EXHIBIT 10.1
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CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of June 28,
1996, by and between MECHANICS SAVINGS BANK, a banking corporation organized and
existing by virtue of the laws of the State of Connecticut (the "Bank"), and
Xxxxx X. Xxxxxx (the "Executive"). This Agreement will become effective when and
if the Bank completes its currently contemplated conversion from a mutual
savings bank to a capital stock savings bank in accordance with Connecticut law.
WHEREAS, the Executive is currently rendering services to the Bank;
WHEREAS, the Bank considers the performance and dedication of its
management team to be significant for its overall corporate strategy and to be
essential to protecting and enhancing the best interests of the Bank;
WHEREAS, the banking industry is a dynamic one with independent public
institutions, as the Bank will be upon conversion, subject to unexpected changes
in ownership;
WHEREAS, the performance by the Executive of services to the Bank may be
negatively affected by his uncertainty over the possibility of a change in
ownership of the Bank and possible affect thereof on his employment with the
Bank; and
WHEREAS, the Bank wishes to mitigate the fears of the Executive regarding a
potential Bank ownership change, so as to avoid a negative effect on his
performance of services to the Bank, and in that interest the Bank desires to
afford certain protection to the Executive in the event of dismissal or
substantial change in duties or compensation upon the occurrence of certain
events as specified herein.
NOW, THEREFORE, to further the above recited corporate objective, and for
other good and valuable consideration, the receipt and adequacy of which each
party hereby acknowledges, the Bank and the Executive agree as follows:
1. (a) If, at any time while the Executive is a full-time officer of the
Bank, there is a "Change of Control" of the Bank (as hereinafter defined),
the Executive shall be entitled to receive a severance payment (the
"Severance Amount") in consideration of services previously rendered to the
Bank. The Severance Amount shall be made as a lump sum cash payment and
shall be equal to three (3)
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times the greater of the following: (A) the Executive's compensation (the
"Compensation") from the Bank for services rendered for the last full
calendar year immediately preceding the Change of Control, or (B) the
Executive's average annual Compensation with respect to the three (3) most
recent taxable years ending before the date on which the Change of Control
occurs. Compensation as described above shall include the amount of base
salary and bonus, if any, paid to the Executive for services rendered for
the time period in question, including any and all of said amounts as may
have been deferred by the Executive under Bank deferral plans, if any, and
shall include long-term compensation which, by its terms, is accelerated
upon a Change of Control or, if not, shall by this Agreement be so
accelerated and determined as the present value (determined at the discount
rate provided in Section 280G(d)(4) of the Internal Revenue Code of 1986,
as amended, or its successor provision) of any cash or non-cash long-term
incentive compensation (whether in the form of performance units or
otherwise) previously awarded to the Executive but not yet paid, measured
at the time of award with the assumption that the award would be 100%
earned over the performance period. Notwithstanding the provisions hereof,
in no event shall the Severance Amount (taken together with all other
payments, rights, options and benefits payable to the Executive under this
or any other agreement or arrangement which is payable contingent upon a
change in the ownership or effective control of the Bank, as contemplated
by Section 280G) exceed one dollar ($1.00) less than an aggregate amount
which would cause all or any portion of the Severance Amount to be deemed
an "parachute payment" under Section 280G.
(b) Payment under this Section 1 shall be paid in full within ninety (90)
days following the date of the Change of Control and shall not be reduced
by any compensation which the Executive may receive from the Bank or from
other employment with another employer should Executive's employment with
the Bank terminate.
(c) "Change of Control" shall be deemed to have occurred if:
(1) a Person (as defined below) beneficially owns (i.e. directly,
indirectly or acting through one or more other persons owns,
controls or has power to vote) 25% or more of any class of voting
securities of Bank, without the prior approval of at
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least 75% of the members of the Bank's Board of Directors prior
to such Person attaining such percentage interest;
(2) a proxy contest to which the Bank is a party takes place, as a
consequence of which members of the Bank's Board of Directors in
office immediately prior to such event constitute less than 75%
of the Board of Directors after such event;
(3) the Bank shall consummate a merger or consolidation with another
bank, corporation, association or business entity ("Party"), or
the Bank shall sell, exchange, liquidate or transfer all or
substantially all of its respective assets to a Party, except in
any such case in a transaction in which immediately after such
merger or consolidation or such sale, exchange, liquidation or
transfer, the shareholders of the Bank, in their capacities as
such and as a result thereof, shall own at least 50 percent in
voting power of the then outstanding securities of the Bank or of
any surviving corporation or business entity pursuant to any such
merger (or of its parent), the consolidated corporation or
business entity in any such consolidation, or of the Party to
which such sale, liquidation, exchange or transfer of assets is
made; or
(4) the Board of Directors of Bank otherwise determines that a Person
directly or indirectly exercises a controlling influence over the
management or policies of Bank.
A "Change of Control" shall be deemed not to have occurred if (A) such
event is mandated or directed by a regulatory body having jurisdiction over
the Bank's operations; or (B) it occurs pursuant to the terms of a plan for
the acquisition of the capital stock of the Bank by a newly formed bank
holding company if in the consummation of such plan the shareholders of
Bank will receive, pro rata, all of the common stock of such bank holding
company; unless, in such transaction, a Person satisfies sub-paragraph (1),
(2) or (4) above.
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A "Person" shall include a natural person, corporation, or other
entity. When two or more persons act as a partnership, limited partnership,
syndicate, or other group for the purpose of acquiring, holding or
disposing of Bank capital stock, such partnership, syndicate or group shall
be considered a Person. Beneficial ownership shall be determined under the
then current provisions of Rule 13d-3 of the Securities Exchange Act of
1934, as amended, Reg. Section 240.13d-3, or their successor provision(s).
The filing of a Form F-11 or F-11A by a Person shall not in and of itself
be deemed a Change of Control.
(d) If, after a Change of Control of the Bank, the Executive incurs any
fees and expenses of counsel to enforce this Agreement, the Bank agrees to
pay such fees and expenses to the Executive. The Executive's choice of
counsel and his decision to retain counsel shall be in his discretion,
provided any such fees and expenses must be reasonable.
(e) Notwithstanding any other provision of this Agreement or of any other
agreement, understanding or compensation plan, the Bank shall not be
obligated to pay any amounts the payment of which violate restrictions
imposed, or which may in the future be imposed, on such payments by the
Bank pursuant to Section 18(k)(1) of the Federal Deposit Insurance Act, or
any regulations or orders which are or may be promulgated thereunder; nor
shall any payments be made which would constitute an "unsafe or unsound
banking practice" pursuant to 12 U.S.C. Section 1818(b).
(f) It is expressly understood and agreed that payment of the Severance
Amount may not include amounts which are deemed to be "excess parachute
payments" under Section 280G of the Internal Revenue Code of 1986, as
amended. The calculation of the maximum Severance Amount shall be
performed by the Bank's independent auditing firm at the time of Change of
Control, or such other qualified party in the Bank's discretion; provided
that , if the maximum Severance Amount so determined is later challenged
successfully by Executive, by court decision or negotiation with the Bank,
the Bank shall be additionally liable for all costs and expenses incurred
by Executive in that challenge, including reasonable attorney fees.
(g) This Agreement shall survive and continue for as long as the Executive
is a full-time officer of the Bank.
2. This Agreement contains the entire agreement between the
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parties with respect to the subject matter herein, and there are no other
representations, warranties, conditions or agreements relating to the subject
matter of this Agreement.
3. This Agreement may not be changed orally but only by an agreement in
writing duly executed on behalf of the party against which enforcement of any
waiver, change, modification, consent or discharge is sought.
4. This Agreement shall be binding upon and inure to the benefit of the Bank
and the Executive and their respective successors, assigns, heirs and legal
representatives. Without otherwise limiting the foregoing, "Bank" as used
herein shall refer to any successor institution whether by merger,
consolidation, acquisition or otherwise.
5. Each of the parties agrees to execute all further instruments and documents
and to take all further action as the other party may reasonably request in
order to effectuate the terms and purposes of this Agreement.
6. This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same instrument.
7. This Agreement shall be construed pursuant to and in accordance with the
laws of the State of Connecticut.
8. If any term or provision of this Agreement is held or deemed to be invalid
or unenforceable, in whole or in part, by a court of competent jurisdiction,
such term or provision shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
MECHANICS SAVINGS BANK
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chairman, Organization and
Compensation Committee
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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