EXHIBIT 10.14
THE MERCHANTS BANK AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN FOR DIRECTORS
THE MERCHANTS BANK, a Vermont banking corporation with a principal
place of business in Burlington, Vermont (the "Bank"), does hereby amend the
Deferred Compensation Plan (the "Plan") heretofore adopted by the Bank and
as set forth in the standard contract executed by the Bank and various
directors of the Bank since the time of adoption.
Section 1. Purpose. The purpose of this Plan is to provide a
foundation for continued growth of the Bank by strengthening its capacity to
attract and retain outstanding directors in continued service.
Section 2. Participants. All Directors of the Bank are eligible to
participate in the Plan ("Participants"). No officers who are not already
Participants will be allowed to take part in this Plan.
Section 3. Participant's Election.
(a) For the purpose of this Plan, "compensation" shall mean all fees,
salary or other compensation paid by the Bank to said
Participant as a director or officer of the Bank (including any
amount of such fees which a Participant elects to defer under
this Plan, but not including amounts paid as expense
reimbursement).
(b) For the year 1986, a Participant, by filing a written election
with the Bank on or before January 31, 1986 may elect not to
receive a part or all of the compensation that would have
otherwise been paid during the remainder of the year.
(c) For the year 1987, and each year thereafter, a Participant, by
filing a written election with the Bank on or before December 31
of the preceding year, may elect not to receive a part or all of
the compensation that would have otherwise been paid during such
year.
(d) Individuals who first become eligible to participate in this Plan
after January 1 during any year, by filing a written election
with the Bank before becoming eligible to participate, may elect
not to receive a part or all of the compensation that would have
otherwise been paid during the remainder of such year.
(e) An election shall not be effective unless the Participant also
specifies the manner in which the account will be distributed
(see Section 5) and whether the Growth Program shall be fixed
or floating (see Section 4). The Fixed Growth Percentage shall
only be available in amounts and at times and rates in the sole
discretion of the Bank.
(f) Any election to defer compensation under this Section shall be
irrevocable for that year or the remainder of that year (or
longer in the case of Fixed Growth Program) and may not be
cancelled by the Participant for any reason except that if the
Board of Directors of the Bank or any committee appointed by it
(the "Board") amends the Plan pursuant to Section 11, the
Participant may elect, prior to the effective date of such
amendment, to discontinue contributions for the remainder of the
year (or other election period) commencing with the effective
date of such amendment.
(g) Any election to defer compensation under this Section will not
reduce benefits payable under any other benefit plan the Bank
may provide for its directors. Such benefits will be calculated
as if the election had not been made.
Section 4. Deferral Account.
(a) The Bank shall establish one or more bookkeeping accounts (a
"Deferral Account") for each Participant to record the amounts
deferred according to the provisions of Section 3. The Bank
shall credit to each Participant's Deferral Account the
compensation deferred by the Participant in accordance with this
Plan. Such credits shall be made at the times that payment to
the Participant of current compensation would have been made if
the deferral had not been elected hereunder.
(b) If the Participant shall elect a Floating Growth Program (as
hereinafter defined), the Bank shall also credit to such
Participant's Deferral Account on the last day of each month an
amount equal to a percentage (hereinafter referred to as the
"Growth Percentage") of the balance recorded in such account as
of the fifteenth day of said month. The Growth Percentage will
be fixed from time to time in the discretion of the Board. The
amount determined by applying the Growth Percentage will be
added to the balance in the Deferral Account. The Board shall
have the right to establish or change the method of computing
Growth Percentages in its sole discretion.
(c) If the Participant shall elect a Fixed Growth Program, such as
may, from time to time, be offered by the Bank, the Participant
shall so signify on his Deferred Compensation Election Form and,
subject to the provisions of the remainder of this subsection
(c), Growth Percentages will be credited to such Participant's
account in accordance with the terms and schedule as shown on
the Deferred Compensation Election Form executed by the
Participant and as may, from time to time, be amended; provided,
however, that:
(i) From and after December 31, 1994, no further deferrals may
be made to the Fixed Growth Program.
(ii) The amount that otherwise would be credited to a
Participant's Fixed Growth Account to the effective date
of this Amended and Restated Deferred Compensation Plan
for Directors, whether on account of deferrals, on account
of Fixed Growth Percentage credits, or otherwise, shall be
replaced and supplanted by the credit to such
Participant's Fixed Growth Account in the amount set
opposite such Participant's name on the attached Schedule
4(c).
(iii) On the effective date of this Amended and Restated Plan,
in lieu of any amounts that the Bank otherwise would be
obligated to pay to any Plan Participant from and after
the Effective Date on account of the Fixed Growth Program,
the Bank shall be obligated to distribute to each
Participant, at the times and as provided in this Amended
and Restated Plan: (i) that number of shares of Merchants
Bancshares, Inc. set forth on Schedule 4(c) opposite such
Participant's name; plus (ii) all dividends, distributions
or other consideration paid on, on account of, or in
exchange for such shares prior to their distribution as
herein provided; plus (iii) the amount, if any, set
opposite the Participant's name under the Column labeled
"1/2/96 Payment" on that schedule. Notwithstanding the
provisions of the immediately-preceding sentence: (y) in
the event of a merger, consolidation or reorganization of
Merchants Bancshares, Inc., the Bank shall be obligated to
distribute, in lieu of the shares of Merchants Bancshares,
Inc. referred to above, such shares or other property as
shall have been exchanged for said Merchants Bancshares,
Inc. stock, or into which said Merchants Bancshares, Inc.
shares shall have been converted pursuant to such merger,
consolidation or reorganization; and (z) in the event of a
Change of Control (as defined below), the Bank shall have
the option, to be exercised (if at all) not earlier than
sixty days prior to such Change of Control nor later than
sixty days thereafter, and to be effective not earlier
than the time when such Change of Control occurs nor later
than one hundred eighty days thereafter, to provide that
in lieu of any obligation thereafter to distribute shares
of Merchants Bancshares, Inc., the Bank thereafter shall
be required to pay or distribute to each Fixed Growth Plan
Participant, in cash or in securities, a variable amount
that equals the value from time to time of the balance
posted to the bookkeeping account maintained for such
Participant in the Trust referred to in Section 6, below;
provided, however, that to the extent the balance posted
to the credit of such Participant in the Trust has been
reduced as a result of any withdrawals from the Trust for
any purpose other than a payment to or for the benefit of
the Participant or the Participant's designated
beneficiary (see Section 7, below), the amount to be paid
or distributed to such Participant shall be adjusted to
take into account both such withdrawal(s) and the earnings
(or losses) that would have been credited to the
Participant's account under the Trust if such
withdrawal(s) had not occurred.
A "Change of Control" shall occur upon the earliest of the following:
(A) any "person," as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934 (a "Person"), becomes a
"beneficial owner," as such term is used in Rule 13D-3
promulgated under such Act (an "Owner") of twenty-five percent
(25%) or more of the Voting Stock, as defined below, of
Merchants Bancshares, Inc.; or
(B) the majority of the Board of Merchants Bancshares, Inc. consists
of individuals other than the Incumbent Directors;
(C) Merchants Bancshares, Inc., or the Bank, adopts any plan of
liquidation providing for the distribution of all or
substantially all of its assets;
(D) all or substantially all of the business of Merchants Bancshares,
Inc. is disposed of pursuant to a merger, consolidation, or
other transaction in which Merchants Bancshares, Inc. is not the
surviving corporation or is substantially or completely
liquidated (unless the shareholders of Merchants Bancshares,
Inc. immediately prior to such merger, consolidation, or other
transaction beneficially own, directly or indirectly, in
substantially the same proportion as they owned the Voting Stock
of Merchants Bancshares, Inc., all of the Voting Stock, or
correlative ownership interests, of the entity or entities, if
any, that succeed to the business of Merchants Bancshares,
Inc.); or
(E) Merchants Bancshares, Inc. combines with another company and is
the surviving corporation but, immediately after the
combination, the shareholders of Merchants Bancshares, Inc.
immediately prior to the combination (other than shareholders
who, immediately prior to the combination, were "affiliates" of
such other company, as such term is defined in the rules of the
Securities and Exchange Commission) do not beneficially own,
directly or indirectly, fifty percent (50%) or more of the
Voting Stock of the combined company; or
(F) Merchants Bancshares, Inc. transfers to any Person or Persons not
controlled by Merchants Bancshares, Inc.: (1) fifty percent
(50%) of the Voting Stock of the Bank; or (2) forty percent
(40%) or more of the assets of the Bank.
Notwithstanding the occurrence of any of the events described in
clauses (A), (D) or (E), above, no "Change of Control" shall be deemed to
have occurred if:
(1) immediately following such event, members of the Board or
employees of Merchants Bancshares, Inc. and its subsidiaries who
file or are required to file (or immediately prior to such
event, filed or were required to file) reports under Section
16(a) of the 1934 Act) are beneficial owners, directly or
indirectly, of twenty-five percent (25%) or more of the Voting
Stock of Merchants Bancshares, Inc. or its successor, as the
case may be; or
(2) such Change of Control event occurs as a result of a proposal
initiated by the Board of Merchants Bancshares, Inc. (and not as
a result of prior actions taken by the Person or Persons
effecting the Change of Control), and if at the time of making
the proposal, the Board of Directors notifies the Fixed Growth
Plan Participants that any such Change of Control event
resulting from the proposal shall not constitute a Change of
Control. For this purpose, a Change of Control event shall be
considered to result from a proposal if the event occurs because
of the acquisition of stock or assets of Merchants Bancshares,
Inc., directly or indirectly, by Persons, or a group of some of
whose members are Persons, identified in the written notice
described above.
"Incumbent Director(s)" shall mean the members of the Board of
Merchants Bancshares, Inc. on the date of this Amended Plan, provided that
any person becoming a director subsequent to the date of this Amended Plan
whose election or nomination for election was approved by two-thirds (but in
no event less than two) of the directors who at the time of such election or
nomination comprise the Incumbent Directors shall be considered to be an
Incumbent Director.
"Voting Stock" of any corporation shall mean the capital stock of any
class or classes having general voting power under ordinary circumstances,
in the absence of contingencies, to elect directors of such corporation.
Section 5. Distribution of Deferral Account.
(a) Commencing on January 2 of the year following the Participant's
attaining the age of sixty-five (65) or the Participant's
earlier death ("Termination Date"), the Bank shall commence
distribution and/or payment of the Merchants Bancshares, Inc.
shares and/or other amounts which the Bank is obligated to
distribute and/or pay pursuant to Section 4 of this Amended and
Restated Plan, in accordance with the provisions of the
Participant's Deferred Compensation Election Form and this Plan.
(b) Notwithstanding the provisions of Section 5(a), above, to the
extent, if at all, that the Bank is provided with evidence
reasonably satisfactory to it that all or part of the shares or
other amounts to be distributed to the Participant or the
Participant's beneficiary are includible in the Participant's or
such beneficiary's taxable estate for estate tax purposes, and
increase the estate taxes otherwise payable by such estate, the
Bank shall promptly distribute or pay to the person(s) or
entity(ies) entitled thereto, the entire remaining amounts
payable by the Bank under this Plan to such person(s) or
entity(ies).
(c) Notwithstanding the provisions of Section 5(a), above, a
Participant may request, and the Bank may approve, a
distribution due to hardship by submitting a written request to
the Board accompanied by evidence to demonstrate that the
circumstances being experienced qualify as a hardship. If a
hardship is found by the Bank, the distribution shall be limited
to an amount sufficient to meet the emergency.
(d) For purposes of Section 5(c), "hardship" means a severe financial
hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or a dependent
of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control
of the Participant. The circumstances that will constitute a
hardship will depend on the facts of each case. However, in no
event shall payment be made if such purported hardship is or may
be relieved:
(i) through reimbursement or compensation by insurance or
otherwise;
(ii) by liquidation of the Participant's assets, to the extent
that such liquidation would not itself cause severe
financial hardship; or
(iii) by the Participant's ceasing deferrals under the Plan.
In no case shall the need to send a Participant's child to
college or the desire to purchase a home be considered a
hardship.
(e) Prior to the year in which payments are to commence under Section
5(a) a Participant may request in writing to defer commencement
of the such payments for any amount of time up to three years
from the first January 2 following the Termination Date.
(f) During the period of time that payments are being made to a
Participant who has elected a Floating Growth Program, the
Growth Percentage shall be applied to the unpaid balance of the
Floating Growth Deferral Account in the manner prescribed
herein, and the resulting growth amount shall be paid to the
Participant upon the due date of the next regular distribution
payment. Participants who elect a Fixed Growth Program will be
paid in accordance with the provisions of the Deferred
Compensation Election Form and Section 4 hereof.
Section 6. Nature of Accounts.
(a) With respect to the Fixed Growth Program, the Bank shall
establish and maintain, from and after the Effective Date, a
Trust Under The Merchants Bank Amended and Restated Deferred
Compensation Plan For Directors in substantially the form
attached hereto as Exhibit "A" (the "Trust").
(b) Except as provided in the Trust: all amounts credited to
Deferral Accounts shall remain the sole property of the Bank and
shall be usable by it as a part of its general funds for any
legal purpose whatever; the Deferral Accounts shall exist only
for the purpose of facilitating the computation of benefits
hereunder; nothing contained in this Plan and no action taken
pursuant to the provisions of this Plan shall create or be
construed to create a trust or escrow of any kind, or a
fiduciary relationship between the Bank and the Participant, the
designated beneficiary or any other person; and to the extent
that any person acquires a right to receive payments from the
Bank under this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Bank.
(c) It is the intention of all parties that this Plan be unfunded for
purposes of the Internal Revenue Code of 1986, as amended, and
Title I of the Employee Retirement Income Security Act of 1974,
as amended.
Section 7. Beneficiary Designation. A Participant may designate a
beneficiary to receive, in the event of Participant's death, all amounts
which are then and thereafter payable under the Plan. Beneficiaries shall
receive such amounts in accordance with the Participant's specifications
(see Section 5) and the provisions of this Plan. Such designation and any
subsequent changes thereto shall be made in writing and filed with the
Treasurer. In the event of the Participant's death prior to receipt of the
total Deferral Account and without so designating a beneficiary, the balance
of said Deferral Account shall be paid to Participant's spouse, if then
living, otherwise to Participant's estate in accordance with the election
made pursuant to Section 5.
Section 8. Nontransferability. No right to payment or distribution
under this Plan shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge the same shall be void.
No right to payment or distribution shall, in any manner, be liable for or
subject to the debts, contracts, liabilities or torts of the person entitled
thereto. If, at the time when payments or distributions are to be made
hereunder, the Participant or the beneficiary is indebted to the Bank, then
any payments or distributions remaining to be made hereunder may, at the
discretion of the Bank, be reduced by the amount of such indebtedness. An
election by the Bank not to reduce such payments or distributions shall not
constitute a waiver of its claim for such indebtedness.
Section 9. Plan Interpretation. The Board shall have full power and
authority to interpret, construe and administer this Plan, and the Board's
interpretations and construction thereof, and actions thereunder, including
any valuation of the Deferral Account, or the amount or recipient of the
payment to be made therefrom, shall be binding and conclusive on all persons
for all purposes. No member of the Board shall be liable to any person for
any action taken or omitted in connection with the interpretation and
administration of this Plan unless attributable to that member's own willful
misconduct or lack of good faith.
Section 10. Successors and Assigns. This Plan shall be binding upon
and inure to the benefit of the Bank, its successors and assigns, and the
Participant and the Participant's heirs, executors, administrators and legal
representatives.
Section 11. Amendment and Termination. The Bank may, in its sole
discretion, at any time, amend or terminate this Plan with respect to any
future period, provided, however, that (except as specifically provided in
subsection 4(c), above) no such amendment or termination shall reduce the
distributions and/or payments which the Bank is obligated to make as of the
effective date of the amendment or termination nor reduce the amount of any
deferral account existing as of such effective date. Notice of any such
amendment or termination shall be given to the Participants sixty days
before the effective date(s) thereof. Notwithstanding anything to the
contrary elsewhere in this Plan or in the Trust, the Bank shall have the
right to order the immediate distribution to all Fixed Growth Participants
of the full number of shares of Merchants Bancshares, Inc. stock and/or
other amounts which the Bank is then obligated to distribute or pay
hereunder in full and final settlement and satisfaction of all such
Participants' rights to any payment under this Plan with respect to or on
account of any Fixed Growth deferral, if the Bank determines in good faith
that financial market, regulatory, legislative, income tax, or other
objective conditions would make failure to do so materially adverse to the
Bank's interests.
Section 12. Governing Law. This Plan shall be governed by and
construed in accordance with the laws of the State of Vermont, without
giving effect to such jurisdiction's principles of conflict of laws.
IN WITNESS WHEREOF, the Bank has caused this Amended Plan to be
executed by its duly authorized officer as of the 20th day of December,
1995.
IN PRESENCE OF: THE MERCHANTS BANK
/s/ Jennifer L. Varin By: /s/ Joseph L. Boutin
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Secretary Its President and
Chief Executive Officer