Document:

Exhibit 10.7

    
      

    

     

    Exhibit
      10.7

    NBT
      Bancorp Inc. 2006 Executive Incentive Compensation Plan

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    January
      2006

    

    

    

    NBT
      BANCORP INC. AND SUBSIDIARIES

     

    2006
      EXECUTIVE INCENTIVE COMPENSATION PLAN

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    NBT
      BANCORP INC. AND SUBSIDIARIES

    2006
      EXECUTIVE INCENTIVE COMPENSATION PLAN

    

    Table
      of
      Contents

    

    
 

    
      	 	
              Page

            
	 	 
	
              Introduction

            	
              1-2

            
	
              Incentive
                Plan

            	 
	
              Section
                I - Definitions

            	
              3

            
	
              Section
                II - Participation

            	
              4

            
	
              Section
                III - Activating the Plan

            	
              4

            
	
              Section
                IV - Calculation of Awards

            	
              4

            
	
              Section
                V - President's Special Recommendations

            	
              4

            
	
              Section
                VI - Distribution of Awards

            	
              5

            
	
              Section
                VII - Plan Administration

            	
              5

            
	
              Section
                VIII - Amendment, Modification, Suspension or Termination

            	
              5

            
	
              Section
                IX - Effective Date

            	
              5

            
	
              Section
                X - Employer Relations with Participants

            	
              6

            
	
              Section
                XI - Governing Law

            	
              6

            
	 	 
	
              Incentive
                Plan Participants and Distribution of Awards

            	
              Appendix
                A

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    NBT
      BANCORP INC. AND SUBSIDIARIES

     

    Introduction

     

    It
      is
      important to examine the benefits that accrue to the organization through the
      operation of the Executive Incentive Compensation Plan (EICP). The Plan impacts
      directly on the success of the organization and its purpose can be summarized
      as
      follows:

    

    

    
      	
              *

            	
              Provides
                Motivation:
                The opportunity for incentive awards provides Executives with the
                impetus
                to "stretch" for challenging, yet attainable,
                goals.

            

    

    

    

    
      	
              *

            	
              Provides
                Retention:
                By
                enhancing the organization's competitive compensation
                posture.

            

    

     

    

      
        	
                *

              	
                Provides
                  Management Team Building:
                  By
                  making the incentive award dependent on the attainment of organization
                  goals, a "team orientation" is fostered among the participant
                  group.

              

      

    

     

     

    
      	
              *

            	
              Provides
                Individual Motivation:
                By
                encouraging the participant to make significant personal contribution
                to
                the corporate effort.

            

    

    

    

    
      	
              *

            	
              Provides
                Competitive Compensation Strategy:
                The implementation of incentive arrangements is competitive with
                current
                practice in the banking industry.

            

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    Highlights
      of the 2006 Executive Incentive Compensation Plan (EICP) are listed
      below:

     

    

    
      	
              1.

            	
              The
                Plan is competitive compared with similar sized banking organizations
                and
                the banking industry in general.

            

    

    

    

    
      	
              2.

            	
              The
                Compensation Committee of the Board of Directors controls all aspects
                of
                the Plan.

            

    

    

    

    
      	
              3.

            	
              All
                active Executives are eligible for
                participation.

            

    

    

    

    
      	
              4.

            	
              The
                financial criteria necessary for Plan operation consist of achieving
                certain levels of Earnings Per Share (EPS) for the Company and its
                Subsidiaries as applicable. Certain non-recurring events inclusive
                of
                changes to tax law or accounting rules may be excluded from the financials
                at the discretion of the CEO and the Compensation
                Committee.

            

    

    

    

    
      	
              5.

            	
              Incentive
                distributions will be made during the first quarter of the year following
                the Plan Year and will be based on the matrix in Appendix
                A.

            

    

    

    

    
      	
              6.

            	
              Incentive
                awards will be based on attainment of corporate goals. Total incentive
                awards may contain Corporate, Subsidiary and Individual components.
                The
                Corporate and Subsidiary components are awarded by virtue of performance
                related to pre-established goals and the individual component is
                awarded
                by virtue of individual performance related to individual goals.
                No bonus
                will be paid unless the Corporation attains its pre-established goals,
                and
                Division Heads achieve their respective
                budgets.

            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

    NBT
      BANCORP INC. AND SUBSIDIARIES

    

    The
      Board
      of Directors has established this 2006 Executive Incentive Compensation Plan.
      The purpose of the Plan is to meet and exceed financial goals and to promote
      a
      superior level of performance relative to the competition in our market areas.
      Through payment of incentive compensation beyond base salaries, the Plan
      provides reward for meeting and exceeding financial goals.

    

    SECTION
      I
      - DEFINITIONS

    Various
      terms used in the Plan are defined as follows:

    

    Base
      Salary:
      The base
      salary at the end of the Plan Year, excluding any bonuses, contributions to
      Executive benefit programs, or other compensation not designated as
      salary.

    

    Board
      of Directors:
      The
      Board of Directors of NBT Bancorp Inc.

    

    CEO:
      The CEO
      of NBT Bancorp Inc.

    

    Corporate
      Goals:
      Those
      pre-established objectives and goals of NBT Bancorp Inc. which are required
      to
      activate distribution of awards under the Plan.

    

    Divisional/Subsidiary
      Goals:
      Those
      pre-established objectives and goals which apply to each of the Banking
      Divisions of NBT Bancorp Inc. and which may activate distribution of awards
      under the Plan.

    

    Individual
      Goals:
      Key
      objectives mutually agreed upon between participants and
      management.

    

    Compensation
      Committee:
      The
      Compensation and Benefits Committee of the NBT Bancorp Inc. Board of
      Directors.

    

    Plan
      Participant:
      An
      eligible Executive as designated by the CEO and approved by the Compensation
      Committee for participation for the Plan Year.

    

    Plan
      Year:
      The 2006
      calendar year.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    

    SECTION
      II - ELIGIBILITY
      TO PARTICIPATE

    

    To
      be
      eligible for an award under the Plan, a Plan participant must be an Executive
      in
      full-time service at the start and close of the calendar year and at the time
      of
      the award unless mutually agreed upon prior to the Executive leaving the
      company. Newly hired employees may be designated by the CEO and approved by
      the
      Compensation Committee as eligible for an award as determined by their date
      of
      hire or any relevant employment agreement. A Plan participant must be in the
      same or equivalent position, at year-end as they were when named a participant
      or have been promoted during the course of the year, to be eligible for an
      award. If a Plan participant voluntarily leaves the company prior to the payment
      of the award, he/she is not eligible to receive an award unless mutually agreed
      upon prior to the Executive leaving the company. However, if the active
      full-time service of a participant in the Plan is terminated by death,
      disability, retirement, or if the participant is on an approved leave of
      absence, an award will be recommended for such a participant based on the
      proportion of the Plan Year that he/she was in active service.

    

    SECTION
      III - ACTIVATING
      THE PLAN

    

    The
      operation of the Plan is predicated on attaining and exceeding management
      performance goals. The goals will consist of the attainment of certain Earnings
      Per Share (EPS) levels as applicable. Non-recurring events including changes
      in
      tax laws and accounting rules may be excluded from the financial results at
      the
      discretion of the CEO and upon approval of the Compensation Committee. The
      Corporation must achieve a minimum EPS set forth in Appendix A and Division
      Heads must achieve their respective budgets to trigger an award pursuant to
      the
      terms of this Plan.

    

    SECTION
      IV - CALCULATION
      OF AWARDS

    

    The
      Compensation Committee designates the incentive formula as shown in Appendix
      A.
      The Compensation Committee will make final decisions with respect to all
      incentive awards and will have final approval over all incentive awards. The
      individual participant data regarding maximum award and formulas used in
      calculation has been customized and appears as Appendix A.

    

    SECTION
      V
      - SPECIAL
      RECOMMENDATIONS

    

    The
      CEO
      will recommend to the Compensation Committee the amounts to be awarded to
      individual participants in the incentive Plan. The CEO may recommend a change
      outside the formula to a bonus award (increase or decrease) to an individual
      participant by a specified percentage based on assessment of special individual
      performance outside the individual goals or based on special circumstances
      that
      may have occurred during the plan year. The Compensation Committee may amend
      the
      CEO's bonus award. No award will be granted to an Executive whose performance
      is
      unacceptable.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    SECTION
      VI - DISTRIBUTION
      OF AWARDS

    

    Distribution
      of the EICP will be made during the first quarter of the year following the
      plan. Distribution of the award must be approved by the Compensation
      Committee.

    

    In
      the
      event of death, any approved award earned under the provisions of this plan
      will
      become payable to the designated beneficiary of the participant as recorded
      under the Company’s group life insurance program; or in the absence of a valid
      designation, to the participant's estate.

    

    SECTION
      VII - PLAN
      ADMINISTRATION

    

    The
      Compensation Committee shall, with respect to the Plan have full power and
      authority to construe, interpret, manage, control and administer this Plan.
      The
      Committee shall decide upon cases in conformity with the objectives of the
      Plan
      under such rules as the Board of Directors may establish.

    

    Any
      decision made or action taken by NBT Bancorp Inc., the Board of Directors,
      or
      the Compensation Committee arising out of, or in connection with, the
      administration, interpretation, and effect of the Plan shall be at their
      absolute discretion and will be conclusive and binding on all parties. No member
      of the Board of Directors, Compensation Committee, or employee shall be liable
      for any act or action hereunder, whether of omission or commission, by a Plan
      participant or employee or by any agent to whom duties in connection with the
      administration of the Plan have been delegated in accordance with the provision
      of the Plan.

    

    SECTION
      VIII - AMENDMENT,
      MODIFICATION, SUSPENSION OR TERMINATION

    

    NBT
      Bancorp Inc. reserves the right, by and through its Board of Directors to amend,
      modify, suspend, reinstate or terminate all or part of the Plan at any time.
      The
      Compensation Committee will give prompt written notice to each participant
      of
      any amendment, suspension or termination or any material modification of the
      Plan. In the event of a merger or acquisition, the Plan and related financial
      formulas will be reviewed and adjusted to take into account the effect of such
      activities.

    

    SECTION
      IX - EFFECTIVE
      DATE OF THE PLAN

    

    The
      effective date of the Plan shall be January 1, 2006.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    SECTION
      X
      - EMPLOYER
      RELATION WITH PARTICIPANTS

    

    Neither
      establishment nor the maintenance of the Plan shall be construed as conferring
      any legal rights upon any participant or any person for a continuation of
      employment, nor shall it interfere with the right of an employer to discharge
      any participant or otherwise deal with him/her without regard to the existence
      of the Plan.

    

    SECTION
      XI - GOVERNING
      LAW

    

    Except
      to
      the extent pre-empted under federal law, the provisions of the Plan shall be
      construed, administered and enforced in accordance with the domestic internal
      law of the State of New York. In the event of relevant changes in the Internal
      Revenue Code, related rulings and regulations, changes imposed by other
      regulatory agencies affecting the continued appropriateness of the Plan and
      awards made thereunder, the Board may, at its sole discretion, accelerate or
      change the manner of payments of any unpaid awards or amend the provisions
      of
      the Plan.

     

    -6-Exhibit 10.10

    
      

    

    Exhibit
      10.10

    Amendment
      dated December 19, 2005 to Form of Employment Agreement between NBT Bancorp
      Inc.
      and Daryl R. Forsythe made as of August 2, 2003.

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    December
      19, 2005

    

    

    

    Daryl
      R.
      Forsythe

    21
      Ridgeland Road

    Norwich,
      New York 13815

    

    Re:
      Employment Agreement and Change in Control -- Severance Agreement
      Amendment

    

    Dear
      Daryl:

    

    As
      you
      are aware, in 2004 a new Section 409A was added to the Internal Revenue Code
      by
      the American Jobs Creation Act of 2004 (the “Act”). The Act has made significant
      changes in the tax law as it is applied to executive compensation. In late
      September of 2005 the Internal Revenue Service published proposed regulations
      relating to compliance with the Jobs Act. As a “key employee” severance payments
      made to you on termination from employment under the terms of your current
      employment agreement with NBT Bancorp Inc.1 
      (“Employment Agreement”) must be made in compliance with the Act or a
      substantial excise tax (payable by you) will be imposed.

    

    Your
      Employment Agreement provides that you would be entitled to certain severance
      payments if your relationship with NBT Bancorp Inc. was involuntarily terminated
      (other than “for cause”) or you resigned for Good Reason, as those terms are
      defined in your Employment Agreement. Pursuant to the Employment Agreement,
      severance payments would begin on the date immediately following the Termination
      Date (as defined in your Employment Agreement) and continue for the term set
      forth in your Employment Agreement. 

    

    Your
      Change in Control -- Severance Agreement2 
      (“Severance Agreement”) provides that you would be entitled to severance
      payments if, within 24 months following a Change in Control of NBT Bancorp
      Inc.,
      your employment as Chief Executive Officer was involuntarily terminated (other
      than for “Cause”) or you resigned for Good Reason (or without Good Reason within
      12 months following a Change in Control of NBT Bancorp Inc.), as those terms
      are
      defined in your Severance Agreement. Pursuant to the Severance Agreement,
      severance payment would begin not later than the fifth business day following
      your Date of Termination (as defined in your Severance Agreement) and continue
      for the term set forth in your Severance Agreement.

     

    

    
      1
        Dated
        August 2, 2003, and as revised on January 1, 2005.

    

    
      2
        Dated
        July 23, 2001.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    If
      the
      severance payments provided for in your Employment Agreement or your Severance
      Agreement were made as described therein the Act provides that these payments
      would be subject to the excise tax of 20% of the severance payment.

    

    Under
      the
      Act, one of the ways to avoid application of the excise tax to severance due
      a
“key employee” under the terms of an employment agreement such as yours is to
      defer payment for six (6) months after separation from employment. Accordingly,
      the Compensation and Benefits Committee of NBT Bancorp Inc. has determined
      that
      in the event that you become entitled to severance payments under your
      Employment Agreement and/or Severance Agreement, it will defer commencement
      of
      those payments until six (6) months after your relationship with NBT Bancorp
      Inc. ends. In all other respects, both your Employment Agreement and your
      Severance Agreement shall remain in full force and effect.

    

    In
      accordance with section 10 of the Employment Agreement and section 10 of the
      Severance Agreement, please sign the acknowledgement and agreement set forth
      below and return one original to me. The other original is for your
      files.

    

    
      	 	
              Very
                truly yours,

            	 
	 	
              NBT
                BANCORP INC.

            	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
              /S/
                Michael J. Chewens

            	 
	 	 	
              Michael
                J. Chewens

            	 
	 	 	
              Senior
                Executive Vice President 

            	 
	 	 	
              and
                Chief Financial Officer

            	 

    

    
 

    Acknowledged
      and Agreed to:

    

    /S/
      Daryl
      R. Forsythe

    Daryl
      R.
      Forsythe

    Chairman
      and Chief Executive Officer

     

     

    
 

    Date:
      December 19, 2005

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