SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 2001.
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 October 31, 2001, there were 24,335,800 shares outstanding of the
Registrant's common stock, $0.01 par value.
1
NBT BANCORP INC.
FORM 10-Q -- Quarter Ended September 30, 2001
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1 Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at September 30, 2001, December 31,
2000 (Audited), and September 30, 2000
Consolidated Statements of Income for the three month and nine
month periods ended September 30, 2001 and 2000
Consolidated Statements of Stockholders' Equity for the nine month
periods ended September 30, 2001 and 2000
Consolidated Statements of Cash Flows for the nine month periods
ended September 30, 2001 and 2000
Consolidated Statements of Comprehensive Income for the three month
and nine month periods ended September 30, 2001 and 2000
Notes to Unaudited Interim Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3 Quantitative and Qualitative Disclosures about Market Risk
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 Subsidiaries September 30, December 31, September 30,
Consolidated Balance Sheets 2001 2000 2000
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands, except share and per share data) (Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents $ 82,786 $ 96,429 $ 62,964
Short-term interest bearing accounts 4,696 14,233 13,361
Trading securities, at fair value 112 20,541 228
Securities available for sale, at fair value 577,160 576,372 590,895
Securities held to maturity (fair value-$92,783,
$101,833 and $104,772 at September 30, 2001,
December 31, 2000 and September 30, 2000, respectively) 91,880 102,413 107,350
Federal Reserve and Federal Home Loan Bank stock 19,184 27,647 27,647
Loans, net 1,778,612 1,702,133 1,644,951
Premises and equipment, net 49,253 43,457 44,308
Intangible assets, net 33,829 27,739 15,648
Other assets 40,695 44,824 50,616
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $2,678,207 $2,655,788 $2,557,968
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 338,208 $ 302,137 $ 284,600
Savings, NOW, and money market 736,519 671,980 632,809
- ----------------------------------------------------------------------------------------------------------------------------
Time 1,004,390 1,066,121 1,019,074
Total deposits 2,079,117 2,040,238 1,936,483
Short-term borrowings 72,121 132,375 154,162
Long-term debt 269,276 234,872 236,418
Other liabilities 25,698 40,282 23,922
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,446,212 2,447,767 2,350,985
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Stockholders' equity:
Preferred stock, $0.01 par value; shares authorized - 2,500,000 - - -
Common stock, $0.01 par value and 50,000,000 authorized
at September 30, 2001, 30,000,000 authorized at December 31, 2000 and
September 30, 2000; issued 25,312,688, 24,237,322 and 24,213,882 at
September 30, 2001, December 31, 2000
and September 30, 2000, respectively 253 242 242
Additional paid-in-capital 199,014 185,041 184,915
Retained earnings 41,647 36,689 48,030
Accumulated other comprehensive income (loss) 8,543 (2,864) (14,921)
Common stock in treasury at cost, 976,888, 512,213
and 521,257 shares at September 30, 2001, December 31, 2000
and September 30, 2000, respectively (17,462) (11,087) (11,283)
- ----------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 231,995 208,021 206,983
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,678,207 $2,655,788 $2,557,968
- ----------------------------------------------------------------------------------------------------------------------------
See notes to unaudited interim consolidated financial statements.
3
Three months ended Nine months ended
NBT Bancorp Inc. and Subsidiaries September 30, September 30,
Consolidated Statements of Income 2001 2000 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data) (Unaudited)
Interest, fee and dividend income:
Loans $36,585 $36,494 $110,314 $103,102
Securities available for sale 9,142 10,140 27,496 31,008
Securities held to maturity 1,258 1,521 3,961 4,655
Other 433 766 1,430 1,864
- ----------------------------------------------------------------------------------------------------------------------------
Total interest, fee and dividend income 47,418 48,921 143,201 140,629
- ----------------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 16,381 19,018 53,245 52,792
Short-term borrowings 775 2,441 3,261 6,771
Long-term debt 3,497 3,352 9,998 10,133
- ----------------------------------------------------------------------------------------------------------------------------
Total interest expense 20,653 24,811 66,504 69,696
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Net interest income 26,765 24,110 76,697 70,933
Provision for loan losses 5,988 1,619 13,451 5,418
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Net interest income after provision for loan losses 20,777 22,491 63,246 65,515
- ----------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust 956 784 2,752 2,455
Service charges on deposit accounts 2,702 2,068 7,702 6,036
Broker/dealer fees 1,034 1,017 2,956 1,595
Net securities gains 10 137 556 143
Gain on sale of branch building - - 1,367 -
Other 1,894 1,567 5,694 4,540
- ----------------------------------------------------------------------------------------------------------------------------
Total noninterest income 6,596 5,573 21,027 14,769
- ----------------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 9,041 9,095 27,279 25,753
Office supplies and postage 823 716 2,635 2,155
Occupancy 1,520 1,341 4,710 4,171
Equipment 1,489 1,376 4,123 4,220
Professional fees and outside services 1,150 764 2,975 2,432
Data processing and communications 2,305 1,335 6,081 4,134
Amortization of intangible assets 771 446 2,083 1,160
Merger, acquisition and reorganization costs - 3,165 - 7,204
Deposit overdraft writeoffs - - 2,125 -
Other operating 2,646 1,890 6,746 6,300
- ----------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 19,745 20,128 58,757 57,529
- ----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 7,628 7,936 25,516 22,755
Income taxes 2,544 2,781 8,089 8,251
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Net income $ 5,084 $ 5,155 $ 17,427 $ 14,504
- ----------------------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic $ 0.21 $ 0.22 $ 0.72 $ 0.62
Diluted $ 0.21 $ 0.22 $ 0.72 $ 0.62
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See notes to unaudited interim consolidated financial statements.
4
NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Unaudited)
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated
Additional Other
Common Paid-in- Retained Comprehensive Treasury
Stock Capital Earnings Income (Loss) Stock Total
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share and per share data)
Balance at December 31, 1999 $23,786 $156,112 $44,949 $(21,710) $(11,665) $191,472
Net income 14,504 14,504
Cash dividends - $0.510 per share (11,400) (11,400)
Payment in lieu of fractional
shares (23) (23)
Issuance of 24,122 shares to
employee benefits plans and
other stock plans
including tax benefit 6 457 382 845
Change $1.00 stated value per
share to $.01 par value per
share (23,554) 23,554
Issuance of 420,989 shares to
purchase M. Griffith, Inc. 4 4,792 4,796
Other comprehensive income 6,789 6,789
- -------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 2000 $ 242 $184,915 $48,030 $(14,921) $(11,283) $206,983
- -------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000 $ 242 $185,041 $36,689 $ (2,864) $(11,087) $208,021
Net income 17,427 17,427
Cash dividends - $0.510 per share (12,469) (12,469)
Purchase of 653,603 treasury shares (10,277) (10,277)
Issuance of 188,928 shares to
employee benefit plans and other
stock plans including tax benefit (2,018) 3,902 1,884
Issuance of 1,075,366 shares to
purchase First National
Bancorp, Inc. 11 15,991 16,002
Other comprehensive income 11,407 11,407
- -------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 2001 $ 253 $199,014 $41,647 $ 8,543 $(17,462) $231,995
- -------------------------------------------------------------------------------------------------------------------------------
See notes to unaudited interim consolidated financial statements.
Note: Dividend per share data represents historical dividends per share of
NBT Bancorp Inc. stand-alone.
5
NBT Bancorp Inc. and Subsidiaries Nine Months Ended September 30,
Consolidated Statements of Cash Flows 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
(in thousands) (Unaudited)
Operating activities:
Net income $ 17,427 $ 14,504
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 13,451 5,418
Depreciation of premises and equipment 3,512 3,727
Net accretion on securities (1,355) (188)
Amortization of intangible assets 2,083 1,160
Proceeds from sale of loans held for sale 5,531 10,947
Origination and purchases of loans held for sale (4,489) (8,169)
Net gain on sales of loans (27) (82)
Net loss on on disposal of premises and equipment 118 39
Net (gain) loss on sale of other real estate owned (146) 99
Writedown of other real estate owned 133 235
Net security transactions (556) (143)
Proceeds from sale of trading securities 20,429 -
Gain on sale of branch building (1,367) -
Net decrease (increase) in other assets 9,253 (6,779)
Net (decrease) increase in other liabilities (15,635) 7,794
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 48,362 28,562
- -------------------------------------------------------------------------------------------------------------------------
Investing activities:
Net cash and cash equivalents provided by acquisitions 9,509 33,170
Securities available for sale:
Proceeds from maturities 115,662 30,911
Proceeds from sales 1,012 10,270
Purchases (74,494) (12,148)
Securities held to maturity:
Proceeds from maturities 33,929 25,416
Purchases (17,824) (21,316)
Net increase in loans (19,066) (207,013)
Purchase of premises and equipment, net (4,993) (499)
Proceeds from sales of other real estate owned 984 1,463
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 44,719 (139,746)
- -------------------------------------------------------------------------------------------------------------------------
Financing activities:
Net (decrease) increase in deposits (69,079) 122,718
Net (decrease) increase in short-term borrowings (60,725) 11,895
Proceeds from issuance of long-term debt 246,291 5,000
Repayments of long-term debt (211,886) (20,552)
Proceeds from issuance of treasury shares to
employee benefit plans and other stock plans,
including tax benefit 1,884 242
Purchase of treasury stock (10,277) -
Cash dividends (12,469) (11,423)
- -------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (116,261) 107,880
- -------------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (23,180) (3,304)
Cash and cash equivalents at beginning of period 110,662 79,629
- -------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 87,482 $ 76,325
- -------------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information: Cash paid during the
period for:
Interest $ 71,534 $ 60,970
Income taxes 1,222 8,276
- -------------------------------------------------------------------------------------------------------------------------
See notes to unaudited interim consolidated financial statements.
6
NBT Bancorp Inc. and Subsidiaries Nine Months Ended September 30,
Supplemental Schedule of non-cash investing and financing activities: 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
(in thousands) (Unaudited)
Loans transferred to other real estate owned $ 1,247 $ 1,104
Fair value of assets acquired 109,549 1,068
Fair value of liabilities assumed 110,501 37,094
Common stock issued for acquisitions 16,002 4,796
- -------------------------------------------------------------------------------------------------------------------------
See notes to interim consolidated financial statements.
7
Three months ended Nine months ended
NBT Bancorp Inc. and Subsidiaries September 30, September 30,
Consolidated Statements of Comprehensive Income 2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands) (Unaudited)
Net Income $ 5,084 $ 5,155 $ 17,427 $14,504
- -------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss), net of tax
Unrealized holding gains (losses) arising during
period [pre-tax amounts of $14,428
$8,572, $19,325 and $11,115] 8,662 5,345 11,572 6,874
Less: Reclassification adjustment for net gains included
in net income [pre-tax amounts of
$(6), $(137), $(275) and $(143)] (3) (81) (165) (85)
- -------------------------------------------------------------------------------------------------------------------------------
Total other comprehensive income 8,659 5,264 11,407 6,789
- -------------------------------------------------------------------------------------------------------------------------------
Comprehensive income $13,743 $10,419 $ 28,834 $21,293
- -------------------------------------------------------------------------------------------------------------------------------
See notes to unaudited interim consolidated financial statements.
8
NBT BANCORP INC. and Subsidiary
Notes to Unaudited Interim Consolidated Financial Statements
September 30, 2001
Basis of Presentation
The accompanying unaudited interim consolidated financial statements
include the accounts of NBT Bancorp Inc. ("the Registrant" or "the Company") and
its wholly-owned subsidiaries, NBT Bank, N.A. (NBT) and NBT Financial Services,
Inc. All intercompany transactions have been eliminated in consolidation.
Amounts in the prior periods' financial statements are reclassified whenever
necessary to conform to current period presentation.
The consolidated balance sheet at December 31, 2000 has been derived from
audited consolidated financial statements at that date. 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 and nine month periods ended September 30, 2001
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2001. 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, 2000.
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.
The following is a reconciliation of basic and diluted earnings per share
for the periods presented in the consolidated statements of income.
- -------------------------------------------------------------------------------------------------------------------
Three months ended September 30, 2001 2000
- -------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding 24,493 23,587
Net income available to common shareholders $ 5,084 $ 5,155
- -------------------------------------------------------------------------------------------------------------------
Basic EPS $ 0.21 $ 0.22
- -------------------------------------------------------------------------------------------------------------------
Diluted EPS:
Weighted average common shares outstanding 24,493 23,587
Dilutive common stock options 157 122
- -------------------------------------------------------------------------------------------------------------------
Weighted average common shares and common
share equivalents 24,650 23,709
Net income available to common shareholders $ 5,084 $ 5,155
- -------------------------------------------------------------------------------------------------------------------
Diluted EPS $ 0.21 $ 0.22
- -------------------------------------------------------------------------------------------------------------------
9
- -------------------------------------------------------------------------------------------------------------------
Nine months ended September 30, 2001 2000
- -------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
Basic EPS:
Weighted average common shares outstanding 24,085 23,419
Net income available to common shareholders $17,427 $14,504
- -------------------------------------------------------------------------------------------------------------------
Basic EPS $ 0.72 $ 0.62
- -------------------------------------------------------------------------------------------------------------------
Diluted EPS:
Weighted average common shares outstanding 24,085 23,419
Dilutive common stock options 181 128
- -------------------------------------------------------------------------------------------------------------------
Weighted average common shares and common
share equivalents 24,266 23,547
Net income available to common shareholders $17,427 $14,504
- -------------------------------------------------------------------------------------------------------------------
Diluted EPS $ 0.72 $ 0.62
- -------------------------------------------------------------------------------------------------------------------
There were 948,126 outstanding stock options for the quarter ended
September 30, 2001 and 944,690 outstanding stock options for the quarter ended
September 30, 2000 that were not considered in the calculation of diluted
earnings per share since the stock options' exercise price was greater than the
average market price during these periods. There were 948,126 outstanding stock
options for the nine month period ended September 30, 2001 and 791,174
outstanding stock options for the nine month period ended September 30, 2000
that were not considered in the calculation of diluted earnings per share since
the stock options' exercise price was greater than the average market price
during these periods.
Mergers and Acquisitions
On June 1, 2001, the Company completed the acquisition of First
National Bancorp, Inc. (FNB) whereby FNB was merged with and into NBT Bancorp
Inc. At the same time, FNB's subsidiary, First National Bank of Northern New
York (FNB Bank) was merged into NBT Bank, N.A. The acquisition was accounted for
using the purchase method. As such, both the assets and liabilities assumed have
been recorded on the consolidated balance sheet of the Company at estimated fair
value as of the date of acquisition and the results of operations are included
in the Company's consolidated statement of income from the acquisition date
forward. To complete the transaction, the Company issued approximately 1,075,000
shares of its common stock valued at $16.0 million. Goodwill, representing the
cost over net assets acquired, was approximately $7 million and is presently
being amortized over twenty years on a straight-line basis.
On June 19, 2001, the Company announced the signing of a definitive
agreement to acquire CNB Financial Corp. (CNB) and its wholly owned subsidiary,
Central National Bank (CNB Bank). Under the terms of the agreement, CNB
stockholders will receive 1.2 shares of the Company's common stock. The Company
is expected to issue approximately 8.9 million shares of common stock, with a
total value of approximately $140 million based on the closing price of the
Company's common stock on June 19, 2001. The transaction is structured to be
tax-free to shareholders of CNB and will be accounted for as a pooling of
interests. The merger agreement also provides for the merger of CNB Bank into
10
NBT Bank, N.A. The merger closed effective the close of business November 8,
2001. At September 30, 2001, CNB had consolidated assets of $983 million,
deposits of $854 million and equity of $63 million. CNB Bank operates 29 full
service banking offices in nine upstate New York counties.
The following table presents unaudited pro forma data combining certain
financial information of NBT Bancorp Inc. and CNB Financial Corp. as if the
merger had been consummated on September 30, 2001.
- ----------------------------------------------------------------------------------------------------------
As of or for the
Nine month period ended September 30, 2001 2000
- ----------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
Net interest income $ 101,100 $ 96,153
Net income 17,693 20,617
Diluted earnings per share 0.53 0.63
Total Assets 3,660,269 3,501,629
- ----------------------------------------------------------------------------------------------------------
The unaudited pro forma combined financial data was prepared giving effect to
the merger using the pooling of interests accounting method. The pro forma
financial information above is not necessarily indicative of the combined
financial position and results of operations that would have occurred if the
merger had been completed on September 30, 2001 or that may be attained
in the future.
New Accounting Pronouncements
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," effective January 1, 2001. This statement establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. Changes in the fair
value of the derivative financial instruments are reported in either net income
or as a component of comprehensive income. Consequently, there may be increased
volatility in net income, comprehensive income, and stockholders' equity on an
ongoing basis as a result of accounting for derivatives in accordance with SFAS
No. 133.
Special hedge accounting treatment is permitted only if specific
criteria are met, including a requirement that the hedging relationship be
highly effective both at inception and on an ongoing basis. Accounting for
hedges varies based on the type of hedge - fair value or cash flow. Results of
effective hedges are recognized in current earnings for fair value hedges and in
other comprehensive income for cash flow hedges. Ineffective portions of hedges
are recognized immediately in earnings and are not deferred. The adoption of
SFAS No. 133 by the Company on January 1, 2001 did not have a material effect on
the Company's consolidated financial position or results of operations.
In September 2000, the Financial Accounting Standards Board (FASB)
issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", a replacement of SFAS No. 125. SFAS 140
11
addresses implementation issues that were identified in applying SFAS No. 125.
This statement revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures, but it carries over most of SFAS No. 125 provisions without
reconsideration. SFAS 140 is effective for transfers and servicing of financial
assets and extinguishments of liabilities occurring after March 31, 2001. SFAS
No. 140 is effective for recognition and reclassification of collateral and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. This statement is to be applied
prospectively with certain exceptions. Other than those exceptions, earlier or
retroactive application is not permitted. The adoption of SFAS No. 140 did not
have a material effect on the Company's consolidated financial statements.
In July 2001, the FASB issued Statement No. 141, Business Combinations,
and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001. Statement 141 also
specifies the criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill.
Statement 142 will require that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but instead tested for impairment at least
annually in accordance with the provisions of Statement 142. Statement 142 will
also require that intangible assets with definite useful lives be amortized over
their respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
The Company is required to adopt the provisions of Statement 141
immediately, except with regard to business combinations initiated prior to July
1, 2001, such as the CNB merger, which it expects to account for using the
pooling-of-interests method. The Company is required to adopt the provisions of
Statement 142 effective January 1, 2002. Furthermore, any goodwill and any
intangible asset determined to have an indefinite useful life that are acquired
in a purchase business combination completed after June 30, 2001 will not be
amortized, but will continue to be evaluated for impairment in accordance with
the appropriate pre-Statement 142 accounting literature. Goodwill and intangible
assets acquired in business combinations completed before July 1, 2001 will
continue to be amortized prior to the adoption of Statement 142.
Statement 141 will require upon adoption of Statement 142, that the
Company evaluate its existing intangible assets and goodwill that were acquired
in a prior purchase business combination, and to make any necessary
reclassifications in order to conform with the new criteria in Statement 141 for
recognition apart from goodwill. Upon adoption of Statement 142, the Company
will be required to reassess the useful lives and residual values of all
intangible assets acquired in purchase business combinations, and make any
necessary amortization period adjustments by the end of the first interim period
after adoption. In addition, to the extent an intangible asset is identified as
having an indefinite useful life, the Company will be required to test the
intangible asset for impairment in accordance with the provisions of Statement
142 within the first interim period. Any impairment loss will be measured as of
the date of adoption and recognized as the cumulative effect of a change in
accounting principle in the first interim period.
12
In connection with the transitional goodwill impairment evaluation,
Statement 142 will require the Company to perform an assessment of whether there
is an indication that goodwill is impaired as of the date of adoption based upon
criteria contained in Statement 142. Any transitional impairment loss will be
recognized as the cumulative effect of a change in accounting principle in the
Company's statement of earnings.
Because of the extensive effort needed to comply with adopting Statements 141
and 142, it is not practicable to reasonably estimate the impact of adopting
these Statements on the Company's financial statements at the date of this
report, including whether any transitional impairment losses will be required to
be recognized as the cumulative effect of a change in accounting principle.
On August 16, 2001, the FASB issued SFAS No. 143 "Accounting for Asset
Retirement Obligations." Statement 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Statement 143 applies to all
entities. This Statement requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred
if a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset. Under this Statement, the liability is discounted and the
accretion expense is recognized using the credit-adjusted risk-free interest
rate in effect when the liability was initially recognized. The FASB issued this
Statement to provide consistency for the accounting and reporting of liabilities
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. The Statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. Earlier application is
permitted. The Company does not expect a material impact on its financial
statements when this Statement is adopted.
On October 3, 2001, The FASB issued SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets". This Statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This Statement supersedes SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This Statement
also supersedes the accounting and reporting provisions of APB Opinion No. 30
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." The changes in this Statement improve financial
reporting by requiring that one accounting model be used for long-lived assets
to be disposed of by broadening the presentation of discontinued operations to
include more disposal transactions. This Statement is effective for financial
statements issued for fiscal years beginning after December 15, 2001 and interim
periods within those fiscal years. The provisions of this Statement are to be
applied prospectively. The Company does not expect a material impact on its
financial statements when this Statement is adopted.
13
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 NBT Financial Services, Inc., collectively referred to herein as the
Company. This discussion focuses on the Company's Financial Condition, Results
of Operations, and Liquidity and Capital Resources. Reference should be made to
the Company's consolidated interim financial statements and footnotes thereto
included in this Form 10-Q as well as to the Company's 2000 Form 10-K for an
understanding of the following discussion and analysis.
On October 22, 2001, NBT Bancorp Inc. announced the declaration of a regular
quarterly cash dividend of $0.17 per share. The cash dividend will be paid on
December 15, 2001 to stockholders of record as of December 1, 2001.
Forward Looking Statements
Certain statements in this filing and future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, contain forward-looking statements,
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. There are a number of factors,
many of which are beyond the Company's control, that could cause actual
conditions, events or results to differ significantly from those described in
the forward-looking statements. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements include,
among others, the following possibilities: (1) competitive pressures among
depository and other financial institutions may increase significantly; (2)
revenues may be lower than expected; (3) changes in the interest rate
environment may reduce interest margins; (4) general economic conditions, either
nationally or regionally, may be less favorable than expected, resulting in,
among other things, a deterioration in credit quality or a reduced demand for
credit; (5) legislative or regulatory changes, including changes in accounting
standards, may adversely affect the businesses in which the Company is engaged;
(6) costs or difficulties related to the integration of the businesses of the
Company and its merger partners may be greater than expected; (7) expected cost
savings associated with recent and pending mergers and acquisitions may not be
fully realized or realized within the expected time frames; (8) deposit
attrition, customer loss, or revenue loss following recent and pending mergers
and acquisitions may be greater than expected; (9) competitors may have greater
financial resources and develop products that enable such competitors to compete
more successfully than the Company; and (10) adverse changes may occur in the
securities markets or with respect to inflation.
The Company wishes to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, those described above, could affect the Company's
14
financial performance and could cause the Company's actual results or
circumstances for future periods to differ materially from those anticipated or
projected.
Except as required by law, the Company does not undertake, and specifically
disclaims any obligations to publicly release any revisions to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
MERGERS AND ACQUISITIONS
On June 1, 2001, the Company completed the acquisition of First National
Bancorp, Inc. (FNB) whereby FNB was merged with and into NBT Bancorp Inc. At the
same time, FNB's subsidiary, First National Bank of Northern New York (FNB Bank)
was merged into NBT Bank, N.A. The acquisition was accounted for using the
purchase method. As such, both the assets and liabilities assumed have been
recorded on the consolidated balance sheet of the Company at estimated fair
value as of the date of acquisition and the results of operations are included
in the Company's consolidated statement of income from the acquisition date
forward. To complete the transaction, the Company issued approximately 1,075,000
shares of its common stock valued at $16.0 million. Goodwill, representing the
cost over net assets acquired, was approximately $7 million and is presently
being amortized over twenty years on a straight-line basis.
On June 19, 2001, the Company announced the signing of a definitive
agreement to acquire CNB Financial Corp. (CNB) and its wholly owned subsidiary,
Central National Bank (CNB Bank). The shareholders of NBT Bancorp Inc. and CNB
approved the agreement and plan of merger at separate meetings held on October
16, 2001. The merger is expected to close in the fourth quarter of 2001. The
merger agreement also provides for the merger of CNB Bank into NBT. Upon
completion of the merger, CNB Bank will operate as a division of NBT, retaining
its name and headquarters in Canajoharie, NY. At September 30, 2001, CNB had
consolidated assets of $983 million, deposits of $854 million and equity of $63
million. CNB Bank operates 29 full service banking offices in nine upstate New
York counties.
OVERVIEW
The Company earned net income of $5.1 million, or $.21 diluted earnings per
share, for the three months ended September 30, 2001 compared to $5.2 million,
or $.22 diluted earnings per share, for the three months ended September 30,
2000. Net income for the nine months ended September 30, 2001 was $17.4 million,
or $.72 diluted earnings per share, compared to $14.5 million, or $.62 diluted
earnings per share, for the first nine months of 2000.
The following tables present an overview of the Company's performance ratios and
changes in average balances for the three months and nine months ended September
30, 2001 compared to September 30, 2000. 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. Net interest margin, calculated on a federal taxable equivalent
15
(FTE) basis, measures an entity's ability to utilize its earning assets in
relation to its cost of funding.
Table 1
Performance Measurements
- ----------------------------------------------------------------------------------------------------
First Second Third Nine
Quarter Quarter Quarter Months
- ----------------------------------------------------------------------------------------------------
2001
Return on average assets 1.19% 0.72% 0.75% 0.88%
Return on average equity 14.55% 8.49% 8.73% 10.49%
Net interest margin 4.21% 4.32% 4.36% 4.30%
- ----------------------------------------------------------------------------------------------------
2000
Return on average assets 0.88% 0.66% 0.81% 0.78%
Return on average equity 11.10% 8.29% 10.14% 9.83%
Net interest margin 4.25% 4.16% 4.12% 4.17%
- ----------------------------------------------------------------------------------------------------
16
Table 2 presents the Company's condensed consolidated average balance sheet, an
analysis of interest income/expense and average yield/rate for each major
category of earning assets and interest bearing liabilities on a taxable
equivalent basis.
Table 2
Average Balances and Net Interest Income
Three months ended September 30,
2001 2000
Average Yield/ Average Yield/
(dollars in thousands) Balance Interest Rates Balance Interest Rates
- ------------------------------------------------------------------------------------------------
ASSETS
Short-term interest bearing
accounts $ 7,873 $ 101 5.09% $ 10,517 $ 170 6.43%
Securities available for sale (2)(3) 576,434 9,455 6.51 621,066 10,402 6.66
Securities held to maturity (2)(3) 91,817 1,588 6.86 108,141 1,903 7.00
Investment in FRB and FHLB Banks 18,876 332 6.98 27,647 594 8.55
Loans (1) (3) 1,816,657 36,804 8.04 1,642,830 36,713 8.89
--------- ------ --------- ------
Total interest earning assets 2,511,657 48,280 7.63 2,410,201 49,782 8.22
------ ------
Other assets 181,456 127,257
------- -------
Total assets $2,693,113 $2,537,458
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Money market deposit accounts $ 168,558 1,030 2.42 $ 140,912 1,323 3.74
NOW deposit accounts 240,812 1,011 1.67 210,530 975 1.84
Savings deposits 304,271 1,548 2.02 276,763 1,740 2.50
Time deposits 1,038,807 12,792 4.89 1,004,507 14,980 5.93
--------- ------ --------- ------
Total interest bearing deposits 1,752,448 16,381 3.71 1,632,712 19,018 4.63
Short-term borrowings 80,068 775 3.84 155,655 2,441 6.24
Long-term debt 270,065 3,497 5.14 237,128 3,352 5.62
------- ----- ------- -----
Total interest bearing
liabilities 2,102,581 20,653 3.90% 2,025,495 24,811 4.87%
------ ------
Demand deposits 327,125 282,380
Other liabilities 32,239 27,263
Stockholders' equity 231,168 202,320
------- -------
Total liabilities and
stockholders' equity $2,693,113 $2,537,458
---------- ----------
Net interest income $27,627 $24,971
------- -------
Interest rate spread 3.73% 3.35%
----- -----
Net interest margin 4.36% 4.12%
----- -----
Taxable equivalent adjustment (3) $ 862 $ 861
----- -----
17
Nine months ended September 30,
2001 2000
Average Yield/ Average Yield/
(dollars in thousands) Balance Interest Rates Balance Interest Rates
- ----------------------------------------------------------------------------------------------------
ASSETS
Short-term interest bearing
accounts $ 9,930 $ 369 4.97% $ 7,570 $ 347 6.12%
Securities available for
sale (2)(3) 572,127 28,369 6.63 630,724 31,804 6.74
Securities held to maturity (2)(3) 93,865 4,959 7.06 111,938 5,817 6.94
Investment in FRB and FHLB Banks 21,094 1,061 6.72 27,650 1,512 7.30
Loans (1) (3) 1,766,923 110,972 8.40 1,575,191 103,751 8.80
--------- ------- --------- -------
Total interest earning assets 2,463,939 145,730 7.91 2,353,073 143,231 8.13
------- -------
Other assets 169,995 119,743
------- -------
Total assets $2,633,934 $2,472,816
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Money market deposit accounts $ 165,075 3,700 3.00 $ 134,886 3,465 3.43
NOW deposit accounts 237,467 2,812 1.58 204,809 2,748 1.79
Savings deposits 286,658 4,620 2.15 270,402 5,043 2.49
Time deposits 1,040,749 42,113 5.41 980,977 41,536 5.66
--------- ------ ------- ------
Total interest bearing deposits 1,729,949 53,245 4.12 1,591,074 52,792 4.43
Short-term borrowings 94,271 3,261 4.62 151,801 6,771 5.96
Long-term debt 250,759 9,998 5.33 240,946 10,133 5.62
------- ----- ------- ------
Total interest bearing
liabilities 2,074,979 66,504 4.29% 1,983,821 69,696 4.69%
------ ------
Demand deposits 302,975 267,953
Other liabilities 33,950 23,983
Stockholders' equity 222,030 197,059
------- -------
Total liabilities and
stockholders' equity $2,633,934 $2,472,816
---------- ----------
Net interest income $79,226 $73,535
------- -------
Interest rate spread 3.62% 3.44%
----- -----
Net interest margin 4.30% 4.17%
----- -----
Taxable equivalent adjustment (3) $ 2,529 $ 2,602
--------- -------
(1) For purposes of these computations, nonaccrual loans are included in the
average loan balances outstanding.
(2) Securities are shown at average amortized cost.
(3) Interest income for tax-exempt securities and loans has been adjusted to
a taxable-equivalent basis using the statutory
Federal income tax rate of 35%.
Table 3 presents the changes in interest income, interest expense and net
interest income due to changes in volume and changes in rate. The net change
attributable to the combined impact of volume and rate has been allocated to
each in proportion to the absolute dollar amounts of change.
18
Table 3
Analysis of Changes in Taxable Equivalent Net Interest Income
- --------------------------------------------------------------------------------
Three months ended September 30,
Increase (Decrease)
2001 over 2000
- --------------------------------------------------------------------------------
(in thousands) Volume Rate Total
- --------------------------------------------------------------------------------
Short-term interest bearing accounts $ (38) $ (31) $ (69)
Securities available for sale (736) (211) (947)
Securities held to maturity (283) (32) (315)
Investment in FRB and FHLB Banks (167) (95) (262)
Loans 3,692 (3,601) 91
- --------------------------------------------------------------------------------
Total interest income 2,041 (3,543) (1,502)
- --------------------------------------------------------------------------------
Money market deposit accounts 227 (520) (293)
NOW deposit accounts 132 (96) 36
Savings deposits 162 (354) (192)
Time deposits 497 (2,685) (2,188)
Short-term borrowings (932) (734) (1,666)
Long-term debt 441 (296) 145
- --------------------------------------------------------------------------------
Total interest expense 914 (5,072) (4,158)
- --------------------------------------------------------------------------------
Change in FTE net interest income $ 1,127 $ 1,529 $ 2,656
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nine months ended September 30,
Increase (Decrease)
2001 over 2000
- --------------------------------------------------------------------------------
(in thousands) Volume Rate Total
- --------------------------------------------------------------------------------
Short-term interest bearing accounts $ 95 $ (73) $ 22
Securities available for sale (2,913) (522) (3,435)
Securities held to maturity (953) 95 (858)
Investment in FRB and FHLB Banks (337) (114) (451)
Loans 12,204 (4,983) 7,221
- --------------------------------------------------------------------------------
Total interest income 6,629 (4,130) 2,499
- --------------------------------------------------------------------------------
Money market deposit accounts 713 (478) 235
NOW deposit accounts 409 (345) 64
Savings deposits 291 (714) (423)
Time deposits 2,466 (1,889) 577
Short-term borrowings (2,204) (1,306) (3,510)
Long-term debt 403 (538) (135)
- --------------------------------------------------------------------------------
Total interest expense 3,106 (6,298) (3,192)
- --------------------------------------------------------------------------------
Change in FTE net interest income $ 3,523 $ 2,168 $ 5,691
- --------------------------------------------------------------------------------
19
RESULTS OF OPERATIONS
Three months ended September 30, 2001 compared to three months ended September
30, 2000
Net Income
The Company earned net income of $5.1 million, or $.21 diluted earnings per
share, for the three months ended September 30, 2001 compared to $5.2 million,
or $.22 diluted earnings per share, for the three months ended September 30,
2000. Third quarter 2001 results included a loan loss provision of $6.0 million
compared to a loan loss provision of $1.6 million for the third quarter of 2000.
Results for the three months ended September 30, 2000 included $3.2 million of
pre-tax merger, acquisition and reorganization costs.
Net Interest Income
Net interest income on a federal taxable equivalent basis (FTE) increased $2.7
million to $27.6 million in 2001 compared to $25.0 million in 2000. The
Company's interest rate spread improved 38 basis points from 3.35% for 2000 to
3.73% for 2001. The interest rate margin improved 24 basis points from 4.12% to
4.36%. The improvement in net interest income came primarily from the
significant decline in the Company's cost of funds and related interest expense,
reflecting a greater degree of downward repricing of the Company's deposits and
short term borrowings compared to its earning assets.
Average loans for the three months ended September 30, 2001 increased $173.8
million compared to the same period for 2000. Average loans represented 72% of
earning assets for the quarter ended September 30, 2001 compared to 68% in 2000.
Lower yielding securities, correspondingly, declined as a percentage of average
assets from 30% for 2000 to 27% for 2001.
The yield on earning assets declined 59 basis points from 8.22% for 2000 to
7.63% for 2001, while the cost of interest bearing liabilities declined 97 basis
points from 4.87% for 2000 to 3.90% for 2001. The 10.6% year over year growth in
average loans combined with the increase in loans as a percentage of average
assets helped soften the decline in the Company's yield on earning assets when
compared to the general decline in market interest rates. The decrease in the
Company's cost of funds was driven almost exclusively by the effect of lower
rates combined with the use of deposits to replace short-term borrowings.
Noninterest Income
Noninterest income increased 18.4% from $5.6 million for 2000 to $6.6 million
for 2001. Income from service charges on deposit accounts increased 30.7%, or
$634,000, to $2.7 million, the result of increases in both the number of deposit
accounts and the related fees. In addition, fee income from trust services
increased 21.9%, or $172,000.
20
Noninterest Expense
Noninterest expense, excluding costs of merger, acquisition and reorganization
activities, totaled $19.7 million for 2001, compared to $17.0 million for 2000.
Expenses for data processing and communications and professional and outside
services increased year over year, principally due to the Company's expanded
branch network, costs associated with enhanced technologies and expanded data
processing volume capacities resulting from recent data processing conversions.
The expanded data processing capabilities will allow the Company to take on
additional data processing volume in the future with little additional marginal
costs.
Income Taxes
Income tax expense for 2001 was $2.5 million for an effective tax rate of 33.4%,
compared to $2.8 million, or 35.0%, for 2000. The effective tax rate was
slightly higher for 2000 primarily as a result of nondeductible merger and
acquisition expenses in that period.
Nine months ended September 30, 2001 compared to nine months ended September 30,
2000
Net Income
Net income for the nine months ended September 30, 2001 was $17.4 million, or
$.72 diluted earnings per share, compared to $14.5 million, or $.62 diluted
earnings per share, for the first nine months of 2000. Through September 30,
2001, revenues from net interest income and noninterest income increased $5.8
million and $6.3 million, respectively, compared to the same period in 2000. The
loan loss provision increased $8.0 million for 2001 compared to 2000. In the
first nine months of 2000, the Company incurred $7.2 million in pre-tax merger,
acquisition and reorganization costs with no comparable expense in the first
nine months of 2001.
Net Interest Income
Net interest income on a federal taxable equivalent basis (FTE) increased $5.7
million to $79.2 million for 2001 compared to $73.5 million for 2000. The
Company's interest rate spread improved 18 basis points from 3.44% for 2000 to
3.62% for 2001. The interest rate margin improved 13 basis points from 4.17% to
4.30%. The improvement in net interest income was primarily a result of the
increase in interest income generated by the year over year growth in average
loans combined with a decrease in interest expense caused by the decline in the
average cost of deposits and borrowings.
Average loans for the nine months ended September 30, 2001 increased $191.7
million, or 12.2%, compared to the same period in 2000. As a percentage of
earning assets, average loans increased from 67% for 2000 to 72% for 2001.
Correspondingly, lower yielding securities declined as a percentage of average
assets from 32% for 2000 to 27% for 2001.
Average interest bearing deposits, which generally have a lower cost than
borrowings, increased from 80% of average interest bearing liabilities for 2000
21
to 83% for 2001 while the average cost of those deposits declined from 4.43% in
2000 to 4.12% in 2001. Consistent with the decline in general market interest
rates, all categories of the Company's deposits reflected a lower average cost
in 2001 compared to 2000.
As a result of the increase in average deposits, average short-term borrowings
declined $57.5 million, or 37.9%, from $151.8 million for 2000 to $94.3 million
for 2001; the average cost of these borrowings also declined from 5.96% for 2000
to 4.62% for 2001. The rate paid on total interest bearing liabilities decreased
40 basis points from 4.69% for 2000 to 4.29% for 2001.
Noninterest Income
Noninterest income, excluding net securities gains and the gain on the sale of a
branch building, totaled $19.1 million for 2001 compared to $14.6 million for
2000, an increase of 30.6%. Service charges on deposit accounts totaled $7.7
million for 2001, increasing $1.7 million, or 27.6%, compared to 2000,
principally due to the increase in deposit accounts and related fees.
Broker/dealer fees increased $1.4 million, or 85.3%, to $3.0 million for 2001.
The increase in broker/dealer fees reflects a full nine months of revenue in
2001 from the Company's broker/dealer, M. Griffith, Inc., which was acquired on
May 5, 2000.
Noninterest Expense
Noninterest expense, excluding nonrecurring items such as merger, acquisition
and reorganization costs and certain deposit overdraft writeoffs, totaled $56.6
million for 2001, an increase of $6.3 million, or 12.5%, compared to 2000.
Increases in 2001 for salaries and benefits, supplies and postage, occupancy,
professional fees and outside services and data processing and communications
are primarily attributable to the Company's growth through acquisition including
the expansion of its branch network and data processing capabilities. The
expense for the amortization of intangible assets also increased from $1.2
million for 2000 to $2.1 million for 2001 in connection with the Company's
growth through acquisition. The Company's efficiency ratio, which measures
noninterest expense (excluding nonrecurring charges) as a percentage of income
(net interest income plus noninterest income excluding net securities gains and
nonrecurring income) deteriorated slightly from 56.94% for 2000 to 57.64% for
2001.
At September 30, 2001, the Company has a remaining accrued liability for merger,
acquisition and reorganization costs of $2.6 million, consisting primarily of
severance costs which will be paid out over a period of time consistent with the
respective severance agreements.
22
Income Taxes
Income tax expense for 2001 was $8.1 million for an effective tax rate of 31.7%,
compared to $8.3 million, or 36.3%, for 2000. The effective tax rate was higher
for 2000 primarily as a result of nondeductible merger and acquisition expenses
in that year. In addition, the Company implemented certain tax planning
strategies that resulted in a lower effective rate for 2001.
ANALYSIS OF FINANCIAL CONDITION
Loans
Total loans were $1,807.6 million, or 67.5% of assets, at September 30, 2001,
compared to $1,726.5 million, or 65.0%, at December 31, 2000, and $1,667.6
million, or 65.2%, at September 30, 2000. The Company acquired approximately $42
million for loans in connection with its purchase of branches from Sovereign
Bank in November 2000 and an additional $73 million in loans in connection with
its acquisition of FNB in June 2001. In addition, the Company continues to
experience modest growth in its loan portfolio, primarily residential mortgages,
which has increased as a result of the refinance activity triggered by the
decline in market interest rates during 2001. At September 30, 2001, commercial
loans, including commercial mortgages, represented approximately 48% of the loan
portfolio, while consumer loans and residential mortgages represented 26% and
26%, respectively.
Allowance for Loan Losses, Nonperforming Assets and the Provision for Loan
Losses
The allowance for loan losses is maintained at a level estimated by management
to provide adequately for risk of probable losses inherent in the current loan
portfolio. The adequacy of the allowance for loan losses is continuously
monitored. It is assessed for adequacy using a methodology designed to ensure
the level of the allowance reasonably reflects the loan portfolio's risk
profile. It is evaluated to ensure that it is sufficient to absorb all
reasonably estimable credit losses inherent in the current loan portfolio.
Table 4 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 chargeoffs. Chargeoffs 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.
23
Table 4
Allowance For Loan Losses
- --------------------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(dollars in thousands) 2001 2000 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Balance, beginning of period $25,691 $22,005 $23,349 $19,711
Recoveries 794 418 1,464 918
Chargeoffs (3,438) (1,360) (10,734) (3,365)
- --------------------------------------------------------------------------------------------------------------------------------
Net chargeoffs (2,644) (942) (9,270) (2,447)
Allowance related to purchase
acquisition - - 505 -
Provision for loan losses 5,988 1,619 13,451 5,418
- --------------------------------------------------------------------------------------------------------------------------------
Balance, end of period $29,035 $22,682 $29,035 $22,682
- --------------------------------------------------------------------------------------------------------------------------------
Composition of Net Chargeoffs
- --------------------------------------------------------------------------------------------------------------------------------
Commercial and agricultural $(1,822) 69% $ (363) 39% $(7,060) 76% $ (982) 40%
Real estate mortgage (218) 8% (160) 17% (340) 4% (432) 18%
Consumer (604) 23% (419) 44% (1,870) 20% (1,033) 42%
- --------------------------------------------------------------------------------------------------------------------------------
Net chargeoffs $(2,644) 100% $ (942) 100% $(9,270) 100% $(2,447) 100%
- --------------------------------------------------------------------------------------------------------------------------------
Annualized net chargeoffs
to average loans 0.58% 0.23% 0.70% 0.21%
- --------------------------------------------------------------------------------------------------------------------------------
Net chargeoffs to average loans for the year ended December 31, 2000 0.28%
- --------------------------------------------------------------------------------------------------------------------------------
Nonperforming assets were $29.5 million at September 30, 2001 compared to $25.6
million at June 30, 2001, $22.2 million at December 31, 2000 and $13.0 million
at September 30, 2000. Table 5 presents the components of nonperforming assets
at September 30, 2001 and 2000.
Table 5
Nonperforming Assets and Risk Elements
- --------------------------------------------------------------------------------------------------------------------------------
September 30, September 30,
(dollars in thousands) 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Commercial and agricultural $19,498 76% $7,810 85%
Real estate mortgage 3,851 15% 491 5%
Consumer 2,443 9% 956 10%
- --------------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 25,792 100% 9,257 100%
- --------------------------------------------------------------------------------------------------------------------------------
Loans 90 days or more past due and still accruing:
Commercial and agricultural 70 3% 314 14%
Real estate mortgage 1,469 66% 1,595 72%
Consumer 702 31% 315 14%
- --------------------------------------------------------------------------------------------------------------------------------
Total loans 90 days or more past due and still accruing 2,241 100% 2,224 100%
- --------------------------------------------------------------------------------------------------------------------------------
Restructured loans in compliance with modified terms: 606 747
- --------------------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 28,639 12,228
- --------------------------------------------------------------------------------------------------------------------------------
Other real estate owned 893 745
- --------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $29,532 $12,973
- --------------------------------------------------------------------------------------------------------------------------------
Total nonperforming loans to loans 1.58% 0.73%
Total nonperforming assets to assets 1.10% 0.51%
Total allowance for loan losses to nonperforming loans 101.38% 185.49%
- --------------------------------------------------------------------------------------------------------------------------------
24
Nonperforming loans at September 30, 2001 were $28.6 million compared to
$24.8 million at June 30, 2001 and $12.2 million at September 30, 2000. The
ratio of the allowance for loan losses to total loans was 1.61% at September 30,
2001, 1.41% at June 30, 2001 and 1.36% at September 30, 2000. The allowance for
loan losses as a percentage of nonperforming loans was 101.38% at September 30,
2001 compared to 103.57% at June 30, 2001 and 185.49% at September 30, 2000.
Net charge-offs during the third quarter of 2001 were $2.6 million,
compared to $.9 million during the three months ended September 30, 2000, and
$5.5 million in the second quarter of 2001. The increased net charge-offs in
third quarter 2001 over the same period in the prior year were primarily a
result of problem loans identified at the Pennstar division of our Bank during
the Pennstar integration process, which was completed in the second quarter
2001. While the net charge-offs in the third quarter are down from the second
quarter, management expects charge-offs to continue to be higher than
experienced in 2000.
In addition to increased net charge-offs, the Company also experienced an
increase in nonperforming loans and classified loans during the second and third
quarters of 2001. The increase during the second quarter was the result of the
completion of the integration of the Pennstar Bank credit administration
function. The increase in classified loans in the third quarter is primarily due
to two large credits in the New York banking division, and the increase in
nonperforming loans during the third quarter is due primarily to one credit in
the New York banking division.
As a result of the above, as well as consideration of a weakening economy
in the Bank's market area in the third quarter and growth in the
commercial-related loan portfolio, a provision of $6.0 million was recorded in
the third quarter of 2001, as compared to $1.6 million in the third quarter of
2000. As a result, the allowance for loans increased to 1.61% of total loans at
September 30, 2001 as compared to 1.36% at September 30, 2000.
Management considers the allowance for loan losses at September 30, 2001 to be
adequate based on its evaluation and analysis of the inherent risk of loss in
the current loan portfolio.
Securities
Securities totaled $669.2 million, or 25.0% of assets, at September 30, 2001,
compared to $699.3 million, or 26.3%, at December 31, 2000, and $698.5 million,
or 27.3%, at September 30, 2000. The Company's acquisition of FNB in September
2001 added approximately $27.8 million in securities. The overall net decrease
in the portfolio compared to the prior periods was primarily used to fund the
Company's loan growth. At September 30, 2001, the portfolio consisted of 86%
securities available for sale and 14% securities held to maturity.
Deposits
Total deposits were $2,079.1 million at September 30, 2001, an increase of $38.9
million, or 1.9%, from year end 2000, and $142.6 million, or 7.4%, from the
prior year. Total average deposits increased $164.5 million, or 8.6%, from
25
September 30, 2000 to September 30, 2001. The Company purchased approximately
$97 million in deposits in conjunction with the purchase of branches from
Sovereign Bank in November, 2000. In addition, the Company's acquisition of FNB
in September 2001 added approximately $108 million in deposits. The Company has
focused on maintaining and growing its base of lower costing checking, savings
and money market accounts while allowing runoff of some of its higher costing
time deposits, particularly brokered and jumbo time deposits.
Borrowings
The Company's borrowed funds consist of short-term borrowings and long-term
debt. Short-term borrowings totaled $72.1 million at September 30, 2001 compared
to $132.4 million and $154.2 million at December 31, and September 30, 2000,
respectively. The previously mentioned increase in deposits enabled the Company
to pay down a portion of its existing short-term debt. In addition, certain
higher rate short-term borrowings were paid down with proceeds from long-term
borrowings. Long-term debt was $269.3 million at September 30, 2001, up
approximately 15% from year end and from the prior year, as the Company took
advantage of lower interest rates and locked in longer term advances.
CAPITAL RESOURCES
Stockholders' equity of $232.0 million represents 8.7% of total assets at
September 30, 2001, compared with $207.0 million, or 8.1% a year previous, and
$208.0 million, or 7.8% at December 31, 2000. As the capital ratios in Table 6
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 Total risk-based capital ratios have regulatory
minimum guidelines of 4%, 4% and 8% respectively, with requirements to be
considered well capitalized of 5%, 6% and 10%, respectively.
26
Table 6
Capital Measurements
- ------------------------------------------------------------------------------------------------------
As of and for the quarter ended
March 31 June 30 Sptember 30
- ------------------------------------------------------------------------------------------------------
2001
Tier 1 leverage ratio 7.32% 7.59% 7.13%
Tier 1 capital ratio 11.18% 10.76% 10.66%
Total risk-based capital ratio 12.43% 12.01% 11.92%
Cash dividends as a percentage of net income 52.98% 67.16% 71.55%
Per common share:
Book value $ 9.13 $ 9.26 $ 9.53
Tangible book value $ 7.99 $ 7.89 $ 8.14
- ------------------------------------------------------------------------------------------------------
2000
Tier 1 leverage ratio 8.59% 8.26% 8.11%
Tier 1 capital ratio 13.24% 12.62% 12.54%
Total risk-based capital ratio 14.40% 13.81% 13.75%
Cash dividends as a percentage of net income 69.11% 79.10% 78.60%
Per common share:
Book value $ 8.36 $ 8.47 $ 8.74
Tangible book value $ 7.99 $ 7.79 $ 8.08
- ------------------------------------------------------------------------------------------------------
Table 7 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. The Company's price to book value ratio was 1.50 at September 30,
2001 and 1.37 a year ago. The per share market price was 14.86 times annualized
earnings at September 30, 2001 and 14.49 times annualized earnings at September
30, 2000.
Table 7
Quarterly Common Stock and Dividend Information
- ----------------------------------------------------------------------------------------------
Cash
Dividends
Quarter Ending High Low Close Declared
- ----------------------------------------------------------------------------------------------
2000
March 31 $16.50 $11.38 $14.50 $0.170
June 30 14.50 9.38 10.69 0.170
September 30 12.50 9.75 12.00 0.170
December 31 15.94 11.13 14.63 0.170
- ----------------------------------------------------------------------------------------------
2001
March 31 $17.50 $13.25 $16.69 $0.170
June 30 25.42* 14.30 19.30 0.170
September 30 17.30 13.50 14.30 0.170
- ----------------------------------------------------------------------------------------------
* This price was reported on June 29, 2001, a day on which the Nasdaq Stock
Market experienced computerized trading disruptions which, among other
things, forced it to extend its regular trading session and cancel its late
trading session. Subsequently the Nasdaq Stock Market recalculated and
republished several closing stock prices (not including NBT Bancorp Inc.,
for which it had reported a closing price of $19.30). Excluding trading on
June 29, 2001, the high sales price for the quarter ended June 30, 2001 was
$16.75.
In connection with its acquisition of First National Bancorp, Inc., the Company
had announced on January 2, 2001 its intention to buy back up to 1.03 million
shares of its common stock. In order for the merger with CNB to be accounted for
27
under the pooling-of-interest method, the Company has reduced this repurchase
program to 680 thousand shares. As of September 30, 2001, the Company had
completed the purchase of 649 thousand shares.
LIQUIDITY
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 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
policies 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. Liquidity management includes a
focus on interest rate sensitivity management with a goal of avoiding widely
fluctuating net interest margins through periods of changing economic
conditions.
The primary liquidity measurement the Company utilizes is called the Basic
Surplus which captures the adequacy of its access to reliable sources of cash
relative to the stability of its funding mix of average liabilities. 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, which can be accessed when necessary. Accordingly, the
Company has purchased brokered time deposits, established borrowing facilities
with other banks (Federal funds), the Federal Home Loan Bank of New York (short
and long-term borrowings which are denoted as advances), and repurchase
agreements with investment companies.
This Basic Surplus approach enables the Company to adequately manage liquidity
from both operational and contingency perspectives. By tempering the need for
cash flow liquidity with reliable borrowing facilities, the Company is able to
operate with a more fully invested and, therefore, higher interest income
generating, securities portfolio. The makeup and term structure of the
securities portfolio is, in part, impacted by the overall interest rate
sensitivity of the balance sheet. Investment decisions and deposit pricing
strategies are impacted by the liquidity position. At September 30, 2001, the
Company considered its Basic Surplus adequate to meet liquidity needs. At
September 30, 2001, a large percentage of the Company's loans and securities
were pledged as collateral on borrowings. Therefore, future growth of earning
assets will depend upon the Company's ability to obtain additional funding,
through growth of core deposits and collateral management, and may require
further use of brokered time deposits, or other higher cost borrowing
arrangements.
28
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK
Interest rate risk is the most significant market risk affecting the Company.
Other types of market risk, such as foreign currency exchange rate risk and
commodity price risk, do not arise in the normal course of the Company's
business activities.
Interest rate risk is defined as an exposure to a movement in interest rates
that could have an adverse effect on the Company's net interest income. Net
interest income is susceptible to interest rate risk to the degree that
interest-bearing liabilities mature or reprice on a different basis than earning
assets. When interest-bearing liabilities mature or reprice more quickly than
earning assets in a given period, a significant increase in market rates of
interest could adversely affect net interest income. Similarly, when earning
assets mature or reprice more quickly than interest-bearing liabilities, falling
interest rates could result in a decrease in net interest income.
In an attempt to manage its exposure to changes in interest rates, management
monitors the Company's interest rate risk. ALCO meets monthly to review the
Company's interest rate risk position and profitability, and to recommend
strategies for consideration by the Board of Directors. Management also reviews
loan and deposit pricing, and the Company's securities portfolio, formulates
investment and funding strategies, and oversees the timing and implementation of
transactions to assure attainment of the Board's objectives in the most
effective manner. Notwithstanding the Company's interest rate risk management
activities, the potential for changing interest rates is an uncertainty that can
have an adverse effect on net income.
In adjusting the Company's asset/liability position, the Board and management
attempt to manage the Company's interest rate risk while enhancing the net
interest margin. At times, depending on the level of general interest rates, the
relationship between long and short term interest rates, market conditions and
competitive factors, the Board and management may determine to increase the
Company's interest rate risk position somewhat in order to increase its net
interest margin. The Company's results of operations and net portfolio values
remain vulnerable to changes in interest rates and to fluctuations in the
difference between long and short-term interest rates.
The primary tool utilized by ALCO to manage interest rate risk is a balance
sheet/income statement simulation model (interest rate sensitivity analysis).
Information such as principal balance, interest rate, maturity date, cash flows,
next repricing date (if needed), and current rates is uploaded into the model to
create an ending balance sheet. In addition, ALCO makes certain assumptions
regarding prepayment speeds for loans and mortgage related investment securities
along with any optionality within the deposits and borrowings.
The model is first run under an assumption of a flat rate scenario (i.e. no
change in current interest rates) with a static balance sheet over a 12-month
period. A second and third model are run in which a gradual increase and
decrease, respectively, of 200 basis points takes place over a 12 month period.
29
A fourth and fifth model are run in which a gradual increase and decrease,
respectively, of 100 basis points takes place over a 12 month period. Under
these scenarios, assets subject to prepayments are adjusted to account for
faster or slower prepayment assumptions. Any investment securities or borrowings
that have callable options embedded into them are handled accordingly based on
the interest rate scenario. The resultant changes in net interest income are
then measured against the flat rate scenario.
In the declining rate scenarios, net interest income is projected to be below
the flat rate scenario through the simulation period. Net interest income
experiences a reduction as a result of adjustable rate loans repricing, and
increased cash flow as a result of higher prepayments on loans reinvested at
lower market rates, callable securities reinvested at lower market rates and
limited continued deposit pricing reductions.
In the plus 100 basis points scenario, net interest income is projected to be
relatively stable compared to the flat rate scenario. However, in the plus 200
basis point scenario, net interest income is projected to be at lower levels
than in a flat rate scenario through the simulation period primarily due to a
lag in assets repricing while funding costs increase. The potential impact on
earnings is dependent on the ability to lag deposit repricing.
Net interest income for the next twelve months in a +/- 200 basis point scenario
is within the internal policy risk limits of a not more than a 5% change in net
interest income. Using the September 30, 2001 balance sheet position, the
following table summarizes the percentage change in net interest income in the
rising and declining rate scenarios over a 12-month period from the forecasted
net interest income in the flat rate scenario.
Interest Rate Sensitivity Analysis
- --------------------------------------------------------------------------------
Change in interest rates Percent change in
(in basis points) net interest income
- --------------------------------------------------------------------------------
+200 (0.94)%
+100 0.19 %
-100 (1.55)%
-200 (2.38)%
- --------------------------------------------------------------------------------
30
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
None.
Item 2 -- Changes in Securities
None.
Item 3 -- Defaults Upon Senior Securities
Not applicable.
Item 4 -- Submission of Matters to a Vote of Security Holders
Not applicable.
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 quarter ended September 30, 2001, the Company filed the
following Current Reports on Form 8-K:
Current report on Form 8K, Items 5 and 7, filed with the Securities and
Exchange Commission on July 27, 2001; and
31
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 14th day of November 2001.
NBT BANCORP INC.
By: /s/ MICHAEL J. CHEWENS
-------------------------------------------
Michael J. Chewens, CPA
Executive Vice President
Chief Financial Officer and Secretary
32
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
10.1 Change in control agreement with Michael J. Chewens Herein
10.2 Change in control agreement with Peter Corso Herein
10.3 Change in control agreement with Martin A. Dietrich Herein
10.4 Change in control agreement with Daryl R. Forsythe Herein
10.5 Change in control agreement with Lance D. Mattingly Herein
10.6 Change in control agreement with Jane E. Neal Herein
10.7 Change in control agreement with David E. Raven Herein
10.8 Form of Employment Agreement between NBT Bancorp Inc.
and Peter Corso made as of October 18, 2001 Herein
10.9 Form of Employment Agreement between NBT Bancorp Inc.
and Daryl R. Forsythe made as of January 1, 2000, and revised
on January 22, 2001 Herein
10.10 Form of Employment Agreement between NBT Bancorp Inc.
and Lance D. Mattingly made as of May 1, 2001 Herein
10.11 Form of Employment Agreement between NBT Bancorp Inc.
and David E. Raven made as of August 1, 2001 Herein
10.12 Supplemental Executive Retirement Agreement between NBT Bancorp Inc.
and Michael J. Chewens made as of July 23, 2001 Herein
10.13 Supplemental Executive Retirement Agreement between NBT Bancorp Inc.
and Martin A. Dietrich made as of July 23, 2001 Herein
10.14 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,
January 1, 2000, and on January 22, 2001 Herein
33
Exhibit 10.1
Change in control agreement with Michael J. Chewens
July 23, 2001
Mr. Michael J. Chewens
2613 Pinebluff Drive
Vestal, NY 13850
Dear Mr. Chewens:
NBT Bancorp Inc. (which, together with its wholly-owned subsidiary, NBT
Bank, National Association, 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 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, we
entered an agreement, approved by the Board, dated January 1, 1998, and revised
by Board action most recently on July 23, 2001, 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 of the
Company ("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:
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.
(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, 2003; provided, however, that
commencing December 31, 2001 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 of
the Company 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, With Good Reason or Without
Good Reason within 12 Months of the Change. If, (I) 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 (II) within 12 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 12-month period shall run from
the date of occurrence of each such event) you terminate your employment either
with or 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 12
Months 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 12
months of a change in control of the Company 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 through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs plus year-to-date accrued vacation.
(ii) As severance pay, an amount equal to the
product of 2.99 multiplied by the greater of (A) the sum of your annualized
salary for the calendar year in which the change in control of the Company
occurs, the maximum target bonus that could have been paid to you for such year
if all applicable targets and objectives had been achieved, or if no formal
bonus program is in effect, the largest bonus amount paid to you during any one
of the three preceding calendar years, your income from the exercise of
nonqualified options during such year, your compensation income from any
disqualifying disposition during such year of stock acquired pursuant to the
exercise of incentive stock options and other annualized amounts that constitute
taxable income to you from the Company for such year, without reduction for
salary reduction amounts excludible from income under Section 402(e)(3) or 125
of the Internal Revenue Code of 1986, as amended (the "Code"), or (B) your
average "Compensation" (as defined below) for the three calendar years preceding
the calendar year in which the change in control of the Company occurs. As used
in this subsection 3(b)(ii) your "Compensation" shall mean your base salary,
bonus, income from the exercise of nonqualified options, compensation income
from any disqualifying disposition of stock acquired pursuant to the exercise of
incentive stock options and any other amounts that constitute taxable income to
you from the Company, without reduction for salary reduction amounts excludible
from income under Section 402(e)(3) or 125 of the Code.
(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 and not within 12 months after a change in control of the Company, (i)
the Company shall maintain in full force and effect, for your continued benefit
and, if applicable, for the continued benefit of your spouse and family, for
three years after the Date of Termination, or such longer period as may be
provided by the terms of the appropriate plan, 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, as in effect at the Date of Termination, or, if more
favorable to you and, if applicable, your spouse and family, as in effect
generally at any time thereafter with respect to executive employees of the
Company or any successor; 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,
and (ii) your benefit under any supplemental retirement agreement or
supplemental retirement plan maintained by the Company in which you are a
participant shall be fully vested upon such termination of your employment, and
your benefit under such agreement or plan shall be determined as if you had
continued to be employed by the Company for three additional years (or the
period after which the maximum benefit payable is attained, if less) and if your
annual compensation for purposes of such agreement or plan during such period of
additional employment had been equal to the amount specified in Section
3(b)(ii)(A) or (B), whichever is higher. In the event that your participation in
any such plan, program, or arrangement is not possible after Termination under
the general terms and provisions of such plans, programs, and arrangements, 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 of the Company, you elect or, if applicable, your
spouse or family elects, COBRA continuation coverage, the Company will pay the
applicable COBRA premium for the maximum period during which such coverage is
available. If termination follows a change in control of the Company specified
in Section 6(b)(iii), then you and, if applicable, your spouse and family may
elect in lieu of COBRA continuation coverage to have the acquiring entity obtain
an individual or group health insurance coverage and the acquiring entity will
pay premiums thereunder for the maximum period during which you and, if
applicable, your spouse and family could have elected to receive COBRA
continuation coverage.
(d) Establishment of Trust. Within five days following
conclusion of a change in control of the Company, 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 of the Company, 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 and not within 12 Months of the
Change in Control. 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 12 months
after a change in control of the Company, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect on the date
the change in control of the Company occurs plus year-to-date accrued vacation.
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 of the Company. 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 of the Company; 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 of the Company, 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 of the Company.
(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 of the Company, 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 of the Company 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
of the Company.
(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 of the Company.
(v) The Company's requiring you to be based
anywhere other than where your office is located immediately prior to the change
in control of the Company 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 of the
Company.
(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 of the
Company, 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 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: /S/ Daryl R. Forsythe
AGREED TO:
/S/ Michael J. Chewens
Michael J. Chewens
Exhibit 10.2
Change in control agreement with Peter Corso
July 23, 2001
Mr. Peter J. Corso
11 Kingsbury Ave.
St. Johnsville, NY13452
Dear Mr. Corso:
NBT Bancorp Inc. (which, together with its wholly-owned subsidiary, NBT
Bank, National Association, 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 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, 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.
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.
(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, 2003; provided, however, that
commencing December 31, 2001 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 of
the Company 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, With Good Reason or Without
Good Reason within 12 Months of the Change. If, (I) 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 (II) within 12 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 12-month period shall run from
the date of occurrence of each such event) you terminate your employment either
with or 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 12
Months 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 12
months of a change in control of the Company 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 through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs plus year-to-date accrued vacation.
(ii) As severance pay, an amount equal to the
product of 2.99 multiplied by the greater of (A) the sum of your annualized
salary for the calendar year in which the change in control of the Company
occurs, the maximum target bonus that could have been paid to you for such year
if all applicable targets and objectives had been achieved, or if no formal
bonus program is in effect, the largest bonus amount paid to you during any one
of the three preceding calendar years, your income from the exercise of
nonqualified options during such year, your compensation income from any
disqualifying disposition during such year of stock acquired pursuant to the
exercise of incentive stock options and other annualized amounts that constitute
taxable income to you from the Company for such year, without reduction for
salary reduction amounts excludible from income under Section 402(e)(3) or 125
of the Internal Revenue Code of 1986, as amended (the "Code"), or (B) your
average "Compensation" (as defined below) for the three calendar years preceding
the calendar year in which the change in control of the Company occurs. As used
in this subsection 3(b)(ii) your "Compensation" shall mean your base salary,
bonus, income from the exercise of nonqualified options, compensation income
from any disqualifying disposition of stock acquired pursuant to the exercise of
incentive stock options and any other amounts that constitute taxable income to
you from the Company, without reduction for salary reduction amounts excludible
from income under Section 402(e)(3) or 125 of the Code.
(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 and not within 12 months after a change in control of the Company, the
Company shall maintain in full force and effect, for your continued benefit and,
if applicable, for the continued benefit of your spouse and family, for three
years after the Date of Termination, or such longer period as may be provided by
the terms of the appropriate plan, 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, as in effect at the Date of Termination, or, if more favorable to
you and, if applicable, your spouse and family, as in effect generally at any
time thereafter with respect to executive employees of the Company or any
successor; 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 not
possible after Termination under the general terms and provisions of such plans,
programs, and arrangements, 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 of the Company, you
elect or, if applicable, your spouse or family elects, COBRA continuation
coverage, the Company will pay the applicable COBRA premium for the maximum
period during which such coverage is available. If termination follows a change
in control of the Company specified in Section 6(b)(iii), then you and, if
applicable, your spouse and family may elect in lieu of COBRA continuation
coverage to have the acquiring entity obtain an individual or group health
insurance coverage and the acquiring entity will pay premiums thereunder for the
maximum period during which you and, if applicable, your spouse and family could
have elected to receive COBRA continuation coverage.
(d) Establishment of Trust. Within five days following
conclusion of a change in control of the Company, 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 of the Company, 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 and not within 12 Months of the
Change in Control. 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 12 months
after a change in control of the Company, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect on the date
the change in control of the Company occurs plus year-to-date accrued vacation.
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 of the Company. 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 of the Company; 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 of the Company, 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 of the Company.
(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 of the Company, 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 of the Company 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
of the Company.
(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 of the Company.
(v) The Company's requiring you to be based
anywhere other than where your office is located immediately prior to the change
in control of the Company 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 of the
Company.
(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 of the
Company, 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. Maximization of After-Tax Amounts. Notwithstanding any other
provision of this Agreement, and notwithstanding any other agreement or formal
or informal compensation plan or arrangement, if you are a "disqualified
individual," as defined in Section 280G(c) of the Internal Revenue Code of 1986,
as amended (the "Code"), your right to receive any payment or benefit under this
Agreement shall be limited to the extent that: (i) such payment or benefit,
taking into account any other "payment in the nature of compensation" (within
the meaning of Section 280G of the Code) to you or for your benefit
("Compensation"), would cause any payment or benefit under this Agreement to be
considered a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code as then in effect (a "Parachute Payment") and (ii) as a result of receiving
a Parachute Payment, the aggregate after-tax amount you would receive (under
this Agreement and otherwise) would be less than the maximum after-tax amount
that you could receive without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such
payment or benefit under this Agreement, in conjunction with your other
Compensation, would cause you to be considered to have received a Parachute
Payment that would have the effect of decreasing the after-tax amount received
by you as described in clause (ii) of the preceding sentence, then you shall
have the right, in your sole discretion, to designate any payments or benefits
under this Agreement, and any other Compensation, that shall be reduced or
eliminated so as to avoid having the payment or benefit to you under this
Agreement be deemed to be a Parachute Payment.
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: /S/ Daryl R. Forsythe
AGREED TO:
/S/ Peter J. Corso
Peter J. Corso
Exhibit 10.3
Change in control agreement with Martin A. Dietrich
July 23, 2001
Mr. Martin A. Dietrich
155 Serenity Drive
Norwich, New York 13815
Dear Mr. Dietrich:
NBT Bancorp Inc. (which, together with its wholly-owned subsidiary, NBT
Bank, National Association, 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 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, we
entered an agreement, approved by the Board, dated January 2, 1997, and revised
by Board action most recently on July 23, 2001, 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 of the
Company ("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:
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.
(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, 2003; provided, however, that
commencing December 31, 2001 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 of
the Company 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, With Good Reason or Without
Good Reason within 12 Months of the Change. If, (I) 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 (II) within 12 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 12-month period shall run from
the date of occurrence of each such event) you terminate your employment either
with or 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 12
Months 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 12
months of a change in control of the Company 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 through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs plus year-to-date accrued vacation.
(ii) As severance pay, an amount equal to the
product of 2.99 multiplied by the greater of (A) the sum of your annualized
salary for the calendar year in which the change in control of the Company
occurs, the maximum target bonus that could have been paid to you for such year
if all applicable targets and objectives had been achieved, or if no formal
bonus program is in effect, the largest bonus amount paid to you during any one
of the three preceding calendar years, your income from the exercise of
nonqualified options during such year, your compensation income from any
disqualifying disposition during such year of stock acquired pursuant to the
exercise of incentive stock options and other annualized amounts that constitute
taxable income to you from the Company for such year, without reduction for
salary reduction amounts excludible from income under Section 402(e)(3) or 125
of the Internal Revenue Code of 1986, as amended (the "Code"), or (B) your
average "Compensation" (as defined below) for the three calendar years preceding
the calendar year in which the change in control of the Company occurs. As used
in this subsection 3(b)(ii) your "Compensation" shall mean your base salary,
bonus, income from the exercise of nonqualified options, compensation income
from any disqualifying disposition of stock acquired pursuant to the exercise of
incentive stock options and any other amounts that constitute taxable income to
you from the Company, without reduction for salary reduction amounts excludible
from income under Section 402(e)(3) or 125 of the Code.
(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 and not within 12 months after a change in control of the Company, (i)
the Company shall maintain in full force and effect, for your continued benefit
and, if applicable, for the continued benefit of your spouse and family, for
three years after the Date of Termination, or such longer period as may be
provided by the terms of the appropriate plan, 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, as in effect at the Date of Termination, or, if more
favorable to you and, if applicable, your spouse and family, as in effect
generally at any time thereafter with respect to executive employees of the
Company or any successor; 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,
and (ii) your benefit under any supplemental retirement agreement or
supplemental retirement plan maintained by the Company in which you are a
participant shall be fully vested upon such termination of your employment, and
your benefit under such agreement or plan shall be determined as if you had
continued to be employed by the Company for three additional years (or the
period after which the maximum benefit payable is attained, if less) and if your
annual compensation for purposes of such agreement or plan during such period of
additional employment had been equal to the amount specified in Section
3(b)(ii)(A) or (B), whichever is higher. In the event that your participation in
any such plan, program, or arrangement is not possible after Termination under
the general terms and provisions of such plans, programs, and arrangements, 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 of the Company, you elect or, if applicable, your
spouse or family elects, COBRA continuation coverage, the Company will pay the
applicable COBRA premium for the maximum period during which such coverage is
available. If termination follows a change in control of the Company specified
in Section 6(b)(iii), then you and, if applicable, your spouse and family may
elect in lieu of COBRA continuation coverage to have the acquiring entity obtain
an individual or group health insurance coverage and the acquiring entity will
pay premiums thereunder for the maximum period during which you and, if
applicable, your spouse and family could have elected to receive COBRA
continuation coverage.
(d) Establishment of Trust. Within five days following
conclusion of a change in control of the Company, 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 of the Company, 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 and not within 12 Months of the
Change in Control. 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 12 months
after a change in control of the Company, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect on the date
the change in control of the Company occurs plus year-to-date accrued vacation.
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 of the Company. 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 of the Company; 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 of the Company, 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 of the Company.
(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 of the Company, 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 of the Company 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
of the Company.
(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 of the Company.
(v) The Company's requiring you to be based
anywhere other than where your office is located immediately prior to the change
in control of the Company 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 of the
Company.
(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 of the
Company, 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 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: /S/ Daryl R. Forsythe
AGREED TO:
/S/ Martin A. Dietrich
Martin A. Dietrich
Exhibit 10.4
Change in control agreement with Daryl R. Forsythe
July 23, 2001
Mr. Daryl R. Forsythe
21 Ridgeland Road
Norwich, New York 13815
Dear Mr. Forsythe:
NBT Bancorp Inc. (which, together with its wholly-owned subsidiary, NBT
Bank, National Association, 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 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, we
entered an agreement, approved by the Board, dated February 21, 1995, and
revised by Board action most recently on July 23, 2001, 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 of the
Company ("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:
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.
(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, 2003; provided, however, that
commencing December 31, 2001 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 of
the Company 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, With Good Reason or Without
Good Reason within 12 Months of the Change. If, (I) 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 (II) within 12 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 12-month period shall run from
the date of occurrence of each such event) you terminate your employment either
with or 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 12
Months 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 12
months of a change in control of the Company 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 through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs plus year-to-date accrued vacation.
(ii) As severance pay, an amount equal to the
product of 2.99 multiplied by the greater of (A) the sum of your annualized
salary for the calendar year in which the change in control of the Company
occurs, the maximum target bonus that could have been paid to you for such year
if all applicable targets and objectives had been achieved, or if no formal
bonus program is in effect, the largest bonus amount paid to you during any one
of the three preceding calendar years, your income from the exercise of
nonqualified options during such year, your compensation income from any
disqualifying disposition during such year of stock acquired pursuant to the
exercise of incentive stock options and other annualized amounts that constitute
taxable income to you from the Company for such year, without reduction for
salary reduction amounts excludible from income under Section 402(e)(3) or 125
of the Internal Revenue Code of 1986, as amended (the "Code"), or (B) your
average "Compensation" (as defined below) for the three calendar years preceding
the calendar year in which the change in control of the Company occurs. As used
in this subsection 3(b)(ii) your "Compensation" shall mean your base salary,
bonus, income from the exercise of nonqualified options, compensation income
from any disqualifying disposition of stock acquired pursuant to the exercise of
incentive stock options and any other amounts that constitute taxable income to
you from the Company, without reduction for salary reduction amounts excludible
from income under Section 402(e)(3) or 125 of the Code.
(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 and not within 12 months after a change in control of the Company, (i)
the Company shall maintain in full force and effect, for your continued benefit
and, if applicable, for the continued benefit of your spouse and family, for
three years after the Date of Termination, or such longer period as may be
provided by the terms of the appropriate plan, 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, as in effect at the Date of Termination, or, if more
favorable to you and, if applicable, your spouse and family, as in effect
generally at any time thereafter with respect to executive employees of the
Company or any successor; 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,
and (ii) your benefit under any supplemental retirement agreement or
supplemental retirement plan maintained by the Company in which you are a
participant shall be fully vested upon such termination of your employment, and
your benefit under such agreement or plan shall be determined as if you had
continued to be employed by the Company for three additional years (or the
period after which the maximum benefit payable is attained, if less) and if your
annual compensation for purposes of such agreement or plan during such period of
additional employment had been equal to the amount specified in Section
3(b)(ii)(A) or (B), whichever is higher. In the event that your participation in
any such plan, program, or arrangement is not possible after Termination under
the general terms and provisions of such plans, programs, and arrangements, 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 of the Company, you elect or, if applicable, your
spouse or family elects, COBRA continuation coverage, the Company will pay the
applicable COBRA premium for the maximum period during which such coverage is
available. If termination follows a change in control of the Company specified
in Section 6(b)(iii), then you and, if applicable, your spouse and family may
elect in lieu of COBRA continuation coverage to have the acquiring entity obtain
an individual or group health insurance coverage and the acquiring entity will
pay premiums thereunder for the maximum period during which you and, if
applicable, your spouse and family could have elected to receive COBRA
continuation coverage.
(d) Establishment of Trust. Within five days following
conclusion of a change in control of the Company, 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 of the Company, 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 and not within 12 Months of the
Change in Control. 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 12 months
after a change in control of the Company, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect on the date
the change in control of the Company occurs plus year-to-date accrued vacation.
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 of the Company. 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 of the Company; 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 of the Company, 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 of the Company.
(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 of the Company, 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 of the Company 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
of the Company.
(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 of the Company.
(v) The Company's requiring you to be based
anywhere other than where your office is located immediately prior to the change
in control of the Company 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 of the
Company.
(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 of the
Company, 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 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: /S/ Michael J. Chewens
AGREED TO:
/S/ Daryl R. Forsythe
Daryl R. Forsythe
Exhibit 10.5
Change in control agreement with Lance D. Mattingly
July 23, 2001
Mr. Lance D. Mattingly
187 Carronbridge Way
Franklin, TN 37067
Dear Mr. Mattingly:
NBT Bancorp Inc. (which, together with its wholly-owned subsidiary, NBT
Bank, National Association, 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 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, we
entered an agreement, approved by the Board, dated July 23, 2001, 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 of the Company ("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:
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.
(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, 2003; provided, however, that
commencing December 31, 2001 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 of
the Company 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, With Good Reason or Without
Good Reason within 12 Months of the Change. If, (I) 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 (II) within 12 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 12-month period shall run from
the date of occurrence of each such event) you terminate your employment either
with or 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 12
Months 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 12
months of a change in control of the Company 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 through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs plus year-to-date accrued vacation.
(ii) As severance pay, an amount equal to the
product of 2.99 multiplied by the greater of (A) the sum of your annualized
salary for the calendar year in which the change in control of the Company
occurs, the maximum target bonus that could have been paid to you for such year
if all applicable targets and objectives had been achieved, or if no formal
bonus program is in effect, the largest bonus amount paid to you during any one
of the three preceding calendar years, your income from the exercise of
nonqualified options during such year, your compensation income from any
disqualifying disposition during such year of stock acquired pursuant to the
exercise of incentive stock options and other annualized amounts that constitute
taxable income to you from the Company for such year, without reduction for
salary reduction amounts excludible from income under Section 402(e)(3) or 125
of the Internal Revenue Code of 1986, as amended (the "Code"), or (B) your
average "Compensation" (as defined below) for the three calendar years preceding
the calendar year in which the change in control of the Company occurs. As used
in this subsection 3(b)(ii) your "Compensation" shall mean your base salary,
bonus, income from the exercise of nonqualified options, compensation income
from any disqualifying disposition of stock acquired pursuant to the exercise of
incentive stock options and any other amounts that constitute taxable income to
you from the Company, without reduction for salary reduction amounts excludible
from income under Section 402(e)(3) or 125 of the Code.
(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 and not within 12 months after a change in control of the Company, the
Company shall maintain in full force and effect, for your continued benefit and,
if applicable, for the continued benefit of your spouse and family, for three
years after the Date of Termination, or such longer period as may be provided by
the terms of the appropriate plan, 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, as in effect at the Date of Termination, or, if more favorable to
you and, if applicable, your spouse and family, as in effect generally at any
time thereafter with respect to executive employees of the Company or any
successor; 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 not
possible after Termination under the general terms and provisions of such plans,
programs, and arrangements, 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 of the Company, you
elect or, if applicable, your spouse or family elects, COBRA continuation
coverage, the Company will pay the applicable COBRA premium for the maximum
period during which such coverage is available. If termination follows a change
in control of the Company specified in Section 6(b)(iii), then you and, if
applicable, your spouse and family may elect in lieu of COBRA continuation
coverage to have the acquiring entity obtain an individual or group health
insurance coverage and the acquiring entity will pay premiums thereunder for the
maximum period during which you and, if applicable, your spouse and family could
have elected to receive COBRA continuation coverage.
(d) Establishment of Trust. Within five days following
conclusion of a change in control of the Company, 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 of the Company, 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 and not within 12 Months of the
Change in Control. 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 12 months
after a change in control of the Company, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect on the date
the change in control of the Company occurs plus year-to-date accrued vacation.
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 of the Company. 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 of the Company; 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 of the Company, 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 of the Company.
(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 of the Company, 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 of the Company 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
of the Company.
(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 of the Company.
(v) The Company's requiring you to be based
anywhere other than where your office is located immediately prior to the change
in control of the Company 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 of the
Company.
(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 of the
Company, 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 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: /S/ Daryl R. Forsythe
AGREED TO:
/S/ Lance D. Mattingly
Lance D. Mattingly
Exhibit 10.6
Change in control agreement with Jane E. Neal
July 23, 2001
Ms. Jane Neal
6087 Marigold Lane
Cicero, New York 13039
Dear Ms. Neal:
NBT Bancorp Inc. (which, together with its wholly-owned subsidiary, NBT
Bank, National Association, 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 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, we
entered an agreement, approved by the Board, dated January 1, 1998, and revised
by Board action most recently on July 23, 2001, 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 of the
Company ("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:
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.
(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, 2003; provided, however, that
commencing December 31, 2001 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 of
the Company 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, With Good Reason or Without
Good Reason within 12 Months of the Change. If, (I) 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 (II) within 12 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 12-month period shall run from
the date of occurrence of each such event) you terminate your employment either
with or 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 12
Months 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 12
months of a change in control of the Company 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 through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs plus year-to-date accrued vacation.
(ii) As severance pay, an amount equal to the
product of 2.99 multiplied by the greater of (A) the sum of your annualized
salary for the calendar year in which the change in control of the Company
occurs, the maximum target bonus that could have been paid to you for such year
if all applicable targets and objectives had been achieved, or if no formal
bonus program is in effect, the largest bonus amount paid to you during any one
of the three preceding calendar years, your income from the exercise of
nonqualified options during such year, your compensation income from any
disqualifying disposition during such year of stock acquired pursuant to the
exercise of incentive stock options and other annualized amounts that constitute
taxable income to you from the Company for such year, without reduction for
salary reduction amounts excludible from income under Section 402(e)(3) or 125
of the Internal Revenue Code of 1986, as amended (the "Code"), or (B) your
average "Compensation" (as defined below) for the three calendar years preceding
the calendar year in which the change in control of the Company occurs. As used
in this subsection 3(b)(ii) your "Compensation" shall mean your base salary,
bonus, income from the exercise of nonqualified options, compensation income
from any disqualifying disposition of stock acquired pursuant to the exercise of
incentive stock options and any other amounts that constitute taxable income to
you from the Company, without reduction for salary reduction amounts excludible
from income under Section 402(e)(3) or 125 of the Code.
(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 and not within 12 months after a change in control of the Company, the
Company shall maintain in full force and effect, for your continued benefit and,
if applicable, for the continued benefit of your spouse and family, for three
years after the Date of Termination, or such longer period as may be provided by
the terms of the appropriate plan, 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, as in effect at the Date of Termination, or, if more favorable to
you and, if applicable, your spouse and family, as in effect generally at any
time thereafter with respect to executive employees of the Company or any
successor; 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 not
possible after Termination under the general terms and provisions of such plans,
programs, and arrangements, 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 of the Company, you
elect or, if applicable, your spouse or family elects, COBRA continuation
coverage, the Company will pay the applicable COBRA premium for the maximum
period during which such coverage is available. If termination follows a change
in control of the Company specified in Section 6(b)(iii), then you and, if
applicable, your spouse and family may elect in lieu of COBRA continuation
coverage to have the acquiring entity obtain an individual or group health
insurance coverage and the acquiring entity will pay premiums thereunder for the
maximum period during which you and, if applicable, your spouse and family could
have elected to receive COBRA continuation coverage.
(d) Establishment of Trust. Within five days following
conclusion of a change in control of the Company, 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 of the Company, 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 and not within 12 Months of the
Change in Control. 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 12 months
after a change in control of the Company, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect on the date
the change in control of the Company occurs plus year-to-date accrued vacation.
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 of the Company. 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 of the Company; 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 of the Company, 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 of the Company.
(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 of the Company, 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 of the Company 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 of the Company.
(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 of the Company.
(v) The Company's requiring you to be based
anywhere other than where your office is located immediately prior to the change
in control of the Company 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 of the
Company.
(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 of the
Company, 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 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: /S/ Daryl R. Forsythe
AGREED TO:
/S/ Jane E. Neal
Jane E. Neal
Exhibit 10.7
Change in control agreement with David E. Raven
July 23, 2001
Mr. David E. Raven
913 Parkview Road
Moscow, PA 18444
Dear Mr. Raven:
NBT Bancorp Inc. (which, together with its wholly-owned subsidiary, NBT
Bank, National Association, 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 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, we
entered an agreement, approved by the Board, dated January 1, 1998 and revised
by Board action on July 23, 2001, 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 of the Company
("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:
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.
(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, 2003; provided, however, that
commencing December 31, 2001 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 of
the Company 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, With Good Reason or Without
Good Reason within 12 Months of the Change. If, (I) 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 (II) within 12 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 12-month period shall run from
the date of occurrence of each such event) you terminate your employment either
with or 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 12
Months 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 12
months of a change in control of the Company 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 through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs plus year-to-date accrued vacation.
(ii) As severance pay, an amount equal to the
product of 2.99 multiplied by the greater of (A) the sum of your annualized
salary for the calendar year in which the change in control of the Company
occurs, the maximum target bonus that could have been paid to you for such year
if all applicable targets and objectives had been achieved, or if no formal
bonus program is in effect, the largest bonus amount paid to you during any one
of the three preceding calendar years, your income from the exercise of
nonqualified options during such year, your compensation income from any
disqualifying disposition during such year of stock acquired pursuant to the
exercise of incentive stock options and other annualized amounts that constitute
taxable income to you from the Company for such year, without reduction for
salary reduction amounts excludible from income under Section 402(e)(3) or 125
of the Internal Revenue Code of 1986, as amended (the "Code"), or (B) your
average "Compensation" (as defined below) for the three calendar years preceding
the calendar year in which the change in control of the Company occurs. As used
in this subsection 3(b)(ii) your "Compensation" shall mean your base salary,
bonus, income from the exercise of nonqualified options, compensation income
from any disqualifying disposition of stock acquired pursuant to the exercise of
incentive stock options and any other amounts that constitute taxable income to
you from the Company, without reduction for salary reduction amounts excludible
from income under Section 402(e)(3) or 125 of the Code.
(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 and not within 12 months after a change in control of the Company, the
Company shall maintain in full force and effect, for your continued benefit and,
if applicable, for the continued benefit of your spouse and family, for three
years after the Date of Termination, or such longer period as may be provided by
the terms of the appropriate plan, 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, as in effect at the Date of Termination, or, if more favorable to
you and, if applicable, your spouse and family, as in effect generally at any
time thereafter with respect to executive employees of the Company or any
successor; 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 not
possible after Termination under the general terms and provisions of such plans,
programs, and arrangements, 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 of the Company, you
elect or, if applicable, your spouse or family elects, COBRA continuation
coverage, the Company will pay the applicable COBRA premium for the maximum
period during which such coverage is available. If termination follows a change
in control of the Company specified in Section 6(b)(iii), then you and, if
applicable, your spouse and family may elect in lieu of COBRA continuation
coverage to have the acquiring entity obtain an individual or group health
insurance coverage and the acquiring entity will pay premiums thereunder for the
maximum period during which you and, if applicable, your spouse and family could
have elected to receive COBRA continuation coverage.
(d) Establishment of Trust. Within five days following
conclusion of a change in control of the Company, 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 of the Company, 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 and not within 12 Months of the
Change in Control. 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 12 months
after a change in control of the Company, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect on the date
the change in control of the Company occurs plus year-to-date accrued vacation.
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 of the Company. 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 of the Company; 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 of the Company, 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 of the Company.
(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 of the Company, 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 of the Company 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
of the Company.
(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 of the Company.
(v) The Company's requiring you to be based
anywhere other than where your office is located immediately prior to the change
in control of the Company 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 of the
Company.
(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 of the
Company, 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 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: /S/ Daryl R. Forsythe
AGREED TO:
/S/ David E. Raven
David E. Raven
Exhibit 10.8
Form of Employment Agreement between NBT Bancorp Inc.
and Peter Corso made as of October 18, 2001
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
October 18, 2001, by and between PETER J. CORSO ("Executive") and NBT BANCORP
INC., a Delaware corporation having its principal office in Norwich, New York
("NBTB") and NBT Bank, National Association ("NBT Bank");
W I T N E S S E T H T H A T :
WHEREAS, upon the terms and subject to the conditions set forth in the
Agreement and Plan of Merger, dated as of June 19, 2001 by and between CNB
Financial Corp., a New York corporation ("CNB") and NBTB (the "Merger
Agreement"), CNB will merge into NBTB (the "Merger");
WHEREAS, commencing on the first day following the consummation of the
Merger pursuant to the Merger Agreement (the "Effective Time"), the Executive
will assume the duties of President and Chief Operating Officer of Central
National Bank, a Division of NBT Bank (the "Division');
WHEREAS, NBTB desires to secure the continued employment of Executive,
subject to the provisions of this Agreement;
WHEREAS, because of Executive's abilities and his knowledge of, and
reputation in, markets where CNB conducts its business, NBTB and NBT Bank have
determined that it is essential to obtain a commitment from Executive to provide
consulting services to NBT Bank and not to compete against NBTB or any of its
affiliates or to solicit to employ certain of their officers in accordance with
the terms hereof; and
WHEREAS, Executive is desirous of entering into the Agreement 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) NBT Bank hereby agrees to employ, and NBTB hereby agrees
to cause NBT Bank to employ, Executive as President and Chief Operating Officer
of the Division and any successor during the Term of Employment (as hereinafter
defined) and Executive hereby agrees to serve as the President and Chief
Operating Officer of the Division during the Term of Employment. Executive shall
report directly to the Chief Executive Officer of NBT Bank and shall have such
executive duties, responsibilities, and authority as determined by the Chief
Executive Officer of NBT Bank.
(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 Chief Executive Officer of NBT Bank, 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 sections 4, 5 and 6 hereof, (i) render services to
charitable organizations, (ii) manage his personal investments, and (iii) with
the prior permission of the Chief Executive Officer of NBT Bank, 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 Executive's employment under this Agreement
("Term of Employment") shall be the period commencing on the date of the
consummation of the merger between NBTB and CNB (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 by the mutual agreement
of the parties hereto;
(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;
(iv) the discharge of Executive by NBT Bank "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 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 NBT Bank;
(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, 6, or 7 hereof, which breach is material and adverse to NBTB or
any of its affiliates for which Executive is assigned material responsibilities
or duties;
(v) Executive's resignation from his position as
President and Chief Operating Officer of the Division for any reason; or
(vi) the termination of Executive's employment by
NBT Bank "without cause," which shall mean the termination of Executive's
employment by NBT Bank for any reason other than those set forth in subsections
(i), (ii), (iii) or (iv) of this section 2(a), upon the thirtieth day following
notice to Executive.
(b) In the event that the Term of Employment shall be
terminated by reason of an event described in section 2(a)(i) - 2(a)(iv) hereof,
Executive shall be entitled to, upon the occurrence of any such event:
(i) receive 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(b)(vi)
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(b)(ii)
hereof.
(c) In the event that the Term of Employment shall be
terminated by reason of an event other than an event described in section
2(a)(i) - 2(a)(iv) hereof, Executive shall be entitled to:
(i) receive any salary payable pursuant to
section 3(a)(i) hereof which shall have accrued as of the Termination Date;
(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(b)(vi)
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(b)(ii)
hereof;
(iii) if the Termination Date occurs during the
first year of the Term of Employment, then in consideration of Executive's past
services, Executive's agreement to provide consulting services under section 4
hereof, and Executive's covenants under sections 5 and 6 hereof, Executive shall
be entitled to a lump-sum cash payment equal to $525,000;
(iv) if the Termination Date occurs during the
second year of the Term of Employment, then in consideration of Executive's past
services, Executive's agreement to provide consulting services under section 4
hereof, and Executive's covenants under sections 5 and 6 hereof, Executive shall
be entitled to receive a lump sum cash payment equal to the sum of (A) the
undiscounted remainder of his base annual compensation during the second year of
the Term of Employment (assuming Executive remained employed by NBT Bank for the
entirety of such second year) and (B) an undiscounted amount equal to eighteen
months of additional annual base compensation at the then current rate; and
(v) if the Termination Date occurs after the
second year of the Term of Employment, then in consideration of Executive's past
services and his covenants under sections 5 and 6 hereof, Executive shall be
entitled to receive a lump sum cash payment equal to the undiscounted amount of
Executive's annual base compensation (at the rate in effect immediately prior to
the Termination Date) that would have been payable to Executive assuming
Executive remained employed by NBT Bank for the greater of (i) one year after
the Termination Date or (ii) the date after the third anniversary of the
Commencement Date, if any, agreed to by the parties hereto.
(d) In the event that the employment of Executive with NBT
Bank is terminated in any situation described in section 3 of the
change-in-control letter agreement dated as of the date hereof (but effective as
of the Effective Time) 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 notwithstanding
the provisions of section 2 (c) hereof, Executive shall be entitled to 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(b)(vi)
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(b)(ii)
hereof; and
(iii) the severance payment and other benefits
provided in the Change-in-Control Agreement.
Notwithstanding the foregoing provisions of this section 2(d), the Executive may
at any time prior to the payment of any severance or other benefits under
section 3 of the Change-In-Control Agreement elect in writing to waive his
rights under the Change-in-Control Agreement, in which case this Agreement shall
apply to Executive without regard to the foregoing provisions of this section
2(d). In the event that Executive becomes entitled to the severance and other
benefits under section 3 of the Change-in-Control Agreement, NBTB shall promptly
(and in all events within three business days) notify Executive in writing of
Executive's right to waive his rights under the Change-in-Control Agreement and,
unless otherwise directed by the Executive in writing, no severance payments or
other benefits under section 3 of the Change in Control Agreement shall be paid
to Executive until ten business days after the providing of written notice by
NBTB to Executive. If Executive does not waive his rights under the
Change-in-Control Agreement and receives severance or other benefits under
section 3 of the Change-in-Control Agreement, sections 4 and 5 of this Agreement
shall cease to apply and Executive shall have no obligation thereunder.
3. Compensation. For the services to be performed by
Executive for NBT Bank under this Agreement, Executive shall be compensated in
the following manner:
(a) Salary. During the Term of Employment:
(i) NBT Bank shall pay Executive a salary,
which, on an annual basis, shall not be less than $175,000 during the Term of
Employment. 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 minimum
annual salary increases of 7 percent during the Term of Employment, and in
addition, if the term of this agreement is extended as per Section 2(a)(i),
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 50 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 and its affiliates, as presently in effect or as they may
be modified 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.
(i) 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, $0.01 par value (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 200
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 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.
(ii) 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 each year during the Term
of Employment.
(iii) Automobile. During the Term of Employment,
Executive shall be entitled to the use of an automobile (whose value shall not
exceed $40,000), 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, and
which will be replaced every three years (or earlier if the accumulated mileage
exceeds 50,000 miles) with a new automobile whose value shall not exceed the sum
of $40,000 escalated by an amount calculated by the controller's division of
NBTB to adjust for the effect of inflation upon the $40,000 (an "Inflation
Adjustment"). 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(b)(vi).
(iv) Country Club Dues. During the Term of Employment, Executive
shall be reimbursed for dues and assessments incurred in relation to Executive's
membership at a country club mutually agreed upon by Executive and the Chief
Executive Officer of NBT Bank.
(v) Withholding. All compensation to be paid to
Executive hereunder shall be subject to required withholding and other taxes.
(vi) 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. Consulting Services
(a) In the event that Executive's employment terminates
hereunder during the first two years of the Term of Employment and Executive
becomes entitled to a payment under either section 2(c)(iii) or 2(c)(iv) hereof,
Executive shall, during the Consulting Period (as hereinafter defined), be
available to render such consulting services to NBTB or NBT Bank as they may
reasonably request of Executive from time-to-time relating to their business and
operations. The services requested of Executive by NBTB and NBT Bank during the
Consulting Period shall be scheduled in consultation with Executive and shall be
of a scope so as to not materially interfere with Executive's engaging in
full-time employment after the Employment Term. NBTB or NBT Bank shall promptly
reimburse Executive for all expenses incurred by Executive in the performance of
Executive's consulting duties, including travel and subsistence expenses,
recognizing that Executive's home may not be in the geographic area where NBTB
and NBT Bank conduct business. Executive shall perform his duties under this
section 4(a) as an independent contractor to NBTB and NBT Bank.
(b) For purposes of this Agreement, the term "Consulting
Period" shall mean (i) if Executive's employment terminates hereunder during the
first year of the Employment Term and Executive becomes entitled to the payment
described in section 2(c)(iii) hereof, the period beginning on the date of
Executive's termination of employment with NBT Bank and ending on the second
anniversary of such termination of employment, and (ii) if Executive's
employment terminates hereunder during the second year of the Employment Term
and Executive becomes entitled to the payment described in section 2(c)(iv)
hereof, the period beginning on the date of Executive's termination of
employment with NBT Bank and ending on the second anniversary of the Merger.
(c) In consideration for Executive's covenants under this
section 4 and under sections 5 and 6 hereof, NBTB or NBT Bank shall, in addition
to any lump sum payment provided for by Section 2(c)(iii) and 2(c)(iv), as
applicable, provide to Executive for a three year period following the date of
Executive's termination of employment with NBT Bank, at no cost to Executive,
life insurance and health insurance (collectively, "Welfare Benefits") that are
not less favorable in all respects to those that Executive was receiving
immediately prior to the Termination Date; provided, however, that the medical
coverage provided shall be family medical coverage that also covers Executive's
spouse and any dependents. Executive will be entitled to elect to change his
level of coverage and/or his choice of coverage options with respect to the
Welfare Benefits provided by NBTB or NBT Bank to Executive to the same extent
that actively employed senior executives of NBTB and NBT Bank are permitted to
make such changes.
5. Covenant Not to Compete.
(a) The parties acknowledge: (i) that as a result of the Merger, NBT Bank
and NBTB will be engaged in the business of banking in those markets where CNB
currently conducts its banking business; (ii) that Executive has developed
special expertise and a recognized reputation in CNB's markets and business; and
(iii) that if Executive were to undertake efforts in competition with NBT Bank
and NBTB in CNB's current market areas or solicit for employment officers of CNB
the result would be substantial and irreparable damage to NBT Bank and NBTB.
(b) During the Restricted Period, Executive shall not solicit
any business (other than business in an area outside of twenty miles in which
NBTB or any of its subsidiaries is competitively engaged), customers or
prospective customers of NBTB or any of its subsidiaries whom Executive has
served or solicited during the course of his employment by CNB.
(c) During the Restricted Period, Executive shall not,
directly or indirectly, either for Executive's own benefit or purpose or for the
benefit or purpose of any person or entity other than NBTB or any of its
subsidiaries, employ or offer to employ, call on, or actively interfere with
NBTB's or any of its subsidiaries' relationship with, or attempt to divert or
entice away, any officer of NBTB or any of its subsidiaries who was an officer
of CNB or any of its subsidiaries immediately prior to the Merger.
(d) The term "Restricted Period shall mean (a) if there is a
Consulting Period, the period beginning on the first day of the Consulting
Period and ending on the first anniversary of the last day of the Consulting
Period, and (b) if there is no Consulting Period, the period beginning on
Executive's Termination Date and ending on the date that is six months after
such Termination Date.
(e) The parties hereto agree that the amount of the lump-sum
payment paid to Executive pursuant to Section 2(c)(ii), (c)(iii), or (c)(iv), as
applicable, that is allocable to services or consideration provided by Executive
other than pursuant to Sections 4, 5 and 6 hereof is less than $135,000.
6. Confidential Business Information; Non-Competition.
(a) Executive acknowledges that certain business methods,
creative techniques, and technical data and the like of NBTB and its affiliates
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 CNB or their
affiliates, and compositions, ideas, plans, and methods belonging to or related
to the affairs of NBTB or CNB 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 CNB or their
affiliates, any confidential business information obtained during the course of
his employment by CNB or NBT Bank. The foregoing shall not be construed as
restricting Executive from disclosing such information to the employees of NBTB
or CNB 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 acknowledges and agrees that irreparable injury
will result to NBTB and its affiliates in the event of a breach of any of the
provisions of section 5 hereof or this section 6 (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, to restrain the violation or breach thereof by
Executive, and Executive submits to the jurisdiction of such court in any such
action.
(c) It is the desire and intent of the parties that the
provisions of section 5 hereof and this section 6 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 section 5 hereof or this section 6 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 section 5 hereof or this section 6
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 section 5 hereof
and this section 6.
(d) Life Insurance. In light of the unusual abilities and
experience of Executive, NBTB or NBT Bank in their 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 or NBT Bank may choose. NBTB or NBT Bank,
as applicable, 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 or NBT Bank, as applicable, 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 or NBT Bank, as applicable, has applied for insurance.
7. Representations and Warranties.
(a) Executive represents and warrants to NBTB that his
execution, delivery, and performance of the Agreement will not result in or
constitute a breach of 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 7(a) hereof to be true
and correct when made.
8. 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 or NBT Bank:
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Attention: Mr. Daryl R. Forsythe
Chairman, President and
Chief Executive Officer
With a required copy, in the case of a notice to NBT Bancorp Inc. or NBT Bank,
to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to Executive:
Mr. Peter J. Corso
11 Kingsbury Ave.
St. Johnsville, NY 13452
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
9. Assignment. Neither party may assign this Agreement or any
rights or obligations hereunder without the consent of the other party.
10. 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.
11. Entire Agreement. This Agreement constitutes the entire
understanding among NBTB, NBT Bank and Executive relating to the subject matter
hereof. Any previous agreements or understandings between the parties hereto or
between Executive and CNB 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.
12. 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.
13. Arbitration. Subject to the right of each party hereto 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.
14. Certain Expenses. NBTB shall pay to Executive all legal fees and
expenses (but not taxes, penalties or interest on taxes or penalties) incurred
by Executive (a) in seeking to obtain or enforce any provision of this Agreement
or (b) in connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment or benefit
provided hereunder or under other plans and programs of CNB, NBTB or any of
their affiliates. Such payments shall be made within five (5) business days
after delivery of Executive's written requests for payment accompanied with such
evidence of fees and expenses incurred as NBTB reasonably may require.
15. Consent to Retirement Annuity Contribution. NBTB hereby consents,
for purposes of the Merger Agreement, to CNB taking all necessary and
appropriate actions prior to the Merger to (i) cause an aggregate of $25,000 to
be contributed to one or both of the annuity contracts (as specified by
Executive) held under the Supplemental Retirement Annuity Agreement (the "SRAA")
between Executive and CNB, dated May 15, 2000, (ii) cause the transfer of such
annuity contracts to a "rabbi trust," the terms of which shall provide for the
payment of benefits to Executive and his beneficiaries in accordance with the
terms of the SRAA, and (iii) amend the SRAA as necessary or appropriate to
reflect such actions.
16. Affiliation. A company will be deemed to be "affiliated"
with NBTB or CNB 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.
17. 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.
18. Termination. This Agreement shall terminate in the event that
the Merger Agreement terminates in accordance with Section 12 thereof.
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
Chairman, President and
Chief Executive Officer
NBT BANK, NATIONAL ASSOCIATION
By: /S/ Daryl R. Forsythe
Daryl R. Forsythe
Chairman and Chief Executive Officer
PETER J. CORSO
/S/ Peter J. Corso
Exhibit 10.9
Form of Employment Agreement between NBT Bancorp Inc.
and Daryl R. Forsythe made as of January 1, 2000, and revised
on January 22, 2001
EMPLOYMENT AGREEMENT (REVISED)
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of
the first day of January, 2000, and revised on January 22, 2001 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
(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.
(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.
(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 during the first year of the Term of Employment.
During the second year of the Term of Employment, Executive shall additionally
be excused from physical presence within the "Market Area," as defined below,
for up to six weeks during the months of February and March except on an as -
required basis as mutually agreed by the Board of Directors of NBTB and
Executive. During 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), Executive shall be excused from physical presence within the
Market Area 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.
As used herein, "Market Area" shall mean the counties in which are located (i)
the head office of NBT Bank, (ii) the authorized branches of NBT Bank as they
may exist from time to time, (iii) each branch of a depository institution
affiliated with NBT Bank for which Executive has or has had significant
executive or managerial responsibilities, and (iv) each office to which
customers are afforded access or from which sales activities are conducted of a
nondepository institution affiliated with NBT Bank for which Executive has or
has had significant executive or managerial responsibilities.
(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 and every two years thereafter (or earlier
if accumulated mileage exceeds 50,000 miles). 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 a country club(s) mutually agreed upon by the Board of
Directors of NBTB and Executive. Such reimbursement during the initial year of
membership shall include any and all initiation fees incurred with respect to
Executive's membership at selected club(s).
(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
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.
(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:
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.
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
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
DARYL R. FORSYTHE
/S/ Daryl R. Forsythe
Exhibit 10.10
Form of Employment Agreement between NBT Bancorp Inc.
and Lance D. Mattingly made as of May 1, 2001
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into this
first day of May, 2001, by and between LANCE D. MATTINGLY ("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 executive vice president and chief
information officer of NBTB and National 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 to cause NBT
Bank and any successor organization to NBT Bank to employ Executive, and
Executive hereby agrees to serve as the executive vice president and chief
information officer of NBTB and NBT Bank and any successor organization to NBTB
or NBT Bank, as applicable during the Term of Employment. Executive shall have
such executive duties, responsibilities, and authority as shall be set forth in
the bylaws of NBTB or 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) 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 Chairman 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 Chairman 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 second 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:
(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
president and chief operating officer of NBT 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 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.
(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 24
month period commencing on the date immediately following 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.
(iii) if, within eighteen (18) months following
the Termination Date, Executive should sell his principal residence in the
Syracuse Rand McNally Metropolitan Area as determined by Rand McNally & Company
(the "Syracuse RMA") and relocate to a place outside of the Syracuse RMA, (A)
reimbursement for any shortfall between the net proceeds on the sale of his
principal residence and the purchase prince, including direct, necessary and
reasonable transaction costs incurred in connection with such purchase, as
determined by the finance division of NBTB, for such residence, and including
direct, necessary and reasonable expenses, as determined by the finance division
of NBTB, incurred to prepare the residence for sale, (B) reimbursement for
direct, necessary and reasonable expenses, as determined by the finance division
of NBTB, incurred in connection with the sale of such residence not already
included as part of the reimbursement under (A) above, and (C) an amount
necessary to pay all federal, state and local income taxes resulting from any
reimbursement made pursuant to (A) and (B) (including any additional federal
state and local income taxes resulting from the payment hereunder of such
taxes), the intent being that Executive shall be paid an additional amount (the
"Gross-Up") such that the net amount retained by the Executive, after deduction
of such federal, state and local income taxes resulting from the reimbursement
under (A) and (B) shall be equal to the amount of the reimbursement under (A)
and (B) before payment of such taxes; for purposes of determining the amount of
the Gross-Up, Executive shall be deemed to pay federal, state and local income
taxes at the highest marginal rate of taxation in effect in the calendar year in
which the reimbursement is made. Amounts due under this subsection shall be paid
as soon as administratively practicable, but in no event later than ninety (90)
days after the date of the sale of Executive's principal residence.
Notwithstanding the foregoing, in the event the Executive is
reimbursed, entitled to reimbursement, or is paid any amounts by an entity or
entities other than NBTB or NBT Bank or any affiliate or successor thereof (the
"Third Party"), for any amounts for which Executive has received, or is entitled
to receive, reimbursement under (A) or (B) above with respect to the sale of his
principal residence or any Gross-Up under (C) above, the Executive agrees:
(1) with regard to amounts already paid by NBTB or NBT Bank or any
affiliate or successor thereof (hereinafter referred to collectively as
the "Company"), the Executive shall notify the Company of all amounts
received or due from the Third Party, and shall reimburse the Company
in an amount equal to the amount so received or due from the Third
Party up to the amount the Company paid to the Executive under (A),
(B), and (C) above; and
(2) with regard to amounts due but not yet paid by the Company to the
Executive, the Executive shall notify the Company of any amounts
received or due from the Third Party, and the Executive agrees that the
Company shall reduce the amount due under (A), (B), and (C) above by
the amount the Executive has been paid or is entitled to be paid by the
Third Party up to the amount due the Executive from the Company.
(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 July 1, 2001 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 $190,000 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 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 50 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.
In addition, Executive will be eligible to receive up to $25,000 in
temporary living expenses for a period up to eighteen (18) months from
Executives date of hire. Payment of such expenses will be promptly made by NBTB
to Executive upon approval of submitted expense forms.
(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 the 200 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) Country Club Dues. During the Term of Employment,
Executive shall be reimbursed for dues and assessments incurred in relation to
Executive's membership at a country club of his choice.
Withholding. All compensation to be paid to Executive hereunder shall be
subject to required withholding and other taxes.
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.
Moving Expenses: NBTB agreed to reimburse Executive up to $30,000 for moving
expenses if Executive were to relocate his family from their principal residence
in Franklin, TN to within the state of New York. Upon Executives explanation of
having the need to have access to such monies in advance of relocation, to
satisfy personal debts, the Company, in good faith, has advanced Executive said
$30,000 grossed-up for applicable payroll taxes. In doing so, Executive agrees
that if he and his family do not relocate within eighteen (18) months from the
date employment commenced, Executive will repay the Company the $30,000
(grossed-up for taxes) in its entirety. Executive also agrees to pay any
necessary collection cost the Company may incur in enforcing its right of
repayment of said amount.
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 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 NBT 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 NBT 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 NBT 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).
(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.
(e) As used herein, "Market Area" shall mean the counties in
which are located (i) the head office of NBT Bank, (ii) the authorized branches
of NBT Bank as they may exist from time to time, and (iii) each branch of a
depository institution affiliated with NBT Bank for which Executive has or has
had significant executive or managerial responsibilities.
6. 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.
7. 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.
8. 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
Chairman, 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. Lance D. Mattingly
187 Carronbridge Way
Franklin, TN 37067
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
9. Assignment. Neither party may assign this Agreement or
any rights or obligations hereunder without the consent of the other party.
10. 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.
11. Entire Agreement. This Agreement constitutes the entire
understanding among NBTB and Executive relating to the subject matter hereof.
Any previous agreements or underings 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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, Chairman
President and Chief Executive Officer
/S/ Lance D. Mattingly
Lance D. Mattingly
Exhibit 10.11
Form of Employment Agreement between NBT Bancorp Inc.
and David E. Raven made as of August 1, 2001
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of
this first day of August, 2001, by and between DAVID E. RAVEN ("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 NBTB and president
and chief operating officer of Pennstar Bank, a Division 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 and NBT Bank hereby agrees to employ Executive and to
cause Pennstar Bank and any successor organization to Pennstar Bank to employ
Executive, and Executive hereby agrees to serve as an executive vice president
of NBTB and president and chief operating officer of Pennstar Bank, during 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 or NBT Bank. During the Term
of Employment, Executive shall report directly to the chief executive officer of
NBT Bank and dotted line to the Chairman of the Board of Pennstar Bank.
(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 Chief Executive Officer of NBT Bank, 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 Chief Executive Officer of NBT Bank, 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) January 1, 2003 provided, however that on
January 1, 2002, and on each January 1 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 Pennstar 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
executive vice president of NBTB or as president and chief operating officer of
Pennstar 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 executive vice president of
NBTB or as president and chief operating officer of Pennstar 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:
(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 24
month period commencing on the date immediately following 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;
and
(iii) if, within eighteen (18) months following
the Termination Date, Executive should sell his principal residence in the
Scranton Rand McNally Metropolitan Area as determined by Rand McNally & Company
(the "Scranton RMA") and relocate to a place outside of the Scranton RMA, (A)
reimbursement for any shortfall between the net proceeds on the sale of his
principal residence and the purchase prince, including direct, necessary and
reasonable transaction costs incurred in connection with such purchase, as
determined by the finance division of NBTB, for such residence, and including
direct, necessary and reasonable expenses, as determined by the finance division
of NBTB, incurred to prepare the residence for sale, (B) reimbursement for
direct, necessary and reasonable expenses, as determined by the finance division
of NBTB, incurred in connection with the sale of such residence not already
included as part of the reimbursement under (A) above, and (C) an amount
necessary to pay all federal, state and local income taxes resulting from any
reimbursement made pursuant to (A) and (B) (including any additional federal
state and local income taxes resulting from the payment hereunder of such
taxes), the intent being that Executive shall be paid an additional amount (the
"Gross-Up") such that the net amount retained by the Executive, after deduction
of such federal, state and local income taxes resulting from the reimbursement
under (A) and (B) shall be equal to the amount of the reimbursement under (A)
and (B) before payment of such taxes; for purposes of determining the amount of
the Gross-Up, Executive shall be deemed to pay federal, state and local income
taxes at the highest marginal rate of taxation in effect in the calendar year in
which the reimbursement is made. Amounts due under this subsection shall be paid
as soon as administratively practicable, but in no event later than ninety (90)
days after the date of the sale of Executive's principal residence.
Notwithstanding the foregoing, in the event the Executive is
reimbursed, entitled to reimbursement, or is paid any amounts by an entity or
entities other than NBTB or Pennstar Bank or any affiliate or successor thereof
(the "Third Party"), for any amounts for which Executive has received, or is
entitled to receive, reimbursement under (A) or (B) above with respect to the
sale of his principal residence or any Gross-Up under (C) above, the Executive
agrees:
(2) with regard to amounts already paid by NBTB or Pennstar Bank or any
affiliate or successor thereof (hereinafter referred to collectively as
the "Company"), the Executive shall notify the Company of all amounts
received or due from the Third Party, and shall reimburse the Company
in an amount equal to the amount so received or due from the Third
Party up to the amount the Company paid to the Executive under (A),
(B), and (C) above; and
(3) with regard to amounts due but not yet paid by the Company to the
Executive, the Executive shall notify the Company of any amounts
received or due from the Third Party, and the Executive agrees that the
Company shall reduce the amount due under (A), (B), and (C) above by
the amount the Executive has been paid or is entitled to be paid by the
Third Party up to the amount due the Executive from the Company.
(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 July 1, 2001 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 $200,000 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) Commencing on January 1, 2003, Executive
shall be entitled to annual salary increases of 8 percent each subsequent
January during 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 50 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, $0.01 par value (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 200
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 (whose value shall not exceed $40,000),
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 and which will
be replaced every three years (or earlier if the accumulated mileage exceeds
50,000 miles) with new automobile whose value shall not exceed the sum of
$40,000 escalated by an amount calculated by the finance division of NBTB to
adjust for the effect of inflation upon the $40,000 (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 a country club mutually agreed upon by the Chief
Executive Officer of NBT Bank and the Executive.
(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 Pennstar Bank or
their affiliates, and compositions, ideas, plans, and methods belonging to or
related to the affairs of NBTB or Pennstar 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
Pennstar 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 Pennstar 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 first anniversary of the Termination Date, Executive will not (i)
interfere with the relationship of NBTB or Pennstar 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 Pennstar Bank or their affiliates), or (ii) directly or indirectly
divert or attempt to divert from NBTB, Pennstar 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, Pennstar 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.
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
Chairman, 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. David E. Raven
913 Parkview Road
Moscow, PA 18444
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 Pennstar 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.
(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.
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 Pennstar 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
Chairman, President and
Chief Executive Officer
DAVID E. RAVEN
/S/ David E. Raven
Exhibit 10.12
Supplemental Executive Retirement Agreement between NBT Bancorp Inc.
and Michael J. Chewens made as of July 23, 2001
SUPPLEMENTAL RETIREMENT AGREEMENT
EFFECTIVE JULY 23, 2001
The attached document (NBT Bancorp Inc. Supplemental Executive Retirement Plan,
effective as of July 23, 2001) sets forth the terms of an agreement for the
payment of supplemental retirement income made as of July 23, 2001 between NBT
Bancorp Inc., a Delaware corporation and a registered financial holding company
headquartered at 52 S. Broad Street, Norwich, New York 13815, and Michael J.
Chewens, an individual residing at 2613 Pine Bluff Drive, Vestal, New York
13815. The parties hereby execute this agreement as follows:
NBT BANCORP INC.
By: /s/ Daryl R. Forsythe Date: July 23, 2001
Daryl R. Forsythe
Chairman, President and
Chief Executive Officer
/s/ Micheal J. Chewens Date: July 23, 2001
Michael J. Chewens
PREAMBLE
This NBT Bancorp Inc. Supplemental Executive Retirement Plan (the "Plan") is
effective as of July 23, 2001. The purpose of the Plan is to permit certain
employees of NBT Bancorp Inc. (the "Company"), its subsidiary, NBT Bank,
National Association (the "Bank") and adopting affiliated employers to receive
supplemental retirement income when such amounts would be due under the benefit
and contribution formulas in the tax-qualified NBT Bancorp Inc. Defined Benefit
Pension Plan and NBT Bancorp Inc. 401(k) and Employee Stock Ownership Plan but
cannot be paid thereunder due to the reductions and other limitations imposed by
Sections 401(a)(17), 401(k)(3), 401(m) and 415 of the Internal Revenue Code of
1986, as amended and to provide such employees' with an aggregate retirement
benefit (taking into consideration amounts paid under such Plans and social
security benefits) commencing following retirement at or after age 62 of not
less than 50% of such employees' final average compensation, subject to the
terms of the Plan. Capitalized terms are defined in Article 1 below.
The Plan is intended to be an unfunded, non-qualified deferred compensation
plan. Neither the Employer, the Committee, nor the individual members of the
Committee shall segregate or otherwise identify specific assets to be applied to
the purposes of the Plan, nor shall any of them be deemed to be a trustee of any
amounts to be paid under the Plan. Any liability of the Employer to any person
with respect to benefits payable under the Plan shall be based solely upon such
contractual obligations, if any, as shall be created by the Plan, and shall give
rise only to a claim against the general assets of the Employer. No such
liability shall be deemed to be secured by any pledge or any other encumbrance
on any specific property of the Employer.
ARTICLE 1
DEFINITIONS
The following words and phrases shall have the meanings hereafter ascribed to
them. Those words and phrases which have limited application are defined in the
respective Articles in which such terms appear.
1.1 "Actuarial Equivalent" shall have the same meaning the term "Actuarial
Equivalent" has under Section 2.03 of Appendix A to the Basic
Retirement Plan using the following actuarial assumptions:
Mortality: "Applicable Mortality Rate" as such term is
defined in Section 2.03c of Appendix A
to the Basic Retirement Plan.
Interest Rate: "Applicable Interest Rate" as such term is
defined in Section 2.09b of Appendix
A to the Basic Retirement Plan.
1.2 "Bank" means NBT Bank, National Association or any successor thereto by
merger, consolidation or otherwise by operation of law.
1.3 "Basic 401(k)/ESOP" means the NBT Bancorp Inc. 401(k) and Employee
Stock Ownership Plan, as amended from
time to time.
1.4 "Basic 401(k)/ESOP Benefit" means the benefit paid to a Participant
under the Basic 401(k)/ESOP and includes benefits payable upon Normal
Retirement, Early Retirement, Postponed Retirement, death or
termination of service.
1.5 "Basic 401(k)/ESOP Surviving Spouse Benefit" means the benefit payable
to a Participant's surviving spouse under the Basic 401(k)/ESOP upon
the Participant's death before a distribution of the Participant's
entire Basic 401(k)/ESOP account balance.
1.6 "Basic Retirement Plan" means the NBT Bancorp Inc. Defined Benefit
Pension Plan, as amended from time to time.
1.7 "Basic Retirement Plan Benefit" means the benefit payable to a
Participant under the Basic Retirement Plan and includes benefits
payable upon Normal Retirement, Early Retirement, Postponed Retirement,
death or termination of service.
1.8 "Basic Retirement Plan Surviving Spouse Benefit" means the benefit
payable to a Participant's surviving spouse or eligible children under
the Basic Retirement Plan upon the Participant's death, if any.
1.9 "Beneficiary" means such living person or living persons designated by
the Participant in accordance with Section 7.5(a) to receive the
Supplemental Retirement Benefit after his or her death, or his or her
personal or legal representative, all as herein described and provided.
If no Beneficiary is designated by the Participant or if no Beneficiary
survives the Participant, the Beneficiary shall be the Participant's
estate.
1.10 "Board" means the Board of Directors of the Company, as duly
constituted from time to time.
1.11 "Cause" means the Participant's (a) conviction of robbery, bribery,
extortion, embezzlement, fraud, grand larceny, burglary, perjury,
income tax evasion, misapplication of Employer funds, false statements
in violation of 18 U.S.C. ss. 1001, or any other felony that is
punishable by a term of imprisonment of more than one year; (b)
material breach of his or her duty of loyalty to the Employer; (c) acts
or omissions in the performance of his or her duties having a material
adverse effect on the Employer that were not done or omitted to be done
in good faith or which involved intentional misconduct or a knowing
violation of law; or (d) any transaction in the performance of his or
her duties with the Employer from which he or she derived a material
improper personal benefit.
1.12 "Change in Control" means:
(i) A change in control with respect to the Company or the
Bank 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 (including
an individual, corporation, partnership, trust, association, joint
venture, pool, syndicate, unincorporated organization, joint-stock
company or similar organization or group acting in concert) 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 common stock and other voting securities
of the Company; 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 shareholders of the Company, 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 it is not the continuing or surviving
corporation or pursuant to which voting securities of the Company would
be converted into cash, securities, or other property, other than a
merger of the Company in which the holders of its common stock and
other voting securities immediately before the merger have
substantially the same proportionate ownership of common stock and
other voting securities, respectively, 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 or the Bank,
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 its liquidation or dissolution.
1.13 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
1.14 "Committee" means the Plan's administrative committee, as appointed by
the Board to administer the Plan, as described in Article 10.
1.15 "Company" means NBT Bancorp, Inc. or any successor thereto by
merger, consolidation or otherwise by operation of law.
1.16 "Confidential Information" means business methods, creative techniques
and technical data of the Company, the Bank and their affiliates that
are deemed by the Company, the Bank or any such affiliate to be and are
in fact confidential business information of the Company, the Bank or
its affiliates or are entrusted to the Company, the Bank or its
affiliates by third parties, and includes, but is not limited to,
procedures, methods, sales relationships developed while the
Participant is in the service of the Company, the Bank or their
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 the Company, the Bank or their
affiliates, and compositions, ideas, plans, and methods belonging to or
related to the affairs of the Company, the Bank or their affiliates,
except for such information as is clearly in the public domain,
provided, that information that would be generally known or available
to persons skilled in the Participant's fields shall be considered to
be "clearly in the public domain" for this purpose.
1.17 "Deferral Credit Account" means the bookkeeping account maintained in
the name of the Employer, on behalf of each Participant, pursuant to
Article 5.
1.18 "Determination Date" means the earlier of (i) the date of termination
of the Participant's employment with the Employer or (ii) the first day
of the month following the Participant's 65th birthday.
1.19 "Effective Date" means July 23, 2001.
1.20 "Employee" means a person who is an employee of the Employer.
1.21 "Employer" means the Company, the Bank and any subsidiary or affiliated
corporation of either of them which, with the approval of the Board and
subject to such conditions as the Board may impose, adopts the Plan,
and any successor or successors of any of them.
1.22 "Final Average Compensation" shall have the same meaning as the term
"Final Average Compensation" has under Section 2.27 of Appendix A to
the Basic Retirement Plan, except that in determining the amount of
Compensation (as defined in Section 2.14 of Appendix A to the Basic
Retirement Plan) to be used in calculating Final Average Compensation
under Section 2.27 of Appendix A to the Basic Retirement Plan,
Compensation shall not be subject to the compensation limitation of
section 401(a)(17) of the Code.
1.23 "401(k)/ESOP Benefit" means the deferred compensation 401(k)/ESOP
Benefit provided to Participants and their beneficiaries in accordance
with the applicable provisions of the Plan.
1.24 "Full-Time Employee" shall mean an Employee who works not less than
1,000 hours in a calendar year.
1.25 "Other Retirement Benefits" means the sum of:
(a) The annual benefit payable to the Participant from the Basic
Retirement Plan; plus
(b) The annual Retirement Income Benefit payable to the
Participant hereunder; plus
(c) The annual amount of any supplemental retirement benefit
payable to the Participant by the Employer or any other
Employer pursuant to any Supplemental Retirement Agreement
with the Participant (other than amounts attributable to
elective deferrals of such Participant's compensation); plus
(d) The annual benefit that could be provided by (A) Employer
contributions (other than elective deferrals) made on the
Participant's behalf under the Basic 401(k)/ESOP, and (B)
actual earnings on contributions in (A), if such contributions
and earnings were converted to a benefit payable at age 62 in
the same form as the Supplemental Retirement Benefit, using
the same actuarial assumptions as are provided under Section
1.1; plus
(e) The annual benefit that could be provided by the Participant's
Deferral Credit Account, if such Deferral Credit Account were
converted to a benefit payable at age 62 in the same form as
the Supplemental Retirement Benefit, using the same actuarial
assumptions as are provided under Section 1.1.
The amount of Other Retirement Benefits shall be determined by an
actuary selected by the Company, with such determination to be made
without regard to whether the Participant is receiving payment of such
benefits on the Determination Date. To the extent the Participant
receives a payment of Other Retirement Benefits described in 1.25(d) or
(e) prior to the date the Supplemental Retirement Benefit is determined
pursuant to this Plan, 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
Plan.
1.26 "Participant" means an Employee who has been designated by the Employer
as eligible to participate in the Plan and who becomes a Participant
pursuant to the provisions of Article 2.
1.27 "Plan" means the NBT Bancorp Inc. Supplemental Executive Retirement
Plan, as herein set forth, and as it may hereafter be amended from time
to time.
1.28 "Plan Limitation Provisions" means provisions of the Basic 401(k)/ESOP
and the Basic Retirement Plan that reduce or restrict an Employee's
employer-provided benefits under the Basic Retirement Plan and employer
matching contributions to the Basic 401(k)/ESOP (including Article IX
and the last sentence of Section 1.12 of the Basic Retirement Plan and
the next to last paragraph of Section 1.14, the third paragraph of
Section 1.33 and Sections 4.5, 4.7 and 4.9 of the Basic 401(k)/ESOP, or
the corresponding provisions of any amendment to such Plans) in order
to satisfy the limitations imposed by one or more of the following: (i)
Section 401(a)(17) of the Code, (ii) Section 401(k)(3) of the Code,
(iii) Section 401(m) of the Code, or (iv) Section 415 of the Code.
1.29 "Plan Year" means the period from the Effective Date
through December 31, 2001 and each
calendar year thereafter within which the Plan is in effect.
1.30 "Present Value" means the present value of a benefit determined
on the basis of the actuarial assumptions specified in Section 1.1
1.31 "Social Security Benefit" means the Participant's actual social
security benefit at his or her Social Security Retirement Age.
1.32 "Social Security Retirement Age" shall have the same meaning the term
"Social Security Retirement Age" has under Section 2.58 of Appendix A
to the Basic Retirement Plan.
1.33 "Retirement Income Benefit" means the deferred compensation retirement
income benefit determined pursuant to Article 4.
1.34 "Supplemental Retirement Benefit" means the deferred compensation
retirement benefit determined pursuant to Article 6.
1.35 "Supplemental Surviving Spouse Benefit" means the survivor death
benefit payable to a Participant's surviving spouse, pursuant to the
provisions of Sections 8.1 through 8.3.
1.36 "Year of Service" means a calendar year in which the Participant
completes not less than 1,000 Hours of Service (as defined in Section
1.25 of the Basic Retirement Plan) with an Employer.
Words importing males shall be construed to include females and the
singular shall be construed to include the plural, and vice versa,
wherever appropriate.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 Plan eligibility is limited to a select group of management or highly
compensated Employees, as designated in writing by the Board, who
participate in the Basic Retirement Plan, the Basic 401(k)/ESOP or both
such plans.
From time to time, the Company may designate one or more Employees who
participate in the Basic Retirement Plan, the Basic 401(k)/ESOP or both
such plans as participants in the Plan, from the class of Employees
participating in the Basic Retirement Plan, the Basic 401(k)/ESOP or
both such plans who are members of a select group of management
Employees or are highly compensated Employees. Newly eligible Employees
shall participate as of the date specified by the Board.
2.2 The Company may, from time to time, remove any Participant from
participation in the Plan; provided, however, that, subject to Section
12.4, such removal will not reduce the amount of Retirement Income
Benefit and 401(k)/ESOP Benefit credited to the Participant under the
Plan, as determined as of the date of such Participant's removal. A
Participant so removed shall remain a Participant until all benefits
are distributed in accordance with the provisions of the Plan.
2.3 The Committee may provide each eligible Employee with appropriate forms
in connection with participation in the Plan.
ARTICLE 3
RETIREMENT DATE
3.1 A Participant's Retirement Date shall be his or her date of actual
retirement, which may be his or her Normal, Early, Disability or
Postponed Retirement Date, whichever is applicable pursuant to the
following sections of this Article 3.
3.2 A Participant's Normal Retirement Age shall be the 65th anniversary of
his or her birth. Such Participant's Normal Retirement Date shall be
the date coinciding with Normal Retirement Date under the Basic
Retirement Plan.
3.3 A Participant may retire on an Early Retirement Date, which shall be
the date coinciding with the initial distribution of an early
retirement benefit under the Basic Retirement Plan.
3.4 A Participant may retire on a Disability Retirement Date, which shall
be the date coinciding with the initial distribution of a disability
retirement benefit under the Basic Retirement Plan.
3.5 If a Participant continues in the employment of the Employer beyond
Normal Retirement Date, the date coinciding with postponed retirement
under the Basic Retirement Plan shall be the Participant's Postponed
Retirement Date.
ARTICLE 4
RETIREMENT INCOME BENEFIT
4.1 The Retirement Income Benefit payable to an eligible Participant in the
form of a life annuity with five years certain commencing on his or her
Normal, Early, Disability or Postponed Retirement Date, as the case may
be, shall be equal to the excess, if any, of the amount specified in
(a) over the amount specified in (b), as stated below:
(a) the monthly amount of Basic Retirement Plan retirement income
payable upon Normal, Early or Postponed Retirement Date, as
the case may be, to which the Participant would have been
entitled under the Basic Retirement Plan, if such benefit were
calculated under the Basic Retirement Plan without giving
effect to the limitations and restrictions imposed by the
application of Plan Limitation Provisions and any other
provisions of the Basic Retirement Plan that are necessary to
comply with Code Sections 401(a)(17) and 415, or any successor
provisions thereto;
(b) the sum of (i) the monthly amount of Basic Retirement Plan
retirement income payable upon Normal, Early or
Postponed Retirement Date, as the case may be, actually
payable to the Participant under the Basic Retirement Plan,
after the limitations and restrictions imposed by
the application of the Plan Limitation Provisions and
any other provisions of the Basic Retirement Plan that
are necessary to comply with Code Sections 401(a)(17)
and 415, or any successor provisions thereto, plus (ii)
the monthly amount of retirement income that is the
actuarial equivalent (determined in accordance with
the Basic Retirement Plan) of any supplemental
retirement benefit payable to the Participant by any
Employer upon Normal, Early or Postponed Retirement Date,
as the case may be, pursuant to any Supplemental
Retirement Agreement with the Participant.
4.2 With respect to eligible Participants who terminate their employment
other than on a Retirement Date specified in Article 3, the vested
Retirement Income Benefit payable in the form of a life annuity with
five years certain, commencing on the date the Participant is eligible
for a vested retirement benefit under the Basic Retirement Plan, shall
be equal to the excess, if any, of the amount specified in (a) over the
amount specified in (b), as stated below:
(a) the monthly amount of Basic Retirement Plan vested retirement
income payable upon termination of service to which the
Participant would have been entitled under the Basic
Retirement Plan, if such benefit were calculated under the
Basic Retirement Plan without giving effect to the limitations
and restrictions imposed by the application of the Plan
Limitation Provisions and any other provisions of the Basic
Retirement Plan that are necessary to comply with Code
Sections 401(a)(17) and 415, or any successor provisions
thereto;
(b) the sum of (i) the monthly amount of Basic Retirement Plan
vested retirement income payable upon termination of service actually
payable to the Participant under the Basic Retirement Plan, after the
limitations and restrictions imposed by the application of the Plan Limitation
Provisions and any other provisions of the Basic Retirement Plan that are
necessary to comply with Code Sections 401(a)(17) and 415, or any successor
provisions thereto, plus (ii) the monthly amount of retirement income that is
the actuarial equivalent (determined in accordance with the Basic Retirement
Plan) of any supplemental retirement benefit payable to the Participant by any
Employer following such termination of service pursuant to any Supplemental
Retirement Agreement with the Participant.
ARTICLE 5
SUPPLEMENTAL 401(k)/ESOP
BENEFIT AND DEFERRAL CREDIT ACCOUNTS
5.1 The 401(k)/ESOP Benefit under the Plan shall equal the discretionary
and matching contributions or other Employer-provided benefit to the
extent provided for under the Basic 401(k)/ESOP (disregarding the
limitations and restrictions imposed by the application of the Plan
Limitation Provisions and any other provisions of the Basic 401(k)/ESOP
that are necessary to comply with Code Sections 401(a)(17), 401(k)(3),
401(m), and 415, or any successor provisions thereto) for plan years of
the Basic 401(k)/ESOP ending after the Effective Date, less any such
amount actually contributed by the Employer to the Basic 401(k)/ESOP
for such plan years (to the extent permitted by the terms thereof,
taking into account the limitations and restrictions imposed by the
application of the Plan Limitation Provisions and any other provisions
of the Basic 401(k)/ESOP that are necessary to comply with Code
Sections 401(a)(17), 401(k)(3), 401(m), and 415, or any successor
provisions thereto), adjusted for income, gains and losses based on
deemed investments, pursuant to Section 5.4 below. For purposes of this
Section 5.1, it shall be assumed that the Participant has made Basic
401(k)/ESOP contributions, on a before-tax or after-tax basis, as are
necessary to qualify for the maximum Employer provided benefit
available under the Basic 401(k)/ESOP to similarly situated Basic
401(k)/ESOP Participants who are not affected by such restrictions and
limitations.
5.2 The 401(k)/ESOP Benefit under the Plan shall be accounted for by the
Employer under a Deferral Credit Account, maintained in the name of the
Employer, on behalf of each Participant.
5.3 Each Deferral Credit Account maintained by the Employer shall be
credited with units on behalf of each Participant, as appropriate in
accordance with the 401(k)/ESOP Benefit, as soon as administratively
practicable, but in no event later than March 15 of the Plan Year
following the Plan Year in which Basic 401(k)/ESOP contributions on
behalf of the Participant were limited or restricted.
5.4 The 401(k)/ESOP Benefit credited annually to each Participant's
Deferral Credit Account under the Plan shall be deemed to be invested
on a time weighted basis, based upon the crediting of the Deferral
Credit Account under Section 5.3 above, as if such amounts had been
invested in the same manner as the investment of the corresponding
amounts pursuant to the Basic 401(k)/ESOP, and such Account shall be
credited with income and gains, and charged with losses, as if such
investments had actually been made.
ARTICLE 6
SUPPLEMENTAL RETIREMENT BENEFIT
6.1 If an eligible Participant shall remain employed by the Employer until
reaching his or her 62nd birthday, serving as a Full-Time Employee
until such date, and subject to the other terms and conditions of this
Plan, the Company shall pay such Participant an annual "Supplemental
Retirement Benefit" determined as follows:
(a) the Participant shall be entitled to a Supplemental Retirement
Benefit on and after his or her 62nd birthday but before his
or her Social Security Retirement Age in an amount equal to
the excess, if any, of (1) 50 percent of the Participant's
Final Average Compensation, over (2) the Participant's Other
Retirement Benefits, determined as of the Determination Date.
(b) the Participant shall be entitled to a Supplemental Retirement
Benefit on and after his or her Social Security Retirement Age
in an amount equal to the excess, if any, of (1) 50 percent of
the Participant's Final Average Compensation, over (2) the sum
of (aa) the Participant's Other Retirement Benefits,
determined as of the Determination Date, plus (bb) the
Participant's Social Security Benefit.
6.2 If an eligible Participant shall remain employed by the Employer until
reaching his or her 60th birthday, serving as a Full-Time Employee
until such date and he or she continues to serve as a Full-Time
Employee until the date of his or her retirement, and he or she retires
then or thereafter but before reaching his or her 62nd birthday, and
subject to the other terms and conditions of this Plan, the Company
shall pay such Participant after the date of his or her retirement,
pursuant to Section 7.4(b), or to his or her spouse or other
Beneficiary, pursuant and subject to Section 8.6(c) if he or she has
died before his or her 62nd birthday, a reduced early Supplemental
Retirement Benefit calculated in accordance with the following
schedule:
(a) if the date of the Participant's retirement shall be on or
after his or her 60th birthday but before his or her 61st
birthday, the Company shall pay such Participant 60% of the
Supplemental Retirement Benefit calculated in accordance with
Section 6.1; and
(b) if the date of the Participant's retirement shall be on or
after his or her 61st birthday but before his or her 62nd
birthday, the Company shall pay such Participant 70% of the
Supplemental Retirement Benefit so calculated.
ARTICLE 7
MODES OF BENEFIT PAYMENT AND
VESTING OF BENEFITS
7.1 Except as otherwise provided in the following paragraph, any Retirement
Income Benefit and 401(k)/ESOP Benefit payable under the Plan to a
Participant, beneficiary, joint or contingent annuitant or eligible
child, shall be payable in the modes provided by, and subject to the
provisions of, the Basic Retirement Plan and Basic 401(k)/ESOP,
respectively, as the case may be. Any Retirement Income Benefit paid
from the Plan in a form other than a life annuity shall be the
actuarial equivalent of a life annuity, utilizing the actuarial
equivalent factors set forth in the Basic Retirement Plan and applied
to obtain the optional mode of payment thereunder.
The Committee, in its sole discretion and consistent with the best
interests of the Employer may distribute any Retirement Income Benefit
and 401(k)/ESOP Benefit payable under the Plan to a Participant,
beneficiary, joint or contingent annuitant, or eligible child, as a
single lump sum benefit, using, in the case of a Retirement Income
Benefit, the actuarial equivalent factors set forth in the Basic
Retirement Plan for lump-sum cashouts. In exercising its discretion
hereunder, the Committee shall not be bound by any request by a
Participant, beneficiary, joint or contingent annuitant, or eligible
child, to receive any Retirement Income Benefit and 401(k)/ESOP Benefit
payable under the Plan as a single lump-sum benefit.
7.2 Except with respect to receipt of a lump sum benefit under Section 7.1,
any elections for an optional mode of benefit payment made by a
Participant under the Basic Retirement Plan and the Basic 401(k)/ESOP,
shall also be effective with respect to any Retirement Income Benefit
and 401(k)/ESOP Benefit, as the case may be, payable under the Plan to
a Participant, beneficiary, joint or contingent annuitant, or eligible
child.
7.3 Except with respect to receipt of a lump sum benefit under Section 7.1,
payment of any Retirement Income Benefit and 401(k)/ESOP Benefit under
the Plan shall commence on the same date as payment of a Basic
Retirement Plan and 401(k)/ESOP Plan distribution payable to a
Participant or beneficiary, and shall terminate on the date of last
payment of Basic Retirement Plan and 401(k)/ESOP Plan distribution, as
the case may be.
7.4 The Supplemental Retirement Benefit shall be paid:
(a) except as provided in Section 7.4(b) (early retirement) and
Section 8.6 (death), commencing on the first day of the month
following the later of the Participant's retirement or his or
her attainment of age 62; or
(b) commencing on the first day of the month following the
Participant's Determination Date in connection with early
retirement after reaching age 60 and prior to the date of his
or her 62nd birthday.
7.5 The Supplemental Retirement Benefit shall be paid in the form specified
below:
(a) The Supplemental Retirement Benefit shall be paid as a
straight life annuity, payable in monthly installments, for the
Participant's life; provided, however, that if the Participant has no surviving
spouse and dies before having received 60 monthly payments, such monthly
payments shall be continued to his or her Beneficiary until the total number of
monthly payments to the Participant and his or her Beneficiary equal 60,
whereupon all payments shall cease and the Company's obligation to pay the
Supplemental Retirement Benefit under shall be deemed to have been fully
discharged. If the Participant and his or her 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 the Participant and his or her Beneficiary. If
Supplemental Retirement Benefits are payable in the form described in this
Section 7.5(a), the Participant shall designate in writing, as his or her
Beneficiary, any person or persons, primarily, contingently or successively, to
whom the Company shall pay benefits following the Participant's death if the
Participant's death occurs before 60 monthly payments have been made.
(b) Notwithstanding the form of payment described in Section
7.5(a), if the Participant 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 the
Participant's spouse as the Beneficiary. The 50% joint and
survivor annuity shall be the Actuarial Equivalent of the
benefit described in Section 7.5(a). If the Supplemental
Retirement Benefit is payable pursuant to this Section 7.5(a),
but the Participant's spouse fails to survive him or her, no
payments of the Supplement Retirement Benefit will be made
following the Participant's death.
(c) Notwithstanding the foregoing provisions of this Section 7.5,
the Company, 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
Section 7.5(c) shall be the Actuarial Equivalent of the
payment being accelerated.
7.6 Subject to Section 12.4, each Participant shall have a 100 percent
vested and non-forfeitable right to benefits under the Plan.
ARTICLE 8
DEATH BENEFITS
8.1 Upon the death of: (i) a Participant who has not terminated from
employment before Retirement Date as defined in Section 3.1, or (ii) a
Participant who retires on a Retirement Date as defined in Section 3.1
and dies before the complete distribution of Basic Retirement Plan
Benefit and Basic 401(k)/ESOP Benefit, as the case may be, benefits
shall be payable as set forth in Sections 8.2, 8.3 and 8.4.
8.2 With respect to any Retirement Income Benefit, if a Basic Retirement
Plan pre-retirement survivor annuity or post retirement survivor
annuity, as the case may be, is payable to a Participant's surviving
spouse or eligible children, if applicable, a supplemental
pre-retirement survivor annuity or post retirement survivor annuity, as
the case may be, shall be payable to the surviving spouse or eligible
children, if applicable, under the Plan. The monthly amount of the
Supplemental Surviving Spouse Benefit pre-retirement survivor annuity
or post retirement survivor annuity, as the case may be, payable to a
surviving spouse or eligible children, if applicable, shall be equal to
the excess, if any, of the amount specified in (a) over the amount
specified in (b), as stated below:
(a) the monthly amount of Basic Retirement Plan pre-retirement
survivor annuity or post retirement survivor annuity, as the
case may be, to which the surviving spouse or eligible
children, if applicable, would have been entitled under the
Basic Retirement Plan, if such benefit were calculated under
the Basic Retirement Plan without giving effect to the
limitations and restrictions imposed by the Plan Limitation
Provisions and any other provisions of the Basic Retirement
Plan that are necessary to comply with Code Sections
401(a)(17) and 415, or any successor provisions thereto;
(b) (i) the monthly amount of Basic Retirement Plan
pre-retirement survivor annuity or post retirement survivor annuity, as the
case may be, actually payable to the surviving spouse or eligible children,
if applicable, under the Basic Retirement Plan, after the limitations imposed by
the application of Plan Limitation Provisions and any other provisions of the
Basic Retirement Plan that are necessary to comply with Code Sections 401(a)(17)
and 415, or any successor provisions thereto plus (ii) the monthly amount that
is the actuarial equivalent (determined in accordance with the Basic Retirement
Plan) of any supplemental retirement benefit payable to the surviving spouse or
eligible children, if applicable, by any Employer following the Participant's
death pursuant to any Supplemental Retirement Agreement with the Participant.
8.3 The Retirement Income Benefit supplemental pre-retirement survivor
annuity or post retirement survivor annuity shall be payable over the
lifetime of the surviving spouse, or to eligible children to the extent
provided in the Basic Retirement Plan, in monthly installments
commencing on the same date as payment of the Basic Retirement Plan
pre-retirement survivor annuity or post retirement survivor annuity, as
the case may be, and shall terminate on the date of the last payment of
the Basic Retirement Plan pre-retirement survivor annuity or post
retirement survivor annuity, as the case may be.
8.4 With respect to any 401(k)/ESOP Benefit, all amounts credited to the
Participant's Deferral Credit Account shall be payable in a single lump
sum to the Participant's surviving spouse, if any, as a Supplemental
Surviving Spouse Benefit, unless an optional mode has been elected
pursuant to Article 7.
8.5 Upon the death of a Participant under the circumstances set forth in
clauses (i) and (ii) of Section 8.1, if no Basic Retirement Plan
Surviving Spouse Benefit, or Basic 401(k)/ESOP Surviving Spouse
Benefit, as the case may be, is payable, (a) no further Retirement
Income Benefit shall be payable, unless an optional mode has been
elected pursuant to Article 7, and (b) all amounts credited to the
Participant's Deferral Credit Account shall be payable to the
Participant's designated beneficiary in a single lump sum, unless an
optional mode has been elected pursuant to Article 7.
8.6 The following provisions shall apply with respect to payment of the
Supplemental Retirement Benefit after the death of a Participant:
(a) Except as provided in Section 8.6(b), if a Participant shall
die before his or her 62nd birthday, no Supplemental
Retirement Benefit shall be payable.
(b) If a Participant shall die on or after his or her 60th
birthday, after he or she has retired but before payment of any Supplemental
Retirement Benefit has commenced, the Participant's surviving spouse, if any,
shall be paid as a straight life annuity 50 percent of the Supplemental
Retirement Benefit for her life commencing within 30 days following the
Participant's death. Such payments shall be made in monthly installments,
subject to the right of the Company to accelerate payment at any time in
accordance with Section 7.5(c). However, if such Participant is not married at
the time of his or her death, the Company shall pay to the Participant's
Beneficiary a lump sum benefit equal to 50 percent of the Present Value of the
Participant's Supplemental Retirement Benefit.
(c) Except as provided in Section 8.6(b), no Supplemental
Retirement Benefit shall be payable if the Participant dies
before payment of any Supplement Retirement Benefit has begun
without having a spouse who survives him or her.
(d) If a Participant dies after payment of a Supplemental
Retirement Benefit has commenced, the amount, if any, of the
Supplemental Retirement Benefit payable to the Participant's
surviving spouse or other Beneficiary shall be determined
pursuant to the applicable provisions of Section 7.5.
ARTICLE 9
UNFUNDED PLAN
9.1 The Plan shall be administered as an unfunded plan and is not intended
to meet the qualification requirements of Sections 401(a) and 401(k) of
the Code. No Participant or beneficiary shall be entitled to receive
any payment or benefits under the Plan from the qualified trust
maintained in connection with the Basic Retirement Plan and Basic
401(k)/ESOP.
9.2 The Employer shall have the right to establish a reserve, establish a
grantor trust or make any investment for the purposes of satisfying its
obligation hereunder for payment of benefits, including, but not
limited to, investments in one or more registered investment companies
under the Investment Company Act of 1940, as amended, to the extent
permitted by applicable banking or other law; provided, however, that
no Participant or beneficiary shall have any interest in such
investment, trust, or reserve.
9.3 To the extent that any Participant or beneficiary acquires a right to
receive benefits under the Plan, such rights shall be no greater than
those rights which guarantee to the Participant or beneficiary the
strongest claim to such benefits, without resulting in the
Participant's or beneficiary's constructive receipt of such benefits.
9.4 With respect to any 401(k)/ESOP Benefit, 100% of the Participant's
Deferral Credit Account shall be deemed to be invested as provided in
Section 5.4 above. A Participant's Deferral Credit Account may not be
encumbered or assigned by a Participant or any beneficiary.
9.5 A Participant or beneficiary with a Retirement Income Benefit, the
401(k)/ESOP Benefit or both such Benefits under the Plan shall be an
unsecured creditor of the Employer as to any benefit payable under the
Plan.
9.6 Not later than the closing of any transaction that would constitute a
Change of Control, the Employer shall transfer to an independent
corporate trustee of a grantor trust within the meaning of section 671
of the Code that satisfies the applicable requirements of Revenue
Procedure 92-64 or any successor thereto an amount sufficient to cover
all potential liabilities under this Plan.
ARTICLE 10
ADMINISTRATION
10.1 Except for the functions reserved to the Company or the Board, the
administration of the Plan shall be the responsibility of the
Committee. The Committee shall consist of three or more persons
designated by the Company. Members of the Committee shall serve for
such terms as the Company shall determine and until their successors
are designated and qualified. Any member of the Committee may resign
upon at least 60 days written notice to the Company, or may be removed
from office by the Company at any time, with or without notice.
10.2 The Committee shall hold meetings upon notice at such times and places
as it may determine. Notice shall not be required if waived in writing.
Any action of the Committee shall be taken pursuant to a majority vote
at a meeting, or pursuant to the written consent of a majority of its
members without a meeting, and such action shall constitute the action
of the Committee and shall be binding in the same manner as if all
members of the Committee had joined therein. A majority of the members
of the Committee shall constitute a quorum. No member of the Committee
shall note or be counted for quorum purposes on any matter relating
solely to himself or herself or his or her rights under the Plan. The
Committee shall record minutes of any actions taken at its meetings or
of any other official action of the Committee. Any person dealing with
the Committee shall be fully protected in relying upon any written
notice, instruction, direction or other communication signed by the
Secretary of the Committee or by any of the members of the Committee or
by a representative of the Committee authorized by the Committee to
sign the same in its behalf.
10.3 The Committee shall have the power and the duty to take all actions and
to make all decisions necessary or proper to carry out the Plan. The
determination of the Committee as to any question involving the Plan
shall be final, conclusive and binding. Any discretionary actions to be
taken under the Plan by the Committee shall be uniform in their nature
and applicable to all persons similarly situated. Without limiting the
generality of the foregoing, the Committee shall have the following
powers and duties:
(a) the duty to furnish to all Participants, upon
request, copies of the Plan;
(b) the power to require any person to furnish such information
as it may request for the purpose of the proper administration
of the Plan as a condition to receiving any benefits under
the Plan;
(c) the power to make and enforce such rules and regulations and
prescribe the use of such forms as it shall deem necessary for
the efficient administration of the Plan;
(d) the power to interpret the Plan, and to resolve ambiguities,
inconsistencies and omissions,
which findings shall be binding, final and conclusive;
(e) the power to decide on questions concerning the Plan in
accordance with the provisions of the Plan;
(f) the power to determine the amount of benefits which shall be
payable to any person in accordance with the provisions of the
Plan and to provide a full and fair review to any Participant
whose claim for benefits has been denied in whole or in part;
(g) the power to designate a person who may or may not be a member
of the Committee as Plan "Administrator" for purposes of the
Employee Retirement Income Security Act of 1974 (ERISA); if
the Committee does not so designate an Administrator, the
Committee shall be the Plan Administrator;
(h) the power to allocate any such powers and duties to or
among individual members of the Committee; and
(i) the power to designate persons other than Committee members to
carry out any duty or power which would otherwise be a
responsibility of the Committee or Administrator, under the
terms of the Plan.
10.4 To the extent permitted by law, the Committee and any person to whom it
may delegate any duty or power in connection with administering the
Plan, the Company, any Employer, and the officers and directors
thereof, shall be entitled to rely conclusively upon, and shall be
fully protected in any action taken or suffered by them in good faith
in the reliance upon, any actuary, counsel, accountant, other
specialist, or other person selected by the Committee, or in reliance
upon any tables, valuations, certificates, opinions or reports which
shall be furnished by any of them. Further, to the extent permitted by
law, no member of the Committee, nor the Company, any Employer, nor the
officers or directors thereof, shall be liable for any neglect,
omission or wrongdoing of any other members of the Committee, agent,
officer or employee of the Company or any Employer. Any person claiming
benefits under the Plan shall look solely to the Employer for redress.
10.5 All expenses incurred before the termination of the Plan that shall
arise in connection with the administration of the Plan (including, but
not limited to administrative expenses, proper charges and
disbursements, compensation and other expenses and charges of any
actuary, counsel, accountant, specialist, or other person who shall be
employed by the Committee in connection with the administration of the
Plan), shall be paid by the Employer.
ARTICLE 11
AMENDMENT OR TERMINATION
11.1 The Board shall have the power to suspend or terminate the Plan in
whole or in part at any time, and from time to time to extend, modify,
amend or revise the Plan in such respects as the Board, by resolution,
may deem advisable; provided, however, that no such extension,
modification, amendment, revision, or termination shall deprive a
Participant or any beneficiary of any benefit accrued under the Plan.
11.2 In the event of a termination or partial termination of the Plan, the
rights of all affected parties, if any, to benefits accrued to the date
of such termination or partial termination, shall become nonforfeitable
to the same extent that such rights would be nonforfeitable if such
benefits were provided under the Basic Retirement Plan or the Basic
401(k)/ESOP and such plans were terminated on such date.
11.3 No amendment of the Plan shall reduce the vested and accrued benefits,
if any, of a Participant under this Plan, except to the extent that
such a reduction would be permitted if such benefits were provided
under the Basic Retirement Plan or the Basic 401(k)/ESOP.
11.4 In the event of the termination or partial termination of the Plan: (a)
the Company shall pay in one lump sum to affected Participants or their
beneficiaries the 401(k)/ESOP Benefit, if any, to which they are
entitled, as if such Participants' termination of service had occurred
on the date the Plan is terminated, and (b) the Retirement Income
Benefit and Supplemental Retirement Benefit, if any, to which they are
entitled shall continue to be payable.
ARTICLE 12
GENERAL PROVISIONS
12.1 The Plan shall not be deemed to constitute an employment contract
between the Employer and any Employee or other person, whether or not
in the employ of the Employer, nor shall anything herein contained be
deemed to give any Employee or other person, whether or not in the
employ of the Employer, any right to be retained in the employ of the
Employer, or to interfere with the right of the Employer to discharge
any Employee at any time and to treat such Employee without any regard
to the effect which such treatment might have upon such Employee as a
Participant of the Plan.
12.2 Except as provided in Section 12.4, or as may otherwise be required by
law, no distribution or payment under the Plan to any Participant or
beneficiary shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, whether
voluntary or involuntary, and any attempt to so anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge the same shall be
void; nor shall any such distribution or payment be in any way liable
for or subject to the debts, contracts, liabilities, engagements or
torts of any person entitled to such distribution or payment. If any
Participant or beneficiary is adjudicated bankrupt or purports to
anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any such distribution or payment, voluntarily or involuntarily,
the Committee, in its sole discretion, may cancel such distribution or
payment or may hold or cause to be held or applied such distribution or
payment, or any part thereof, to or for the benefit of such Participant
or beneficiary, in such manner as the Committee shall direct.
12.3 If the Employer determines that any person entitled to payments under
the Plan is incompetent by reason of physical or mental disability, it
may cause all payments thereafter becoming due to such person to be
made to any other person for his or her benefit, without responsibility
to follow application of amounts so paid. Payments made pursuant to
this provision shall completely discharge the Plan, the Employer and
the Committee.
12.4 Notwithstanding any other provision of this Plan:
(a) if the Employer determines that Cause exists for the
termination of the Participant's employment, the Participant
and his or her spouse and beneficiaries shall forfeit all
rights to any payments under this Plan;
(b) if a Participant separates from service before having
completed five Years of Service with any Employer, no
Supplemental Retirement Benefit shall be payable hereunder;
(c) no amounts shall be payable hereunder to the
Participant and his or her spouse and
beneficiaries:
(i) following any breach by the Participant of any
provision of any employment or other written
agreement with the Company, the Bank or any other
Employer with respect to confidentiality,
non-competition, non-interference with, or
non-solicitation of, employees, customers, suppliers
or agents or similar matters, provided that no Change
in Control shall have occurred before such breach;
(ii) if, without the prior written consent of the
Company, the Participant discloses or divulges to any
third party, except as may be required by his or her
duties, by law, regulation, or order of a court or
government authority, or as directed by the Company,
or uses to the detriment of the Company or its
affiliates or in any business or on behalf of any
business competitive with or substantially similar to
any business of the Company or the Bank or their
affiliates, any Confidential Information obtained
during the course of his or her employment by the
Company, the Bank or any affiliate of any of either
of them, provided that this Section 12.4(c)(ii) shall
not be construed as restricting the Participant from
disclosing such information to the employees of the
Company or the Bank or their affiliates;
(iii) if while the Participant is employed by the
Company, the Bank, any Employer or any affiliate of
any of them or within two years after any termination
of such employment other than in anticipation of or
following a Change in Control, the Participant (A)
interferes with the relationship of the Company, the
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 the Company, the
Bank or their affiliates), or (B) directly or
indirectly diverts or attempts to divert from the
Company, the Bank or their affiliates any business in
which any of them has been actively engaged during
the period of such employment, or interferes with the
relationship of the Company, the Bank or their
affiliates with any of their customers or prospective
customers, provided, that this Section 12.4(c)(iii)
shall not, in and of itself, prohibit the Participant
from engaging in the banking, trust, or financial
services business in any capacity, including that of
an owner or employee; and
(d) if any particular provision of this section 12.4 shall
be adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete from 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 12.4
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 the Company, the Bank and
their affiliates, to the fullest extent permitted by applicable law, the
benefits intended by this section 12.4.
12.5 The Employer shall be the sole source of benefits under the Plan, and
each Employee, Participant, beneficiary, or any other person who shall
claim the right to any payment or benefit under the Plan shall be
entitled to look solely to the Employer for payment of benefits.
12.6 If the Employer is unable to make payment to any Participant,
beneficiary, or any other person to whom a payment is due under the
Plan, because it cannot ascertain the identity or whereabouts of such
Participant, beneficiary, or other person after reasonable efforts have
been made to identify or locate such person (including a notice of the
payment so due mailed to the last known address of such Participant,
beneficiary, or other person shown on the records of the Employer),
such payment and all subsequent payments otherwise due to such
Participant, beneficiary or other person shall be forfeited 24 months
alter the date such payment first became due; provided, however, that
such payment and any subsequent payments shall be reinstated,
retroactively, no later than 60 days after the date on which the
Participant, beneficiary, or other person shall make application
therefor. Neither the Company, the Committee nor any other person shall
have any duty or obligation under the Plan to make any effort to locate
or identify any person entitled to benefits under the Plan, other than
to mail a notice to such person's last known mailing address.
12.7 If upon the payment of any benefits under the Plan, the Employer shall
be required to withhold any amounts with respect to such payment by
reason of any federal, state or local tax laws, rules or regulations,
then the Employer shall be entitled to deduct and withhold such amounts
from any such payments. In any event, such person shall make available
to the Employer, promptly when requested by the Employer, sufficient
funds or other property to meet the requirements of such withholding.
Furthermore, at any time the Employer shall be obligated to withhold
taxes, the Employer shall be entitled to take and authorize such steps
as it may deem advisable in order to have the amounts required to be
withheld made available to the Employer out of any funds or property
due to become due to such person, whether under the Plan or otherwise.
12.8 The Committee, in its discretion, may increase or decrease the amount
of any benefit payable hereunder if and to the extent that it
determines, in good faith, that an increase is necessary in order to
avoid the omission of a benefit intended to be payable under this Plan
or that a decrease is necessary in order to avoid a duplication of the
benefits intended to be payable under this Plan.
12.9 The provisions of the Plan shall be construed, administered and
governed under applicable federal laws and the laws of the State of New
York. In applying the laws of the State of New York, no effect shall be
given to conflict of laws principles that would cause the laws of
another jurisdiction to apply.
NBT BANCORP INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective as of July 23, 2001)
TABLE OF CONTENTS
Page
Preamble.......................................................................................................1
Article 1 - Definitions........................................................................................1
Article 2 - Eligibility and Participation......................................................................6
Article 3 - Retirement Date....................................................................................7
Article 4 - Retirement Income Benefit..........................................................................7
Article 5 - Supplemental 401(k)/ESOP Benefit and Deferral Credit Accounts .....................................9
Article 6 - Supplemental Retirement Benefit....................................................................10
Article 7 - Modes of Benefit Payment and Vesting of Benefits...................................................11
Article 8 - Death Benefits ....................................................................................12
Article 9 - Unfunded Plan .....................................................................................14
Article 10 - Administration ...................................................................................15
Article 11 - Amendment or Termination .........................................................................17
Article 12 - General Provisions................................................................................18
Exhibit 10.13
Supplemental Executive Retirement Agreement between NBT Bancorp Inc.
and Martin A. Dietrich made as of July 23, 2001
SUPPLEMENTAL RETIREMENT AGREEMENT
EFFECTIVE JULY 23, 2001
The attached document (NBT Bancorp Inc. Supplemental Executive Retirement Plan,
effective as of July 23, 2001) sets forth the terms of an agreement for the
payment of supplemental retirement income made as of July 23, 2001 between NBT
Bancorp Inc., a Delaware corporation and a registered financial holding company
headquartered at 52 S. Broad Street, Norwich, New York 13815, and Martin A.
Dietrich, an individual residing at 155 Serenity Drive, Norwich, New York 13815.
The parties hereby execute this agreement as follows:
NBT BANCORP INC.
By: /s/ Daryl R. Forsythe Date: July 23, 2001
Daryl R. Forsythe
Chairman, President and
Chief Executive Officer
/s/ Martin A. Dietrich Date: July 23, 2001
Martin A. Dietrich
PREAMBLE
This NBT Bancorp Inc. Supplemental Executive Retirement Plan (the "Plan") is
effective as of July 23, 2001. The purpose of the Plan is to permit certain
employees of NBT Bancorp Inc. (the "Company"), its subsidiary, NBT Bank,
National Association (the "Bank") and adopting affiliated employers to receive
supplemental retirement income when such amounts would be due under the benefit
and contribution formulas in the tax-qualified NBT Bancorp Inc. Defined Benefit
Pension Plan and NBT Bancorp Inc. 401(k) and Employee Stock Ownership Plan but
cannot be paid thereunder due to the reductions and other limitations imposed by
Sections 401(a)(17), 401(k)(3), 401(m) and 415 of the Internal Revenue Code of
1986, as amended and to provide such employees' with an aggregate retirement
benefit (taking into consideration amounts paid under such Plans and social
security benefits) commencing following retirement at or after age 62 of not
less than 50% of such employees' final average compensation, subject to the
terms of the Plan. Capitalized terms are defined in Article 1 below.
The Plan is intended to be an unfunded, non-qualified deferred compensation
plan. Neither the Employer, the Committee, nor the individual members of the
Committee shall segregate or otherwise identify specific assets to be applied to
the purposes of the Plan, nor shall any of them be deemed to be a trustee of any
amounts to be paid under the Plan. Any liability of the Employer to any person
with respect to benefits payable under the Plan shall be based solely upon such
contractual obligations, if any, as shall be created by the Plan, and shall give
rise only to a claim against the general assets of the Employer. No such
liability shall be deemed to be secured by any pledge or any other encumbrance
on any specific property of the Employer.
ARTICLE 1
DEFINITIONS
The following words and phrases shall have the meanings hereafter ascribed to
them. Those words and phrases which have limited application are defined in the
respective Articles in which such terms appear.
1.1 "Actuarial Equivalent" shall have the same meaning the term "Actuarial
Equivalent" has under Section 2.03 of Appendix A to the Basic
Retirement Plan using the following actuarial assumptions:
Mortality: "Applicable Mortality Rate" as such term is
defined in Section 2.03c of Appendix A
to the Basic Retirement Plan.
Interest Rate: "Applicable Interest Rate" as such term is
defined in Section 2.09b of Appendix
A to the Basic Retirement Plan.
1.2 "Bank" means NBT Bank, National Association or any successor thereto by
merger, consolidation or otherwise by operation of law.
1.3 "Basic 401(k)/ESOP" means the NBT Bancorp Inc. 401(k) and Employee
Stock Ownership Plan, as amended from time to time.
1.4 "Basic 401(k)/ESOP Benefit" means the benefit paid to a Participant
under the Basic 401(k)/ESOP and includes benefits payable upon Normal
Retirement, Early Retirement, Postponed Retirement, death or
termination of service.
1.5 "Basic 401(k)/ESOP Surviving Spouse Benefit" means the benefit payable
to a Participant's surviving spouse under the Basic 401(k)/ESOP upon
the Participant's death before a distribution of the Participant's
entire Basic 401(k)/ESOP account balance.
1.6 "Basic Retirement Plan" means the NBT Bancorp Inc. Defined Benefit
Pension Plan, as amended from time to time.
1.7 "Basic Retirement Plan Benefit" means the benefit payable to a
Participant under the Basic Retirement Plan and includes benefits
payable upon Normal Retirement, Early Retirement, Postponed Retirement,
death or termination of service.
1.8 "Basic Retirement Plan Surviving Spouse Benefit" means the benefit
payable to a Participant's surviving spouse or eligible children under
the Basic Retirement Plan upon the Participant's death, if any.
1.9 "Beneficiary" means such living person or living persons designated by
the Participant in accordance with Section 7.5(a) to receive the
Supplemental Retirement Benefit after his or her death, or his or her
personal or legal representative, all as herein described and provided.
If no Beneficiary is designated by the Participant or if no Beneficiary
survives the Participant, the Beneficiary shall be the Participant's
estate.
1.10 "Board" means the Board of Directors of the Company, as duly
constituted from time to time.
1.11 "Cause" means the Participant's (a) conviction of robbery, bribery,
extortion, embezzlement, fraud, grand larceny, burglary, perjury,
income tax evasion, misapplication of Employer funds, false statements
in violation of 18 U.S.C. ss. 1001, or any other felony that is
punishable by a term of imprisonment of more than one year; (b)
material breach of his or her duty of loyalty to the Employer; (c) acts
or omissions in the performance of his or her duties having a material
adverse effect on the Employer that were not done or omitted to be done
in good faith or which involved intentional misconduct or a knowing
violation of law; or (d) any transaction in the performance of his or
her duties with the Employer from which he or she derived a material
improper personal benefit.
1.12 "Change in Control" means:
(i) A change in control with respect to the Company or the
Bank 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 (including
an individual, corporation, partnership, trust, association, joint
venture, pool, syndicate, unincorporated organization, joint-stock
company or similar organization or group acting in concert) 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 common stock and other voting securities
of the Company; 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 shareholders of the Company, 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 it is not the continuing or surviving
corporation or pursuant to which voting securities of the Company would
be converted into cash, securities, or other property, other than a
merger of the Company in which the holders of its common stock and
other voting securities immediately before the merger have
substantially the same proportionate ownership of common stock and
other voting securities, respectively, 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 or the Bank,
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 its liquidation or dissolution.
1.13 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
1.14 "Committee" means the Plan's administrative committee, as appointed by
the Board to administer the Plan, as described in Article 10.
1.15 "Company" means NBT Bancorp, Inc. or any successor thereto by
merger, consolidation or otherwise by operation of law.
1.16 "Confidential Information" means business methods, creative techniques
and technical data of the Company, the Bank and their affiliates that
are deemed by the Company, the Bank or any such affiliate to be and are
in fact confidential business information of the Company, the Bank or
its affiliates or are entrusted to the Company, the Bank or its
affiliates by third parties, and includes, but is not limited to,
procedures, methods, sales relationships developed while the
Participant is in the service of the Company, the Bank or their
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 the Company, the Bank or their
affiliates, and compositions, ideas, plans, and methods belonging to or
related to the affairs of the Company, the Bank or their affiliates,
except for such information as is clearly in the public domain,
provided, that information that would be generally known or available
to persons skilled in the Participant's fields shall be considered to
be "clearly in the public domain" for this purpose.
1.17 "Deferral Credit Account" means the bookkeeping account maintained in
the name of the Employer, on behalf of each Participant, pursuant to
Article 5.
1.18 "Determination Date" means the earlier of (i) the date of termination
of the Participant's employment with the Employer or (ii) the first day
of the month following the Participant's 65th birthday.
1.19 "Effective Date" means July 23, 2001.
1.20 "Employee" means a person who is an employee of the Employer.
1.21 "Employer" means the Company, the Bank and any subsidiary or affiliated
corporation of either of them which, with the approval of the Board and
subject to such conditions as the Board may impose, adopts the Plan,
and any successor or successors of any of them.
1.22 "Final Average Compensation" shall have the same meaning as the term
"Final Average Compensation" has under Section 2.27 of Appendix A to
the Basic Retirement Plan, except that in determining the amount of
Compensation (as defined in Section 2.14 of Appendix A to the Basic
Retirement Plan) to be used in calculating Final Average Compensation
under Section 2.27 of Appendix A to the Basic Retirement Plan,
Compensation shall not be subject to the compensation limitation of
section 401(a)(17) of the Code.
1.23 "401(k)/ESOP Benefit" means the deferred compensation 401(k)/ESOP
Benefit provided to Participants and their beneficiaries in accordance
with the applicable provisions of the Plan.
1.24 "Full-Time Employee" shall mean an Employee who works not less than
1,000 hours in a calendar year.
1.25 "Other Retirement Benefits" means the sum of:
(a) The annual benefit payable to the Participant from the Basic
Retirement Plan; plus
(b) The annual Retirement Income Benefit payable to the
Participant hereunder; plus
(c) The annual amount of any supplemental retirement benefit
payable to the Participant by the Employer or any other
Employer pursuant to any Supplemental Retirement Agreement
with the Participant (other than amounts attributable to
elective deferrals of such Participant's compensation); plus
(d) The annual benefit that could be provided by (A) Employer
contributions (other than elective deferrals) made on the
Participant's behalf under the Basic 401(k)/ESOP, and (B)
actual earnings on contributions in (A), if such contributions
and earnings were converted to a benefit payable at age 62 in
the same form as the Supplemental Retirement Benefit, using
the same actuarial assumptions as are provided under Section
1.1; plus
(e) The annual benefit that could be provided by the Participant's
Deferral Credit Account, if such Deferral Credit Account were
converted to a benefit payable at age 62 in the same form as
the Supplemental Retirement Benefit, using the same actuarial
assumptions as are provided under Section 1.1.
The amount of Other Retirement Benefits shall be determined by an
actuary selected by the Company, with such determination to be made
without regard to whether the Participant is receiving payment of such
benefits on the Determination Date. To the extent the Participant
receives a payment of Other Retirement Benefits described in 1.25(d) or
(e) prior to the date the Supplemental Retirement Benefit is determined
pursuant to this Plan, 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
Plan.
1.26 "Participant" means an Employee who has been designated by the Employer
as eligible to participate in the Plan and who becomes a Participant
pursuant to the provisions of Article 2.
1.27 "Plan" means the NBT Bancorp Inc. Supplemental Executive Retirement
Plan, as herein set forth, and as it may hereafter be amended from time
to time.
1.28 "Plan Limitation Provisions" means provisions of the Basic 401(k)/ESOP
and the Basic Retirement Plan that reduce or restrict an Employee's
employer-provided benefits under the Basic Retirement Plan and employer
matching contributions to the Basic 401(k)/ESOP (including Article IX
and the last sentence of Section 1.12 of the Basic Retirement Plan and
the next to last paragraph of Section 1.14, the third paragraph of
Section 1.33 and Sections 4.5, 4.7 and 4.9 of the Basic 401(k)/ESOP, or
the corresponding provisions of any amendment to such Plans) in order
to satisfy the limitations imposed by one or more of the following: (i)
Section 401(a)(17) of the Code, (ii) Section 401(k)(3) of the Code,
(iii) Section 401(m) of the Code, or (iv) Section 415 of the Code.
1.29 "Plan Year" means the period from the Effective Date
through December 31, 2001 and each
calendar year thereafter within which the Plan is in effect.
1.30 "Present Value" means the present value of a benefit determined
on the basis of the actuarial assumptions specified in Section 1.1
1.31 "Social Security Benefit" means the Participant's actual social
security benefit at his or her Social Security Retirement Age.
1.32 "Social Security Retirement Age" shall have the same meaning the term
"Social Security Retirement Age" has under Section 2.58 of Appendix A
to the Basic Retirement Plan.
1.33 "Retirement Income Benefit" means the deferred compensation retirement
income benefit determined pursuant to Article 4.
1.34 "Supplemental Retirement Benefit" means the deferred compensation
retirement benefit determined pursuant to Article 6.
1.35 "Supplemental Surviving Spouse Benefit" means the survivor death
benefit payable to a Participant's surviving spouse, pursuant to the
provisions of Sections 8.1 through 8.3.
1.36 "Year of Service" means a calendar year in which the Participant
completes not less than 1,000 Hours of Service (as defined in Section
1.25 of the Basic Retirement Plan) with an Employer.
Words importing males shall be construed to include females and the
singular shall be construed to include the plural, and vice versa,
wherever appropriate.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 Plan eligibility is limited to a select group of management or highly
compensated Employees, as designated in writing by the Board, who
participate in the Basic Retirement Plan, the Basic 401(k)/ESOP or both
such plans.
From time to time, the Company may designate one or more Employees who
participate in the Basic Retirement Plan, the Basic 401(k)/ESOP or both
such plans as participants in the Plan, from the class of Employees
participating in the Basic Retirement Plan, the Basic 401(k)/ESOP or
both such plans who are members of a select group of management
Employees or are highly compensated Employees. Newly eligible Employees
shall participate as of the date specified by the Board.
2.2 The Company may, from time to time, remove any Participant from
participation in the Plan; provided, however, that, subject to Section
12.4, such removal will not reduce the amount of Retirement Income
Benefit and 401(k)/ESOP Benefit credited to the Participant under the
Plan, as determined as of the date of such Participant's removal. A
Participant so removed shall remain a Participant until all benefits
are distributed in accordance with the provisions of the Plan.
2.3 The Committee may provide each eligible Employee with appropriate forms
in connection with participation in the Plan.
ARTICLE 3
RETIREMENT DATE
3.1 A Participant's Retirement Date shall be his or her date of actual
retirement, which may be his or her Normal, Early, Disability or
Postponed Retirement Date, whichever is applicable pursuant to the
following sections of this Article 3.
3.2 A Participant's Normal Retirement Age shall be the 65th anniversary of
his or her birth. Such Participant's Normal Retirement Date shall be
the date coinciding with Normal Retirement Date under the Basic
Retirement Plan.
3.3 A Participant may retire on an Early Retirement Date, which shall be
the date coinciding with the initial distribution of an early
retirement benefit under the Basic Retirement Plan.
3.4 A Participant may retire on a Disability Retirement Date, which shall
be the date coinciding with the initial distribution of a disability
retirement benefit under the Basic Retirement Plan.
3.5 If a Participant continues in the employment of the Employer beyond
Normal Retirement Date, the date coinciding with postponed retirement
under the Basic Retirement Plan shall be the Participant's Postponed
Retirement Date.
ARTICLE 4
RETIREMENT INCOME BENEFIT
4.1 The Retirement Income Benefit payable to an eligible Participant in the
form of a life annuity with five years certain commencing on his or her
Normal, Early, Disability or Postponed Retirement Date, as the case may
be, shall be equal to the excess, if any, of the amount specified in
(a) over the amount specified in (b), as stated below:
(a) the monthly amount of Basic Retirement Plan retirement income
payable upon Normal, Early or Postponed Retirement Date, as
the case may be, to which the Participant would have been
entitled under the Basic Retirement Plan, if such benefit were
calculated under the Basic Retirement Plan without giving
effect to the limitations and restrictions imposed by the
application of Plan Limitation Provisions and any other
provisions of the Basic Retirement Plan that are necessary to
comply with Code Sections 401(a)(17) and 415, or any successor
provisions thereto;
(b) the sum of (i) the monthly amount of Basic Retirement Plan
retirement income payable upon Normal, Early or Postponed Retirement Date, as
the case may be, actually payable to the Participant under the Basic Retirement
Plan, after the limitations and restrictions imposed by the application of the
Plan Limitation Provisions and any other provisions of the Basic Retirement Plan
that are necessary to comply with Code Sections 401(a)(17) and 415, or any
successor provisions thereto, plus (ii) the monthly amount of retirement income
that is the actuarial equivalent (determined in accordance with the Basic
Retirement Plan) of any supplemental retirement benefit payable to the
Participant by any Employer upon Normal, Early or Postponed Retirement Date, as
the case may be, pursuant to any Supplemental Retirement Agreement with the
Participant.
4.2 With respect to eligible Participants who terminate their employment
other than on a Retirement Date specified in Article 3, the vested
Retirement Income Benefit payable in the form of a life annuity with
five years certain, commencing on the date the Participant is eligible
for a vested retirement benefit under the Basic Retirement Plan, shall
be equal to the excess, if any, of the amount specified in (a) over the
amount specified in (b), as stated below:
(a) the monthly amount of Basic Retirement Plan vested retirement
income payable upon termination of service to which the
Participant would have been entitled under the Basic
Retirement Plan, if such benefit were calculated under the
Basic Retirement Plan without giving effect to the limitations
and restrictions imposed by the application of the Plan
Limitation Provisions and any other provisions of the Basic
Retirement Plan that are necessary to comply with Code
Sections 401(a)(17) and 415, or any successor provisions
thereto;
(b) the sum of (i) the monthly amount of Basic Retirement Plan
vested retirement income payable upon termination of service actually payable to
the Participant under the Basic Retirement Plan, after the limitations and
restrictions imposed by the application of the Plan Limitation Provisions and
any other provisions of the Basic Retirement Plan that are necessary to comply
with Code Sections 401(a)(17) and 415, or any successor provisions thereto, plus
(ii) the monthly amount of retirement income that is the actuarial equivalent
(determined in accordance with the Basic Retirement Plan) of any supplemental
retirement benefit payable to the Participant by any Employer following such
termination of service pursuant to any Supplemental Retirement Agreement with
the Participant.
ARTICLE 5
SUPPLEMENTAL 401(k)/ESOP
BENEFIT AND DEFERRAL CREDIT ACCOUNTS
5.1 The 401(k)/ESOP Benefit under the Plan shall equal the discretionary
and matching contributions or other Employer-provided benefit to the
extent provided for under the Basic 401(k)/ESOP (disregarding the
limitations and restrictions imposed by the application of the Plan
Limitation Provisions and any other provisions of the Basic 401(k)/ESOP
that are necessary to comply with Code Sections 401(a)(17), 401(k)(3),
401(m), and 415, or any successor provisions thereto) for plan years of
the Basic 401(k)/ESOP ending after the Effective Date, less any such
amount actually contributed by the Employer to the Basic 401(k)/ESOP
for such plan years (to the extent permitted by the terms thereof,
taking into account the limitations and restrictions imposed by the
application of the Plan Limitation Provisions and any other provisions
of the Basic 401(k)/ESOP that are necessary to comply with Code
Sections 401(a)(17), 401(k)(3), 401(m), and 415, or any successor
provisions thereto), adjusted for income, gains and losses based on
deemed investments, pursuant to Section 5.4 below. For purposes of this
Section 5.1, it shall be assumed that the Participant has made Basic
401(k)/ESOP contributions, on a before-tax or after-tax basis, as are
necessary to qualify for the maximum Employer provided benefit
available under the Basic 401(k)/ESOP to similarly situated Basic
401(k)/ESOP Participants who are not affected by such restrictions and
limitations.
5.2 The 401(k)/ESOP Benefit under the Plan shall be accounted for by the
Employer under a Deferral Credit Account, maintained in the name of the
Employer, on behalf of each Participant.
5.3 Each Deferral Credit Account maintained by the Employer shall be
credited with units on behalf of each Participant, as appropriate in
accordance with the 401(k)/ESOP Benefit, as soon as administratively
practicable, but in no event later than March 15 of the Plan Year
following the Plan Year in which Basic 401(k)/ESOP contributions on
behalf of the Participant were limited or restricted.
5.4 The 401(k)/ESOP Benefit credited annually to each Participant's
Deferral Credit Account under the Plan shall be deemed to be invested
on a time weighted basis, based upon the crediting of the Deferral
Credit Account under Section 5.3 above, as if such amounts had been
invested in the same manner as the investment of the corresponding
amounts pursuant to the Basic 401(k)/ESOP, and such Account shall be
credited with income and gains, and charged with losses, as if such
investments had actually been made.
ARTICLE 6
SUPPLEMENTAL RETIREMENT BENEFIT
6.1 If an eligible Participant shall remain employed by the Employer until
reaching his or her 62nd birthday, serving as a Full-Time Employee
until such date, and subject to the other terms and conditions of this
Plan, the Company shall pay such Participant an annual "Supplemental
Retirement Benefit" determined as follows:
(a) the Participant shall be entitled to a Supplemental Retirement
Benefit on and after his or her 62nd birthday but before his
or her Social Security Retirement Age in an amount equal to
the excess, if any, of (1) 50 percent of the Participant's
Final Average Compensation, over (2) the Participant's Other
Retirement Benefits, determined as of the Determination Date.
(b) the Participant shall be entitled to a Supplemental Retirement
Benefit on and after his or her Social Security Retirement Age
in an amount equal to the excess, if any, of (1) 50 percent of
the Participant's Final Average Compensation, over (2) the sum
of (aa) the Participant's Other Retirement Benefits,
determined as of the Determination Date, plus (bb) the
Participant's Social Security Benefit.
6.2 If an eligible Participant shall remain employed by the Employer until
reaching his or her 60th birthday, serving as a Full-Time Employee
until such date and he or she continues to serve as a Full-Time
Employee until the date of his or her retirement, and he or she retires
then or thereafter but before reaching his or her 62nd birthday, and
subject to the other terms and conditions of this Plan, the Company
shall pay such Participant after the date of his or her retirement,
pursuant to Section 7.4(b), or to his or her spouse or other
Beneficiary, pursuant and subject to Section 8.6(c) if he or she has
died before his or her 62nd birthday, a reduced early Supplemental
Retirement Benefit calculated in accordance with the following
schedule:
(a) if the date of the Participant's retirement shall be on or
after his or her 60th birthday but before his or her 61st
birthday, the Company shall pay such Participant 60% of the
Supplemental Retirement Benefit calculated in accordance with
Section 6.1; and
(b) if the date of the Participant's retirement shall be on or
after his or her 61st birthday but before his or her 62nd
birthday, the Company shall pay such Participant 70% of the
Supplemental Retirement Benefit so calculated.
ARTICLE 7
MODES OF BENEFIT PAYMENT AND
VESTING OF BENEFITS
7.1 Except as otherwise provided in the following paragraph, any Retirement
Income Benefit and 401(k)/ESOP Benefit payable under the Plan to a
Participant, beneficiary, joint or contingent annuitant or eligible
child, shall be payable in the modes provided by, and subject to the
provisions of, the Basic Retirement Plan and Basic 401(k)/ESOP,
respectively, as the case may be. Any Retirement Income Benefit paid
from the Plan in a form other than a life annuity shall be the
actuarial equivalent of a life annuity, utilizing the actuarial
equivalent factors set forth in the Basic Retirement Plan and applied
to obtain the optional mode of payment thereunder.
The Committee, in its sole discretion and consistent with the best
interests of the Employer may distribute any Retirement Income Benefit
and 401(k)/ESOP Benefit payable under the Plan to a Participant,
beneficiary, joint or contingent annuitant, or eligible child, as a
single lump sum benefit, using, in the case of a Retirement Income
Benefit, the actuarial equivalent factors set forth in the Basic
Retirement Plan for lump-sum cashouts. In exercising its discretion
hereunder, the Committee shall not be bound by any request by a
Participant, beneficiary, joint or contingent annuitant, or eligible
child, to receive any Retirement Income Benefit and 401(k)/ESOP Benefit
payable under the Plan as a single lump-sum benefit.
7.2 Except with respect to receipt of a lump sum benefit under Section 7.1,
any elections for an optional mode of benefit payment made by a
Participant under the Basic Retirement Plan and the Basic 401(k)/ESOP,
shall also be effective with respect to any Retirement Income Benefit
and 401(k)/ESOP Benefit, as the case may be, payable under the Plan to
a Participant, beneficiary, joint or contingent annuitant, or eligible
child.
7.3 Except with respect to receipt of a lump sum benefit under Section 7.1,
payment of any Retirement Income Benefit and 401(k)/ESOP Benefit under
the Plan shall commence on the same date as payment of a Basic
Retirement Plan and 401(k)/ESOP Plan distribution payable to a
Participant or beneficiary, and shall terminate on the date of last
payment of Basic Retirement Plan and 401(k)/ESOP Plan distribution, as
the case may be.
7.4 The Supplemental Retirement Benefit shall be paid:
(a) except as provided in Section 7.4(b) (early retirement) and
Section 8.6 (death), commencing on the first day of the month
following the later of the Participant's retirement or his or
her attainment of age 62; or
(b) commencing on the first day of the month following the
Participant's Determination Date in connection with early
retirement after reaching age 60 and prior to the date of his
or her 62nd birthday.
7.5 The Supplemental Retirement Benefit shall be paid in the form specified
below:
(a) The Supplemental Retirement Benefit shall be paid as a
straight life annuity, payable in monthly installments, for the Participant's
life; provided, however, that if the Participant has no surviving spouse and
dies before having received 60 monthly payments, such monthly payments shall be
continued to his or her Beneficiary until the total number of monthly payments
to the Participant and his or her Beneficiary equal 60, whereupon all payments
shall cease and the Company's obligation to pay the Supplemental Retirement
Benefit under shall be deemed to have been fully discharged. If the Participant
and his or her 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 the Participant and his or her Beneficiary. If Supplemental
Retirement Benefits are payable in the form described in this Section 7.5(a),
the Participant shall designate in writing, as his or her Beneficiary, any
person or persons, primarily, contingently or successively, to whom the Company
shall pay benefits following the Participant's death if the Participant's death
occurs before 60 monthly payments have been made.
(b) Notwithstanding the form of payment described in Section
7.5(a), if the Participant 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 the
Participant's spouse as the Beneficiary. The 50% joint and
survivor annuity shall be the Actuarial Equivalent of the
benefit described in Section 7.5(a). If the Supplemental
Retirement Benefit is payable pursuant to this Section 7.5(a),
but the Participant's spouse fails to survive him or her, no
payments of the Supplement Retirement Benefit will be made
following the Participant's death.
(c) Notwithstanding the foregoing provisions of this Section 7.5,
the Company, 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
Section 7.5(c) shall be the Actuarial Equivalent of the
payment being accelerated.
7.6 Subject to Section 12.4, each Participant shall have a 100 percent
vested and non-forfeitable right to benefits under the Plan.
ARTICLE 8
DEATH BENEFITS
8.1 Upon the death of: (i) a Participant who has not terminated from
employment before Retirement Date as defined in Section 3.1, or (ii) a
Participant who retires on a Retirement Date as defined in Section 3.1
and dies before the complete distribution of Basic Retirement Plan
Benefit and Basic 401(k)/ESOP Benefit, as the case may be, benefits
shall be payable as set forth in Sections 8.2, 8.3 and 8.4.
8.2 With respect to any Retirement Income Benefit, if a Basic Retirement
Plan pre-retirement survivor annuity or post retirement survivor
annuity, as the case may be, is payable to a Participant's surviving
spouse or eligible children, if applicable, a supplemental
pre-retirement survivor annuity or post retirement survivor annuity, as
the case may be, shall be payable to the surviving spouse or eligible
children, if applicable, under the Plan. The monthly amount of the
Supplemental Surviving Spouse Benefit pre-retirement survivor annuity
or post retirement survivor annuity, as the case may be, payable to a
surviving spouse or eligible children, if applicable, shall be equal to
the excess, if any, of the amount specified in (a) over the amount
specified in (b), as stated below:
(a) the monthly amount of Basic Retirement Plan pre-retirement
survivor annuity or post retirement survivor annuity, as the
case may be, to which the surviving spouse or eligible
children, if applicable, would have been entitled under the
Basic Retirement Plan, if such benefit were calculated under
the Basic Retirement Plan without giving effect to the
limitations and restrictions imposed by the Plan Limitation
Provisions and any other provisions of the Basic Retirement
Plan that are necessary to comply with Code Sections
401(a)(17) and 415, or any successor provisions thereto;
(b) (i) the monthly amount of Basic Retirement Plan
pre-retirement survivor annuity or post retirement survivor annuity, as the case
may be, actually payable to the surviving spouse or eligible children, if
applicable, under the Basic Retirement Plan, after the limitations imposed by
the application of Plan Limitation Provisions and any other provisions of the
Basic Retirement Plan that are necessary to comply with Code Sections 401(a)(17)
and 415, or any successor provisions thereto plus (ii) the monthly amount that
is the actuarial equivalent (determined in accordance with the Basic Retirement
Plan) of any supplemental retirement benefit payable to the surviving spouse or
eligible children, if applicable, by any Employer following the Participant's
death pursuant to any Supplemental Retirement Agreement with the Participant.
8.3 The Retirement Income Benefit supplemental pre-retirement survivor
annuity or post retirement survivor annuity shall be payable over the
lifetime of the surviving spouse, or to eligible children to the extent
provided in the Basic Retirement Plan, in monthly installments
commencing on the same date as payment of the Basic Retirement Plan
pre-retirement survivor annuity or post retirement survivor annuity, as
the case may be, and shall terminate on the date of the last payment of
the Basic Retirement Plan pre-retirement survivor annuity or post
retirement survivor annuity, as the case may be.
8.4 With respect to any 401(k)/ESOP Benefit, all amounts credited to the
Participant's Deferral Credit Account shall be payable in a single lump
sum to the Participant's surviving spouse, if any, as a Supplemental
Surviving Spouse Benefit, unless an optional mode has been elected
pursuant to Article 7.
8.5 Upon the death of a Participant under the circumstances set forth in
clauses (i) and (ii) of Section 8.1, if no Basic Retirement Plan
Surviving Spouse Benefit, or Basic 401(k)/ESOP Surviving Spouse
Benefit, as the case may be, is payable, (a) no further Retirement
Income Benefit shall be payable, unless an optional mode has been
elected pursuant to Article 7, and (b) all amounts credited to the
Participant's Deferral Credit Account shall be payable to the
Participant's designated beneficiary in a single lump sum, unless an
optional mode has been elected pursuant to Article 7.
8.6 The following provisions shall apply with respect to payment of the
Supplemental Retirement Benefit after the death of a Participant:
(a) Except as provided in Section 8.6(b), if a Participant shall
die before his or her 62nd birthday, no Supplemental
Retirement Benefit shall be payable.
(b) If a Participant shall die on or after his or her 60th
birthday, after he or she has retired but before payment of any Supplemental
Retirement Benefit has commenced, the Participant's surviving spouse, if any,
shall be paid as a straight life annuity 50 percent of the Supplemental
Retirement Benefit for her life commencing within 30 days following the
Participant's death. Such payments shall be made in monthly installments,
subject to the right of the Company to accelerate payment at any time in
accordance with Section 7.5(c). However, if such Participant is not married at
the time of his or her death, the Company shall pay to the Participant's
Beneficiary a lump sum benefit equal to 50 percent of the Present Value of the
Participant's Supplemental Retirement Benefit.
(c) Except as provided in Section 8.6(b), no Supplemental
Retirement Benefit shall be payable if the Participant dies
before payment of any Supplement Retirement Benefit has begun
without having a spouse who survives him or her.
(d) If a Participant dies after payment of a Supplemental
Retirement Benefit has commenced, the amount, if any, of the
Supplemental Retirement Benefit payable to the Participant's
surviving spouse or other Beneficiary shall be determined
pursuant to the applicable provisions of Section 7.5.
ARTICLE 9
UNFUNDED PLAN
9.1 The Plan shall be administered as an unfunded plan and is not intended
to meet the qualification requirements of Sections 401(a) and 401(k) of
the Code. No Participant or beneficiary shall be entitled to receive
any payment or benefits under the Plan from the qualified trust
maintained in connection with the Basic Retirement Plan and Basic
401(k)/ESOP.
9.2 The Employer shall have the right to establish a reserve, establish a
grantor trust or make any investment for the purposes of satisfying its
obligation hereunder for payment of benefits, including, but not
limited to, investments in one or more registered investment companies
under the Investment Company Act of 1940, as amended, to the extent
permitted by applicable banking or other law; provided, however, that
no Participant or beneficiary shall have any interest in such
investment, trust, or reserve.
9.3 To the extent that any Participant or beneficiary acquires a right to
receive benefits under the Plan, such rights shall be no greater than
those rights which guarantee to the Participant or beneficiary the
strongest claim to such benefits, without resulting in the
Participant's or beneficiary's constructive receipt of such benefits.
9.4 With respect to any 401(k)/ESOP Benefit, 100% of the Participant's
Deferral Credit Account shall be deemed to be invested as provided in
Section 5.4 above. A Participant's Deferral Credit Account may not be
encumbered or assigned by a Participant or any beneficiary.
9.5 A Participant or beneficiary with a Retirement Income Benefit, the
401(k)/ESOP Benefit or both such Benefits under the Plan shall be an
unsecured creditor of the Employer as to any benefit payable under the
Plan.
9.6 Not later than the closing of any transaction that would constitute a
Change of Control, the Employer shall transfer to an independent
corporate trustee of a grantor trust within the meaning of section 671
of the Code that satisfies the applicable requirements of Revenue
Procedure 92-64 or any successor thereto an amount sufficient to cover
all potential liabilities under this Plan.
ARTICLE 10
ADMINISTRATION
10.1 Except for the functions reserved to the Company or the Board, the
administration of the Plan shall be the responsibility of the
Committee. The Committee shall consist of three or more persons
designated by the Company. Members of the Committee shall serve for
such terms as the Company shall determine and until their successors
are designated and qualified. Any member of the Committee may resign
upon at least 60 days written notice to the Company, or may be removed
from office by the Company at any time, with or without notice.
10.2 The Committee shall hold meetings upon notice at such times and places
as it may determine. Notice shall not be required if waived in writing.
Any action of the Committee shall be taken pursuant to a majority vote
at a meeting, or pursuant to the written consent of a majority of its
members without a meeting, and such action shall constitute the action
of the Committee and shall be binding in the same manner as if all
members of the Committee had joined therein. A majority of the members
of the Committee shall constitute a quorum. No member of the Committee
shall note or be counted for quorum purposes on any matter relating
solely to himself or herself or his or her rights under the Plan. The
Committee shall record minutes of any actions taken at its meetings or
of any other official action of the Committee. Any person dealing with
the Committee shall be fully protected in relying upon any written
notice, instruction, direction or other communication signed by the
Secretary of the Committee or by any of the members of the Committee or
by a representative of the Committee authorized by the Committee to
sign the same in its behalf.
10.3 The Committee shall have the power and the duty to take all actions and
to make all decisions necessary or proper to carry out the Plan. The
determination of the Committee as to any question involving the Plan
shall be final, conclusive and binding. Any discretionary actions to be
taken under the Plan by the Committee shall be uniform in their nature
and applicable to all persons similarly situated. Without limiting the
generality of the foregoing, the Committee shall have the following
powers and duties:
(a) the duty to furnish to all Participants, upon request, copies
of the Plan;
(b) the power to require any person to furnish such information
as it may request for the purpose
of the proper administration of the Plan as a condition to
receiving any benefits under the Plan;
(c) the power to make and enforce such rules and regulations and
prescribe the use of such forms as it shall deem necessary for
the efficient administration of the Plan;
(d) the power to interpret the Plan, and to resolve ambiguities,
inconsistencies and omissions, which findings shall be
binding, final and conclusive;
(e) the power to decide on questions concerning the Plan in
accordance with the provisions of the Plan;
(f) the power to determine the amount of benefits which shall be
payable to any person in accordance with the provisions of the
Plan and to provide a full and fair review to any Participant
whose claim for benefits has been denied in whole or in part;
(g) the power to designate a person who may or may not be a member
of the Committee as Plan "Administrator" for purposes of the
Employee Retirement Income Security Act of 1974 (ERISA); if
the Committee does not so designate an Administrator, the
Committee shall be the Plan Administrator;
(h) the power to allocate any such powers and duties to or
among individual members of the Committee; and
(i) the power to designate persons other than Committee members to
carry out any duty or power which would otherwise be a
responsibility of the Committee or Administrator, under the
terms of the Plan.
10.4 To the extent permitted by law, the Committee and any person to whom it
may delegate any duty or power in connection with administering the
Plan, the Company, any Employer, and the officers and directors
thereof, shall be entitled to rely conclusively upon, and shall be
fully protected in any action taken or suffered by them in good faith
in the reliance upon, any actuary, counsel, accountant, other
specialist, or other person selected by the Committee, or in reliance
upon any tables, valuations, certificates, opinions or reports which
shall be furnished by any of them. Further, to the extent permitted by
law, no member of the Committee, nor the Company, any Employer, nor the
officers or directors thereof, shall be liable for any neglect,
omission or wrongdoing of any other members of the Committee, agent,
officer or employee of the Company or any Employer. Any person claiming
benefits under the Plan shall look solely to the Employer for redress.
10.5 All expenses incurred before the termination of the Plan that shall
arise in connection with the administration of the Plan (including, but
not limited to administrative expenses, proper charges and
disbursements, compensation and other expenses and charges of any
actuary, counsel, accountant, specialist, or other person who shall be
employed by the Committee in connection with the administration of the
Plan), shall be paid by the Employer.
ARTICLE 11
AMENDMENT OR TERMINATION
11.1 The Board shall have the power to suspend or terminate the Plan in
whole or in part at any time, and from time to time to extend, modify,
amend or revise the Plan in such respects as the Board, by resolution,
may deem advisable; provided, however, that no such extension,
modification, amendment, revision, or termination shall deprive a
Participant or any beneficiary of any benefit accrued under the Plan.
11.2 In the event of a termination or partial termination of the Plan, the
rights of all affected parties, if any, to benefits accrued to the date
of such termination or partial termination, shall become nonforfeitable
to the same extent that such rights would be nonforfeitable if such
benefits were provided under the Basic Retirement Plan or the Basic
401(k)/ESOP and such plans were terminated on such date.
11.3 No amendment of the Plan shall reduce the vested and accrued benefits,
if any, of a Participant under this Plan, except to the extent that
such a reduction would be permitted if such benefits were provided
under the Basic Retirement Plan or the Basic 401(k)/ESOP.
11.4 In the event of the termination or partial termination of the Plan: (a)
the Company shall pay in one lump sum to affected Participants or their
beneficiaries the 401(k)/ESOP Benefit, if any, to which they are
entitled, as if such Participants' termination of service had occurred
on the date the Plan is terminated, and (b) the Retirement Income
Benefit and Supplemental Retirement Benefit, if any, to which they are
entitled shall continue to be payable.
ARTICLE 12
GENERAL PROVISIONS
12.1 The Plan shall not be deemed to constitute an employment contract
between the Employer and any Employee or other person, whether or not
in the employ of the Employer, nor shall anything herein contained be
deemed to give any Employee or other person, whether or not in the
employ of the Employer, any right to be retained in the employ of the
Employer, or to interfere with the right of the Employer to discharge
any Employee at any time and to treat such Employee without any regard
to the effect which such treatment might have upon such Employee as a
Participant of the Plan.
12.2 Except as provided in Section 12.4, or as may otherwise be required by
law, no distribution or payment under the Plan to any Participant or
beneficiary shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, whether
voluntary or involuntary, and any attempt to so anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge the same shall be
void; nor shall any such distribution or payment be in any way liable
for or subject to the debts, contracts, liabilities, engagements or
torts of any person entitled to such distribution or payment. If any
Participant or beneficiary is adjudicated bankrupt or purports to
anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any such distribution or payment, voluntarily or involuntarily,
the Committee, in its sole discretion, may cancel such distribution or
payment or may hold or cause to be held or applied such distribution or
payment, or any part thereof, to or for the benefit of such Participant
or beneficiary, in such manner as the Committee shall direct.
12.3 If the Employer determines that any person entitled to payments under
the Plan is incompetent by reason of physical or mental disability, it
may cause all payments thereafter becoming due to such person to be
made to any other person for his or her benefit, without responsibility
to follow application of amounts so paid. Payments made pursuant to
this provision shall completely discharge the Plan, the Employer and
the Committee.
12.4 Notwithstanding any other provision of this Plan:
(a) if the Employer determines that Cause exists for the
termination of the Participant's employment, the Participant
and his or her spouse and beneficiaries shall forfeit all
rights to any payments under this Plan;
(b) if a Participant separates from service before having
completed five Years of Service with any Employer, no
Supplemental Retirement Benefit shall be payable hereunder;
(c) no amounts shall be payable hereunder to the
Participant and his or her spouse and beneficiaries:
(i) following any breach by the Participant of any
provision of any employment or other written
agreement with the Company, the Bank or any other
Employer with respect to confidentiality,
non-competition, non-interference with, or
non-solicitation of, employees, customers, suppliers
or agents or similar matters, provided that no Change
in Control shall have occurred before such breach;
(ii) if, without the prior written consent of the
Company, the Participant discloses or divulges to any
third party, except as may be required by his or her
duties, by law, regulation, or order of a court or
government authority, or as directed by the Company,
or uses to the detriment of the Company or its
affiliates or in any business or on behalf of any
business competitive with or substantially similar to
any business of the Company or the Bank or their
affiliates, any Confidential Information obtained
during the course of his or her employment by the
Company, the Bank or any affiliate of any of either
of them, provided that this Section 12.4(c)(ii) shall
not be construed as restricting the Participant from
disclosing such information to the employees of the
Company or the Bank or their affiliates;
(iii) if while the Participant is employed by the
Company, the Bank, any Employer or any affiliate of
any of them or within two years after any termination
of such employment other than in anticipation of or
following a Change in Control, the Participant (A)
interferes with the relationship of the Company, the
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 the Company, the
Bank or their affiliates), or (B) directly or
indirectly diverts or attempts to divert from the
Company, the Bank or their affiliates any business in
which any of them has been actively engaged during
the period of such employment, or interferes with the
relationship of the Company, the Bank or their
affiliates with any of their customers or prospective
customers, provided, that this Section 12.4(c)(iii)
shall not, in and of itself, prohibit the Participant
from engaging in the banking, trust, or financial
services business in any capacity, including that of
an owner or employee; and
(d) if any particular provision of this section 12.4 shall
be adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete from 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 12.4
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 the Company, the Bank and
their affiliates, to the fullest extent permitted by applicable law, the
benefits intended by this section 12.4.
12.5 The Employer shall be the sole source of benefits under the Plan, and
each Employee, Participant, beneficiary, or any other person who shall
claim the right to any payment or benefit under the Plan shall be
entitled to look solely to the Employer for payment of benefits.
12.6 If the Employer is unable to make payment to any Participant,
beneficiary, or any other person to whom a payment is due under the
Plan, because it cannot ascertain the identity or whereabouts of such
Participant, beneficiary, or other person after reasonable efforts have
been made to identify or locate such person (including a notice of the
payment so due mailed to the last known address of such Participant,
beneficiary, or other person shown on the records of the Employer),
such payment and all subsequent payments otherwise due to such
Participant, beneficiary or other person shall be forfeited 24 months
alter the date such payment first became due; provided, however, that
such payment and any subsequent payments shall be reinstated,
retroactively, no later than 60 days after the date on which the
Participant, beneficiary, or other person shall make application
therefor. Neither the Company, the Committee nor any other person shall
have any duty or obligation under the Plan to make any effort to locate
or identify any person entitled to benefits under the Plan, other than
to mail a notice to such person's last known mailing address.
12.7 If upon the payment of any benefits under the Plan, the Employer shall
be required to withhold any amounts with respect to such payment by
reason of any federal, state or local tax laws, rules or regulations,
then the Employer shall be entitled to deduct and withhold such amounts
from any such payments. In any event, such person shall make available
to the Employer, promptly when requested by the Employer, sufficient
funds or other property to meet the requirements of such withholding.
Furthermore, at any time the Employer shall be obligated to withhold
taxes, the Employer shall be entitled to take and authorize such steps
as it may deem advisable in order to have the amounts required to be
withheld made available to the Employer out of any funds or property
due to become due to such person, whether under the Plan or otherwise.
12.8 The Committee, in its discretion, may increase or decrease the amount
of any benefit payable hereunder if and to the extent that it
determines, in good faith, that an increase is necessary in order to
avoid the omission of a benefit intended to be payable under this Plan
or that a decrease is necessary in order to avoid a duplication of the
benefits intended to be payable under this Plan.
12.9 The provisions of the Plan shall be construed, administered and
governed under applicable federal laws and the laws of the State of New
York. In applying the laws of the State of New York, no effect shall be
given to conflict of laws principles that would cause the laws of
another jurisdiction to apply.
NBT BANCORP INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective as of July 23, 2001)
TABLE OF CONTENTS
Page
Preamble.......................................................................................................1
Article 1 - Definitions........................................................................................1
Article 2 - Eligibility and Participation......................................................................6
Article 3 - Retirement Date....................................................................................7
Article 4 - Retirement Income Benefit..........................................................................7
Article 5 - Supplemental 401(k)/ESOP Benefit and Deferral Credit Accounts .....................................9
Article 6 - Supplemental Retirement Benefit....................................................................10
Article 7 - Modes of Benefit Payment and Vesting of Benefits...................................................11
Article 8 - Death Benefits ....................................................................................12
Article 9 - Unfunded Plan .....................................................................................14
Article 10 - Administration ...................................................................................15
Article 11 - Amendment or Termination .........................................................................17
Article 12 - General Provisions................................................................................18
Exhibit 10.14
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,
January 1, 2000, and on January 22, 2001
SUPPLEMENTAL RETIREMENT AGREEMENT
(AS AMENDED AND RESTATED EFFECTIVE January 22, 2001)
(REVISED)
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, January 1, 2000, and on January 22, 2001) 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 Appendix A to the Qualified Plan (i.e., the NBT BANCORP Inc. Defined
Benefit Pension Plan, as amended and restated as of October 1, 1989,
including amendments adopted through August 31, 1998) using the
following actuarial assumptions:
Mortality: "Applicable Mortality Rate" as such
term is defined in Section 2.03c of
said Appendix A to the Qualified Plan.
Interest Rate: "Applicable Interest Rate" as such
term is defined in
Section 2.09b of said Appendix A to
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 Appendix A to the Qualified Plan (i.e., the NBT
BANCORP Inc. Defined Benefit Pension Plan, as amended and restated as
of October 1, 1989, including amendments adopted through August 31,
1998), except that in determining the amount of Compensation (as
defined in Section 2.14 of said Appendix A to the Qualified Plan) to be
used in calculating Final Average Compensation under Section 2.27 of
said Appendix A to 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
(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 Appendix A to the
Qualified Plan (i.e., the
NBT BANCORP Inc. Defined Benefit
Pension Plan, as amended
and restated as of October 1, 1989,
including amendments
adopted through August 31, 1998).
Interest Rate: "Applicable Interest Rate" as such
term is defined in
Section 2.09b of said Appendix A to the
Qualified Plan.
(k) Qualified Plan. "Qualified Plan" shall mean the NBT BANCORP Inc.
Defined Benefit Pension Plan, as
amended and restated effective as of January 1, 2000.
(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 Appendix A to the Qualified Plan (i.e., the
NBT BANCORP Inc. Defined Benefit Pension Plan, as
amended and restated as of October 1, 1989, including
amendments adopted through August 31, 1998).
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 subparagraph 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
subparagraph 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;
(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) except that
at age 62 the amount shall not be less than an amount equal to the excess of (A)
65% of Forsythe's Final Average Compensation over (B) Forsythe's Other
Retirement Benefits determined as of the Determination Date and calculated in
accordance with subparagraph 2(i)
(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).
(c) Continued Medical Benefits. Upon Forsythe's retirement, the Bank will
continue in force the same level of medical benefits (including
medical, dental and vision care) for Executive until his death and for
his spouse (if alive) at the time of his death that was in effect at
the time of Executive's retirement.
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
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
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
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.
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.
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 2/9/01 Its: Chairman
NBT BANK, NATIONAL ASSOCIATION
By: /S/ Michael J. Chewens
Date 2/9/01 Its: CFO
Date: 2/9/01 /S/ Daryl R. Forsythe
DARYL R. FORSYTHE