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Exhibit
10.21
CHITTENDEN
CORPORATION
Senior Executive
Severance Agreement
AGREEMENT made as of this
18th day of March, 1998 by and among Chittenden Corporation, a
Vermont corporation with its principal place of business in
Burlington, Vermont (the “Company” and the
“Employer”), and F. Sheldon Prentice of Montpelier,
Vermont (the “Executive”), an individual presently
employed as the Senior Vice President and General Counsel of the
Company.
1. Purpose . The
Company considers it essential to the best interest of its
stockholders to foster the continuous employment of key management
personnel. The Board of Directors of the Company (the
“Board”) recognizes, however, that, as is the case with
many publicly held corporations, the possibility of a Change in
Control (as defined in Section 2 hereof) 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 Company and its
stockholders. Therefore, the Board has determined that appropriate
steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Employer’s
management, including the Executive, to their assigned duties
without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control.
Nothing in this Agreement shall be construed as creating an express
or implied contract of employment and except as otherwise agreed in
writing between the Executive and the Employer, the Executive shall
not have any right to be retained in the employ of the
Employer.
2. Change in Control .
A “Change in Control” shall mean the occurrence of any
one of the following events:
(a) any “person,”
as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)
(other than the Company or any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), 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 more than 25% of the number
of the Company’s then outstanding securities; or
(b) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in Section 2(a), (c) or
(d) of this Section 2) whose election by the Board or nomination
for election by the Company’s stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease by any reason to constitute at lease one half
thereof; or
(c) the stockholders of the
Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or being converted into voting securities of
the surviving entity) more than 60% of the number of outstanding
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(d) the stockholders of the
Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.
3. Terminating Event .
A “Terminating Event” shall mean any of the events
provided in this Section 3 occurring within 3 years subsequent to a
Change in Control as defined in Section 2:
(a) termination by the
Employer of the employment of the Executive with the Employer for
any reason other than death of the Executive.
A Terminating Event shall not
be deemed to have occurred pursuant to this Section 3(a) solely as
a result of the Executive being an employee of any direct or
indirect successor to the business or assets of the Employer,
rather than continuing as an employee of the Employer following a
Change in Control, or
(b) termination by the
Executive of the Executive’s employment with the Employer for
any reason, at Executive’s option.
4. Special Termination
Payments . In the event a Terminating Event occurs within three
(3) years after a Change in Control, including Executive’s
election to terminate employment, upon written notice from the
Executive to the Employer.
(a) the Employer shall pay to
the Executive an amount equal to the sum of the
following:
(i) 1.50 times the amount of
the current base salary of the Executive, determined prior to any
reductions for pre-tax contributions to a cash or deferred
arrangement or a cafeteria plan; and
(ii) 1.50 times the amount of
the bonus that was actually paid to the Executive in the year of
the Change in Control; and
(iii) 1.50 times the amount
equal to the 401(k) match and the profit sharing portion of the
401(k) contribution which Executive would have received in the year
of the Change in Control; and
(iv) 1.50 times the amount
equal to 401(k) restoration payment, if any, made to the Executive
in the year of the Change in Control; and
(v) 1.50 times the amount
equal to any payment made to the Executive under the supplemental
executive retirement plan for members of the executive management
group; and
(vi) all bonus payments
relating to prior year bonuses and related contingent payments that
have yet to be fully paid for any reason.
Said amount shall be paid in one lump
sum payment no later than thirty-one (31) days following the Date
of Termination (as such term is defined in Section 8(b));
and
2
expense certain benefits, including,
without limitation, medical, dental, long-term disability,
accidental death and dismemberment insurance, life insurance and
other fringe benefits received by Executive in the year of a Change
in Control, on the same terms and same conditions as though the
Executive had remained an active employee, for eighteen (18)
months. At Executive’s election, the Employer will be
required to pay to Executive the cash equivalent of the foregoing,
determined by a reputable accounting or actuarial firm selected by
the Executive and paid for by Employer, and
(c) the Employer shall
transfer or roll over any restricted stock or options granted by
the Company to the Executive to the successor entity after a Change
in Control; and
(d) the Employer shall
provide Executive with professional advice of a financial planner,
or actuary or an accountant of Executive’s choice to help
Executive determine which elections Executive will make with
respect to this Agreement,
(e) Employer shall pay for
outplacement services selected by Executive and shall provide an
office and clerical assistance to the Executive for one year after
a termination of Executive’s employment.
(f) The Employer shall pay to
the Executive all reasonable legal and mediation fees and expenses
incurred by the Executive in obtaining or enforcing any right or
benefit provided by this Agreement, except in cases involving
frivolous or bad faith litigation initiated by the
Executive.
5. Additional
Benefits.
(a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be
determined that any compensation, payment or distribution by 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 (the “Severance payments”)
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
interest and penalties, are hereinafter collectively referred to as
the “Excise Tax”), then the Executive shall be entitled
to receive an additional payment (a “Gross-Up Payment”)
such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Severance Payments, and Federal, state,
and local income tax, employment tax and Excise Tax upon the
payment provided by this subsection and any interest and/or
penalties assessed with respect to such Excise Tax, shall be equal
to the Severance Payments.
(b) Subject to the provisions
of Section 5(c), all determinations required to be made under this
Section 5, including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be determined by Arthur
Andersen, LLP or any other nationally recogni
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