Exhibit 10.4
FIRST NIAGARA FINANCIAL GROUP
EXECUTIVE SEVERANCE PLAN
Effective as of October 23, 2006
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.
Both the original effective date and the amended and restated effective date of
the Plan is October 23, 2006 (the “Effective Date”). The Plan Year is the
calendar year.
ARTICLE II.
PARTICIPATION
Section 2.1. Eligible Executives. 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.
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 Strategic Performance Committee excluding any employee covered under
an employment agreement that provides for severance or other similar
post-employment compensation. If any employee becomes a Participant and
thereafter is no longer designated as a member of the Strategic Performance
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.
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.

 

 

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For purposes of this Plan, “Cause” means a finding by the Board of Directors of
the Company that any of the following conditions exist:
(1) The Participant’s willful and continued failure substantially to 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.
(2) 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.
(3) 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.
(4) 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 Agreement 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 Agreement 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 Agreement 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.

 

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Section 3.2. Benefit Amount. A Participant’s Severance Payment will be equal to
the greater of:
(i) The Participant’s base salary, determined as of the date of termination, for
twelve (12) months, plus the Participant’s targeted bonus amount; or
(ii) The 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 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 Participant’s remittance to First Niagara of a receipt for
such services.
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. 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 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
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 Agreement 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.

 

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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 in any position that meets the criteria in Section 3.1(c) above.
Section 3.5. Effect of Regulatory Actions. Any actions by First Niagara 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
First Niagara. Specifically, any payments to the Participant by First Niagara,
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.
Section 3.6. Golden Parachute Adjustments. Notwithstanding anything in this
Agreement 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 Agreement 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 Agreement 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 Agreement.

 

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(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 Agreement, 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).

 

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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.

 

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(b) Denial of Claim. If a claim is denied in whole or in part, the claimant must
be provided with the following information:
(1) A statement of specific reasons for the denial of the claim;
(2) References to the specific provisions of the Plan on which the denial is
based;
(3) A description of any additional material or information necessary to perfect
the claim with an explanation of why such material information is necessary;
(4) 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.

 

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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.
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, for a period of
one (1) year following his termination of employment with First Niagara, he
shall not, without the written consent of First Niagara, either directly or
indirectly:
(i) 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;

 

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(ii) 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; or
(iii) 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.
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 compliance with this Article VII. 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.

 

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

            FIRST NIAGARA FINANCIAL GROUP, INC.
    December 12, 2008  By:   /s/ John R. Koelmel     Date    John R. Koelmel   
    President & CEO   

 

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