PATHFINDER BANCORP,
INC.
PATHFINDER BANK
CHANGE IN CONTROL
AGREEMENT
This Agreement
is made effective as of the January 1, 2007, by and between
Pathfinder Bank (the "Bank"), a New York chartered stock savings
bank, with its principal administrative office at 214 West First
Street, Oswego, New York 13126-2547, jointly with Pathfinder
Bancorp, Inc, the sole stockholder of the Bank, and Melissa A.
Miller (the "Executive"). Any reference to "Company"
herein shall mean Pathfinder Bancorp, Inc. or any successor
thereto. Any reference to "Employer" herein shall mean both the
Bank and the Company or any successors thereto.
WHEREAS , the Employer and Executive entered into a
change in control agreement; and
WHEREAS , Section 409A of the Internal Revenue Code
(“Code”), effective January 1, 2005, requires deferred
compensation arrangements, including those set forth in change in
control agreements, to comply with its provisions and restrictions
and limitations on payments of deferred compensation;
and
WHEREAS , Code Section 409A and the final regulations
issued thereunder in April of 2007 necessitate changes to said
change in control agreement; and
WHEREAS , Executive has agreed to such changes;
and
WHEREAS , the Employer believes it is in the best
interests to enter into a revised change in control agreement (the
“Agreement”) in order to provide Executive with certain
benefits in the event of a Change in Control of the Employer, as
herein after defined, and incorporate the changes required by the
new tax laws.
NOW,
THEREFORE , in
consideration of the mutual covenants herein contained, and upon
the other terms and conditions hereinafter provided, the parties
hereby agree as follows:
1 .
CHANGE IN CONTROL DEFINED
For purposes of
this Agreement, a "Change in Control" of the Bank or Company shall
mean a Change in Control of a nature that (i) would be required to
be reported in response to Item 5.01 of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
or (ii) results in a Change in Control of the Bank or the Company
within the meaning of the Home Owners Loan Act, as amended, and
applicable rules and regulations promulgated there under, as in
effect at the time of the Change in Control (collectively, the
“HOLA”); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (a) any
"person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined
voting power of Company's outstanding securities except for any
securities purchased by the Employer’s employee stock
ownership plan or trust; or (b) individuals who constitute the
Company’s Board of Directors on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved
by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the
Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes
of this clause (b), considered as though he were a member of the
Incumbent Board; or (c) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the
Bank or the Company or similar transaction in which the Bank or
Company is not the surviving institution occurs; or (d) a proxy
statement soliciting proxies from stockholders of the Company, by
someone other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or
more corporations or financial institutions, and as a result such
proxy solicitation a plan of reorganization, merger consolidation
or similar transaction involving the Company is approved by the
requisite vote of the Company’s stockholders; or (e) a tender
offer is made for 25% or more of the voting securities of the
Company and the shareholders owning beneficially or of record 25%
or more of the outstanding securities of the Company have tendered
or offered to sell their shares pursuant to such tender offer and
such tendered shares have been accepted by the tender
offeror. Notwithstanding anything to the contrary
herein, a “Change in Control” of the Bank or the
Company shall not be deemed to have occurred in the event of a
conversion of Pathfinder Bancorp, MHC to stock holding company
form.
2.
BENEFITS DUE TO EXECUTIVE IN THE EVENT OF CHANGE IN
CONTROL
If any of the
events described in Section 1 hereof constituting a Change in
Control have occurred, Executive shall be entitled to the benefits
provided in paragraphs (a), (b), (c), (d) and (e) of this Section 2
upon his dismissal from employment within twelve (12) months of the
Change in Control (“Dismissal”). Notwithstanding any
other provision of this Agreement, a voluntary termination by the
Executive shall not be deemed a “Dismissal”, although
the following actions by the employer shall be deemed a
“Dismissal”: (i) material change in 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; (ii) relocation of Executive’s principal
place of employment by more than 30 miles from its location at the
effective date of this agreement; or, (iii) a material reduction in
the benefits and prerequisites to the Executive from those being
provided as of the effective date of this Agreement, provided that
Executive provides written notice to the Employer within ninety
(90) days of the initial existence of an event described in this
paragraph and the Employer has at least thirty (30) days to remedy
such events described paragraph unless the Employer decides to
waive such period and make an immediate payment
hereunder.
(a) Upon
the occurrence of a Change in Control followed by the Executive's
Dismissal, the Employer shall pay Executive, or in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay or liquidated damages, or
both, a sum equal to his most recent annual base salary, including
bonuses and any other cash compensation paid to the Executive
within the most recent twelve (12) month period. Such
Payment shall be made by the Employer on the Date of
Dismissal. Notwithstanding the foregoing, in the event
the Executive 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 Executive prior to the first day of the
seventh month following the Executive’s Date of Dismissal 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 Executive’s annualized compensation
based upon the annual rate of pay for services provided to the
Employer for the calendar year preceding the year in which occurs
the Executive’s Date of Dismissal 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 Executive’s Date of Dismissal. Payment of the
“permitted amount” shall be made within thirty days
following the Executive’s Date of Dismissal. Any
payment in excess of the permitted amount shall be made to the
Executive on the first day of the seventh month following the
Executive’s Date of Dismissal.
(b) Upon
the occurrence of a Change in Control followed by the Executive's
Dismissal of employment, the Employer will cause to be continued
life insurance and non-taxable medical and dental coverage
substantially identical to the coverage maintained by the Employer
for Executive prior to his Dismissal. Such
coverage and payments shall cease upon the expiration of twelve
(12) months.
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