Employment Agreement with President and CEO

EXHIBIT 10.2
EMPLOYMENT AGREEMENT


This EMPLOYMENT AGREEMENT is entered into effective as of this day of
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,2002, by and between Francis J. Wiatr (the "Executive") - ------------- --------- and NewMil Bancorp, Inc., a Delaware corporation.


WHEREAS, the Executive is the Chairman, President and Chief Executive Officer of NewMil Bancorp, Inc., possessing unique skills, knowledge, and experience relating to NewMil Bancorp, Inc.'s business, and the Executive has made and is expected to continue to make major contributions to the profitability, growth and financial strength of NewMil Bancorp, Inc. and its affiliates,


WHEREAS, NewMil Bancorp, Inc. recognizes that, as is the case for most companies, the possibility of a Change in Control (as defined herein) exists,


WHEREAS, NewMil Bancorp, Inc. desires to assure itself of the current and future continuity of management and desires to establish minimum severance benefits for certain of its officers and other key employees, including the Executive, if a Change in Control occurs,


WHEREAS, NewMil Bancorp, Inc. 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, Inc. desires to provide additional inducement for the Executive to remain in the employ of NewMil Bancorp, Inc. as President and Chief Executive Officer,


WHEREAS, NewMil Bancorp, Inc. and the Executive desire to set forth in this Agreement the terms and conditions of the Executive's employment,


WHEREAS, the Executive and NewMil Bank, a Connecticut-chartered savings bank and wholly owned subsidiary of NewMil Bancorp, Inc., entered into an "Employment Agreement" dated as of March 28, 1994, as amended by the First Amendment dated October 20, 1996 and by the Second Amendment dated August 3, 1998, but the parties hereto intend that this Agreement supersede and replace in its entirety that "Employment Agreement,"


WHEREAS, NewMil Bank and the Executive entered into an Amended and Restated Salary Continuation Agreement dated as of , 2002, and the
----------------------- parties hereto intend that this Agreement shall have no effect on the Amended and Restated Salary Continuation Agreement except as may be explicitly stated in this Agreement, and NewMil Bancorp, Inc. and the Executive intend that the Amended and Restated Salary Continuation Agreement, as the same may be amended and restated after the date of this Agreement, shall continue in full force and effect, and


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, Inc., is contemplated insofar as NewMil Bancorp, Inc. or any of its affiliates is concerned.


NOW THEREFORE, in consideration of these premises, the mutual covenants contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.


ARTICLE 1
EMPLOYMENT


1.1 EMPLOYMENT. NewMil Bancorp, Inc. hereby employs the Executive to serve NewMil Bancorp, Inc. as its President and Chief Executive Officer according to the terms and conditions of this Agreement and for the period stated in Section 3 of this Agreement, and the Executive hereby accepts employment according to the terms and conditions of this Agreement and for the period stated in Section 3 of this Agreement.


1.2 SERVICE ON THE BOARD OF DIRECTORS. (a) Board of Directors of NewMil Bancorp, Inc. NewMil Bancorp, Inc. shall nominate the Executive for election as a director at such times as necessary so that the Executive may, if elected by stockholders, remain a director of NewMil Bancorp, Inc. throughout the term of this Agreement. The Executive hereby consents to serve as a director of NewMil Bancorp, Inc., and the Executive hereby consents to being named as a director of NewMil Bancorp, Inc. in documents filed by NewMil Bancorp, Inc. with the Securities and Exchange Commission.


(b) Board of Directors of NewMil Bank. The Executive is currently serving as a director of NewMil Bank. The board of directors of NewMil Bancorp, Inc. and the board of directors of NewMil Bank shall undertake every lawful effort to ensure that the Executive continues throughout the term of his employment to be elected or reelected as a director of NewMil Bank.


ARTICLE 2
DUTIES


As President and Chief Executive Officer, the Executive shall serve under the direction of NewMil Bancorp, Inc.'s board of directors and in accordance with NewMil Bancorp, Inc.'s Certificate of Incorporation and Bylaws, as each may be amended or restated from time to time. The Executive shall report directly to the board of directors. He shall serve NewMil Bancorp, Inc. faithfully, diligently, competently, and to the best of his ability, and he shall exclusively devote his full time, energy, and attention to the business of NewMil Bancorp, Inc. and to the promotion of its interests throughout the term of this Agreement. Without the written consent of NewMil Bancorp, Inc.'s board of directors, the Executive shall not render services to or for any person, firm, corporation, or other entity or organization in exchange for compensation, regardless of the form in which such compensation is paid and regardless of whether it is paid directly or indirectly to the Executive. Nothing in this Article 2 shall prevent the Executive from managing his personal investments and affairs, provided that doing so does not interfere with the proper performance of his duties and responsibilities as President and Chief Executive Officer.


ARTICLE 3
TERM OF EMPLOYMENT


The initial term of this Agreement shall be for a period of three years, commencing , 2002. On the first anniversary of the
------------- ----------------- , 2002 effective date of this Agreement and on each anniversary thereafter this Agreement shall be extended automatically for one additional year unless NewMil Bancorp, Inc.'s board of directors determines C


(a) that the Executive's performance has not met the board's
expectations, and


(b) that the term shall not be extended.


If the board of directors determines not to extend the term, it shall promptly notify the Executive in writing. If the board 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 C by itself C 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 Articles 6 or 7 of this Agreement. References herein to the term of this Agreement shall refer to the initial term, as the same may be extended. Unless sooner terminated, the Executive's employment shall terminate when he reaches age 65.


ARTICLE 4
COMPENSATION AND OTHER BENEFITS


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4.1 BASE SALARY. In consideration of the Executive's performance of his obligations under this Agreement, NewMil Bancorp, Inc. shall cause NewMil Bank to pay the Executive a salary at the annual rate of not less than $325,000, payable in semi-monthly installments. The Executive's salary shall be subject to annual review by the Salary and Benefits Committee of NewMil Bancorp, Inc.'s board of directors. The Executive's salary, as the same may be adjusted from time to time as a result of annual review by the Salary and Benefits Committee and board action, is referred to in this Agreement as the "Base Salary."
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4.2 BENEFIT PLANS AND PERQUISITES. The Executive shall be entitled throughout the term of this Agreement to participate in any and all officer or employee compensation, bonus, incentive, and benefit plans in effect from time to time, including without limitation plans providing pension, medical, dental, disability, and group life benefits, and 401(k) retirement plans, and to receive any and all other fringe benefits provided from time to time, provided that the Executive satisfies the eligibility requirements for any such plans or benefits. Without limiting the generality of the foregoing C


(a) Participation in Stock Plans. The Executive shall be eligible to participate in NewMil Bancorp, Inc.'s Second Amended and Restated 1986 Stock Option and Incentive Plan for Officers and Key Employees (the "Stock Option
------------ Plan") and other stock compensation, incentive, bonus, or purchase plans - ---- existing on the date of this Agreement or adopted during the term of this Agreement for the benefit of officers or employees.


(b) Supplemental Retirement Plan. In 2005, on the third anniversary of the execution of this Agreement and continuing every third anniversary thereafter until payments under the Amended and Restated Salary Continuation Agreement commence, NewMil Bancorp, Inc. will cause NewMil Bank to review the Amended and Restated Salary Continuation Agreement for reasonableness of the Executive's retirement benefits, taking into account projected benefits under the Amended and Restated Salary Continuation Agreement, benefits under 401(k) plan(s) of NewMil Bancorp, Inc. and subsidiaries, and the employer's portion of Social Security benefits. The parties acknowledge that this triennial review obligation is set forth in Section 7.18 of the Amended and Restated Salary Continuation Agreement.


(c) Life and Disability Insurance. (1) NewMil Bank is and shall remain the owner of, and shall pay or cause to be paid all premiums as and when due on, the Massachusetts Mutual Life Insurance Company policy on the Executive's life (Policy Number 9681589 dated March 1, 1997), which policy has a face amount of $1,112,282, as well as any replacement or substitute or additional whole life policy on the Executive's life obtained in the future.


(2) The Executive shall also be eligible to participate in any life insurance and long-term disability plans maintained by NewMil Bancorp, Inc. and subsidiaries from time to time during the term of this Agreement if any other executive officers are entitled to participate in any such plans, subject to the terms and provisions of such plans.


(d) Automobile. The Executive shall receive an automobile allowance or use of company-owned vehicles consistent with past practice.


(e) Reimbursement of Business Expenses. The Executive shall be entitled to reimbursement for all reasonable business expenses incurred in performing his obligations under this Agreement, including but not limited to all reasonable business travel and entertainment expenses incurred while acting at the request of or in the service of NewMil Bancorp, Inc. or NewMil Bank, provided such expenses are incurred and accounted for in accordance with the policies and procedures established from time to time by NewMil Bancorp, Inc. or NewMil Bank.


4.3 VACATION. The Executive shall be entitled to six weeks of paid vacation annually and paid sick leave in accordance with the policies established from time to time by NewMil Bancorp, Inc. or NewMil Bank. Unused vacation and sick leave shall not accrue from year to year but shall be used, if at all, during the calendar year in which they are first available, unless otherwise agreed to by NewMil Bancorp, Inc.'s board.


ARTICLE 5


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TERMINATION OF EMPLOYMENT


5.1 TERMINATION BY NEWMIL BANCORP, INC. (a) Death, Disability, or Retirement. The Executive's employment shall terminate automatically on the date of the Executive's death or on the date of the Executive's retirement. By delivery of 30 days' advance written notice to the Executive, NewMil Bancorp, Inc. also may terminate the Executive's employment if the Executive is determined to be disabled, as defined in paragraph (e) below.


(b) Termination Without Cause. With 90 days' advance written notice to the Executive, NewMil Bancorp, Inc. may terminate the Executive's employment without Cause.


(c) Termination with Cause. Effective on the date on which termination notice is given to the Executive and without the requirement of advance notice to the Executive, NewMil Bancorp, Inc. may terminate the Executive's employment with Cause. The Executive shall be deemed to have resigned as a director of NewMil Bancorp, Inc. and NewMil Bank effective immediately after termination of the Executive's employment for Cause under this Agreement, regardless of whether the Executive submits a formal, written resignation as director.


The Executive shall not be deemed to have been terminated for Cause under this Agreement unless and until there is 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, Inc. then in office at a meeting of the board of directors called and held for such purpose, which resolution shall (1) contain findings that, in the good faith opinion of the board, the Executive has committed an act constituting Cause, and (2) specify the particulars thereof in detail. Notice of that meeting and the proposed termination for 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.


(d) Definition of Cause. For purposes of this Agreement, "Cause" means any of the following C -----


(1) an intentional act of fraud, embezzlement, or theft by the
Executive in the course of his employment with NewMil Bancorp, Inc. or
NewMil Bank. 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, Inc.,


(2) intentional wrongful damage by the Executive to the business or
property of NewMil Bancorp, Inc. or NewMil Bank, causing material harm to
NewMil Bancorp, Inc. or NewMil Bank,


(3) material breach by the Executive of this Agreement,


(4) gross negligence or insubordination by the Executive in the
performance of his duties as an officer of NewMil Bancorp, Inc. or NewMil
Bank,


(5) breach by the Executive of his fiduciary duties to NewMil Bancorp,
Inc. and its stockholders or misconduct involving dishonesty, in either
case whether in his capacity as an officer or as a director of NewMil
Bancorp, Inc.,


(6) conviction of the Executive for a felony or conviction of a
misdemeanor involving moral turpitude,


(7) intentional violation of any law or significant policy of NewMil
Bancorp, Inc. or NewMil Bank committed in connection with the Executive's
employment, which, in NewMil Bancorp, Inc.'s sole judgment, has an adverse
effect on NewMil Bancorp, Inc. or NewMil Bank, or


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(8) 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).


(e) Definition of Disability. For purposes of this Agreement, the Executive shall be deemed to be "disabled" if an independent physician selected by NewMil
-------- Bancorp, Inc. and reasonably acceptable to the Executive or his legal representative determines that, because of illness or accident, the Executive is unable to perform his duties and will be unable to perform his duties for a period of 180 consecutive days or for any period of eight of 12 consecutive months. The Executive shall not be deemed to be disabled, however, if he returns to work on a full-time basis within 30 days after NewMil Bancorp, Inc. gives him notice of termination due to disability. NewMil Bancorp, Inc. may require the Executive to submit to such physical or mental evaluations and tests as NewMil Bancorp, Inc.'s board of directors deems appropriate.


5.2 TERMINATION BY THE EXECUTIVE. The Executive may terminate his employment with 30 days' advance written notice to NewMil Bancorp, Inc., whether with or without Good Reason. If the Executive terminates for Good Reason, the termination will take effect at the conclusion of the 30-day period unless the event or circumstance constituting Good Reason is cured by NewMil Bancorp, Inc. or unless the notice of termination for Good Reason is revoked by the Executive within the 30-day period. For purposes of this Agreement, "Good Reason" means
----------- any of the following events occur


(a) Reduction in Base Salary: involuntary reduction in the Executive's Base Salary,


(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, Inc.'s benefit plans and NewMil Bank's benefit plans, unless in the case of either company a company-wide reduction of all officers' award opportunities occurs simultaneously,


(c) Participation in Benefit Plans: involuntary discontinuance of the Executive's participation in any officer or employee benefit plans maintained by NewMil Bancorp, Inc. or by NewMil Bank, unless such plans are discontinued by reason of law or loss of tax deductibility to NewMil Bancorp, Inc. with respect to contributions to such plans, or are discontinued as a matter of NewMil Bancorp, Inc. policy or NewMil Bank policy applied equally to all participants in such plans,


(d) Reduction in Responsibilities or Status: assignment to the Executive of duties or responsibilities that are materially inconsistent with the Executive's position as NewMil Bancorp, Inc.'s principal executive officer or that represent a reduction of his authority; any other action by NewMil Bancorp, Inc. or its successor that results in a material reduction or material adverse change in the Executive's position, authority, duties or responsibilities; failure to appoint or reappoint the Executive as President and Chief Executive Officer of NewMil Bancorp, Inc.; failure to nominate the Executive as a director of NewMil Bancorp, Inc.; 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 in accordance with Section 1.2(b) of this Agreement without the Executive's written consent,


(e) Failure to Obtain Assumption Agreement: failure to obtain an assumption of NewMil Bancorp, Inc.'s obligations under this Agreement by any successor to NewMil Bancorp, Inc., regardless of whether such entity becomes a successor to NewMil Bancorp, Inc. as a result of a merger, consolidation, sale of assets, or other form of reorganization,


(f) Termination without Compliance with this Agreement: termination by NewMil Bancorp, Inc. of Executive's employment effected in a manner that does not satisfy the requirements of this Agreement,


(g) Material Breach: a material breach of this Agreement by NewMil Bancorp, Inc. that is not corrected within a reasonable time, or


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(h) Relocation of the Executive: relocation of NewMil Bancorp, Inc.'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, Inc.'s principal executive offices on the date of this Agreement.


5.3 NOTICE. Any purported termination by NewMil Bancorp, Inc. or by the Executive shall be communicated by written notice of termination to the other party. The notice must state the specific termination provision of this Agreement relied upon. The notice must also state the date on which termination shall become effective, which shall be a date not earlier than the date of the termination notice. If termination is for Cause or with Good Reason, the notice must state in reasonable detail the facts and circumstances forming the basis for termination of the Executive's employment.


ARTICLE 6
COMPENSATION AND BENEFITS UPON TERMINATION


6.1 DEATH. If the Executive's employment terminates because of his death, any bonus earned by the Executive or accrued by NewMil Bank for his benefit but not paid at the time of the Executive's death and any compensation shall be paid to the Executive's estate. NewMil Bancorp, Inc. shall also provide or cause to be provided to the Executive or his estate such other benefits as may be available under NewMil Bancorp, Inc.'s or NewMil Bank's benefit plans and policies.


6.2 DISABILITY. If the Executive's employment terminates because of his disability, the Executive shall be entitled to receive the Base Salary to which he was entitled through the date on which termination became effective and continuing for six months thereafter, any unpaid bonus or incentive compensation due to the Executive for the calendar year preceding the calendar year in which the termination became effective, any payments the Executive is eligible to receive under any disability insurance program in which the Executive participates, and such other benefits as may be available to the Executive through NewMil Bancorp, Inc.'s or NewMil Bank's benefit plans and policies.


6.3 CAUSE. If the Executive's employment terminates for Cause, the Executive shall be entitled to receive the Base Salary to which he wa ...