EXHIBIT 2.5
FORM OF CHANGE-IN-CONTROL AGREEMENT
[_____________________], 2000
[___________________]
[___________________]
[___________________]
Dear Mr. [___________________]:
NBT Bancorp Inc. (which, together with its wholly-owned subsidiaries,
NBT Bank, National Association, LA Bank, National Association, and Pioneer
American 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
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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, your
obligations under this section 1(b) shall thereupon terminate.
2. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect until the third anniversary of the date
hereof; provided, however, that commencing on the first anniversary of the date
hereof, and each such anniversary 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 auto matically be extended for
24 months from the date the change in control occurs. This Agreement shall
terminate if you or the Company terminates your employment prior to a change in
control of the Company but without prejudice to any remedy the Company may have
for breach of your obligations, if any, under section 1(b).
3. Severance Payment and Benefits If Termination Occurs Following
Change in Control for Disability, Without Cause, or With Good Reason. If, within
24 months from the date of occurrence of any event constituting a change in
control of the Company (it being recognized that more than one such event may
occur in which case the 24-month period shall run from the date of occurrence of
each such event), your employment with the Company is terminated (i) by the
Company for Disability, (ii) by the Company without Cause, or (iii) by you with
Good Reason (as defined in section 6), 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. If your
employment with the Company is terminated without Cause by the Company or with
Good Reason by you, then the Company shall pay to you, upon demand, the
following amounts (net of applicable payroll taxes):
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(i) Your full base salary plus year-to-date accrued
vacation through the Date of Termination at the rate in effect on the date the
change in control occurs.
(ii) As severance pay, an amount equal to the product of
your "Base Amount" multiplied by the number [ ]. (1) As used in the previous
sentence, your "Base Amount" is your average annual compensation includible in
your gross income for federal income tax purposes for the five years immediately
preceding the year in which the change in control occurs (or, if you shall have
been employed by the Company for less than those five years, for the number of
those years during which you shall have been employed by the Company, with any
partial year annualized), including base salary, non-deferred amounts under
annual incentive, long-term performance, and profit-sharing plans, distributions
of previously deferred amounts under such plans, and ordinary income recognized
with respect to stock options.
(c) Related Benefits. Unless you die or your employment is
terminated by the Company for Cause or Disability, or by you other than for Good
Reason, the Company shall maintain in full force and effect, for the continued
benefit of you for one year after the Date of Termination, all noncash employee
benefit plans, programs, or arrangements (including, without limitation, pension
and retirement plans and arrangements, stock option plans, life insurance and
health and accident plans and arrangements, medical insurance plans, disability
plans, and vacation plans) in which you were entitled to participate immediately
prior to the Date of Termination provided that your continued participation is
possible after Termination under the general terms and provisions of such plans,
programs, and arrangements; provided, however, that if you become eligible to
participate in a benefit plan, program, or arrangement of another employer which
confers substantially similar benefits upon you, you shall cease to receive
benefits under this subsection in respect of such plan, program, or arrangement.
In the event that your participation in any such plan, program, or arrangement
is barred, the Company shall arrange to provide you with benefits substantially
similar to those which you are entitled to receive under such plans, programs
and arrangements.
4. Payment If Termination Occurs Following Change In Control, Because
of Death, For Cause, or Without Good Reason. If your employment shall be
terminated following any event constituting a change in control of the Company
because of your death, or by the Company for Cause, or by you other than for
Good Reason, the Company shall pay you such amounts as are to be paid to you in
such circumstance under any written employment agreement in effect between you
and the Company or, if there be no such written employment agreement in effect,
the Company shall pay you your full base salary plus year-to-date accrued
vacation through the Date of Termination at the rate in effect on the date the
change in control occurs. The Company shall have no further obligations to you
under this Agreement.
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(1) [Xxxx X. Xxxxxxx: insert "2.99."]
[Xxxxxxxx X. Xxxx: insert "2."]
[Xxxxx X. Xxxxxxx: insert "2."]
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5. No Mitigation. You shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, nor, except as expressly set forth herein, shall the amount of any
payment provided for in this Agreement be reduced by any compensation earned by
you as the result of employment by another employer after the Date of
Termination, or otherwise.
6. Definitions of Certain Terms. For the purpose of this Agreement,
the terms defined in this section 6 shall have the meanings assigned to them
herein.
(a) Cause. Termination of your employment by the Company for
"Cause" shall mean termination because, and only because, you committed an act
of fraud, embezzlement, or theft constituting a felony or an act intentionally
against the interests of the Company which causes the Company material injury.
Notwithstanding the foregoing, you shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct constituting Cause as
defined above and specifying the particulars thereof in detail.
(b) Change in Control. A "Change in Control" of the Company shall
mean:
(i) A change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A as in
effect on the date hereof pursuant to the Securities Exchange Act of 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
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appropriate banking regulatory agency shall not constitute a change in control;
or
(iv) Approval by the shareholders of the Company of any
plan or proposal for the liquidation or dissolution of the Company.
(c) Date of Termination. "Date of Termination" shall mean
(i) if your employment is terminated by the Company for Disability, 30 days
after Notice of Termination is given (provided that you shall not have returned
to the performance of your duties on a full-time basis during such 30-day
period), and (ii) if your employment is terminated for any other reason, the
date on which a Notice of Termination is given; provided that if within 30 days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties or by a
final judg ment, order, or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected). The
term of this Agreement shall be extended until the Date of Termination.
(d) Disability. Termination of your employment by the
Company for "Disability" shall mean termination because of your absence from
your duties with the Company on a full-time basis for 180 consecutive days as a
result of your incapacity due to physical or mental illness and your failure to
return to the performance of your duties on a full-time basis during the 30-day
period after Notice of Termination is given.
(e) Good Reason. Termination by you of your employment for
"Good Reason" shall mean termination based on any of the following:
(i) A change in your status or position(s) with the
Company, which in your reasonable judgment, does not represent a promotion from
your status or position(s) as in effect immediately prior to the change in
control, or a change in your duties or responsibilities which, in your
reasonable judgment, is inconsistent with such status or position(s), or any
removal of you from, or any failure to reappoint or reelect you to, such
position(s), except in connection with the termination of your employment for
Cause or Disability or as a result of your death or by you other than for Good
Reason.
(ii) A reduction by the Company in your base salary as
in effect immediately prior to the change in control.
(iii) The failure by the Company to continue in effect
any Plan (as hereinafter defined) in which you are participating at the time of
the change in control of the Company (or Plans providing you with at least
substantially similar benefits) other than as a result of the normal expiration
of any such Plan in accordance with its terms as in effect at the time of the
change in control, or the taking of any action, or the failure to act, by the
Company which would adversely affect your continued participation in any of such
Plans on at least as favorable a basis to you as is the case on the date of the
change in control or which would materially reduce your
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benefits in the future under any of such Plans or deprive you of any material
benefit enjoyed by you at the time of the change in control.
(iv) The failure by the Company to provide and credit
you with the number of paid vacation days to which you are then entitled in
accordance with the Company's normal vacation policy as in effect immediately
prior to the change in control.
(v) The Company's requiring you to be based anywhere
other than where your office is located immediately prior to the change in
control except for required travel on the Company's business to an extent
substantially consistent with the business travel obligations which you
undertook on behalf of the Company prior to the change in control.
(vi) The failure by the Company to obtain from any
successor the assent to this Agreement contemplated by section 8 hereof.
(vii) Any purported termination by the Company of your
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of this Agree ment; and for purposes of this Agreement, no such
purported termination shall be effective.
(viii) Any refusal by the Company to continue to allow
you to attend to matters or engage in activities not directly related to the
business of the Company which, prior to the change in control, you were
permitted by the Board to attend to or engage in.
For purposes of this subsection, "Plan" shall mean any compensation plan such as
an incentive or stock option plan or any employee benefit plan such as a thrift,
pension, profit sharing, medical, disability, accident, life insurance plan, or
a relocation plan or policy or any other plan, program, or policy of the Company
intended to benefit employees.
(f) Notice of Termination. A "Notice of Termination" of your
employment given by the Company shall mean a written notice given to you of the
termination of your employment which shall indicate the specific termination
provision in this Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
your employment under the provision so indicated.
(g) Person. The term "Person" shall mean and include any
individual, corporation, partnership, group, association, or other "person," as
such term is used in section 14(d) of the Exchange Act, other than the Company
or any employee benefit plan(s) sponsored by the Company.
7. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
attention of the Chief Executive
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Officer of the Company with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
8. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of, and be
binding upon, any corporate or other successor or assignee of the Company which
shall acquire, directly or indirectly, by merger, consolidation or purchase, or
otherwise, all or substantially all of the business or assets of the Company.
The Company shall require any such successor, by an agreement in form and
substance satisfactory to you, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee, or
other designee or, if there is no such designee, to your estate.
9. Increased Severance Payments Upon Application of Excise Tax.
(a) Adjustment of Payment. In the event any payments or
benefits you become entitled to pursuant to the Agreement or any other payments
or benefits received or to be received by you in connection with a change in
control of the Company or your termination of employment (whether pursuant to
the terms of any other agreement, plan, or arrangement, or otherwise, with the
Company, any person whose actions result in a change in control or any person
affiliated with the Company or such person) (collectively the "Severance
Payments") will be subject to the tax (the "Excise Tax") imposed by section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall
pay you an additional amount (the "Gross-Up Payment") so that the net amount
retained by you, after deduction of the Excise Tax (but before deduction for any
federal, state or local income tax) on the Severance Payments and after
deduction for the aggregate of any federal, state, or local income tax and
Excise Tax upon the gross-Up Payment, shall be equal to the Severance Payments.
For purposes of determining whether any of the Severance Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) the entire
amount of the Severance Payments shall be treated as "parachute payments" within
the meaning of section 280G(b)(2) of the Code and as subject to the Excise Tax,
unless and to the extent, in the written opinion of outside tax counsel selected
by the Company's independent accountants and reasonably acceptable to you, such
payments (in whole or in part) are not subject to the Excise Tax; and (ii) the
value of any noncash benefits or any deferred payment or benefit (constituting a
part of the Severance Payments) shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay federal income taxes at the highest marginal rate of the
federal income
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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
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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.
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:
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Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
AGREED TO:
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[______________]
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