THE CHITTENDEN CORPORATION
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SUPPLEMENTAL EXECUTIVE SAVINGS PLAN
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Effective January 1, 1997
PREAMBLE
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This Supplemental Executive Savings Plan is a nonqualified plan whose principal
objective is to make up contributions for selected executives which would have
been made to the Chittenden Corporation Incentive Savings and Profit Sharing
Plan except for the compensation and contribution limits imposed by Sections
401(a)(17), 401(k), 402(g), 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 will become effective on January 1, 1997, and becomes
effective as to each Participant on the date he or she is designated as such
hereunder.
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 "Beneficiary" I-1
1.4 "Board" I-1
1.5 "Code" I-1
1.6 "Corporation" I-1
1.7 "Earnings" I-1
1.8 "Effective Date" I-2
1.9 "Interest Credits" I-2
1.10 "Participant"
1.11 "Plan" I-2
1.12 "Plan Year" I-2
1.13 "Salary Reduction Agreement" I-3
1.14 "Salary Reduction Contributions" I-3
1.15 "Severance Date" I-3
SECTION II - ELIGIBILITY FOR BENEFITS II-1
SECTION III - SUPPLEMENTAL PLAN CONTRIBUTIONS
3.1 Salary Reduction Agreement III-1
3.2 Matching Employer Contributions III-2
3.3 Income Credits III-3
3.4 Vesting III-3
SECTION IV - PAYMENT OF RETIREMENT BENEFITS IV-1
SECTION V - DEATH BENEFITS PAYABLE V-1
SECTION VI - MISCELLANEOUS VI-1
SECTION I
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DEFINITIONS
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1.1 "Account" means the notional account balance of a Participant under the
Plan represented by his Salary Reduction Contributions and Matching
Employer Contributions plus Interest Credits (as described in Section III).
1.2 "Basic Plan" means the Chittenden Corporation Incentive Savings and Profit
Sharing Plan.
1.3 "Beneficiary" means a Participant's Beneficiary as designated under the
terms of the Basic Plan.
1.4 "Board" means the Board of Directors of the Chittenden Corporation.
1.5 "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.
1.6 "Corporation" means the Chittenden Corporation.
1.7 "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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1.8 "Effective Date" means January 1, 1997.
1.9 "Income Credits" means the earnings credited to a Participant's Account, as
described in Section 3.3.
1.10 "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, provided such individual(s) satisfies the
participation eligibility requirements of the Basic Plan:
(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; and
(h) General Counsel;
An employee 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.
1.11 "Plan" means the Chittenden Corporation Supplemental Executive Savings
Plan, as set forth herein and as may be amended from time to time.
1.12 "Plan Year" means the 12-month period beginning on January 1 and ending on
the following December 31.
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1.13 "Salary Reduction Agreement" means the agreement between the Corporation
and the Participant pursuant to Section 3.1 of this Plan.
1.14 "Salary Reduction Contributions" means the Participant's contributions made
pursuant to Section 3.1.
1.15 "Severance Date" means the termination of a Participant's employment with
the Corporation on one of the dates specified in Section 2.1.
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 FOR BENEFITS
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2.1 Each Participant is eligible to receive a benefit under this Plan beginning
on the earliest of one of the following Severance Dates:
(a) "Normal Retirement Date", which is the first day of the month in which
the Participant reaches age 65, or, if later, the first day of the
month in which he terminates employment.
(b) "Disability Retirement Date", which is the first day of the month in
which a Participant is deemed to be disabled under the terms of the
Basic Plan.
(c) The date the Participant has terminated employment with the Corporation
and is entitled to receive a benefit under the Basic Plan.
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SECTION III
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SUPPLEMENTAL PLAN CONTRIBUTIONS
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3.1 Salary Reduction Agreement.
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(a) Subject to the further provisions of this Section 3.1, if the Board, or
any individual or individuals to whom the Board has delegated
responsibilities for Plan administration, determines that any portion
or all of the amount that would otherwise be contributed on behalf of a
Participant to the Basic Plan as a pre-tax contribution will be reduced
because of the limitations in Code Sections 401(a)(17), 401(k)(3)(A),
402(g)(1) and/or 415(c)(1), such Participant shall be eligible to enter
into a Salary Reduction Agreement under this Plan. Under this Salary
Reduction Agreement, the Participant agrees to elect a reduction in his
Earnings to make corresponding Salary Reduction Contributions and the
Corporation agrees to credit his Account the amount of such Salary
Reduction Contributions, provided that the amount of such
contributions, when combined with his pre-tax contributions to the
Basic Plan, shall not exceed 16% (or such lesser amount or percentage
as may be permitted under the terms of the Basic Plan) of his Earnings.
The amounts determined under this paragraph (a) shall be credited as of
the date on which contributions to the Basic Plan would have been
credited and under the same terms that would have applied but for the
limitations set forth in Code Sections 401(a)(17), 401(k)(3)(A),
402(g)(1) and/or 415(c)(1).
(b) In order to make Salary Reduction Contributions hereunder, each
Participant shall execute a Salary Reduction Agreement prior to January
1 (or in the case of the initial Plan Year, prior to the first payroll
period for which the Plan actually becomes effective) of each Plan
Year. Such Salary Reduction Agreement shall
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be valid only to the extent that such Participant has elected to make
the maximum allowable amount (percentage) of pre-tax contributions to
the Basic Plan for the Plan Year. In the event that such Participant
elects at any time during the Plan Year to reduce his pre-tax
contributions to the Basic Plan, his participation hereunder shall be
forfeited for such Plan Year.
A Participant's Salary Reduction Agreement, exclusive of the
aforementioned limitations of the Plan, will continue in effect until
the earliest of:
(i) the date as of which the Participant is no longer eligible to make
pre-tax contributions to the Basic Plan;
(ii) the date as of which the Participant is no longer designated as a
Participant hereunder;
(iii) the January 1 as of which the Participant elects no longer to
participate or elects to change his election under the Plan,
provided written notice is given to the Board, or its delegate
before such date; and
(iv) the date the Participant's employment with the Corporation
terminates.
3.2 Matching Employer Contributions.
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(a) The Corporation shall make a contribution to the Plan each Plan Year
on behalf of each Participant equal to 35% of the first 6% of his
Earnings with respect to which he makes salary reduction contributions
pursuant to Section 3.1; provided that the amount of such contribution
shall be reduced by the amount of matching contributions made under
Section 4.1 (a) of the Basic Plan on behalf of such Participant for
the same Plan Year.
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(b) The Corporation may make a supplemental contribution to the Plan each
Plan Year on behalf of each Participant equal to a percentage of his
Earnings with respect to which he makes salary reduction contributions
pursuant to Section 3.1; provided that such contribution percentage
shall be equal to the supplemental contribution percentage made under
Section 4.1(b) of the Basic Plan. The amount of such supplemental
contribution hereunder shall be reduced by the amount of supplemental
matching contributions made under Section 4.1(b) of the Basic Plan on
behalf of such Participant for the same Plan Year.
(c) The amounts determined under paragraphs (a) and (b) shall be credited
as of the end of the Plan Year, under the same terms that would have
applied under the Basic Plan but for the limitations set forth in Code
Sections 401(a)(17) and/or 415(c)(1).
3.3 Income Credits. At the end of each Plan Year, income shall be credited on
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any balance in the Participant's Account. The amount of such income shall
be determined on the basis of either the Corporation's average annual yield
on earning assets for the comparable time period or the Chittenden Stock
Equivalent Account (determined in the manner described below), as elected
by the Participant at the same time he enters into a Salary Reduction
Agreement for such Plan Year. Income Credits on any portion of the
Participant's Account added during a Plan Year shall be prorated to reflect
the period of time during which such added portion was credited to the
Participant's Account.
The Participant's Chittenden Stock Equivalent Account shall be credited
with the number of shares (including fractional interests in shares) of
Chittenden Corporation stock which could be purchased with the balance in
his Account at the Crediting Price (described below).
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(a) If a Participant has selected the Chittenden Stock Equivalent Account,
as of each date of payment of dividends on the Chittenden Corporation
Stock there shall be credited, with respect to the equivalent share of
Chittenden Corporation Stock credited pursuant to this Section 3.3 on
the record date of such dividend, the equivalent of such additional
shares (including fractional Interests therein) of Chittenden
Corporation Stock as follows:
(i) In the case of cash dividends, the number of shares that could be
purchased at the Crediting Price (defined below) as of such
payment date with the dividends which would have been payable on
the credited shares as if they had been outstanding;
(ii) In the case of dividends payable in Chittenden Corporation Stock,
the equivalent number of shares that would have been payable on
the equivalent shares as if they had been outstanding.
(b) Crediting Price. The Crediting Price at the time any credit is to be
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made pursuant to this Section 3.3 shall be the fair market value of
the Chittenden Corporation Stock as of the end of the Plan Year for
which such election has been made, and, pursuant to paragraph (a)
shall be the fair market value of the Chittenden Corporation Stock on
the date of the dividend payment.
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For purposes of this paragraph (b), fair market value on any day shall mean
the average of the high and low prices on a national securities exchange as
of the end of the Plan Year for which such election has been made or on the
date of dividend payment. If there were no sales on said dates, then the
fair market value shall be the average of the high and low prices on the
previous business day.
(c) The total number of equivalent shares of Chittenden Corporation Stock held
for purposes of this Section 3.3 shall be proportionately adjusted from
time to time, as determined by the Board, for any increase or decrease in
the number of outstanding shares of Chittenden Corporation Stock resulting
from a subdivision or combination of shares of Chittenden Corporation
Stock, a dividend payable in Chittenden Corporation Stock (to the extent
that credits have not otherwise been made with respect thereto pursuant to
paragraph (a)(i)), a reclassification of Chittenden Corporation Stock, a
merger or consolidation, or for any other change in capital structure of
Chittenden Corporation Stock.
3.4 Vesting. A Participant shall be vested in his contributions hereunder
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pursuant to the vesting provisions set forth in Article VIII of the Basic
Plan.
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SECTION IV
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PAYMENT OF RETIREMENT BENEFITS
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4.1 Vested benefits payable in accordance with Section III will be paid on the
Participant's Severance Date pursuant to Section II. Benefits will be paid
in the form of a lump sum payment only.
4.2 It is intended that the benefits under this Plan be payable only in the
event of a Participant's severance from employment on one of the dates
specified in Section 2.1, or death of a Participant as provided in Section
V. Participants will not be permitted to borrow from or make withdrawals
from their Account 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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DEATH BENEFITS PAYABLE
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5.1 If a Participant should die before payment of benefits hereunder, his
Beneficiary will receive a benefit equal to the amount credited to the
Participant's Account, determined in accordance with Section III as if the
Participant had retired on the first day of the month following the date
of his death.
5.2 If a Participant should die after payment of benefit hereunder, no further
amount shall be payable to his Beneficiary.
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SECTION VI
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MISCELLANEOUS
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6.1 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 the
applicable provisions of this Plan as in effect on such Participant's
Severance Date.
6.2 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.
6.3 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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6.4 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 tile 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 6.4) 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.
6.5 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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6.6 The Board or its delegate may adopt rules and regulations to assist it in
the administration of the Plan.
6.7 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.
6.8 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
VI-4
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.
6.9 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.
6.10 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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