by such optionee
at the date of such termination of employment shall be deemed forfeited,
immediately terminated, and rendered null and void.
(ii) Termination of an optionee's employment by the Company for "cause"
shall mean termination because, and only because, the optionee committed an act
of fraud, embezzlement, or theft constituting a felony or an act intentionally
against the interests of the Company which causes the Company material injury.
Notwithstanding the foregoing, the optionee shall not be deemed to have been
terminated for cause unless and until there shall have been delivered to the
optionee a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board at a meeting of the
Board called and held for the purpose (after reasonable notice to the optionee
and an opportunity for the optionee, together with optionee's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board the
optionee was guilty of conduct constituting cause as defined above and
specifying the particulars thereof in detail.
12. Retirement, disability, or death of optionee. (a) In the event that
the optionee shall retire, the option shall become exercisable in full on the
date of retirement, shall otherwise continue in full force and effect as if the
optionee were still employed by the Company or its subsidiaries, and shall be
exercisable in accordance with its terms.
(b) In the event that the optionee shall become permanently and totally
disabled, as determined by the Committee in accordance with applicable Company
personnel policies, such option shall become exercisable in full on the date of
such disability and shall otherwise remain exercisable in accordance with its
terms for the remaining term of the option as established upon grant of such
option.
(c) In the event of the death of an optionee while in the employ of the
Company or its subsidiaries, the option theretofore granted to him shall be
exercisable only by the proper personal representative of the optionee's estate
within a period of six months after the date of death and such option shall
become exercisable in full on the date of such death.
13. Acceleration of Vesting. (a) Immediately upon the occurrence of
a Change in Control of the Company, all options shall immediately vest and
become exercisable in full, including that portion of any option that had not
theretofore become vested and exercisable.
(b) A "Change of Control" of the Company shall mean:
(i) A change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A as in
effect on the date hereof pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act"); provided that, without limitation, such a change in control
shall be deemed to have occurred at such time as any Person hereafter becomes
the "Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 30 percent or more of the combined voting power of
the Company's Voting Securities; or
(ii) During any period of two consecutive years, individuals
who at the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof unless the election, or the nomination
for election by the Company's shareholders, of each new director was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(iii) There shall be consummated (x) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which Voting Securities would be converted into cash,
securities, or other property, other than a merger of the Company in which the
holders of Voting Securities immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (y) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions), of all, or substantially all
of the assets of the Company, provided that any such consolidation, merger,
sale, lease, exchange or other transfer consummated at the insistence of an
appropriate banking regulatory agency shall not constitute a change in control;
or
(iv) Approval by the shareholders of the Company of any plan
or proposal for the liquidation or dissolution of the Company.
(c) For purposes of these "Change in Control" provisions, the term
"Person" shall mean and include any individual, corporation, partnership, group,
association, or other "person," as such term is used in Section 14(d) of the
Exchange Act, other than the Company or any employee benefit plan(s) sponsored
by the Company.
(d) The term "Voting Securities" shall mean the Company's outstanding
securities ordinarily having the right to vote at elections of directors.
14. Adjustments. In the event of any change in the outstanding shares
of Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination or exchange of shares, or
other similar corporate change, then if the Committee shall determine, in its
sole discretion, that such change necessarily or equitably requires an
adjustment in the number of shares subject to each outstanding option and the
option prices or in the maximum number of shares subject to this Plan, such
adjustments shall be made by the Committee and shall be conclusive and binding
for all purposes of this Plan. No adjustment shall be made in connection with
the sale by the Company of its Common Stock in the open market in an
SEC-registered offering or in a privately-placed exempt offering or the issuance
by the Company of Common Stock pursuant to the Company's Automatic Dividend
Reinvestment and Stock Purchase Plan or the Employees' Stock Ownership Plan or
of any warrants, rights, or options to acquire additional shares of Common Stock
or of securities convertible into Common Stock.
15. Extraordinary transactions. Upon (i) the dissolution or liquidation
of the Company, (ii) a reorganization, merger or consolidation of the Company
with one or more corporations or other entity as a result of which the Company
is not the surviving corporation, or (iii) a sale of substantially all the
assets of the Company to another corporation or other entity, the Board of
Directors shall cause written notice of the proposed transaction to be given to
the optionee or grantee not less than 40 days prior to the anticipated effective
date of the proposed transaction, and the option shall be accelerated and, prior
to a date specified in such notice, which shall be not more than ten days prior
to the anticipated effective date of the proposed transaction, the optionee
shall have the right to exercise the stock option to purchase any or all shares
then subject to the option, including those, if any, which have not become
available for purchase under other provisions of the Plan. The optionee, by so
notifying the Company in writing, may, in exercising the stock options,
condition such exercise upon, and provide that such exercise shall become
effective at the time of but immediately prior to, the consummation of the
transaction, in which event the optionee need not make payment for the shares of
Common Stock to be purchased upon exercise of the option until five days after
written notice by the Company to the optionee that the transaction is
consummated. Each option, to the extent not previously exercised prior to the
date specified in the foregoing notice, shall terminate on the effective date of
such consummation. If the proposed transaction is abandoned, any shares of
Common Stock not purchased upon exercise of the option shall continue to be
available for exercise in accordance with the other provisions of the Plan, and
the shares of Common Stock, if any, purchased upon exercise of an option
pursuant to this subsection shall be deemed to have been purchased in the order
in which they first become available for purchase under other provisions of the
plan.
16. Claim to stock option, ownership, or employment rights. No employee
or other person shall have any claim or right to be granted options under this
Plan. No optionee, prior to issuance of the stock, shall be entitled to voting
rights, dividends, or other rights of stockholders except as otherwise provided
in this Plan. Neither this Plan nor any other action taken hereunder shall be
construed as giving any employee any right to be retained in the employ of the
Company or a subsidiary.
17. Unsecured obligation. Optionees under this Plan shall not have any
interest in any fund or specific asset of the Company by reason of this Plan. No
trust fund shall be created in connection with this Plan or any award
thereunder, and there shall be no required funding of amounts which may become
payable to any optionee.
18. Expenses of plan. The expenses of administering the Plan shall be
borne by the Company.
19. Reliance on reports. Each member of the Committee and each member
of the Board of Directors shall be fully justified in relying or acting in good
faith upon any report made by the independent public accountants of the Company
and its subsidiaries and upon any other information furnished in connection with
the Plan by any person or persons other than himself. In no event shall any
person who is or shall have been a member of the Committee or of the Board of
Directors be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for any
action, including the furnishing of information, taken or failure to act, if in
good faith.
20. Indemnification. Each person who is or shall have been a member of
the Committee or of the Board of Directors shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be a party
or in which he may be involved by reason of any action taken or failure to act,
in good faith, under the Plan and against and from any and all amounts paid by
him in settlement thereof, with the Company's approval, or paid by him in
satisfaction of judgment in any such action, suit, or proceeding against him,
provided he shall give the Company an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such person may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power than the Company may have to indemnify them or hold them harmless.
21. Amendment and termination. Unless this Plan shall theretofore have
been terminated as hereinafter provided, no options may be granted after April
18, 2008. The Board of Directors may terminate this Plan or modify or amend this
Plan in such respect as it shall deem advisable, provided, however, that the
Board of Directors may not without further approval by the Company's
shareholders, (a) increase the aggregate number of shares of Common Stock as to
which options may be granted under the Plan except as provided in Section 14,
(b) change the class of persons eligible to receive options, (c) change the
provisions of the Plan regarding the option price, (d) extend the period during
which options may be granted, (e) extend the maximum period after the date of
grant during which options may be exercised or (f) change the provision in the
Plan as to the qualification for membership on the Committee. No termination or
amendment of the Plan may, without the consent of a person to whom an option
shall theretofore have been granted, adversely affect the rights of such person
under such option.
22. Revision and amendment of 1986 Plan. (a) Upon the adoption of the
Plan, the Board of Directors and the Committee shall have no authority to grant
additional options or SARs pursuant to the 1986 Plan, except as otherwise
provided in this Section.
(b) Article VI of the 1986 Plan is hereby amended to authorize the
Board of Directors or the Committee to (i) dissolve the in tandem feature of
previously-granted options and SARs and (ii) cancel previously granted SARs and
grant replacement options on the basis of seven-tenths (.7) options for each SAR
and such replacement options having terms similar to those of the canceled SARS,
the Board of Directors having determined that this vas the amount necessary to
induce holders of SARs to surrender such SARS.
23. Gender. Any masculine terminology used in this Plan shall also
include the feminine gender.
24. Effective date of plan. The Plan was approved by a majority of the
shareholders of the Company at its annual meeting on April 24, 1993 (or
adjournment thereof) and shall become effective as of April 24, 1993.
25. Plan binding on successors. The Plan shall be binding upon the
successors and assigns of the Company.
26. Ratification of actions. By accepting any option or other benefit
under the Plan, each participant in the Plan and each person claiming under or
through such participant shall be conclusively deemed to have indicated such
person's acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board, or the Committee.
27. Invalidity or unenforceability. If any term or provision of the
Plan is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms and provisions will remain in full
force and effect and will in no way be affected, impaired, or invalidated.
NBT BANCORP INC.
/S/ Daryl R. Forsythe
Daryl R. Forsythe
President and Chief Executive Officer
/S/ John D. Roberts
John D. Roberts
Secretary
EXHIBIT 10.2
Form of Employment Agreement between NBT Bancorp Inc. and
Daryl R. Forsythe made as of January 1, 2000
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of
the first day of January, 2000, by and between DARYL R. FORSYTHE ("Executive")
and NBT BANCORP INC., a Delaware corporation having its principal office in
Norwich, New York ("NBTB")
W I T N E S S E T H T H A T :
WHEREAS, Executive is the president and chief executive officer of NBTB
and chairman and chief executive officer of NBT Bank, National Association, a
national banking association which is a wholly-owned subsidiary of NBTB ("NBT
Bank");
WHEREAS, NBTB desires to secure the continued employment of Executive,
subject to the provisions of this Agreement; and
WHEREAS, Executive is desirous of entering into the Agreement for such
periods and upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, intending to be legally bound, the parties
agree as follows:
1. EMPLOYMENT; RESPONSIBILITIES AND DUTIES.
(a) NBTB hereby agrees to employ Executive, and Executive
hereby agrees to serve as the president and chief executive officer of NBTB,
during the first fifteen months of the Term of Employment and as chairman,
president and chief executive officer of NBTB during the next twenty-one months
of the Term of Employment. NBTB further agrees to cause NBT Bank to employ
Executive, and Executive hereby agrees to serve as the chairman and chief
executive officer of NBT Bank, during the first fifteen months of the Term of
Employment and as chairman of the board of NBT Bank during the next twenty-one
months of the Term of Employment. Executive shall have such executive duties,
responsibilities, and authority as shall be set forth in the bylaws of NBTB and
NBT Bank or as may otherwise be determined by NBTB.
(b) Executive shall devote his full working time and best
efforts to the performance of his responsibilities and duties hereunder. During
the Term of Employment, Executive shall not, without the prior written consent
of the Board of Directors of NBTB, render services as an employee, independent
contractor, or otherwise, whether or not compensated, to any person or entity
other than NBTB or its affiliates; provided that Executive may, where
involvement in such activities does not individually or in the aggregate
significantly interfere with the performance by Executive of his duties or
violate the provisions of section 4 hereof, (i) render services to charitable
organizations, (ii) manage his personal investments, and (iii) with the prior
permission of the Board of Directors of NBTB, hold such other directorships or
part-time academic appointments or have such other business affiliations as
would otherwise be prohibited under this section 1.
2. TERM OF EMPLOYMENT.
(a) The term of this Agreement ("Term of Employment") shall be
the period commencing on the date of this Agreement (the "Commencement Date")
and continuing until the Termination Date, which shall mean the earliest to
occur of:
(i) the third anniversary of the Commencement
Date, unless the Term of Employment shall be extended for one additional year by
the mutual agreement of the parties;
(ii) the death of Executive;
(iii) Executive's inability to perform his duties
hereunder, as a result of physical or mental disability as reasonably determined
by the personal physician of Executive, for a period of at least 180 consecutive
days or for at least 180 days during any period of twelve consecutive months
during the Term of Employment; or
(iv) the discharge of Executive by NBTB "for
cause," which shall mean one or more of the following:
(A) any willful or gross misconduct by
Executive with respect to the business and affairs of NBTB or NBT Bank, or with
respect to any of its affiliates for which Executive is assigned material
responsibilities or duties;
(B) the conviction of Executive of a
felony (after the earlier of the expiration of any applicable appeal period
without perfection of an appeal by Executive or the denial of any appeal as to
which no further appeal or review is available to Executive) whether or not
committed in the course of his employment by NBTB;
(C) Executive's willful neglect, failure,
or refusal to carry out his duties hereunder in a reasonable manner (other than
any such failure resulting from disability or death or from termination by
Executive for Good Reason, as hereinafter defined) after a written demand for
substantial performance is delivered to Executive that specifically identifies
the manner in which NBTB believes that Executive has not substantially performed
his duties and Executive has not resumed substantial performance of his duties
on a continuous basis within thirty days of receiving such demand; or
(D) the breach by Executive of any
representation or warranty in section 6(a) hereof or of any agreement contained
in section 1, 4, 5, or 6(b) hereof, which breach is material and adverse to NBTB
or any of its affiliates for which Executive is assigned material
responsibilities or duties; or
(v) Executive's resignation from his position as
chairman, president, or chief executive officer of NBTB or NBT Bank other than
in implementation of the schedule set out in section 1(a) of this Agreement or
for "Good Reason," as hereinafter defined; or
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(vi) the termination of Executive's employment by
NBTB "without cause," which shall be for any reason other than those set forth
in subsections (i), (ii), (iii), (iv), or (v) of this section 2(a), at any time,
upon the thirtieth day following notice to Executive; or
(vii) Executive's resignation for "Good Reason."
"Good Reason" shall mean, without Executive's express written consent,
reassignment of Executive to a position other than as set forth in section 1(a)
of this Agreement other than for "Cause," or a decrease in the amount or level
of Executive's salary or benefits from the amount or level established in
section 3 hereof.
(b) In the event that the Term of Employment shall be
terminated for any reason other than that set forth in section 2(a)(vi) or
2(a)(vii) hereof, Executive shall be entitled to receive, upon the occurrence of
any such event:
(i) any salary (as hereinafter defined) payable
pursuant to section 3(a)(i) hereof which shall have accrued as of the
Termination Date; and
(ii) such rights as Executive shall have accrued
as of the Termination Date under the terms of any plans or arrangements in which
he participates pursuant to section 3(b) hereof, any right to reimbursement for
expenses accrued as of the Termination Date payable pursuant to section 3(h)
hereof, and the right to receive the cash equivalent of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(d) hereof.
(c) In the event that the Term of Employment shall be
terminated for the reason set forth in section 2(a)(vi) or 2(a)(vii) hereof,
Executive shall be entitled to receive:
(i) any salary payable pursuant to section 3(a)
(i) hereof which shall have accrued as of the Termination Date, and, for the
period commencing on the date immediately following the Termination Date and
ending upon and including the later of the third anniversary of the Commencement
Date or the first anniversary of the Termination Date, salary payable at the
rate established pursuant to section 3(a)(i) hereof, in a manner consistent with
the normal payroll practices of NBTB with respect to executive personnel as
presently in effect or as they may be modified by NBTB from time to time; and
(ii) such rights as Executive may have accrued as
of the Termination Date under the terms of any plans or arrangements in which he
participates pursuant to section 3(b) hereof, any right to reimbursement for
expenses accrued as of the Termination Date payable pursuant to section 3(h)
hereof, and the right to receive the cash equivalent of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(d) hereof.
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(d) Any provision of this section 2 to the contrary
notwithstanding, in the event that the employment of Executive with NBTB is
terminated in any situation described in section 3 of the change-in-control
letter agreement dated January 1, 2000 between NBTB and Executive (the
"Change-in-Control Agreement") so as to entitle Executive to a severance payment
and other benefits described in section 3 of the Change-in-Control Agreement,
then Executive shall be entitled to receive the following, and no more, under
this section 2:
(i) any salary payable pursuant to section 3(a)
(i) hereof which shall have accrued as of the Termination Date;
(ii) such rights as Executive shall have accrued
as of the Termination Date under the terms of any plans or arrangements in which
he participates pursuant to section 3(b) hereof, any right to reimbursement for
expenses accrued as of the Termination Date payable pursuant to section 3(h)
hereof, and the right to receive the cash equivalent of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(d) hereof;
and
(iii) the severance payment and other benefits
provided in the Change-in-Control Agreement.
3. COMPENSATION. For the services to be performed by Executive
for NBTB and its affiliates under this Agreement, Executive shall be compensated
in the following manner:
(a) SALARY. During the Term of Employment:
(i) NBTB shall pay Executive a salary which, on
an annual basis, shall not be less than $300,000 during the first year of the
Term of Employment, $350,000 during the second year of the Term of Employment,
$400,000 during the third year of the Term of Employment, and $400,000 during
the additional year, if any, by which the Term of Employment shall be extended
pursuant to section 2(a)(i), assuming Executive performs competently. Salary
shall be payable in accordance with the normal payroll practices of NBTB with
respect to executive personnel as presently in effect or as they may be modified
by NBTB from time to time.
(ii) Executive shall be eligible to be considered
for performance bonuses of up to 80 percent of salary, in accordance with the
compensation policies of NBTB with respect to executive personnel as presently
in effect or as they may be modified by NBTB from time to time.
(b) EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS. During the Term of
Employment, Executive shall be entitled to participate in all employee benefit
plans of NBTB, as presently in effect or as they may be modified by NBTB from
time to time, under such terms as may be applicable to officers of Executive's
rank employed by NBTB or its affiliates, including, without limitation, plans
providing retirement benefits, stock options, medical insurance, life insurance,
disability insurance, and accidental death or dismemberment insurance, provided
that there be no duplication of such benefits as are provided under any other
provision of this Agreement.
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(c) STOCK OPTIONS. Each January or February annually during
the Term of Employment, NBTB will cause Executive to be granted a non-statutory
("non-qualified") stock option (each an "Option") to purchase the number of
shares of the common stock of NBTB, no par value, $1.00 stated value, or the
common stock of NBTB as reclassified to have a par value of $.01 per share, as
the case may be (the "NBTB Common Stock"), pursuant to the NBT Bancorp Inc. 1993
Stock Option Plan, as amended, or any appropriate successor plan (the "Stock
Option Plan"), computed by dividing 250 percent of the annualized salary of
Executive on the date of grant of the Option by the "Fair Market Value" of NBTB
Common Stock (as defined in the Stock Option Plan). The option exercise price
per share of the shares subject to each Option shall be such Fair Market Value,
and the terms, conditions of exercise, and vesting schedule of such Option shall
be as set forth in section 8 of the Stock Option Plan.
(d) VACATION AND SICK LEAVE. During the Term of Employment,
Executive shall be entitled to paid annual vacation periods and sick leave in
accordance with the policies of NBTB as in effect as of the Commencement Date or
as may be modified by NBTB from time to time as may be applicable to officers of
Executive's rank employed by NBTB or its affiliates, but in no event less than
five weeks of paid vacation per year during the first year of the Term of
Employment, six weeks of paid vacation per year during the second year of the
Term of Employment, and three weeks of paid vacation per year during each of the
third year of the Term of Employment and the additional year, if any, by which
the Term of Employment shall be extended pursuant to section 2(a)(i), during
each of which third year and additional year Executive shall additionally be
excused from physical presence within the Market Area (as defined in section
4(e) of this Agreement) during the months of January, February, and March except
on an as-required basis as mutually agreed by the board of directors of NBTB and
Executive.
(e) AUTOMOBILE. During the Term of Employment, Executive shall
be entitled to the use of an automobile owned by NBTB or an affiliate of NBTB,
the make and model of which automobile shall be appropriate to an officer of
Executive's rank, and which will be replaced with a new automobile during the
second year of the Term of Employment. Executive shall be responsible for all
expenses of ownership and use of such automobile, subject to reimbursement of
expenses for business use in accordance with section 3(h).
(f) COUNTRY CLUB DUES. During the Term of Employment,
Executive shall be reimbursed for dues and assessments incurred in relation to
Executive's membership at Seven Oaks Country Club, Hamilton, New York.
(g) WITHHOLDING. All compensation to be paid to Executive
hereunder shall be subject to required withholding and other taxes.
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(h) EXPENSES. During the Term of Employment, Executive shall
be reimbursed for reasonable travel and other expenses incurred or paid by
Executive in connection with the performance of his services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as may from time to time be requested, in accordance with
such policies of NBTB as are in effect as of the Commencement Date and as may be
modified by NBTB from time to time, under such terms as may be applicable to
officers of Executive's rank employed by NBTB or its affiliates.
4. CONFIDENTIAL BUSINESS INFORMATION; NON-COMPETITION.
(a) Executive acknowledges that certain business methods,
creative techniques, and technical data of NBTB and its affiliates and the like
are deemed by NBTB to be and are in fact confidential business information of
NBTB or its affiliates or are entrusted to third parties. Such confidential
information includes but is not limited to procedures, methods, sales
relationships developed while in the service of NBTB or its affiliates,
knowledge of customers and their requirements, marketing plans, marketing
information, studies, forecasts, and surveys, competitive analyses, mailing and
marketing lists, new business proposals, lists of vendors, consultants, and
other persons who render service or provide material to NBTB or NBT Bank or
their affiliates, and compositions, ideas, plans, and methods belonging to or
related to the affairs of NBTB or NBT Bank or their affiliates. In this regard,
NBTB asserts proprietary rights in all of its business information and that of
its affiliates except for such information as is clearly in the public domain.
Notwithstanding the foregoing, information that would be generally known or
available to persons skilled in Executive's fields shall be considered to be
"clearly in the public domain" for the purposes of the preceding sentence.
Executive agrees that he will not disclose or divulge to any third party, except
as may be required by his duties hereunder, by law, regulation, or order of a
court or government authority, or as directed by NBTB, nor shall he use to the
detriment of NBTB or its affiliates or use in any business or on behalf of any
business competitive with or substantially similar to any business of NBTB or
NBT Bank or their affiliates, any confidential business information obtained
during the course of his employment by NBTB. The foregoing shall not be
construed as restricting Executive from disclosing such information to the
employees of NBTB or NBT Bank or their affiliates.
(b) Executive hereby agrees that from the Commencement Date
until the first anniversary of the Termination Date, Executive will not (i)
interfere with the relationship of NBTB or NBT Bank or their affiliates with any
of their employees, suppliers, agents, or representatives (including, without
limitation, causing or helping another business to hire any employee of NBTB or
NBT Bank or their affiliates), or (ii) directly or indirectly divert or attempt
to divert from NBTB, NBT Bank or their affiliates any business in which any of
them has been actively engaged during the Term of Employment, nor interfere with
the relationship of NBTB, NBT Bank or their affiliates with any of their
customers or prospective customers. This paragraph 4(b) shall not, in and of
itself, prohibit Executive from engaging in the banking, trust, or financial
services business in any capacity, including that of an owner or employee.
(c) Executive acknowledges and agrees that irreparable injury
will result to NBTB in the event of a breach of any of the provisions of this
section 4 (the "Designated Provisions") and that NBTB will have no adequate
remedy at law with respect thereto. Accordingly, in the event of a material
breach of any Designated Provision, and in addition to any other legal or
equitable remedy NBTB may have, NBTB shall be entitled to the entry of a
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preliminary and permanent injunction (including, without limitation, specific
performance) by a court of competent jurisdiction in Chenango County, New York,
or elsewhere, to restrain the violation or breach thereof by Executive, and
Executive submits to the jurisdiction of such court in any such action.
(d) It is the desire and intent of the parties that the
provisions of this section 4 shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this section
4 shall be adjudicated to be invalid or unenforceable, such provision shall be
deemed amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 4 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to NBTB, to the fullest extent
permitted by applicable law, the benefits intended by this section 4.
5. LIFE INSURANCE. In light of the unusual abilities and experience of
Executive, NBTB in its discretion may apply for and procure as owner and for its
own benefit insurance on the life of Executive, in such amount and in such form
as NBTB may choose. NBTB shall make all payments for such insurance and shall
receive all benefits from it. Executive shall have no interest whatsoever in any
such policy or policies but, at the request of NBTB, shall submit to medical
examinations and supply such information and execute such documents as may
reasonably be required by the insurance company or companies to which NBTB has
applied for insurance.
6. REPRESENTATIONS AND WARRANTIES.
(a) Executive represents and warrants to NBTB that his
execution, delivery, and performance of this Agreement will not result in or
constitute a breach of or conflict with any term, covenant, condition, or
provision of any commitment, contract, or other agreement or instrument,
including, without limitation, any other employment agreement, to which
Executive is or has been a party.
(b) Executive shall indemnify, defend, and hold harmless NBTB
for, from, and against any and all losses, claims, suits, damages, expenses, or
liabilities, including court costs and counsel fees, which NBTB has incurred or
to which NBTB may become subject, insofar as such losses, claims, suits,
damages, expenses, liabilities, costs, or fees arise out of or are based upon
any failure of any representation or warranty of Executive in section 6(a)
hereof to be true and correct when made.
7. NOTICES. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
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receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to NBTB:
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Attention: Board of Directors
With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to Executive:
Mr. Daryl R. Forsythe
21 Ridgeland Road
Norwich, New York 13815
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
8. ASSIGNMENT. Neither party may assign this Agreement or any
rights or obligations hereunder without the consent of the other party.
9. GOVERNING LAW. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of New York, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate Chenango County, New York to be the proper jurisdiction and venue for
any suit or action arising out of this Agreement. Each of the parties consents
to personal jurisdiction in such venue for such a proceeding and agrees that it
may be served with process in any action with respect to this Agreement or the
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
State of New York. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
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10. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding among NBTB and Executive relating to the subject matter hereof.
Any previous agreements or understandings between the parties hereto or between
Executive and NBTB or any of its affiliates regarding the subject matter hereof,
including without limitation the terms and conditions of employment,
compensation, benefits, retirement, competition following employment, and the
like, are merged into and superseded by this Agreement. Neither this Agreement
nor any provisions hereof can be modified, changed, discharged, or terminated
except by an instrument in writing signed by the party against whom any waiver,
change, discharge, or termination is sought.
11. ILLEGALITY; SEVERABILITY.
(a) Anything in this Agreement to the contrary
notwithstanding, this Agreement is not intended and shall not be construed to
require any payment to Executive which would violate any federal or state
statute or regulation, including without limitation the "golden parachute
payment regulations" of the Federal Deposit Insurance Corporation codified to
Part 359 of title 12, Code of Federal Regulations.
(b) If any provision or provisions of this Agreement shall
be held to be invalid, illegal, or unenforceable for any reason whatsoever:
(i) the validity, legality, and enforceability
of the remaining provisions of this Agreement (including, without limitation,
each portion of any section of this Agreement containing any such provision
held to be invalid, illegal, or unenforceable) shall not in any way be
affected or impaired thereby; and
(ii) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provisions held to be invalid,
illegal, or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal, or unenforceable.
12. ARBITRATION. Subject to the right of each party to seek specific
performance (which right shall not be subject to arbitration), if a dispute
arises out of or related to this Agreement, or the breach thereof, such dispute
shall be referred to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
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as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in the
Northern District of New York. In the event of any arbitration, each party shall
have a reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
In the event of any arbitration, the arbitrator or arbitrators shall have the
power to award reasonable attorney's fees to the prevailing party. Any provision
in this Agreement to the contrary notwithstanding, this section shall be
governed by the Federal Arbitration Act and the parties have entered into this
Agreement pursuant to such Act.
13. COSTS OF LITIGATION. In the event litigation is commenced to
enforce any of the provisions hereof, or to obtain declaratory relief in
connection with any of the provisions hereof, the prevailing party shall be
entitled to recover reasonable attorney's fees. In the event this Agreement is
asserted in any litigation as a defense to any liability, claim, demand, action,
cause of action, or right asserted in such litigation, the party prevailing on
the issue of that defense shall be entitled to recovery of reasonable attorney's
fees.
14. AFFILIATION. A company will be deemed to be "affiliated" with
NBTB or NBT Bank according to the definition of "Affiliate" set forth in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
15. HEADINGS. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto executed or caused this
Agreement to be executed as of the day and year first above written.
NBT BANCORP INC.
By: /S/ EVERETT A. GILMOUR
Everett A. Gilmour
Chairman of the Board
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DARYL R. FORSYTHE
/S/ Daryl R. Forsyte
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EXHIBIT 10.3
Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Daryl R. Forsythe made as of January 1,
1995 and as revised on April 28, 1998, and on January 1, 2000
SUPPLEMENTAL RETIREMENT AGREEMENT
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2000)
This sets forth the terms of an agreement for the payment of
supplemental retirement income ("Agreement") made as of January 1, 1995 (and as
revised on April 28, 1998, and on January 1, 2000) between (i) NBT BANCORP INC.,
a Delaware corporation and a registered bank holding company, and NBT BANK,
NATIONAL ASSOCIATION, a national banking association chartered under the laws of
the United States, both having offices located at Norwich, New York
(collectively, the "Bank"), and (ii) DARYL R. FORSYTHE, an individual residing
at 21 Ridgeland Road, Norwich, New York 13815, and who is a member of a select
group of management or highly compensated employees within the meaning of
section 201(2) of the Employee Retirement Income Security Act of 1974, as
amended ("Forsythe").
1. PURPOSE OF THE AGREEMENT. The purpose of this Agreement is to
provide Forsythe a supplemental retirement benefit in accordance with the terms
of this Agreement.
2. DEFINITIONS. For purposes of this Agreement, the following
words shall have the meaning indicated:
(a) ACTUARIAL EQUIVALENT. "Actuarial Equivalent" shall
have the same meaning the term "Actuarial Equivalent" has under Section 2.03 of
the Qualified Plan using the following actuarial assumptions:
MORTALITY: "Applicable Mortality Rate" as
such term is defined in Section 2.03c of the Qualified Plan.
INTEREST RATE: "Applicable Interest Rate" as such
term is defined in Section 2.09b of the Qualified Plan.
(b) BENEFICIARY. "Beneficiary" shall mean such living person
or living persons designated by Forsythe in accordance with
subparagraph 5(a) to receive benefits under this Agreement after his
death, or his personal or legal representative, all as herein described
and provided. If no Beneficiary is designated by Forsythe or if no
Beneficiary survives Forsythe, the Beneficiary shall be Forsythe's
estate.
(c) CAUSE. "Cause" shall mean Forsythe's:
(i) willful or gross misconduct with respect to the
business and affairs of the Bank, or with respect to any of
its affiliates for which Forsythe is assigned material
responsibilities or duties;
(ii) conviction of a felony (after the earlier of the
expiration of any applicable appeal period without perfection
of an appeal by Forsythe or the denial of any appeal as to
which no further appeal or review is available to Forsythe)
whether or not committed in the course of his employment by
the Bank;
(iii) willful neglect, failure, or refusal to carry
out his duties under the Employment Agreement between NBT
Bancorp Inc. and Forsythe dated as of January 1, 2000 (the
"Employment Agreement") in a reasonable manner (other than any
such failure resulting from disability or death or from
termination by Forsythe for Good Reason, as defined in the
Employment Agreement) after a written demand for substantial
performance is delivered to Forsythe that specifically
identifies the manner in which the Bank believes that Forsythe
has not substantially performed his duties and he has not
resumed substantial performance of his duties on a continuous
basis within thirty days of receiving such demand; or
(iv) breach of any representation or warranty in
section 6(a) of the Employment Agreement or of any agreement
contained in section 1, 4, 5, or 6(b) of the Employment
Agreement, which breach is material and adverse to the Bank or
any of its affiliates for which Forsythe is assigned material
responsibilities or duties.
(d) CHANGE OF CONTROL. "Change of Control" shall mean a Change
in Control as such term is defined in the Change of Control Agreement
between Forsythe and the Bank dated January 1, 2000 (a revision of the
April 28, 1998 and February 21, 1995 agreements).
(e) CODE. "Code" shall mean the Internal Revenue Code of
1986, as amended.
(f) DETERMINATION DATE. "Determination Date" shall
mean the earlier of (i) the date of termination of Forsythe's employment
with the Bank or (ii) the first day of the month following Forsythe's 65th
birthday.
(g) FINAL AVERAGE COMPENSATION. "Final Average Compensation"
shall have the same meaning the term "Final Average Compensation" has
under Section 2.27 of the Qualified Plan, except that in determining
the amount of Compensation (as defined in Section 2.14 of the Qualified
Plan) to be used in calculating Final Average Compensation under
Section 2.27 of the Qualified Plan, Compensation shall not be subject
to the compensation limitation of section 401(a)(17) of the Code.
(h) FULL-TIME EMPLOYEE. "Full-Time Employee" shall mean an
employee who works not less than 1,000 hours in a calendar year.
(i) OTHER RETIREMENT BENEFITS. "Other Retirement Benefits"
shall mean the sum of:
(i) The annual benefit payable to Forsythe from the
Qualified Plan, plus
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(ii) The annual benefit that could be provided by (A)
Bank contributions (other than elective deferrals) made on
Forsythe's behalf under the NBT Bancorp Inc. 401(k) and
Employee Stock Ownership Plan, and (B) actual earnings on
contributions in (A), if such contributions and earnings were
converted to a benefit payable at age 65 in the same form as
the benefit paid under this Agreement, using the same
actuarial assumptions as are provided under subparagraph 2(a).
The amount of Other Retirement Benefits shall be determined by
an actuary selected by the Bank, with such determination to be made
without reduction for payment of benefits prior to any stated "normal
retirement date" and without regard to whether Forsythe is receiving
payment of such benefits on the Determination Date. To the extent
Forsythe receives a payment of Other Retirement Benefits described in
subparagraph 2(i)(ii) prior to the date the Supplemental Retirement
Benefit is determined pursuant to this Agreement, the total of such
Other Retirement Benefits shall be determined by including and assuming
that such amounts earned interest at a variable rate equal to the
one-year United States Treasury bill rate as reported in the New York
edition of The Wall Street Journal on the Determination Date from the
date received to the date Other Retirement Benefits are calculated for
purposes of this Agreement.
(j) PRESENT VALUE. "Present Value" shall mean the
present value of a benefit determined on the basis of the following actuarial
assumptions:
MORTALITY: "Applicable Mortality Rate" as such
term is defined in Section 2.03c of the Qualified Plan.
INTEREST RATE: "Applicable Interest Rate" as such
term is defined in Section 2.09b of the Qualified Plan.
(k) QUALIFIED PLAN. "Qualified Plan" shall mean the NBT
BANCORP Inc. Defined Benefit Pension Plan.
(l) SOCIAL SECURITY BENEFIT. "Social Security Benefit"
shall mean Forsythe's actual social security benefit at his Social Security
Retirement Age.
(m) SOCIAL SECURITY RETIREMENT AGE. "Social Security
Retirement Age" shall have the same meaning the term "Social Security
Retirement Age" has under Section 2.58 of the Qualified Plan.
(n) YEAR OF SERVICE. "Year of Service" shall mean a
calendar year in which Forsythe completes not less than 1,000 hours of
service.
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3. AMOUNT OF SUPPLEMENTAL RETIREMENT BENEFIT.
(a) SUPPLEMENTAL RETIREMENT BENEFIT.
(i) AMOUNT PAYABLE ON AND AFTER AGE 65. If Forsythe
shall remain employed by the Bank until reaching his 65th
birthday, serving as a Full-Time Employee until such date, and
subject to the other terms and conditions of this Agreement,
the Bank shall pay Forsythe an annual "Supplemental Retirement
Benefit" determined as follows:
(A) ON AND AFTER AGE 65 BUT BEFORE SOCIAL
SECURITY RETIREMENT AGE. Forsythe shall be entitled
to a Supplemental Retirement Benefit on and after his
65th birthday but before his Social Security
Retirement Age in an amount equal to the excess of
(1) 75 percent of Forsythe's Final Average
Compensation, over (2) Forsythe's Other Retirement
Benefits, determined as of the Determination Date and
calculated in accordance with paragraph 2(i).
(B) ON AND AFTER SOCIAL SECURITY RETIREMENT
AGE. Forsythe shall be entitled to a Supplemental
Retirement Benefit on and after his Social Security
Retirement Age in an amount equal to the excess of
(1) 75 percent of Forsythe's Final Average
Compensation, over (2) the sum of (aa) Forsythe's
Other Retirement Benefits, determined as of the
Determination Date and calculated in accordance with
paragraph 2(i), plus (bb) Forsythe's Social Security
Benefit.
(ii) AMOUNT PAYABLE ON AND AFTER AGE 56 BUT BEFORE
AGE 60. If Forsythe shall remain employed by the Bank until
reaching his 56th birthday, serving as a Full-Time Employee
until such date and he continues to serve as a Full-Time
Employee until the date of his retirement, and he retires then
or thereafter but before reaching his 60th birthday, and
subject to the other terms and conditions of this Agreement,
the Bank shall pay Forsythe on his 60th birthday, pursuant to
subparagraph 4(b), or to his spouse or other Beneficiary,
pursuant and subject to subparagraph 6(c) if he has died
before his 60th birthday, a reduced early Supplemental
Retirement Benefit calculated in accordance with subparagraph
3(b) and the following schedule:
(A) If the date of Forsythe's retirement
shall be on or after his 56th birthday but before his
57th birthday, the Bank shall pay Forsythe 20% of the
reduced early Supplemental Retirement Benefit so
calculated;
(B) If the date of Forsythe's retirement
shall be on or after his 57th birthday but before his
58th birthday, the Bank shall pay Forsythe 40% of the
reduced early Supplemental Retirement Benefit so
calculated;
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(C) If the date of Forsythe's retirement
shall be on or after his 58th birthday but before his
59th birthday, the Bank shall pay Forsythe 60% of the
reduced early Supplemental Retirement Benefit so
calculated; and
(D) If the date of Forsythe's retirement
shall be on or after his 59th birthday but before his
60th birthday, the Bank shall pay Forsythe 80% of the
reduced early Supplemental Retirement Benefit so
calculated.
(iii) AMOUNT PAYABLE ON AND AFTER AGE 60 BUT BEFORE
AGE 65. If Forsythe shall remain employed by the Bank until
reaching his 60th birthday, serving as a Full-Time Employee
until such date and he continues to serve as a Full-Time
Employee until the date of his retirement, and he retires then
or thereafter but before reaching his 65th birthday, and
subject to the other terms and conditions of this Agreement,
the Bank shall pay Forsythe a reduced early Supplemental
Retirement Benefit calculated in accordance with subparagraph
3(b).
(b) EARLY SUPPLEMENTAL RETIREMENT BENEFIT. If the Bank
commences payment of a reduced early Supplemental Retirement Benefit
before Forsythe reaches age 65, the amount paid shall equal the product
of (i) the Supplemental Retirement Benefit, as calculated under
subparagraph 3(a)(i)(A), times (ii) a fraction, the numerator of which
shall be the number of complete months of Forsythe's employment with
the Bank after January 1, 1995, and the denominator of which is 164
(the number of complete months of employment Forsythe would have had
after January 1, 1995 if he remained employed by the Bank until the
first day of the month following his 65th birthday).
4. TIME OF PAYMENT.
(a) Except as provided in subparagraph 4(b) (early retirement)
and paragraph 6 (payment on death), the Bank shall pay the Supplemental
Retirement Benefit commencing on the first day of the month following
Forsythe's attainment of age 65.
(b) Notwithstanding subparagraph 4(a), the Bank shall commence
payment of a reduced early Supplemental Retirement Benefit on the first
day of the month following Forsythe's Determination Date in connection
with early retirement after reaching age 60 and prior to the date of
his 65th birthday; provided that, if Forsythe shall retire prior to his
60th birthday as permitted in this Agreement, the Bank shall commence
payment of the reduced early Supplemental Retirement Benefit on the
first day of the month following Forsythe's 60th birthday.
5. FORM OF PAYMENT.
(a) The Supplemental Retirement Benefit described in paragraph
3 of this Agreement shall be paid as a straight life annuity, payable
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in monthly installments, for Forsythe's life; provided, however, that
if Forsythe has no surviving spouse and dies before having received 60
monthly payments, such monthly payments shall be continued to his
Beneficiary until the total number of monthly payments to Forsythe and
his Beneficiary equal 60, whereupon all payments shall cease and the
Bank's obligation under this Agreement shall be deemed to have been
fully discharged. If Forsythe and his Beneficiary shall die before
having received a total of 60 monthly payments, an amount equal to the
Actuarial Equivalent of the balance of such monthly payments shall be
paid in a single sum to the estate of the survivor of Forsythe and his
Beneficiary. If Supplemental Retirement Benefits are payable in the
form described in this subparagraph 5(a), Forsythe shall designate in
writing, as his Beneficiary, any person or persons, primarily,
contingently or successively, to whom the Bank shall pay benefits
following Forsythe's death if Forsythe's death occurs before 60 monthly
payments have been made.
(b) Notwithstanding the form of payment described in
subparagraph 5(a), if Forsythe is married on the date payment of the
Supplemental Retirement Benefit commences, the benefit shall be paid as
a 50% joint and survivor annuity with Forsythe's spouse as the
Beneficiary. The 50% joint and survivor annuity shall be the Actuarial
Equivalent of the benefit described in subparagraph 5(a). If the
Supplemental Retirement Benefit is payable pursuant to this
subparagraph 5(b), but Forsythe's spouse fails to survive him, no
payments will be made pursuant to this Agreement following Forsythe's
death.
(c) Notwithstanding the foregoing provisions of this paragraph
5, the Bank, in its sole discretion, may accelerate the payment of all
or any portion of the Supplemental Retirement Benefit or the reduced
early Supplemental Retirement Benefit at any time. Any payment
accelerated in accordance with this subparagraph 5(c) shall be the
Actuarial Equivalent of the payment being accelerated.
(d) If payment of a reduced early Supplemental Retirement
Benefit commences pursuant to subparagraph 4(b), and payments are
accelerated pursuant to subparagraph 5(c), the reduction described in
subparagraph 3(b) shall be applied before any Actuarial Equivalent is
determined under this paragraph 5.
6. PAYMENTS UPON FORSYTHE'S DEATH.
(a) Except as provided in subparagraphs 6(b) and (c), if
Forsythe shall die before his 65th birthday, no payment shall be due
his estate under this Agreement.
(b) If Forsythe's death shall occur on or after his 60th
birthday, after he has retired but before payment of any Supplemental
Retirement Benefit has commenced, Forsythe's surviving spouse shall be
paid as a straight life annuity 50 percent of the Supplemental
Retirement Benefit for her life commencing within 30 days following
Forsythe's death, calculated in accordance with subparagraph 3(b). Such
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payments shall be made in monthly installments, subject to the right of
the Bank to accelerate payment at any time in accordance with
subparagraph 5(c).
(c) If Forsythe elects early retirement pursuant to
subparagraph 3(a)(ii) or (iii) and he dies before payment of any
Supplemental Retirement Benefit has commenced, Forsythe's surviving
spouse shall be paid, in monthly installments, as a straight life
annuity, 50 percent of such Supplemental Retirement Benefit for her
life commencing within 30 days following Forsythe's death, subject to
the right of the Bank to accelerate such payments as provided in
subparagraph 5(c). However, if Forsythe's spouse fails to survive him,
the Bank shall pay to Forsythe's estate a lump sum benefit equal to 50
percent of the Present Value of Forsythe's Supplemental Retirement
Benefit.
(d) Except as otherwise provided in subparagraph 6(c), no
payments shall be made under this Agreement if Forsythe dies before
payment of any Supplemental Retirement Benefit begins and his spouse
fails to survive him.
(e) If Forsythe's death shall occur after payment of a
Supplemental Retirement Benefit has commenced, Forsythe surviving
spouse or other Beneficiaries shall receive payments under this
Agreement to the extent provided in paragraph 5.
7. FORFEITURE FOR CAUSE. Notwithstanding any other provision of
this Agreement, if Forsythe's employment with the Bank is terminated for Cause,
Forsythe and his spouse or other Beneficiaries shall forfeit all rights to any
payment under this Agreement.
8. POWERS. The Bank shall have such powers as may be necessary
to discharge its duties under this Agreement, including the power to interpret
and construe this Agreement and to determine all questions regarding employment,
disability status, service, earnings, income and such factual matters as birth
and marital status. The Bank's determinations hereunder shall be conclusive and
binding upon the parties hereto and all other persons having or claiming an
interest under this Agreement. The Bank shall have no power to add to, subtract
from, or modify any of the terms of this Agreement. The Bank's determinations
hereunder shall be entitled to deference upon review by any court, agency or
other entity empowered to review its decisions, and shall not be overturned or
set aside by any court, agency or other entity unless found to be arbitrary,
capricious or contrary to law.
9. CLAIMS PROCEDURE.
(a) Any claim for benefits by Forsythe, his spouse or other
Beneficiaries shall be made in writing to the Bank. In this paragraph,
Forsythe and his Beneficiaries are referred to as "claimants."
(b) If the Bank denies a claim in whole or in part, it shall
send the claimant a written notice of the denial within 90 days after
the date it receives a claim, unless it needs additional time to make
its decision. In that case, the Bank may authorize an extension of an
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additional 90 days if it notifies the claimant of the extension within
the initial 90-day period. The extension notice shall state the reasons
for the extension and the expected decision date.
(c) A denial notice shall contain:
(i) The specific reason or reasons for the denial
of the claim;
(ii) Specific reference to pertinent Agreement
provisions upon which the denial is based;
(iii) A description of any additional material or
information necessary to perfect the claim, with an
explanation of why the material or information is necessary;
and
(iv) An explanation of the review procedures
provided below.
(d) Within 60 days after the claimant receives a denial
notice, he or she may file a request for review with the Bank. Any such
request must be made in writing.
(e) A claimant who timely requests review shall have the right
to review pertinent documents, to submit additional information or
written comments, and to be represented.
(f) The Bank shall send the claimant a written decision on any
request for review within 60 days after the date it receives a request
for review, unless an extension of time is needed, due to special
circumstances. In that case, the Bank may authorize an extension of an
additional 60 days, provided it notifies the claimant of the extension
within the initial 60-day period.
(g) The review decision shall contain:
(i) The specific reason or reasons for the decision;
and
(ii) Specific reference to the pertinent Agreement
provisions upon which the decision is based.
(h) If the Bank does not send the claimant a review decision
within the applicable time period, the claim shall be deemed denied on
review.
(i) The denial notice or, in the case of a timely review, the
review decision (including a deemed denial under subparagraph 9(h))
shall be the Bank's final decision.
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10. ASSIGNMENT. Neither Forsythe nor his spouse or other Beneficiaries
may transfer his, her or their right to payments to which he, she or they are
entitled under this Agreement. Except insofar as may otherwise be required by
law, any Supplemental Retirement Benefit payable under this Agreement shall not
be subject in any manner to alienation by anticipation, sale, transfer,
assignment, pledge or encumbrance, nor subject to the debts, contracts, or
liabilities of Forsythe or his spouse or other Beneficiaries.
11. CONTINUED EMPLOYMENT. This Agreement shall not be
construed as conferring on Forsythe a right to continued employment with
the Bank.
12. FUNDING.
(a) The Supplemental Retirement Benefit at all times shall be
entirely unfunded, and no provision shall at any time be made with
respect to segregating any assets of the Bank for payments of any
benefits hereunder, except that in the event of a Change of Control,
the Bank, within five (5) days of such Change of Control, shall fund a
grantor trust within the meaning of section 671 of the Code with an
amount sufficient to cover all potential liabilities under this
Agreement.
(b) Neither Forsythe nor his spouse or other Beneficiaries
shall have any interest in any particular assets of the Bank by reason
of the right to receive a benefit under this Agreement. Forsythe and
his spouse or other Beneficiaries shall have only the rights of general
unsecured creditors of the Bank with respect to any rights under this
Agreement.
(c) Nothing contained in this Agreement shall constitute a
guarantee by the Bank or any entity or person that the assets of the
Bank will be sufficient to pay any benefit hereunder.
13. WITHHOLDING. Any payment made pursuant to this Agreement shall be
reduced by federal and state income, FICA or other employee payroll, withholding
or other similar taxes the Bank may be required to withhold. In addition, as the
Supplemental Retirement Benefit accrues during Forsythe's employment with the
Bank, the Bank may withhold from Forsythe's regular compensation from the Bank
any FICA or other employee payroll, withholding or other similar taxes the Bank
may be required to withhold.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and shall inure to the benefit of, the successors and assigns of the Bank.
15. APPLICABLE LAW. This Agreement shall be construed and
administered in accordance with the laws of the State of New York, except to the
extent preempted by federal law.
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16. AMENDMENT. This Agreement may not be amended, modified or
otherwise altered except by written instrument executed by both parties.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties, and supersedes all prior agreements
or understanding (whether oral or written) between the parties, relating
to deferred compensation and/or supplemental retirement income.
The parties hereby execute this Agreement as follows:
NBT BANCORP INC.
By: /S/ EVERETT A. GILMOUR
Date: 1/1/2000 Its: CHAIRMAN
----------------------------------- ----------------
NBT BANK, NATIONAL ASSOCIATION
By:
Date: Its:
-----------------------------------
Date: 1/1/2000 /S/ DARYL R. FORSYTHE
----------------------------------- -----------------------------
DARYL R. FORSYTHE
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EXHIBIT 10.4
Form of Employment Agreement between NBT Bancorp Inc. and
Martin A. Dietrich made as of January 1, 2000
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of
the first day of January, 2000, by and between MARTIN A. DIETRICH ("Executive")
and NBT BANCORP INC., a Delaware corporation having its principal office in
Norwich, New York ("NBTB")
W I T N E S S E T H T H A T :
WHEREAS, Executive is the president and chief operating officer and a
director of NBT Bank, National Association, a national banking association which
is a wholly-owned subsidiary of NBTB ("NBT Bank");
WHEREAS, NBTB desires to secure the continued employment of Executive,
subject to the provisions of this Agreement; and
WHEREAS, Executive is desirous of entering into the Agreement for such
periods and upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, intending to be legally bound, the parties
agree as follows:
1. EMPLOYMENT; RESPONSIBILITIES AND DUTIES.
(a) NBTB hereby agrees to cause NBT Bank to employ Executive,
and Executive hereby agrees to serve as the president and chief operating
officer of NBT Bank, during the Term of Employment. Executive shall have such
executive duties, responsibilities, and authority as shall be set forth in the
bylaws of NBT Bank or as may otherwise be determined by NBTB or by NBT Bank.
During the Term of Employment, Executive shall report directly to the chief
executive officer of NBTB.
(b) NBTB hereby agrees to cause Executive to be reelected to
the board of directors of NBT Bank for successive terms throughout the Term of
Employment.
(c) Executive shall devote his full working time and best
efforts to the performance of his responsibilities and duties hereunder. During
the Term of Employment, Executive shall not, without the prior written consent
of the Board of Directors of NBTB, render services as an employee, independent
contractor, or otherwise, whether or not compensated, to any person or entity
other than NBTB or its affiliates; provided that Executive may, where
involvement in such activities does not individually or in the aggregate
significantly interfere with the performance by Executive of his duties or
violate the provisions of section 4 hereof, (i) render services to charitable
organizations, (ii) manage his personal investments, and (iii) with the prior
permission of the Board of Directors of NBTB or the president and chief
executive officer of NBTB, hold such other directorships or part-time academic
appointments or have such other business affiliations as would otherwise be
prohibited under this section 1.
2. TERM OF EMPLOYMENT.
(a) The term of this Agreement ("Term of Employment") shall be
the period commencing on the date of this Agreement (the "Commencement Date")
and continuing until the Termination Date, which shall mean the earliest to
occur of:
(i) the third anniversary of the Commencement
Date, provided, however, that on the second anniversary of the Commencement
Date, and on each anniversary of the Commencement Date thereafter, the Term
of Employment shall automatically extend itself by one additional year;
(ii) the death of Executive;
(iii) Executive's inability to perform his duties
hereunder, as a result of physical or mental disability as reasonably determined
by the personal physician of Executive, for a period of at least 180 consecutive
days or for at least 180 days during any period of twelve consecutive months
during the Term of Employment; or
(iv) the discharge of Executive by NBTB "for
cause," which shall mean one or more of the following:
(A) any willful or gross misconduct by
Executive with respect to the business and affairs of NBTB or NBT Bank, or with
respect to any of its affiliates for which Executive is assigned material
responsibilities or duties;
(B) the conviction of Executive of a
felony (after the earlier of the expiration of any applicable appeal period
without perfection of an appeal by Executive or the denial of any appeal as to
which no further appeal or review is available to Executive) whether or not
committed in the course of his employment by NBTB;
(C) Executive's willful neglect, failure,
or refusal to carry out his duties hereunder in a reasonable manner (other than
any such failure resulting from disability or death or from termination by
Executive for Good Reason, as hereinafter defined) after a written demand for
substantial performance is delivered to Executive that specifically identifies
the manner in which NBTB believes that Executive has not substantially performed
his duties and Executive has not resumed substantial performance of his duties
on a continuous basis within thirty days of receiving such demand; or
(D) the breach by Executive of any
representation or warranty in section 6(a) hereof or of any agreement contained
in section 1, 4, 5, or 6(b) hereof, which breach is material and adverse to NBTB
or any of its affiliates for which Executive is assigned material
responsibilities or duties; or
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(v) Executive's resignation from his position as
president and chief operating officer of NBT Bank other than (A) for "Good
Reason," as hereinafter defined, or (B) following a "Change in Reporting," as
hereinafter defined; or
(vi) the termination of Executive's employment by
NBTB "without cause," which shall be for any reason other than those set forth
in subsections (i), (ii), (iii), (iv), or (v) of this section 2(a), at any time,
upon the thirtieth day following notice to Executive; or
(vii) Executive's resignation for "Good Reason," or
(viii) Executive's resignation following a "Change
in Reporting."
"Good Reason" shall mean, without Executive's express written consent,
reassignment of Executive to a position other than as president and chief
operating officer of NBT Bank other than for "Cause," or a decrease in the
amount or level of Executive's salary or benefits from the amount or level
established in section 3 hereof.
If during the Term of Employment Executive shall be required to report to a
person or organizational level within NBTB different from the person or
organizational level to which Executive is required to report as of the date of
this Agreement, then during the ninety-day period commencing upon the
communication of such requirement to Executive (or such longer period agreed to
by NBTB), Executive in his sole discretion may either (x) consent to such
requirement, in which event this Agreement shall continue in accordance with its
terms, (y) require NBTB to engage in good-faith re-negotiation of the terms of
this Agreement, or (z) resign his employment, in which event such resignation
shall be deemed to be a resignation following a "Change in Reporting."
(b) In the event that the Term of Employment shall be
terminated for any reason other than that set forth in section 2(a)(vi) or
2(a)(vii) hereof, Executive shall be entitled to receive, upon the occurrence of
any such event:
(i) any salary (as hereinafter defined) payable
pursuant to section 3(a)(i) hereof which shall have accrued as of the
Termination Date; and
(ii) such rights as Executive shall have accrued
as of the Termination Date under the terms of any plans or arrangements in which
he participates pursuant to section 3(b) hereof, any right to reimbursement for
expenses accrued as of the Termination Date payable pursuant to section 3(h)
hereof, and the right to receive the cash equivalent of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(d) hereof.
(c) In the event that the Term of Employment shall be
terminated for the reason set forth in section 2(a)(vi) or 2(a)(vii) hereof,
Executive shall be entitled to receive:
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(i) any salary payable pursuant to section 3(a)
(i) hereof which shall have accrued as of the Termination Date, and, for the
period commencing on the date immediately following the Termination Date and
ending upon and including the latest of the third anniversary of the
Commencement Date, the date to which the Term of Employment shall (as of the
Termination Date) have automatically extended itself under section 2(a)(i)(A) or
2(a)(i)(B) hereof, or the first anniversary of the Termination Date, salary
payable at the rate established pursuant to section 3(a)(i) hereof, in a manner
consistent with the normal payroll practices of NBTB with respect to executive
personnel as presently in effect or as they may be modified by NBTB from time to
time; and
(ii) such rights as Executive may have accrued as
of the Termination Date under the terms of any plans or arrangements in which he
participates pursuant to section 3(b) hereof, any right to reimbursement for
expenses accrued as of the Termination Date payable pursuant to section 3(h)
hereof, and the right to receive the cash equivalent of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(d) hereof.
(d) Any provision of this section 2 to the contrary
notwithstanding, in the event that the employment of Executive with NBTB is
terminated in any situation described in section 3 of the change-in-control
letter agreement dated January 1, 2000 between NBTB and Executive (the
"Change-in-Control Agreement") so as to entitle Executive to a severance payment
and other benefits described in section 3 of the Change-in-Control Agreement,
then Executive shall be entitled to receive the following, and no more, under
this section 2:
(i) any salary payable pursuant to section 3(a)
(i) hereof which shall have accrued as of the Termination Date;
(ii) such rights as Executive shall have accrued
as of the Termination Date under the terms of any plans or arrangements in which
he participates pursuant to section 3(b) hereof, any right to reimbursement for
expenses accrued as of the Termination Date payable pursuant to section 3(h)
hereof, and the right to receive the cash equivalent of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(d) hereof;
and
(iii) the severance payment and other benefits
provided in the Change-in-Control Agreement.
3. COMPENSATION. For the services to be performed by Executive
for NBTB and its affiliates under this Agreement, Executive shall be compensated
in the following manner:
(a) SALARY. During the Term of Employment:
(i) NBTB shall pay Executive a salary which, on
an annual basis, shall not be less than $230,000 during the Term of Employment,
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assuming Executive performs competently. Salary shall be payable in accordance
with the normal payroll practices of NBTB with respect to executive personnel as
presently in effect or as they may be modified by NBTB from time to time.
(ii) Executive shall be entitled to annual salary
increases of 8 percent during the Term of Employment, beginning in the second
year of the Term of Employment, and shall be eligible to be considered for
further salary increases, upon review, in accordance with the compensation
policies of NBTB with respect to executive personnel as presently in effect or
as they may be modified by NBTB from time to time.
(iii) Executive shall be eligible to be considered
for performance bonuses of up to 75 percent of salary, in accordance with the
compensation policies of NBTB with respect to executive personnel as presently
in effect or as they may be modified by NBTB from time to time.
(b) EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS. During the Term of
Employment, Executive shall be entitled to participate in all employee benefit
plans of NBTB, as presently in effect or as they may be modified by NBTB from
time to time, under such terms as may be applicable to officers of Executive's
rank employed by NBTB or its affiliates, including, without limitation, plans
providing retirement benefits, stock options, medical insurance, life insurance,
disability insurance, and accidental death or dismemberment insurance, provided
that there be no duplication of such benefits as are provided under any other
provision of this Agreement.
(c) STOCK OPTIONS. Each January or February annually during
the Term of Employment, NBTB will cause Executive to be granted a non-statutory
("non-qualified") stock option (each an "Option") to purchase the number of
shares of the common stock of NBTB, no par value, $1.00 stated value, or the
common stock of NBTB as reclassified to have a par value of $.01 per share, as
the case may be (the "NBTB Common Stock"), pursuant to the NBT Bancorp Inc. 1993
Stock Option Plan, as amended, or any appropriate successor plan (the "Stock
Option Plan"), computed by dividing 250 percent of the annualized salary of
Executive on the date of grant of the Option by the "Fair Market Value" of NBTB
Common Stock (as defined in the Stock Option Plan). The option exercise price
per share of the shares subject to each Option shall be such Fair Market Value,
and the terms, conditions of exercise, and vesting schedule of such Option shall
be as set forth in section 8 of the Stock Option Plan.
(d) VACATION AND SICK LEAVE. During the Term of Employment,
Executive shall be entitled to paid annual vacation periods and sick leave in
accordance with the policies of NBTB as in effect as of the Commencement Date or
as may be modified by NBTB from time to time as may be applicable to officers of
Executive's rank employed by NBTB or its affiliates, but in no event less than
four weeks of paid vacation per year.
(e) AUTOMOBILE. During the Term of Employment, Executive shall
be entitled to the use of an automobile owned by NBTB or an affiliate of NBTB,
the make, model, and year of which automobile shall be appropriate to an officer
of Executive's rank employed by NBTB or its affiliates and consistent with that
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provided to others of Executive's rank employed by NBTB or its affiliates.
During the first year of the Term of Employment, the automobile used by
Executive will be replaced with a new automobile, whose value shall not exceed
$45,000 escalated by an amount calculated by the controller's division of NBT
Bank to adjust for the effect of inflation upon $45,000 between the Commencement
Date and the date of the replacement of the vehicle (an "Inflation Adjustment").
During the remaining term of the Term of Employment, should three years elapse
from the date of the automobile replacement described in the previous sentence
(or any subsequent automobile replacement that takes place under this section),
or, if earlier, should the replaced automobile (or any automobile provided under
such subsequent automobile replacement) have accumulated 50,000 miles, then it
will be replaced with a new automobile whose value shall not exceed the sum of
$45,000 and an Inflation Adjustment. Executive shall be responsible for all
expenses of ownership and use of any such automobile, subject to reimbursement
of expenses for business use in accordance with section 3(h).
(f) COUNTRY CLUB DUES. During the Term of Employment,
Executive shall be reimbursed for dues and assessments incurred in relation to
Executive's membership at [ ].
(g) WITHHOLDING. All compensation to be paid to
Executive hereunder shall be subject to required withholding and other taxes.
(h) EXPENSES. During the Term of Employment, Executive
shall be reimbursed for reasonable travel and other expenses incurred or paid by
Executive in connection with the performance of his services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as may from time to time be requested, in accordance with
such policies of NBTB as are in effect as of the Commencement Date and as may be
modified by NBTB from time to time, under such terms as may be applicable to
officers of Executive's rank employed by NBTB or its affiliates.
4. CONFIDENTIAL BUSINESS INFORMATION; NON-COMPETITION.
(a) Executive acknowledges that certain business methods,
creative techniques, and technical data of NBTB and its affiliates and the like
are deemed by NBTB to be and are in fact confidential business information of
NBTB or its affiliates or are entrusted to third parties. Such confidential
information includes but is not limited to procedures, methods, sales
relationships developed while in the service of NBTB or its affiliates,
knowledge of customers and their requirements, marketing plans, marketing
information, studies, forecasts, and surveys, competitive analyses, mailing and
marketing lists, new business proposals, lists of vendors, consultants, and
other persons who render service or provide material to NBTB or NBT Bank or
their affiliates, and compositions, ideas, plans, and methods belonging to or
related to the affairs of NBTB or NBT Bank or their affiliates. In this regard,
NBTB asserts proprietary rights in all of its business information and that of
its affiliates except for such information as is clearly in the public domain.
Notwithstanding the foregoing, information that would be generally known or
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available to persons skilled in Executive's fields shall be considered to be
"clearly in the public domain" for the purposes of the preceding sentence.
Executive agrees that he will not disclose or divulge to any third party, except
as may be required by his duties hereunder, by law, regulation, or order of a
court or government authority, or as directed by NBTB, nor shall he use to the
detriment of NBTB or its affiliates or use in any business or on behalf of any
business competitive with or substantially similar to any business of NBTB or
NBT Bank or their affiliates, any confidential business information obtained
during the course of his employment by NBTB. The foregoing shall not be
construed as restricting Executive from disclosing such information to the
employees of NBTB or NBT Bank or their affiliates. On or before the Termination
Date, Executive shall promptly deliver to NBTB any and all tangible,
confidential information in his possession.
(b) Executive hereby agrees that from the Commencement Date
until the earlier of the first anniversary of the Termination Date or the date
of Executive's resignation following a "Change in Reporting," Executive will not
(i) interfere with the relationship of NBTB or NBT Bank or their affiliates with
any of their employees, suppliers, agents, or representatives (including,
without limitation, causing or helping another business to hire any employee of
NBTB or NBT Bank or their affiliates), or (ii) directly or indirectly divert or
attempt to divert from NBTB, NBT Bank or their affiliates any business in which
any of them has been actively engaged during the Term of Employment, nor
interfere with the relationship of NBTB, NBT Bank or their affiliates with any
of their customers or prospective customers. This paragraph 4(b) shall not, in
and of itself, prohibit Executive from engaging in the banking, trust, or
financial services business in any capacity, including that of an owner or
employee.
(c) Executive acknowledges and agrees that irreparable injury
will result to NBTB in the event of a breach of any of the provisions of this
section 4 (the "Designated Provisions") and that NBTB will have no adequate
remedy at law with respect thereto. Accordingly, in the event of a material
breach of any Designated Provision, and in addition to any other legal or
equitable remedy NBTB may have, NBTB shall be entitled to the entry of a
preliminary and permanent injunction (including, without limitation, specific
performance) by a court of competent jurisdiction in Chenango County, New York,
or elsewhere, to restrain the violation or breach thereof by Executive, and
Executive submits to the jurisdiction of such court in any such action.
(d) It is the desire and intent of the parties that the
provisions of this section 4 shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this section
4 shall be adjudicated to be invalid or unenforceable, such provision shall be
deemed amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 4 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to NBTB, to the fullest extent
permitted by applicable law, the benefits intended by this section 4.
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5. LIFE INSURANCE. In light of the unusual abilities and experience of
Executive, NBTB in its discretion may apply for and procure as owner and for its
own benefit insurance on the life of Executive, in such amount and in such form
as NBTB may choose. NBTB shall make all payments for such insurance and shall
receive all benefits from it. Executive shall have no interest whatsoever in any
such policy or policies but, at the request of NBTB, shall submit to medical
examinations and supply such information and execute such documents as may
reasonably be required by the insurance company or companies to which NBTB has
applied for insurance.
6. REPRESENTATIONS AND WARRANTIES.
(a) Executive represents and warrants to NBTB that his
execution, delivery, and performance of this Agreement will not result in or
constitute a breach of or conflict with any term, covenant, condition, or
provision of any commitment, contract, or other agreement or instrument,
including, without limitation, any other employment agreement, to which
Executive is or has been a party.
(b) Executive shall indemnify, defend, and hold harmless NBTB
for, from, and against any and all losses, claims, suits, damages, expenses, or
liabilities, including court costs and counsel fees, which NBTB has incurred or
to which NBTB may become subject, insofar as such losses, claims, suits,
damages, expenses, liabilities, costs, or fees arise out of or are based upon
any failure of any representation or warranty of Executive in section 6(a)
hereof to be true and correct when made.
7. NOTICES. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to NBTB:
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Attention: Mr. Daryl R. Forsythe
President and Chief Executive Officer
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With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to Executive:
Mr. Martin A. Dietrich
155 Serenity Drive
Norwich, New York 13815
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
8. ASSIGNMENT. Neither party may assign this Agreement or any
rights or obligations hereunder without the consent of the other party.
9. GOVERNING LAW. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of New York, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate Chenango County, New York to be the proper jurisdiction and venue for
any suit or action arising out of this Agreement. Each of the parties consents
to personal jurisdiction in such venue for such a proceeding and agrees that it
may be served with process in any action with respect to this Agreement or the
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
State of New York. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding among NBTB and Executive relating to the subject matter hereof.
Any previous agreements or understandings between the parties hereto or between
Executive and NBT Bank or any of its affiliates regarding the subject matter
hereof, including without limitation the terms and conditions of employment,
compensation, benefits, retirement, competition following employment, and the
like, are merged into and superseded by this Agreement. Neither this Agreement
nor any provisions hereof can be modified, changed, discharged, or terminated
except by an instrument in writing signed by the party against whom any waiver,
change, discharge, or termination is sought.
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11. ILLEGALITY; SEVERABILITY.
(a) Anything in this Agreement to the contrary
notwithstanding, this Agreement is not intended and shall not be construed to
require any payment to Executive which would violate any federal or state
statute or regulation, including without limitation the "golden parachute
payment regulations" of the Federal Deposit Insurance Corporation codified to
Part 359 of title 12, Code of Federal Regulations.
(b) If any provision or provisions of this Agreement shall
be held to be invalid, illegal, or unenforceable for any reason whatsoever:
(i) the validity, legality, and enforceability
of the remaining provisions of this Agreement (including, without limitation,
each portion of any section of this Agreement containing any such provision held
to be invalid, illegal, or unenforceable) shall not in any way be affected or
impaired thereby; and
(ii) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provisions held to be invalid,
illegal, or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal, or unenforceable.
12. ARBITRATION. Subject to the right of each party to seek specific
performance (which right shall not be subject to arbitration), if a dispute
arises out of or related to this Agreement, or the breach thereof, such dispute
shall be referred to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in the
Northern District of New York. In the event of any arbitration, each party shall
have a reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
In the event of any arbitration, the arbitrator or arbitrators shall have the
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power to award reasonable attorney's fees to the prevailing party. Any provision
in this Agreement to the contrary notwithstanding, this section shall be
governed by the Federal Arbitration Act and the parties have entered into this
Agreement pursuant to such Act.
13. COSTS OF LITIGATION. In the event litigation is commenced to
enforce any of the provisions hereof, or to obtain declaratory relief in
connection with any of the provisions hereof, the prevailing party shall be
entitled to recover reasonable attorney's fees. In the event this Agreement is
asserted in any litigation as a defense to any liability, claim, demand, action,
cause of action, or right asserted in such litigation, the party prevailing on
the issue of that defense shall be entitled to recovery of reasonable attorney's
fees.
14. AFFILIATION. A company will be deemed to be "affiliated" with
NBTB or NBT Bank according to the definition of "Affiliate" set forth in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
15. HEADINGS. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto executed or caused this
Agreement to be executed as of the day and year first above written.
NBT BANCORP INC.
By: /S/ DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
MARTIN A. DIETRICH
/S/ MARTIN A. DIETRICH
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EXHIBIT 10.5
Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Martin A. Dietrich made as of
January 1, 2000
SUPPLEMENTAL RETIREMENT AGREEMENT
This sets forth the terms of an agreement for the payment of
supplemental retirement income ("Agreement") made as of January 1, 2000 between
(i) NBT BANCORP INC., a Delaware corporation and a registered bank holding
company, and NBT BANK, NATIONAL ASSOCIATION, a national banking association
chartered under the laws of the United States, both having offices located at
Norwich, New York (collectively, the "Bank"), and (ii) MARTIN A. DIETRICH, an
individual residing at 155 Serenity Drive, Norwich, New York 13815, and who is a
member of a select group of management or highly compensated employees within
the meaning of section 201(2) of the Employee Retirement Income Security Act of
1974, as amended ("Dietrich").
1. PURPOSE OF THE AGREEMENT. The purpose of this Agreement is to
provide Dietrich a supplemental retirement benefit in accordance with the terms
of this Agreement.
2. DEFINITIONS. For purposes of this Agreement, the following
words shall have the meaning indicated:
(a) ACTUARIAL EQUIVALENT. "Actuarial Equivalent" shall
have the same meaning the term "Actuarial Equivalent" has under Section 2.03 of
the Qualified Plan using the following actuarial assumptions:
MORTALITY: "Applicable Mortality Rate" as such
term is defined in Section 2.03c of the Qualified Plan.
INTEREST RATE: "Applicable Interest Rate" as such
term is defined in Section 2.09b of the Qualified Plan.
(b) BENEFICIARY. "Beneficiary" shall mean such living person
or living persons designated by Dietrich in accordance with
subparagraph 5(a) to receive benefits under this Agreement after his
death, or his personal or legal representative, all as herein described
and provided. If no Beneficiary is designated by Dietrich or if no
Beneficiary survives Dietrich, the Beneficiary shall be Dietrich's
estate.
(c) CAUSE. "Cause" shall mean Dietrich's:
(i) willful or gross misconduct with respect to the
business and affairs of the Bank, or with respect to any of
its affiliates for which Dietrich is assigned material
responsibilities or duties;
(ii) conviction of a felony (after the earlier of the
expiration of any applicable appeal period without perfection
of an appeal by Dietrich or the denial of any appeal as to
which no further appeal or review is available to Dietrich)
whether or not committed in the course of his employment by
the Bank;
(iii) willful neglect, failure, or refusal to carry
out his duties under the Employment Agreement between NBT
Bancorp Inc. and Dietrich dated as of January 1, 2000 (the
"Employment Agreement") in a reasonable manner (other than any
such failure resulting from disability or death or from
termination by Dietrich for Good Reason, as defined in the
Employment Agreement) after a written demand for substantial
performance is delivered to Dietrich that specifically
identifies the manner in which the Bank believes that Dietrich
has not substantially performed his duties and he has not
resumed substantial performance of his duties on a continuous
basis within thirty days of receiving such demand; or
(iv) breach of any representation or warranty in
section 6(a) of the Employment Agreement or of any agreement
contained in section 1, 4, 5, or 6(b) of the Employment
Agreement, which breach is material and adverse to the Bank or
any of its affiliates for which Dietrich is assigned material
responsibilities or duties.
(d) CHANGE OF CONTROL. "Change of Control" shall mean a Change
in Control as such term is defined in the Change in Control Agreement
between Dietrich and the Bank dated January 1, 2000 (a revision of the
October 27, 1998 and January 2, 1997 agreements).
(e) CODE. "Code" shall mean the Internal Revenue Code of
1986, as amended.
(f) DETERMINATION DATE. "Determination Date" shall
mean the earlier of (i) the date of termination of Dietrich's employment
with the Bank or (ii) the first day of the month following Dietrich's 65th
birthday.
(g) FINAL AVERAGE COMPENSATION. "Final Average Compensation"
shall have the same meaning the term "Final Average Compensation" has
under Section 2.27 of the Qualified Plan, except that in determining
the amount of Compensation (as defined in Section 2.14 of the Qualified
Plan) to be used in calculating Final Average Compensation under
Section 2.27 of the Qualified Plan, Compensation shall not be subject
to the compensation limitation of section 401(a)(17) of the Code.
(h) FULL-TIME EMPLOYEE. "Full-Time Employee" shall
mean an employee who works not less than 1,000 hours in a calendar year.
(i) OTHER RETIREMENT BENEFITS. "Other Retirement Benefits"
shall mean the sum of:
(i) The annual benefit payable to Dietrich from the
Qualified Plan, plus
(ii) The annual benefit that could be provided by (A)
Bank contributions (other than elective deferrals) made on
Dietrich's behalf under the NBT Bancorp Inc. 401(k) and
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Employee Stock Ownership Plan, and (B) actual earnings on
contributions in (A), if such contributions and earnings were
converted to a benefit payable on the Determination Date in
the same form as the benefit paid under this Agreement, using
the same actuarial assumptions as are provided under
subparagraph 2(a).
The amount of Other Retirement Benefits shall be determined by
an actuary selected by the Bank, with such determination to be made
without reduction for payment of benefits prior to any stated "normal
retirement date" and without regard to whether Dietrich is receiving
payment of such benefits on the Determination Date. To the extent
Dietrich receives a payment of Other Retirement Benefits described in
subparagraph 2(i)(ii) prior to the date the Supplemental Retirement
Benefit is determined pursuant to this Agreement, the total of such
Other Retirement Benefits shall be determined by including and assuming
that such amounts earned interest at a variable rate equal to the
one-year United States Treasury bill rate as reported in the New York
edition of The Wall Street Journal on the Determination Date from the
date received to the date Other Retirement Benefits are calculated for
purposes of this Agreement.
(j) PRESENT VALUE. "Present Value" shall mean the
present value of a benefit determined on the basis of the following actuarial
assumptions:
MORTALITY: "Applicable Mortality Rate" as
such term is defined in Section 2.03c of the Qualified Plan.
INTEREST RATE: "Applicable Interest Rate" as such
term is defined in Section 2.09b of the Qualified Plan.
(k) QUALIFIED PLAN. "Qualified Plan" shall mean the NBT
BANCORP Inc. Defined Benefit Pension Plan.
(l) SOCIAL SECURITY BENEFIT. "Social Security Benefit"
shall mean Dietrich's actual social security benefit at his Social Security
Retirement Age.
(m) SOCIAL SECURITY RETIREMENT AGE. "Social Security
Retirement Age" shall have the same meaning the term "Social Security Retirement
Age" has under Section 2.58 of the Qualified Plan.
(n) YEAR OF SERVICE. "Year of Service" shall mean a
calendar year in which Dietrich completes not less than 1,000 hours of
service.
3. AMOUNT OF SUPPLEMENTAL RETIREMENT BENEFIT.
(a) AMOUNT PAYABLE ON AND AFTER AGE 62. If Dietrich shall
remain employed by the Bank until reaching his 62nd birthday, serving
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as a Full-Time Employee until such date, and subject to the other terms
and conditions of this Agreement, the Bank shall pay Dietrich an annual
"Supplemental Retirement Benefit" determined as follows:
(i) ON AND AFTER AGE 62 BUT BEFORE SOCIAL SECURITY
RETIREMENT AGE. Dietrich shall be entitled to a Supplemental
Retirement Benefit on and after his 62nd birthday but before
his Social Security Retirement Age in an amount equal to the
excess of (1) 50 percent of Dietrich's Final Average
Compensation, over (2) Dietrich's Other Retirement Benefits,
determined as of the Determination Date and calculated in
accordance with paragraph 2(i).
(ii) ON AND AFTER SOCIAL SECURITY RETIREMENT AGE.
Dietrich shall be entitled to a Supplemental Retirement
Benefit on and after his Social Security Retirement Age in an
amount equal to the excess of (1) 50 percent of Dietrich's
Final Average Compensation, over (2) the sum of (aa)
Dietrich's Other Retirement Benefits, determined as of the
Determination Date and calculated in accordance with paragraph
2(i), plus (bb) Dietrich's Social Security Benefit.
(b) AMOUNT PAYABLE ON AND AFTER AGE 60 BUT BEFORE AGE 62. If
Dietrich shall remain employed by the Bank until reaching his 60th
birthday, serving as a Full-Time Employee until such date and he
continues to serve as a Full-Time Employee until the date of his
retirement, and he retires then or thereafter but before reaching his
62nd birthday, and subject to the other terms and conditions of this
Agreement, the Bank shall pay Dietrich on the date of his retirement,
pursuant to subparagraph 4(b), or to his spouse or other Beneficiary,
pursuant and subject to subparagraph 6(c) if he has died before his
62nd birthday, a reduced early Supplemental Retirement Benefit
calculated in accordance with the following schedule:
(i) If the date of Dietrich's retirement shall be on
or after his 60th birthday but before his 61st birthday, the
Bank shall pay Dietrich 60% of the Supplemental Retirement
Benefit calculated in accordance with subparagraph 3(a)(i);
and
(ii) If the date of Dietrich's retirement shall be on
or after his 61st birthday but before his 62nd birthday, the
Bank shall pay Dietrich 70% of the Supplemental Retirement
Benefit so calculated.
4. TIME OF PAYMENT.
(a) Except as provided in subparagraph 4(b) (early retirement)
and paragraph 6 (payment on death), the Bank shall pay the Supplemental
Retirement Benefit commencing on the first day of the month following
Dietrich's attainment of age 62.
(b) Notwithstanding subparagraph 4(a), the Bank shall commence
payment of an early Supplemental Retirement Benefit, in the amount
determined under subparagraph 3(b), on the first day of the month
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following Dietrich's Determination Date in connection with early
retirement after reaching age 60 and prior to the date of his 62nd
birthday.
5. FORM OF PAYMENT.
(a) The Supplemental Retirement Benefit described in paragraph
3 of this Agreement shall be paid as a straight life annuity, payable
in monthly installments, for Dietrich's life; provided, however, that
if Dietrich has no surviving spouse and dies before having received 60
monthly payments, such monthly payments shall be continued to his
Beneficiary until the total number of monthly payments to Dietrich and
his Beneficiary equal 60, whereupon all payments shall cease and the
Bank's obligation under this Agreement shall be deemed to have been
fully discharged. If Dietrich and his Beneficiary shall die before
having received a total of 60 monthly payments, an amount equal to the
Actuarial Equivalent of the balance of such monthly payments shall be
paid in a single sum to the estate of the survivor of Dietrich and his
Beneficiary. If Supplemental Retirement Benefits are payable in the
form described in this subparagraph 5(a), Dietrich shall designate in
writing, as his Beneficiary, any person or persons, primarily,
contingently or successively, to whom the Bank shall pay benefits
following Dietrich's death if Dietrich's death occurs before 60 monthly
payments have been made.
(b) Notwithstanding the form of payment described in
subparagraph 5(a), if Dietrich is married on the date payment of the
Supplemental Retirement Benefit commences, the benefit shall be paid as
a 50% joint and survivor annuity with Dietrich's spouse as the
Beneficiary. The 50% joint and survivor annuity shall be the Actuarial
Equivalent of the benefit described in subparagraph 5(a). If the
Supplemental Retirement Benefit is payable pursuant to this
subparagraph 5(b), but Dietrich's spouse fails to survive him, no
payments will be made pursuant to this Agreement following Dietrich's
death.
(c) Notwithstanding the foregoing provisions of this paragraph
5, the Bank, in its sole discretion, may accelerate the payment of all
or any portion of the Supplemental Retirement Benefit or the reduced
early Supplemental Retirement Benefit at any time. Any payment
accelerated in accordance with this subparagraph 5(c) shall be the
Actuarial Equivalent of the payment being accelerated.
6. PAYMENTS UPON DIETRICH'S DEATH.
(a) Except as provided in subparagraphs 6(b) and (c), if
Dietrich shall die before his 62nd birthday, no payment shall be due
his estate under this Agreement.
(b) If Dietrich's death shall occur on or after his 60th
birthday, after he has retired but before payment of any Supplemental
Retirement Benefit has commenced, Dietrich's surviving spouse shall be
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paid as a straight life annuity 50 percent of the Supplemental
Retirement Benefit for her life commencing within 30 days following
Dietrich's death. Such payments shall be made in monthly installments,
subject to the right of the Bank to accelerate payment at any time in
accordance with subparagraph 5(c).
(c) If Dietrich elects early retirement pursuant to
subparagraph 3(b) and he dies before payment of any Supplemental
Retirement Benefit has commenced, Dietrich's surviving spouse shall be
paid, in monthly installments, as a straight life annuity, 50 percent
of such Supplemental Retirement Benefit for her life commencing within
30 days following Dietrich's death, subject to the right of the Bank to
accelerate such payments as provided in subparagraph 5(c). However, if
Dietrich's spouse fails to survive him, the Bank shall pay to
Dietrich's estate a lump sum benefit equal to 50 percent of the Present
Value of Dietrich's Supplemental Retirement Benefit.
(d) Except as otherwise provided in subparagraph 6(c), no
payments shall be made under this Agreement if Dietrich dies before
payment of any Supplemental Retirement Benefit begins and his spouse
fails to survive him.
(e) If Dietrich's death shall occur after payment of a
Supplemental Retirement Benefit has commenced, Dietrich surviving
spouse or other Beneficiaries shall receive payments under this
Agreement to the extent provided in paragraph 5.
7. FORFEITURE FOR CAUSE. Notwithstanding any other provision of
this Agreement, if Dietrich's employment with the Bank is terminated for Cause,
Dietrich and his spouse or other Beneficiaries shall forfeit all rights to any
payment under this Agreement.
8. POWERS. The Bank shall have such powers as may be necessary to
discharge its duties under this Agreement, including the power to interpret and
construe this Agreement and to determine all questions regarding employment,
disability status, service, earnings, income and such factual matters as birth
and marital status. The Bank's determinations hereunder shall be conclusive and
binding upon the parties hereto and all other persons having or claiming an
interest under this Agreement. The Bank shall have no power to add to, subtract
from, or modify any of the terms of this Agreement. The Bank's determinations
hereunder shall be entitled to deference upon review by any court, agency or
other entity empowered to review its decisions, and shall not be overturned or
set aside by any court, agency or other entity unless found to be arbitrary,
capricious or contrary to law.
9. CLAIMS PROCEDURE.
(a) Any claim for benefits by Dietrich, his spouse or other
Beneficiaries shall be made in writing to the Bank. In this paragraph,
Dietrich and his Beneficiaries are referred to as "claimants."
(b) If the Bank denies a claim in whole or in part, it shall
send the claimant a written notice of the denial within 90 days after
the date it receives a claim, unless it needs additional time to make
its decision. In that case, the Bank may authorize an extension of an
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additional 90 days if it notifies the claimant of the extension within
the initial 90-day period. The extension notice shall state the reasons
for the extension and the expected decision date.
(c) A denial notice shall contain:
(i) The specific reason or reasons for the
denial of the claim;
(ii) Specific reference to pertinent Agreement
provisions upon which the denial is based;
(iii) A description of any additional material or
information necessary to perfect the claim, with an
explanation of why the material or information is necessary;
and
(iv) An explanation of the review procedures
provided below.
(d) Within 60 days after the claimant receives a denial
notice, he or she may file a request for review with the Bank. Any such
request must be made in writing.
(e) A claimant who timely requests review shall have the right
to review pertinent documents, to submit additional information or
written comments, and to be represented.
(f) The Bank shall send the claimant a written decision on any
request for review within 60 days after the date it receives a request
for review, unless an extension of time is needed, due to special
circumstances. In that case, the Bank may authorize an extension of an
additional 60 days, provided it notifies the claimant of the extension
within the initial 60-day period.
(g) The review decision shall contain:
(i) The specific reason or reasons for the
decision; and
(ii) Specific reference to the pertinent Agreement
provisions upon which the decision is based.
(h) If the Bank does not send the claimant a review decision
within the applicable time period, the claim shall be deemed denied on
review.
(i) The denial notice or, in the case of a timely review, the
review decision (including a deemed denial under subparagraph 9(h))
shall be the Bank's final decision.
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10. ASSIGNMENT. Neither Dietrich nor his spouse or other Beneficiaries
may transfer his, her or their right to payments to which he, she or they are
entitled under this Agreement. Except insofar as may otherwise be required by
law, any Supplemental Retirement Benefit payable under this Agreement shall not
be subject in any manner to alienation by anticipation, sale, transfer,
assignment, pledge or encumbrance, nor subject to the debts, contracts, or
liabilities of Dietrich or his spouse or other Beneficiaries.
11. CONTINUED EMPLOYMENT. This Agreement shall not be
construed as conferring on Dietrich a right to continued employment with
the Bank.
12. FUNDING.
(a) The Supplemental Retirement Benefit at all times shall be
entirely unfunded, and no provision shall at any time be made with
respect to segregating any assets of the Bank for payments of any
benefits hereunder, except that in the event of a Change of Control,
the Bank, within five (5) days of such Change of Control, shall fund a
grantor trust within the meaning of section 671 of the Code with an
amount sufficient to cover all potential liabilities under this
Agreement.
(b) Neither Dietrich nor his spouse or other Beneficiaries
shall have any interest in any particular assets of the Bank by reason
of the right to receive a benefit under this Agreement. Dietrich and
his spouse or other Beneficiaries shall have only the rights of general
unsecured creditors of the Bank with respect to any rights under this
Agreement.
(c) Nothing contained in this Agreement shall constitute a
guarantee by the Bank or any entity or person that the assets of the
Bank will be sufficient to pay any benefit hereunder.
13. WITHHOLDING. Any payment made pursuant to this Agreement shall be
reduced by federal and state income, FICA or other employee payroll, withholding
or other similar taxes the Bank may be required to withhold. In addition, as the
Supplemental Retirement Benefit accrues during Dietrich's employment with the
Bank, the Bank may withhold from Dietrich's regular compensation from the Bank
any FICA or other employee payroll, withholding or other similar taxes the Bank
may be required to withhold.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and shall inure to the benefit of, the successors and assigns of the Bank.
15. APPLICABLE LAW. This Agreement shall be construed and
administered in accordance with the laws of the State of New York, except to the
extent preempted by federal law.
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16. AMENDMENT. This Agreement may not be amended, modified or
otherwise altered except by written instrument executed by both parties.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties, and supersedes all prior agreements
or understanding (whether oral or written) between the parties, relating
to deferred compensation and/or supplemental retirement income.
The parties hereby execute this Agreement as follows:
NBT BANCORP INC.
By: /S/ DARYL R. FORSYTHE /S/ EVERETT A. GILMOUR
----------------------------------------------
Date: 1/1/2000 Its: PRES & CEO CHAIRMAN
--------------------- ----------------------------------------------
NBT BANK, NATIONAL ASSOCIATION
By: /S/ DARYL R. FORSYTHE
Date: 1/1/2000 Its: CHAIRMAN & CEO
--------------------- --------------------------
Date: 1/1/2000 /S/ MARTIN A. DIETRICH
--------------------- -----------------------------
MARTIN A. DIETRICH
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EXHIBIT 10.6
Form of Employment Agreement between NBT Bancorp Inc. and
Joe C. Minor made as of January 1, 2000
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of
the first day of January, 2000, by and between JOE C. MINOR ("Executive") and
NBT BANCORP INC., a Delaware corporation having its principal office in Norwich,
New York ("NBTB")
W I T N E S S E T H T H A T :
WHEREAS, Executive is an executive vice president of NBT Bancorp Inc.
and NBT Bank, National Association, a national banking association which is a
wholly-owned subsidiary of NBTB ("NBT Bank"), and president and chief operating
officer of NBT Financial Services, Inc., a Delaware corporation which is a
wholly-owned subsidiary of NBT Bank ("NBT FSI");
WHEREAS, NBTB desires to secure the continued employment of Executive,
subject to the provisions of this Agreement; and
WHEREAS, Executive is desirous of entering into the Agreement for such
periods and upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, intending to be legally bound, the parties
agree as follows:
1. EMPLOYMENT; RESPONSIBILITIES AND DUTIES.
(a) NBTB hereby agrees to cause NBT Bank to employ Executive,
and Executive hereby agrees to serve as an executive vice president of NBT
Bancorp Inc. and NBT Bank, during the Term of Employment. NBTB hereby agrees
to cause NBT FSI to employ Executive, and Executive hereby agrees to serve
as the president and chief operating officer of NBT FSI, during the Term of
Employment. Executive shall have such executive duties, responsibilities,
and authority as shall be set forth in the bylaws of NBT Bank and NBT FSI,
as the case may be, or as may otherwise be determined by NBTB or by NBT Bank
and NBT FSI, as the case may be, including supervisory responsibilities over
the trust department of NBT Bank during the period commencing at the time of
the retirement of the individual who is the chief trust officer of NBT
Bank on the date of this Agreement and continuing until the Termination Date.
During the Term of Employment, Executive shall report directly to the chief
executive officer of NBTB.
(b) NBTB hereby agrees to cause Executive to be reelected to
the board of directors of NBT FSI for successive terms throughout the Term of
Employment.
(c) Executive shall devote his full working time and best
efforts to the performance of his responsibilities and duties hereunder. During
the Term of Employment, Executive shall not, without the prior written consent
of the Board of Directors of NBTB or the president and chief executive officer
of NBTB, render services as an employee, independent contractor, or otherwise,
whether or not compensated, to any person or entity other than NBTB or its
affiliates; provided that Executive may, where involvement in such activities
does not individually or in the aggregate significantly interfere with the
performance by Executive of his duties or violate the provisions of section 4
hereof, (i) render services to charitable organizations, (ii) manage his
personal investments, and (iii) with the prior permission of the Board of
Directors of NBTB, hold such other directorships or part-time academic
appointments or have such other business affiliations as would otherwise be
prohibited under this section 1.
2. TERM OF EMPLOYMENT.
(a) The term of this Agreement ("Term of Employment") shall be
the period commencing on the date of this Agreement (the "Commencement Date")
and continuing until the Termination Date, which shall mean the earliest to
occur of:
(i) the third anniversary of the Commencement
Date, provided, however, that (A) on the first
anniversary of the Commencement Date, the Term of Employment shall automatically
extend itself to the fourth anniversary of the Commencement Date, and (B) on the
second anniversary of the Commencement Date, the Term of Employment shall
automatically extend itself to December 31, 2004;
(ii) the death of Executive;
(iii) Executive's inability to perform his duties
hereunder, as a result of physical or mental disability as reasonably determined
by the personal physician of Executive, for a period of at least 180 consecutive
days or for at least 180 days during any period of twelve consecutive months
during the Term of Employment; or
(iv) the discharge of Executive by NBTB "for
cause," which shall mean one or more of the following:
(A) any willful or gross misconduct by
Executive with respect to the business and affairs of NBTB, NBT Bank, or NBT
FSI, or with respect to any of its affiliates for which Executive is assigned
material responsibilities or duties;
(B) the conviction of Executive of a
felony (after the earlier of the expiration of any applicable appeal period
without perfection of an appeal by Executive or the denial of any appeal as to
which no further appeal or review is available to Executive) whether or not
committed in the course of his employment by NBTB;
(C) Executive's willful neglect,
failure, or refusal to carry out his duties hereunder in a reasonable manner
(other than any such failure resulting from disability or death or from
termination by Executive for Good Reason, as hereinafter defined) after a
written demand for substantial performance is delivered to Executive
that specifically identifies the manner in which NBTB believes that Executive
has not substantially performed his duties and Executive has not resumed
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substantial performance of his duties on a continuous basis within thirty days
of receiving such demand; or
(D) the breach by Executive of any
representation or warranty in section 6(a) hereof or of any agreement
contained in section 1, 4, 5, or 6(b) hereof, which breach is
material and adverse to NBTB or any of its affiliates for which Executive is
assigned material responsibilities or duties; or
(v) Executive's resignation from his position as
an executive vice president of NBT Bancorp Inc. and NBT Bank or as president and
chief operating officer of NBT FSI other than for "Good Reason," as hereinafter
defined; or
(vi) the termination of Executive's employment by
NBTB "without cause," which shall be for any reason other than those set forth
in subsections (i), (ii), (iii), (iv), or (v) of this section 2(a), at any time,
upon the thirtieth day following notice to Executive; or
(vii) Executive's resignation for "Good Reason."
"Good Reason" shall mean, without Executive's express written consent,
reassignment of Executive to a position other than as an executive vice
president of NBT Bancorp Inc. and NBT Bank and president and chief operating
officer of NBT FSI other than for "Cause," or a decrease in the amount or level
of Executive's salary or benefits from the amount or level established in
section 3 hereof.
(b) In the event that the Term of Employment shall be
terminated for any reason other than that set forth in section 2(a)(vi) or
2(a)(vii) hereof, Executive shall be entitled to receive, upon the occurrence of
any such event:
(i) any salary (as hereinafter defined) payable
pursuant to section 3(a)(i) hereof which shall have accrued as of the
Termination Date; and
(ii) such rights as Executive shall have accrued
as of the Termination Date under the terms of any plans or arrangements in which
he participates pursuant to section 3(b) hereof, any right to reimbursement
for expenses accrued as of the Termination Date payable pursuant to
section 3(i) hereof, and the right to receive the cash equivalent of paid
annual leave and sick leave accrued as of the Termination Date pursuant to
section 3(e) hereof.
(c) In the event that the Term of Employment shall be
terminated for the reason set forth in section 2(a)(vi) or 2(a)(vii) hereof,
Executive shall be entitled to receive:
(i) any salary payable pursuant to section 3(a)
(i) hereof which shall have accrued as of the Termination Date, and, for the
period commencing on the date immediately following the Termination Date
and ending upon and including the latest of the third anniversary of the
Commencement Date, the date to which the Term of Employment shall (as of the
Termination Date) have automatically extended itself under section 2(a)(i)(A)
or 2(a)(i)(B) hereof, or the first anniversary of the
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Termination Date, salary payable at the rate established pursuant to section
3(a)(i) hereof, in a manner consistent with the normal payroll practices of NBTB
with respect to executive personnel as presently in effect or as they may be
modified by NBTB from time to time; and
(ii) such rights as Executive may have accrued as
of the Termination Date under the terms of any plans or arrangements in which he
participates pursuant to section 3(b) hereof, any
right to reimbursement for expenses accrued as of the Termination Date payable
pursuant to section 3(i) hereof, and the right to receive the cash equivalent of
paid annual leave and sick leave accrued as of the Termination Date pursuant to
section 3(e) hereof.
(d) Any provision of this section 2 to the contrary
notwithstanding, in the event that the employment of Executive with NBTB is
terminated in any situation described in section 3 of the change-in-control
letter agreement dated January 1, 2000 between NBTB and Executive (the
"Change-in-Control Agreement") so as to entitle Executive to a severance payment
and other benefits described in section 3 of the Change-in-Control Agreement,
then Executive shall be entitled to receive the following, and no more, under
this section 2:
(i) any salary payable pursuant to section 3(a)
(i) hereof which shall have accrued as of the Termination Date;
(ii) such rights as Executive shall have accrued
as of the Termination Date under the terms of any
plans or arrangements in which he participates pursuant to section 3(b) hereof,
any right to reimbursement for expenses accrued as of the Termination Date
payable pursuant to section 3(i) hereof, and the right to receive the cash
equivalent of paid annual leave and sick leave accrued as of the Termination
Date pursuant to section 3(e) hereof; and
(iii) the severance payment and other benefits
provided in the Change-in-Control Agreement.
3. COMPENSATION. For the services to be performed by Executive
for NBTB and its affiliates under this Agreement, Executive shall be compensated
in the following manner:
(a) SALARY. During the Term of Employment:
(i) NBTB shall pay Executive a salary which, on
an annual basis, shall not be less than $230,000 during the Term of Employment,
assuming Executive performs competently. Salary shall be payable in accordance
with the normal payroll practices of NBTB with respect to executive personnel
as presently in effect or as they may be modified by NBTB from time to time.
(ii) Executive shall be entitled to annual salary
increases of 8 percent during the Term of Employment, beginning in the second
year of the Term of Employment, and shall be eligible to
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be considered for further salary increases, upon review, in accordance with the
compensation policies of NBTB with respect to executive personnel as presently
in effect or as they may be modified by NBTB from time to time.
(iii) Executive shall be eligible to be considered
for performance bonuses of up to 75 percent of salary, in accordance with the
compensation policies of NBTB with respect to executive personnel as presently
in effect or as they may be modified by NBTB from time to time.
(b) EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS. During the Term of
Employment, Executive shall be entitled to participate in all employee benefit
plans of NBTB, as presently in effect or as they may be modified by NBTB from
time to time, under such terms as may be applicable to officers of Executive's
rank employed by NBTB or its affiliates, including, without limitation, plans
providing retirement benefits, stock options, medical insurance, life insurance,
disability insurance, and accidental death or dismemberment insurance, provided
that there be no duplication of such benefits as are provided under any other
provision of this Agreement.
(c) PERFORMANCE BASED INCREASE TO EXECUTIVE'S RETIREMENT
BENEFITS.
(1) MEASURE AND AMOUNT. If, as a direct result
of Executive's personal performance, NBTB has a "Sustained Increase" to its net
earnings before taxes ("EBT"), determined in accordance with section 3(c)(2)
hereof, over the Lookback Period, as defined in section 3(c)(2)(i) hereof,
then NBTB shall pay Executive an enhanced benefit under the Supplemental
Retirement Agreement between NBTB, NBT Bank, and Executive dated January
1, 2000 ("SRA"), and an additional retirement benefit as follows:
(i) If the Sustained Increase to EBT over
the Lookback Period is at least $1.5 million, but less than $4 million, then
the benefit payable under the SRA that would
otherwise be payable upon Executive's attaining age 62 shall instead be payable
thereunder upon his attaining age 61. In addition, NBTB shall make a lump-sum
cash payment of $100,000 to a grantor trust (as described in section 671 of the
Internal Revenue Code of 1986, as amended) to be established for the sole
benefit of Executive ("Executive's Rabbi Trust") for payment upon his retirement
from employment with NBTB, in addition to any and all other payments payable
thereupon, such payment to be made in accordance with the terms of Executive's
Rabbi Trust.
(ii) If the Sustained Increase to EBT
over the Lookback Period is at least $4 million, but
less than $8 million, then the benefit payable under the SRA that would
otherwise be payable upon Executive's attaining age 62 shall instead be payable
thereunder upon his attaining age 60. In addition, NBTB shall make a lump-sum
cash payment of $300,000 to Executive's Rabbi Trust for payment upon his
retirement from employment with NBTB, in addition to any and all other payments
payable thereupon, such payment to be made in accordance with the terms of
Executive's Rabbi Trust.
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(iii) If the Sustained Increase to EBT
over the Lookback Period is at least $8 million, then
the benefit payable under the SRA that otherwise would be payable thereunder
upon Executive's attaining age 62 shall be calculated using the following
percentages in paragraph 3(a)(i)(1) of the SRA instead of "50%" at the following
retirement ages: 75% for retirement at age 62; 65% for retirement at age 61; and
55% for retirement at age 60. In addition, NBTB shall make a lump-sum cash
payment of $600,000 to Executive's Rabbi Trust for payment upon his retirement
from employment with NBTB, in addition to any and all other payments payable
upon such retirement, such payment to be made in accordance with the terms of
Executive's Rabbi Trust.
(2) LOOKBACK PERIOD AND DETERMINATION.
(i) The Lookback Period shall be the
period of three (3) full fiscal years of NBTB ending on
the day prior to the first day of the fiscal year in which falls the
Determination Date, as defined in paragraph 2(f) of the SRA.
(ii) Whether an increase to EBT is an
increase specified above ("Specified Increase") shall be
determined by comparing the contribution to EBT as a direct result of
Executive's personal performance over the departments and/or companies for which
Executive is directly responsible (the "Attributed Amount") for the fiscal year
immediately preceding the first year of the Lookback Period to that of the first
fiscal year of the Lookback Period. An increase to EBT will be considered
sustained if the Attributed Amount for each of the second and third fiscal years
of the Lookback Period is no less than the Attributed Amount for the year
immediately preceding the first year of the Lookback Period plus a Specified
Increase. If the Specified Increase is achieved and sustained in the manner
provided in this section 3(c)(2), then such increase to EBT shall be deemed to
be a "Sustained Increase" under section 3(c)(1).
(iii) Whether Executive has achieved a
Sustained Increase to EBT shall be determined by a
committee of the board of directors of NBT FSI made up of (a) Daryl R. Forsythe,
if he be a director of NBT FSI, and (b) those directors of NBT FSI who are not
employees of NBTB or any of its affiliates ("Committee"). Within a reasonable
period after the Determination Date, the Committee shall determine separately
whether there has been a Sustained Increase to NBTB's EBT and, if the Committee
determines there has been a Sustained Increase, whether such Sustained Increase
was solely attributable to Executive's personal performance based on the data
and factors described below.
(iv) If the Determination Date falls on a
date prior to the day following the last day of the
third full fiscal year the first of which began coincident with, or immediately
following, the effective date of this Agreement, then the Executive may make a
reasonable and good faith projection of NBTB's EBT for the balance of what would
be the Lookback Period were the Determination Date to fall on the earliest date
that would provide a full Lookback Period. If, under Executive's projections,
(A) there would be a Sustained Increase to EBT for the partial Lookback Period,
(B) such Sustained Increase would continue for what would be the balance of the
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Lookback Period, and (C) such Sustained Increase was and would continue to be
solely attributable to Executive's personal performance, then Executive may
submit his projections, with all underlying data, assumptions, methodology and
factors, to the Committee. The Committee shall review Executive's submission and
determine whether a Sustained Increase to EBT (AA) was achieved for the partial
Lookback Period, (BB) is likely to continue for what would be the balance of the
Lookback Period, and (CC) was and would continue to be a result of Executive's
personal performance. The Committee shall make its determination based on the
data and factors described below.
(v) In making comparisons and
calculations under this section 3(c)(2), the Committee shall (A) deem each
non-recurring gain or loss enjoyed or suffered by NBT Capital
Corp. at any time during the Lookback Period to have been enjoyed or suffered in
equal annual amounts during the years of the Lookback Period, the sum of which
equal annual amounts shall equal the amount of the particular non-recurring gain
or loss, rather than allot it entirely to the year in which it was actually
enjoyed or suffered, and (B) deem each non-recurring gain or loss enjoyed or
suffered by NBT Capital Corp. during the fiscal year immediately preceding the
first year of the Lookback Period to have been enjoyed or suffered in equal
annual amounts during such year and the years of the Lookback Period, the sum of
which equal annual amounts shall equal the amount of the particular
non-recurring gain or loss, rather than allot it entirely to the fiscal year
immediately preceding the first year of the Lookback Period. In addition, for
determinations based on Executive's projections, the Committee shall consider
whether the data, assumptions and methodology used by Executive in preparing his
projections were each and, in the aggregate, accurate and reasonable and are
consistent with NBTB's historical performance. In making any determination
hereunder, the Committee may retain and consult with such financial, accounting
and legal advisors as it deems appropriate and may solicit and accept further
data and analysis from the Executive, NBTB and/or third party advisor(s), as the
Committee believes necessary and/or desirable in its sole discretion.
(vi) The Committee's determination as to
whether a Sustained Increase has been achieved as a result of Executive's
personal performance and the amount thereof shall be
absolute, final and binding on the Executive, NBTB and all other parties.
(d) STOCK OPTIONS. Each January or February annually during
the Term of Employment, NBTB will cause Executive to be granted a non-statutory
("non-qualified") stock option (each an "Option") to purchase the number of
shares of the common stock of NBTB, no par value, $1.00 stated value, or the
common stock of NBTB as reclassified to have a par value of $.01 per share, as
the case may be (the "NBTB Common Stock"), pursuant to the NBT Bancorp Inc. 1993
Stock Option Plan, as amended, or any appropriate successor plan (the "Stock
Option Plan"), computed by dividing 250 percent of the annualized salary of
Executive on the date of grant of the Option by the "Fair Market Value" of NBTB
Common Stock (as defined in the Stock Option Plan). The option exercise price
per share of the shares subject to each Option shall be such Fair Market Value,
and the terms, conditions of exercise, and vesting schedule of such Option shall
be as set forth in section 8 of the Stock Option Plan.
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(e) VACATION AND SICK LEAVE. During the Term of Employment,
Executive shall be entitled to paid annual vacation periods and sick leave in
accordance with the policies of NBTB as in effect as of the Commencement Date or
as may be modified by NBTB from time to time as may be applicable to officers of
Executive's rank employed by NBTB or its affiliates, but in no event less than
four weeks of paid vacation per year.
(f) AUTOMOBILE. During the Term of Employment, Executive shall
be entitled to the use of an automobile owned by NBTB or an affiliate of NBTB,
the make, model, and year of which automobile shall be appropriate to an officer
of Executive's rank employed by NBTB or its affiliates and consistent with that
provided to others of Executive's rank employed by NBTB or its affiliates.
During the second year of the Term of Employment, the automobile used by
Executive will be replaced with a new automobile, whose value shall not exceed
$45,000 escalated by an amount calculated by the controller's division of NBT
Bank to adjust for the effect of inflation upon $45,000 between the Commencement
Date and the date of the replacement of the vehicle (an "Inflation Adjustment").
During the remaining term of the Term of Employment, should three years elapse
from the date of the automobile replacement described in the previous sentence
(or any subsequent automobile replacement that takes place under this section),
or, if earlier, should the replaced automobile (or any automobile provided under
such subsequent automobile replacement) have accumulated 50,000 miles, then it
will be replaced with a new automobile whose value shall not exceed the sum of
$45,000 and an Inflation Adjustment. Executive shall be responsible for all
expenses of ownership and use of any such automobile, subject to reimbursement
of expenses for business use in accordance with section 3(i).
(g) COUNTRY CLUB DUES. During the Term of Employment,
Executive shall be reimbursed for dues and assessments incurred in relation to
Executive's membership at Yahundasis Country Club. Such reimbursement during the
first year of the Term of Employment shall include reimbursement of Executive's
initiation fees with respect to Executive's membership at Yahundasis Country
Club.
(h) WITHHOLDING. All compensation to be paid to
Executive hereunder shall be subject to required withholding and other taxes.
(i) EXPENSES. During the Term of Employment, Executive shall
be reimbursed for reasonable travel and other expenses incurred or paid by
Executive in connection with the performance of his services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as may from time to time be requested, in accordance with
such policies of NBTB as are in effect as of the Commencement Date and as may be
modified by NBTB from time to time, under such terms as may be applicable to
officers of Executive's rank employed by NBTB or its affiliates.
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4. CONFIDENTIAL BUSINESS INFORMATION; NON-COMPETITION.
(a) Executive acknowledges that certain business methods,
creative techniques, and technical data of NBTB and its affiliates and the like
are deemed by NBTB to be and are in fact confidential business information of
NBTB or its affiliates or are entrusted to third parties. Such confidential
information includes but is not limited to procedures, methods, sales
relationships developed while in the service of NBTB or its affiliates,
knowledge of customers and their requirements, marketing plans, marketing
information, studies, forecasts, and surveys, competitive analyses, mailing and
marketing lists, new business proposals, lists of vendors, consultants, and
other persons who render service or provide material to NBTB or NBT Bank or
their affiliates, and compositions, ideas, plans, and methods belonging to or
related to the affairs of NBTB or NBT Bank or their affiliates. In this regard,
NBTB asserts proprietary rights in all of its business information and that of
its affiliates except for such information as is clearly in the public domain.
Notwithstanding the foregoing, information that would be generally known or
available to persons skilled in Executive's fields shall be considered to be
"clearly in the public domain" for the purposes of the preceding sentence.
Executive agrees that he will not disclose or divulge to any third party, except
as may be required by his duties hereunder, by law, regulation, or order of a
court or government authority, or as directed by NBTB, nor shall he use to the
detriment of NBTB or its affiliates or use in any business or on behalf of any
business competitive with or substantially similar to any business of NBTB or
NBT Bank or their affiliates, any confidential business information obtained
during the course of his employment by NBTB. The foregoing shall not be
construed as restricting Executive from disclosing such information to the
employees of NBTB or NBT Bank or their affiliates.
(b) Executive hereby agrees that from the Commencement Date
until the first anniversary of the Termination Date, Executive will not (i)
interfere with the relationship of NBTB or NBT Bank or their affiliates with any
of their employees, suppliers, agents, or representatives (including, without
limitation, causing or helping another business to hire any employee of NBTB or
NBT Bank or their affiliates), or (ii) directly or indirectly divert or attempt
to divert from NBTB, NBT Bank or their affiliates any business in which any of
them has been actively engaged during the Term of Employment, nor interfere with
the relationship of NBTB, NBT Bank or their affiliates with any of their
customers or prospective customers. This paragraph 4(b) shall not, in and of
itself, prohibit Executive from engaging in the banking, trust, or financial
services business in any capacity, including that of an owner or employee.
(c) Executive acknowledges and agrees that irreparable injury
will result to NBTB in the event of a breach of any of the provisions of this
section 4 (the "Designated Provisions") and that NBTB will have no adequate
remedy at law with respect thereto. Accordingly, in the event of a material
breach of any Designated Provision, and in addition to any other legal or
equitable remedy NBTB may have, NBTB shall be entitled to the entry of a
preliminary and permanent injunction (including, without limitation, specific
performance) by a court of competent jurisdiction in Chenango County, New York,
or elsewhere, to restrain the violation or breach thereof by Executive, and
Executive submits to the jurisdiction of such court in any such action.
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(d) It is the desire and intent of the parties that the
provisions of this section 4 shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this section
4 shall be adjudicated to be invalid or unenforceable, such provision shall be
deemed amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 4 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to NBTB, to the fullest extent
permitted by applicable law, the benefits intended by this section 4.
5. LIFE INSURANCE. In light of the unusual abilities and experience of
Executive, NBTB in its discretion may apply for and procure as owner and for its
own benefit insurance on the life of Executive, in such amount and in such form
as NBTB may choose. NBTB shall make all payments for such insurance and shall
receive all benefits from it. Executive shall have no interest whatsoever in any
such policy or policies but, at the request of NBTB, shall submit to medical
examinations and supply such information and execute such documents as may
reasonably be required by the insurance company or companies to which NBTB has
applied for insurance.
6. REPRESENTATIONS AND WARRANTIES.
(a) Executive represents and warrants to NBTB that his
execution, delivery, and performance of this Agreement will not result in or
constitute a breach of or conflict with any term, covenant, condition, or
provision of any commitment, contract, or other agreement or instrument,
including, without limitation, any other employment agreement, to which
Executive is or has been a party.
(b) Executive shall indemnify, defend, and hold harmless NBTB
for, from, and against any and all losses, claims, suits, damages, expenses, or
liabilities, including court costs and counsel fees, which NBTB has incurred or
to which NBTB may become subject, insofar as such losses, claims, suits,
damages, expenses, liabilities, costs, or fees arise out of or are based upon
any failure of any representation or warranty of Executive in section 6(a)
hereof to be true and correct when made.
7. NOTICES. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
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If to NBTB:
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Attention: Mr. Daryl R. Forsythe
President and Chief Executive Officer
With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to Executive:
Mr. Joe C. Minor
One Wales Drive
Norwich, New York 13815
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
8. ASSIGNMENT. Neither party may assign this Agreement or any
rights or obligations hereunder without the consent of the other party.
9. GOVERNING LAW. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of New York, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate Chenango County, New York to be the proper jurisdiction and venue for
any suit or action arising out of this Agreement. Each of the parties consents
to personal jurisdiction in such venue for such a proceeding and agrees that it
may be served with process in any action with respect to this Agreement or the
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
State of New York. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding among NBTB and Executive relating to the subject matter hereof.
Any previous agreements or understandings between the parties hereto or between
Executive and NBT Bank or any of its affiliates regarding the subject matter
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hereof, including without limitation the terms and conditions of employment,
compensation, benefits, retirement, competition following employment, and the
like, are merged into and superseded by this Agreement. Neither this Agreement
nor any provisions hereof can be modified, changed, discharged, or terminated
except by an instrument in writing signed by the party against whom any waiver,
change, discharge, or termination is sought.
11. ILLEGALITY; SEVERABILITY.
(a) Anything in this Agreement to the contrary
notwithstanding, this Agreement is not intended and shall not be construed to
require any payment to Executive which would violate any federal or state
statute or regulation, including without limitation the "golden parachute
payment regulations" of the Federal Deposit Insurance Corporation codified to
Part 359 of title 12, Code of Federal Regulations.
(b) If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable for any reason
whatsoever:
(i) the validity, legality, and enforceability
of the remaining provisions of this Agreement (including, without limitation,
each portion of any section of this Agreement containing any such provision
held to be invalid, illegal, or unenforceable) shall not in any way be
affected or impaired thereby; and
(ii) to the fullest extent possible,
the provisions of this Agreement (including, without limitation,
each portion of any section of this Agreement containing any such provisions
held to be invalid, illegal, or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal, or
unenforceable.
12. ARBITRATION. Subject to the right of each party to seek specific
performance (which right shall not be subject to arbitration), if a dispute
arises out of or related to this Agreement, or the breach thereof, such dispute
shall be referred to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
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subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in the
Northern District of New York. In the event of any arbitration, each party shall
have a reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
In the event of any arbitration, the arbitrator or arbitrators shall have the
power to award reasonable attorney's fees to the prevailing party. Any provision
in this Agreement to the contrary notwithstanding, this section shall be
governed by the Federal Arbitration Act and the parties have entered into this
Agreement pursuant to such Act.
13. COSTS OF LITIGATION. In the event litigation is commenced to
enforce any of the provisions hereof, or to obtain declaratory relief in
connection with any of the provisions hereof, the prevailing party shall be
entitled to recover reasonable attorney's fees. In the event this Agreement is
asserted in any litigation as a defense to any liability, claim, demand, action,
cause of action, or right asserted in such litigation, the party prevailing on
the issue of that defense shall be entitled to recovery of reasonable attorney's
fees.
14. AFFILIATION. A company will be deemed to be "affiliated" with
NBTB or NBT Bank according to the definition of "Affiliate" set forth in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
15. HEADINGS. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto executed or caused this
Agreement to be executed as of the day and year first above written.
NBT BANCORP INC.
By: /S/ DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
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JOE C. MINOR
/S/ Joe C. Minor
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EXHIBIT 10.7
Supplemental Retirement Agreement between NBT Bancorp Inc., NBT
Bank, National Association and Joe C. Minor made as of
January 1, 2000
SUPPLEMENTAL RETIREMENT AGREEMENT
This sets forth the terms of an agreement for the payment of
supplemental retirement income ("Agreement") made as of January 1, 2000 between
(i) NBT BANCORP INC., a Delaware corporation and a registered bank holding
company, and NBT BANK, NATIONAL ASSOCIATION, a national banking association
chartered under the laws of the United States, both having offices located at
Norwich, New York (collectively, the "Bank"), and (ii) JOE C. MINOR, an
individual residing at One Wales Drive, Norwich, New York 13815, and who is a
member of a select group of management or highly compensated employees within
the meaning of section 201(2) of the Employee Retirement Income Security Act of
1974, as amended ("Minor").
1. PURPOSE OF THE AGREEMENT. The purpose of this Agreement is
to provide Minor a supplemental retirement benefit in accordance with the
terms of this Agreement.
2. DEFINITIONS. For purposes of this Agreement, the following
words shall have the meaning indicated:
(a) ACTUARIAL EQUIVALENT. "Actuarial Equivalent" shall
have the same meaning the term "Actuarial Equivalent" has under Section 2.03
of the Qualified Plan using the following actuarial assumptions:
MORTALITY: "Applicable Mortality Rate" as such
term is defined in Section 2.03c of the Qualified
Plan.
INTEREST RATE: "Applicable Interest Rate" as such
term is defined in Section 2.09b of the Qualified
Plan.
(b) BENEFICIARY. "Beneficiary" shall mean such living person
or living persons designated by Minor in accordance with subparagraph
5(a) to receive benefits under this Agreement after his death, or his
personal or legal representative, all as herein described and provided.
If no Beneficiary is designated by Minor or if no Beneficiary survives
Minor, the Beneficiary shall be Minor's estate.
(c) CAUSE. "Cause" shall mean Minor's:
(i) willful or gross misconduct with respect to the
business and affairs of the Bank, or with respect to any of
its affiliates for which Minor is assigned material
responsibilities or duties;
(ii) conviction of a felony (after the earlier of the
expiration of any applicable appeal period without perfection
of an appeal by Minor or the denial of any appeal as to which
no further appeal or review is available to Minor) whether or
not committed in the course of his employment by the Bank;
(iii) willful neglect, failure, or refusal to carry
out his duties under the Employment Agreement between NBT
Bancorp Inc. and Minor dated as of January 1, 2000 (the
"Employment Agreement") in a reasonable manner (other than any
such failure resulting from disability or death or from
termination by Minor for Good Reason, as defined in the
Employment Agreement) after a written demand for substantial
performance is delivered to Minor that specifically identifies
the manner in which the Bank believes that Minor has not
substantially performed his duties and he has not resumed
substantial performance of his duties on a continuous basis
within thirty days of receiving such demand; or
(iv) breach of any representation or warranty in
section 6(a) of the Employment Agreement or of any agreement
contained in section 1, 4, 5, or 6(b) of the Employment
Agreement, which breach is material and adverse to the Bank or
any of its affiliates for which Minor is assigned material
responsibilities or duties.
(d) CHANGE OF CONTROL. "Change of Control" shall mean a Change
in Control as such term is defined in the Change in Control Agreement
between Minor and the Bank dated January 1, 2000 (a revision of the
October 27, 1998 and January 2, 1997 agreements).
(e) CODE. "Code" shall mean the Internal Revenue Code of
1986, as amended.
(f) DETERMINATION DATE. "Determination Date" shall
mean the earlier of (i) the date of termination of Minor's
employment with the Bank or (ii) the first day of the month following
Minor's 65th birthday.
(g) FINAL AVERAGE COMPENSATION. "Final Average Compensation"
shall have the same meaning the term "Final Average Compensation" has
under Section 2.27 of the Qualified Plan, except that in determining
the amount of Compensation (as defined in Section 2.14 of the Qualified
Plan) to be used in calculating Final Average Compensation under
Section 2.27 of the Qualified Plan, Compensation shall not be subject
to the compensation limitation of section 401(a)(17) of the Code.
(h) FULL-TIME EMPLOYEE. "Full-Time Employee" shall mean an
employee who works not less than 1,000 hours in a calendar year.
(i) OTHER RETIREMENT BENEFITS. "Other Retirement
Benefits" shall mean the sum of:
(i) The annual benefit payable to Minor from the
Qualified Plan, plus
(ii) The annual benefit that could be provided by (A)
Bank contributions (other than elective deferrals) made on
Minor's behalf under the NBT Bancorp Inc. 401(k) and Employee
Stock Ownership Plan, and (B) actual earnings on contributions
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in (A), if such contributions and earnings were converted to a
benefit payable on the Determination Date in the same form as
the benefit paid under this Agreement, using the same
actuarial assumptions as are provided under subparagraph 2(a).
The amount of Other Retirement Benefits shall be determined by
an actuary selected by the Bank, with such determination to be made
without reduction for payment of benefits prior to any stated "normal
retirement date" and without regard to whether Minor is receiving
payment of such benefits on the Determination Date. To the extent Minor
receives a payment of Other Retirement Benefits described in
subparagraph 2(i)(ii) prior to the date the Supplemental Retirement
Benefit is determined pursuant to this Agreement, the total of such
Other Retirement Benefits shall be determined by including and assuming
that such amounts earned interest at a variable rate equal to the
one-year United States Treasury bill rate as reported in the New York
edition of The Wall Street Journal on the Determination Date from the
date received to the date Other Retirement Benefits are calculated for
purposes of this Agreement.
(j) PRESENT VALUE. "Present Value" shall mean the present
value of a benefit determined on the basis of the following actuarial
assumptions:
MORTALITY: "Applicable Mortality Rate" as
such term is defined in Section
2.03c of the Qualified Plan.
INTEREST RATE: "Applicable Interest Rate" as such
term is defined in Section 2.09b of
the Qualified Plan.
(k) QUALIFIED PLAN. "Qualified Plan" shall mean the NBT
BANCORP Inc. Defined Benefit Pension Plan.
(l) SOCIAL SECURITY BENEFIT. "Social Security Benefit"
shall mean Minor's actual social security benefit at his
Social Security Retirement Age.
(m) SOCIAL SECURITY RETIREMENT AGE. "Social Security
Retirement Age" shall have the same meaning the term
"Social Security Retirement Age" has under Section 2.58 of the
Qualified Plan.
(n) YEAR OF SERVICE. "Year of Service" shall mean a
calendar year in which Minor completes not less than 1,000
hours of service.
3. AMOUNT OF SUPPLEMENTAL RETIREMENT BENEFIT.
(a) AMOUNT PAYABLE ON AND AFTER AGE 62. If Minor shall remain
employed by the Bank until reaching his 62nd birthday, serving as a
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Full-Time Employee until such date, and subject to the other terms and
conditions of this Agreement, the Bank shall pay Minor an annual
"Supplemental Retirement Benefit" determined as follows:
(i) ON AND AFTER AGE 62 BUT BEFORE SOCIAL SECURITY
RETIREMENT AGE. Minor shall be entitled to a Supplemental
Retirement Benefit on and after his 62nd birthday but before
his Social Security Retirement Age in an amount equal to the
excess of (1) 50 percent of Minor's Final Average
Compensation, over (2) Minor's Other Retirement Benefits,
determined as of the Determination Date and calculated in
accordance with paragraph 2(i).
(ii) ON AND AFTER SOCIAL SECURITY RETIREMENT AGE.
Minor shall be entitled to a Supplemental Retirement Benefit
on and after his Social Security Retirement Age in an amount
equal to the excess of (1) 50 percent of Minor's Final Average
Compensation, over (2) the sum of (aa) Minor's Other
Retirement Benefits, determined as of the Determination Date
and calculated in accordance with paragraph 2(i), plus (bb)
Minor's Social Security Benefit.
(b) AMOUNT PAYABLE ON AND AFTER AGE 60 BUT BEFORE AGE 62. If
Minor shall remain employed by the Bank until reaching his 60th
birthday, serving as a Full-Time Employee until such date and he
continues to serve as a Full-Time Employee until the date of his
retirement, and he retires then or thereafter but before reaching his
62nd birthday, and subject to the other terms and conditions of this
Agreement, the Bank shall pay Minor on the date of his retirement,
pursuant to subparagraph 4(b), or to his spouse or other Beneficiary,
pursuant and subject to subparagraph 6(c) if he has died before his
62nd birthday, a reduced early Supplemental Retirement Benefit
calculated in accordance with the following schedule:
(i) If the date of Minor's retirement shall be on or
after his 60th birthday but before his 61st birthday, the Bank
shall pay Minor 60% of the Supplemental Retirement Benefit
calculated in accordance with subparagraph 3(a)(i); and
(ii) If the date of Minor's retirement shall be on or
after his 61st birthday but before his 62nd birthday, the Bank
shall pay Minor 70% of the Supplemental Retirement Benefit so
calculated.
(c) ENHANCED BENEFIT. Notwithstanding any provision of this
paragraph to the contrary, Minor's benefit hereunder shall be
calculated in accordance with section 3(c) of the Employment Agreement
between the Bank and Minor if, in accordance with the terms of such
section, Minor is entitled to the enhancement provided therein.
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4. TIME OF PAYMENT.
(a) Except as provided in subparagraph 4(b) (early retirement)
and paragraph 6 (payment on death), the Bank shall pay the Supplemental
Retirement Benefit commencing on the first day of the month following
Minor's attainment of age 62.
(b) Notwithstanding subparagraph 4(a), the Bank shall commence
payment of an early Supplemental Retirement Benefit, in the amount
determined under subparagraph 3(b), on the first day of the month
following Minor's Determination Date in connection with early
retirement after reaching age 60 and prior to the date of his 62nd
birthday.
5. FORM OF PAYMENT.
(a) The Supplemental Retirement Benefit described in paragraph
3 of this Agreement shall be paid as a straight life annuity, payable
in monthly installments, for Minor's life; provided, however, that if
Minor has no surviving spouse and dies before having received 60
monthly payments, such monthly payments shall be continued to his
Beneficiary until the total number of monthly payments to Minor and his
Beneficiary equal 60, whereupon all payments shall cease and the Bank's
obligation under this Agreement shall be deemed to have been fully
discharged. If Minor and his Beneficiary shall die before having
received a total of 60 monthly payments, an amount equal to the
Actuarial Equivalent of the balance of such monthly payments shall be
paid in a single sum to the estate of the survivor of Minor and his
Beneficiary. If Supplemental Retirement Benefits are payable in the
form described in this subparagraph 5(a), Minor shall designate in
writing, as his Beneficiary, any person or persons, primarily,
contingently or successively, to whom the Bank shall pay benefits
following Minor's death if Minor's death occurs before 60 monthly
payments have been made.
(b) Notwithstanding the form of payment described in
subparagraph 5(a), if Minor is married on the date payment of the
Supplemental Retirement Benefit commences, the benefit shall be paid as
a 50% joint and survivor annuity with Minor's spouse as the
Beneficiary. The 50% joint and survivor annuity shall be the Actuarial
Equivalent of the benefit described in subparagraph 5(a). If the
Supplemental Retirement Benefit is payable pursuant to this
subparagraph 5(b), but Minor's spouse fails to survive him, no payments
will be made pursuant to this Agreement following Minor's death.
(c) Notwithstanding the foregoing provisions of this paragraph
5, the Bank, in its sole discretion, may accelerate the payment of all
or any portion of the Supplemental Retirement Benefit or the reduced
early Supplemental Retirement Benefit at any time. Any payment
accelerated in accordance with this subparagraph 5(c) shall be the
Actuarial Equivalent of the payment being accelerated.
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6. PAYMENTS UPON MINOR'S DEATH.
(a) Except as provided in subparagraphs 6(b) and (c), if Minor
shall die before his 62nd birthday, no payment shall be due his estate
under this Agreement.
(b) If Minor's death shall occur on or after his 60th
birthday, after he has retired but before payment of any Supplemental
Retirement Benefit has commenced, Minor's surviving spouse shall be
paid as a straight life annuity 50 percent of the Supplemental
Retirement Benefit for her life commencing within 30 days following
Minor's death. Such payments shall be made in monthly installments,
subject to the right of the Bank to accelerate payment at any time in
accordance with subparagraph 5(c).
(c) If Minor elects early retirement pursuant to subparagraph
3(b) and he dies before payment of any Supplemental Retirement Benefit
has commenced, Minor's surviving spouse shall be paid, in monthly
installments, as a straight life annuity, 50 percent of such
Supplemental Retirement Benefit for her life commencing within 30 days
following Minor's death, subject to the right of the Bank to accelerate
such payments as provided in subparagraph 5(c). However, if Minor's
spouse fails to survive him, the Bank shall pay to Minor's estate a
lump sum benefit equal to 50 percent of the Present Value of Minor's
Supplemental Retirement Benefit.
(d) Except as otherwise provided in subparagraph 6(c), no
payments shall be made under this Agreement if Minor dies before
payment of any Supplemental Retirement Benefit begins and his spouse
fails to survive him.
(e) If Minor's death shall occur after payment of a
Supplemental Retirement Benefit has commenced, Minor surviving spouse
or other Beneficiaries shall receive payments under this Agreement to
the extent provided in paragraph 5.
7. FORFEITURE FOR CAUSE. Notwithstanding any other provision of
this Agreement, if Minor's employment with the Bank is terminated for Cause,
Minor and his spouse or other Beneficiaries shall forfeit all rights to any
payment under this Agreement.
8. POWERS. The Bank shall have such powers as may be necessary to
discharge its duties under this Agreement, including the power to interpret and
construe this Agreement and to determine all questions regarding employment,
disability status, service, earnings, income and such factual matters as birth
and marital status. The Bank's determinations hereunder shall be conclusive and
binding upon the parties hereto and all other persons having or claiming an
interest under this Agreement. The Bank shall have no power to add to, subtract
from, or modify any of the terms of this Agreement. The Bank's determinations
hereunder shall be entitled to deference upon review by any court, agency or
other entity empowered to review its decisions, and shall not be overturned or
set aside by any court, agency or other entity unless found to be arbitrary,
capricious or contrary to law.
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9. CLAIMS PROCEDURE.
(a) Any claim for benefits by Minor, his spouse or other
Beneficiaries shall be made in writing to the Bank. In this paragraph,
Minor and his Beneficiaries are referred to as "claimants."
(b) If the Bank denies a claim in whole or in part, it shall
send the claimant a written notice of the denial within 90 days after
the date it receives a claim, unless it needs additional time to make
its decision. In that case, the Bank may authorize an extension of an
additional 90 days if it notifies the claimant of the extension within
the initial 90-day period. The extension notice shall state the reasons
for the extension and the expected decision date.
(c) A denial notice shall contain:
(i) The specific reason or reasons for the denial
of the claim;
(ii) Specific reference to pertinent Agreement
provisions upon which the denial is based;
(iii) A description of any additional material or
information necessary to perfect the claim, with an
explanation of why the material or information is necessary;
and
(iv) An explanation of the review procedures
provided below.
(d) Within 60 days after the claimant receives a denial
notice, he or she may file a request for review with the Bank. Any such
request must be made in writing.
(e) A claimant who timely requests review shall have the right
to review pertinent documents, to submit additional information or
written comments, and to be represented.
(f) The Bank shall send the claimant a written decision on any
request for review within 60 days after the date it receives a request
for review, unless an extension of time is needed, due to special
circumstances. In that case, the Bank may authorize an extension of an
additional 60 days, provided it notifies the claimant of the extension
within the initial 60-day period.
(g) The review decision shall contain:
(i) The specific reason or reasons for the
decision; and
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(ii) Specific reference to the pertinent Agreement
provisions upon which the decision is based.
(h) If the Bank does not send the claimant a review decision
within the applicable time period, the claim shall be deemed denied on
review.
(i) The denial notice or, in the case of a timely review, the
review decision (including a deemed denial under subparagraph 9(h))
shall be the Bank's final decision.
10. ASSIGNMENT. Neither Minor nor his spouse or other Beneficiaries may
transfer his, her or their right to payments to which he, she or they are
entitled under this Agreement. Except insofar as may otherwise be required by
law, any Supplemental Retirement Benefit payable under this Agreement shall not
be subject in any manner to alienation by anticipation, sale, transfer,
assignment, pledge or encumbrance, nor subject to the debts, contracts, or
liabilities of Minor or his spouse or other Beneficiaries.
11. CONTINUED EMPLOYMENT. This Agreement shall not be construed
as conferring on Minor a right to continued employment with the Bank.
12. FUNDING.
(a) The Supplemental Retirement Benefit at all times shall be
entirely unfunded, and no provision shall at any time be made with
respect to segregating any assets of the Bank for payments of any
benefits hereunder, except that in the event of a Change of Control,
the Bank, within five (5) days of such Change of Control, shall fund a
grantor trust within the meaning of section 671 of the Code with an
amount sufficient to cover all potential liabilities under this
Agreement.
(b) Neither Minor nor his spouse or other Beneficiaries shall
have any interest in any particular assets of the Bank by reason of the
right to receive a benefit under this Agreement. Minor and his spouse
or other Beneficiaries shall have only the rights of general unsecured
creditors of the Bank with respect to any rights under this Agreement.
(c) Nothing contained in this Agreement shall constitute a
guarantee by the Bank or any entity or person that the assets of the
Bank will be sufficient to pay any benefit hereunder.
13. WITHHOLDING. Any payment made pursuant to this Agreement shall be
reduced by federal and state income, FICA or other employee payroll, withholding
or other similar taxes the Bank may be required to withhold. In addition, as the
Supplemental Retirement Benefit accrues during Minor's employment with the Bank,
the Bank may withhold from Minor's regular compensation from the Bank any FICA
or other employee payroll, withholding or other similar taxes the Bank may be
required to withhold.
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14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and shall inure to the benefit of, the successors and assigns of the Bank.
15. APPLICABLE LAW. This Agreement shall be construed and
administered in accordance with the laws of the State of New York, except to the
extent preempted by federal law.
16. AMENDMENT. This Agreement may not be amended, modified or
otherwise altered except by written instrument executed by both parties.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties, and supersedes all prior agreements
or understanding (whether oral or written) between the parties, relating to
deferred compensation and/or supplemental retirement income.
The parties hereby execute this Agreement as follows:
NBT BANCORP INC.
By: /S/ EVERETT A. GILMOUR
Date: 1/1/2000 Its: CHAIRMAN
----------------------------- ---------------
NBT BANK, NATIONAL ASSOCIATION
By: /S/ DARYL R. FORSYTHE
Date: 1/1/2000 Its: CHAIRMAN & CEO
----------------------------- ------------------
Date: 1/1/2000 /S/ JOE C. MINOR
---------------------------- -----------------------
JOE C. MINOR
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EXHIBIT 10.8
Form of Employment Agreement between NBT Bancorp Inc. and
John G. Martines made as of February 17, 2000
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into this
seventeenth day of February, 2000, by and between JOHN G. MARTINES ("Executive")
and NBT BANCORP INC., a Delaware corporation having its principal office in
Norwich, New York ("NBTB")
W I T N E S S E T H T H A T :
WHEREAS, the Agreement and Plan of Merger (the "Merger Agreement")
dated as of August 16, 1999, as amended as of December 13, 1999, and as further
amended as of December 27, 1999, and as further amended as of February 17, 2000,
by and between NBTB and Lake Ariel Bancorp, Inc., a Pennsylvania corporation
having its principal office in Lake Ariel, Pennsylvania ("LABN"), provides that
LABN will be merged with and into NBTB (the "Merger");
WHEREAS, Executive is the president and chief executive officer of LA
Bank, National Association, a national banking association which is a
wholly-owned subsidiary of LABN (referred to herein, together with the
operations of any Pennsylvania-based bank with which it may combine, as "New
Bank");
WHEREAS, NBTB desires to secure the employment of Executive upon
consummation of the Merger;
WHEREAS, Executive is desirous of entering into the Agreement for such
periods and upon the terms and conditions set forth herein; and
WHEREAS, to assist in achieving the objectives of the transactions
described in the Merger Agreement, section 4.8 of the Merger Agreement
contemplates that Executive will enter into an employment agreement as a
condition to the consummation of the transactions described therein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, intending to be legally bound, the parties
agree as follows:
1. EMPLOYMENT; RESPONSIBILITIES AND DUTIES.
(a) Contingent upon the occurrence of the Merger, NBTB hereby
agrees to cause New Bank to employ Executive, and Executive hereby agrees to
serve as chief executive officer of New Bank, or of the northeastern
Pennsylvania operations of any successor entity to New Bank, during the Term of
Employment. Executive shall have such executive duties, responsibilities, and
authority as shall be set forth in the bylaws of New Bank or such successor
entity on the date of this Agreement or as may otherwise be determined by NBTB
or by New Bank or such successor entity. During the Term of Employment,
Executive shall report directly to the chief executive officer of NBTB.
(b) Contingent upon the occurrence of the Merger, NBTB hereby
agrees to cause Executive to be reelected to the board of directors of New Bank
for successive terms throughout the Term of Employment. Subject to the fiduciary
duties of its directors to NBTB, as promptly as practicable after the occurrence
of the Merger NBTB will use its best efforts to cause Executive to be elected or
appointed as a director of NBTB, to serve as a director of the class whose term
expires in 2000, and to propose to its stockholders at its next annual meeting
of stockholders that Executive be reelected to the board of directors of NBTB as
a member of the class whose term shall expire in 2003.
(c) Executive shall devote his full working time and best
efforts to the performance of his responsibilities and duties hereunder and to
the retention of the customer relationships to which New Bank has been a party
prior to the date of this Agreement and the expansion of the customer
relationships of New Bank subsequent to the date of this Agreement. During the
Term of Employment, Executive shall not, without the prior written consent of
the Board of Directors of New Bank, render services as an employee, independent
contractor, or otherwise, whether or not compensated, to any person or entity
other than New Bank or its affiliates; provided that Executive may, where
involvement in such activities does not individually or in the aggregate
significantly interfere with the performance by Executive of his duties or
violate the provisions of section 4 hereof, (i) render services to charitable
organizations, (ii) manage his personal investments, and (iii) with the prior
permission of the Board of Directors of NBTB, hold such other directorships or
part-time academic appointments or have such other business affiliations as
would otherwise be prohibited under this section 1.
2. TERM OF EMPLOYMENT.
(a) The term of this Agreement ("Term of Employment") shall be
the period commencing on the first business day following the date of the Merger
(the "Commencement Date") and continuing until the Termination Date, which shall
mean the earliest to occur of:
(i) the third anniversary of the Commencement
Date, unless the Term of Employment shall be extended for one additional year by
Executive, upon written notice provided by Executive to NBTB not later than
nine months prior to the third anniversary of the Commencement Date;
(ii) the death of Executive;
(iii) Executive's inability to perform his duties
hereunder, as a result of physical or mental disability as reasonably determined
by the personal physician of Executive, for a period of at least 180 consecutive
days or for at least 180 days during any period of twelve consecutive months
during the Term of Employment; or
(iv) the discharge of Executive by NBTB "for
cause," which shall mean one or more of the following:
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(A) any willful or gross misconduct by
Executive with respect to the business and affairs of NBTB or New Bank, or with
respect to any of its affiliates for which Executive is assigned material
responsibilities or duties;
(B) the conviction of Executive of a
felony (after the earlier of the expiration of any applicable appeal period
without perfection of an appeal by Executive or the denial of any appeal as to
which no further appeal or review is available to Executive) whether or not
committed in the course of his employment by NBTB;
(C) Executive's willful neglect, failure,
or refusal to carry out his duties hereunder in a
reasonable manner (other than any such failure resulting from disability or
death or from termination by Executive for Good Reason, as hereinafter defined)
after a written demand for substantial performance is delivered to Executive
that specifically identifies the manner in which NBTB believes that Executive
has not substantially performed his duties and Executive has not resumed
substantial performance of his duties on a continuous basis within thirty days
of receiving such demand; or
(D) the breach by Executive of any
representation or warranty in section 6(a) hereof or of
any agreement contained in section 1, 4, 5, or 6(b) hereof, which breach is
material and adverse to NBTB or New Bank or any of its affiliates for which
Executive is assigned material responsibilities or duties; or
(v) Executive's resignation from his position as
chief executive officer of New Bank other than for "Good Reason," as hereinafter
defined; or
(vi) the termination of Executive's employment by
NBTB "without cause," which shall be for any reason
other than those set forth in subsections (i), (ii), (iii), (iv), or (v) of this
section 2(a), at any time, upon the thirtieth day following notice to Executive;
or
(vii) Executive's resignation for "Good Reason."
"Good Reason" shall mean, without Executive's express written consent,
reassignment of Executive to a position other than as chief executive officer of
New Bank, or of the northeastern Pennsylvania operations of any successor entity
to New Bank, other than for "Cause," or a decrease in the amount or level of
Executive's salary or benefits from the amount or level established in section 3
hereof.
(b) In the event that the Term of Employment shall be
terminated for any reason other than that set forth in section 2(a)(vi) or
2(a)(vii) hereof, Executive shall be entitled to receive, upon the occurrence of
any such event:
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(i) any salary (as hereinafter defined) payable
pursuant to section 3(a)(i) hereof which shall have accrued as of the
Termination Date; and
(ii) such rights as Executive shall have accrued
as of the Termination Date under the terms of any
plans or arrangements in which he participates pursuant to section 3(b) hereof,
any right to reimbursement for expenses accrued as of the Termination Date
payable pursuant to section 3(j) hereof, and the right to receive the cash
equivalent of paid annual leave and sick leave accrued as of the Termination
Date pursuant to section 3(e) hereof.
(c) In the event that the Term of Employment shall be
terminated for the reason set forth in section 2(a)(vi) or 2(a)(vii) hereof,
Executive shall be entitled to receive:
(i) any salary payable pursuant to section 3(a)
(i) hereof which shall have accrued as of the
Termination Date, and, for the period commencing on the date immediately
following the Termination Date and ending upon and including the fourth
anniversary of the Commencement Date, salary payable at the rate established
pursuant to section 3(a)(i) hereof, in a manner consistent with the normal
payroll practices of New Bank with respect to executive personnel as presently
in effect or as they may be modified by New Bank from time to time; and
(ii) such rights as Executive may have accrued as
of the Termination Date under the terms of any plans
or arrangements in which he participates pursuant to section 3(b) hereof, any
right to reimbursement for expenses accrued as of the Termination Date payable
pursuant to section 3(j) hereof, and the right to receive the cash equivalent of
paid annual leave and sick leave accrued as of the Termination Date pursuant to
section 3(e) hereof.
(d) Any provision of this section 2 to the contrary
notwithstanding, in the event that the employment of Executive with NBTB or New
Bank is terminated in any situation described in section 3 of the
change-in-control letter agreement dated February 17, 2000 between NBTB and
Executive (the "Change-in-Control Agreement") so as to entitle Executive to a
severance payment and other benefits described in section 3 of the
Change-in-Control Agreement, then Executive shall be entitled to receive the
following, and no more, under this section 2:
(i) any salary payable pursuant to section 3(a)
(i) hereof which shall have accrued as of the Termination Date;
(ii) such rights as Executive shall have accrued
as of the Termination Date under the terms of any
plans or arrangements in which he participates pursuant to section 3(b) hereof,
any right to reimbursement for expenses accrued as of the Termination Date
payable pursuant to section 3(j) hereof, and the right to receive the cash
equivalent of paid annual leave and sick leave accrued as of the Termination
Date pursuant to section 3(e) hereof; and
(iii) the severance payment and other benefits
provided in the Change-in-Control Agreement.
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3. COMPENSATION. For the services to be performed by Executive
for New Bank under this Agreement, Executive shall be compensated in the
following manner:
(a) SALARY. During the Term of Employment:
(i) New Bank shall pay Executive a salary which,
on an annual basis, shall not be less than $230,000,
assuming Executive performs competently. Salary shall be payable in accordance
with the normal payroll practices of New Bank with respect to executive
personnel as presently in effect or as they may be modified by New Bank from
time to time.
(ii) Executive shall be eligible to be considered
for salary increases, upon review, in accordance with
the compensation policies of NBTB with respect to executive personnel as
presently in effect or as they may be modified by NBTB from time to time.
(iii) Executive shall be eligible to be considered
for performance bonuses of up to 75 percent of salary
(with his performance evaluated primarily based upon the performance of New
Bank, or of the northeastern Pennsylvania operations of any successor entity to
New Bank, and secondarily based upon the performance of NBTB taken as a whole),
in accordance with the compensation policies of NBTB with respect to executive
personnel as presently in effect or as they may be modified by NBTB from time to
time.
(b) EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS. During the Term of
Employment, Executive shall be entitled to participate in all employee benefit
plans of NBTB, as presently in effect or as they may be modified by NBTB from
time to time, under such terms as may be applicable to officers of Executive's
rank employed by NBTB or its affiliates, including, without limitation, plans
providing retirement benefits, stock options, medical insurance, life insurance,
disability insurance, and accidental death or dismemberment insurance, provided
that there be no duplication of such benefits as are provided under any other
provision of this Agreement. During the Term of Employment, medical insurance
for Executive will be procured through the same carrier that provided insurance
coverage to Executive as an employee of New Bank as of June 30, 1999, or from
such other insurance carrier as shall be mutually acceptable to Executive and
NBTB.
(c) STOCK OPTIONS. Each January or February annually during
the Term of Employment, NBTB will cause Executive to be granted a non-statutory
("non-qualified") stock option (each an "Option") to purchase the number of
shares of the common stock of NBTB, no par value, $1.00 stated value, or the
common stock of NBTB as reclassified to have a par value of $.01 per share, as
the case may be (the "NBTB Common Stock"), pursuant to the NBT Bancorp Inc. 1993
Stock Option Plan, as amended, or any appropriate successor plan (the "Stock
Option Plan"), computed by dividing 250 percent of the annualized salary of
Executive on the date of grant of the Option by the "Fair Market Value" of NBTB
Common Stock (as defined in the Stock Option Plan). The option exercise price
per share of the shares subject to each Option shall be such Fair Market Value,
and the terms, conditions of exercise, and vesting schedule of such Option shall
be as set forth in section 8 of the Stock Option Plan.
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(d) SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS. NBTB shall assume
and continue in effect the LA Bank, N.A. Salary Continuation Agreement between
New Bank and Executive dated March 7, 1997, the Supplementary Retirement Benefit
Agreement between New Bank and Executive dated January 6, 1995, and the Salary
Continuation Agreement between New Bank and Executive dated May 5, 1989, and, in
return therefor, Executive renounces entitlement to benefits under any
supplemental executive retirement plan to which he would otherwise be entitled
as an executive of NBTB or an affiliate of NBTB.
(e) VACATION AND SICK LEAVE. During the Term of Employment,
Executive shall be entitled to paid annual vacation periods and sick leave in
accordance with the policies of NBTB as in effect as of the Commencement Date or
as may be modified by NBTB from time to time as may be applicable to officers of
Executive's rank employed by NBTB or its affiliates, but in no event less than
four weeks of paid vacation per year.
(f) AUTOMOBILE. During the Term of Employment, Executive shall
be entitled to the use of an automobile owned by New Bank, the make, model, and
year of which automobile shall be appropriate to an officer of Executive's rank
employed by NBTB or its affiliates and consistent with that provided to others
of Executive's rank employed by NBTB or its affiliates. Executive shall be
responsible for all expenses of ownership and use of such automobile, subject to
reimbursement of expenses for business use in accordance with section 3(j).
(g) COUNTRY CLUB DUES. During the Term of Employment,
Executive shall be reimbursed for dues and assessments incurred in relation to
Executive's membership at Country Club of Scranton.
(h) LIFE INSURANCE. During the Term of Employment, life
insurance paid by New Bank on the life of Executive for the benefit of his
designated beneficiary or beneficiaries shall be maintained at no less than the
level of insurance maintained as of June 30, 1999.
(i) WITHHOLDING. All compensation to be paid to
Executive hereunder shall be subject to required withholding and other taxes.
(j) EXPENSES. During the Term of Employment, Executive shall
be reimbursed for reasonable travel and other expenses incurred or paid by
Executive in connection with the performance of his services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as may from time to time be requested, in accordance with
such policies of NBTB as are in effect as of the Commencement Date and as may be
modified by NBTB from time to time, under such terms as may be applicable to
officers of Executive's rank employed by NBTB or its affiliates.
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4. CONFIDENTIAL BUSINESS INFORMATION; NON-COMPETITION.
(a) Executive acknowledges that certain business methods,
creative techniques, and technical data of NBTB and its affiliates and the like
are deemed by NBTB to be and are in fact confidential business information of
NBTB or its affiliates or are entrusted to third parties. Such confidential
information includes but is not limited to procedures, methods, sales
relationships developed while in the service of NBTB or its affiliates,
knowledge of customers and their requirements, marketing plans, marketing
information, studies, forecasts, and surveys, competitive analyses, mailing and
marketing lists, new business proposals, lists of vendors, consultants, and
other persons who render service or provide material to NBTB or New Bank or
their affiliates, and compositions, ideas, plans, and methods belonging to or
related to the affairs of NBTB or New Bank or their affiliates. In this regard,
NBTB asserts proprietary rights in all of its business information and that of
its affiliates except for such information as is clearly in the public domain.
Notwithstanding the foregoing, information that would be generally known or
available to persons skilled in Executive's fields shall be considered to be
"clearly in the public domain" for the purposes of the preceding sentence.
Executive agrees that he will not disclose or divulge to any third party, except
as may be required by his duties hereunder, by law, regulation, or order of a
court or government authority, or as directed by NBTB, nor shall he use to the
detriment of NBTB or its affiliates or use in any business or on behalf of any
business competitive with or substantially similar to any business of NBTB or
New Bank or their affiliates, any confidential business information obtained
during the course of his employment by New Bank. The foregoing shall not be
construed as restricting Executive from disclosing such information to the
employees of NBTB or New Bank or their affiliates.
(b) Executive hereby agrees that from the Commencement Date
until the second anniversary of the Termination Date (or, in the event that the
Term of Employment has been terminated for the reason set forth in section
2(a)(vi) or 2(a)(vii) hereof, Executive agrees that until the first anniversary
of the Termination Date), Executive will not (i) engage in any aspect of the
banking, trust or financial services business over which Executive has had,
during the Term of Employment, significant executive or managerial
responsibilities, other than on behalf of NBTB or New Bank or their affiliates,
within the Market Area (as hereinafter defined), (ii) directly or indirectly
own, manage, operate, control, be employed by, or provide management or
consulting services in any capacity to any firm, corporation, or other entity
(other than NBTB or New Bank or their affiliates) engaged in the Market Area in
any aspect of the banking, trust or financial services business over which
Executive has had, during the Term of Employment, significant executive or
managerial responsibilities, or (iii) directly or indirectly solicit or
otherwise intentionally cause any person known to Executive to be an employee,
officer, or member of the respective Boards of Directors of New Bank or any of
its affiliates to engage in any action prohibited under (i) or (ii) of this
section 4(b); provided that the ownership by Executive as an investor of not
more than five percent of the outstanding shares of stock of any corporation, or
the shares of any investment company as defined in section 3 of the Investment
Company Act of 1940, as amended, shall not in itself constitute a violation of
Executive's obligations under this section 4(b).
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(c) Executive acknowledges and agrees that irreparable injury
will result to NBTB in the event of a breach of any of the provisions of this
section 4 (the "Designated Provisions") and that NBTB will have no adequate
remedy at law with respect thereto. Accordingly, in the event of a material
breach of any Designated Provision, and in addition to any other legal or
equitable remedy NBTB or New Bank may have, NBTB shall be entitled to the entry
of a preliminary and permanent injunction (including, without limitation,
specific performance) by a court of competent jurisdiction in Chenango County,
New York, Wayne County, Pennsylvania, or elsewhere, to restrain the violation or
breach thereof by Executive, and Executive submits to the jurisdiction of such
court in any such action.
(d) It is the desire and intent of the parties that the
provisions of this section 4 shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this section
4 shall be adjudicated to be invalid or unenforceable, such provision shall be
deemed amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 4 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to NBTB, to the fullest extent
permitted by applicable law, the benefits intended by this section 4.
(e) As used herein, "Market Area" shall mean the area or areas
delineated by circles formed by radii extending twenty-five miles from (i) the
head office of New Bank, (ii) the authorized branches of New Bank as they may
exist from time to time, and (iii) each branch of a depository institution
affiliated with New Bank for which Executive has or has had significant
executive or managerial responsibilities.
5. LIFE INSURANCE. In light of the unusual abilities and experience of
Executive, NBTB in its discretion may apply for and procure as owner and for its
own benefit insurance on the life of Executive, in such amount and in such form
as NBTB may choose. NBTB shall make all payments for such insurance and shall
receive all benefits from it. Executive shall have no interest whatsoever in any
such policy or policies but, at the request of NBTB, shall submit to medical
examinations and supply such information and execute such documents as may
reasonably be required by the insurance company or companies to which NBTB has
applied for insurance.
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6. REPRESENTATIONS AND WARRANTIES.
(a) Executive represents and warrants to NBTB that his
execution, delivery, and performance of this Agreement will not result in or
constitute a breach of or conflict with any term, covenant, condition, or
provision of any commitment, contract, or other agreement or instrument,
including, without limitation, any other employment agreement, to which
Executive is or has been a party.
(b) Executive shall indemnify, defend, and hold harmless NBTB
for, from, and against any and all losses, claims, suits, damages, expenses, or
liabilities, including court costs and counsel fees, which NBTB has incurred or
to which NBTB may become subject, insofar as such losses, claims, suits,
damages, expenses, liabilities, costs, or fees arise out of or are based upon
any failure of any representation or warranty of Executive in section 6(a)
hereof to be true and correct when made.
7. NOTICES. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to NBTB:
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Attention: Mr. Daryl R. Forsythe
President and Chief Executive Officer
With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to Executive:
Mr. John G. Martines
R.D. 1, Box 824
Carbondale, Pennsylvania 18407
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All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
8. ASSIGNMENT.
(a) Neither party may assign this Agreement or any rights
or obligations hereunder without the consent of the other party.
(b) The parties contemplate that at the time of the Merger, or
subsequent to such time, New Bank may engage in a merger or similar transaction
with an affiliated bank, in which case references in this Agreement to New Bank
shall be construed to apply to the successor institution in such transaction.
9. GOVERNING LAW. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate the Chancery Court in New Castle County, Delaware to be the proper
jurisdiction and venue for any suit or action arising out of this Agreement.
Each of the parties consents to personal jurisdiction in such venue for such a
proceeding and agrees that it may be served with process in any action with
respect to this Agreement or the transactions contemplated thereby by certified
or registered mail, return receipt requested, or to its registered agent for
service of process in the State of Delaware. Each of the parties irrevocably and
unconditionally waives and agrees, to the fullest extent permitted by law, not
to plead any objection that it may now or hereafter have to the laying of venue
or the convenience of the forum of any action or claim with respect to this
Agreement or the transactions contemplated thereby brought in the courts
aforesaid.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding among NBTB, New Bank, and Executive relating to the subject matter
hereof. Any previous agreements or understandings between the parties hereto or
between Executive and New Bank or any of its affiliates regarding the subject
matter hereof, including without limitation the terms and conditions of
employment, compensation, benefits, retirement, competition following
employment, and the like, are merged into and superseded by this Agreement.
Neither this Agreement nor any provisions hereof can be modified, changed,
discharged, or terminated except by an instrument in writing signed by the party
against whom any waiver, change, discharge, or termination is sought.
11. ILLEGALITY; SEVERABILITY.
(a) Anything in this Agreement to the contrary
notwithstanding, this Agreement is not intended and shall not be construed to
require any payment to Executive which would violate any federal or state
statute or regulation, including without limitation the "golden parachute
payment regulations" of the Federal Deposit Insurance Corporation codified to
Part 359 of title 12, Code of Federal Regulations.
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(b) If any provision or provisions of this Agreement shall
be held to be invalid, illegal, or unenforceable for any reason whatsoever:
(i) the validity, legality, and enforceability
of the remaining provisions of this Agreement
(including, without limitation, each portion of any section of this Agreement
containing any such provision held to be invalid, illegal, or unenforceable)
shall not in any way be affected or impaired thereby; and
(ii) to the fullest extent possible, the
provisions of this Agreement (including, without limitation,
each portion of any section of this Agreement containing any such provisions
held to be invalid, illegal, or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal, or
unenforceable.
12. ARBITRATION. Subject to the right of each party to seek specific
performance (which right shall not be subject to arbitration), if a dispute
arises out of or related to this Agreement, or the breach thereof, such dispute
shall be referred to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in the
Northern District of New York. In the event of any arbitration, each party shall
have a reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
In the event of any arbitration, the arbitrator or arbitrators shall have the
power to award reasonable attorney's fees to the prevailing party. Any provision
in this Agreement to the contrary notwithstanding, this section shall be
governed by the Federal Arbitration Act and the parties have entered into this
Agreement pursuant to such Act.
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13. COSTS OF LITIGATION. In the event litigation is commenced to
enforce any of the provisions hereof, or to obtain declaratory relief in
connection with any of the provisions hereof, the prevailing party shall be
entitled to recover reasonable attorney's fees. In the event this Agreement is
asserted in any litigation as a defense to any liability, claim, demand, action,
cause of action, or right asserted in such litigation, the party prevailing on
the issue of that defense shall be entitled to recovery of reasonable attorney's
fees.
14. AFFILIATION. A company will be deemed to be "affiliated" with
NBTB or New Bank according to the definition of "Affiliate" set forth in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
15. HEADINGS. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
16. AGREEMENT CONTINGENT UPON MERGER. This Agreement is
contingent upon the occurrence of the Merger and, if the Merger
fails to occur, this Agreement will be null and void and of no past or
future effect.
IN WITNESS WHEREOF, the parties hereto executed or caused this
Agreement to be executed as of the day and year first above written.
NBT BANCORP INC.
By: /S/ DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
JOHN G. MARTINES
/S/ JOHN G. MARTINES
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EXHIBIT 10.9
Form of Change-In-Control Agreement between NBT Bancorp Inc.
and the following officers of NBT Bancorp Inc. or one or more of its
subsidiaries: John R. Bradley, Michael J. Chewens, Rita K. DeMarko,
Martin A. Dietrich, Joseph J. Earyes, Daryl R. Forsythe, John G. Martines,
Joe C. Minor, Jane Neal, David E. Raven, Kenneth C. Reilly, and
John D. Roberts
[ 1 ], 2000
[ ]
[ ]
[ ]
Dear Mr./Ms. [ ]:
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NBT Bancorp Inc. (which, together with its wholly-owned [ 2 ] is
referred to as the "Company") considers the stability of its key management
group to be essential to the best interests of the Company and its shareholders.
The Company recognizes that, as is the case with many publicly-held
corporations, the possibility of a change in control may arise and that the
attendant uncertainty may result in the departure or distraction of key
management personnel to the detriment of the Company and its shareholders.
Accordingly, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to encourage members of the
Company's key management group to
[FN]
1 "January 1" for Messrs. Bradley, Chewens, Dietrich, Forsythe,
Minor, Raven, Reilly, Roberts, Ms. DeMarko, and Ms. Neal; "February 17" for
Messrs. Earyes and Martines.
2 "subsidiary, NBT Bank, National Association," for Messrs.
Bradley, Chewens, Dietrich, Forsythe, Minor, Raven, Reilly, Roberts, Ms.
DeMarko, and Ms. Neal; "subsidiaries, NBT Bank, National Association and LA
Bank, National Association" for Messrs. Earyes and Martines.
continue as employees notwithstanding the possibility of a change in control
of the Company.
The Board also believes it important that, in the event of a proposal
for transfer of control of the Company, you be able to assess the proposal and
advise the Board without being influenced by the uncertainties of your own
situation.
In order to induce you to remain in the employ of the Company, [ 3 ]
1. AGREEMENT TO PROVIDE SERVICES; RIGHT TO TERMINATE.
(a) TERMINATION PRIOR TO CERTAIN OFFERS. Except as otherwise
provided in paragraph (b) below, or in any written employment agreement between
you and the Company, the Company or you may terminate your employment at any
time. If, and only if, such termination occurs after a change in control of the
Company (as defined in section 6), the provisions of this Agreement regarding
the payment of severance compensation and benefits shall apply.
[FN]
3 "we entered an agreement, approved by the Board, dated February 21, 1995, and
revised by Board action on April 28, 1998, providing for severance compensation
that the Board agreed would be provided to you in the event your employment with
the Company terminated subsequent to a change in control ("Agreement"). We have
agreed upon various changes to the Agreement, agreed to by the Board, and have
agreed to amend and restate the Agreement in its entirety as follows:" for Mr.
Forsythe; "we entered an agreement, approved by the Board, dated January 2, 1997
and revised by Board action on October 27, 1998, providing for severance
compensation that the Board agreed would be provided to you in the event your
employment with the Company terminated subsequent to a change in control
("Agreement"). We have agreed upon various changes to the Agreement, agreed to
by the Board, and have agreed to amend and restate the Agreement in its entirety
as follows:" for Messrs. Dietrich, Minor, and Roberts; "we entered an agreement,
approved by the Board, dated January 2, 1997 and revised by Board action on
April 28, 1998, providing for severance compensation that the Board agreed would
be provided to you in the event your employment with the Company terminated
subsequent to a change in control ("Agreement"). We have agreed upon various
changes to the Agreement, agreed to by the Board, and have agreed to amend and
restate the Agreement in its entirety as follows:" for Mr. Bradley; "we entered
an agreement, approved by the Board, dated January 1, 1998 and revised by Board
action on April 28, 1998, providing for severance compensation that the Board
agreed would be provided to you in the event your employment with the Company
terminated subsequent to a change in control ("Agreement"). We have agreed upon
various changes to the Agreement, agreed to by the Board, and have agreed to
amend and restate the Agreement in its entirety as follows:" for Messrs.
Chewens, Raven, and Reilly and Ms. Neal; "this Agreement, which has been
approved by the Board, sets forth the severance compensation which the Company
agrees will be provided to you in the event your employment with the Company is
terminated subsequent to a "change in control" of the Company under the
circumstances described below." for Messrs. Earyes and Martines and Ms. DeMarko.
(b) TERMINATION SUBSEQUENT TO CERTAIN OFFERS. In the event a
tender offer or exchange offer is made by a person (as defined in section 6) for
more than 30 percent of the combined voting power of the Company's outstanding
securities ordinarily having the right to vote at elections of directors
("Voting Securities"), including shares of common stock, no par value, of the
Company (the "Company Shares"), you agree that you will not leave the employ of
the Company (other than as a result of Disability as such term is defined in
section 6) and will render services to the Company in the capacity in which you
then serve until such tender offer or exchange offer has been abandoned or
terminated or a change in control of the Company has occurred as a result of
such tender offer or exchange offer. If, during the period you are obligated to
continue in the employ of the Company pursuant to this section 1(b), the Company
reduces your compensation, terminates your employment without Cause, or you
provide written notice of your decision to terminate your employment for Good
Reason, your obligations under this section 1(b) shall thereupon terminate and
you will be entitled to payments provided under Section 3(b).
2. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect until December 31, 2002; provided, however, that
commencing December 31, 2000 and each December 31 thereafter, the remaining term
of this Agreement shall automatically be extended for one additional year (to a
total of three years) unless at least 90 days prior to such anniversary, the
Company or you shall have given notice that this Agreement shall not be
extended; and provided, however, that if a change in control of the Company
shall occur while this Agreement is in effect, this Agreement shall
automatically be extended for 24 months from the date the change in control
occurs. This Agreement shall terminate if you or the Company terminates your
employment prior to a change in control of the Company but without prejudice to
any remedy the Company may have for breach of your obligations, if any, under
section 1(b).
3. SEVERANCE PAYMENT AND BENEFITS IF TERMINATION OCCURS FOLLOWING
CHANGE IN CONTROL FOR DISABILITY, WITHOUT CAUSE, OR WITH GOOD REASON. If, within
24 months from the date of occurrence of any event constituting a change in
control of the Company (it being recognized that more than one such event may
occur in which case the 24-month period shall run from the date of occurrence of
each such event), your employment with the Company is terminated (i) by the
Company for Disability, (ii) by the Company without Cause, or (iii) by you with
Good Reason (as defined in section 6), or within 90 days of a Change in Control
by you without Good Reason, you shall be entitled to a severance payment and
other benefits as follows:
(a) DISABILITY. If your employment with the Company is
terminated for Disability, your benefits shall thereafter be determined in
accordance with the Company's long-term disability income insurance plan. If the
Company's long-term disability income insurance plan is modified or terminated
following a change in control, the Company shall substitute such a plan with
benefits applicable to you substantially similar to those provided by such plan
prior to its modification or termination. During any period that you fail to
perform your duties hereunder as a result of incapacity due to physical or
mental illness, you shall continue to receive your full base salary at the rate
then in effect until your employment is terminated by the Company for
Disability.
(b) TERMINATION WITHOUT CAUSE OR WITH GOOD REASON OR WITHIN 90
DAYS OF CHANGE IN CONTROL. If your employment with the Company is terminated
without Cause by the Company or with Good Reason by you, or by you within 90
days of a Change in Control without Good Reason, then the Company shall pay to
you, upon demand, the following amounts (net of applicable payroll taxes):
(i) Your full base salary plus year-to-date
accrued vacation through the Date of Termination at the rate in effect on the
date the change in control occurs.
(ii) As severance pay, an amount equal to the
product of your "Base Amount" multiplied by the number [
4 ]. As used in the previous sentence, your "Base Amount" will be determined in
accordance with Section 280G of the Internal Revenue Code of 1986, as amended,
which generally provides that the base amount is your average annual
compensation includible in your gross income for federal income tax purposes for
the five years immediately preceding the year in which the change in control
occurs (or, if you shall have been employed by the Company for less than those
five years, for the number of those years during which you shall have been
employed by the Company, with any partial year annualized), including base
salary, non-deferred amounts under annual incentive, long-term performance, and
profit-sharing plans, distributions of previously deferred amounts under such
plans, and ordinary income recognized with respect to stock options.
(C) RELATED BENEFITS. Unless you die or your employment is terminated by the
Company for Cause or Disability, or by you other than for Good Reason or
within 90 days of a Change in Control by you without Good Reason, the
Company shall maintain in full force and effect, for the continued benefit
of you for one year after the Date of Termination, all noncash employee
benefit plans, programs, or arrangements (including, without limitation,
pension and retirement plans and arrangements, stock option plans, life
insurance and health and accident plans and arrangements, medical insurance
plans, disability plans, and vacation plans) in which you were entitled to
participate immediately prior to the Date of Termination provided that your
continued participation is possible after Termination under the general
terms and provisions of such plans, programs, and arrangements; provided,
however, that if you become eligible to participate in a benefit plan,
program, or arrangement of another employer which confers substantially
similar benefits upon you, you shall cease to receive benefits under this
subsection in respect of such plan, program, or arrangement. In the event
that your participation in any such plan, program, or arrangement is
barred, the Company shall arrange to provide you with benefits
substantially similar to those which you are entitled to receive under such
plans, programs and arrangements or alternatively, pay an amount equal to
the reasonable value of such substantially similar benefits. If, after
termination of employment following a Change in Control, you elect COBRA
continuation coverage, the Company will pay you [ 5 ] worth of the
applicable COBRA premium. If termination follows a Change in Control
specified in Section 6(b)(iii), then you may elect in lieu of COBRA
continuation
[FN]
4 "2.99" for Messrs. Bradley, Chewens, Dietrich, Forsythe,
Martines, Minor, Roberts, and Ms. Neal; "2" for Mr. Earyes; "1" for Messrs.
Raven and Reilly and Ms. DeMarko.
5 "18 months" for Messrs. Bradley, Chewens, Dietrich, Earyes,
Forsythe, Martines, Minor, Roberts, and Ms. Neal; "12 months" for Messrs.
Raven and Reilly and Ms. DeMarko.
coverage to have the acquiring entity obtain an individual or
group health insurance coverage and the acquiring entity will pay [ 6 ] worth of
premiums thereunder.
[FN]
6 "18 months" for Messrs. Bradley, Chewens, Dietrich, Earyes,
Forsythe, Martines, Minor, Roberts, and Ms. Neal; "12 months" for Messrs. Raven
and Reilly and Ms. DeMarko.
(d) ESTABLISHMENT OF TRUST. Within five days following
conclusion of a Change in Control, the Company shall establish a trust that
conforms in all regards with the model trust published in Revenue Procedure
92-64 and deposit an amount sufficient to satisfy all liabilities of the Company
under Section 3(b) of this Agreement.
(e) AUTOMATIC EXTENSION. Notwithstanding the prior provisions
of this Section, if an individual is elected to the Board of Directors who has
not been nominated by the Board of Directors as constituted prior to his
election, then the term of this Agreement will automatically be extended until
two years from the date on which such individual was elected if such extended
termination date is later than the normal termination date of this Agreement,
otherwise, the termination date of this Agreement will be as provided above.
This extension will take effect only upon the first instance of an individual
being elected to the Board of Directors without having been nominated by the
original Board.
(f) ALTERNATIVE TO LUMP SUM PAYOUT. The amount described in
this subsection will be paid to you in a single lump-sum unless, at least 30
days before the conclusion of a Change in Control, you elect in writing to
receive the severance pay in 3 equal annual payments with the first payment to
be made within 30 days of demand and the subsequent payments to be made by
January 31st of each year subsequent to the year in which the first payment is
made, provided that under no circumstances will two payments be made during a
single tax year of the recipient.
4. PAYMENT IF TERMINATION OCCURS FOLLOWING CHANGE IN CONTROL, BECAUSE
OF DEATH, FOR CAUSE, OR WITHOUT GOOD REASON. If your employment shall be
terminated following any event constituting a change in control of the Company
because of your death, or by the Company for Cause, or by you other than for
Good Reason and not within 90 days of a Change in Control, the Company shall pay
you your full base salary plus year-to-date accrued vacation through the Date of
Termination at the rate in effect on the date of the change in control occurs.
The Company shall have no further obligations to you under this Agreement.
5. NO MITIGATION. You shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, nor, except as expressly set forth herein, shall the amount of any
payment provided for in this Agreement be reduced by any compensation earned by
you as the result of employment by another employer after the Date of
Termination, or otherwise.
6. DEFINITIONS OF CERTAIN TERMS. For the purpose of this
Agreement, the terms defined in this section 6 shall have the meanings assigned
to them herein.
(a) CAUSE. Termination of your employment by the Company for
"Cause" shall mean termination because, and only because, you committed an act
of fraud, embezzlement, or theft constituting a felony or an act intentionally
against the interests of the Company which causes the Company material injury.
Notwithstanding the foregoing, you shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct constituting Cause as
defined above and specifying the particulars thereof in detail.
(b) CHANGE IN CONTROL. A "Change in Control" of the
Company shall mean:
(i) A change in control of a nature that would
be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A as in effect on the date hereof pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act"); provided that, without
limitation, such a change in control shall be deemed to have occurred at such
time as any Person hereafter becomes the "Beneficial Owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 30 percent or more of
the combined voting power of the Company's Voting Securities; or
(ii) During any period of two consecutive years,
individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period; or
(iii) There shall be consummated (x) any
consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which Voting
Securities would be converted into cash, securities, or other property, other
than a merger of the Company in which the holders of Voting Securities
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all, or substantially all of the assets of the Company,
provided that any such consolidation, merger, sale, lease, exchange or other
transfer consummated at the insistence of an appropriate banking regulatory
agency shall not constitute a change in control; or
(iv) Approval by the shareholders of the Company
of any plan or proposal for the liquidation or dissolution of the Company.
(c) DATE OF TERMINATION. "Date of Termination" shall mean (i)
if your employment is terminated by the Company for Disability, 30 days after
Notice of Termination is given (provided that you shall not have returned to the
performance of your duties on a full-time basis during such 30-day period), and
(ii) if your employment is terminated for any other reason, the date on which a
Notice of Termination is given; provided that if within 30 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 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). The term of this Agreement
shall be extended until the Date of Termination.
(d) DISABILITY. Termination of your employment by the Company
for "Disability" shall mean termination because of your absence from your duties
with the Company on a full-time basis for 180 consecutive days as a result of
your incapacity due to physical or mental illness and your failure to return to
the performance of your duties on a full-time basis during the 30-day period
after Notice of Termination is given.
(e) GOOD REASON. Termination by you of your employment
for "Good Reason" shall mean termination based on any of the following:
(i) A change in your status or position(s) with
the Company, which in your reasonable judgment, does
not represent a promotion from your status or position(s) as in effect
immediately prior to the change in control, or a change in your duties or
responsibilities which, in your reasonable judgment, is inconsistent with such
status or position(s), or any removal of you from, or any failure to reappoint
or reelect you to, such position(s), except in connection with the termination
of your employment for Cause or Disability or as a result of your death or by
you other than for Good Reason.
(ii) A reduction by the Company in your base
salary as in effect immediately prior to the change in control.
(iii) The failure by the Company to continue in
effect any Plan (as hereinafter defined) in which you
are participating at the time of the change in control of the Company (or Plans
providing you with at least substantially similar benefits) other than as a
result of the normal expiration of any such Plan in accordance with its terms as
in effect at the time of the change in control, or the taking of any action, or
the failure to act, by the Company which would adversely affect your continued
participation in any of such Plans on at least as favorable a basis to you as is
the case on the date of the change in control or which would materially reduce
your benefits in the future under any of such Plans or deprive you of any
material benefit enjoyed by you at the time of the change in control.
(iv) The failure by the Company to provide and
credit you with the number of paid vacation days to
which you are then entitled in accordance with the Company's normal vacation
policy as in effect immediately prior to the change in control.
(v) The Company's requiring you to be based
anywhere other than where your office is located
immediately prior to the change in control except for required travel on the
Company's business to an extent substantially consistent with the business
travel obligations which you undertook on behalf of the Company prior to the
change in control.
(vi) The failure by the Company to obtain from
any successor the assent to this Agreement contemplated by section 8 hereof.
(vii) Any purported termination by the Company of
your employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of this Agreement; and for
purposes of this Agreement, no such purported termination shall be effective.
(viii) Any refusal by the Company to continue to
allow you to attend to matters or engage in activities
not directly related to the business of the Company which, prior to the change
in control, you were permitted by the Board to attend to or engage in.
For purposes of this subsection, "Plan" shall mean any compensation plan such as
an incentive or stock option plan or any employee benefit plan such as a thrift,
pension, profit sharing, medical, disability, accident, life insurance plan, or
a relocation plan or policy or any other plan, program, or policy of the Company
intended to benefit employees.
(f) NOTICE OF TERMINATION. A "Notice of Termination" of your
employment given by the Company shall mean a written notice given to you of the
termination of your employment which shall indicate 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
your employment under the provision so indicated.
(g) PERSON. The term "Person" shall mean and include any
individual, corporation, partnership, group, association, or other "person," as
such term is used in section 14(d) of the Exchange Act, other than the Company
or any employee benefit plan(s) sponsored by the Company.
7. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or 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 Company shall be directed to the
attention of the Chief Executive Officer of the Company with a copy to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
8. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall inure to the benefit of, and be
binding upon, any corporate or other successor or assignee of the Company which
shall acquire, directly or indirectly, by merger, consolidation or purchase, or
otherwise, all or substantially all of the business or assets of the Company.
The Company shall require any such successor, by an agreement in form and
substance satisfactory to you, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee, or
other designee or, if there is no such designee, to your estate.
9. INCREASED SEVERANCE PAYMENTS UPON APPLICATION OF EXCISE TAX.
(a) ADJUSTMENT OF PAYMENT. In the event any payments or
benefits you become entitled to pursuant to the Agreement or any other payments
or benefits received or to be received by you in connection with a change in
control of the Company or your termination of employment (whether pursuant to
the terms of any other agreement, plan, or arrangement, or otherwise, with the
Company, any person whose actions result in a change in control or any person
affiliated with the Company or such person) (collectively the "Severance
Payments") will be subject to the tax (the "Excise Tax") imposed by section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall
pay you an additional amount (the "Gross-Up Payment") so that the net amount
retained by you, after deduction of the Excise Tax (but before deduction for any
federal, state or local income tax) on the Severance Payments and after
deduction for the aggregate of any federal, state, or local income tax and
Excise Tax upon the Gross-Up Payment, shall be equal to the Severance Payments.
For purposes of determining whether any of the Severance Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) the entire
amount of the Severance Payments shall be treated as "parachute payments" within
the meaning of section 280G(b)(2) of the Code and as subject to the Excise Tax,
unless and to the extent, in the written opinion of outside tax counsel selected
by the Company's independent accountants and reasonably acceptable to you, such
payments (in whole or in part) are not subject to the Excise Tax; and (ii) the
value of any noncash benefits or any deferred payment or benefit (constituting a
part of the Severance Payments) shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay federal income taxes at the highest marginal rate of the
federal income taxation applicable to individuals (without taking into account
surtaxes or loss or reduction of deductions) for the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of your residence on the
date of Termination. In the event that the amount of Excise Tax you are required
to pay is subsequently determined to be less than the amount taken into account
hereunder, you shall repay to the Company promptly after the time that the
amount of such reduction in Excise Tax is finally determined the amount of the
reduction, together with interest on the amount of such reduction at the rate of
6 percent per annum from the date of the Gross-Up Payment, plus, if in the
written opinion of outside tax counsel selected by the Company's independent
accountants and reasonably acceptable to you, such payment (or a portion
thereof) was not taxable income to you when reported or is deductible by you for
federal income tax purposes, the net federal income tax benefit you actually
realize as a result of making such payment pursuant to this sentence. In the
event that the amount of Excise Tax you are required to pay is subsequently
determined to exceed the amount taken into account hereunder, the Company shall
make an additional Gross-Up Payment in the manner set forth above in respect of
such excess (plus any interest, additions to tax, or penalties payable by you
with respect to such excess) promptly after the time that the amount can be
reasonably determined.
(b) TIME OF PAYMENT: ESTIMATED PAYMENT. The payments provided
for in subsection (a) above, shall be made not later than the fifth business day
following the Date of Termination; provided, however, that if the amounts of
such payments cannot be finally determined on or before such day, the Company
shall pay to you on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments, and shall pay the remainder of
such payments (together with interest at the rate of 6 percent per annum) as
soon as the amount thereof can be determined. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you, payable on the
fifth day after demand by the Company (together with interest at the rate of 6
percent per annum).
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in a writing signed by you and the Chief Executive Officer or President of
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or of compliance 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 laws of the State of New York without giving effect to the
principles of conflict of laws thereof.
11. LEGAL FEES AND EXPENSES. The Company shall pay or reimburse any
reasonable legal fees and expenses you may incur in connection with any legal
action to enforce your rights under, or to defend the validity of, this
Agreement. The Company will pay or reimburse such legal fees and expenses on a
regular, periodic basis upon presentation by you of a statement or statements
prepared by your counsel in accordance with its usual practices.
12. 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.
13. PAYMENTS DURING CONTROVERSY. Notwithstanding the pendency of any
dispute or controversy, the Company will continue to pay you your full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary and installments of incentive
compensation) and continue you as a participant in all compensation, benefit,
and insurance plans in which you were participating when the notice giving rise
to the dispute was given, until the dispute is finally resolved in accordance
with section 7(c). Amounts paid under this section 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. You shall be entitled to seek specific
performance of your 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.
14. ILLEGALITY. Anything in this Agreement to the contrary
notwithstanding, this Agreement is not intended and shall not be construed to
require any payment to you which would violate any federal or state statute or
regulation, including without limitation the "golden parachute payment
regulations" of the Federal Deposit Insurance Corporation codified to Part 359
of title 12, Code of Federal Regulations.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter,
which will then constitute our agreement on this subject.
Very truly yours,
NBT BANCORP INC.
By:__________________________
AGREED TO: ___________________________________
EXHIBIT 10.10
NBT Bancorp Inc. 2000 Executive Incentive Compensation Plan
January 24, 2000
NBT BANCORP INC.
Norwich, New York
2000 EXECUTIVE INCENTIVE COMPENSATION PLAN
NBT BANCORP INC.
Norwich, New York
2000 EXECUTIVE INCENTIVE COMPENSATION PLAN
Table of Contents
PAGE
Introduction...........................................................................................1-2
INCENTIVE PLAN
- --------------
Section I - Definitions..................................................................................3
Section II - Participation...............................................................................4
Section III - Activating the Plan........................................................................4
Section IV - Calculation of Awards.......................................................................4
Section V - President's Special Recommendations..........................................................4
Section VI - Distribution of Awards......................................................................5
Section VII - Plan Administration........................................................................6
Section VIII - Amendment, Modification, Suspension or Termination........................................6
Section IX - Effective Date..............................................................................6
Section X - Employer Relations with Participants.........................................................6
Section XI - Governing Law...............................................................................6
Incentive Plan Participants.....................................................................Appendix A
Distribution of Awards..........................................................................Appendix B
NBT BANCORP INC.
Norwich, New York
INTRODUCTION
It is important to examine the benefits which accrue to the organization through
the operation of the Executive Incentive Compensation Plan. The Plan impacts
directly on senior management - those critical to the organization's success -
and its purpose can be summarized as follows:
* PROVIDES MOTIVATION: The opportunity for incentive awards
provides executives with the impetus to "stretch" for
challenging, yet attainable, goals.
* PROVIDES RETENTION: by enhancing the organization's competitive
compensation posture.
* PROVIDES MANAGEMENT TEAM BUILDING: by making the incentive
award dependent on the attainment of organization goals, a
"team orientation" is fostered among the participant group.
* PROVIDES INDIVIDUAL MOTIVATION: by making a portion of the
incentive award dependent on the attainment of individual
goals, a participant is encouraged to make significant
personal contribution to the corporate effort.
* PROVIDES COMPETITIVE COMPENSATION STRATEGY: The implementation
of incentive arrangements is competitive with current
practice in the banking industry.
-1-
Highlights of the 2000 Executive Incentive Compensation Plan included in the
following pages are below:
1. The Plan is competitive, if not more menerous, compared with
similar sized banking organizations and the banking industry in
general.
2. The Compensation Committee of the Board of Directors controls all
aspects of the Plan.
3. Management employees are eligible for participation.
4. The financial criteria necessary for Plan operation consists
of achieving certain levels of net income for the company and/or
its subsidiaries as applicable. Certain non recurring events
may be excluded from the financial results at the discretion of
the CEO and the Compensation Committee.
5. Incentive distributions will be made during the first quarter of
the year following the Plan Year.
6. Incentive awards will be based on attainment of corporate
goals. Total Incentive Awards may contain corporate,
subsidiary and individual components; the corporate and
subsidiary components awarded by virtue of their performance
related to their goals and the individual component awarded
by virtue of individual performance related to individual
goals. Component percentages are shown in Appendix B.
7. Incentive distributions will be based on the matrix in Appendix
B.
-2-
NBT BANCORP INC.
Norwich, New York
The Board of Directors of NBT Bancorp Inc. has established this 2000 Executive
Incentive Compensation Plan. The purpose of the Plan is to meet and exceed
financial goals and to promote a superior level of performance relative to the
company's competition in its market area. Through payment of incentive
compensation beyond base salaries, the Plan provides reward for meeting and
exceeding the financial goals.
SECTION I - DEFINITIONS
Various terms used in the Plan are defined as follows:
BASE SALARY: the base salary at the end of the Plan year, excluding any
bonuses, contributions to employee benefit programs, or
other compensation not designated as salary.
BOARD OF DIRECTORS: The Board of Directors of NBT Bancorp Inc.
PRESIDENT & CEO: CEO of NBT Bancorp Inc.
CORPORATE GOALS: Those pre-set objectives and goals which are required to
activate distribution of awards under the Plan.
INDIVIDUAL GOALS: Key objectives mutually agreed upon between participants
and superior, and approved by the CEO.
COMPENSATION COMMITTEE: The Compensation Committee of the Board of
Directors of the Bank.
PLAN PARTICIPANT: An eligible employee of the company or its
subsidiaries as designated by the CEO and approved by the
Compensation Committee for participation for the Plan Year.
PLAN YEAR: The 2000 calendar year.
-3-
SECTION II - ELIGIBILITY TO PARTICIPATE
To be eligible for an award under the Plan, a Plan participant must be an
officer in the full-time service of the company at the start and close of the
calendar year and at the time of the award unless the CEO by special exception
recommends to the Compensation Committee a special arrangement for a newly hired
executive who may be designated by the CEO and approved by the Compensation
Committee as eligible for an award as determined in the employment agreement. A
Plan participant must be in the same or equivalent position, at year end as they
were when named a participant or have been promoted during the course of the
year, to be eligible for an award. If a Plan participant voluntarily leaves the
employ of the company or its subsidiaries prior to the payment of the award,
he/she is not eligible to receive an award. However, if the active full-time
service of a participant in the Plan is terminated by death, disability,
retirement, or if the participant is on an approved leave of absence, an award
will be recommended for such a participant based on the proportion of the Plan
year that he/she was in active service with the company or its subsidiaries.
SECTION III - ACTIVATING THE PLAN
The operation of the Plan is predicated on attaining and exceeding management
performance goals. The goals will consist of the attainment of certain net
income levels. Non recurring events may be excluded from the financial results
at the discretion of the CEO and the Compensation Committee. The Corporation
must achieve a minimum net income set forth in Appendix B to trigger an award
pursuant to the terms of this plan.
SECTION IV - CALCULATION OF AWARDS
The Compensation Committee designates the incentive formula as shown in Appendix
B. The Compensation Committee will make final decisions with respect to all
incentive awards and will have final approval over all incentive awards. The
individual participant data regarding maximum award and formulas used in
calculation has been customized and appears as Appendix A.
SECTION V - SPECIAL RECOMMENDATIONS
The CEO will recommend to the Compensation Committee the amounts to be awarded
to individual participants in the incentive Plan. The CEO may recommend a change
beyond the formula to a bonus award (increase or decrease) to an individual
participant by a specified percentage based on assessment of special individual
performance beyond the individual goals. The Compensation Committee may amend
the CEO's bonus award. The amount of the adjustment is from 0%-20% of the actual
award. No award will be granted to an officer whose performance is unacceptable.
-4-
SECTION VI - DISTRIBUTION OF AWARDS
Unless a participant elects the deferred option outlined in the following
paragraph, distribution of awards will be made during the first quarter of the
year following the Plan year. Distribution of the bonus award must be approved
by the Compensation Committee.
A participant may elect by written notice to the Committee at any time during
the month of December of the Plan Year preceding the year to which the award
relates to have all or a portion of his award deferred (Deferred Award). Any
such election shall be irrevocable except unforeseeable financial emergency.
Any portion of participant's award that is deferred shall bear interest
commencing on the Award Date based on the lowest balance in the participant's
account during the month, as if invested at an annual rate equal to the highest
annual rate offered at NBT on any customer deposit account in effect on the last
day of the preceding calendar year. Interest shall be computed monthly, and
credited to the participant's account as of the last day of each calendar month.
The Deferred Award shall be paid in five (5) annual installments upon the
participant's ceasing to be actively employed by the Company for any reason.
Payment shall begin on the 31st day of January following the year in which the
participant ceases to be actively employed with the Company. However, a
participant with the consent of the Committee, prior to termination of
employment, may elect in writing to have the aggregate amount in his or her
Deferred Award Account paid to him or her in a lump sum on a designated date.
Nothing contained in this Plan and no action taken pursuant to the provisions of
this Plan shall create or be constructed to create a trust of any kind, or a
fiduciary relationship between NBT and the participant, his or her designated
beneficiary or any other person, nor shall the participant or any designated
beneficiary have any preferred claim on, any title to, or any beneficial
interest in, the assets of NBT or the payments deferred hereunder prior to the
time such payments are actually paid to the participant pursuant to the terms
herein. To the extent that the participant, his or her designated beneficiary or
any person acquires a right to receive payments from NBT under this Plan, such
right shall be no greater than the right of any unsecured general creditor of
NBT.
The intent of this Section of the Plan is to create a voluntary, non-qualified,
unfunded, deferred executive incentive compensation Plan which will defer the
deduction of such incentive compensation for tax purposes by NBT and which will
correspondingly defer the recognition of such compensation by the participant
until such compensation is actually paid. It is therefore intended, and this
Plan shall be construed and where necessary modified, so that the participants
shall not be deemed to have constructively received such deferred compensation.
In the event of death, any approved award earned under the provisions of this
plan will become payable to the beneficiary designated under this Plan; or if no
such designation, to the designated beneficiary of the participant as recorded
under the bank's group life insurance program; or in the absence of a valid
designation, to the participant's estate.
-5-
SECTION VII - PLAN ADMINISTRATION
The Compensation Committee shall, with respect to the Plan have full power and
authority to construe, interpret and manage, control and administer this Plan,
and to pass and decide upon cases in conformity with the objectives of the Plan
under such rules as the Board of Directors of the bank may establish.
Any decision made or action taken by the company, the Board of Directors, or the
Compensation Committee arising out of, or in connection with, the
administration, interpretation, and effect of the Plan shall be at their
absolute discretion and will be conclusive and binding on all parties. No member
of the Board of Directors, Compensation Committee, or employee of the company or
any of its subsidiaries shall be liable for any act or action hereunder, whether
of omission or commission, by a Plan participant or employee or by any agent to
whom duties in connection with the administration of the Plan have been
delegated in accordance with the provision of the Plan.
SECTION VIII - AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION
NBT reserves the right, by and through its Board of Directors to amend, modify,
suspend, reinstate or terminate all or part of the Plan at any time. The
Compensation Committee will give prompt written notice to each participant of
any amendment, suspension or termination or any material modification of the
Plan. In the event of a merger or acquisition, the Plan and related financial
formulas will be reviewed and adjusted to take into account the effect of such
activities.
SECTION IX - EFFECTIVE DATE OF THE PLAN
The effective date of the Plan shall be January 1, 2000.
SECTION X - EMPLOYER RELATION WITH PARTICIPANTS
Neither establishment nor the maintenance of the Plan shall be construed as
conferring any legal rights upon any participant or any person for a
continuation of employment, nor shall it interfere with the right of an employer
to discharge any participant or otherwise deal with him/her without regard to
the existence of the Plan.
SECTION XI - GOVERNING LAW
Except to the extent pre-empted under federal law, the provisions of the Plan
shall be construed, administered and enforced in accordance with the domestic
internal law of the State of New York. In the event of relevant changes in the
Internal Revenue Code, related rulings and regulations, changes imposed by other
regulatory agencies affecting the continued appropriateness of the Plan and
awards made thereunder, the Board may, at its sole discretion, accelerate or
change the manner of payments of any unpaid awards or amend the provisions of
the Plan.
-6-
DEFERRED COMPENSATION PLAN
FOR OFFICERS OF NBT BANCORP
ELECTION AGREEMENT
I, ___________________________, hereby elect __ to __ not to participate in the
Deferred Compensation Plan for Officers of NBT with respect to Executive
Incentive Compensation (EICP) awards which I may receive for the calendar year
of __________. I hereby elect to defer the payment of _________ (________%) of
the EICP award which I would otherwise be entitled to receive.
__ Please defer payment of the percentage of my EICP award
specified above until the earlier of the following dates:
__ Until __________________(Specify date which may not be
later than the date on which I will retire).
__ Until the date of my death.
__ Begin annual payments of deferred balance on
__________________ in the amount of 1/5th the balance
each year until the balance has been paid in full (5
year payout).
__ Because terms of the plan have changed since my election
to defer EICP awards, please discontinue my deferral
election and:
__ Roll my deferred account proceeds into the following
account at the institution indicated:
__________________________________________________________
__________________________________________________________
__ Please pay me out in cash, the balance of my account, at
this time.
__ I hereby designate the following person or persons as
beneficiary hereunder in the event of my death:
Primary Beneficiary _________________________________________
Secondary Beneficiary _______________________________________
I hereby revoke any prior election that may be inconsistent
with the above.
I acknowledge that I have reviewed the plan and understand that my participation
will be subject to the terms and conditions contained in the plan. Words and
phrases used in this Election Agreement shall have the meanings assigned by the
plan.
Dated this ________ day of _________, 2000
__________________________________________
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
EXHIBIT 27.1
Financial Data Schedule
March 31, 2000
9
1,000
U.S. DOLLARS
3-MOS
DEC-31-2000
JAN-1-2000
MAR-31-2000
1
59,800
1,023
0
0
497,528
78,772
75,808
1,295,651
17,543
2,029,106
1,523,749
165,445
15,587
161,793
0
0
186
162,346
2,029,106
27,189
9,865
402
37,456
13,446
17,846
19,610
1,334
0
14,983
6,908
4,241
0
0
4,241
.24
.23
4.32
7,740
630
0
28,739
16,654
693
248
17,543
14,568
0
2,975
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
EXHIBIT 27.2
Financial Data Schedule
March 31, 1999
9
1,000
U.S. DOLLARS
3-MOS
DEC-31-1999
JAN-1-1999
MAR-31-1999
1
53,223
7,011
0
0
491,502
70,386
70,094
1,081,971
15,608
1,787,508
1,334,145
119,648
13,868
149,887
0
0
17,964
151,996
1,787,508
22,679
8,465
458
31,602
11,006
13,884
17,718
1,120
668
11,816
9,058
5,776
0
0
5,776
.32
.32
4.52
6,029
835
0
35,161
15,322
1,055
221
15,608
13,871
0
1,737