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                                                                    Exhibit 10.3

                        THE SAVINGS BANK OF MANCHESTER
                             EMPLOYMENT AGREEMENT

     This AGREEMENT, entered into on March 1, 2000, by and between The Savings
Bank of Manchester (the "Institution" or the "Bank"), a state-chartered savings
institution, with its principal administrative office at 923 Main Street,
Manchester, CT, 06040, Connecticut Bancshares, Inc. (the "Holding Company"), a
corporation organized under the laws of the state of Delaware and the holding
company of the Institution, and Douglas K. Anderson ("Executive").

     WHEREAS, the Institution wishes to continue to assure itself of the
services of Executive for the period provided in this Agreement; and

     WHEREAS, Executive is willing to continue to serve in the employ of the
Institution on a full-time basis in accordance with the terms of this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

1.   CONSIDERATION PROVIDED BY EXECUTIVE.

     During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President of the Institution. Executive shall render
administrative and management services to the Institution such as are
customarily performed by persons in a similar executive capacity. During said
period, Executive also agrees to serve, if elected, as an officer and director
of the Holding Company or an affiliate. Failure to reappoint or reelect
Executive as Executive Vice President of the Institution, without the consent of
Executive, shall constitute a breach of this Agreement.

2.   TERMS.

     (a)  The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of thirty-six (36) full calendar months. Commencing on the first
year anniversary date of this Agreement, and continuing on each anniversary
thereafter, the disinterested members of the board of directors of the Bank
("Board") may extend the Agreement an additional year such that the remaining
term of the Agreement shall be thirty-six (36) months, unless Executive elects
not to extend the term of this Agreement by giving written notice in accordance
with Section 8 of this Agreement. The Board will review the Agreement and
Executive's performance annually for purposes of determining whether to extend
the Agreement and the rationale and results thereof shall be included in the
minutes of the Board's meeting. The Board shall give notice to Executive as soon
as possible after such review as to whether the Agreement is to be extended.

     (b)  During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive

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shall devote substantially all his business time, attention, skill, and efforts
to the faithful performance of his duties hereunder including activities and
services related to the organization, operation and management of the
Institution and participation in community and civic organizations; provided,
however, that, with the approval of the Board, as evidenced by a resolution of
such Board, from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies or
organizations which, in the Board's judgment, will not present any conflict of
interest with the Institution, or materially affect the performance of
Executive's duties pursuant to this Agreement.

     (c)  Notwithstanding anything contained in this Agreement to the contrary,
Executive's employment with the Institution may be terminated by the Institution
or Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement.

3.   CONSIDERATION PROVIDED BY THE INSTITUTION.

     (a)  The compensation specified under this Agreement shall constitute
consideration paid by the Institution in exchange for the duties described in
Section 1 of this Agreement. The Institution shall pay Executive as compensation
a salary of not less than $180,000 per year ("Base Salary"). Base Salary shall
include any amounts of compensation deferred by Executive under any tax-
qualified retirement plan or welfare plan or any other deferred compensation
arrangement maintained by the Bank or the Holding Company. Executive's Base
Salary shall be payable in accordance with the Bank's general payroll practices.
During the period of this Agreement, Executive's Base Salary shall be reviewed
at least annually; on or about December 30th of each year. Such review shall be
conducted by the Board or a committee designated by the Board, and the Board may
increase Executive's Base Salary at any time. The increased Base Salary shall
become the new "Base Salary" for purposes of this Agreement. In addition to the
Base Salary provided in this Section 3(a), the Institution shall also provide
Executive, at no cost to Executive, with all such other benefits as are provided
uniformly to permanent full-time employees of the Institution or the Holding
Company.

     (b)  The Institution will provide Executive with the opportunity to
participate in employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving a benefit from immediately prior to the beginning of the term
of this Agreement, and the Institution will not, without Executive's prior
written consent, make any changes in such plans, arrangements or perquisites
which would adversely affect Executive's rights or benefits thereunder, without
separately providing for an arrangement that ensures Executive receives or will
receive the economic value that Executive would otherwise lose as a result of
such adverse affect. Without limiting the generality of the foregoing provisions
of this Subsection (b), Executive will be entitled to participate in or receive
benefits under any employee benefit plans, whether tax-qualified or otherwise,
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, health-and-accident plan, medical coverage
or any other employee benefit plan or arrangement made available by the
Institution now or in the future to its senior executives and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements. Executive will be
entitled to incentive

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compensation and bonuses as provided in any plan or arrangement of the
Institution in which Executive is eligible to participate. Nothing paid to
Executive under any such plan or arrangement will be deemed to be in lieu of
other compensation to which Executive is entitled under this Agreement.

     (c)  In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation provided for by paragraph (b) of this Section
3, the Institution shall pay or reimburse Executive for all reasonable expenses
incurred by Executive in performing his obligations under this Agreement,
including expenses associated with membership in clubs or organizations, as
mutually agreed to between the Board and Executive.

4.   PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

     (a)  Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section 4 shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include any one or more of the following: (i) the termination by
the Institution of Executive's full-time employment hereunder for any reason
other than Disability (as defined in Section 6 of this Agreement), Retirement
(as defined in paragraph (f) of this Section 4), termination governed by Section
5(a) of this Agreement, or Termination for Cause (as defined in Section 7 of
this Agreement); or (ii) Executive's resignation from the Institution's employ,
upon any (A) notice to Executive by the Institution of non-renewal of the term
of this Agreement, (B) failure to elect or reelect or to appoint or reappoint
Executive as Executive Vice President of the Institution, unless Executive
consents to any such event, (C) a material change in Executive's function,
duties, or responsibilities, which change would cause Executive's position to
become one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1 of this Agreement (and any such
material change shall be deemed a continuing breach of this Agreement), (D) a
relocation of Executive's principal place of employment by more than thirty-five
(35) miles from its location at the effective date of this Agreement, (E)
liquidation or dissolution of the Institution or the Holding Company, or (F)
breach of this Agreement by the Institution. Upon the occurrence of any event
described in clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have
the right to elect to terminate his employment under this Agreement by
resignation upon not less than sixty (60) days prior written notice given within
a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.

     (b)  Upon the occurrence of an Event of Termination on the Date of
Termination as defined in Section 8 of this Agreement, the Institution shall be
obligated to pay Executive, or, in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be: (i) the amount
of the remaining payments and benefits that Executive would have earned if he
had continued his employment with the Institution or Holding Company during the
remaining unexpired term of this Agreement, based on Executive's Base Salary and
benefits provided at the Date of Termination, as set out in Sections 3(a) and
(b) of this Agreement, as the case may be, and (ii) the amount still due
Executive under any paragraph of Section 3 of this Agreement for service through
the Date of Termination. Such payments shall be paid monthly during the

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remaining term of the agreement following Executive's termination. Such payments
shall not be reduced in the event Executive obtains other employment following
termination of employment.

     (c)  Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Institution or
the Holding Company on his behalf pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Institution or the Holding Company on Executive's behalf to
the extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.

     (d)  To the extent that the Institution or the Holding Company continues to
offer any life, medical, health, disability or dental insurance plan or
arrangement in which Executive participates in on the last day of his employment
(each being a "Welfare Plan"), after an Event of Termination (as herein
defined), Executive and his dependents shall continue participating in such
Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death; (ii) his employment by another employer other than
one of which he is the majority owner; or (iii) the end of the remaining term of
this Agreement. If the Institution or the Holding Company does not offer the
Welfare Plans after the Event of Termination, then the Institution shall provide
Executive with a payment equal to the actuarial value of the provision of such
benefit for the period which runs until the earlier of (i) his death; (ii) his
employment by another employer other than one of which he is the majority owner;
or (iii) the end of the remaining term of this Agreement.

     (e)  In the event that Executive is receiving monthly payments pursuant to
Section 4(b) of this Agreement, on an annual basis, thereafter, between the
dates of January 1 and January 31 of each year, Executive shall elect whether
the balance of the amount payable under the Agreement at that time shall be paid
in a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.

     (f)  For the purpose of this Section 4, termination of Executive based on
"Retirement" shall mean termination in accordance with the Holding Company's or
Bank's retirement policy or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Holding Company or the Bank and other plans to which
Executive is a party or a participant.

5.   CHANGE IN CONTROL.

     (a)  For purposes of this Agreement, a "Change in Control" of the
Institution or the Holding Company shall mean an event of a nature that: (i)
would be required to be reported in response to Item 1(a) 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 Institution or the Holding Company within the meaning
of

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the Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. Section 303.4(a),
with respect to the Institution, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") (or its predecessor agency), with
respect to the Holding Company, as in effect on the date of this Agreement; 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 voting
securities of the Institution or the Holding Company representing 20% or more of
the Institution's or the Holding Company's outstanding voting securities or
right to acquire such securities except for any voting securities of the
Institution purchased by the Holding Company and any voting securities purchased
by any employee benefit plan of the Holding Company or its Subsidiaries, 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 Holding Company's
stockholders was approved by a Nominating Committee solely composed of members
which are Incumbent Board members, 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 Institution or the Holding Company or similar transaction occurs
or is effectuated in which the Institution or Holding Company is not the
resulting entity, or (D) a proxy statement has been distributed soliciting
proxies from stockholders of the Holding Company, by someone other than the
current management of the Holding Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Holding Company or
Institution with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Institution or the Holding Company shall be distributed, or (E) a tender offer
is made for 20% or more of the voting securities of the Institution or Holding
Company then outstanding.

     (b)  If any of the events described in Section 5(a) of this Agreement
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d), (e), (f) and (g) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs at
any time during the term of this Agreement due to (1) Executive's dismissal; (2)
Executive's voluntary resignation for any reason on or within the sixty (60) day
period immediately following the date a Change in Control has occurred; or (3)
Executive's resignation following any demotion, loss of title, office or
significant authority or responsibility, reduction in annual compensation or
benefits or relocation of his principal place of employment by more than 50
miles from its location immediately prior to the Change in Control, unless such
termination is because of his death, or Termination for Cause; provided,
however, that such payments shall be reduced by any payment made under Section 4
of this Agreement.

     (c)  Upon the occurrence of a Change in Control followed by Executive's
termination of employment, as provided in Section 5(b) of this Agreement, the
Institution shall pay

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Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the greater of: (1) the payments due for the
remaining term of the Agreement or (2) three (3) times Executive's average
annual compensation for the five (5) preceding taxable years. In determining
Executive's average annual compensation, annual compensation shall include Base
Salary and any other taxable income, including but not limited to amounts
related to the granting, vesting or exercise of restricted stock or stock option
awards, commissions, bonuses, pension and profit sharing plan contributions or
benefits (whether or not taxable), severance payments, retirement benefits,
director or committee fees and fringe benefits paid or to be paid to Executive
or paid for Executive's benefit during any such year. At the election of
Executive, which election is to be made prior to or within thirty (30) days of
the Date of Termination on or following a Change in Control, such payment may be
made in a lump sum (without discount for early payment) on or immediately
following the Date of Termination (which may be the date a Change in Control
occurs) or paid in equal monthly installments during the thirty-six (36) months
following Executive's termination. In the event that no election is made,
payment to Executive will be made on a monthly basis during the thirty-six (36)
months following Executive's termination.

     (d)  Upon the occurrence of a Change in Control, Executive will be entitled
to receive benefits due him under or contributed by the Institution or the
Holding Company on his behalf pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Institution or the Holding Company on Executive's behalf to
the extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.

     (e)  Upon the occurrence of a Change in Control and Executive's termination
of employment in connection therewith, the Institution will cause to be
continued life, health, dental and disability coverage substantially identical
to the coverage maintained by the Institution or Holding Company for Executive
and any of his dependents covered under such plans prior to the Change in
Control. Such coverage and payments shall cease upon the expiration of thirty-
six (36) full calendar months following the Date of Termination. In the event
Executive's participation in any such plan or program is barred, the Institution
shall arrange to provide Executive and his dependents with benefits
substantially similar as those of which Executive and his dependents would
otherwise have been entitled to receive under such plans and programs from which
their continued participation is barred or provide their economic equivalent.

     (f)  The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change in Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement, no longer be available
to Executive, Executive will have the option to purchase all rights then held by
the Institution or the Holding Company to such item for a price equal to the
then fair market value of the item.

     (g)  In the event that Executive is receiving monthly payments pursuant to
Section 5(c) of this Agreement, on an annual basis, thereafter, between the
dates of January 1 and

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January 31 of each year, Executive shall elect whether the balance of the amount
payable under the Agreement at that time shall be paid in a lump sum or on a pro
rata basis pursuant to such section. Such election shall be irrevocable for the
year for which such election is made.

     (h)  Notwithstanding the preceding paragraphs of this Section 5, for any
taxable year in which Executive shall be liable, as determined for the payment
of an excise tax under Section 4999 of the Code (or any successor provision
thereto), with respect to any payment in the nature of the compensation made by
the Institution or the Holding Company (or for the benefit of) Executive
pursuant to this Agreement or otherwise, the Institution shall pay to Executive
an amount determined under the following formula:

     An amount equal to:  (E x P) + X

WHERE:

     X  =             E x P
          ---------------------------
          1 - [(FI x (1 - SLI)) + SLI + E + (M + PO)]

     E    =    the rate at which the excise tax is assessed under Section 4999
               of the Code;

     P    =    the amount with respect to which such excise tax is assessed,
               determined without regard to this Section 5;

     FI   =    the highest marginal rate of federal income, employment, and
               other taxes (other than taxes imposed under Section 4999 of the
               Code) applicable to Executive for the taxable year in question
               (including any effective increase in Executive's tax rate
               attributable to the disallowance of any deduction);

     SLI  =    the sum of the highest marginal rates of income and payroll tax
               applicable to Executive under applicable state and local laws for
               the taxable year in question (including any effective increase in
               Executive's tax rate attributable to the disallowance of any
               deduction);

     M    =    highest marginal rate of Medicare tax; and

     PO   =    adjustment for phase out of or loss of deduction, personal
               exemption or other similar items.

With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section 5 or otherwise and
on which an excise tax under Section 4999 of the Code may or will be assessed,
the payment determined under this Section 5 shall be made to Executive on the
earliest of (i) the date the Institution is required to withhold such tax, (ii)
the date the tax is required to be paid by Executive, or (iii) at the time of
the Change in Control. It is the intention of the parties that the Institution
provide Executive with a full tax

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gross-up under the provisions of this Section, so that on a net after-tax basis,
the result to Executive shall be the same as if the excise tax under Section
4999 (or any successor provisions) of the Code had not been imposed. The tax
gross-up may be adjusted if alternative minimum tax rules are applicable to
Executive.

     (i)  Notwithstanding the foregoing, if it is (i) initially determined by
the Institution's tax advisors that no excise tax under Section 4999 of the Code
is due with respect to any payment or benefit described in the first paragraph
of Section 5(c) of this Agreement and thereafter it is determined in a final
judicial determination or a final administrative settlement that the Section
4999 excise tax is due with respect to such payments or benefits, or (ii)
subsequently be determined in a final judicial determination or a final
administrative settlement to which Executive is a party that the excess
parachute payment as defined in Section 4999 of the Code, reduced as described
above, is more than the amount determined as "P," above (such greater amount
being hereafter referred to as the "Determinative Excess Parachute Payment"),
then the Institution's independent accountants shall determine the amount (the
"Adjustment Amount"), the Institution must pay to Executive, in order to put
Executive (or the Institution, as the case may be) in the same position as
Executive (or the Institution, as the case may be) would have been if the amount
determined as "P" above had been equal to the Determinative Excess Parachute
Payment. In determining the Adjustment Amount, the independent accountants shall
take into account any and all taxes (including any penalties and interest) paid
by or for Executive or refunded to Executive or for Executive's benefit. As soon
as practicable after the Adjustment Amount has been so determined, the
Institution shall pay the Adjustment Amount to Executive.

     (j)  The Institution  (or its successors) shall indemnify and hold
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorney's fees, reasonable accountant's fees,
interest, fines and penalties of any kind) which Executive incurs as a result of
any administrative or judicial review of Executive's liability under Section
4999 of the Code by the Internal Revenue Service or any comparable state agency
through and including a final judicial determination or final administrative
settlement of any dispute arising out of Executive's liability for the Section
4999 excise tax or otherwise relating to the classification for purposes of
Section 280G of the Code of any payment or benefit in the nature of compensation
made or provided to Executive by the Institution or any successor thereto.
Executive shall promptly notify the Institution in writing whenever Executive
receives notice of the commencement of any judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Agreement is being
reviewed or is in dispute (including a notice of audit or other inquiry
concerning the reporting of Executive's liability under Section 4999). The
Institution (and its successors) may assume control at its expense over all
legal and accounting matters pertaining to such federal or state tax treatment
(except to the extent necessary or appropriate for Executive to resolve any such
proceeding with respect to any matter unrelated to amounts paid or payable
pursuant to this contract) and Executive shall cooperate fully with the
Institution in any such proceeding. Executive shall not enter into any
compromise or settlement or otherwise prejudice any rights the Institution (or
its successors) may have in connection therewith without prior consent to the
Institution (or its successors). In the event that the Institution (or any
successor thereto) elects not to assume control over such matters, the
Institution (or any successor thereto)

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shall promptly reimburse Executive for all expenses related thereto as and when
incurred upon presentation of appropriate documentation relating thereto.

6.   DISABILITY BENEFITS.

     In the event of the disability of Executive, the Institution shall continue
to pay Executive the compensation provided by this Agreement during the period
of his disability. In the event Executive is disabled for a continuous period
exceeding 12 calendar months, the Institution may, at its election, terminate
this Agreement; provided, however, the last 6 months of such 12-month period
shall constitute the "elimination period" for benefit determination under the
Institution's Long-Term Disability Plan. As used in this Agreement, the term
"disability" shall mean the complete and permanent inability of Executive to
perform his duties under this Agreement as determined by an independent
physician selected with the approval of the Institution and Executive.

7.   TERMINATION FOR CAUSE.

     The term "Termination for Cause" shall mean termination because of: (1)
Executive's personal dishonesty, willful misconduct, 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), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Institution or the
Holding Company, or (2) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Institution or its
affiliates. 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 Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board 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. The Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause. During the period beginning on the date of the Notice
of Termination for Cause pursuant to Section 8 of this Agreement through the
Date of Termination, stock options granted to Executive under any stock option
plan shall not be exercisable nor shall any unvested stock awards granted to
Executive under any stock benefit plan of the Institution, the Holding Company
or any subsidiary or affiliate thereof, vest. At the Date of Termination, such
stock options and any such unvested stock awards shall become null and void and
shall not be exercisable by or delivered to Executive at any time subsequent to
such Termination for Cause.

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8.   NOTICE.

     (a)  Any purported termination by the Institution 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.

     (b)  "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given);
provided, however, that if a dispute regarding Executive's termination exists,
the "Date of Termination" shall be determined in accordance with Section 8(c) of
this Agreement.

     (c)  If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by Executive in which case the Date
of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and; provided, further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the Institution
will continue to pay Executive his full compensation in effect when the notice
giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.

9.   POST-TERMINATION OBLIGATIONS.

     All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Institution. Executive shall, upon reasonable
notice, furnish such information and assistance to the Institution as may
reasonably be required by the Institution in connection with any litigation in
which it or any of its subsidiaries or affiliates is, or may become, a party.

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10.  NON-COMPETITION AND NON-DISCLOSURE.

     (a)  Upon any termination of Executive's employment hereunder pursuant to
Section 4 of this Agreement, Executive agrees not to compete with the
Institution for the period in which he receives payments under Section 4(b) of
this Agreement in any city, town or county in which Executive's normal business
office is located and the Institution has an office or has filed an application
for regulatory approval to establish an office, determined as of the effective
date of such termination, except as agreed to pursuant to a resolution duly
adopted by the Board. Executive agrees that during such period and within said
cities, towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Institution. The parties hereto, recognizing that irreparable injury will
result to the Institution, its business and property in the event of Executive's
breach of this Subsection 10(a) agree that in the event of any such breach by
Executive, the Institution, will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employees and all persons
acting for or under the direction of Executive. Executive represents and admits
that in the event of the termination of his employment pursuant to Section 7 of
this Agreement, Executive's experience and capabilities are such that Executive
can obtain employment in a business engaged in other lines and/or of a different
nature than the Institution and that the enforcement of a remedy by way of
injunction will not prevent Executive from earning a livelihood. Nothing herein
will be construed as prohibiting the Institution from pursuing any other
remedies available to the Institution for such breach or threatened breach,
including the recovery of damages from Executive.

     (b)  Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Institution as it
may exist from time to time, is a valuable, special and unique asset of the
business of the Institution. Executive will not, during or after the term of his
employment, disclose any knowledge of the past, present, planned or considered
business activities of the Institution thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Institution. Further, Executive may
disclose information regarding the business activities of the Institution to the
Connecticut Department of Banks, the FDIC and any other applicable government
agency pursuant to a formal regulatory request. In the event of a breach or
threatened breach by the Executive of the provisions of this Section, the
Institution will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Institution or from rendering any services
to any person, firm, corporation, other entity to whom such knowledge, in whole
or in part, has been disclosed or is threatened to be disclosed. Nothing herein
will be construed as prohibiting the Institution from pursuing any other
remedies available to the Institution for such breach or threatened breach,
including the recovery of damages from Executive.

                                       11
<PAGE>

11.  SOURCE OF PAYMENTS.

     (a)  All payments provided in this Agreement shall be timely paid in cash
or check from the general funds of the Institution. The Holding Company,
however, unconditionally guarantees payment and provision of all amounts and
benefits due hereunder to Executive and, if such amounts and benefits due from
the Institution are not timely paid or provided by the Institution, such amounts
and benefits shall be paid or provided by the Holding Company.

     (b)  Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under the Employment Agreement dated March 1, 2000,
between Executive and the Holding Company, such compensation payments and
benefits paid by the Holding Company will be subtracted from any amounts due
simultaneously to Executive under similar provisions of this Agreement.

12.  EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

     This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Institution or any
predecessor of the Institution 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.

13.  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 and the Institution and their respective successors and assigns.

14.  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 as to any act other than that specifically
waived.

                                       12
<PAGE>

15.  REQUIRED PROVISIONS.

     Any payments made to Executive pursuant to this Agreement, or otherwise,
are subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k)
and any rules and regulations promulgated thereunder.

16.  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.

17.  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.

18.  GOVERNING LAW.

     This Agreement shall be governed by the laws of the State of Connecticut,
unless otherwise specified herein.

19.  ARBITRATION.

     Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Institution, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.

20.  REINSTATEMENT OF BENEFITS.

     In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of any back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.

                                       13
<PAGE>

21.  INDEMNIFICATION.

     During the term of this Agreement and for an additional period of seven
years thereafter, the Institution shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense, and shall indemnify, hold
harmless and defend Executive (and his heirs, executors and administrators) to
the fullest extent permitted under Connecticut law against all expenses and
liabilities reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his having
been a director or officer of the Institution (whether or not he continues to be
a director or officer at the time of incurring such expenses or liabilities),
such expenses and liabilities to include, but not be limited to, judgments,
court costs and attorneys' fees and the cost of reasonable settlements.

22.  SUCCESSOR TO THE INSTITUTION.

     The Institution 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 Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Institution's obligations under this Agreement, in the same manner and to the
same extent that the Institution would be required to perform if no such
succession or assignment had taken place.


                                       14
<PAGE>


                                  SIGNATURES

     IN WITNESS WHEREOF, The Savings Bank of Manchester and Connecticut
Bancshares, Inc. have caused this Agreement to be executed and their seals to be
affixed hereunto by their duly authorized officers and directors, and Executive
has signed this Agreement, on the 1st day of March, 2000.


ATTEST:                                 THE SAVINGS BANK OF MANCHESTER


/s/ Carole L. Yungk                     BY:  /s/ Richard Meduski
---------------------------------            -----------------------------------
Secretary                                    For the Board of Directors


          [SEAL]


ATTEST:                                 CONNECTICUT BANCSHARES, INC.
                                             (Guarantor)

/s/ Carole L. Yungk                     BY:  /s/ Richard Meduski
---------------------------------            -----------------------------------
Secretary                                    For the Board of Directors



          [SEAL]



WITNESS:                                EXECUTIVE



/s/ Harriett F. Duff                    /s/ Douglas K. Anderson
---------------------------------       ----------------------------------------
                                        Douglas K. Anderson

                                       15