THE CHITTENDEN CORPORATION
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SUPPLEMENTAL EXECUTIVE CASH BALANCE RESTORATION PLAN
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Effective January 1, 1996
PREAMBLE
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This Supplemental Executive Cash Balance Restoration Plan is a nonqualified plan
whose principal objective is to make up benefits for selected executives which
would have been earned under the Chittenden Pension Account Plan except for the
maximum compensation and benefits limits imposed by Sections 401(a)(17) and
415 of the Internal Revenue Code of 1986, as amended. The plan is designed to
provide a benefit which, when added to other retirement income of the executive,
will meet the objective described above. Eligibility for participation in the
Plan shall be limited to the executives selected by the Board of Directors. This
Plan is intended to be an unfunded Plan maintained solely for the purpose of
providing benefits for a select group of executives, with such benefits to be
paid from the general assets of Chittenden Corporation. This Plan is
retroactively effective on January 1, 1996, and becomes effective as to each
Participant on the date he or she is designated as such hereunder, but on a
date no earlier than the date this Plan is adopted by the Board of Directors.
TABLE OF CONTENTS
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Page
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PREAMBLE
SECTION I - DEFINITIONS
1.1 "Account" I-1
1.2 "Basic Plan" I-1
1.3 "Basic Plan Benefit" I-1
1.4 "Beneficiary" I-1
1.5 "Board" I-1
1.6 "Code" I-1
1.7 "Corporation" I-1
1.8 "Earnings" I-1
1.9 "Effective Date" I-2
1.10 "Opening Account Balance Credit" I-2
1.11 "Participant" 1-2
1.12 "Plan" 1-3
1.13 "Plan Year" 1-3
1.14 "Severance Date" 1-3
SECTION II - ELIGIBILITY II-1
SECTION III - AMOUNT OF BENEFIT
3.1 Amount of Benefit III-1
3.2 Pre-Retirement Death Benefits III-2
SECTION IV - FORM AND TIMING OF
RETIREMENT BENEFITS IV-1
SECTION V - MISCELLANEOUS V-1
SECTION I
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DEFINITIONS
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1.1 "Account" means a notional account established and maintained for each
Participant in accordance with Section 3.1. A Participant's Account shall
include an Opening Balance Credit as defined in Section 1.10 and annual
pay and interest credits, as provided for in Section 3.1.
1.2 "Basic Plan" means the Chittenden Pension Account Plan.
1.3 "Basic Plan Benefit" means the amount of the lump sum benefit payable from
the Basic Plan to a Participant.
1.4 "Beneficiary" means a Participant's Beneficiary as designated under the
terms of the Basic Plan.
1.5 "Board" means the Board of Directors of the Chittenden Corporation.
1.6 "Code" means the Internal Revenue Code of 1986, as amended from time to
time and any regulations issued thereunder. Reference to any Code Section
shall include any successor provision thereto.
1.7 "Corporation" means the Chittenden Corporation.
1.8 "Earnings" means the earnings of a Participant, as defined under the terms
of the Basic Plan, without regard to the earnings limitation that would
otherwise be imposed by Code Section 401(a)(17).
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1.9 "Effective Date" means January 1, 1996.
1.10 "Opening Account Balance Credit" means the single sum actuarial equivalent
(calculated on the basis of the Participant's attained age in years and
completed months as of December 31, 1995, and on the basis of the actuarial
equivalent adjustment factors under the Basic Plan) of the excess, if any,
of (a) over (b), where:
(a) is the Participant's accrued benefit under the Basic Plan as of
December 31, 1995, determined without regard to the compensation
limitation of Code Section 401(a)(17) and regulations thereunder; and
(b) is the Participant's accrued benefit under the Basic Plan as of
December 31, 1995.
1.11 "Participant" means the individuals holding the following positions and
any other executive employee of the Corporation that may be designated as
a Participant by the Board.
(a) Chief Executive Officer;
(b) Chief Auditor;
(c) Chief Credit Policy Officer;
(d) Chief Financial Officer;
(e) Executive Vice President of Commercial Banking and Trust.
(f) Executive Vice President of Community Banking;
(g) Executive Vice President of Operations and Administration;
(h) General Counsel;
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An employee of the Corporation shall become a Participant in the Plan as of
the date he or she is individually selected by, and specifically named in
the resolutions of the Board for inclusion in the Plan.
1.12 "Plan" means the Chittenden Corporation Supplemental Executive Cash Balance
Restoration Plan, as set forth herein and as may be amended from time to
time.
1.13 "Plan Year" means the 12-month period beginning on January 1 and ending on
the following December 31.
1.14 "Severance Date" means the termination of a Participant's employment with
the Corporation on or after the date he is vested in his Basic Plan Benefit
pursuant to Article VII of the Basic Plan.
The masculine gender, where appearing in the Plan will be deemed to include the
feminine gender, and the singular may include the plural, unless the context
clearly indicates the contrary.
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SECTION II
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ELIGIBILITY
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An employee who is accruing a benefit under the Basic Plan on or after January
1, 1996, shall become a Participant hereunder if he has been designated as such
by the Board on or after the date that this Plan has been adopted and:
(a) such employee's Pay is not fully recognized under the Basic Plan because of
the compensation limitations imposed by Code Section 401(a)(17); and/or
(b) such employee's Basic Plan Retirement Benefit is restricted or reduced by
the Code Section 415 limitations on maximum pension benefits.
A Participant's Beneficiary who is entitled to receive or is receiving a benefit
from the Basic Plan which is limited, directly or indirectly, by the same
provisions described above shall also be entitled to receive a benefit from this
Plan.
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SECTION III
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AMOUNT OF BENEFIT
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3.1 Amount of Benefit. The benefit payable under this Plan to a Participant
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shall equal the sum of (a) and (b) as described below.
(a) A Participant's Account shall be established on the Effective Date
with his Opening Account Balance Credit. Subsequently, his Account
shall be credited each year in accordance with the following:
(i) an annual pay credit as provided in Section 3.3 of the Basic Plan,
as applicable to compensation over the wage base, but with respect
only to his Earnings in excess of the Code Section 401(a)(17)
compensation limitation; plus
(ii) an annual interest credit, which shall be computed on the basis of
the Corporation's average yield on earning assets for the
comparable time period.
Both amounts shall be credited to the Account as of the end of the
Plan Year (or at a Severance Date, if earlier) in a manner consistent
with the operation of the Basic Plan.
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(b) The single sum actuarial equivalent value of the excess, if any, of (i)
over (ii) where
(i) is the benefit which would have been paid to such Participant in
the normal form of payment under the Basic Plan at the time
benefits commence from the Basic Plan, if the provisions of the
Basic Plan were administered without regard to the benefit
limitations of Code Section 415 and regulations thereunder; and
(ii) is the benefit which is payable (or would be payable) to such
Participant in the normal form under the Basic Plan at the time
benefits commence from the Basic Plan.
3.2 Pre-Retirement Death Benefits.
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(a) A Participant's Beneficiary who is entitled to a pre-retirement death
benefit under the Basic Plan, shall also be entitled to receive a pre-
retirement death benefit from this Plan. The pre-retirement death
benefit payable under this Plan to a Beneficiary shall equal (i) plus
the single sum actuarial equivalent value of the excess, if any, of
(ii) over (iii) where:
(i) is the Participant's Account as described in Section 3.1(a) with
annual pay and interest credits calculated through the date of
death.
(ii) is the pre-retirement death benefit which would have been paid to
such Beneficiary under the Basic Plan, if the provisions of the
Basic Plan were administered without regard to the benefit
limitations of Code Section 415 and regulations thereunder; and
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(iii) is the pre-retirement death benefit which is payable to such
Beneficiary under the Basic Plan.
Subject to the provisions of Section III, the pre-retirement
death benefit described in this paragraph (a) shall be paid in
accordance with the provisions of Section IV of the Plan.
(b) If a Participant dies at any time after retirement benefits hereunder
have been paid, no further benefit shall be payable from the Plan.
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SECTION IV
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FORM AND TIMING OF RETIREMENT BENEFITS
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4.1 A Participant shall have a nonforfeitable interest in benefits under this
Plan beginning at the same time and under the same conditions as the
vesting of his benefits under the Basic Plan.
4.2 Vested benefits payable in accordance with Section III will be paid on a
date immediately following the Participant's termination of employment from
the Corporation with the Board's consent. Notwithstanding the foregoing, in
no event will the benefit, if any, determined in accordance with Section
3.1(b) be paid prior to the date the Participant's benefit under the Basic
Plan commences.
4.3 Benefits will be paid in the form of a lump sum payment only.
4.4 It is intended that the benefits under this Plan be payable only in the
event of termination of employment of a Participant, or death of a
Participant as provided in Section III. Participants will not be permitted
to borrow from their accrued benefit under this Plan prior to termination
of employment, except as may be permitted by the Board, in its sole
discretion, in exceptional circumstances.
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SECTION V
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MISCELLANEOUS
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5.1 The Board may, in its sole discretion, terminate, suspend, or amend this
Plan at any time or from time to time, in whole or in part. However, no
amendment or suspension of the Plan will affect a Participant's right or
the right of a Beneficiary to receive a benefit in accordance with this
Plan as in effect on such Participant's Severance Date.
5.2 Nothing contained herein will confer upon any Participant the right to be
retained in the service of the Corporation, nor will it interfere with the
right of the Corporation to discharge or otherwise deal with Participants
without regard to the existence of this Plan.
5.3 This agreement shall be binding upon, and shall inure to the benefit of,
the parties hereto, their respective heirs, assigns, successors, executors
and administrators. None of the payments provided for by this agreement
shall be subject to seizure for payment of any debts or judgments against
the Participant or the Participant's Beneficiary; nor shall the Participant
or the Participant's Beneficiary have any right to transfer, modify,
anticipate or encumber any rights or benefits hereunder; provided, however,
that the undistributed portion of any benefit payable hereunder shall at
all times be subject to set-off for debts owed by the Participant to the
Corporation.
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5.4 Notwithstanding anything to the contrary contained herein, any benefit
under the Plan shall be deemed fully vested in the event of a Change in
Control (as hereinafter defined). In such case, the Participant's benefit
shall become immediately payable as of the closing date of the transaction
deemed to effect such Change in Control.
For purposes of this Plan, a Change in Control shall be deemed to have
occurred upon the first to occur 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 (the "Exchange Act"), as amended,
(other than the Corporation or any corporation owned, directly or
indirectly, by the stockholders of this Corporation in substantially
the same proportions as their ownership of stock of the Corporation),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 25% of the number of the
Corporation's then outstanding securities;
(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 Corporation to effect a transaction described in
paragraph (a),(c) or (d) of this Section 5.4) whose election by the
Board or nomination for election by the Corporation'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 least one half thereof;
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(c) the stockholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Corporation 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 Corporation or such surviving entity
outstanding immediately after such merger or consolidation; or
(d) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
5.5 The Corporation may set aside assets in a trust or other funding
arrangement as it, or its delegate, deems appropriate to anticipate benefit
liabilities accumulating under the Plan; provided such arrangement is not
considered "funded" for purposes of the Code and the Employee Retirement
Income Security Act of 1974. Accordingly, the assets of any such
arrangement shall be subject to the claims of the creditors of the
Corporation in the event of the Corporation's insolvency. The rights of a
Participant or Beneficiary shall be limited to those of a general,
unsecured creditor of the Corporation who has a claim equal to the value of
the Participant's benefit hereunder. Benefits under this Plan will be
payable from the general assets of the Corporation or from such other
funding vehicle established for such purpose as described above, or both.
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5.6 The Board or its delegate may adopt rules and regulations to assist it in
the administration of the Plan.
5.7 Each Participant shall receive a copy of this Plan and the Board will make
available for inspection by any Participant a copy of the rules and
regulations used by the Board in administering the Plan.
5.8 Claims Procedures. If any application for a distribution or withdrawal
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under the Plan shall be denied, the Board, or its delegate, shall notify
the claimant within a reasonable time of such denial setting forth the
specific reasons therefor and afford such claimant a reasonable opportunity
for a full and fair review of the decision denying his claim. Notice of
such denial shall set forth, in addition to the specific reasons for the
denial, the following:
(a) reference to pertinent provisions of the Plan;
(b) such additional information as may be relevant to denial of the claim;
(c) an explanation of the claims review procedures; and
(d) advice that such claimant may request the opportunity to review
pertinent Plan documents and submit a statement of issues and
comments.
Within 60 days following advice of denial of his claim, upon request made
by the claimant for a review of such denial, the Board, or its delegate,
shall take appropriate steps to review its decision in light of any further
information or comments submitted by such claimant. The Board, or its
delegate, shall be empowered to hold
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a hearing at which such claimant shall be entitled to present the basis of
his claim for review and at which he may be represented by counsel. The
Board, or its delegate, shall render a decision within 60 days after
claimant's request for review and shall advise claimant in writing of its
decision on such review, specifying its reasons and identifying appropriate
provisions of the Plan.
5.9 The Corporation may withhold from any payments to be made hereunder such
amount as it may be required to withhold under any applicable Federal,
state, or other law, and transmit such withheld amounts to the appropriate
taxing authority.
5.10 This Plan is established under and will be construed according to the laws
of the State of Vermont.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be signed by
its officer thereunto duly authorized on this 18th day of December, 1996.
CHITTENDEN CORPORATION
ATTEST: /s/ F. Sheldon Prentice By: /s/ Sarah P. Merritt
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Corporate Secretary
(CORPORATE SEAL)
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