Exhibit 10.13
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (the "Agreement") is entered
into as of this 1st day of January, 2002, by and between NewMil
Bancorp, Inc., a Delaware corporation (hereafter "NewMil Bancorp"),
and B. Xxx XxXxxxx (the "Executive").
Whereas, the Executive is employed by NewMil Bank, a
Connecticut-chartered, FDIC-insured savings bank and subsidiary of
NewMil Bancorp, and the Executive has made and is expected to continue
to make major contributions to the profitability, growth, and financial
strength of NewMil Bancorp and its subsidiaries,
Whereas, NewMil Bancorp recognizes that, as is the case for most
companies, the possibility of a Change in Control (as defined in
Section 1(c)) exists,
Whereas, NewMil Bancorp desires to assure itself of the current
and future continuity of management and desires to establish minimum
severance benefits for certain of its officers, including the
Executive, if a Change in Control occurs,
Whereas, NewMil Bancorp wishes to ensure that officers and other
key employees are not practically disabled from discharging their
duties if a proposed or actual transaction involving a Change in
Control arises,
Whereas, NewMil Bancorp desires to provide additional inducement
for the Executive to continue to remain in the ongoing employ of NewMil
Bancorp and subsidiary,
Whereas, none of the conditions or events included in the
definition of the term "golden parachute payment" that is set forth in
Section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C.
1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule
359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or, to the best
knowledge of NewMil Bancorp, is contemplated insofar as either of
NewMil Bancorp or any of its subsidiaries is concerned, and
Whereas, the Executive and NewMil Bank entered into a Change in
Control Agreement on October 22, 1996, which the Executive is willing
to terminate in consideration of this Change in Control Agreement
becoming effective.
Now Therefore, in consideration of these premises and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Change in Control Combined with Employment Termination
(a) Termination of Executive Within Two Years After a Change in
Control. If a Change in Control occurs during the term of this
Agreement and if either of the following occurs, the Executive shall
be entitled to severance and termination benefits specified in Section
2 of this Agreement
1) Termination by NewMil Bancorp or Subsidiary: the Executive's
employment with NewMil Bancorp or its Subsidiary(ies) is
involuntarily terminated within two years after a Change in
Control, except for termination under Section 4 of this
Agreement. For purposes of this Agreement, "Subsidiary"
means an entity in which NewMil Bancorp directly or
indirectly beneficially owns 50% or more of the outstanding
voting securities, or
2) Termination by the Executive for Good Reason: the Executive
terminates his employment with NewMil Bancorp or
Subsidiary(ies) for Good Reason (as defined in Section 3)
within two years after a Change in Control.
If the Executive is removed from office or if his employment
terminates after discussions with a third party regarding a Change in
Control commence, and if those discussions ultimately conclude with a
Change in Control, then for purposes of this Agreement the removal of
the Executive or termination of his employment shall be deemed to have
occurred after the Change in Control.
(b) Termination by the Executive During a 90-day Period 12 Months
after a Change in Control. The Executive shall also be entitled to
severance and termination benefits under Section 2 of this Agreement if
he terminates employment with NewMil Bancorp and Subsidiary(ies) for any
reason or for no reason during the 90-day period beginning on the date
that is 12 months after a Change in Control.
(c) Definition of Change in Control. For purposes of this
Agreement, "Change in Control" means any of the following events occur
1) Merger: NewMil Bancorp merges into or consolidates with
another corporation, or merges another corporation into
NewMil Bancorp, and as a result less than 50% of the combined
voting power of the resulting corporation immediately after
the merger or consolidation is held by persons who were the
holders of NewMil Bancorp's voting securities immediately
before the merger or consolidation. For purposes of this
Agreement, the term person means an individual, corporation,
partnership, trust, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization
or other entity, or
2) Acquisition of Significant Share Ownership: a report on
Schedule 13D, Schedule TO, or another form or schedule (other
than Schedule 13G), is filed or is required to be filed under
Sections 13(d) or 14(d) of the Securities Exchange Act of
1934, if the schedule discloses that the filing person or
persons acting in concert has or have become the beneficial
owner of 25% or more of a class of NewMil Bancorp's voting
securities (but this clause (2) shall not apply to beneficial
ownership of voting shares held by a Subsidiary in a fiduciary
capacity), or
3) Change in Board Composition: during any period of two
consecutive years, individuals who constitute NewMil
Bancorp's board of directors at the beginning of the two-year
period cease for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this clause
(3) each director who is first elected by the board (or first
nominated by the board for election by stockholders) by a vote
of at least two-thirds ( ) of the directors who were directors
at the beginning of the period shall be deemed to have been a
director at the beginning of the two-year period, or
4) Sale of Assets: NewMil Bancorp sells to a third party
substantially all of NewMil Bancorp's assets. For purposes
of this Agreement, sale of substantially all of NewMil
Bancorp's assets includes sale of the shares or assets of
NewMil Bank.
2. Severance and Termination Benefits
(a) Severance and Termination Benefits. The severance and
termination benefits to which the Executive is entitled under Section 1
are as follows
1) Lump Sum Payment: NewMil Bancorp shall make a lump sum
payment to the Executive in an amount in cash equal to 2.99
times the Executive's annual compensation. For purposes of
this Agreement, annual compensation means (a) the Executive's
annual base salary on the date of the Change in Control or
the Executive's termination of employment, whichever amount
is greater, plus (b) any bonuses or incentive compensation
earned for the calendar year immediately before the year in
which the Change in Control occurred or immediately before
the year in which termination of employment occurred,
whichever amount is greater, regardless of when the bonus
or incentive compensation is or was paid. NewMil Bancorp
recognizes that the bonus and incentive compensation earned
by the Executive for a particular year's service might be
paid in the year after the calendar year in which the bonus
or incentive compensation is earned. The amount payable to
the Executive hereunder shall not be reduced to account for
the time value of money or discounted to present value. The
payment required under this Section 2(a)(1) is payable no
later than 5 business days after the date the Executive's
employment terminates. If the Executive terminates
employment for Good Reason, the date of termination shall
be the date specified by the Executive in his notice of
termination.
2) Benefit Plans: NewMil Bancorp shall cause the Executive to
become fully vested in any qualified and non-qualified plans,
programs or arrangements in which the Executive participated
if the plan, program, or arrangement does not address the
effect of a change in control. NewMil Bancorp also shall
contribute or cause a Subsidiary to contribute to any account
of the Executive under a 401(k) plan, retirement plan, or
profit-sharing plan the matching and voluntary contributions,
if any, that would have been made had the Executive's
employment not terminated before the end of the plan year.
3) Outplacement Assistance: NewMil Bancorp shall pay to the
Executive reasonable outplacement expenses in an amount up
to $25,000, and NewMil Bancorp shall provide the Executive
with the use of office space and reasonable office support
facilities, including secretarial assistance, for a
period of one year after termination.
(b) No Mitigation Required. NewMil Bancorp hereby acknowledges
that it will be difficult and could be impossible (1) for the
Executive to find reasonably comparable employment after his
employment terminates, and (2) to measure the amount of damages the
Executive suffers as a result of termination. Additionally, NewMil
Bancorp acknowledges that its general severance pay plans do not
provide for mitigation, offset or reduction of any severance payment
received thereunder. Accordingly, NewMil Bancorp further acknowledges
that the payment of severance and termination benefits by NewMil
Bancorp under this Agreement is reasonable and will be liquidated
damages, and the Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor will any profits, income, earnings or
other benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the Executive
hereunder or otherwise.
3. Good Reason
For purposes of this Agreement, "Good Reason" means the occurrence
of any of the events or conditions without the Executive's express
written consent
(a) Reduction in Base Salary: involuntary reduction in the
Executive's base salary, or
(b) Reduced Participation in Bonus, Incentive, Compensation, and
Other Plans: involuntary reduction in the Executive's bonus, incentive,
and other compensation award opportunities under NewMil Bancorp's or
Subsidiary(ies)'s benefit plans, unless a company-wide reduction of
all officers' award opportunities occurs simultaneously, or
(c) Participation in Benefit Plans: involuntary discontinuance
of the Executive's participation in any officer or employee benefit
plans maintained by NewMil Bancorp or Subsidiary(ies), unless such
plans are discontinued by reason of law or loss of tax deductibility
to NewMil Bancorp with respect to contributions to such plans, or are
discontinued as a matter of policy applied equally to all participants
in such plans, or
(d) Reduction in Responsibilities or Status: assignment to the
Executive of duties or responsibilities that are materially inconsistent
with the Executive's duties and responsibilities immediately before the
Change in Control; any other action by NewMil Bancorp or its successor
that results in a material reduction or material adverse change in the
Executive's position, authority, duties or responsibilities; failure to
nominate the Executive as a director of NewMil Bancorp if the Executive
shall have been a director immediately before the Change in Control; or
failure to elect or reelect the Executive or cause the Executive to be
elected or reelected to the board of directors of NewMil Bank if the
Executive shall have been a director immediately before the Change in
Control, or
(e) Failure to Obtain Assumption Agreement: failure to obtain an
assumption of NewMil Bancorp's obligations under this Agreement by any
successor to NewMil Bancorp, regardless of whether such entity becomes
a successor to NewMil Bancorp as a result of a merger, consolidation,
sale of assets, or other form of reorganization, or
(f) Material Breach: a material breach of this Agreement by
NewMil Bancorp that is not corrected within a reasonable time, or
(g) Relocation of the Executive: relocation of NewMil Bancorp's
principal executive offices, or requiring the Executive to change his
principal work location, to any location that is more than 15 miles
from the location of NewMil Bancorp's principal executive offices on
the date of this Agreement.
4. Termination for Which No Severance or Termination Benefits Are
Payable
(a) No Severance for Termination for Cause. Anything in this
Agreement to the contrary notwithstanding, under no circumstance shall
the Executive be entitled to severance or termination benefits if his
employment terminates for Cause.
1) Cause Means Commission of Any of the Following Acts: For
purposes of this Agreement, "Cause" means the Executive shall have
committed any of the following acts
a) Fraud, Embezzlement, Theft or Other Crime: an act of
fraud, embezzlement, or theft in connection with his
duties or in the course of his employment with NewMil
Bancorp or a Subsidiary, or commission of a felony or
commission of a misdemeanor involving moral turpitude,
or
b) Damage to Property: intentional wrongful damage to the
business or property of NewMil Bancorp or
Subsidiary(ies), which, in NewMil Bancorp's sole
judgment, causes material harm to NewMil Bancorp or
Subsidiary(ies), or
c) Negligence and Other Actions: gross negligence,
insubordination, disloyalty, or dishonesty in the
performance of his duties as an officer of NewMil
Bancorp or Subsidiary(ies), or
d) Violation of Law or Policy: intentional violation of
any law or significant policy of NewMil Bancorp or
Subsidiary(ies) committed in connection with the
Executive's employment, which, in NewMil Bancorp's sole
judgment, has an adverse effect on NewMil Bancorp or
Subsidiary(ies), or
e) Removal: removal of the Executive from office or
permanent prohibition of the Executive from
participating in the conduct of NewMil Bank's affairs
by an order issued under section 8(e)(4) or (g)(1) of
the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4)
or (g)(1), or
f) Disclosure of Trade Secrets: intentional wrongful
disclosure of secret processes or confidential
information of NewMil Bancorp or a Subsidiary, which,
in NewMil Bancorp's sole judgment, causes material harm
to NewMil Bancorp or the Subsidiary,
g) Competing with NewMil Bancorp: intentional wrongful
engagement in any competitive activity. For purposes
of this Agreement, competitive activity means the
Executive's participation, without the written consent
of a senior executive officer of NewMil Bancorp, in the
management of any business enterprise if (1) the
enterprise engages in substantial and direct competition
with NewMil Bancorp, (2) the enterprise's revenues
derived from any product or service competitive with any
product or service of NewMil Bancorp or Subsidiary(ies)
amounted to 10% or more of the enterprise's revenues for
its most recently completed fiscal year, and (3) NewMil
Bancorp's revenues from the product or service amounted
to 10% of NewMil Bancorp's revenues for its most recently
completed fiscal year. A competitive activity does not
include mere ownership of securities in an enterprise
and the exercise of rights appurtenant thereto, provided
the Executive's share ownership does not give him
practical or legal control of the enterprise. For this
purpose, ownership of less than 5% of the enterprise's
outstanding voting securities shall conclusively be
presumed to be insufficient for practical or legal
control, and ownership of more than 50% shall
conclusively be presumed to constitute practical and
legal control.
If the Executive is now or hereafter becomes subject
to an agreement not to compete with NewMil Bancorp or
Subsidiary(ies), a breach by the Executive of that other
non-competition agreement shall be grounds for denial of
severance and termination benefits for Cause under this
clause (g) of Section 4(a)(1). But if the Executive
engages in a competitive activity under circumstances
justifying denial of severance or termination benefits
for Cause under this clause (g), that shall not
necessarily be grounds for concluding that the Executive
has also breached the other non-competition agreement
to which he is or may become subject. This clause (g)
is not intended to and shall not be construed to
supersede or amend any provision of an employment or
non-competition agreement to which the Executive is or
may become subject. This clause (g) does not grant to
the Executive any right or privilege to engage in other
activities or enterprises, whether in competition with
NewMil Bancorp or otherwise, or
h) Termination for Cause under an Employment Agreement: any
actions that have caused the Executive to be terminated
for cause under any employment agreement existing on
the date hereof or hereafter entered into between the
Executive and NewMil Bancorp or a Subsidiary.
2) Definition of "Intentional": For purposes of this Agreement,
no act or failure to act on the part of the Executive shall
be deemed to have been intentional if it was due primarily to
an error in judgment or negligence. An act or failure to act
on the Executive's part shall be considered intentional if it
is not in good faith and if it is without a reasonable belief
that the action or failure to act is in the best interests of
NewMil Bancorp or a Subsidiary.
3) Termination for Cause Can Occur Solely by Formal Board Action.
The Executive shall not be deemed under this Agreement to
have been terminated for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of at least three-fourths
( ) of the directors of NewMil Bancorp then in office at a
meeting of the board of directors called and held for such
purpose, which resolution shall (a) contain findings that,
in the good faith opinion of the board, the Executive has
committed an act constituting Cause and (b) specify the
particulars thereof in detail. Notice of that meeting and
the proposed determination of Cause shall be given to the
Executive a reasonable amount of time before the board's
meeting. The Executive and his counsel (if the Executive
chooses to have counsel present) shall have a reasonable
opportunity to be heard by the board at the meeting.
Nothing in this Agreement limits the Executive's or his
beneficiaries' right to contest the validity or propriety of
the board's determination of Cause, and they shall have the
right to contest the validity or propriety of the board's
determination of Cause even if that right does not exist
under any employment agreement of the Executive.
(b) No Severance under this Agreement for the Executive's Death
or Disability. Anything in this Agreement to the contrary
notwithstanding, under no circumstance shall the Executive be entitled
to severance payments or termination benefits under this Agreement if
1) Death: the Executive dies while actively employed by NewMil
Bancorp or a Subsidiary, or
2) Disability: the Executive becomes totally disabled while
actively employed by NewMil Bancorp or a Subsidiary. For
purposes of this Agreement, the term "totally disabled"
means that because of injury or sickness, the Executive is
unable to perform his duties.
The benefits, if any, payable to the Executive or his
beneficiary(ies) or estate relating to his death or disability shall
be determined solely by such benefit plans or arrangements as NewMil
Bancorp or Subsidiary may have with the Executive relating to death or
disability, not by this Agreement.
5. Term of Agreement
The initial term of this Agreement shall be for a period of
three years, commencing January 1, 2002. On the first anniversary
of the January 1, 2002 effective date of this Agreement, and on each
anniversary thereafter, this Agreement shall be extended automatically
for one additional year unless NewMil Bancorp's board of directors
gives notice to the Executive in writing at least 90 days before the
anniversary that the term of this Agreement will not be extended. If
the board of directors determines not to extend the term, it shall
promptly notify the Executive. References herein to the term of this
Agreement mean the initial term and extensions of the initial term.
Unless terminated earlier, this Agreement shall terminate when the
Executive reaches age 65. If the board of directors decides not to
extend the term of this Agreement, this Agreement shall nevertheless
remain in force until its term expires. The board's decision not to
extend the term of this Agreement shall not by itself give the
Executive any rights under this Agreement to claim an adverse change
in his position, compensation or circumstances or otherwise to claim
entitlement to severance or termination benefits under this Agreement.
6. This Agreement Is Not an Employment Contract
The parties hereto acknowledge and agree that (a) this Agreement
is not a management or employment agreement and (b) nothing in this
Agreement shall give the Executive any rights or impose any obligations
to continued employment by NewMil Bancorp or any Subsidiary or
successor of NewMil Bancorp, nor shall it give NewMil Bancorp any
rights or impose any obligations for the continued performance of
duties by the Executive for NewMil Bancorp or any Subsidiary or
successor of NewMil Bancorp.
7. Withholding of Taxes
NewMil Bancorp may withhold from any benefits payable under this
Agreement all Federal, state, local or other taxes as may be required
by law, governmental regulation or ruling.
8. Successors and Assigns
(a) This Agreement Is Binding on NewMil Bancorp's Successors.
This Agreement shall be binding upon NewMil Bancorp and any successor
to NewMil Bancorp, including any persons acquiring directly or
indirectly all or substantially all of the business or assets of
NewMil Bancorp by purchase, merger, consolidation, reorganization, or
otherwise. Any such successor shall thereafter be deemed to be "NewMil
Bancorp" for purposes of this Agreement. But this Agreement and NewMil
Bancorp's obligations under this Agreement are not otherwise
assignable, transferable or delegable by NewMil Bancorp. By
agreement in form and substance satisfactory to the Executive, NewMil
Bancorp shall require any successor to all or substantially all of the
business or assets of NewMil Bancorp expressly to assume and agree to
perform this Agreement in the same manner and to the same extent NewMil
Bancorp would be required to perform if no such succession had
occurred.
(b) This Agreement Is Enforceable by the Executive and His Heirs.
This Agreement will inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributes and legatees.
(c) This Agreement Is Personal in Nature and Is Not Assignable.
This Agreement is personal in nature. Without written consent of the
other party, neither party shall assign, transfer, or delegate this
Agreement or any rights or obligations under this Agreement except as
expressly provided in this Section 8. Without limiting the generality
or effect of the foregoing, the Executive's right to receive payments
hereunder is not assignable or transferable, whether by pledge, creation
of a security interest, or otherwise, except for a transfer by
Executive's will or by the laws of descent and distribution. If the
Executive attempts an assignment or transfer that is contrary to this
Section 8, NewMil Bancorp shall have no liability to pay any amount to
the assignee or transferee.
9. Notices
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return
receipt requested, with postage prepaid to the following addresses or
to such other address as either party may designate by like notice.
(a) If to NewMil Bancorp, to: NewMil Bancorp, Inc.
00 Xxxx Xxxxxx
X.X. Xxx 000
New Milford, Connecticut 06776
Attn: Corporate Secretary
(b) If to the Executive, to: B. Xxx XxXxxxx
00 Xxxx Xxxxxx
X.X. Xxx 000
New Milford, Connecticut 06776
and to such other or additional person or persons as either party shall
have designated to the other party in writing by like notice.
10. Captions and Counterparts
The headings and subheadings used in this Agreement are included
solely for convenience and shall not affect the interpretation of this
Agreement. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
11. Amendments and Waivers
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification, or discharge is agreed
to in a writing or writings signed by the Executive and by NewMil
Bancorp. No waiver by either party hereto at any time of any breach
by the other party hereto or compliance with any condition or provision
of this Agreement to be performed by such other party will be deemed a
waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations,
oral or otherwise, expressed or implied with respect to the subject
matter hereof have been made by either party that are not set forth
expressly in this Agreement.
12. Severability
The provisions of this Agreement shall be deemed severable. The
invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions of this Agreement.
Any provision held to be invalid or unenforceable shall be reformed to
the extent (and only to the extent) necessary to make it valid and
enforceable.
13. Governing Law
The validity, interpretation, construction and performance of this
Agreement shall be governed by and construed in accordance with the
substantive laws of the State of Connecticut, without giving effect
to the principles of conflict of laws of such State.
14. Entire Agreement
This Agreement constitutes the entire agreement between NewMil
Bancorp and the Executive concerning the subject matter hereof. No
rights are granted to the Executive under this Agreement other than
those specifically set forth herein. This Agreement supersedes and
replaces in its entirety the Change in Control Agreement between the
Executive and NewMil Bank.
In Witness Whereof, the parties have executed this Agreement as of
the day and year first written
above.
Witnesses: NewMil Bancorp, Inc.
/s/ Xxxxx Xxxx By: /s/ Xxxxxxx X. Xxxxx
-------------- -----------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxx Its: Chairman, President and
-------------------- Chief Executive Officer
Witnesses: Executive
/s/ Xxxxx Xxxx /s/ B. Xxx XxXxxxx
-------------- ------------------
B. Xxx XxXxxxx
/s/ Xxxxx X. Xxxxxxx
--------------------
County of Litchfield )
) ss:
State of Connecticut )
Before me this 2 day of January, 2002, personally appeared the
above named Xxxxxxx X. Xxxxx and B. Xxx XxXxxxx, who acknowledged that
they did sign the foregoing instrument and that the same was their free
act and deed.
/s/ Xxxxxx Xxxxxxx
------------------
(Notary Seal) Notary Public
My Commission Expires:
