ESTABLISHMENT OF THE PLAN
bancorp-inc" id="cik842518">Evans Bancorp, Inc. (Evans) hereby establishes this bancorp-inc" id="cik842518">Evans Bancorp, Inc. Executive Severance Plan (the Plan), which is a self-insured severance plan for certain of its key executive management personnel. The term Company means Evans and any Organization Under Common Control that is covered under the Plan in accordance with Section 5.6, including Evans Bank, N.A. (Bank). The effective date of the Plan is May 21, 2012 (the Effective Date). The Plan Year is the calendar year.
Section 2.1. Eligible Executives. Each Eligible Executive, as hereafter defined, will become a Participant in the Plan on the later of: (i) the first day on which the individual becomes an Eligible Executive; or (ii) the Effective Date. The term Eligible Executive means any employee of the Company who has been designated in writing by the Chief Executive Officer of Evans eligible to participate in this Plan, excluding any employee covered under an employment or change in control agreement that provides for severance or other similar post-employment compensation. If any employee becomes a Participant and subsequently becomes covered under an employment or change in control agreement that provides for severance or other similar post-employment compensation, the employee will cease to be a Participant as of that date.
Section 2.2. Exclusive Benefit. A Participant in this Plan will not be eligible to receive any benefit under the terms of the bancorp-inc" id="cik842518">Evans Bancorp, Inc. Separation Pay Plan or any other severance plan or arrangement maintained by the Company.
BENEFITS AND PAYMENT OF BENEFITS
Section 3.1. In General. Each Participant (i) whose employment is involuntarily terminated by the Company for reasons other than Cause, as hereafter defined, (ii) who is required to move employment to a location further than 35 miles of the Participants current place of employment and who does not accept such relocation and terminates employment or (iii) whose aggregate compensation is materially reduced and who terminates employment will receive a Severance Payment, as determined under Section 3.2, if the Participant remains in employment with the Company through his or her release date as established by the Company and if the Participant signs a general release of all claims against the Company, in a form provided by the Company.
(a) For purposes of this Plan, termination for Cause shall include termination because of the Executives personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Code of Ethics of either the Bank or the Company, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the reputation of the Company or the Bank, willfully engaging in actions that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Company or the Bank, failure to perform stated duties after receiving written notice of Executives failure to perform assigned duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order.
No act or failure to act, on the part of the Executive, shall be considered willful unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executives action or omission was in the best interests of the Employer. Any act, or failure to act, based upon the direction of the Board or based upon the advice of counsel for the Employer shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Employer.
(b) Upon the occurrence of any event described in Section 3.1(ii) or (iii) above, the Participant shall have the right to elect to terminate his employment by resignation upon not less than thirty (30) days prior written notice to Evans, which notice must be given by the Participant within ninety (90) days after the initial event giving rise to said right to elect to terminate his employment. Notwithstanding the preceding sentence, in the event of a continuing breach by Evans, the Participant, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of his rights by virtue of the fact that Participant has submitted his resignation but has remained in the employment of Evans and is engaged in good faith discussions to resolve any occurrence of an event described above. Evans shall have at least thirty (30) days to remedy any condition set forth above, provided, however, that Evans shall be entitled to waive such period and make an immediate payment hereunder.
Section 3.2. Benefit Amount. A Participants Severance Payment will be equal to:
(i) The Participants base salary, determined as of the date of termination, payable over the eighteen (18) months following the date of termination, plus the Participants short term incentive amount at the target level pro-rated for the time during the year in which the Participant was actively employed by the Company, which together shall be paid in equal installments over the Companys regular payroll cycles during such eighteen-month period.
(ii) In addition, for a twelve (12)-month period following the termination of employment, the Company will reimburse the Participant for outplacement services in an amount not to exceed $5,000; provided however, that reimbursements for such outplacement services shall be made in a cash lump sum within 30 days of Participants remittance to Evans of a receipt for such services.
Section 3.3. Form of Benefit Payment. A Participant will receive his or her benefit in the form of direct deposit to his or her bank account in accordance with the normal payroll process over the eighteen-month severance period. All applicable payroll taxes and withholding will be applied. Severance Payments and benefits payable under this Plan will not be treated as compensation for purposes of calculating benefits under any other employee benefit plan maintained by the Company.
Notwithstanding any other provision in this Plan, termination of employment shall mean Separation from Service as defined in Code Section 409A and the Treasury Regulations thereunder, such that the Company and the Participant reasonably anticipate that the level of bona fide services the Participant would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period.
Notwithstanding anything in this Agreement to the contrary, if the Participant is a Specified Employee (within the meaning of Treasury Regulations §1.409A-1(i)), then, to the extent necessary to avoid penalties under Code Section 409A, no payment shall be made to the Participant prior to the first day of the seventh month following the date of termination in excess of the permitted amount under Code Section 409A. For these purposes, the permitted amount shall be an amount that does not exceed two times the lesser of: (i) the sum of Participants annualized compensation based upon the annual rate of pay for services provided to the Company for the calendar year preceding the year in which occurs the date of termination or (ii) the maximum amount that may be taken into account under a tax-qualified plan pursuant to Code Section 401(a)(17) for the calendar year in which occurs the date of termination. Payment of the permitted amount shall be made in accordance with regular payroll practices. Any payment in excess of the permitted amount shall be made to the Participant on the first day of the seventh month following the date of termination.
Section 3.4. Forfeitures of Benefits. A Participant will forfeit his or her right to any unpaid Severance Payments benefits if he or she is reemployed by the Company in a comparable position, as determined by the Board of Directors of the Company.
Section 3.5. Effect of Regulatory Actions. Any actions by the Company under this Agreement must comply with the law, including regulations and other interpretive action, of the Federal Deposit Insurance Act, Federal Deposit Insurance Corporation, or other entities that supervise any of the activities of the Company. Specifically, any payments to the Participant by the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.
Section 3.6. Golden Parachute Adjustments. Notwithstanding anything in this Agreement or any other agreement to the contrary:
(a) In the event the Company (or its successor) and the Participant both determine, based upon the advice of the independent public accountants for the Company, that part or all of the consideration, compensation or benefits to be paid to the Participant under this Agreement constitute parachute payments under Code Section 280G(b)(2) then, if the aggregate present value of such parachute payments, singularly or together with the aggregate present value of any consideration, compensation or benefits to be paid to the Participant under any other plan, arrangement or agreement which constitute parachute payments (collectively, the Parachute Amount) exceeds 2.99 times the Participants base amount, as defined in Code Section 280G(b)(3) (the Executive Base Amount), the amounts constituting parachute payments which would otherwise be payable to or for the benefit of the Participant shall be reduced to the extent necessary so that the Parachute Amount is equal to 2.99 times the Participant Base Amount (the Reduced Amount); provided that such amounts shall not be so reduced if the Participant determines, based upon the advice of an independent public accounting firm (which may, but need not be the independent public accountants of the Company), that without such reduction the Participant would be entitled to receive and retain, on a net after tax basis (including, without limitation, any excise taxes payable under Code Section 4999), an amount which is greater than the amount, on a net after tax basis, that the Participant would be entitled to retain upon Executives receipt of the Reduced Amount.
(b) If the determination made pursuant to subsection (a) above results in a reduction of the payments that would otherwise be paid to the Participant except for the application of this Section, then the Participant may then elect, in the Participants sole discretion, which and how much of any particular entitlement shall be eliminated or reduced and shall advise the Company in writing of the Participants election within ten days of the determination of the reduction in payments; provided, however, that if it is determined that such election by the Participant shall be in violation of Code Section 409A, or if no such election is made by the Participant within such ten-day period, the allocation of the required reduction shall be pro-rata.. If no such election is made by the Participant within such ten-day period, the Company may elect which and how much of any entitlement shall be eliminated or reduced and shall notify the Participant promptly of such election. Within ten days following such determination and the elections hereunder, the Company shall pay or distribute to or for the benefit of the Participant such amounts as are then due to the Participant under this Agreement and shall promptly pay or distribute to or for the benefit of the Participant in the future such amounts as become due to the Participant under this Agreement.
(c) As a result of the uncertainty in the application of Section 280G of the Code at the time of a determination hereunder, it is possible that payments will be made by the Company which should not have been made under clause (a) of this Section (an Overpayment) or that additional payments which are not made by the Company pursuant to clause (a) of this Section should have been made (an Underpayment). In the event that there is a final determination by the Internal Revenue Service, a final determination by a court of competent jurisdiction or a change in the provisions of the Code or regulations pursuant to which an Overpayment arises, any such Overpayment shall be treated for all purposes as a loan to the Participant which the Participant shall repay to the Company together with interest at the applicable Federal rate provided for in Code Section 7872(f)(2). In the event that there is a final determination by the Internal Revenue Service, a final determination by a court of competent jurisdiction or a change in the provisions of the Code or regulations pursuant to which an Underpayment arises under this Agreement, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Participant, together with interest at the applicable Federal rate provided for in Code Section 7872(f)(2).
The calculations required by clause (a) of this Section will be made by the Companys independent accounting firm engaged immediately prior to the event that triggered the payment, in consultation with the Companys outside legal counsel, and for purposes of making the calculation the accounting firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999, provided that the accounting firms determinations must be made with substantial authority (within the meaning of Code Section 6662).
ADMINISTRATION OF PLAN
Section 4.1. Appointment of Plan Administrator and Responsibility for Administration of Plan. The Compensation Committee of Evans Board of Directors shall serve as Plan Administrator and shall administer this Plan in accordance with its terms. The Plan Administrator may designate other persons to carry out the responsibilities to control and manage the operation of the Plan.
Section 4.2. Agents. The Plan Administrator may employ such agents, including counsel, as it may deem advisable for the administration of the Plan. Such agents need not be Participants under the Plan.
Section 4.3. Compensation. The Company shall pay all the expenses of the Plan Administrator. The Company shall indemnify any employees of the Company to whom responsibilities have been delegated under Section 4.1 against any liability incurred in the course of administration of the Plan, except liability arising from their own gross negligence or willful misconduct.
Section 4.4. Records. The acts and decisions of the Plan Administrator shall be duly recorded. The Plan Administrator shall make a copy of this Plan available for examination by any Participant during the business hours of the Employer.
Section 4.5. Defect or Omission. The Plan Administrator shall refer any material defect, omission or inconsistency in the Plan to the Board of Directors of Evans for such action as may be necessary to correct such defect, supply such omission or reconcile such inconsistency.
Section 4.6. Liability. Except for their own negligence, willful misconduct or breach of fiduciary duty, neither the Plan Administrator nor any agents appointed by the Plan Administrator shall be liable to anyone for any act or omission in the course of the administration of the Plan.
Section 4.7. Contributions and Financing. All benefits required to be paid by the Company under the Plan shall be paid as due directly by the Company from its general assets.
Section 4.8. Claims Procedure. The claims procedure set forth in this paragraph is the exclusive method of resolving disputes that arise under the Plan.
(a) Written Claim. Any person asserting any rights under this Plan must submit a written claim to the Compensation Committee of Evanss Board of Directors (the Committee). The Committee shall render a decision within a reasonable period of time from the date on which the Committee received the written claim, not to exceed 90 days, unless an extension of time is necessary due to reasonable cause.
(b) Denial of Claim. If a claim is denied in whole or in part, the
claimant must be provided with the following information:
(1) A statement of specific reasons for the denial of the claim;
(2) References to the specific provisions of the Plan on which the denial is based;
(3) A description of any additional material or information necessary to perfect the claim with an explanation of why such material information is necessary;
(4) An explanation of the claims review procedures with a statement that the claimant must request review of the decision denying the claim within 30 days following the date on which the claimant received such notice.
(c) Review of Denial. The claimant may request that the Evans Board of Directors review the denial of a claim. A request for review must be in writing and must be received by the Board of Directors within 30 days of the date on which the claimant received written notification of the denial of the claim. The Board of Directors will render a decision with respect to a written request