CHANGE IN CONTROL AGREEMENT
Exhibit
10.23
This
Change
in Control Agreement
(this
“Agreement”) is entered into as of this 20th
day of
December, 2005 by and between NewMil Bancorp, Inc., a Delaware corporation
(hereafter “NewMil Bancorp”), and Xxxxxxxx X. Xxxxxxx, Executive Vice President
of NewMil Bank (the “Executive”).
Whereas,
the
Executive is employed by NewMil Bank, a Connecticut-chartered 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 desires to provide additional inducement for the Executive to continue
to remain in the ongoing employ of NewMil Bancorp and subsidiary, and NewMil
Bancorp desires to assure itself of the current and future continuity of
management and 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,
none of
the conditions or events included in the definition of the term “golden
parachute payment” contained 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 Bancorp are parties to a Change in Control Agreement dated
as of January 1, 2002, but the Executive and NewMil Bancorp intend that this
Agreement supersede and replace the previous agreement in its
entirety.
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.
(a)
Benefit.
If a
Change in Control occurs during the term of this Agreement, within five days
after the Change in Control NewMil Bancorp shall make a lump sum payment to
the
Executive in an amount in cash equal to 1.5 times the Executive’s annual
compensation. For purposes of this Agreement, annual compensation means (1)
the
Executive’s annual base salary on the date of the Change in Control plus (2) any
bonuses or incentive compensation earned for the calendar year immediately
before the year in which the Change in Control occurred, 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. In addition, NewMil Bancorp shall cause the
Executive to become
fully
vested in any qualified and non-qualified plans, programs or arrangements in
which the Executive participates 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 the Executive’s 401(k) plan account, if
any, the matching and profit-sharing contributions, if any, that the Executive
is entitled to based upon all W-2 income earned for the plan year.
(b) Definition
of Change in Control.
For
purposes of this Agreement, “Change in Control” shall mean any one of the
following events occurs, provided the event constitutes a change in control
within the meaning of Internal Revenue Code section 409A and rules, regulations,
and guidance of general application thereunder issued by the Department of
the
Treasury, and provided the occurrence of the event is objectively determinable
and does not require the exercise of judgment or discretion -
1) Change
in Ownership:
a
change in ownership of NewMil Bancorp occurs on the date any one person or
group
accumulates ownership of NewMil Bancorp’s stock constituting more than 50% of
the total fair market value or total voting power of NewMil Bancorp’s
stock,
2) Change
in Effective Control:
(a) any
one person, or more than one person acting as a group, acquires within a
12-month period ownership of stock of NewMil Bancorp possessing 35% or more
of
the total voting power of NewMil Bancorp’s stock, or (b) a majority of NewMil
Bancorp’s board of directors is replaced during any 12-month period by directors
whose appointment or election is not endorsed in advance by a majority of NewMil
Bancorp’s board of directors, or
3) Change
in Ownership of a Substantial Portion of Assets:
a
change in the ownership of a substantial portion of NewMil Bancorp’s assets
occurs on the date any one person, or more than one person acting as a group,
acquires assets from NewMil Bancorp having a total gross fair market value
equal
to or exceeding 40% of the total gross fair market value of all of the assets
of
NewMil Bancorp immediately before the acquisition or acquisitions. For this
purpose, gross fair market value means the value of NewMil Bancorp’s assets, or
the value of the assets being disposed of, determined without regard to any
liabilities associated with the assets.
For
purposes of paragraphs (1) through (3) of this Section 1(b), persons shall
be
considered to be acting as a group if they would be considered to be acting
as a
group under Internal Revenue Code section 409A and rules, regulations, and
guidance of general application issued thereunder by the Department of the
Treasury. References in this Agreement to Internal Revenue Code section 409A
include rules, regulations, and guidance of general application issued by the
Department of the Treasury under section 409A.
(c) No
mitigation required.
NewMil
Bancorp hereby acknowledges that its general severance pay plans do not provide
for mitigation, offset, or reduction of any severance payment received
thereunder. NewMil Bancorp further acknowledges that the payment of 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.
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2. Term
of Agreement.
The
initial term of this Agreement shall be for a period of three years, commencing
December 20, 2005. On the first anniversary of the 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. 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. This Agreement shall terminate when a Change in Control
occurs if benefits are paid to the Executive as required by Section 1, except
that the legal fee reimbursement promise set forth in this Agreement shall
survive termination. This Agreement shall terminate when the Executive’s
employment with NewMil Bancorp and Subsidiaries terminates, except that the
legal fee reimbursement promise set forth in this Agreement shall survive
termination.
3. 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.
4. 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. NewMil Bancorp and the Executive intend that their exercise of
authority or discretion under this Change in Control Agreement shall comply
with
section 409A of the Internal Revenue Code of 1986 and Treasury Department
regulations and guidance of general application issued thereunder. To ensure
that the Executive is not subject to interest and penalties that may be imposed
under section 409A, NewMil Bancorp and the Executive agree to amend this Change
in Control Agreement as necessary to avoid application of interest and penalties
imposed under section 409A and the regulations and guidance of general
application issued thereunder. If any provision of this Change in Control
Agreement does not satisfy the requirements of section 409A or the regulations
and guidance of general application issued thereunder, such provision shall
be
applied in a manner consistent with those requirements, notwithstanding any
provision of this Change in Control Agreement.
5. 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.
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(b)
This
Agreement is enforceable by the Executive and the Executive’s
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
5. 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 5, NewMil
Bancorp shall have no liability to pay any amount to the assignee or
transferee.
6. 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. Unless otherwise changed by notice, notice shall
be
properly addressed to the Executive if addressed to the address of the Executive
on the books and records of NewMil Bancorp at the time of the delivery of such
notice, and properly addressed to NewMil Bancorp if addressed to the Board
of
Directors, NewMil Bancorp, Inc., 00 Xxxx Xxxxxx, X.X. Xxx 000, Xxx Xxxxxxx,
Xxxxxxxxxxx 00000-0000.
7. 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.
8. 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 time or
at
any other time.
9. Severability.
The
provisions of this Agreement are 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 solely to the extent) necessary to make
it
valid and enforceable.
10. 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.
11. Entire
Agreement.
This
Agreement constitutes the entire agreement between NewMil Bancorp and the
Executive concerning the subject matter. No rights are granted to the Executive
under this Agreement other than those specifically set forth. No agreements
or
representations, oral or otherwise, expressed or implied concerning the subject
matter hereof have been made by either party that are not set forth expressly
in
this Agreement. This Agreement supersedes in its entirety the Change in Control
Agreement dated as of January 1, 2002 entered into by the Executive and NewMil
Bancorp, as amended or supplemented. The January 1, 2002 Change in Control
Agreement shall hereafter be void and of no force or effect.
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12. Payment
of Legal Fees after a Change in Control Occurs.
NewMil
Bancorp is aware that after a Change in Control management could cause or
attempt to cause NewMil Bancorp to refuse to comply with the obligations under
this Agreement, or could institute or cause or attempt to cause NewMil Bancorp
to institute litigation seeking to have this Agreement declared unenforceable,
or could take or attempt to take other action to deny the Executive the benefits
intended under this Agreement. In these circumstances the purpose of this
Agreement would be frustrated. It is NewMil Bancorp’s intention that the
Executive not be required to incur the expenses associated with the enforcement
of the Executive’s rights under this Agreement, whether by litigation or other
legal action, because the cost and expense thereof would substantially detract
from the benefits intended to be granted to the Executive hereunder. It is
NewMil Bancorp’s intention that the Executive not be forced to negotiate
settlement of the Executive’s rights under this Agreement under threat of
incurring expenses. Accordingly, if after a Change of Control occurs it appears
to the Executive that (a) NewMil Bancorp has failed to comply with any of its
obligations under this Agreement, or (b) NewMil Bancorp or any other person
has
taken any action to declare this Agreement void or unenforceable, or instituted
any litigation or other legal action designed to deny, diminish, or to recover
from the Executive the benefits intended to be provided to the Executive
hereunder, NewMil Bancorp irrevocably authorizes the Executive from time to
time
to retain counsel of the Executive’s choice, at NewMil Bancorp’s expense as
provided in this section 12, to represent the Executive in connection with
the
initiation or defense of any litigation or other legal action, whether by or
against NewMil Bancorp or any director, officer, stockholder, or other person
affiliated with NewMil Bancorp, in any jurisdiction. Notwithstanding any
existing or previous attorney-client relationship between NewMil Bancorp and
any
counsel chosen by the Executive under this section 12, NewMil Bancorp
irrevocably consents to the Executive entering into an attorney-client
relationship with that counsel, and NewMil Bancorp and the Executive agree
that
a confidential relationship shall exist between the Executive and that counsel.
The fees and expenses of counsel selected from time to time by the Executive
as
provided in this section shall be paid or reimbursed to the Executive by NewMil
Bancorp on a regular, periodic basis upon presentation by the Executive of
a
statement or statements prepared by such counsel in accordance with such
counsel’s customary practices, up to a maximum aggregate amount of $150,000,
whether suit be brought or not, and whether or not incurred in trial,
bankruptcy, or appellate proceedings. NewMil Bancorp’s obligation to pay the
Executive’s legal fees provided by this section 12 operates separately from and
in addition to any legal fee reimbursement obligation NewMil Bancorp may have
with the Executive under any separate severance, employment, salary
continuation, or other agreement. Anything in this section 12 to the contrary
notwithstanding however, NewMil Bancorp shall not be required to pay or
reimburse the Executive’s legal expenses if doing so would violate section 18(k)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of
the
Federal Deposit Insurance Corporation [12 CFR 359.3].
5
In
Witness Whereof,
the
parties have executed this Change in Control Agreement as of the date first
written above.
|
Executive
|
NewMil
Bancorp, Inc.
|
|
/s/
Xxxxxxxx X. Xxxxxxx
|
By:
/s/
Xxxxxxx X. Xxxxx
|
|
Xxxxxxxx
X. Xxxxxxx
|
Xxxxxxx
X. Xxxxx
|
|
Executive
Vice President
|
Its:
Chairman, President and Chief
|
|
Executive
Officer
|
County
of
Litchfield )
)
ss:
State
of
Connecticut )
Before
me
this 20th
day of
December, 2005, personally appeared the above named Xxxxxxx X. Xxxxx and
Xxxxxxxx X. Xxxxxxx, who acknowledged that they did sign the foregoing
instrument and that the same was their free act and deed.
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________________________________
|
|
|
(Notary
Seal)
|
Notary
Public
|
|
My
Commission Expires:
|
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