CHANGE IN CONTROL AGREEMENT
This AGREEMENT is made effective as of the 1st day of May, 2007, by and
between UNITED BANK, a federally chartered stock savings bank (the "Bank"), and
J. JEFFREY SULLIVAN ("Executive"). Any reference to the "Company" herein shall
mean UNITED FINANCIAL BANCORP, INC., or any successor thereto. The Company has
executed this Agreement solely for purposes of guaranteeing the performance of
the Bank hereunder.
WHEREAS, the Bank recognizes the substantial contribution Executive has
made to the Bank and wishes to provide Executive with certain protections and
benefits in the event of a Change in Control of the Bank or the Company, as
provided in this Agreement; and
WHEREAS, Executive has been elected to, and has agreed to serve in the
position of Executive Vice President for the Bank, a position of substantial
responsibility;
NOW, THEREFORE, in consideration of the contribution of Executive, and upon
the other terms and conditions hereinafter provided, the parties hereto agree as
follows:
1. TERM OF AGREEMENT
The "term" of this Agreement shall begin on the effective date set forth
above and shall continue for thirty-six (36) full calendar months thereafter.
Commencing on May 1, 2008, and continuing on the first day of May of each year
thereafter (the "Anniversary Date"), this Agreement shall renew for an
additional year such that the remaining term shall be three (3) years, unless
written notice of non-renewal ("Non-Renewal Notice") is provided to Executive at
least thirty (30) days and not more than sixty (60) days prior to such
Anniversary Date that this Agreement shall not be renewed. The Board will
conduct a performance evaluation and review of Executive for purposes of
determining whether or not to renew or extend this Agreement and the results
thereof shall be included in the minutes of the Board's meeting. In the event
the Board determines not to renew or extend this Agreement, the Board shall
provide a Non-Renewal Notice to Executive, and the remaining term of this
Agreement shall be twenty-four (24) months. If Executive is also a director then
he shall abstain from any and all voting with respect to the renewal or
extension of the term of this Agreement.
2. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL AND TERMINATION
This Agreement provides for certain payments and benefits to Executive only
in the event of a Change in Control followed by Executive's Involuntary
Termination as described in this Agreement.
(a) Upon the occurrence of a "Change in Control" of the Bank or the Company
followed at any time during the term of this Agreement by the Involuntary
Termination of Executive's employment, other than Termination for Cause, death
or Disability of Executive, the Bank shall be obligated to pay or provide
Executive or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be:
(i) Within thirty (30) days of Executive's Involuntary Termination, as
severance pay, a sum equal to two times the sum of (a) the highest
rate of base salary, and (b) highest rate of bonus awarded to
Executive during the prior three years.
(ii) Life insurance and non-taxable medical and dental coverage (at
the expense of the Bank) substantially identical to the coverage
maintained by the Bank for Executive prior to his Involuntary
Termination, provided, however, such medical coverage shall cease upon
the earlier of (i) the expiration of twenty-four (24) months or (ii)
the date Executive becomes eligible for Medicare coverage, provided
further, that if Executive is covered by family coverage, or coverage
for self and a spouse, then the Executive's family or spouse shall
continue to be covered for the remainder of the twenty-four month
period, or, in the case of the spouse, until the spouse becomes
eligible for Medicare coverage, whichever period is less.
(iii) Within thirty (30) days following Executive's Involuntary
Termination a lump sum payment in an amount equal to the present value
of the Bank's contributions that would have been made on his behalf
under each of the Bank's 401(k) Plan and employee stock ownership plan
(and any other defined contribution plan maintained by the Bank in
which Executive participates) if he had continued working for the Bank
for a twenty-four (24) month period following his termination earning
the Base Salary that would have been achieved during the remaining
unexpired term of this Agreement and making the maximum amount of
employee contributions permitted, if any, under such plan or plans,
where such present values are to be determined using a discount rate
of 6%.
(b) Upon the occurrence of a Change in Control, Executive will have such
rights as specified in any other employee benefit plan with respect to options,
stock awards or other stock incentives and such other rights as may have been
granted to Executive under such plans.
(c) Any payments to Executive under this Section 2 (other than payments
under Section 2(a)(ii)) should be made in a lump sum and reduced by applicable
withholding taxes. Notwithstanding the foregoing, in the event Executive is a
"Specified Employee" (as defined herein) no payment shall be made to Executive
under sub-sections 2(a)(i) or 2(a)(iii) prior to the first day of the seventh
month following Executive's Involuntary Termination in excess of the "permitted
amount" under Section 409A of the Internal Revenue Code. For these purposes the
"permitted amount" shall be an amount that does not exceed two times the lesser
of: (A) the sum of Executive's annualized compensation based upon the annual
rate of pay for services provided to the Bank for the calendar year preceding
the year in which Executive has an Involuntary Termination, or (B) the maximum
amount that may be taken into account under a tax-qualified plan pursuant to
Section 401(a)(17) of the Internal Revenue Code for the calendar year in which
the Involuntary Termination occurs. The payment of the "permitted amount"shall
be made within thirty (30) days of the occurrence of the Involuntary
Termination. Any payment in excess of the permitted amount shall be made to
Executive on the first day of the seventh month following the Involuntary
Termination.
(d) Notwithstanding the preceding paragraphs of this Section 2, in no event
shall the aggregate payments or benefits to be made or afforded to Executive
under said paragraphs (the "Termination Benefits") constitute an "excess
parachute payment" under Section 280G of the Code or any successor thereto, and
in order to avoid such a result, Termination Benefits will be reduced, if
necessary, to an amount (the "Non-Triggering Amount"), the value of which is one
dollar ($1.00) less than an amount equal to three (3) times Executive's "base
amount", as determined in accordance with said Section 280G. In addition, in no
event shall the aggregate Termination Benefits to be made or approved to
Executive ever exceed three (3) times "average annual compensation" as such Term
is defined in OTS Regulatory Handbook Section 310 (Oversight by the Board of
Directors).
(e) Executive shall not have the right to receive termination benefits
pursuant to Section 2 hereof in the event of Executive's Termination for Cause
or termination of employment due to Executive's death or Disability.
3. DEFINED TERMS
The following capitalized terms used in this Agreement are defined as set
forth below:
(a) Change in Control. A "Change in Control" of the Bank or the Company
shall mean a change in control of a nature that: (i) would be required to be
reported in response to Item 5.01 of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a Change in
Control of the Bank or the Company within the meaning of the Home Owners' Loan
Act, as amended, and applicable rules and regulations promulgated thereunder
(collectively, the "HOLA") as in effect at the time of the Change in Control; or
(iii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (a) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of Company's
outstanding securities, except for any securities purchased by the Bank's
employee stock ownership plan or trust; or (b) individuals who constitute the
Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by the
same Nominating Committee serving under an Incumbent Board, shall be, for
purposes of this clause (b), considered as though he were a member of the
Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Bank or the Company or similar
transaction in which the Bank or Company is not the surviving institution occurs
or is effected; or (d) a proxy statement soliciting proxies from stockholders of
the Company is distributed, by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or more business
organizations as a result of which the outstanding shares of the class of
securities then subject to the plan are to be exchanged for or converted into
cash or property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror.
(b) Involuntary Termination. "Involuntary Termination" of Executive shall
mean either (i) Executive's termination by the Bank, the Company or any
successor(s) thereto during the term of this Agreement and following a Change in
Control for any reason other than a Termination for Cause, Disability or death,
or (ii) Executive's resignation from employment following a Change in Control as
a result of the Company's (or any successor to the Company) failure to renew or
extend this Agreement for an additional twelve (12) months on the first
anniversary date of this Agreement following a Change in Control, or (iii)
Executive's resignation of employment during the term of this Agreement and
following a Change in Control as a result of: any demotion, loss of title,
office, significant change in Executive's functions, duties or responsibilities
which change would cause Executive's position to become one of lesser
importance, responsibility or scope from the position held immediately prior to
the Change in Control, reduction in Executive's annual compensation or benefits,
relocation of Executive's principal place of employment by more than 25 miles
from its location immediately prior to the Change in Control, or material breach
of this Agreement by the Bank, the Company or its successor(s) following a
Change in Control. Notwithstanding anything herein to the contrary, the
Executive shall not have an Involuntary Termination unless the Executive has a
Separation from Service within the meaning of Code Section 409A.
(c) Termination for Cause. "Termination for Cause" shall mean termination
because of Executive's personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, regulation (other
than traffic violations or similar offenses) or final cease and desist order, or
any material breach of any material provision of this Agreement. In determining
incompetence, the acts or omissions shall be measured against standards
generally prevailing in the savings institution industry. For purposes of this
paragraph, no act or failure to act on the part of the Executive shall be
considered "willful" unless done, or omitted to be done, by Executive not in
good faith and without reasonable belief that Executives action or omission was
in the best interest of the Bank. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based upon
the advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by Executive in good faith and in the best interests of the
Bank. Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the entire membership of the Board of the Bank at a meeting of
the Board called and held for that purpose (after reasonable notice to Executive
and an opportunity for him, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, Executive was
guilty of conduct justifying Termination for Cause and specifying the
particulars thereof in detail. Executive shall not have the right to receive
compensation or other benefits for any period after Termination for Cause. Any
stock options granted to Executive under any stock option plan of the Bank, the
Company or any subsidiary or affiliate thereof, shall become null and void
effective upon Executive's receipt of Notice of Termination for Cause pursuant
to Section 4 hereof, and shall not be exercisable by Executive at any time
subsequent to such Termination for Cause.
(d) Disability. "Disability" shall mean Executive's inability to perform
duties normally associated with his position on a full-time basis for a period
of six consecutive months by reason of illness or other physical or mental
disability. The Bank or the Company may require a physician's written
confirmation that Executive cannot perform his duties because of Executive's
Disability.
(e) Specified Employee. "Specified Employee" shall mean a "key employee" as
such term is defined in Code Section 416(i) (without regard to paragraph 5
thereof), but an individual shall be a Specified Employee only if the Bank or
the Company is a publicly traded company.
(f) Separation from Service. "Separation from Service" means the
Executive's termination of employment with the Bank within the meaning of Code
Section 409A. Whether a Separation from Service has occurred is determined based
on whether the facts and circumstances indicate that the Bank and Executive
reasonably anticipate that either no further services will be performed by the
Executive after the date of the Involuntary Termination (whether as an employee
or as an independent contractor) or the level of further services performed will
not exceed 49% of the average level of bona fide services in the 12 months
immediately preceding the Involuntary Termination. For all purposes hereunder,
the definition of Separation from Service shall be interpreted consistent with
Treasury Regulation Section 1.409A-1(h)(ii).
4. NOTICE OF TERMINATION
(a) Following a Change in Control, any termination by the Bank or by
Executive shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated. Any termination by Executive as a
result of an Involuntary Termination under Section 3(b)(i) or (ii) hereof shall
be communicated by Notice of Termination to the Company within 120 days of the
event giving rise to the Involuntary Termination.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that Executive shall not have returned to the performance of
Executive's duties on a full-time basis during such thirty (30) day period), and
(B) if Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a Termination for
Cause, shall be immediate). In no event shall the Date of Termination exceed 30
days from the date Notice of Termination is given.
5. SOURCE OF PAYMENTS
It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or check from the general funds of the Bank. The
Company, however, guarantees payment and provision of all amounts and benefits
due hereunder to Executive and, if such amounts and benefits due from the Bank
are not timely paid or provided by the Bank, such amounts and benefits shall be
paid or provided by the Company.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior agreement between the Bank and Executive, except that
this Agreement shall not affect or operate to reduce any benefit or compensation
inuring to Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
7. NO ATTACHMENT
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Bank and their respective successors and assigns.
8. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
9. REQUIRED PROVISIONS
(a) The Bank may terminate Executive's employment at any time. Executive
shall not have the right to receive compensation or other benefits for any
period after Termination for Cause as defined herein.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) (12 USC ss.1818(e)(3)) or 8(g)(1) (12 USC ss.1818(g)(1)) of the
Federal Deposit Insurance Act ("FDIA"), the Bank's obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay Executive all or part of the compensation withheld
while its contract obligations were suspended and (ii) reinstate (in whole or in
part) any of its obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) (12 USC ss.1818(e)(4)) or 8(g)(1) (12 USC ss.1818(g)(1)) of
FDIA, all obligations of the Bank under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the Bank is in default as defined in Section 3(x)(1) (12 USC
ss.1813(x)(1)) of FDIA, all obligations under this Agreement shall terminate as
of the date of default, but this paragraph shall not affect any vested rights of
the contracting parties.
(e) All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank, (i) by the Director of OTS or his or her
designee, at the time the FDIC enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) (12 USC
ss.1823(c)) of FDIA; or (ii) by the Director of OTS or his or her designee at
the time the Director of OTS or his or her designee approves a supervisory
merger to resolve problems related to operations of the Bank or when the Bank is
determined by the Director of OTS or his or her designee to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(f) Notwithstanding anything herein contained to the contrary, any payments
to Executive by the Bank, whether pursuant to this Agreement or otherwise, are
subject to and conditioned upon their compliance with Section 18(k) of FDIA, 12
U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R.
Part 359.
10. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
11. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
12. GOVERNING LAW
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the Commonwealth of Massachusetts,
unless superseded or preempted by Federal law as now or hereafter in effect.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a single
arbitrator, mutually acceptable to Executive and the Bank, sitting in a location
selected by the Bank within twenty-five (25) miles of the main office of the
Bank in West Springfield, Massachusetts, in accordance with the rules of the
American Arbitration Association's National Rules for the Resolution of
Employment Disputes then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction.
13. PAYMENT OF LEGAL FEES
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank if Executive is successful on the merits pursuant to a
legal judgment, arbitration or settlement, and such reimbursement shall occur no
later than sixty (60) days after the dispute is settled or resolved in
Executive's favor.
14. SUCCESSOR TO THE BANK
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
[Remainder of Page Intentionally Blank]
15. SIGNATURES
IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to
be executed by their duly authorized officers, and Executive has signed this
Agreement, on this 27th day of November, 2007.
ATTEST: UNITED BANK
/s/ Diane Wilson By: /s/ Richard B. Collins
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President
ATTEST: UNITED FINANCIAL BANCORP, INC.
/s/ Diane Wilson By: /s/ Richard B. Collins
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President
WITNESS: EXECUTIVE
/s/ Miriam Siegel By: /s/ J. Jeffrey Sullivan
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J. Jeffrey Sullivan