EXHIBIT 10.8
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") dated June 28, 1996 by and
between MECHANICS SAVINGS BANK, a Connecticut chartered savings bank (the
"Bank") having its executive offices at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000, and XXXXX X. XXXXXX, an individual residing at 00 Xxxxxxx Xxxx, Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Executive"). This Agreement shall become
effective upon the completion of the Bank's currently contemplated conversion
from a mutual savings bank to a capital stock savings bank, in accordance with
Connecticut law (the "Conversion").
WHEREAS, the Bank currently employs the Executive as its Chairman,
President and Chief Executive Officer (the "Position");
WHEREAS, the Bank and the Executive are currently parties to an Employment
Agreement dated May 21, 1985, which Agreement is not deemed appropriate by the
parties for various reasons relating to the Conversion, the passage of time and
intervening events;
WHEREAS, the Bank desires to secure the services of the Executive in the
Position on a post-Conversion basis; and
WHEREAS, the Executive is agreeable to extending his employment with the
Bank on a post-Conversion basis in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the Bank and the Executive, each intending legally to be bound, agree as
follows:
Section 1. CONTRACT OF EMPLOYMENT AND TERM.
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The Bank employs the Executive and the Executive accepts his employment in
the Position, the responsibilities and other incidents of which are described in
Section 2 of this Agreement. The initial term of employment of the Executive
hereunder shall commence on July 1, 1996 (the "Effective Date") and shall
continue until June 30, 1998 (the "Employment Period"), unless earlier
terminated as set forth below or pursuant to Section 7 hereof; provided that, if
the Conversion shall not have been completed by July 1, 1996, the Effective Date
shall be postponed until the date of Conversion completion, which alternative
date shall be memorialized by an
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amendment to this Agreement executed by both parties. Commencing on July 1,
1998, and on the first day of July of each year thereafter, the Employment
Period shall be automatically extended by successive one (1) year terms unless
Notice (as defined below) has been properly given. "Notice" shall mean a
writing from the Bank or the Executive to the other indicating its or his
intention to terminate this Agreement at the expiration of the then-remaining
Employment Period. Such notice must be delivered on or before April 1 of each
year or the automatic one year extension will go into effect. Notwithstanding
the above, in any and all events, unless sooner terminated, this Agreement shall
terminate on the 65th birthday of the Executive.
Section 2. POSITION, AUTHORITY AND RESPONSIBILITIES.
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During the Employment Period, Executive shall serve in and shall occupy the
Position or, irrespective of the office, title, or other designation, if any,
ascribed to Executive's association with the Bank, the corporate governance
equivalent of the Position, and shall be vested with all the powers and
responsibilities incident to that office as prescribed by the Bank's Bylaws,
applicable law, and custom at the Bank, and as may be necessary to the
convenient and effective discharge of the duties thereof. The Executive shall
report directly to the Bank's Board of Directors (the "Board"). During the
Employment Period, the Executive shall continue to be nominated to serve on the
Board, unless he has been removed for cause in accordance with the Bank's
Bylaws.
Section 3. TIME AND EFFORT.
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Throughout the Employment Period, the Executive shall devote to the
Position the Executive's full time, attention, skill and abilities, during usual
business hours and at such other times as on occasion exigencies may dictate,
and as are reasonably required to carry out the Executive's responsibilities.
Section 4. INDEMNIFICATION.
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In relation to the Executive's serving in the Position, the Executive shall
be indemnified on a basis no less favorable to the Executive than is required by
the Connecticut Stock Corporation Act or the Banking Law of Connecticut, as
amended and in effect from time to time, or is accorded by any contract of
directors' and officers' liability or indemnity insurance obtained by the Bank
and in effect from time to time.
Section 5. FAIR DEALING AND RELATED MATTERS.
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The Executive shall also fulfill the following promises:
5(a) Exclusivity of Employment. During the Employment Period, the
Executive shall not, without the permission of the Compensation Committee (as
defined in Section 6(a) hereof), directly or indirectly engage in, provide, or
commit to provide, any significant personal services to or for the benefit of
any business or commercial activity other than the business of the Bank except
for personal services to or for the benefit of civic, charitable and like not-
for-profit organizations, provided that the Executive's rendering such services
does not interfere with the performance of the Executive's duties under this
Agreement.
5(b) Disclosure and Fair Dealing. During the Employment Period, the
Executive shall:
(1) promptly disclose to the Board or appropriate committee of the
Board information of significant opportunities, developments and
other events coming to the Executive's attention that pertain or
are relevant to the Board's governance responsibilities; and
(2) openly communicate, fully cooperate and, in all respects, deal
fairly and openly with the Board.
5(c) Protection of Ideas and Information.
(1) During the Employment Period, all ideas for new financial
products and all creative works pertaining to the business of
the Bank, whether or not susceptible to copyright protection,
conceived or developed by the Executive, alone or with others,
shall be exclusively the property of the Bank.
(2) During the Employment Period and at all times after it
terminates, irrespective of the circumstances in which such
termination may occur, the Executive will treat as confidential
all non-public information pertaining to the Bank or any of its
subsidiaries or to any customer or other person whose
information or identity the Bank is required to hold in
confidence. The Executive shall not use any of such information
in any way that could be detrimental to the interests of the
Bank.
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Nothing in this Section 5(c), however, shall be construed as imposing a
restraint upon the Executive's use of any general or specialized knowledge
gained by the Executive without use or disclosure restrictions prior to the
Executive's association with the Bank in any capacity, and any information that
is or is made publicly available by the Bank or that is rightfully obtained by
the Executive from persons other than the Bank or another officer or employee
thereof, where such persons neither are nor were under any obligation of
confidentiality to the Bank.
5(d) Non-solicitation. During the Employment Period and for a period of
one (1) year thereafter, the Executive shall not directly or indirectly solicit
or otherwise attempt to induce or encourage any employee of or consultant to the
Bank to terminate his employment or consulting relationship with the Bank.
5(e) Use and Return of Materials. At the termination of the Executive's
employment, the Executive shall return to the Bank the originals and all copies
of correspondence, memoranda, files, records and other materials that otherwise
may have come into the Executive's possession and contain or relate to anything
encompassed by subsection (1) or (2) of Section 5(c) hereof.
5(f) Other Offices. The Executive agrees to serve as an officer or
director of any one or more of the Bank's subsidiaries without additional
compensation, if requested by the Board and provided such additional service
does not unreasonably increase the demands upon Executive's time or energies and
is not inconsistent with or inappropriate to the Position.
Section 6. COMPENSATION AND RELATED MATTERS.
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The Executive and the Bank agree to the following compensation
arrangements:
6(a) Base Salary. For the services to be rendered by Executive and in
consideration of Executive's other undertakings in this Agreement, the Bank
shall pay to the Executive a minimum base salary of $229,000.00 per year ("Base
Salary"). The Base Salary shall be paid (less all applicable tax and other
authorized withholdings) in installments as nearly equal as practicable in
accordance with the Bank's then regular payroll schedule. The Base Salary may
be increased by the Board upon recommendation of the Board's Organization and
Compensation Committee (the "Compensation Committee") in the future as warranted
by business conditions and the Executive's performances, in which case such Base
Salary amount shall
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replace the amount set forth in the first sentence of this Section.
6(b) Performance Bonus. The Bank may also pay the Executive, in the
Board's discretion and in addition to the Base Salary, annual and/or long-term
incentive compensation, as additional compensation for the Executive's services
hereunder, in amounts, if any, to be determined by the Board.
6(c) Stock-Related Awards. During the Employment Period, the Executive
may be included in any stock incentive or stock compensation plan as the Board
may determine.
6(d) Expense Reimbursement. The Bank shall reimburse the Executive for
ordinary, necessary and reasonable expenses incurred in or in connection with
performing services described in Section 2 including expenses of travel, lodging
and sustenance while away from home on Bank business, provided that such
expenses are accounted for in accordance with the policies and procedures
established by the Bank.
6(e) Benefit Plans. During the Employment Period, the Executive shall be
entitled to participate in all employee pension and welfare benefit plans and
arrangements established by the Bank (presently or in future) and in which the
Executive is or may become eligible to participate (including without limitation
group life insurance, accidental death and dismemberment plans, and medical and
disability insurance plans). Such plans and arrangements may provide for
greater benefits to particular employees at the Bank, including the Executive.
Such plans, at the present time, include a Benefit Equalization Plan and
participation in a deferred compensation plan for senior officers.
6(f) Vacations. During the Employment Period, the Executive shall be
entitled to paid holidays and four (4) weeks paid vacation for each calendar
year in which any portion of the Employment Period shall fall, to be taken at a
time or times as shall be mutually agreed upon by the Bank and the Executive and
consistent with applicable regulatory requirements. If the Executive fails to
use all or any portion of his vacation time during a particular calendar year,
the unused portion shall not be carried over to the subsequent calendar year,
nor shall he be paid additionally for such unused time, all in accordance with
the Bank's established policies, as they may be amended from time to time.
6(g) Support Services and Facilities. The Bank shall furnish the
Executive with office space, secretarial assistance, and such other facilities
and services as shall be
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appropriate for performance of the duties of the Position.
Section 7. TERMINATION.
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7(a) Permitted Termination. The Executive's employment hereunder shall
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continue until the end of the Employment Period specified in Section 1 hereof,
except that the employment of the Executive hereunder shall terminate prior to
the end of such Employment Period by reason of any one of the following:
(1) Death. Upon the death of the Executive during the Employment
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Period. In such event the Bank shall be obligated to pay to the
Executive's estate any unpaid Base Salary through the date of death and
incentive compensation, if any, as determined by the Board. Amounts
payable under this Section shall be payable at the times set forth in
Sections 6(a) and 6(b) hereof.
(2) Disability. The Bank shall have the right to terminate this
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Agreement during the continuance of any Disability of the Executive, as
hereinafter defined, upon fifteen (15) days' prior notice to the Executive
during the continuance of the Disability. "Disability" for purposes of
this Section 7(a)(2) shall mean an inability by the Executive to perform a
substantial portion of the Executive's duties hereunder by reason of
physical or mental incapacity or disability for a total of one hundred
eighty (180) days or more in any consecutive period of three hundred and
sixty-five (365) days, as determined by the Board in its good faith
judgment based upon a medical doctor's report. In the event of a
termination by reason of the Executive's Disability, the Bank shall be
obligated to pay the Executive any unpaid Base Salary through the date of
termination, and incentive compensation, if any, as determined by the
Board. Amounts payable under this Section 7(a)(2) shall be payable at the
times set forth in Sections 6(a) and 6(b) hereof.
(3) For Cause. For "Cause" immediately upon written notice by the
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Bank to the Executive. For purposes of this Agreement, the Board may
terminate for Cause only if the Board shall determine that any one or more
of the following has occurred:
(i) the filing of a petition under the federal bankruptcy laws or any
state insolvency law by or against the Executive;
(ii) the appointment by a court of competent
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jurisdiction of a custodian, conservator, sequestrator, or like
official for the person or property (or both) of the Executive;
(iii) the Executive's conviction of a crime involving moral turpitude;
(iv) the Executive's violation of a federal or state banking or
securities law, with actual material, adverse consequences to the
Bank;
(v) the issuance of an order, judgment or decree (not reversed,
suspended or vacated) of any court of competent jurisdiction or
governmental agency having regulatory or supervisory jurisdiction of
the Bank or the Executive (or both), enjoining or otherwise
prohibiting the Executive from engaging in any conduct or activity
that forms a material part of the Position, or enjoining or
otherwise prohibiting the Bank's continued employment of the
Executive, or removing Executive as an officer of the Bank;
(vi) the Executive's material breach of his obligations under this
Agreement, and such breach shall not have been remedied within 30
days after receiving written notice from the Board specifying the
details thereof; or
(vii) the Executive's willful or reckless misstatement of a material fact
in, or failure to state a material fact necessary for the accuracy
of, any reports required to be filed by Executive with any
regulatory or supervisory agency in connection with the Executive's
Position.
Upon any termination of the Executive's employment hereunder pursuant to
this Section 7(a)(3), the Executive will have no right to any compensation
or benefits from the Bank pursuant to this Agreement for any period after
the effective date of such termination (which shall be no earlier than the
date of written notice to the Executive), but this provision shall not
affect other compensation and benefits as provided in any other plans,
policies or practices then applicable to the Executive in accordance with
the terms thereof.
7(b) Termination for Other Reason. If (1) the Executive's employment is
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terminated other than by reason of death, Disability, Cause, the Executive's
65th birthday, or
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the Executive's voluntary termination of employment other than as contemplated
by Section 7(b)(2) below, or (2) the Executive voluntarily terminates his
employment with the Bank based upon the Bank's material breach of any one or
more of the provisions of this Agreement, including but not limited to any such
breach that constitutes Good Reason (as hereinafter defined), and such breach
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shall have continued in effect for a period of thirty (30) days after written
notice to the Bank specifying such breach in reasonable detail, then the Bank
shall pay the Executive an amount equal to one year's Base Salary, which amount
shall be payable in a lump sum within 90 days of such termination, and the Bank
shall continue to provide the Executive, for a period of one year after such
termination (the "Benefits Period"), with all employee welfare benefits to which
the Executive would have been entitled had he stayed employed for the Benefits
Period. All COBRA rights will begin at the end of the Benefits Period. In
addition, the Bank shall provide that the Executive's payment under the Benefit
Equalization Plan or any successor to such plan will be increased as if the
Executive continued to be employed for the Benefits Period at his W-2
compensation for the previous calendar year. For the purpose of pension or
other benefit calculations, the Executive shall be treated as if he had attained
the age he would have at the end of the Benefits Period. For purposes of this
Section 7(b), the term "Good Reason" shall mean any action by the Bank that (i)
significantly reduces the Executive's job responsibilities, (ii) significantly
worsens the Executive's work conditions, including but not limited to the
benefits and perquisites of the Position, or (iii) requires a relocation of the
Executive outside of Hartford County in the State of Connecticut.
7(c) Absence of Obligation to Mitigate. The Executive shall not be
required to take any action to mitigate the amount of any payment provided for
in Section 7(b) by seeking other employment or otherwise.
Section 8. NONCOMPETITION AND NONSOLICITATION.
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8(a) Noncompetition. Subject to the provisions hereof, the Executive
agrees that he shall not, during the Employment Period and for a period of one
(1) year thereafter, without the Bank's prior written consent, by himself or in
partnership or in conjunction with or as an employee, officer, director,
manager, or agent of any other person, firm or corporation, either directly or
indirectly, carry on or be engaged or have any financial or other interest in,
or in any other manner advise or assist any person, firm or corporation engaged
or interested in, any Business, as hereinafter defined, which competes with the
Bank or any of its subsidiaries and is carried on in the Restricted Area, as
hereinafter defined,
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provided, however, that this Section 8(a) shall be of no force or effect if the
Bank terminates the Executive's employment prior to the expiration of the
applicable Employment Period without Cause, or if the Executive terminates his
employment based upon the Bank's material breach of any one or more of the
provisions of this Agreement, including but not limited to any such breach that
constitutes Good Reason (as defined in Section 7(b)), or if the Employment
Period expires due to the Bank's determination not to extend it in accordance
with Section 1 above.
8(b) Nonsolicitation. The Executive agrees that he shall not, during the
Employment Period and for a period of one (1) year thereafter, directly or
indirectly, solicit or otherwise attempt to induce or encourage any customer or
client of the Bank or any of its subsidiaries to terminate or restrict its
relationship with the Bank; provided, however, that this Section 8(b) shall be
of no force or effect at any time when Section 8(a) shall be of no force or
effect.
8(c) Definitions. As used in this Section 8: (1) the term "compete" shall
mean engaging, participating or being involved in any respect in the business of
banking, or furnishing any aid, assistance or service of any kind to any person
in connection with the business of banking, (2) the term "Restricted Area" shall
refer to an area within or without the State of Connecticut inclusive of the
municipalities in which the Bank maintains banking offices or branches at the
time of employment termination, and (3) the term "Business" shall mean a
financial institution or other company offering similar services which competes
with the Bank and has its home office in the Restricted Area, or which has a
branch or other place of business in the Restricted Area where the Executive is
based or in which he spends the majority of his office time.
8(d) Acknowledgement. The Executive acknowledges that in the event of his
violation of the covenants contained in this Section 8, the Bank's remedy at law
will be inadequate. Accordingly, the Executive agrees that, in addition to such
other remedies as the Bank may have at law, the Bank shall be entitled to
specific performance of such covenants and to an injunction to prevent any
continuing violation thereof. The Executive acknowledges and warrants that he
believes that he will be able to earn an adequate livelihood for the Executive
and his dependents if this Section 8 shall be enforced against the Executive.
The Executive further acknowledges and warrants that the covenants contained
herein are reasonable, that valid consideration has been and will be received
therefor and that such covenants are the result of arms' length negotiation
between the parties hereto.
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Section 9. ARBITRATION.
Any disputes as to the meaning, interpretation, application or
enforceability of any provisions of this Agreement that cannot be resolved
within a reasonable time by the parties hereto shall be resolved by arbitration
in accordance with this Section 9. Either party challenging the meaning,
interpretation or application of any provision may initiate arbitration by
delivering written notice to the other party stating the notifying party's
election to resolve such dispute by arbitration. Within 15 days after delivery
of such notice, each party shall designate one disinterested person (defined
below) as an arbitrator, and both parties shall agree on the designation of
another disinterested person to be the third arbitrator within 30 days after
delivery of the notice of arbitration. Each arbitrator, regardless of how
selected, and all parties to the arbitration, shall keep all matters concerning
the arbitration confidential. The arbitrators shall conduct hearings on the
disputed matter in the City of Hartford, Connecticut and in accordance with the
Rules of the American Arbitration Association. The arbitrators shall render
their decision within 30 days after the conclusion of the hearings. The
decision of a majority of the arbitrators shall be final and binding upon all
parties without right of appeal. The Bank and the Executive shall each pay
their own legal fees associated with such arbitration proceedings hereunder, but
the fees of the arbitrators and any other reasonable costs associated with such
arbitration proceedings shall be paid by the Bank. For purposes of this Section
9, the term "disinterested person" means any person who has never been
associated or affiliated with either party to this Agreement.
Section 10. REGULATORY RESTRICTIONS.
Notwithstanding any provision to the contrary in this Agreement, the Bank
shall not be required under this Agreement to continue the Executive in his
position(s) at the Bank, or to make any payments to the Executive, if the
regulatory authorities having jurisdiction over the Bank order his removal from
the Bank, or if the Bank or the Federal Deposit Insurance Corporation determines
that any payment would constitute an illegal "excess parachute" payment under 12
U.S.C. Section 1828(k), or an "unsafe or unsound banking practice" pursuant to
12 U.S.C. Section 1818(b).
Section 11. CHANGE OF CONTROL INTEGRATION.
The Bank's obligations under this Agreement shall terminate automatically
and immediately in the event of and upon payment to the Executive of a full lump
sum cash payment
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as contemplated in Section 1(a) of a Change in Control Agreement by and between
the Executive and the Bank dated June 28, 1996.
Section 12. MISCELLANEOUS.
12(a) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Bank and the
Executive's heirs and personal representatives. The rights, interest and
benefits of the Executive hereunder shall not, however, be subject to voluntary
or involuntary assignment, or other form of disposition, directly or indirectly,
without the written consent of the Bank in advance.
12(b) "Bank" Defined. As used herein, the term "Bank" means Mechanics
Savings Bank, provided, however, that for purposes of Sections 5 and 12 hereof
the term "Bank" shall also include any person that is a business organization,
is at any time controlling, controlled by, or under common control with
Mechanics Savings Bank, and for which the Executive provides services in any
form during his employment under this Agreement.
12(c) Modification and Waiver. No modification or waiver of any of the
provisions of this Agreement shall be binding upon either of the parties unless
made in writing and signed by the Executive and countersigned on behalf of the
Bank by senior officer thereof other than the Executive.
12(d) Notices. All notices, requests, demands, or other communications
required, permitted or contemplated by this Agreement (including a change of
address for purposes of this Section 12(d)) shall be deemed effectively
delivered or otherwise made (a) upon receipt if manually delivered, or (b) upon
the delivery date (or first date of attempted delivery, if delivery is refused)
shown on the returned receipt if mailed by U.S. registered or certified mail,
return receipt requested, addressed to the Executive at his most recent
residence address set forth in the employment records of Bank, or if intended
for the Bank, to its address as set forth in the first sentence of this
Agreement.
12(e) Integration. This Agreement contains the entire understanding
between the parties. Merged into the provisions of this Agreement are all
prior, contemporaneous and collateral negotiations, understandings, covenants,
representations, under-takings and conditions made in connection with the
subject matter hereof.
12(f) Invalidity or Regulatory Restriction. If any
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provision or part of this Agreement is held to be invalid or unenforceable by a
court of competent jurisdiction, by a governmental agency having regulatory or
supervisory authority over the Bank, or by an arbitration panel empowered under
Section 9, the remaining provisions or parts hereof shall nevertheless continue
to be valid and enforceable as though the invalid or unenforceable provision or
part had not been included in this Agreement. If any of the provisions or
covenants contained in Section 8 hereof are held to be unenforceable because of
the duration or geographical scope thereof, the parties agree that the court or
entity exercising jurisdiction shall have the power to reduce the duration or
geographical scope of such provisions or covenants and, in their reduced form,
said provisions or covenants shall be enforceable. Without limiting the
foregoing, if this Agreement shall be deemed unenforceable, or payments
prohibited, pursuant to law, regulation, order or similar action by a regulatory
authority with jurisdiction over the Bank, this Agreement will automatically be
amended, without further action by any of the parties, to be consistent with
such action.
12(g) Counterparts. This Agreement may be executed in two or more
identical counterparts, each of which shall be deemed an original instrument,
but all of such counterparts shall constitute but one and the same agreement.
12(h) Governing Law. This Agreement shall be construed pursuant to and in
accordance with the laws of the State of Connecticut.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be duly executed
by the Chairman of the Organization and Compensation Committee of the Board of
Directors, and the Executive has duly executed this Agreement, all on or as of
the date first set out in this Agreement.
MECHANICS SAVINGS BANK
Attest:
By: /s/ Xxxxxx X. Xxxxxx
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Name: Name: Xxxxxx X. Xxxxxx
Title: Title: Chairman, Organization and
Compensation Committee
Witness: EXECUTIVE:
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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