MECH FINANCIAL, INC.
EXHIBITS 10.18
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of May 19,
1998, by and among MECHANICS SAVINGS BANK, a banking corporation organized and
existing by virtue of the laws of the State of Connecticut (the "Bank"), MECH
FINANCIAL, INC., a Connecticut stock corporation which owns all of the
outstanding capital stock of the Bank (the "Company"), and Xxxxxxx X. Xxxxx (the
"Executive").
WHEREAS, the Executive is currently rendering services to the Bank as a
Senior Vice President;
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 such as the Bank, 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 or the Company 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 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, the Company 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" (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) 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
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cause all or any portion of the Severance Amount to be deemed a "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 and other than the Bank, the
Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Bank or the Company)
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 or the Company, without the prior approval of at
least 75% of the members of the Bank's or the Company's
Board of Directors prior to such Person attaining such
percentage interest;
(2) a proxy contest to which the Bank or the Company is a party
takes place, as a consequence of which members of the Bank's
or the Company's Board of Directors in office immediately
prior to such event constitute less than 75% of such Board
of Directors after such event;
(3) the Bank or the Company shall consummate a merger or
consolidation with another bank, corporation, association or
business entity ("Party"), or the Bank or the Company shall
sell, exchange, liquidate or transfer all or substantially
all of their 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 or 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 Bank, the Company 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 or the Company otherwise
determines that a Person directly or indirectly exercises a
controlling influence over the management or policies of
Bank or the Company.
A "Change of Control" shall be deemed not to have occurred if
such event is mandated or directed by a regulatory body having jurisdiction
over the Bank's operations.
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 or Company 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 or the Company, 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
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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 and the Company
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 and the Company 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 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,
the Company and the Executive and their respective successors, assigns, heirs
and legal representatives. Without otherwise limiting the foregoing, "Bank" and
"Company" as used herein shall refer to any successor institution whether by
merger, consolidation, acquisition or otherwise, and/or, except with respect to
the definition of "Change of Control", to any wholly-owned subsidiary of the
Bank or the Company.
5. Each of the parties agrees to execute all further instruments and documents
and to take all further action as the other parties 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
MECHANICS SAVINGS BANK
By_____________________________________
Name: Xxxxx X. Xxxxxx
Title: President
MECH FINANCIAL, INC.
By_____________________________________
Name: Xxxxx X. Xxxxxx
Title: President
EXECUTIVE
_______________________________________
Xxxxxxx X. Xxxxx
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