EXHIBIT 10.15
AGREEMENT
This Agreement is among THE MERCHANTS BANK, a Vermont banking
corporation with a principal place of business in Burlington, Vermont (the
"Bank") and KATHRYN T. BOARDMAN, THOMAS R. HAVERS and SUSAN D. STRUBLE
(individually, a "Participant" and collectively, the "Participants") and is
effective as of the date specified on the execution page of this Agreement
(the "Effective Date").
Background
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1. The Bank and the Participants are parties to Salary Continuation
Agreements dated June 1, 1989 (the "Salary Continuation Agreements").
2. The Bank desires to amend the Salary Continuation Agreements and
the benefits payable thereunder, and the Participants are willing to agree
to such amendments.
N O W , T H E R E F O R E ,
In consideration of the premises and the mutual covenants and
agreements herein set forth, the parties hereby agree as follows:
Section 1. Bank to Establish Trust. The Bank shall establish, on the
Effective Date, and thereafter shall maintain in accordance with this
Agreement, a so-called rabbi trust in the form attached hereto as Exhibit
"A" (the "Trust"). The Bank shall contribute to the Trust, on the Effective
Date, the sum of $160,863.
Section 2. Deferral Account.
(a) The Bank shall establish a bookkeeping account (a "Deferral
Account") for each Participant to record the amounts due under
this Agreement.
(b) On the effective date of this Agreement, in lieu of any amounts
that the Bank otherwise would be obligated to pay to any
Participant under or on account of the Salary Continuation
Agreements, the Bank shall be and become obligated to distribute
to each Participant, at the times and as provided in this
Agreement: (i) that number of shares of Merchants Bancshares,
Inc. set forth on Schedule 2(b) 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.
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 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, 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 6, 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 3. 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 this Agreement. On or
promptly following such January 2, and on or promptly following
each subsequent January 2, the Bank shall distribute or cause to
be distributed to the Participant: (i) a portion of the total
number of shares of Merchants Bancshares, Inc. specified on
Schedule 2(b) and required then, if at all, to be distributed to
the Participant under this Agreement, minus the number of such
shares previously so distributed; and (ii) a portion of the
balance of the value of the Participant's Deferral Account
valued as of the last business day of the immediately-preceding
calendar year (excluding from such valuation, however, any
shares of Merchants Bancshares, Inc.). The fractional share to
be distributed shall have: (a) a numerator of 1; and (b) a
denominator equal to (i) 15 minus (ii) the aggregate number of
previous annual distributions made to the Participant pursuant
to this Section 3. All such valuations in each case shall
include all adjustments required to be made pursuant to this
Agreement. With respect to distributions other than those
required to satisfy the Bank's obligations to distribute shares
of Merchants Bancshares, Inc., distributions may be made in cash
or in the form of negotiable securities held under the Trust
Under The Merchants Bank Amended and Restated Deferred
Compensation Plan for Directors (the "Trust") (such securities
shall be valued at their fair market value as of the date of
distribution as reasonably determined by the Bank or its
designee).
(b) Notwithstanding the provisions of Section 3(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 Agreement to such person(s) or
entity(ies).
(c) Notwithstanding the provisions of Section 3(a), above, a
Participant may request, and the Bank may approve, a
distribution due to hardship by submitting a written request to
the Bank's Board of Directors 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 3(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.
Section 4. Nature of Accounts.
(a) Except as provided in the Trust: all amounts credited to or held
in the Trust 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 bookkeeping account referred to
herein shall exist only for the purpose of facilitating the
computation of payments hereunder; nothing contained in this
Agreement and no action taken pursuant to the provisions of this
Agreement shall create or be construed to create a trust or
escrow of any kind, or a fiduciary relationship between the Bank
and the Participants or any Participant's designated beneficiary
or any other person; and to the extent that any person acquires
a right to receive payments from the Bank under this Agreement,
such right shall be no greater than the right of any unsecured
general creditor of the Bank.
(b) It is the intention of all parties that the Participants' rights
under this Agreement 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 5. No Reductions. The amounts to be paid to the Participants
hereunder, and the dates on which such payments shall be due, shall under no
circumstances and in no event be subject to reduction, curtailment or
deferral.
Section 6. Beneficiary Designation. Each Participant may designate
one or more beneficiaries to receive, in the event of his or her death, all
amounts which are then and thereafter payable under this Agreement. Such
designation and any subsequent changes thereto shall be made in writing and
filed with the Treasurer of the Bank. In the event of a Participant's death
prior to receipt of the total amount due to him or her hereunder and without
a then-effective beneficiary designation, the balance shall be paid to the
Participant's spouse, if then living, and otherwise to his or her estate.
Section 7. Nontransferability. No right to payment under this
Agreement 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 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 are to be made hereunder, a Participant or any
beneficiary is indebted to the Bank, then any payments 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
shall not constitute a waiver of its claim for such indebtedness.
Section 8. Full Release. The provisions of this Agreement are in
full and final satisfaction of any and all claims which the Participants
have or may have against the Bank under or on account of the Salary
Continuation Agreement.
Section 9. Successors and Assigns. This Plan shall be binding upon
and inure to the benefit of the Bank, its successors and assigns, and the
Participants and their respective heirs, executors, administrators and legal
representatives.
Section 10. 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 and the Participants have executed this
Agreement as of the 20th day of December, 1995.
THE MERCHANTS BANK
/s/ Kathryn T. Boardman By: /s/ Joseph L. Boutin
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Kathryn T. Boardman Its President and
Chief Executive Officer
/s/ Thomas R. Havers
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Thomas R. Havers
/s/ Susan D. Struble
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Susan D. Struble