EMPLOYMENT AGREEMENT

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this 23 ^rd day of April 2007, by and between Jeffrey M. Levy ("Executive") and NBT BANCORP INC., a Delaware corporation having its principal office in Norwich, New York ("NBTB")

W I T N E S S E T H   T H A T:

WHEREAS, Executive is serving as the Executive Vice President, Regional President, Capital Region of NBT Bank, National Association, a national banking association which is a wholly-owned subsidiary of NBTB (“NBT Bank”);

WHEREAS, the parties desire to enter into this Agreement, setting forth the terms and conditions of the continued employment relationship of Executive with NBTB;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements set forth in this Agreement, intending to be legally bound, the parties agree as follows:

1.            Employment; Responsibilities and Duties.

(a)           NBTB hereby agrees to continue to employ Executive and to cause NBT Bank and any successor organization to NBT Bank to employ Executive, and Executive hereby agrees to serve as the Executive Vice President, Regional President, Capital Region of NBT Bank and any successor organization to NBTB or NBT Bank, as applicable, during the Term of Employment (as such term is defined below).  During the Term of Employment, Executive shall perform all duties, and responsibilities, and have the authority as shall be set forth in the bylaws of NBTB or NBT Bank or as may otherwise be determined and assigned to his by NBTB   or by NBT Bank.

(b)           Executive shall devote his full working time and best efforts to the performance of his responsibilities and duties hereunder. During the Term of Employment, Executive shall not, without the prior written consent of the Chief Executive Officer of NBTB, render services as an employee, independent contractor, or otherwise, whether or not compensated, to any person or entity other than NBTB, NBT Bank or their affiliates; provided that Executive may, where involvement in such activities does not individually or in the aggregate significantly interfere with the performance of his duties or violate the provisions of section 4 hereof, (i) render services to charitable organizations, (ii) manage his personal investments, and (iii) with the prior permission of the Chief Executive Officer of NBTB, hold such other directorships or part-time academic appointments or have such other business affiliations as would otherwise be prohibited under this section 1.

2.            Term of Employment .

(a)           The initial term of employment under this Agreement shall be for the period commencing on the date hereof and ending on January 1, 2008 (the “Initial Term”), provided, however, that on December 31, 2007, and each December 31st thereafter, the term of the agreement shall extend itself by one additional year (the “Extended Term”), unless NBTB has given contrary written notice to Executive at least 90 days before any such renewal date.  The Initial Term and all such Extended Terms are collectively referred to herein as the “Term of Employment.”

(b)           Executive’s employment with NBTB shall not terminate prior to the expiration of the Initial Term or any Extended Term, except as provided below:

(i)            Voluntary Termination .  Executive may terminate this Agreement upon not less than 90 days prior written notice delivered to NBTB, in which event Executive shall be entitled to compensation and benefits earned or accrued through the effective date of termination (the “Termination Date”).

(ii)            Termination Upon Death .  This Agreement shall terminate upon Executive’s death, in which event Executive’s estate shall be entitled to compensation and benefits earned or accrued through the date of death.

(iii)           Termination Upon Disability .  NBTB may terminate this Agreement upon Executive’s disability.  For purposes of this Agreement, Executive’s inability to perform his duties hereunder by reason of physical or mental illness or injury for a period of at least 90 consecutive days or at least 120 days in any period of 12 consecutive months (the “Disability Period”) shall constitute disability.  The determination of disability shall be made by a physician selected by NBTB.  During the Disability Period, Executive shall be entitled to the Base Salary (as such term is defined below) otherwise payable during that period, reduced by any other NBTB-provided benefits to which Executive may be entitled, which benefits are specifically payable solely on account of such disability (including, but not limited to, benefits provided under any disability insurance policy or program, worker’s compensation law, or any other benefit program or arrangement).  In the event of termination upon Executive’s disability, Executive shall be entitled to compensation or benefits earned or accrued through the Termination Date.

                                (iv)           Termination for Cause .  NBTB may terminate Executive’s employment for Cause by written notice to Executive.  For purposes of this Agreement, “Cause” shall mean Executive’s: (1) personal dishonesty, incompetence (which shall be measured against standards generally prevailing in the financial institutions industry), willful or gross misconduct with respect to the business and affairs of NBTB or NBT Bank, or with respect to any of their affiliates for which Executive is assigned material responsibilities or duties; (2) willful neglect, failure, or refusal to carry out his duties hereunder in a reasonable manner  after a written demand for substantial performance is delivered to Executive that specifically identifies the manner in which NBTB believes that Executive has not substantially performed his duties and Executive has not resumed such substantial performance within 21 days of receiving such demand; (3) willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or the conviction of a felony, whether or not committed in the course of his employment with NBTB; (4) being a specific subject of a final cease and desist order from, written agreement with, or other order or supervisory direction from, any federal or state regulatory authority; (5) conduct tending to bring NBTB, NBT Bank or any of their affiliates into public disgrace or disrepute; or (6) breach of any representation or warranty in section 6(a) hereof or of any agreement contained in section 1, 4, 5 or 6(b) hereof.

Notwithstanding any other term or provision of this Agreement to the contrary, if Executive’s employment is terminated for Cause, Executive shall forfeit all rights to compensation and benefits otherwise provided pursuant to this Agreement; provided, however, that the Base Salary shall be paid through the Termination Date.

(v)            Termination Without Cause .  NBTB may terminate Executive’s employment for reasons other than Cause upon not less than 30 days prior written notice delivered to Executive, in which event Executive shall be entitled to the Base Salary for a period of 12 months following the Termination Date and the compensation and benefits earned or accrued through the Termination Date.

(vi)            Termination for Good Reason .  If Executive terminates his employment with NBTB for Good Reason, other than following a Change of Control, such termination shall be deemed to have been a termination by NBTB of the Executive’s employment without Cause and Executive shall be entitled to receive all benefits and payments due to his under such a termination.”Good Reason” shall mean, without Executive's express written consent, reassignment of Executive to a position other than for "Cause," or a decrease in the amount or level of Executive's salary or benefits from the amount or level established herein.

                (vii)            Resignation .  Effective upon Executive’s termination of employment for any reason, Executive hereby resigns from any and all offices and positions related to Executive’s employment with NBTB, NBT Bank or any affiliates thereof, and held by Executive at the time of termination.

(viii)           Regulatory Limits .  Notwithstanding any other provision in this Agreement NBTB may terminate or suspend this Agreement and the employment of Executive hereunder, as if such termination were for Cause under section 2(b)(iv) hereof, to the extent required by the applicable federal or state statue related to banking, deposit insurance or bank or savings institution holding companies or by regulations or orders issued by the Office of the Controller of the Currency, the Federal Deposit Insurance Corporation or any other state or federal banking regulatory agency having jurisdiction over NBT Bank or NBTB, and no payment shall be required to be made to or for the benefit of Executive under this Agreement to the extent such payment is prohibited by applicable law, regulation or order issued by a banking agency or a court of competent jurisdiction; provided, that it shall be NBTB’s burden to prove that any such action was so required

 (c)           Any provision of this section 2 to the contrary notwithstanding, in the event that the employment of Executive with NBTB is terminated in any situation described in section 3 of the change-in-control letter agreement dated April 23, 2007 between NBTB and Executive (the "Change-in-Control Agreement") so as to entitle Executive to a severance payment and other benefits described in section 3 of the Change-in-Control Agreement, then Executive shall be entitled to receive the following, and no more, under this section 2:

                                (d)             Any provision of this Section 2 to the contrary notwithstanding, in the event that the Employment of the Executive with NBTB is terminated in any situation described in section 3 of the Change-in-Control Agreement so as to entitle Executive to a severance payment and other benefits described in section 3 of the Change-in-Control Agreement, and if as of the Termination Date the Executive is a “key employee” for the purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, NBTB will delay the payment of such severance payments six (6) months from the date they otherwise would be paid hereunder.

3.             Compensation.   For the services to be performed by Executive for NBTB and its affiliates under this Agreement, Executive shall be compensated in the following manner:

(a)            Base Salary.   During the Term of Employment:

(b)            Employee Benefit Plans or Arrangements.   During the Term of Employment, Executive shall be entitled to participate in all employee benefit plans of NBTB, as presently in effect or as they may be modified by NBTB from time to time, under such terms as may be applicable to o