Exhibit 10.4
Change in control agreement with Xxxxx X. Xxxxxxxx
July 23, 2001
Xx. Xxxxx X. Xxxxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Dear Xx. Xxxxxxxx:
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 0000 (xxx "Xxxxxxxx Xxx"); 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/ Xxxxxxx X. Xxxxxxx
AGREED TO:
/S/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
