FIRST NIAGARA FINANCIAL GROUP,
INC.
CHANGE IN CONTROL
AGREEMENT
This AGREEMENT, dated as of March 26, 2007
(the “Effective Date”), is between FIRST NIAGARA
FINANCIAL GROUP, INC., a Delaware corporation with its executive
offices at 6950 South Transit Road, P.O. Box 514, Lockport, NY
14095-0514 (the “Corporation”), and John R. Koelmel, an
individual residing at 4702 Red Oak Court, Hamburg, NY 14075 (the
“Executive”).
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a.
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The
Executive is presently employed as an executive officer of the
Corporation.
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b.
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The
Board of Directors of the Corporation (the “Board”)
considers it essential to the best interests of the Corporation and
its shareholders to foster the Corporation’s ability to
retain key management personnel.
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c.
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The
Board recognizes that, as is generally the case with publicly held
corporations, the possibility of a Change in Control (as
hereinafter defined) exists and that such possibility, and the
uncertainty and questions which it may raise among management, may
result in the departure or distraction of management personnel to
the detriment of the Corporation and it shareholders.
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d.
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The
Board intends for this Agreement to provide protection to the
Executive against the exigencies of a Change in Control, but not to
otherwise provide assurance of or rights to continued
employment.
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e.
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The
Board believes it to be in the best interests of the Corporation
and its shareholders that the Corporation and the Board be able to
rely upon the Executive to continue in the Executive’s
position, and that the Corporation be able to receive and rely upon
the Executive’s advice as to the best interests of the
Corporation, without concern that the Executive might be distracted
by the personal uncertainties and risks created by the possibility
of a Change in Control.
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f.
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Should the possibility of a Change
in Control arise, in addition to the Executive’s regular
duties, the Executive may be called upon to assist in the
assessment of such possible Change in Control, to advise management
and the Board as to whether such Change in Control would be in the
best interests of the Corporation and its shareholders and to take
such other actions as the Board might determine to be
appropriate.
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g.
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This Agreement is not intended to
alter the rights of the Executive in the absence of a Change in
Control of the Corporation with respect to the Executive’s
employment by the Company or the Executive’s compensation and
benefits in connection with such employment and, accordingly, this
Agreement, although taking effect as provided below, will be
operative only upon a Change in Control of the
Corporation.
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h.
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The
Corporation and the Executive both desire to set forth the terms of
benefits upon a termination of employment in certain circumstances
following a Change in Control.
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i.
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This Agreement has been amended and
restated solely in order to comply with Section 409A of the
Internal Revenue Code of 1986 as amended, (the “Code”)
and the final regulations issued thereunder in
April 2007.
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NOW, THEREFORE, in consideration of the promises
and of the covenants contained in this Agreement, the Corporation
and the Executive agree as follows:
(a) An “Affiliate” of, or a
Person “Affiliated” with, a specified Person, means a
Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under current
control with, the Person specified.
(b)
“Bank” means First Niagara Bank.
(c)
“Board of Directors” or “Board” means the
Board of Directors of the Corporation.
(d) “Cause” means a finding by
the Board of Directors that any of the following conditions
exist:
(i) The Executive’s willful and
continued failure substantially to perform the Executive’s
duties (other than as a result of disability) that is not or cannot
be cured within 30 days of the Corporation giving the
Executive notice of the failure to so perform. For purposes of this
Agreement, no act or failure to act will be deemed
“willful” unless effected by the Executive not in good
faith and without a reasonable belief that the Executive’s
action or failure to act was in or not opposed to the
Corporation’s best interests.
(ii) A willful act or omission by the
Executive constituting dishonesty, fraud or other malfeasance, and
any act or omission by the Executive constituting immoral conduct,
which in any such case is injurious to the financial condition or
business reputation of the Corporation.
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(iii) The Executive’s indictment for
a felony offense under the laws of the United States or any state
other than for actions related to operation of motor vehicles which
does not involve operation of a motor vehicle while intoxicated or
impaired.
(iv) Breach by the Executive of the
Corporation’s Code of Ethics for Senior Financial Officers,
any restrictive covenant, non-competition, confidentiality or
non-solicitation, or other similar agreement which is applicable to
the Executive, or breach of the Corporation’s Code of
Ethics.
The Executive will not be deemed to have been
terminated for Cause until there has been delivered to the
Executive a copy of a resolution, duly adopted by the affirmative
vote of not less than a majority of the Board at a meeting called
and held for that purpose (after reasonable notice to the Executive
and an opportunity for the Executive, with the Executive’s
counsel, to be heard before the Board), stating that, in the good
faith opinion of the Board, the Executive has engaged in conduct
described above and specifying the particulars in
detail.
(e)
“Change in Control” means:
(i) Any acquisition or series of
acquisitions by any Person other than the Corporation, any of its
Affiliates, any employee benefit plan of the Corporation or any of
its Affiliates, or any Person holding common shares of the
Corporation for or pursuant to the terms of such an employee
benefit plan, that results in that Person becoming the beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)), directly
or indirectly, of securities of the Corporation representing 50% or
more of either the then outstanding shares of the common stock of
the Corporation (“Outstanding Corporation Common
Stock”) or the combined voting power of the
Corporation’s then outstanding securities entitled to then
vote generally in the election of Directors of the Corporation
(“Outstanding Corporation Voting Securities”), except
that any such acquisition of Outstanding Corporation Common Stock
or Outstanding Corporation Voting Securities will not constitute a
Change in Control while that Person does not exercise the voting
power of its Outstanding Corporation Common Stock or otherwise
exercise control with respect to any matter concerning or affecting
the Corporation, or Outstanding Corporation Voting Securities, and
promptly sells, transfers, assigns or otherwise disposes of that
number of shares of Outstanding Corporation Common Stock necessary
to reduce its beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of the Outstanding Corporation Common Stock
to below 50%;
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(ii) At the time when, during any period
not longer than twenty-four (24) consecutive months,
individuals who at the beginning of that period constitute the
Board cease to constitute at least a majority of the Board, unless
the election, or the nomination for election by the
Corporation’s shareholders, of each new Board member was
approved by a vote of at least 2/3rds of the Board members then
still in office who were Board members at the beginning of that
period (including, for these purposes, new members whose election
or nomination was so approved); or
(iii) Approval by the shareholders of the
Corporation of
(A) a dissolution or liquidation of the
Corporation,
(B) a sale of all or substantially all of
the assets or earning power of the Corporation, taken as a whole
(with the stock or other ownership interests of the Corporation in
any of its Affiliates constituting assets of the Corporation for
this purpose) to a Person that is not an Affiliate of the
Corporation (for purposes of this paragraph, “sale”
means any change of ownership), or
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(C) an agreement to merge or consolidate or
otherwise reorganize, with or into one or more Persons that are not
Affiliates of the Corporation, as a result of which less than 50%
of the outstanding voting securities of the surviving or resulting
entity immediately after any such merger, consolidation or
reorganization are, or will be, owned, directly or indirectly, by
shareholders of the Corporation immediately before such merger,
consolidation or reorganization (assuming for purposes of that
determination that there is no change in the record ownership of
the Corporation’s securities from the record date for that
approval until that merger, consolidation or reorganization and
that those record owners hold no securities of the other parties to
that merger, consolidation or reorganization), but including in
that determination any securities of the other parties to that
merger, consolidation or reorganization held by
Affiliates.
(f)
“Code” means the Internal Revenue Code of 1986, as
amended.
(i) failure to elect or reelect or to
appoint or reappoint the Executive as an officer of the Corporation
during the term of this Agreement in accordance with Section 2
hereof;
(ii) material change in the
Executive’s function, duties, or responsibilities, which
change would cause Executive’s position to become one of
lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 2 hereof or a material
reduction in the Executive’s base compensation;
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(iii) a relocation of Executive’s
principal place of employment by more than 100 miles from its
location at the effective date of this Agreement;
(iv) liquidation or dissolution of the
Corporation other than liquidations or dissolutions that are caused
by reorganizations that do not affect the status of Executive;
or
(v) breach of this Agreement by the
Corporation.
Upon the occurrence of any event described
above, the Executive shall have the right to elect to terminate his
employment under this Agreement by resignation upon not less than
thirty (30) days prior written notice to the Corporation,
which notice must be given by the Executive 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 of this Agreement by
the Corporation, the Executive, after giving due notice within the
prescribed time frame of an initial event specified above, shall
not waive any of his rights solely under this Agreement by virtue
of the fact that Executive has submitted his resignation but has
remained in the employment of the Corporation and is engaged in
good faith discussions to resolve any occurrence of an event
described above. The Corporation shall have at least thirty
(30) days to remedy any condition set forth above, provided,
however, that the Corporation shall be entitled to waive such
period and make an immediate payment hereunder.
(h) “Person” has the meaning
given that term in Sections 13(d) and 14(d) of the Exchange Act,
but excluding any Person described in and satisfying the conditions
of Rule 13d-1(b)(1) of Section 13 of the Exchange
Act.
2. Term of Agreement
. This Agreement will be effective
for the period beginning on the Effective Date and shall continue
to be effective for the period ending on the “Expiration
Date”; provided, that the Executive’s right to
indemnification and insurance coverage shall continue beyond the
Expiration Date for the duration of all applicable statutes of
limitations and for purposes of all policies of insurance. The
“Expiration Date” shall initially be December 31,
2009 , and thereafter shall automatically be extended for
successive three-year periods unless, not later than six months
prior to any such Expiration Date, the Corporation shall have given
notice to the Executive that it does not wish the Expiration Date
to be so extended in which case the Expiration Period will be the
date that is thirty (30) months from the date of such notice.
Notwithstanding the foregoing, the Expiration Date shall be any
earlier date on which the Executive’s employment with the
Corporation terminates for any reason, in the event such
termination occurs prior to a “Change in Control” of
the Corporation (as hereinafter defined).
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3.
Benefits and Restrictions Upon Termination Following a Change in
Control .
(a) Upon Termination by the Corporation
without Cause or by the Executive with Good Reason . Upon the
Executive’s termination of employment by (i) the
Corporation without Cause within the twelve (12)-month period
following a Change in Control or (ii) the Executive for Good
Reason no later than fourteen (14) months following a Change
in Control, the Corporation will provide the following:
(i) Salary And Fringe Benefits . The
Executive will receive full salary and fringe benefits through the
effective date of termination together with any unpaid annual short
term incentive bonus for a prior period, which shall be paid within
30 days after the effective date of the termination of
employment. The Executive will receive a payment equal to the 300%
of the Executive’s base salary, as in effect in the year of
the termination of employment, payable in one lump sum within
30 days after the effective date of the termination of
employment.. The Executive will also receive non-taxable medical
and health insurance, group term life insurance, automobile
allowance and club membership benefits (hereinafter referred to as
“Fringe Benefits”) as in effect on the date of
termination for a period of thirty-six (36) months beginning
with the month next following the month during which the employment
terminates. If the Executive dies during the thirty-six
(36) month period, any dependent health or medical Fringe
Benefits will be provided for the balance of the thirty-six
(36) month period. For purposes of COBRA health care
continuation coverage, the “qualifying event” will be
deemed to have occurred at the end of the thirty-six
(36) month period following termination of
employment.
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(ii) Bonus . The Executive will receive a
bonus amount equal to the 300% of the Executive’s targeted
annual short term incentive bonus amount in effect in the year of
the termination of employment payable in one lump sum within
30 days after the effective date of the termination of
employment.
(iii) Accrued Vacation . The Executive
will receive payment for accrued but unused vacation, which payment
will be equitably prorated based on the period of active employment
for that portion of the fiscal year in which the Executive’s
termination of employment becomes effective. Payment for accrued
but unused vacation will be payable in one lump sum within 30 days
after the effective date of the termination of
employment.
(iv) Indemnification . For 60 months
following the date of termination of employment, the Corporation
will continue any indemnification agreement with the Executive and
will provide directors’ and officers’ liability
insurance insuring the Executive, such coverage to have limits and
scope of coverage not less than that in effect on the date of
termination of employment.
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(v) Equity Compensation . The Executive
will be fully vested in and will have the immediate right to
exercis
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