Exhibit 10.18
CHANGE OF CONTROL AGREEMENT
This CHANGE OF CONTROL AGREEMENT is dated as of November 30,
2001 between COMMUNITY BANK SYSTEM, INC., a Delaware Corporation and registered
bank holding company ("CBSI"), and COMMUNITY BANK, N.A., a wholly-owned
subsidiary of CBSI, having an office in DeWitt, New York ("CBNA") (CBSI and CBNA
are referred to collectively in this Agreement as the "Employer"), and W. Xxxxx
XxXxxxxx ("Employee").
Recitals
A. Employee is currently employed by CBNA in a senior management
capacity.
B. Employer desires to retain the services of Employee and to induce
Employee to remain with CBNA.
C. In consideration of the agreements of the parties contained in this
Agreement, and intending to be legally bound by the terms of this
Agreement, the parties agree as follows:
Terms
1. Term of Agreement.
The term of this Agreement shall be for the period from the date of the
Agreement to December 31, 2005 and shall automatically expire effective December
31, 2005.
2. Change of Control.
(a) Subject to the limitations described in paragraphs 2(d), (e), (f) and
(g), if Employee's employment by CBNA shall cease for any reason, including
Employee's voluntary termination, but not including Employee's termination for
"cause" (as defined in paragraph 3), within 1 year following a "Change of
Control" that occurs during the term of this Agreement, Employer shall:
(i) Pay to Employee an aggregate severance benefit equal to (A) the
greater of 150 percent of Employee's then current Base Salary or the severance
benefit otherwise due Employee, plus (B) an amount equal to the Management
Incentive paid to Employee in the year previous to the year during which the
"Change of Control" occurs; and
(ii) Treat as immediately exercisable all options granted by CBSI to
Employee to acquire CBSI common stock that are not exercisable or that have not
been exercised, so as to permit Employee to purchase the balance of CBSI stock
not yet purchased until the end of the exercise period provided in the original
grant of the option right; and
(iii) Treat as immediately vested all restricted CBSI stock held by
Employee; and
(iv) Provide Employee with continuation of life and health insurance
benefits, under the same terms and conditions (including cost) that Employer
provides such insurance to its active employees, until payments under paragraph
2(a)(i) above have been paid in full.
(b) The severance benefit payable under paragraph 2(a)(i) above shall be
payable in substantially equal installments over a period of eighteen months or
longer if provided for under Employer's established severance policy.
(c) The provision of health insurance to Employee during the period
described in paragraph 2(a)(iv) shall not be credited towards Employer's
obligation to provide continuation of health insurance coverage under the
Consolidated Omnibus Reconciliation Act of 1985 ("COBRA"). Accordingly, upon
expiration of the period described in paragraph 2(a)(iv), Employee (and
Employee's qualified beneficiaries) shall be eligible to commence continuation
coverage under the COBRA provisions of Employer's group health plan(s).
(d) In no event shall the aggregate of all amounts paid to, or value
received by, Employee following a "Change of Control" (whether paid or received
pursuant to this paragraph 2 or otherwise) exceed the maximum aggregate amount
or value that could be paid to, or received by, Employee without such aggregate
amount being treated as a "parachute payment" within the meaning of Internal
Revenue Code Section 280G.
(e) Employer shall not be obligated to provide or continue the payments
specified in paragraph 2(a)(i) above, if Employer, within the one-year period
following such Change of Control, provides Employee, and Employee accepts, a
position within Employer's organization of comparable responsibility and
compensation. Employer shall allow Employee to maintain such alternative
position for a period of not less than one year from the date of acceptance.
(f) As provided in paragraph 2(a) above, Employee may voluntarily
terminate his employment with CBNA within 1 year following a Change of Control,
and receive all of the payments and benefits specified in 2(a) above. In the
event of such a voluntary termination, the payments specified in paragraph
2(a)(i) shall be reduced by any non-Employer related wages or self-employment
income derived by Employee during the period payments are made under paragraph
2(a)(i).
(g) Payments made and benefits provided pursuant to this paragraph 2 shall
be subject to withholding for income, employment and other similar taxes
Employer may be required to withhold.
(h) For purposes of paragraph 2(a), a "Change of Control," shall be deemed
to have occurred if:
(i) any "person," including a "group" as determined in accordance
with the Section 13(d)(3) of the Securities Exchange Act of 1934 ("Exchange
Act"), is or becomes the beneficial owner, directly or indirectly, of securities
of CBSI or CBNA representing 30% or more of the combined voting power of CBSI's
or CBNA's then outstanding securities;
(ii) as a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination (a "Transaction"), the
persons who were directors of CBSI or CBNA before the Transaction shall cease to
constitute a majority of the Board of Directors of CBSI or CBNA or any successor
to either;
(iii) CBSI or CBNA is merged or consolidated with another
corporation and as a result of the merger or consolidation less than 70% of the
outstanding voting securities of the surviving or resulting corporation shall
then be owned in the aggregate by the former stockholders of CBSI or CBNA, other
than (A) affiliates within the meaning of the Exchange Act, or (B) any party to
the merger or consolidation;
(iv) a tender offer or exchange offer is made and consummated for
the ownership of securities of CBSI or CBNA representing 30% or more of the
combined voting power of CBSI's or CBNA's then outstanding voting securities; or
(v) CBSI or CBNA transfers substantially all of its assets to
another corporation which is not controlled by CBSI or CBNA.
3. Termination "For Cause"
(a) Notwithstanding any contrary provision contained in paragraph 2, CBSI
or CBNA may terminate this Agreement "for cause" (defined below) at any time,
effective upon receipt by Employee of written notice of termination. Upon
termination of employment "for cause," Employee shall be entitled only to the
salary due Employee from Employer to the date of receipt by Employee of written
notice of termination and Employee shall forfeit any and all stock options
granted by CBSI or CBNA that remain unexercised as of the date of the written
termination notice and any and all shares of restricted CBSI stock that are not
vested as of the date of the written termination notice.
(b) Termination "for cause" for purposes of this Agreement shall include,
but not be limited to, any of the following:
(i) any act of dishonesty or fraud, acts of moral turpitude, or the
commission of a felony; or
(ii) breach of duty or obligation to CBSI or CBNA or receipt of
financial or other economic profit or gain as a result of or in any way arising
out of Employee's position with CBNA and failure to account to CBSI or CBNA for
such profits or other gains; or
(iii) disclosure of confidential or private Employer information or
aiding a competitor of Employer (or any affiliate of Employer) to the detriment
of Employer (or any affiliate of Employer).
4. Miscellaneous.
(a) Notices. Any and all notices with respect to this Agreement shall be
sufficient if furnished personally in writing or sent by certified mail, return
receipt requested, to the last known address or other address designated by the
parties to this Agreement.
(b) Entire Agreement: Release From Prior Agreements. This Agreement
represents the entire agreement between the parties and specifically supersedes
any and all oral or written agreements previously entered into by the parties,
and each party releases the other party of all obligations and liabilities with
respect to any prior employment agreements between the parties.
(c) Governing Law. This Agreement, having been made and duly executed
within the State of New York, shall be construed and governed in accordance with
and pursuant to New York law.
(d) Waiver. In the event that any breach of this Agreement by Employee or
Employer is waived by act or failure to act, such waiver shall not constitute a
waiver of any subsequent breach by either party.
(e) Severability. If any provision of this Agreement shall be held invalid
or unenforceable, such invalidity or unenforceability shall affect only that
particular provision and shall not affect or render invalid or unenforceable any
other provision of this Agreement, and this Agreement shall be carried out as if
any such invalid or unenforceable provision were not a part of the Agreement.
(f) Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the successors, assigns, legal representatives and heirs of
the parties.
(g) Arbitration and Fees. Any dispute between the parties relating to the
terms of this Agreement, or any interpretation, construction or enforcement
hereof, shall first be submitted to non-binding arbitration in Syracuse, New
York in accordance with the rules and regulations of the American Arbitration
Association then in effect. Each party shall be responsible for its own costs
and expenses in pursuing non-binding arbitration, and any arbitration fees or
costs shall be shared equally between the parties. However, if Employee is a
party in an arbitration to collect
payments due pursuant to this Agreement and prevails in collecting payments due
in the arbitration or settlement of the arbitration. Employer shall reimburse
Employee for reasonable attorneys' fees incurred by Employee in connection with
such arbitration.
(h) Personal Qualifications. It is hereby agreed that this Agreement and
the employment of Employee pursuant hereto is personal in nature, and that
Employee possesses highly specialized skills and abilities. For such reason and
in accordance with applicable provisions of New York State law, this agreement
may not be assigned by Employee, and as to the obligations to be performed by
Employee, other than the rendering or personal service as an employee ofCBNA,
this Agreement shall be binding upon Employee's heirs and/or administrators and
executors.
IN WITNESS WHEREOF, the parties have signed this Agreement after full
opportunity to read and discuss the provisions of the Agreement, and both
parties voluntarily assent to this Agreement with full understanding of its
provisions.
EMPLOYEE
/s/ W. Xxxxx XxXxxxxx .
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W. Xxxxx XxXxxxxx
COMMUNITY BANK SYSTEM, INC.
By: /s/ Xxxxxxx X. Xxxxxx .
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Xxxxxxx X. Xxxxxx
COMMUNITY BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxx .
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Xxxxxxx X. Xxxxxx
