CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of October
, 1996, by and between THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN, a banking
corporation organized and existing by virtue of the laws of the State of
Connecticut (the "Bank"), and XXXX X. XXXXXX (the "Executive").
WHEREAS, the Executive is currently rendering services to the Bank pursuant
to an Employment Agreement dated August 1, 1986 containing "change in control"
provisions, as amended and restated by an Amended and Restated Employment
Agreement dated as of the date hereof which does not contain "change in control"
provisions (the "Employment Agreement");
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 and its
sole shareholder, People's Savings Financial Corp. (the "Company");
WHEREAS, the banking industry is a dynamic one with independent public
institutions 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 the possible affect thereof on his
employment with the Bank; and
WHEREAS, the Bank wishes to additionally mitigate the fears of the
Executive regarding a potential ownership change, so as to avoid any negative
effect on his performance of services to the Bank, and in that interest the Bank
desires to afford certain additional protections to the Executive 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
or the Company, there is a "Change of Control" of the Bank or the Company,
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 from the Bank and the Company (the "Compensation")
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 calendar 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 pursuant to
the Employment Agreement, 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. In addition to the
above, Executive shall receive or be paid
(1) an amount equal to the aggregate amounts that Bank would have
contributed on behalf of Executive under Executive's Deferred Profit
Sharing or 401-K Plan, if any such plan shall be in effect upon the
Change of Control, for an additional three-year period from the Change
of Control (plus estimated earnings thereon) as if Executive had
continued in the employ of Bank for that period and made contributions
under said plan at a rate, as a percentage of salary, equal to the
average rate at which Executive had made contributions to said plan in
the period, not exceeding three (3) fiscal years of Bank, preceding
the Change of Control;
(2) supplemental pension benefits equal to the difference between (i) the
annual pension benefit that would have been payable to Executive under
the Retirement Plan of Bank (the "Plan") if Executive had been
continued in the employ of Bank for an additional three-year period
from the Change of Control and had received compensation at least
equal to that determined pursuant to Paragraph 1(a) above, and (ii)
the annual pension benefit actually payable to Executive under the
Plan, such supplemental pension benefits to be payable at the same
time and in the same manner as benefits under the Plan; and
(3) for a period of three years following the Change of Control, Executive
shall also continue to participate in all life, health, disability and
similar insurance plans and programs of Bank to the extent that such
continued participation is possible under the general terms and
provisions of such plans and programs, with Bank and Executive paying
the same portion of the cost of each such plan or program as existed
at the time of Executive's termination. In the event that Executive's
continued participation in any group plans and programs is not
permitted, then in lieu thereof, Bank shall acquire, with the same
cost sharing, individual insurance policies providing comparable
coverage for Executive; provided that Bank shall not be obligated to
pay for any such individual coverage more than three (3) times Bank's
cost of such group coverage; and provided further, if any such
individual coverage is unavailable, then Bank shall pay to Executive
annually for such remaining three year period an amount equal to the
sum of the average annual contributions, payments, credits, or
allocations made by Bank for such insurance on Executive's behalf over
the three (3) fiscal years of Bank preceding the Change of Control,
which amount shall be pro-rated for any fraction of a year. The
foregoing subparagraphs (1), (2) and (3) shall also be considered part
of the "Severance Amount" for the purposes of this Agreement.
(b) It is expressly understood and agreed that payment of the Severance
Amount may include amounts which are deemed to be "excess parachute
payments" under Section 280G of the Internal Revenue Code of 1986, as
amended. In that event, the Bank agrees to pay Executive an additional cash
payment (the "Additional Payment") in the amount of the excise tax imposed
pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended, on the Executive for that portion of the
Severance Amount which is deemed to be an excess parachute payment (if
any). The Additional Payment shall be determined and paid once upon the
determination of the Severance Amount under Paragraph 1(a) above.
(c) Payment of the Severance Amount and Additional Payment under this
Section 1 shall be paid in full by Bank, Company and/or its or their
successors or assigns 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 the Company or from other employment
with another employer should Executive's employment with the Bank or the
Company terminate.
(d) "Change of Control" shall be deemed to have occurred if:
(1) a Person (as defined below) directly or indirectly or acting
through one (1) or more other persons owns, controls, or has
power to vote ten percent (10%) or more of the voting common
stock of the Company, or a Person other than the Company directly
or indirectly or acting through one (1) or more other persons
owns, controls, or has the power to vote ten percent (10%) or
more of the voting common stock of the Bank; or
(2) a Person acquires or agrees to acquire all or substantially all
of the assets and business of the Bank or the Company; or
(3) a Person controls in any manner the election of a majority of the
directors of the Company or a Person other than the Company
controls in any manner the election of a majority of the
directors of the Bank; or
(4) the Board of Directors of the Company determines that a Person
directly or indirectly exercises a controlling influence over the
management or policies of Company.
Notwithstanding the foregoing, a "Change-in-Control" shall not be deemed to
have occurred if (i) a majority of the directors of the Company or the
Bank, as applicable, in office prior to the events described in (a), (b) or
(c) above shall so vote not later than thirty (30) days following the event
and (ii) the Employee shall so agree in writing.
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 13D or 13G by a Person shall not in and of itself be
deemed a Change of Control.
(e) 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 Executive's choice of counsel and his/her decision to retain counsel
shall be in his/her discretion, provided any such fees
and expenses must be reasonable.
(f) 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).
(g) The calculation of the 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
Severance Amount so determined is later challenged successfully by the
Executive, by court decision or negotiation with the Bank, the Bank shall
be additionally liable for all costs and expenses incurred by the Executive
in that challenge, including reasonable attorney fees.
(h) This Agreement shall survive and continue for as long as the Executive
is a full-time officer of the Bank or the Company.
(i) This Agreement does not constitute an agreement for the employment of
the Executive and shall not give the Executive any right to be retained in
the service or employ of the Bank or the Company.
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,
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.
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
