Employment Agreement

Severance Agreement

Change in Control Agreement

 

 EX-10.1 2 a8-kex101121913.htm EXHIBIT

 

 

Exhibit 10.1

 

December 19, 2013

Gary M. Crosby

 

Re:    President and Chief Executive Officer Terms

Dear Gary:

I am pleased to confirm the terms of your employment in connection with your assuming the permanent position of President and Chief Executive Officer of First Niagara Financial Group, Inc. and First Niagara Bank, N.A. (collectively, “First Niagara”), effective as of December 19, 2013 (the “Effective Date”).

1.Position and Employment Term. Your position as President and Chief Executive Officer of First Niagara will continue from the Effective Date until terminated by you or First Niagara. You will report directly to the Board of Directors of First Niagara and have all of the customary authorities, duties and responsibilities that accompany the position of President and Chief Executive Officer, including the strategic and operational responsibility for all lines of First Niagara’s business. In addition, you will be elected to the Board of Directors of First Niagara immediately following the Effective Date, and nominated for re-election at the 2014 annual shareholders meeting.

 

2.Base Salary. As of January 1, 2014, your annual base salary will be $975,000 per annum. Your salary will continue to be paid in accordance with First Niagara’s ordinary payroll schedule and practices, as in effect from time to time. Your annual base salary may be increased in the sole discretion of the Compensation Committee of the Board of Directors of First Niagara (the “Compensation Committee”), as well as decreased in the sole discretion of the Compensation Committee.

 

3.Annual Incentive Award. Beginning for calendar year 2014, your target annual incentive opportunity shall be 100% of your annual base salary earned during the applicable calendar year (your “Annual Incentive”). Your Annual Incentive will be subject to the terms of the applicable plan and agreement under which the Annual Incentive is granted, will be determined by the Compensation Committee in accordance with First Niagara’s ordinary annual incentive award practices and will be paid in accordance with First Niagara’s ordinary annual incentive award practices, in each case, as in effect from time to time. There is no guaranteed minimum Annual Incentive.

 

4.Long-Term Incentive Award. Beginning for calendar year 2014, your target long-term incentive award opportunity shall be $2,500,000 (your “Long-Term Incentive”). Your Long-Term Incentive will be subject to the terms of the applicable plan and agreement under which the Long-Term Incentive is granted, will be determined by the Compensation Committee in accordance with First Niagara’s ordinary long-term incentive award practices and will be paid in accordance with First Niagara’s ordinary long-term incentive award practices, in each case, as in effect from time to time. There is no guaranteed minimum Long-Term Incentive.

 

5.Severance. You currently are entitled to severance benefits under the terms of a Transition Severance Plan, adopted earlier this year, and effective as of March 19, 2013, in the event of a qualifying termination of your employment. This Transition Severance Plan is being terminated by First Niagara and the existing Executive Severance Plan (which provides severance benefits to First Niagara’s senior executives) is being amended to provide severance benefits to the President and Chief Executive Officer of First Niagara in an amount equal to the severance benefits to which you are currently eligible to receive under the Transition Severance Plan in the event of a qualifying termination of employment.

 

6.Existing Letter Agreement. Upon your acceptance of the terms of this letter agreement by execution where indicated below, your existing letter agreement with First Niagara dated April 5, 2013 (your

 

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“Existing Letter Agreement”) will terminate and be of no further effect as of such date except as otherwise set forth in this Section. No further payments of the Cash Fee pursuant to your Existing Letter Agreement will be made on or after the Effective Date. Notwithstanding the other provisions of this Section, you shall be entitled to payment of the Completion Bonus pursuant to Section 9 of your Existing Letter Agreement in a lump sum on the first payroll date following the Effective Date in accordance with First Niagara’s ordinary payroll practices, as in effect from time to time.

 

7.Acknowledgement of Certain Terms of Outstanding Awards.

(a)    To avoid any ambiguity with respect to your outstanding Non-Statutory Stock Options granted under the First Niagara Financial Group, Inc. Amended and Restated 2002 Long-Term Incentive Stock Benefit Plan, whether or not vested, you hereby acknowledge and agree that the post-termination exercise period for such awards is one year (or the option’s expiration date, if earlier), as set forth in the applicable award agreements, regardless of terms of the plan or any other document.

(b)    To avoid any ambiguity with respect to your outstanding performance-based awards, you hereby acknowledge and agree that your existing (and your future, unless they expressly provide otherwise) performance-based awards become payable only upon the satisfaction of any applicable performance criteria, regardless of whether any time-based vesting requirements or other restrictions lapse.

8.Compliance with First Niagara Policies; Employee Benefits. You agree and acknowledge that, as an employee of First Niagara, you will be subject to First Niagara’s policies as in effect from time to time (including, but not limited to, policies related to ethics, insider trading, confidentiality and proprietary information) and you agree to execute any agreements as reasonably requested by First Niagara to acknowledge your agreement to such policies. During your employment with First Niagara, you will to be eligible to participate in First Niagara’s employee benefit plans and expense reimbursement policy on the same basis as those benefits are provided to other members of First Niagara’s executive team, in each case, in accordance with the terms of the applicable benefit plan, as in effect from time to time.

 

9.Covenants.    You agree to comply with this Section 9 while employed by First Niagara and for the two-year period (an unlimited period for the covenants set forth in Section 9(c), (e) and (f) below) immediately following your termination of service with First Niagara, regardless of the reason for your termination of service.

 

(a)You shall not, directly or indirectly, either for your own benefit or purpose or for the benefit or purpose of any person other than First Niagara or any of its subsidiaries, solicit, call on, do business with, or actively interfere with First Niagara’s or any subsidiary’s relationship with, or attempt to divert or entice away, any person or entity that you should reasonably know (i) is a customer of First Niagara or any subsidiary for which First Niagara or any subsidiary provides any services as of the date of your termination of service; or (ii) was a customer of First Niagara or any subsidiary for which First Niagara or any subsidiary provided any services at any time during the 12-month period immediately preceding the date of your termination of service; or (iii) was, as of the date of your termination of service, considering retention of First Niagara or any subsidiary to provide any services.

 

(b)You shall not, directly or indirectly, either for your own benefit or purpose or for the benefit or purpose of any person other than First Niagara or any of its subsidiaries, employ, or offer to employ, call on, or actively interfere with First Niagara’s or any subsidiary’s relationship with, or attempt to divert or entice away, any employee of First Niagara or any of its subsidiaries, nor will you assist any other person in such activities.

 

(c)During your employment with First Niagara or any subsidiary and thereafter, you will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of First Niagara and its subsidiaries, whether or not conceived of or prepared by you, other than: (i) information generally known to the public; (ii) as required in the course of employment by First Niagara or subsidiary; (iii) as required by any court, supervisory authority, administrative agency or applicable law; or (iv) with the prior written consent of the Compensation Committee or its designee.

 

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(d)You shall not engage, directly or indirectly, in any manner (whether as an employee, consultant, independent contractor, owner, officer, director, partner, manager of any person, firm or business entity or otherwise) in the Restricted Business or in any activity that competes with the Restricted Business anywhere in any geographic area served by First Niagara worldwide; provided, however, that your ownership of no more than two percent (2%) of the total equity securities of a publicly-traded entity shall not violate the provisions of this Section 9(d); for purposes hereof, “Restricted Business” means the banking and financial services business. You acknowledge that the limitations set forth in this Section 9(d) are reasonable.

 

(e)Each party agrees that it will not directly or indirectly make, or cause to be made, any written or oral statement or other communication that is derogatory or disparaging to the other party or, in the case of First Niagara, to First Niagara’s predecessors, successors or its past, current or future parents, subsidiaries, related entities, or any of its members, shareholders, officers, directors, agents, attorneys, employees, or assigns. The inclusion of specific individuals in this provision (including, but not limited to, shareholders, officers, directors, agents, attorneys, and employees) to protect them from derogatory or disparaging remarks is a material term of this offer letter and intended to make such individuals third-party beneficiaries of this particular provision of the offer letter, with all applicable rights to enforce its terms in the event of a violation.

 

(f)You agree and acknowledge that a breach of the covenants set forth in this Section 9 will cause First Niagara and its subsidiaries irreparable harm, and that First Niagara and its subsidiaries will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining you, and each and every person and entity acting in concert or participating with you, from initiation and/or continuation of such breach. You further understand and agree that for the purpose of fashioning an appropriate injunctive remedy, the time period of the covenants set forth in this Section 9 shall be extended by any time period you are found to be in breach of said covenants. In the event any of this Section 9 is determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is your intent and the intent of First Niagara and its subsidiaries that said court reduce and reform the provisions thereof so as to apply to the greatest limitations considered enforceable by the court.

 

10.Press Release. First Niagara shall have the right to control any press release regarding your promotion. You shall make no public or private disclosure of your negotiations with or promotion by First Niagara, nor the provision of any term sheet or any other documents related to your promotion, until First Niagara has made public disclosure of such matter, and any future disclosure by you shall be limited solely to the items publicly disclosed by First Niagara.

 

11.Tax Matters. This letter agreement and the compensation and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the treasury regulation promulgated and other official guidance issued thereunder (collectively, “Section 409A”), and shall be administered and interpreted consistent with such intent. To the extent any taxable expense reimbursement or in-kind benefits under this letter agreement, or otherwise, is subject to Section 409A, the amount thereof eligible in one taxable year will not affect the amount eligible for any other taxable year, in no event will any expenses be reimbursed after the last day of the taxable year following the taxable year in which you incurred such expenses and in no event will any right to reimbursement or receipt of in-kind benefits be subject to liquidation or exchange for another benefit. Each payment under this letter agreement will be treated as a separate payment for purposes of Section 409A.

 

12.Governing Law. This letter agreement will be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed entirely within that state.

 

13.Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed to you at the address on file with First Niagara and addressed to the General Counsel of First Niagara at the address of corporate headquarters.

 

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14.General. This letter agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of First Niagara. This letter agreement will bind the heirs, personal representatives, successors and assigns of both you and First Niagara, as applicable, and inure to the benefit of both you and First Niagara, each of our respective heirs, successors and assigns, as applicable. If any provision of this letter agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision hereof and the provision in question will be modified by the court so as to be rendered enforceable to the fullest extent permitted by law, consistent with the intent of the parties.

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We look forward to your continued service to and leadership of First Niagara. I would appreciate it if you could acknowledge your agreement to the terms of this letter agreement by returning a signed copy to me.

Sincerely,

 

 

FIRST NIAGARA FINANCIAL GROUP, INC.
 

FIRST NIAGARA BANK, N.A.

 

 

By:

/s/ G. Thomas Bowers

 

G. Thomas Bowers

 

Chairman of the Board

AGREED AND ACKNOWLEDGED

 

 

By:

/s/ Gary M. Crosby

 

Gary M. Crosby

 

 

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EX-10.3 4 a8-kex103121913.htm EXHIBIT

 

 

 

 

Exhibit 10.3

 

 

FIRST NIAGARA FINANCIAL GROUP

AMENDED AND RESTATED

EXECUTIVE SEVERANCE PLAN

Effective as of December 19, 2013

ARTICLE I.

ESTABLISHMENT OF THE PLAN

First Niagara Financial Group, Inc. (“First Niagara”) hereby establishes a self-insured severance plan for certain of its key executive management personnel. The term “Company” means First Niagara and any Organization Under Common Control that is covered under the Plan in accordance with Section 5.6. The original effective date of the Plan was October 23, 2006. The amended and restated Plan is effective as of December 19, 2013 (the “Effective Date”). The Plan Year is the calendar year.

ARTICLE II.

PARTICIPATION

Section 2.1     Eligible Executives.

(a)    Each Eligible Executive, as hereafter defined, will become a Participant in the Plan on the later of: (i) the first day on which the individual becomes an Eligible Executive; or (ii) the Effective Date.

(b)    For any employee other than the Chief Executive Officer of First Niagara, the term “Eligible Executive” means any employee of the Company who has been designated by the Chief Executive Officer of First Niagara as a member of First Niagara’s Management Committee, excluding any employee covered under an employment agreement that provides for severance or other similar post-employment compensation (each, a “Non-CEO Participant”). If any Non-CEO Participant is no longer designated as a member of the Management Committee or subsequently becomes covered under an employment agreement that provides for severance or other similar post-employment compensation, the employee will cease to be a Participant as of that date.

(c)    The term Eligible Executive also means the Chief Executive Officer of First Niagara (the “CEO Participant”).

Section 2.2    Exclusive Benefit. A Participant in this Plan will not be eligible to receive any benefit under the terms of the First Niagara Financial Group Separation Pay Plan.

ARTICLE III.

BENEFITS AND PAYMENT OF BENEFITS

Section 3.1    In General. Each Participant (i) whose employment is involuntarily terminated by the Company for reasons other than Cause, as hereafter defined, (ii) who is required to move employment to a location further than 100 miles of the Participant’s current place of employment and who does not accept such relocation and terminates employment or (iii) whose aggregate compensation is materially reduced and who terminates employment will receive a Severance Payment, as determined under Section 3.2, if the Participant remains in employment with the Company through his or her release date as established by the Company.

 

 


 

 

(a)    For purposes of this Plan, “Cause” means a finding by the Board of Directors of First Niagara that any of the following conditions exist:

(i)    The Participant’s willful and continued failure to substantially perform the Participant’s duties (other than as a result of disability) that is not, or cannot be, cured within 30 days of the Company giving the Participant notice of the failure to so perform. For purposes of this Plan, no act or failure to act will be deemed “willful” unless effected by the Participant not in good faith and without a reasonable belief that the Participant’s action or failure to act was in or not opposed to the Company’s best interests.

(ii)    A willful act or omission by the Participant constituting dishonesty, fraud or other malfeasance, and any act or omission by the Participant constituting immoral conduct, which in any such case is injurious to the financial condition or business reputation of the Company.

(iii)    The Participant’s indictment for a felony offense under the laws of the United States or any state other than for actions related to operation of motor vehicles which does not involve operation of a motor vehicle while intoxicated or impaired.

(iv)    Breach by the Participant of First Niagara’s Code of Ethics for Senior Financial Officers, any restrictive covenant, non-competition, confidentiality or non-solicitation, or other similar agreement which is applicable to the Participant.

The Participant will not be deemed to have been terminated for Cause until there has been delivered to the Participant a copy of a resolution, duly adopted by the affirmative vote of not less than a majority of the Board of First Niagara at a meeting called and held for that purpose (after reasonable notice to the Participant and an opportunity for the Participant, with the Participant’s counsel, to be heard before the Board), stating that, in the good faith opinion of the Board, the Participant has engaged in conduct described above and specifying the particulars in detail.

(b)    Upon the occurrence of any event described in Section 3.1(ii) or (iii) above, the Participant shall have the right to elect to terminate his employment under this Plan by resignation upon not less than thirty (30) days prior written notice to First Niagara, which notice must be given by the Participant within ninety (90) days after the initial event giving rise to said right to elect to terminate his employment. Notwithstanding the preceding sentence, in the event of a continuing breach of this Plan by First Niagara, the Participant, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of his rights solely under this Plan by virtue of the fact that Participant has submitted his resignation but has remained in the employment of First Niagara and is engaged in good faith discussions to resolve any occurrence of an event described above. First Niagara shall have at least thirty (30) days to remedy any condition set forth above, provided, however, that First Niagara shall be entitled to waive such period and make an immediate payment hereunder.

Section 3.2    Benefit Amount.

(a)    A Non-CEO Participant’s Severance Payment will be equal to the greater of:

(i)    The Non-CEO Participant’s base salary, determined as of the date of termination, for twelve (12) months, plus the Non-CEO Participant’s targeted bonus amount for the year in which the Non-CEO Participant is terminated; or

(ii)    The Non-CEO Participant’s base salary, determined as of the date of termination, for eighteen (18) months.

In addition, for a twelve (12)-month period following the termination of employment, First Niagara will reimburse the Non-CEO Participant for outplacement services in an amount not to exceed $10,000; provided however, that reimbursements for such outplacement services shall be made in a cash lump sum within 30 days of the Non-CEO Participant’s remittance to First Niagara of a receipt for such services.

 

 


 

 

(b)    The CEO Participant’s Severance Payment will be equal to the greater of:

(i)    The CEO Participant’s base salary, determined as of the date of termination, for twenty-four (24) months, plus the CEO Participant’s targeted bonus amount for the year in which the CEO Participant is terminated; or

(ii)    The CEO Participant’s base salary, determined as of the date of termination, for thirty-six (36) months.

In addition, for a twelve (12)-month period following the termination of employment, First Niagara will reimburse the CEO Participant for outplacement services in an amount not to exceed $10,000; provided however, that reimbursements for such outplacement services shall be made in a cash lump sum within 30 days of the CEO Participant’s remittance to First Niagara of a receipt for such services.

Section 3.2A    Temporary Enhanced Benefit. For the Non-CEO Participants specified on Appendix A, the Severance Payment determined under Section 3.2(a) (not including the outplacement services benefit) shall be the Non-CEO Participant’s base salary for eighteen (18) months, plus 150 percent of the Non-CEO Participant’s targeted bonus amount, each determined as of the date of termination, during the period of December 19, 2013 until December 18, 2014. At the expiration of such one-year period, this enhanced benefit shall automatically expire (except with respect to a Non-CEO Participant who is then receiving or entitled to receive enhanced Severance Payment(s) as a result of a qualifying termination during the applicable one-year period) and this Section 3.2A and Appendix A shall be automatically eliminated from the Plan without the need for further action or amendment.

Section 3.3    Form of Benefit Payment.

A Participant will receive his or her benefit in the form of direct deposit to his or her bank account in accordance with the normal payroll process over the period of the Severance Payment. All applicable payroll taxes and withholding will be applied. The Severance Payment will normally begin by the second pay period following separation from service and upon execution by the Participant of all required documentation to process payments; provided, however, in the event that the period to execute and not revoke a waiver and release of claims crosses from one tax year into another tax year, payment shall commence no sooner than the first payroll period of the second tax year. Severance Payments and benefits payable under this Plan will not be treated as compensation for purposes of calculating benefits under any other employee benefit plan maintained by the Company.

Notwithstanding any other provision in this Plan, for purposes of this Plan, “termination of employment” shall mean “Separation from Service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated and other official guidance issued thereunder (collectively, “Code Section 409A”), such that First Niagara and the Participant reasonably anticipate that the level of bona fide services the Participant would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period.

Notwithstanding anything in this Plan to the contrary, if the Participant is a Specified Employee (within the meaning of Treasury Regulations §1.409A-1(i)), then, to the extent necessary to avoid penalties under Code Section 409A, no payment shall be made to the Participant prior to the first day of the seventh month following the date of termination in excess of the “permitted amount” under Code Section 409A. For these purposes, the “permitted amount” shall be an amount that does not exceed two times the lesser of: (i) the sum of Participant’s annualized compensation based upon the annual rate of pay for services provided to First Niagara for the calendar year preceding the year in which occurs the date of termination or (ii) the maximum amount that may be taken into account under a tax-qualified plan pursuant to Code Section 401(a)(17) for the calendar year in which occurs the date of termination. Payment of the “permitted amount” shall be made in accordance with regular payroll practices. Any payment in excess of the permitted amount shall be made to the Participant on the first day of the seventh month following the date of termination.

 

 


 

 

Section 3.4    Forfeitures of Benefits. A Participant will forfeit his or her right to any unpaid Severance Payments benefits if he or she is reemployed by the Company.

Section 3.5    Effect of Regulatory Actions. Any actions by First Niagara under this Plan must comply with the law, including regulations and other interpretive action, of the Federal Deposit Insurance Act, Federal Deposit Insurance Corporation, or other entities that supervise any of the activities of First Niagara. Specifically, any payments to the Participant by First Niagara, whether pursuant to this Plan or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

Section 3.6    Golden Parachute Adjustments. Notwithstanding anything in this Plan or any other agreement to the contrary:

(a)    In the event First Niagara (or its successor) and the Participant both determine, based upon the advice of the independent public accountants for First Niagara, that part or all of the consideration, compensation or benefits to be paid to the Participant under this Plan constitute “parachute payments” under Code Section 280G(b)(2) then, if the aggregate present value of such parachute payments, singularly or together with the aggregate present value of any consideration, compensation or benefits to be paid to the Participant under any other plan, arrangement or agreement which constitute “parachute payments” (collectively, the “Parachute Amount”) exceeds 2.99 times the Participant’s “base amount,” as defined in Code Section 280G(b)(3) (the “Executive Base Amount”), the amounts constituting “parachute payments” which would otherwise be payable to or for the benefit of the Participant shall be reduced to the extent necessary so that the Parachute Amount is equal to 2.99 times the Participant Base Amount (the “Reduced Amount”); provided that such amounts shall not be so reduced if the Participant determines, based upon the advice of an independent public accounting firm (which may, but need not be the independent public accountants of First Niagara), that without such reduction the Participant would be entitled to receive and retain, on a net after tax basis (including, without limitation, any excise taxes payable under Code Section 4999), an amount which is greater than the amount, on a net after tax basis, that the Participant would be entitled to retain upon Executive’s receipt of the Reduced Amount.

(b)    If the determination made pursuant to subsection (a) above results in a reduction of the payments that would otherwise be paid to the Participant except for the application of this Section, then the Participant may then elect, in the Participant’s sole discretion, which and how much of any particular entitlement shall be eliminated or reduced and shall advise First Niagara in writing of the Participant’s election within ten days of the determination of the reduction in payments; provided, however, that if it is determined that such election by the Participant shall be in violation of Code Section 409A, or if no such election is made by the Participant within such ten-day period, the allocation of the required reduction shall be pro-rata. If no such election is made by the Participant within such ten-day period, First Niagara may elect which and how much of any entitlement shall be eliminated or reduced and shall notify the Participant promptly of such election. Within ten days following such determination and the elections hereunder, First Niagara shall pay or distribute to or for the benefit of the Participant such amounts as are then due to the Participant under this Plan and shall promptly pay or distribute to or for the benefit of the Participant in the future such amounts as become due to the Participant under this Plan.

(c)    As a result of the uncertainty in the application of Section 280G of the Code at the time of a determination hereunder, it is possible that payments will be made by First Niagara which should not have been made under clause (a) of this Section (an “Overpayment”) or that additional payments which are not made by First Niagara pursuant to clause (a) of this Section should have been made (an “Underpayment”). In the event that there is a final determination by the Internal Revenue Service, a final determination by a court of competent jurisdiction or a change in the provisions of the Code or regulations pursuant to which an Overpayment arises, any such Overpayment shall be treated for all purposes as a loan to the Participant which the Participant shall repay to First Niagara together with interest at the applicable Federal rate provided for in Code Section 7872(f)(2). In the event that there is a final determination by the Internal Revenue Service, a final determination by a court of competent jurisdiction or a change in the provisions of the Code or regulations pursuant to which an Underpayment arises under this Plan, any such Underpayment shall be promptly paid by First Niagara to or for the benefit of the Participant, together with interest at the applicable Federal rate provided for in Code Section 7872(f)(2).

 

 


 

 

The calculations required by clause (a) of this Section will be made by First Niagara’s independent accounting firm engaged immediately prior to the event that triggered the payment, in consultation with First Niagara’s outside legal counsel, and for purposes of making the calculation the accounting firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999, provided that the accounting firm’s determinations must be made with substantial authority (within the meaning of Code Section 6662).

ARTICLE IV.

ADMINISTRATION OF PLAN

Section 4.1     Appointment of Plan Administrator and Responsibility for Administration of Plan. First Niagara shall serve as Plan Administrator and shall administer this Plan in accordance with its terms. The Plan Administrator may designate other persons to carry out the responsibilities to control and manage the operation of the Plan.

Section 4.2    Agents. The Plan Administrator may employ such agents, including counsel, as it may deem advisable for the administration of the Plan. Such agents need not be Participants under the Plan.

Section 4.3    Compensation. The Company shall pay all the expenses of the Plan Administrator. The Company shall indemnify any employees of the Company to whom responsibilities have been delegated under Section 4.1 against any liability incurred in the course of administration of the Plan, except liability arising from their own gross negligence or willful misconduct.

Section 4.4    Records. The acts and decisions of the Plan Administrator shall be duly recorded. The Plan Administrator shall make a copy of this Plan available for examination by any Participant during the business hours of the Employer.

Section 4.5    Defect or Omission. The Plan Administrator shall refer any material defect, omission or inconsistency in the Plan to the Board of Directors of First Niagara for such action as may be necessary to correct such defect, supply such omission or reconcile such inconsistency.

Section 4.6    Liability. Except for their own negligence, willful misconduct or breach of fiduciary duty, neither the Plan Administrator nor any agents appointed by the Plan Administrator shall be liable to anyone for any act or omission in the course of the administration of the Plan.

Section 4.7    Contributions and Financing. All benefits required to be paid by the Company under the Plan shall be paid as due directly by the Company from its general assets.

Section 4.8    Claims Procedure. The claims procedure set forth in this paragraph is the exclusive method of resolving disputes that arise under the Plan.

(a)    Written Claim. Any person asserting any rights under this Plan must submit a written claim to the Compensation Committee of First Niagara’s Board of Directors (the “Committee”). The Committee shall render a decision within a reasonable period of time from the date on which the Committee received the written claim, not to exceed 90 days, unless an extension of time is necessary due to reasonable cause.

(b)    Denial of Claim. If a claim is denied in whole or in part, the claimant must be provided with the following information:

(i)    A statement of specific reasons for the denial of the claim;

(ii)    References to the specific provisions of the Plan on which the denial is based;

 

 


 

 

(iii)    A description of any additional material or information necessary to perfect the claim with an explanation of why such material information is necessary;

(iv)    An explanation of the claims review procedures with a statement that the claimant must request review of the decision denying the claim within 30 days following the date on which the claimant received such notice.

(c)    Review of Denial. The claimant may request that the First Niagara Board of Directors review the denial of a claim. A request for review must be in writing and must be received by the Board of Directors within 30 days of the date on which the claimant received written notification of the denial of the claim. The Board of Directors will render a decision with respect to a written request for review within 60 days from the date on which the Board of Directors received the request for review. If the request for review is denied in whole or in part, the Board of Directors must mail the claimant a written decision that includes a statement of the reasons for the decision.

ARTICLE V.

MISCELLANEOUS PROVISIONS

Section 5.1    Plan Terms are Legally Enforceable. The Company intends that the terms of this Plan, including those relating to coverage and benefits, are legally enforceable.

Section 5.2    Plan Exclusively Benefits Employees. The Company intends that the Plan is maintained for the exclusive benefit of employees of the Company.

Section 5.3    Illegality of Particular Provision. The illegality of any particular provision of the Plan shall not affect the other provisions, and the Plan shall be construed in all other respects as if such invalid provision were omitted.

Section 5.4    Applicable Laws. To the extent not pre-empted by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Plan shall be governed by the laws of the State of New York.

Section 5.5    Non-Guaranty of Employment. Nothing in this Plan shall be construed as granting any Participant a right to continued employment with the Company.

Section 5.6    Coverage of Plan by Organization Under Common Control. The Plan is adopted by First Niagara and covers any Organization Under Common Control with First Niagara. The term “Organization Under Common Control” means (i) an Affiliated Corporation, (ii) a Related Business, (iii) an Affiliated Service Organization or (iv) any other entity required to be aggregated with First Niagara pursuant to Section 414(o) of the Code and the regulations thereunder. The term “Affiliated Corporation” means any corporation that is a member of a controlled group of corporations as defined in Section 414(b) of the Code, which includes First Niagara. The term “Related Business” means any trade or business included in a group of trade or businesses with First Niagara which are under common control, as defined in Section 414(c) of the Code. The term “Affiliated Service Organization” means any service organization which is a member of an affiliated service group, as defined in Section 414(m) of the Code, which includes First Niagara.

Section 5.7    Release and Return of Property. Payment of all benefits under this Plan is contingent upon (i) the Participant’s timely execution, delivery and non-revocation of a confidential separation agreement in a form provided by the Company that includes a waiver and release of claims in a form provided by the Company, and (ii) the Participant’s timely return of any and all Company property.

Section 5.8    Section 409A Compliance.

(a)    The compensation and benefits provided under this Plan are intended to be exempt from or to comply with the requirements of Code Section 409A, and this Plan shall be administered and interpreted consistent with that intention.

 

 


 

 

(b)     Section 5.8(a) shall not be construed as a guarantee by the Company of any particular tax effect to any Eligible Employee under this Plan. The Company shall not be liable to any Eligible Employee for any payment made under this Plan that is determined to result in an additional tax, penalty or interest under Code Section 409A, nor for reporting in good faith any payment made under this Plan as an amount includible in gross income under Code Section 409A.

ARTICLE VI.

AMENDMENT AND TERMINATION

Section 6.1    Amendment of the Plan. First Niagara intends to maintain this Plan indefinitely, but reserves the right to amend, modify or terminate the Plan at any time. First Niagara may make modifications or amendments to the Plan that are necessary or appropriate to maintain the Plan as a plan meeting the requirements of the applicable provisions of ERISA.

ARTICLE VII.

POST TERMINATION OBLIGATIONS

Section 7.1    Each Participant hereby covenants and agrees that (x) with respect to the covenants set forth in Section 7.1(a), Section 7.1(b) and Section 7.1(c), for the applicable Obligations Period (as defined below) following his termination of employment with First Niagara, and (y) with respect to the covenant set forth in Section 7.1(d) and (e), indefinitely, that the Participant shall not, without the written consent of First Niagara, either directly or indirectly:

(a)    solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of First Niagara, or any of its subsidiaries or affiliates, to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes with the business of First Niagara, or any of its direct or indirect subsidiaries or affiliates or has headquarters or offices within 100 miles of the locations in which First Niagara, or any of its direct or indirect subsidiaries or affiliates, has business operations or has filed an application for regulatory approval to establish an office;

 

(b)    become an officer, employee, consultant, director, independent contractor, agent, sole proprietor, joint venturer, greater than 5% equity owner or stockholder, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity competing with First Niagara or its affiliates in the same geographic locations where First Niagara or its affiliates has material business interests;

 

(c)    solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of First Niagara or any of its direct or indirect subsidiaries or affiliates to terminate an existing business or commercial relationship with First Niagara;

 

(d)    make, or cause to be made, any written or oral statement or other communication that is derogatory or disparaging to First Niagara or First Niagara’s predecessors, successors or its past, current or future parents, subsidiaries, related entities, or any of its members, shareholders, officers, directors, agents, attorneys, employees, or assigns; or

 

(e)     disclose, use or make known, for the Participant’s or another’s benefit any confidential information of the Company or use such confidential information in any way except in the best interest of the Company. In addition, to the extent that First Niagara has entered into a confidentiality agreement with any other person or entity the Participant agrees to comply with the terms of such confidentiality agreement and to be subject to the restrictions and limitations imposed by such confidentiality agreement as if the Participant was a party thereto.

 

Section 7.2    Each Participant shall, upon reasonable notice, furnish such information and assistance to First Niagara as may reasonably be required by First Niagara, in connection with any litigation in which

 

 


 

 

it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that the Participant shall not be required to provide information or assistance with respect to any litigation between the Participant and First Niagara or any of its subsidiaries or affiliates.

Section 7.3    All payments and benefits to a Participant under this Plan shall be subject to the Participant’s timely execution and non-revocation of a waiver and release pursuant to Section 5.7. The parties hereto, recognizing that irreparable injury will result to First Niagara, its business and property in the event of Participant’s breach of this Article VII, agree that, in the event of any such breach by a Participant, First Niagara will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by the Participant and all persons acting for or with the Participant. The Participant represents and admits that Participant’s experience and capabilities are such that Participant can obtain employment in a business engaged in other lines and/or of a different nature than First Niagara, and that the enforcement of a remedy by way of injunction will not prevent Participant from earning a livelihood. Nothing herein will be construed as prohibiting First Niagara from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from the Participant.

Section 7.4    The Obligations Period for a CEO Participant is twenty-four (24) months following termination of employment with First Niagara and the Obligations Period for a Non-CEO Participant is twelve (12) months following termination of employment with First Niagara. The applicable Obligations Period shall be based on the position held by the Participant at the time of the Participant’s termination of employment with First Niagara.

*    *    *    *    *

IN WITNESS WHEREOF, First Niagara has duly executed this Plan as of the date first above written.

    

 

 

 

 

 

FIRST NIAGARA FINANCIAL GROUP, INC.
 

Date: December 19, 2013

/s/ Kate White

 

Kate White, Managing Director of Human Resources

 

 

 

 

 


 

 

 

 

FIRST NIAGARA FINANCIAL GROUP

EXECUTIVE SEVERANCE PLAN

Appendix A

Participants Eligible for Temporary Enhanced Benefit

Under Section 3.2A

Richard Barry

Daniel E. Cantara III

Andrew Fornarola

Gregory W. Norwood

Mark Rendulic

 

 

 

 

 

 

EX-10.2 3 a8-kex102121913.htm EXHIBIT

 

 

Exhibit 10.2

 

 

 

FIRST NIAGARA FINANCIAL GROUP, INC.

AMENDED AND RESTATED

CHANGE IN CONTROL AGREEMENT

WITH GARY M. CROSBY


 

This AGREEMENT, dated as of December 19, 2013 (the “Effective Date”), is between FIRST NIAGARA FINANCIAL GROUP, INC., a Delaware corporation with its executive offices at 726 Exchange Street, Buffalo, New York, 14210 (the “Corporation”), and Gary M. Crosby (the “Executive”).

RECITALS:

a.

 

The Executive is presently employed as an executive officer of the Corporation.

 

 

 

b.

 

The Board of Directors of the Corporation (the “Board”) considers it essential to the best interests of the Corporation and its shareholders to foster the Corporation’s ability to retain key management personnel.

 

 

 

c.

 

The Board recognizes that, as is generally the case with publicly held corporations, the possibility of a Change in Control (as hereinafter defined) 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 Corporation and it shareholders.

 

 

 

d.

 

The Board intends for this Agreement to provide protection to the Executive against the exigencies of a Change in Control, but not to otherwise provide assurance of or rights to continued employment.

 

 

 

e.

 

The Board believes it to be in the best interests of the Corporation and its shareholders that the Corporation and the Board be able to rely upon the Executive to continue in the Executive’s position, and that the Corporation be able to receive and rely upon the Executive’s advice as to the best interests of the Corporation, without concern that the Executive might be distracted by the personal uncertainties and risks created by the possibility of a Change in Control.

 

 

 

f.

 

Should the possibility of a Change in Control arise, in addition to the Executive’s regular duties, the Executive may be called upon to assist in the assessment of such possible Change in Control, to advise management and the Board as to whether such Change in Control would be in the best interests of the Corporation and its shareholders and to take such other actions as the Board might determine to be appropriate.

 

 

 

g.

 

This Agreement is not intended to alter the rights of the Executive in the absence of a Change in Control of the Corporation with respect to the Executive’s employment by the Company or the Executive’s compensation and benefits in connection with such employment and, accordingly, this Agreement, although taking effect as provided below, will be operative only upon a Change in Control of the Corporation.

 

 

 

h.

 

The Corporation and the Executive both desire to set forth the terms of benefits upon a termination of employment in certain circumstances following a Change in Control.

 

 

 

i.

 

This Agreement is being amended and restated and it replaces and supersedes in its entirety the Amended and Restated Change in Control Agreement between the Corporation and the Executive

 

 

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NOW, THEREFORE, in consideration of the promises and of the covenants contained in this Agreement, the Corporation and the Executive agree as follows:

 

1. Definitions.

(a) An “Affiliate” of, or a Person “Affiliated” with, a specified Person, means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under current control with, the Person specified.

(b) “Bank” means First Niagara Bank.

(c) “Board of Directors” or “Board” means the Board of Directors of the Corporation.

(d) “Cause” means a finding by the Board of Directors that any of the following conditions exist:

(i) The Executive’s willful and continued failure substantially to perform the Executive’s duties (other than as a result of disability) that is not or cannot be cured within 30 days of the Corporation giving the Executive notice of the failure to so perform. For purposes of this Agreement, no act or failure to act will be deemed “willful” unless effected by the Executive not in good faith and without a reasonable belief that the Executive’s action or failure to act was in or not opposed to the Corporation’s best interests.

(ii) A willful act or omission by the Executive constituting dishonesty, fraud or other malfeasance, and any act or omission by the Executive constituting immoral conduct, which in any such case is injurious to the financial condition or business reputation of the Corporation.

(iii) The Executive’s indictment for a felony offense under the laws of the United States or any state other than for actions related to operation of motor vehicles which does not involve operation of a motor vehicle while intoxicated or impaired.

(iv)  Breach by the Executive of the Corporation’s Code of Ethics for Senior Financial Officers, any restrictive covenant, non-competition, confidentiality or non-solicitation, or other similar agreement which is applicable to the Executive, or breach of the Corporation’s Code of Ethics.

The Executive will not be deemed to have been terminated for Cause until there has been delivered to the Executive a copy of a resolution, duly adopted by the affirmative vote of not less than a majority of the Board at a meeting called and held for that purpose (after reasonable notice to the Executive and an opportunity for the Executive, with the Executive’s counsel, to be heard before the Board), stating that, in the good faith opinion of the Board, the Executive has engaged in conduct described above and specifying the particulars in detail.

(e) “Change in Control” means:     

(i) Any acquisition or series of acquisitions by any Person other than the Corporation, any of its Affiliates, any employee benefit plan of the Corporation or any of its Affiliates, or any Person holding common shares of the Corporation for or pursuant to the terms of such an employee benefit plan, that results in that Person becoming the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), directly or indirectly, of securities of the Corporation representing 50% or more of either the then outstanding shares of the common stock of the Corporation (“Outstanding Corporation Common Stock”) or the combined voting power of the Corporation’s then outstanding securities entitled to then vote generally in the election of Directors of the Corporation (“Outstanding Corporation Voting Securities”), except that any such acquisition of Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities will not constitute a Change in Control while that Person does not exercise the voting power of its Outstanding Corporation Common Stock or otherwise exercise control with respect to any matter concerning or affecting the Corporation, or Outstanding Corporation Voting Securities, and promptly sells, transfers, assigns or otherwise disposes of that

 

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number of shares of Outstanding Corporation Common Stock necessary to reduce its beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of the Outstanding Corporation Common Stock to below 50%;

(ii) At the time when, during any period not longer than twenty-four (24) consecutive months, individuals who at the beginning of that period constitute the Board cease to constitute at least a majority of the Board, unless the election, or the nomination for election by the Corporation’s shareholders, of each new Board member was approved by a vote of at least 2/3rds of the Board members then still in office who were Board members at the beginning of that period (including, for these purposes, new members whose election or nomination was so approved); or

(iii) Approval by the shareholders of the Corporation of

(A) a dissolution or liquidation of the Corporation,

(B) a sale of all or substantially all of the assets or earning power of the Corporation, taken as a whole (with the stock or other ownership interests of the Corporation in any of its Affiliates constituting assets of the Corporation for this purpose) to a Person that is not an Affiliate of the Corporation (for purposes of this paragraph, “sale” means any change of ownership), or

(C) an agreement to merge or consolidate or otherwise reorganize, with or into one or more Persons that are not Affiliates of the Corporation, as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity immediately after any such merger, consolidation or reorganization are, or will be, owned, directly or indirectly, by shareholders of the Corporation immediately before such merger, consolidation or reorganization (assuming for purposes of that determination that there is no change in the record ownership of the Corporation’s securities from the record date for that approval until that merger, consolidation or reorganization and that those record owners hold no securities of the other parties to that merger, consolidation or reorganization), but including in that determination any securities of the other parties to that merger, consolidation or reorganization held by Affiliates.

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Good Reason” means:

(i) failure to elect or reelect or to appoint or reappoint the Executive as an officer of the Corporation during the term of this Agreement in accordance with Section 2 hereof;

(ii) material change in the Executive’s function, duties, or responsibilities, which change would cause Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Section 2 hereof;

(iii) a material reduction in the Executive’s base compensation; provided, however, that neither the “Cash Fee,” the “ICEO Restricted Stock Units” nor the “Completion Bonus” (as those terms are defined in the prior letter agreement between the Corporation and the Executive, dated as of April 5, 2013) shall be considered part of the Executive’s “base compensation;”

(iv) a relocation of Executive’s principal place of employment by more than 100 miles from its location as of the Effective Date;

(v) liquidation or dissolution of the Corporation other than liquidations or dissolutions that are caused by reorganizations that do not affect the status of Executive; or

(vi) breach of this Agreement by the Corporation.

Upon the occurrence of any event described above, the Executive shall have the right to elect to terminate his employment under this Agreement by resignation upon not less than thirty (30) days prior written notice to the

 

3


 

 

Corporation, which notice must be given by the Executive within ninety (90) days after the initial event giving rise to said right to elect to terminate his employment. Notwithstanding the preceding sentence, in the event of a continuing breach of this Agreement by the Corporation, the Executive, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of his rights solely under this Agreement by virtue of the fact that Executive has submitted his resignation but has remained in the employment of the Corporation and is engaged in good faith discussions to resolve any occurrence of an event described above. The Corporation shall have at least thirty (30) days to remedy any condition set forth above, provided, however, that the Corporation shall be entitled to waive such period and make an immediate payment hereunder.

(h) “Person” has the meaning given that term in Sections 13(d) and 14(d) of the Exchange Act, but excluding any Person described in and satisfying the conditions of Rule 13d-1(b)(1) of Section 13 of the Exchange Act.

2. Term of Agreement. This Agreement will be effective for the period beginning on the Effective Date and shall continue to be effective for the period ending on the “Expiration Date”; provided, that the Executive’s right to indemnification and insurance coverage shall continue beyond the Expiration Date for the duration of all applicable statutes of limitations and for purposes of all policies of insurance. The “Expiration Date” shall initially be December 31, 2015, and thereafter shall automatically be extended for successive two-year periods unless, not later than six months prior to any such Expiration Date, the Corporation shall have given notice to the Executive that it does not wish the Expiration Date to be so extended in which case the Expiration Period will be the date that is thirty (30) months from the date of such notice. Notwithstanding the foregoing, the Expiration Date shall be any earlier date on which the Executive’s employment with the Corporation terminates for any reason, in the event such termination occurs prior to a Change in Control of the Corporation.

3. Benefits and Restrictions Upon Termination Following a Change in Control.

(a) Upon Termination by the Corporation without Cause or by the Executive with Good Reason. Upon the Executive’s termination of employment by (i) the Corporation without Cause within the twelve (12)-month period following a Change in Control or (ii) the Executive for Good Reason no later than fourteen (14) months following a Change in Control, the Corporation will provide the following:

(i) Salary And Fringe Benefits. The Executive will receive full salary and fringe benefits through the effective date of termination together with any unpaid annual short term incentive bonus for a prior period, which shall be paid within 30 days after the effective date of the termination of employment. The Executive will receive a payment equal to 300% of the Executive’s base salary, as in effect in the year of the termination of employment, payable in one lump sum within 30 days after the effective date of the termination of employment. The Executive will also receive non-taxable medical and health insurance, group term life insurance, automobile allowance and club membership benefits (hereinafter referred to as “Fringe Benefits”) as in effect on the date of termination for a period of thirty-six (36) months beginning with the month next following the month during which the employment terminates. If the Executive dies during the thirty-six (36) month period, any dependent health or medical Fringe Benefits will be provided for the balance of the thirty-six (36) month period. For purposes of COBRA health care continuation coverage, the “qualifying event” will be deemed to have occurred at the end of the thirty-six (36) month period following termination of employment.

(ii) Bonus. The Executive will receive a bonus amount equal to 300% of the Executive’s targeted annual short term incentive bonus amount in effect in the year of the termination of employment payable in one lump sum within 30 days after the effective date of the termination of employment.

(iii) Accrued Paid Time Off. The Executive will receive payment for accrued but unused paid time off based on the period of active employment for that portion of the fiscal year in which the Executive’s termination of employment becomes effective. Payment for accrued but unused paid time off will be payable in one lump sum within 30 days after the effective date of the termination of employment.

 

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(iv) Indemnification. For 60 months following the date of termination of employment, the Corporation will continue any indemnification agreement with the Executive and will provide directors’ and officers’ liability insurance insuring the Executive, such coverage to have limits and scope of coverage not less than that in effect on the date of termination of employment.

(v) Equity Compensation. The Executive will be fully vested in and will have the immediate right to exercise all equity compensation awards including, but not limited to, stock options, restricted stock, stock appreciation rights, and phantom equity awards, which the Executive has received in connection with Executive’s employment with the Corporation.

(vi) Qualified Plans. The Executive will receive a lump sum payment within 30 days after the effective date of the termination of employment in an amount equal to the value of the accrued benefit under any qualified pension or profit sharing plan maintained by the Corporation which was not vested.

(vii) Outplacement. For a twelve (12)-month period following the termination of employment, the Corporation will reimburse the Executive for outplacement services in an amount not to exceed $10,000; provided however, that reimbursements for such outplacement services shall be made in a cash lump sum within 30 days after Executive incurs such expenses.

(viii) Reduction in Fringe Benefits. Fringe benefits under this Section will be reduced to the extent practicable for any similar fringe benefits provided by and available to the Executive from any subsequent employer but will not be limited by the terms of any fringe benefit of a subsequent employer.

(b) Upon Any Other Termination. Upon the Executive’s termination of employment absent Good Reason, by the Corporation for Cause, or on account of death or disability, in any case following a Change in Control, no amounts will be payable under this Agreement.

4. Section 409A ComplianceNotwithstanding any other provision in this Agreement, for purposes of this Agreement, “termination of employment” shall mean “Separation from Service” as defined in Code Section 409A and the Treasury Regulations thereunder, such that the Corporation and the Executive reasonably anticipate that the level of bona fide services the Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period. Notwithstanding anything in this Agreement to the contrary, in the event Executive is a Specified Employee (within the meaning of Treasury Regulations §1.409A-1(i)), then, to the extent necessary to avoid penalties under Code Section 409A, no payment shall be made to Executive prior to the first day of the seventh month following the Date of Termination in excess of the “permitted amount” under Code Section 409A. For these purposes, the “permitted amount” shall be an amount that does not exceed two times the lesser of: (i) the sum of Executive’s annualized compensation based upon the annual rate of pay for services provided to the Bank for the calendar year preceding the year in which occurs the Date of Termination or (ii) the maximum amount that may be taken into account under a tax-qualified plan pursuant to Code Section 401(a)(17) for the calendar year in which occurs the Date of Termination. Payment of the “permitted amount” shall be made within thirty (30) days following the Date of Termination. Any payment in excess of the permitted amount shall be made to Executive on the first day of the seventh month following the Date of Termination.

5. Effect of Regulatory Actions. Any actions by the Corporation under this Agreement must comply with the law, including regulations and other interpretive action, of the Federal Deposit Insurance Act, Federal Deposit Insurance Corporation, or other entities that supervise any of the activities of the Corporation. Specifically, any payments to the Executive by the Corporation, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

6. Golden Parachute AdjustmentsNotwithstanding anything in this Agreement or any other agreement to the contrary,

 

5


 

 

 

(a) in the event the Corporation (or its successor) and the Executive both determine, based upon the advice of the independent public accountants for the Corporation, that part or all of the consideration, compensation or benefits to be paid to the Executive under this Agreement constitute “parachute payments” under Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended, then, if the aggregate present value of such parachute payments, singularly or together with the aggregate present value of any consideration, compensation or benefits to be paid to the Executive under any other plan, arrangement or agreement which constitute “parachute payments” (collectively, the “Parachute Amount”) exceeds 2.99 times the Executive’s “base amount,” as defined in Section 280G(b)(3) of the Code (the “Executive Base Amount”), the amounts constituting “parachute payments” which would otherwise be payable to or for the benefit of the Executive shall be reduced to the extent necessary so that the Parachute Amount is equal to 2.99 times the Executive Base Amount (the “Reduced Amount”); provided that such amounts shall not be so reduced if the Executive determines, based upon the advice of an independent public accounting firm (which may, but need not be the independent public accountants of the Corporation), that without such reduction the Executive would be entitled to receive and retain, on a net after tax basis (including, without limitation, any excise taxes payable under Section 4999 of the Code), an amount which is greater than the amount, on a net after tax basis, that the Executive would be entitled to retain upon Executive’s receipt of the Reduced Amount.

(b) If the determination made pursuant to clause (A) above results in a reduction of the payments that would otherwise be paid to the Executive except for the application of this Section 6, then the Executive may then elect, in the Executive’s sole discretion, which and how much of any particular entitlement shall be eliminated or reduced and shall advise the Corporation in writing of the Executive’s election within ten days of the determination of the reduction in payments; provided, however, that if it is determined that such election by the Executive shall be in violation of Code Section 409A, or if no such election is made by the Executive within such ten-day period, the allocation of the required reduction shall be pro-rata. Within ten days following such determination and the election hereunder, the Corporation shall pay or distribute to or for the benefit of the Executive such amounts as are then due to the Executive under this Agreement and shall promptly pay or distribute to or for the benefit of the Executive in the future such amounts as become due to the Executive under this Agreement.

(c) As a result of the uncertainty in the application of Section 280G of the Code at the time of a determination hereunder, it is possible that payments will be made by the Corporation which should not have been made under clause (A) of this Section 6 (an “Overpayment”) or that additional payments which are not made by the Corporation pursuant to clause (A) of this Section 6 should have been made (an “Underpayment”). In the event that there is a final determination by the Internal Revenue Service, a final determination by a court of competent jurisdiction or a change in the provisions of the Code or regulations pursuant to which an Overpayment arises, any such Overpayment shall be treated for all purposes as a loan to the Executive which the Executive shall repay to the Corporation together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code. In the event that there is a final determination by the Internal Revenue Service, a final determination by a court of competent jurisdiction or a change in the provisions of the Code or regulations pursuant to which an Underpayment arises under this Agreement, any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive, together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.

The calculations required by clause (a) of this Section 6 will be made by the Corporation’s independent accounting firm engaged immediately prior to the event that triggered the payment, in consultation with the Corporation’s outside legal counsel, and for purposes of making the calculation the accounting firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code, provided that the accounting firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).

7. Late Payments: Tax Withholding. Any payment required to be made to the Executive under this Agreement that is not made at the time required hereunder shall bear interest at a rate equal to 120% of the monthly compounded applicable federal rate, as in effect under Section 1274(d) of the Code for the month in which the payment is required to be made. All payments required to be made to the Executive under this Agreement shall be

 

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subject to the withholding of such amounts, if any, relating to tax, excise tax and other payroll deductions as the Corporation may reasonably determine it should withhold pursuant to any applicable law or regulation.

8. Non-SolicitationIn consideration of the compensation and other benefits to be paid to the Executive under this Agreement, the Executive agrees that, beginning on the date of this Agreement and continuing until the Covenant Expiration Date, as hereafter defined, the Executive shall not, directly or indirectly, for the Executive’s own account or as agent, employee, officer, director, trustee, consultant, partner, stockholder or equity owner of any corporation or any other entity (a) solicit the employment of any person who is employed by the Corporation or any Affiliate at the Reference Date or at any time during the six-month period preceding the Reference Date, except that the Executive shall be free to solicit the employment of any such person whose employment with the Corporation or any Affiliate has terminated for any reason (without any interference from the Executive) or who has not been employed by the Corporation or any Affiliate for at least six (6) months, (b) canvass or solicit business in competition with the business conducted by the Corporation or any Affiliate at the Reference Date from any person or entity who during the six (6) month period preceding the Reference Date shall have been a customer of the Corporation or any Affiliate, (c) willfully dissuade or discourage any person or entity from using, employing or conducting business with the Corporation or any Affiliate or (d) intentionally disrupt or interfere with, or seek to disrupt or interfere with, the business or contractual relationship between the Corporation or any Affiliate and any other party who during the six-month period preceding the Reference Date shall have supplied materials or services to the Corporation or any Affiliate. “Covenant Expiration Date” shall mean the date which is twelve (12) months after the Reference Date. “Reference Date” shall mean the date on which the Executive’s employment with the Corporation or an Affiliate has terminated; provided however that the Executive’s employment shall not be deemed to have terminated so long as the Executive continues to be employed or engaged as an employee or consultant of the Corporation or any Affiliate.

9. Confidential Information. The Executive has and will have access to become acquainted with confidential or proprietary information and trade secrets related to the business of the Corporation, its subsidiaries and any Affiliates (collectively, the “Companies”), including but not limited to (a) trade secrets, business plans, software programs, operating plans, marketing plans, financial reports, operating data, budgets, wage and salary rates, pricing strategies and information, terms of agreements with suppliers or customers and others, customer lists, reports, correspondence, tapes, disks, tangible property and specifications owned by or used in the Companies’ businesses; (b) operating strengths and weaknesses of the Companies’ officers, directors, employees, agents, suppliers and customers, and/or (c) information pertaining to future developments such as, but not limited to, software development or enhancement, future marketing plans or ideas, and plans or ideas for new services or products, (d) all information which is learned or developed by the Executive in the course and performance of the Executive’s duties under this Agreement, including without limitation, reports, information and data relating to the Companies’ acquisition strategies, and (e) other tangible and intangible property which is used in the business and operations of the Companies’ but not made publicly available ((a) through (e) are, collectively, “Confidential Information”). The Executive will not, directly or indirectly, disclose, use or make known for the Executive’s or another’s benefit any Confidential Information of the Companies or use such Confidential Information in any way except in the best interests of the Companies in the performance of the Executive’s duties. The Executive will take all necessary steps to safeguard the Companies’ Confidential Information. In addition, to the extent that the Corporation has entered into a confidentiality agreement with any other person or entity the Executive agrees to comply with the terms of such confidentiality agreement and to be subject to the restrictions and limitations imposed by such confidentiality agreements as if the Executive was a party thereto.

10. Non-exclusivity of Rights. Except as otherwise specifically provided, nothing in this Agreement will prevent or limit the Executive’s continued or future participation in any benefit, incentive, or other plan, practice, or program provided by the Corporation and for which the Executive may qualify. Any amount of vested benefit or any amount to which the Executive is otherwise entitled under any plan, practice, or program of the Corporation will be payable in accordance with the plan, practice, or program, except as specifically modified by this Agreement. To the extent that this Agreement provides a larger or greater separate severance benefit than may be provided to the Executive pursuant to any policy, program, contract or arrangement adopted by the Corporation, this Agreement will supersede and be in full substitution of such other policy, program, contract or arrangement with respect to the larger or greater separate severance benefit to be provided.

 

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11. No Obligation to Seek Other Employment. The Executive will not be obligated to seek other employment or to take other action to mitigate any amount payable to the Executive under this Agreement.

12. Benefit ClaimsIn the event the Executive, or the Executive’s beneficiaries, as the case may be, and the Corporation disagree as to their respective rights and obligations under this Agreement, and the Executive or the Executive’s beneficiaries are successful in establishing, privately or otherwise, that the Executive’s or their position is substantially correct, or that the Corporation’s position is substantially wrong or unreasonable, or in the event that the disagreement is resolved by settlement, the Corporation will pay all costs and expenses, including counsel fees, which the Executive or the Executive’s beneficiaries may incur in connection therewith directly to the provider of the services or as may otherwise be directed by the Executive or the Executive’s beneficiaries. The Corporation will not delay or reduce the amount of any payment provided for hereunder or setoff or counterclaim against any such amount for any reason whatsoever; it is the intention of the Corporation and the Executive that the amounts payable to the Executive or the Executive’s beneficiaries hereunder will continue to be paid in all events in the manner and at the times herein provided. All payments made by the Corporation hereunder will be final and the Corporation will not seek to recover all or any part of any portion of any payments hereunder for any reason.

13. Successors. This Agreement is personal to the Executive and may not be assigned by the Executive other than by will or the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives or successors in interest. The Executive may designate a successor or successors in interest to receive any amounts due under this Agreement after the Executive’s death. A designation of a successor in interest must be made in writing, signed by the Executive, and delivered to the Corporation pursuant the Notice provisions of this Agreement. Except as otherwise provided in this Agreement, if the Executive has not designated a successor in interest, payment of benefits under this Agreement will be made to the Executive’s estate. This Section will not supersede any designation of beneficiary or successor in interest made by the Executive or provided for under any other plan, practice, or program of the Corporation.

This Agreement will inure to the benefit of and be binding upon the Corporation and its successors and assigns.

The Corporation will require any successor (whether direct or indirect, by acquisition of assets, merger, consolidation or otherwise) to all or substantially all of the operations or assets of the Corporation or any successor and without regard to the form of transaction used to acquire the operations or assets of the Corporation, to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no succession had taken place. “Corporation” means the Corporation and any successor to its operations or assets as set forth in this Section that is required by this clause to assume and agree to perform this Agreement or that otherwise assumes and agrees to perform this Agreement.

14. ArbitrationAny controversy or claim arising out of or relating to this Agreement, or a breach of it, must be settled by final and binding arbitration administered by the American Arbitration Association under its National Rules for the Resolution of Employment Disputes, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction over it. The arbitration must take place in Buffalo, New York. The arbitration must be conducted before three (3) arbitrators.

15. Allocation of Payments, Etc., Between Corporation and BankAll payments, accruals and other benefits under this Agreement will be allocated between the Corporation and the Bank. The Corporation and Bank management will recommend allocations supported by data they provide, and the Board will approve the allocations. The allocation will make certain no amounts are paid or owed by the Bank that are attributable to services performed by the Executive for the Corporation. The Corporation nonetheless will remain jointly liable for all payments, accruals and benefits under this Agreement.

16. Failure, Delay or WaiverNo course of action or failure to act by the Corporation or the Executive will constitute a waiver by the party of any right or remedy under this Agreement, and no waiver by either party of any right or remedy under this Agreement will be effective unless made in writing.

 

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17. SeverabilityWhenever possible, each provision of this Agreement will be interpreted in such a manner as to be enforceable under applicable law. However, if any provision of this Agreement is deemed unenforceable under applicable law by a court having jurisdiction, the provision will be unenforceable only to the extent necessary to make it enforceable without invalidating the remainder of it or any of the remaining provisions of this Agreement.

18. NoticeAll written communications to parties required hereunder must be in writing and (a) delivered in person, (b) mailed by registered or certified mail, return receipt requested, (such mailed notice to be effective 4 days after the date it is mailed) or (c) sent by facsimile transmission, with confirmation sent by way of one of the above methods, to the party at the address given below for the party (or to any other address as the party designates in a writing complying with this Section, delivered to the other party):

If to the Corporation:

First Niagara Financial Group, Inc.

726 Exchange Street

Buffalo, NY 14210

Attention: Managing Director Human Resources

Telephone: 716-858-3332

 

with a copy (which shall not constitute notice) to:

Harter Secrest & Emery, LLP

1600 Bausch & Lomb Place

Rochester, New York 14604-2711

Attention: Christopher Potash, Esq.

Telephone: 585-231-1278

 

If to the Executive:

 

Gary M. Crosby

[The latest home address on file with the Company]

 

19. Miscellaneous. This Agreement (a) may not be amended, modified or terminated orally or by any course of conduct pursued by the Corporation or the Executive, but may be amended, modified or terminated only by a written agreement duly executed by the Corporation and the Executive, (b) is binding upon and inures to the benefit of the Corporation and the Executive and each of their respective heirs, representatives, successors and assignees, except that the Executive may not assign any of the Executive’s rights or obligations pursuant to this Agreement, (c) constitutes the entire agreement between the Corporation and the Executive with respect to the subject matter of this Agreement, and supersedes all oral and written proposals, representations, understandings and agreements previously made or existing with respect to such subject matter, and (d) will be governed by, and interpreted and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law.

20. Termination of this Agreement. This Agreement will terminate on the later of (i) the Expiration Date or (ii) the date on which the Corporation has made the last payment to the Executive of any amount provided for under this Agreement. However, the obligations set forth under Sections 3(a)(iv) and 9 will survive any termination and will remain in full force and effect. Without the written consent of the Executive, the Corporation has no right to terminate this Agreement prior to the date of the last payment.

21. Multiple CounterpartsThis Agreement may be executed in one or more counter parts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any party may execute this Agreement by facsimile signature and the other party shall be entitled to rely on such facsimile

 

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signature as evidence that this Agreement has been duly executed by such party. Any party executing this Agreement by facsimile signature shall immediately forward to the other party an original page by overnight mail.

 

 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

 

 

 

 

 

FIRST NIAGARA FINANCIAL GROUP, INC.
 

Date: December 19, 2013

By:  

/s/ G.Thomas Bowers

 

 

G. Thomas Bowers, Chairman of the Board

 

 

 

 

 

 

 

 

EXECUTIVE

Date: December 19, 2013

/s/ Gary M. Crosby

 

Gary M. Crosby 

 

 

 

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