EXHIBIT 10.9
NEWMIL BANK
GROUP TERM CARVE OUT PLAN
THIS PLAN is made and entered into as of this 1st day of January, 2002, by
and between NewMil Bank, a Connecticut-chartered, FDIC-insured savings bank with
its main offices in New Milford, Connecticut (the "Bank") and the Participant
selected to participate in this Plan (the "Participant").
INTRODUCTION
The Bank wishes to attract and retain highly qualified executives. To
further this objective, the Bank is willing to divide the death proceeds of
certain life insurance policies which are owned by the Bank on the lives of the
participating executives with the designated beneficiary of each insured
participating executive. The Bank will pay the life insurance premiums from its
general assets.
Article 1
Definitions
Whenever used in this Plan, the following terms shall have the meanings
specified:
1.1 "Base Annual Salary" means the current base annual salary of the
Participant at the earliest of (1) the date of the Participant's death; (2) the
date of the Participants Disability; (3) the date the Participant's employment
with NewMil Bancorp, Inc. or the Bank terminates within three years after a
Change in Control (except for Termination for Cause); (4) the date of the
Participant's termination of employment on or after Early Retirement Age; or (5)
the Participant's Normal Retirement Date. Current Base Annual Salary shall be
defined by reference to compensation of the type that would be required to be
reported by Securities and Exchange Commission Rule 228.402(b) (17 C.F.R.
'228.402(b)), specifically column (c) of that rule's Summary Compensation Table
(or any successor provision).
1.2 "Change in Control" means any one of the following events occurs:
(a) Merger: NewMil Bancorp, Inc. merges into or consolidates with another
corporation, or merges another corporation into NewMil Bancorp, Inc.,
and as a result less than a majority of the combined voting power of
the resulting corporation immediately after the merger or
consolidation is held by persons who were stockholders of NewMil
Bancorp, Inc. immediately before the merger or consolidation,
(b) Acquisition of Significant Share Ownership: a report on Schedule 13D
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, Inc.'s voting securities,
but this clause (b) shall not apply to beneficial ownership of NewMil
Bancorp, Inc. voting shares held in a fiduciary capacity by an entity
of which NewMil Bancorp, Inc. directly or indirectly beneficially owns
50% or more of its outstanding voting securities,
(c) Change in Board Composition: during any period of two consecutive
years, individuals who constitute NewMil Bancorp, Inc.'s Board of
Directors at the beginning of the two-year period cease for any reason
to constitute at least a majority of NewMil Bancorp, Inc.'s Board of
Directors; provided, however, that C for purposes of this clause (c) C
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
(d) Sale of Assets: NewMil Bancorp, Inc. sells to a third party all or
substantially all of NewMil Bancorp, Inc.'s assets.
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1.3 "Compensation Committee" means either the Compensation Committee
designated from time to time by the Bank's Board of Directors (as of the date
this Plan is created, the Bank identifies the board committee performing this
function as the Salary and Benefits Committee) or a majority of the Bank's Board
of Directors, either of which shall hereinafter be referred to as the
Compensation Committee.
1.4 "Disability" means the Participant's suffering a sickness, accident or
injury which has been determined by the carrier of any individual or group
disability insurance policy covering the Participant, or by the Social Security
Administration, to be a disability rendering the Participant totally and
permanently disabled. The Participant must submit proof to the Bank of the
carrier's or Social Security Administration's determination upon the request of
the Bank.
1.5 "Early Retirement Age" means the first day of the month following the
Participant's 55th birthday, provided the Participant has at least 10 Years of
Service with the Bank on that date. If the Participant does not have 10 Years of
Service with the Bank by the first day of the month following the date of his
55th birthday, the Participant's Early Retirement Age means the date on which
the Participant has 10 Years of Service with the Bank, provided such 10 Years of
Service occurs before the Participant's Normal Retirement Age.
1.6 "Early Termination" means the Termination of Employment before Early
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change in Control.
1.7 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.8 "Insured" means the individual whose life is insured.
1.9 "Insurer" means the insurance company issuing the life insurance policy
on the life of the Insured.
1.10 "Normal Retirement Age" means the Participant attaining age 65.
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age
or the date that the Participant terminates or is terminated for any reason
other than Termination for Cause.
1.12 "Participant" means the employee who is designated by the Compensation
Committee as eligible to participate in the Plan, elects in writing to
participate in the Plan using the form attached hereto as Exhibit A, and signs a
Split Dollar Endorsement for the Policy in which he or she is the Insured.
1.13 "Policy" or "Policies" means the individual insurance policy or
policies adopted by the Compensation Committee for purposes of insuring a
Participant's life under this Plan.
1.14 "Plan" means this instrument, including all amendments thereto.
1.15 "Terminated for Cause" or :"Termination for Cause" means (i) in the
case of those Participants who are parties to an severance agreement with NewMil
Bancorp, Inc. the definition of termination for cause specified in that
severance agreement or (ii) in the case of those Participants who are parties to
an employment agreement with NewMil Bancorp, Inc. the definition of termination
for cause specified in that employment agreement. For all other Participants,
Termination for Cause or Terminated for Cause means that the Bank has terminated
the Participant's employment for any of the following reasons:
(a) Gross negligence or gross neglect of duties;
(b) Commission of a felony or of a gross misdemeanor involving moral
turpitude; or
(c) Fraud, disloyalty, dishonesty or willful violation of any law or
significant Bank policy committed in connection with the Participant's
employment and resulting in an adverse effect on the Bank. No act, or
failure to act, on the Participant's part shall be considered
"willful" unless he
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has acted, or failed to act, with an absence of good faith and without
a reasonable belief that his action or failure to act was in the best
interest of the Bank.
1.16 "Years of Service" means the total number of twelve-month periods
during which the Participant serves as an employee of the Bank.
Article 2
Participation
2.1 Eligibility to Participate. The Compensation Committee in its sole
discretion shall designate from time to time Participants that are eligible to
participate in this Plan.
2.2 Participation. The eligible executive may participate in this Plan by
executing an Election to Participate and a Split Dollar Endorsement for each
Policy. The Split Dollar Endorsement shall bind the Participant and his or her
beneficiaries, assigns and transferees, to the terms and conditions of this
Plan. An executive's participation is limited to only Policies where he or she
is the Insured. Exhibit B attached hereto sets forth the original Insured
Participants and the Policies on their lives.
2.3 Termination of Participation. A Participant's rights under this Plan
shall cease and his or her participation in this Plan shall terminate if any of
the following events occur:
(a) If the Participant is Terminated for Cause,
(b) If the Participant's employment with the Bank is terminated prior to
the Early Retirement Age for reasons other than Disability or Change
in Control, or
(c) If the Participant terminates employment due to Disability and
thereafter becomes gainfully employed with an entity other than the
Bank.
In the event that the Bank decides to maintain the Policy after the
Participant's termination of participation in the Plan, the Bank shall be the
direct beneficiary of the entire death proceeds of the Policy.
2.4 Maintaining the Policy and Endorsement until Death. If any of the
events listed below occur, the Bank shall maintain the Policy in full force and
effect and, in no event, shall the Bank amend, terminate or otherwise abrogate
the Participant's interest in the Policy, unless the Participant agrees pursuant
to section 8.1. The Bank may replace the Policy with a comparable insurance
policy to cover the benefit provided under this Agreement if the Bank and
Participant execute a new Split Dollar Policy Endorsement for a comparable
benefit, which Policy or any comparable policy shall be subject to the claims of
the Bank's creditors.
(a) Disability. If the Participant's employment with the Bank is
terminated due to Disability, except as set forth in section 2.3(c)
herein.
(b) Retirement. If the Participant's employment with the Bank is
terminated on or after Early Retirement Age.
(c) Change in Control. If the Participant's employment with NewMil
Bancorp, Inc. or the Bank terminates within three years after a Change
in Control (except for Termination for Cause).
Article 3
Policy Ownership/Interests
3.1 Participant's Interest. With respect to each Policy, the Participant or
the Participant's assignee shall have the right to designate the beneficiary of
one of the following death benefit amounts:
(a) Pre-Retirement Death Benefit. If the Participant was employed by the
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Bank at the time of death, the death benefit shall be the lesser of
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(i) or (ii): (i) two times the Participant's current Base Annual
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Salary; or (ii) $1,000,000, in either case, less the Participant's
$50,000 group term life insurance benefit under the Bank's group term
life insurance policy.
(b) Post-Retirement Death Benefit. If the Participant was no longer
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employed by the Bank at the time of death, but had terminated
employment
. within three years after a Change in Control,
. due to Disability, or
. on or after Early Retirement Age,
the death benefit shall be the lesser of (i) one times the
Participant's Base Annual Salary at the time of termination of
employment or (ii) $1,000,000.
The Participant shall also have the right to elect and change settlement
options with the consent of the Bank and the Insurer.
3.2 Bank's Interest. The Bank shall own the Policies and shall have the
right to exercise all incidents of ownership except that the Bank shall not
sell, surrender or transfer ownership of a Policy so long as a Participant has
an interest in the Policy during the time periods as described in section 3.1.
This provision shall not impair the right of the Bank to terminate this Plan.
With respect to each Policy, the Bank shall be the direct beneficiary of the
remaining death proceeds of the Policy after the Participant's interest is
determined according to section 3.1.
Article 4
Premiums
4.1 Premium Payment. The Bank shall pay all premiums due on all Policies.
4.2 Imputed Income. The Bank shall impute income to the Participant in an
amount equal to the current term rate for the Participant's age multiplied by
the net death benefit payable to the Participant's beneficiary. The "current
term rate" is the minimum amount required to be imputed under Revenue Rulings
64-328 and 66-110, or any subsequent applicable authority.
Article 5
Assignment
Any Participant may assign without consideration all interests in his or
her Policy and in this Plan to any person, entity or trust. In the event a
Participant shall transfer all of his or her interest in the Policy, then all of
that Participant's interest in his or her Policy and in the Plan shall be vested
in his or her transferee, who shall be substituted as a party hereunder, and
that Participant shall have no further interest in his or her Policy or in this
Plan.
Article 6
Insurer
The Insurer shall be bound only by the terms of their corresponding Policy.
Any payments the Insurer makes or actions it takes in accordance with a Policy
shall fully discharge it from all claims, suits and demands of all persons
relating to that Policy. The Insurer shall not be bound by the provisions of
this Plan. The Insurer shall have the right to rely on the Bank's
representations with regard to any definitions, interpretations, or Policy
interests as specified under this Plan.
ARTICLE 7
Claims and Review Procedures
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7.1 Claims Procedure. A Participant or beneficiary ("claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:
7.1.1 Initiation B Written Claim. The claimant initiates a claim by
submitting to the Bank a written claim for the benefits.
7.1.2 Timing of Company Response. The Bank shall respond to such claimant
within 90 days after receiving the claim. If the Bank determines that
special circumstances require additional time for processing the
claim, the Bank can extend the response period by an additional 90
days by notifying the claimant in writing, prior to the end of the
initial 90-day period, that an additional period is required. The
notice of extension must set forth the special circumstances and the
date by which the Bank expects to render its decision.
7.1.3 Notice of Decision. If the Bank denies part or all of the claim, the
Bank shall notify the claimant in writing of such denial. The Bank
shall write the notification in a manner calculated to be understood
by the claimant. The notification shall set forth:
7.1.3.1 The specific reasons for the denial,
7.1.3.2 A reference to the specific provisions of the Plan on which
the denial is based,
7.1.3.3 A description of any additional information or material
necessary for the claimant to perfect the claim and an explanation of
why it is needed,
7.1.3.4 An explanation of the Plan's review procedures and the time
limits applicable to such procedures, and
7.1.3.5 A statement of the claimant's right to bring a civil action
under ERISA Section 502(a) following an adverse benefit determination
on review.
7.2 Review Procedure. If the Bank denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Bank of
the denial, as follows:
7.2.1 Initiation B Written Request. To initiate the review, the claimant,
within 60 days after receiving the Bank's notice of denial, must file
with the Bank a written request for review.
7.2.2 Additional Submissions B Information Access. The claimant shall then
have the opportunity to submit written comments, documents, records
and other information relating to the claim. The Bank shall also
provide the claimant, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to
the claimant's claim for benefits.
7.2.3 Considerations on Review. In considering the review, the Bank shall
take into account all materials and information the claimant submits
relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
7.2.4 Timing of Company Response. The Bank shall respond in writing to such
claimant within 60 days after receiving the request for review. If
the Bank determines that special circumstances require additional
processing the claim, the Bank can extend the response period by an
time for additional 60 days by notifying the claimant in writing,
prior to the end of the initial 60-dayperiod, that an additional
period is required. The notice of extension must set forth the
specialcircumstances and the date by which the Bank expects to render
its decision.
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7.2.5 Notice of Decision. The Bank shall notify the claimant in writing of
its decision on review. The Bank shall write the notification in a
manner calculated to be understood by the claimant. The notification
shall set forth:
7.2.5.1 The specific reasons for the denial,
7.2.5.2 A reference to the specific provisions of the Plan on which
the denial is based,
7.2.5.3 A statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant (as defined in
applicable ERISA regulations) to the claimant's claim for benefits,
and
7.2.5.4 A statement of the claimant's right to bring a civil action
under ERISA Section 502(a).
Article 8
Amendments and Termination
8.1 Amendment or Termination of Plan. Except as otherwise provided in
section 2.4 and 8.2, (i) the Bank may amend or terminate the Plan at any time,
and (ii) the Bank may amend or terminate a Participant's rights under the Plan
at any time prior to a Participant's death by written notice to the Participant.
8.2 Amendment or Termination of Plan Upon Change in Control.
Notwithstanding the provisions of section 8.1, in the event of a Change in
Control, the Bank, or its successor, shall maintain in full force and effect
each Policy that is in existence on the date the Change in Control occurs and
shall not terminate or otherwise abrogate a Participant's interest in the
Policy. However, the Bank may replace the Policy with a comparable insurance
policy to cover the benefit provided under this Agreement. The Policy or any
comparable policy shall be subject to the claims of the Bank's creditors. This
section 8.2 shall apply to all Participants in the Plan on the date the Change
in Control occurs, including but not limited to (i) a retired Participant who
has an interest in a Policy; (ii) a disabled Participant who has an interest in
the Policy; and (iii) a Participant whose employment terminates within three
years of a Change in Control.
8.3 Participant Waiver. A Participant may, in the Participant's sole and
absolute discretion, waive his or her rights under the Plan at any time. Any
waiver permitted under this section 8.3 shall be in writing and delivered to the
Board of Directors of the Bank.
Article 9
Miscellaneous
9.1 Binding Effect. This Plan in conjunction with each Split Dollar
Endorsement shall bind each Participant and the Bank, their beneficiaries,
survivors, executors, administrators and transferees and any Policy beneficiary.
9.2 No Guarantee of Employment. This Plan is not an employment policy or
contract. It does not give a Participant the right to remain an employee of the
Bank, nor does it interfere with the Bank's right to discharge a Participant. It
also does not require a Participant to remain an employee nor interfere with a
Participant's right to terminate employment at any time.
9.3 Applicable Law. The Plan and all rights hereunder shall be governed by
and construed according to the laws of the State of Connecticut, except to the
extent preempted by the laws of the United States of America.
9.4 Notice. Any notice, consent or demand required or permitted to be given
under the provisions of this Plan by one party to another shall be in writing,
shall be signed by the party giving or making the same, and may be given either
by delivering the same to such other party personally, or by mailing the same,
by United States
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certified mail, postage prepaid, to such party, addressed to his/her last known
address as shown on the records of the Bank. The date of such mailing shall be
deemed the date of such mailed notice, consent or demand.
9.5 Entire Agreement. This Plan constitutes the entire agreement between
the Bank and the Participant as to the subject matter hereof. No rights are
granted to the Participants by virtue of this Plan other than those specifically
set forth herein.
9.6 Administration. The Bank shall have powers which are necessary to
administer this Plan, including but not limited to:
(a) Interpreting the provisions of the Plan;
(b) Establishing and revising the method of accounting for the Plan;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or desirable to
administer the Plan.
9.7 Designated Fiduciary. For purposes of the Employee Retirement Income
Security Act of 1974, if applicable, the Bank shall be the named fiduciary and
plan administrator under the Agreement. The named fiduciary may delegate to
others certain aspects of the management and operational responsibilities of the
Plan including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
9.8 Severability. If for any reason any provision of this Agreement is held
invalid such invalidity shall not affect any other provision of this Agreement
not held so invalid, and each such other provision shall, to the full extent
consistent with the law, continue in full force and effect. If any provision of
this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision, not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement shall, to the
full extent consistent with the law, continue in full force and effect.
9.9 Headings. The headings of Sections herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
IN WITNESS WHEREOF, the Bank executes this Plan as of the date indicated
above.
BANK:
NewMil Bank
By
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Title
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EXHIBIT A
ELECTION TO PARTICIPATE
I, , an eligible employee as determined in
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section 2.1 of the NewMil Bank Group Term Carve Out Plan (the "Plan") dated as
of January 1, 2002, hereby elect to become a Participant of the Plan in
accordance with Section 2.2 of the Plan. Additionally, I acknowledge that I have
read the Plan document and agree to be bound by its terms.
Executed this day of , 2002.
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Witness Participant
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