Exhibit 10.2
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AGREEMENT is made as of this
_ 25th __ day of January, 2006, by and among PARTNERS trust
financial group, inc., a Federal corporation ("Partners Trust" or
the "Employer"), and STEVEN A. COVERT, an individual residing in
New Hartford, New York (the "Executive").
WHEREAS, the Executive is serving
as Senior Executive Vice President and Chief Operating Officer of
Partners Trust and Partners Trust Bank, a federally chartered stock
savings bank wholly owned by Partners Trust (the "Bank")
;
WHEREAS, the Executive and
Partners Trust have previously entered into a Second Amended and
Restated Employment Agreement dated as of April 29, 2004 (the
"Prior Agreement"), which the parties intend to be replaced and
superceded by this Agreement; and
WHEREAS, the Board of Directors
of Partners Trust have approved and authorized Partners Trust to
amend and restate this Agreement to set forth the terms and
conditions for the employment relationship of the Executive with
the Employer:
NOW, THEREFORE, in consideration
of the foregoing and the mutual promises, covenants and agreements
set forth in this Agreement, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties agree as follows:
1.
Employment.
(a)
Term. The initial term of employment under this Agreement
shall be for the period commencing on the date hereof and ending on
March 31, 2009 (the "Initial Term"). Subject to annual review and
approval by the Board of Directors of the Employer, this Agreement
may be extended by written notice from the Employer to the
Executive for an additional consecutive 12-month period (the
"Extended Term") no later than March 31, 2007 and every subsequent
March 31 thereafter, unless the Executive has given contrary
written notice to the Employer at least 90 days before any such
renewal date. The Initial Term and all such Extended Terms are
collectively referred to herein as the "Employment
Term."
(b)
Duties. The Executive is employed as Senior Executive Vice
President and Chief Operating Officer of Partners Trust during the
Employment Term. As the Senior Executive Vice President and Chief
Operating Officer of Partners Trust, the Executive shall render
executive, policy and other management services to Partners Trust
of the type customarily performed by persons serving in a similar
executive capacity and Partners Trust shall cause the Bank to
appoint Executive to also serve as Senior Executive Vice President
and Chief Operating Officer of the Bank. During the Employment
Term, the Executive shall serve as a full-time employee, and be
subject to the direction of such person(s) designated by the Board
of Directors of the Employer and Board of Directors of the Bank to
give direction to the Executive, and, in connection therewith to
perform such duties as shall be directed by such person designated,
and as are commensurate and consistent with the Executive's title,
position and experience. The Executive shall also perform such
duties as the Board of Directors of the Employer or the Board of
Directors of the Bank may from time to time reasonably direct.
During the Employment Term, there shall be no material decrease in
the duties and responsibilities of the Executive otherwise than as
provided herein, unless the parties otherwise agree in writing;
provided , that if the Executive temporarily assumes some or
all of the duties and responsibilities of another key executive of
the Employer due to such key executive's death, disability or
termination of employment, the reassignment of such duties and
responsibilities back to the key executive or his or her
replacement shall not constitute a material decrease in the duties
and responsibilities of the Executive. During the Employment Term,
the Executive shall not be required to relocate, without his
consent, his place of employment to a location more than 65 miles
away from the Bank's Utica, New York headquarters location to
perform his duties hereunder, except for reasonably required travel
by the Executive on the business of the Employer or the Bank. The
Executive is encouraged to affiliate with professional
associations, business and civic organizations in support of his
role as Senior Executive Vice President and Chief Operating Officer
, provided that Executive's involvement in such activities does not
adversely affect the performance of his duties on behalf of the
Employer or the Bank.
2.
Compensation and Benefits.
(a)
Base Salary. The Executive shall initially be paid a base
salary at an annualized rate of $231,000 (as may be adjusted from
time to time in accordance with this Agreement, "Base Salary"),
payable in accordance with the Employer's regular payroll practices
for its executive employees. On an annual basis, prior to June 30
of each year during the Employment Term, the Executive's Base
Salary shall be reviewed by the Board of Directors of the Employer
and may be increased in the discretion of the Board of Directors of
the Employer. In reviewing the Executive's Base Salary, the Board
of Directors of the Employer shall consider the Executive's
performance, scope of responsibility, and such other matters, as
the Board of Directors of the Employer deems appropriate. The Base
Salary of the Executive shall not be decreased at any time during
the Employment Term from the amount then in effect, unless the
Executive otherwise agrees in writing. The Executive shall not be
entitled to receive fees for serving as a director of the Employer
or any of its subsidiaries or for serving as a member of any
committee of the Boards of Directors of the Employer or any of its
subsidiaries.
(b)
Bonuses and Incentive Compensation. The Executive shall be
eligible to participate in an equitable manner with all other
executive employees of the Employer and the Employer shall cause
the Bank to allow the Executive to participate in an equitable
manner with all other executive employees of the Bank in any bonus
or other incentive programs as may be authorized, declared and paid
by either the Board of Directors of the Employer or the Board of
Directors of the Bank. No other compensation provided for in this
Agreement shall be deemed a substitute for the Executive's right to
participate in such bonuses and incentive programs when and as
declared by the Board of Directors of the Employer or the Board of
Directors of the Bank. This provision shall not preclude the grant
of any other bonus to the Executive as determined by the Board of
Directors of the Employer or the Board of Directors of the
Bank.
(c)
Benefit Plans. The Executive shall be eligible to
participate in any employee pension benefit plans (as that term is
defined under Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended), group life insurance plans,
medical plans, dental plans, long-term disability plans, business
travel insurance programs and other fringe benefit plans or
programs maintained by the Employer for the benefit of its
executive employees and the Employer shall cause the Bank to make
the Executive eligible to participate in such plans or programs as
maintained by the Bank for the benefit of its executive employees.
The Executive's participation in any such benefit plans and
programs shall be based on, and subject to satisfaction of, the
eligibility requirements and other conditions of such plans and
programs. If the Executive's employment by the Employer shall cease
for any reason other than by voluntary termination (as described in
Section 3(b) below) or for "Cause" (defined in Section 3(e) below),
the Executive shall receive continued group life, health, dental,
accident and long term disability insurance coverage for the
remaining Employment Term, equivalent to the coverage to which he
would have been entitled under such plans (as in effect on the date
of his termination of employment, or, if his termination of
employment occurs after a "Change of Control" (defined in Section
4(c) below), on the date of such Change of Control, whichever
benefits are greater, if he had continued working for the Employer
during the remaining Employment Term at the highest rate of salary
achieved during the Employment Term, but taking into account any
coverage provided from any subsequent employer.
(d)
Expenses. The Executive is expected and is authorized to
incur reasonable expenses in the performance of his duties
hereunder, including the costs of business entertainment, travel,
and attendance at conventions and meetings. The Employer shall
reimburse the Executive for all such expenses promptly upon
periodic presentation by the Executive of an itemized account of
such expenses.
(e)
Other Benefits. During the period of employment, the
Executive shall also be entitled to receive the following
benefits:
(i)
Paid vacation of at least four weeks during each calendar year
(prorated for partial years) (with no carry over of unused vacation
to a subsequent year) and any holidays that may be provided to
substantially all employees of the Employer and the Bank in
accordance with the Employer's and the Bank's holiday
policy;
(ii)
Reasonable sick leave consistent with the Employer's and the Bank's
policy in that regard for other executive officers; and
(iii)
Reimbursement of fees or dues (but not personal expenses) for up to
two club memberships of the Executive at dining or country clubs as
may be beneficial to the Executive's roles with the Employer and
the Bank. The choice of clubs shall be subject to review and
disapproval by either the Board of Directors of the Employer at any
time.
(iv)
Use of an Employer- or Bank-owned vehicle of type and age
commensurate with the Executive's duties and role with the
Employer.
3.
Termination.
Prior to a Change of Control, the
Executive's employment by the Employer shall be subject to
termination as follows:
(a)
Expiration of the Employment Term . The Executive's
employment with the Employer shall not terminate prior to the
expiration of the established term, except as provided below in
Section 3.
(b)
Voluntary Termination . The Executive may terminate this
Agreement upon not less than 60 days prior written notice delivered
to the Employer, in which event the Executive shall be entitled
only to the compensation and benefits the Executive has earned or
accrued through the effective date of the voluntary
termination.
(c)
Termination Upon Death . This Agreement shall terminate upon
the Executive's death. In the event this Agreement is terminated as
a result of the Executive's death, the Employer shall continue
payments of the Executive's Base Salary which should have otherwise
been due for a period of 90 days following the Executive's death to
the Executive's estate.
(d)
Termination Upon Disability . The Employer may terminate
this Agreement upon the Executive's disability. For purposes of
this Agreement, the Executive's inability to perform the
Executive's duties hereunder by reason of physical or mental
illness or injury for a period of 26 consecutive weeks that follows
the Executive's use of all available sick leave (the "Disability
Period") shall constitute disability. The determination of
disability shall be made by a physician selected by the Employer.
During the Disability Period, the Executive shall be entitled to
100% of the Executive's Base Salary otherwise payable during that
period, reduced by any other Employer- or Bank-provided benefits to
which the Executive may be entitled with respect to the Disability
Period 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).
(e)
Termination for Cause . The Employer may terminate the
Executive's employment for Cause by written notice to the
Executive. For purposes of this Agreement, "Cause" shall mean the
Executive's (1) personal dishonesty, incompetence, willful
misconduct; (2) breach of fiduciary duty involving personal profit,
intentional failure to perform material stated duties; (3) willful
violation of any law, rule, or regulation (other than traffic
violations or similar offenses); (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; or (5) conduct tending to bring the Employer
or the Bank into substantial public disgrace or disrepute. In
determining incompetence, the acts or omissions shall be measured
against standards generally prevailing in the financial
institutions industry; provided, it shall be the burden of the
Employer to prove the alleged acts and omissions and the prevailing
nature of the standards the Employer shall have alleged are
violated by such acts and/or omissions.
Notwithstanding any other term or
provision of this Agreement to the contrary, if the Executive's
employment is terminated for Cause, the Executive shall forfeit all
rights to payments and benefits otherwise provided pursuant to this
Agreement; provided, however, that Base Salary shall be paid
through the date of termination.
(f)
Termination Without Cause. The Employer may terminate the
Executive's employment for reasons other than Cause upon not less
than 60 days prior written notice delivered to the Executive, in
which event the Employer shall pay to the Executive, within 30 days
of the date of termination, a lump sum payment equal to the unpaid
Base Salary that would have been paid to or earned by the Executive
pursuant to this Agreement, if the Executive had remained employed
under the terms of this Agreement through the end of the Employment
Term, or for a period of 12 months following the date of
termination, whichever period is longer. If the Executive
terminates his employment with the Employer during the Employment
Term for "Good Reason" (defined in Section 4(d) below), other than
following a Change of Control, such termination shall be deemed to
have been a termination by the Employer of the Executive's
employment without cause.
(g)
Change of Control. If the Executive's employment by the
Employer shall cease for any reason other than Cause within six
months prior to, or 24 months following, a Change of Control that
occurs during the Employment Term, the provisions of paragraph 4
below shall apply.
(h)
Resignation. Effective upon the Executive's termination of
employment for any reason, the Executive hereby resigns from any
and all offices and positions related to the Executive's employment
with the Employer and any subsidiaries or affiliates thereof, and
held by the Executive at the time of termination.
(i)
Regulatory Limits. Notwithstanding any other provision in
this Agreement, (i) the Employer may terminate or suspend this
Agreement and the employment of the Executive hereunder, as if such
termination were for Cause under Section 3(e) hereof, to the extent
required by the applicable Federal or state related to banking,
deposit insurance or bank or savings institution holding companies
or by regulations or orders issued by the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation or any other
state or federal banking regulatory agency having jurisdiction over
Partners Trust or the Bank and (ii) no payment shall be required to
be made to or for the benefit of the 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 the
Employer's burden to prove that any such action was so
required.
4.
Termination Following a Change of Control.
(a)
In the event the Employer terminates the Executive's employment, or
the Executive terminates employment with Good Reason, in either
case within six months prior to, or 24 months after, a Change of
Control, the Employer shall, within 60 days of termination, pay to
the Executive a lump sum cash payment equal to 2.99 times the
average annual compensation paid to the Executive by Employer and
included in the Executive's gross income for income tax purposes
during the five full calendar years, or shorter period of
employment, that immediately precede the year during which the
Change of Control occurs.
(b)
Except as set forth below, in the event it shall be determined that
any payment or distribution by or for the account of the Employer
to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this Section 4) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or any
interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such
