Mr. Martin A.
Dietrich
155 Serenity
Drive
Norwich, New
York 13815
Dear Mr.
Dietrich:
NBT Bancorp Inc. (which, together with its
wholly-owned subsidiary, NBT 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, we entered an agreement, approved by the Board,
dated February 21, 1995, and revised by Board action most recently
on July 23, 2001, providing for severance compensation that the
Board agreed would be provided to you in the event your employment
with the Company terminated subsequent to a change in control of
the Company ("Agreement"). We have agreed upon various
changes to the Agreement, agreed to by the Board, and have agreed
to amend and restate the Agreement in its entirety as
follows:
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 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, terminates your employment without Cause, or you
provide written notice of your decision to terminate your
employment for Good Reason, your obligations under this section
1(b) shall thereupon terminate and you will be entitled to payments
provided under Section 3(b).
2.
Term of Agreement
. This Agreement shall commence on the date hereof and
shall continue in effect until December 31, 2003; provided,
however, that commencing December 31, 2001 and each December 31
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
automatically be extended for 24 months from the date the
change in control of the Company 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, With Good Reason or Without
Good Reason within 12 Months of the Change . If, (I)
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), or (II)
within 12 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 12-month period shall run from the date of occurrence of each
such event) you terminate your employment either with or without
Good Reason, 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 or Within 12
Months of Change in Control . If your employment
with the Company is terminated without Cause by the Company or with
Good Reason by you, or by you within 12 months of a change in
control of the Company without Good Reason, then the Company shall
pay to you, upon demand, the following amounts (net of applicable
payroll taxes):
(i)
Your full base salary through the
Date of Termination at the rate in effect on the date the change in
control of the Company occurs plus year-to-date accrued
vacation.
(ii) As
severance pay, an amount equal to the product of 2.99 multiplied by
the greater of (A) the sum of your annualized salary for the
calendar year in which the change in control of the Company occurs,
the maximum target bonus that could have been paid to you for such
year if all applicable targets and objectives had been achieved, or
if no formal bonus program is in effect, the largest bonus amount
paid to you during any one of the three preceding calendar years,
your income from the exercise of nonqualified options during such
year, your compensation income from any disqualifying disposition
during such year of stock acquired pursuant to the exercise of
incentive stock options and other annualized amounts that
constitute taxable income to you from the Company for such year,
without reduction for salary reduction amounts excludible from
income under Section 402(e)(3) or 125 of the Internal Revenue Code
of 1986, as amended (the "Code"), or (B) your average
"Compensation" (as defined below) for the three calendar years
preceding the calendar year in which the change in control of the
Company occurs. As used in this subsection 3(b)(ii) your
"Compensation" shall mean your base salary, bonus, income from the
exercise of nonqualified options, compensation income from any
disqualifying disposition of stock acquired pursuant to the
exercise of incentive stock options and any other amounts that
constitute taxable income to you from the Company, without
reduction for salary reduction amounts excludible from income under
Section 402(e)(3) or 125 of the Code.
(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 and not within 12 months after a
change in control of the Company, (i) the Company shall maintain in
full force and effect, for your continued benefit and, if
applicable, for the continued benefit of your spouse and family,
for three years after the Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan, 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, as in
effect at the Date of Termination, or, if more favorable to you
and, if applicable, your spouse and family, as in effect generally
at any time thereafter with respect to executive employees of the
Company or any successor; 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, and (ii) your benefit under any supplemental
retirement agreement or supplemental retirement plan maintained by
the Company in which you are a participant shall be fully vested
upon such termination of your employment, and your benefit under
such agreement or plan shall be determined as if you had continued
to be employed by the Company for three additional years (or the
period after which the maximum benefit payable is attained, if
less) and if your annual compensation for purposes of such
agreement or plan during such period of additional employment had
been equal to the amount specified in Section 3(b)(ii)(A) or (B),
whichever is higher. In the event that your
participation in any such plan, program, or arrangement is not
possible after Termination under the general terms and provisions
of such plans, programs, and arrangements, 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 or alternatively, pay an amount equal to the
reasonable value of such substantially similar
benefits. If, after termination of employment following
a change in control of the Company, you elect or, if applicable,
your spouse or family elects, COBRA continuation coverage, the
Company will pay the applicable COBRA premium for the maximum
period during which such coverage is available. If
termination follows a change in control of the Company specified in
Section 6(b)(iii), then you and, if applicable, your spouse and
family may elect in lieu of COBRA continuation coverage to have the
acquiring entity obtain an individual or group health insurance
coverage and the acquiring entity will pay premiums thereunder for
the maximum period during which you and, if applicable, your spouse
and family could have elected to receive COBRA continuation
coverage.
(d)
Establishment of Trust . Within five days
following conclusion of a change in control of the Company, the
Company shall establish a trust that conforms in all regards with
the model trust published in Revenue Procedure 92-64 and deposit an
amount sufficient to satisfy all liabilities of the Company under
Section 3(b) of this Agreement.
(e)
Automatic Extension . Notwithstanding the prior
provisions of this Section, if an individual is elected to the
Board of Directors who has not been nominated by the Board of
Directors as constituted prior to his election, then the term of
this Agreement will automatically be extended until two years from
the date on which such individual was elected if such extended
termination date is later than the normal termination date of this
Agreement, otherwise, the termination date of this Agreement will
be as provided above. This extension will take effect
only upon the first instance of an individual being elected to the
Board of Directors without having been nominated by the original
Board.
(f)
Alternative to Lump Sum Payout . The amount
described in this subsection will be paid to you in a single
lump-sum unless, at least 30 days before the conclusion of a change
in control of the Company, you elect in writing to receive the
severance pay in 3 equal annu
