CHANGE IN CONTROL
AGREEMENT
This
Change in Control Agreement (this
“Agreement”) is entered into as of this 20
th day of December, 2005, by and between NewMil Bancorp,
Inc., a Delaware corporation (hereafter “NewMil
Bancorp”), and William D. Starbuck, Executive Vice President
of NewMil Bank (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 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”
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 Bancorp are parties
to a Change in Control Agreement dated as of January 1, 2004, 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 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
benefits specified in Section 2 of this Agreement -
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1)
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Termination
by NewMil Bancorp or Subsidiary : the Executive’s employment with NewMil
Bancorp or its Subsidiaries 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
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2)
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Termination
by the Executive for Good Reason : the Executive terminates employment with
NewMil Bancorp or Subsidiaries for Good Reason (as defined in
Section 3) within two years after a Change in Control.
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If the
Executive’s 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 termination of the Executive’s
employment shall be deemed to have occurred after the Change in
Control.
(b)
Definition of Change in
Control . For
purposes of this Agreement, “Change in Control” means
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1)
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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
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2)
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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
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3)
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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 (
b
) 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
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4)
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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.
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2.
Severance
Benefits . (a)
Severance Benefits . The severance benefits
to which the Executive is entitled under Section 1 are as follows
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1)
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Lump Sum
Payment : NewMil Bancorp
shall make a lump sum payment to the Executive in an amount in cash
equal to 1.0 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 the notice of
termination.
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2)
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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 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.
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3)
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Outplacement Assistance : NewMil Bancorp will pay reasonable expenses
associated with the outplacement of the Executive to a professional
outplacement firm up to a maximum of $30,000, which shall be for
the purpose of trying to place the Executive into a position
comparable to that held by the Executive prior to the Change in
Control. Should the Executive become reemployed before the $30,000
is exhausted, no further payment to the outplacement firm or the
Executive shall be made. Typical outplacement assistance may
include the costs of office or administrative support facilitated
through the outplacement firm.
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(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, and (2) to measure the amount of damages the
Executive suffers as a result of employment 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. 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
following events or conditions without the Executive’s
express written consent -
(a)
Reduced base
salary :
involuntary reduction of the Executive’s base salary,
or
(b)
Participation in benefit
plans reduced or terminated : reduction of the Executive’s bonus,
incentive, or other compensation award opportunities under NewMil
Bancorp’s or Subsidiaries’ benefit plans, unless a
company-wide reduction of all officers’ award opportunities
occurs simultaneously, or termination of the Executive’s
participation in any officer or employee benefit plan maintained by
NewMil Bancorp or Subsidiaries, unless the plan is terminated
because of changes in law or loss of tax deductibility to NewMil
Bancorp or Subsidiaries for contributions to the plan, or unless
the plan is terminated as a matter of policy applied equally to all
participants in the plan, or
(c)
Reduced 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
materia
