MECHANICS SAVINGS BANK
EXHIBIT (4.2)(b)
AMENDMENT NO. 1 TO THE MECHANICS SAVINGS BANK
1996 DIRECTOR STOCK OPTION PLAN
This Amendment No. 1 to the Mechanics Savings Bank 1996 Director Stock
Option Plan ("Amendment No. 1") dated as of January 1, 1998 is entered into by
and between Mechanics Savings Bank, a Connecticut chartered stock savings bank
with its main office located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx (the
"Bank") and MECH Financial, Inc., a Connecticut stock corporation, with its main
office located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx (the "Company").
RECITALS
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WHEREAS, the Board of Directors (the "Board") of the Bank initially adopted
the Mechanics Savings Bank 1996 Director Stock Option Plan on February 7, 1996
(the "Stock Option Plan");
WHEREAS, the shareholders of the Bank approved the Plan at the 1996 Annual
Meeting of the Bank's Shareholders;
WHEREAS, the Company has acquired all of the Bank's common stock, par value
$0.01 per share ("Bank Common Stock") in a one-for-one-share exchange for the
Company's common stock, par value $0.01 per share ("Company Common Stock")
pursuant to that certain Agreement and Plan of Reorganization dated November 25,
1997 entered into between the Bank and the Company (the "Plan of
Reorganization");
WHEREAS, Section 4 of the Plan of Reorganization provides that the Company
shall adopt and assume certain rights and obligations of the Bank under the
Stock Option Plan, including the substitution of Company Common Stock for Bank
Common Stock as the stock for which options may be granted under the Stock
Option Plan;
WHEREAS, the Plan of Reorganization provides that holders of options under
the Stock Option Plan prior to the effective time will receive an option to
purchase the same number of shares of Company Common Stock at the same exercise
price and in accordance with such other terms and conditions as pertained to
the options outstanding under the Stock Option Plan prior to the Effective
Time; and
WHEREAS, the Company and the Bank have determined that it is appropriate to
enter into an agreement amending the Stock Option Plan.
NOW, THEREFORE, in consideration of the sum of one dollar ($1.00) receipt
of which is hereby acknowledged and the mutual promises and covenants contained
herein, the Bank and the Company agree as follows:
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1. DEFINITIONS:
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(a) The definition of "Board" contained in Section 2 of the Stock Option
Plan shall be deleted in its entirety and the following shall be substituted in
lieu thereof:
"Board" means the Board of Directors of Mechanics Savings Bank and, if
the context so permits or requires, the Board of Directors of MECH
Financial, Inc.
(b) The definition of "Common Stock" contained in Section 2 of the Stock
Option Plan shall be deleted in its entirety and the following shall be
substituted in lieu thereof:
"Common Stock" means the Company's Common Stock, par value $0.01 per
share."
(c) The following definition shall be added to Section 2 of the Stock
Option Plan:
"Company" means MECH Financial, Inc.
(d) The definition of "Committee" contained in Section 2 of the Stock
Option Plan shall be deleted in its entirety and the following shall be
substituted in lieu thereof:
"Committee" means the entire Board with the exception of those
directors who are also employees or officers of the Company or the
Bank or, if so delegated by the Board, the Organization and
Compensation Committee of the Board, provided that no Committee member
is an officer or employee of the Company or the Bank.
(e) The definition of "Non-Employee Director" shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
"Non-Employee Director" means a member of the Board who is not an
employee of the Company, the Bank, or their respective subsidiaries.
(f) The definition of "Option Agreement" contained in Section 2 of the
Stock Option Plan shall be deleted in its entirety and the following shall be
substituted in lieu thereof:
"Option Agreement" means a written agreement in a form attached hereto
as Appendix A to be entered into by the Company, the Bank and the
Grantee of an Option, as provided in Section 8 hereof.
(g) The definition of "Subsidiary" contained in Section 2 of the Stock
Option Plan shall be deleted in its entirety and the following shall be
substituted in lieu thereof:
"Subsidiary" means an entity of which, at the time such subsidiary is
to be determined, at least 50% of the total combined voting power of
all classes
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of stock of such entity is held by the Company, the Bank, or their
respective subsidiaries (exclusive of the ownership by the entity
whose subsidiary is being determined).
2. Except as otherwise specifically provided for in this Amendment No. 1,
all references made to the "Bank" in Sections 5(a)(iv), 10(c), 10(g), 16, and
17, shall be deemed to refer to the Company.
3. Except as otherwise specifically referred to in Amendment No. 1 all
references made to the "Bank" in Sections 1, 10(d), 11, 12, 13, 15, and 18 shall
be deemed to refer both to the Bank and the Company.
4. AMENDMENT TO SECTION 9 OF STOCK OPTION PLAN.
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The final sentence of Section 9 of the Stock Option Plan shall be deleted
in its entirety and the following shall be substituted in lieu thereof:
Payment of the Option Price shall be made in cash or shares of Common
Stock valued at the Fair Market Value on the date of exercise of the
Option, or a combination of cash and/or such other form of property as
the Company deems appropriate, or if, authorized by the Committee's
regulations and accomplished in accordance therewith, by delivery of a
properly executed exercise notice together with irrevocable
instructions to a broker to deliver promptly to the Company sale or
loan proceeds sufficient to pay the Option Price.
5. AMENDMENT TO SECTION 14 OF STOCK OPTION PLAN.
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Section 14 of the Stock Option Plan shall be deleted in its entirety and
the following shall be substituted in lieu thereof:
14. EFFECT OF CHANGES IN CAPITALIZATION
(a) Changes in Common Stock. If the outstanding shares of Common
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Stock are increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company
by reason of any recapitalization, reclassification, stock split-up,
combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or decrease
in such shares effected without receipt of consideration by the
Company, occurring after the effective date of the Plan, the number
and kind of shares for the purchase of which Options may be granted
under Section 5(d) of the Plan shall be adjusted proportionately and
accordingly by the Committee. In addition, the number and kind of
shares for which Options are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of
the holder of the Option immediately following such event shall, to
the extent
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practicable, be the same as immediately prior to such event. Any such
adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to shares subject to the unexercised
portion of the Option outstanding but shall include a corresponding
proportionate adjustment in the Option Price per share.
(b) Reorganization in Which the Company is the Surviving Entity.
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Subject to Subsection (c) hereof, if the Company shall be the
surviving entity in any reorganization, merger, or consolidation of
the Company with one or more other entities, any Option theretofore
granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of Common Stock
subject to such Option would have been entitled immediately following
such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price per share so that the
aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately
prior to such reorganization, merger, or consolidation.
(c) Reorganization in Which the Company is Not the Surviving Company
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or Sale of Assets or Stock. Upon the dissolution or liquidation of
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the Bank, or upon a merger, consolidation or reorganization of the
Company with one or more other entities in which the Company is not
the surviving entity, or upon a sale of all or substantially all of
the assets of the Company to another entity, or upon any transaction
approved by the Board which results in any person or entity owning 80%
or more of the combined voting power of all classes of stock of the
Company, the Plan and all Options outstanding hereunder shall
terminate, except to the extent provision is made in writing in
connection with such transaction for the continuation of the Plan
and/or the assumption of the Options theretofore granted, or for the
substitution for such Options of new options or stock appreciation
rights covering the stock of a successor entity, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares and exercise prices, in which event the Plan and
Options theretofore granted shall continue in the manner and under the
terms so provided. In the event of any such termination of the Plan,
each individual holding an Option shall have the right (subject to the
general limitations on exercise set forth in Section 10 above and
except as otherwise specifically provided in the Option Agreement
relating to such Option), immediately prior to the occurrence of such
termination and during the period following the notice of termination
described below to exercise such Option in whole or in part, whether
or not such Option was otherwise vested and exercisable at the time
such notice of termination is given and without regard to any
installment limitation on exercise imposed pursuant to Section 10
above. The Committee shall send written notice of an event that will
result in such a termination to all individuals who hold Options not
later than the time at which the Company gives notice thereof to its
shareholders.
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(d) Adjustments. Adjustments under this Section 14 related to stock
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or securities of the Company shall be made by the Committee whose
determination in that respect shall be final, binding, and conclusive.
No fractional shares of Common Stock or units of other securities
shall be issued pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
(e) No Limitations on Company. The grant of an Option pursuant to the
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Plan shall not affect or limit in any way the right or power of the
Company or Bank to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to
merge, consolidate, dissolve or liquidate, or to sell or transfer all
or any part of its business or assets.
(f) Except as provided in this Section 14, the issuance by the
Company of shares of stock of any class or securities convertible into
shares of stock of any class, shall not affect the outstanding
Options.
6. The following Section 16.A shall be added to the Stock Option Plan:
16.A CHANGE IN CONTROL
(a) Upon the occurrence of a Change in Control (as hereinafter
defined):
(1) All Options shall become immediately exercisable in
full for the remainder of their terms.
(2) All Stock Appreciation Rights shall become immediately
exercisable in full for the remainder of their terms.
(b) A "Change in Control" is the occurrence of any one of the
following events:
(i) any Person (other than a Grantee, the Company, Bank or
any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or the Bank (or any subsidiary of either))
is or becomes an "Acquiring Person";
(ii) less than eighty percent (80%) of the total membership
of the Board shall be Continuing Directors; or
(iii) the shareholders of the Company shall approve a
merger or consolidation of the Company or the Bank or a plan of
complete
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liquidation of the Company or an agreement for the sale or disposition
by the Company or the Bank of all or substantially all of the
Company's or Bank's assets to another Person, except in any such case
in a transaction in which immediately after such merger, consolidation
or sale, exchange or transfer, the shareholders of the Company, 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
Company or of any surviving Person pursuant to any such merger (or of
its parent), the consolidated corporation or business entity in any
such consolidation, or of the other Person to which such sale,
exchange or transfer of assets is made.
(c) A "Change in Control" shall be deemed not to have occurred
if (A) such event is mandated or directed by a regulatory body having
jurisdiction over the Company's or the Bank's operations.
(d) For purposes of this Section 16.A.:
(1) "Acquiring Person" shall mean any Person who is or
becomes a "beneficial owner" (as defined in Rule 13d-3 of the Exchange
Act) of securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding voting securities, unless such Person has filed Form 13-G
and all required amendments thereto with respect to its holdings and
continues to hold such securities for investment in a manner
qualifying such Person to utilize Form 13-G for reporting of
ownership.
(2) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date hereof.
(3) "Continuing Directors" shall mean any member of the
Board who was a member of the Board prior to the date hereof, and any
successor of a Continuing Director while such successor is a member of
the Board who is not an Acquiring Person or an Affiliate or Associate
of an Acquiring Person or of any such Affiliate or Associate and is
recommended or elected to succeed the Continuing Director by a
majority of the Continuing Directors.
(4) "Person" shall mean any individual, corporation,
partnership, group, association or other "person", as such term is
used in Section 13(d) and 14(d) of the Exchange Act.
7 OTHER PROVISIONS TO REMAIN IN EFFECT.
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Except as expressly modified or amended by this Amendment, all of the
terms,
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covenants and conditions of the Agreement and all Options granted hereunder are
hereby ratified and confirmed, all to remain in full force and effect.
IN WITNESS WHEREOF, the undersigned parties have executed this Amendment
No. 1 as of the date first written above.
MECHANICS SAVINGS BANK
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Its President
MECH FINANCIAL, INC.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Its President
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