Exhibit 10.13
NEWPORT FEDERAL SAVINGS
BANK
CHANGE IN CONTROL
AGREEMENT
This AGREEMENT
(“Agreement”) is hereby entered into as of
October 14, 2005, by and between Newport Federal Savings
Bank (the “Bank”), a federally-chartered savings
bank with its principal offices at 100 Bellevue Avenue, Newport,
Rhode Island 02840-3231 and ______________
(“Executive”).
WHEREAS, the Bank recognizes the importance of Executive
to the Bank’s operations and wishes to protect his position
with the Bank in the event of a change in control of the Bank or
any holding company of the Bank (“Holding Company”) for
the period provided for in this Agreement; and
WHEREAS, Executive and the Board of Directors of the Bank
desire to enter into an agreement setting forth the terms and
conditions of payments due to Executive in the event of a change in
control and the related rights and obligations of each of the
parties.
NOW, THEREFORE,
in consideration of the promises and
mutual covenants herein contained, it is hereby agreed as
follows:
(a) The term of this Agreement shall
be (i) the initial term, consisting of the period commencing
on the date of this Agreement (the “Effective Date”)
and ending on the third anniversary of the Effective Date, plus
(ii) any and all extensions of the initial term made pursuant
to this Section 1.
(b) Commencing December 2006 and
continuing each December thereafter, the Board of Directors of the
Bank (the “Board of Directors”) may extend the term of
this Agreement for an additional one (1) year period beyond
the then effective expiration date, provided that Executive shall
not have given at least sixty (60) days’ written notice
of his desire that the term not be extended.
(c) Notwithstanding anything in this
Section to the contrary, this Agreement shall terminate if
Executive or the Bank terminates Executive’s employment prior
to a Change in Control.
(a) Upon the occurrence of a Change
in Control of the Bank or the Holding Company followed by the
voluntary termination (for “Good Reason” as defined
below) or involuntary termination of Executive’s employment
within two (2) years of the Change in Control, other than
termination for Cause, (as defined in Section 2(d) of this
Agreement) the provisions of Section 3 of this Agreement shall
apply.
(b) “Good Reason” means,
unless Executive has consented in writing thereto, the occurrence
following a Change in Control, of any of the following:
|
|
(1)
|
the assignment
to Executive of any duties materially inconsistent with
Executive’s position, including any material diminution in
status, title, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and that is remedied by the Bank or
Executive’s employer reasonably promptly after receipt of
notice from Executive;
|
|
|
(2)
|
Any reduction
in Executive’s base salary below the amount to which
Executive was entitled prior to the Change in Control;
|
|
|
(3)
|
the taking of
any action by the Bank or any of its affiliates or successors that
would materially adversely affect Executive’s overall
compensation and benefits package (other than changes to the
Bank’s tax-qualified plans), unless such changes to the
compensation and benefits package are made on a non-discriminatory
basis and affect substantially all employees
|
|
|
(4)
|
A requirement
that Executive relocate his principal business office or his
principal place of residence outside of the area consisting of a
twenty-five (25) mile radius from the current main office, or
the assignment to Executive of duties that would reasonably require
such a relocation; or
|
|
|
(5)
|
Liquidation or
dissolution of the Bank or the Holding Company.
|
(c) For purposes of this Agreement,
a “Change in Control” means:
|
|
i.
|
Merger : The Bank or the Holding Company, as the case
may be, merges into or consolidates with another entity, or merges
another entity into the Bank or the Holding Company, and as a
result less than a majority of the combined voting power of the
resulting entity immediately after the merger or consolidation is
held by persons who were members of the Bank or the Holding Company
immediately before the merger or consolidation;
|
|
|
ii.
|
Change in
Board Composition :
During any period of two consecutive years, individuals who
constitute the Bank’s or the Holding Company’s Board of
Directors at the beginning of the two-year period cease for any
reason to constitute at least a majority of the Bank’s or the
Holding Company’s Board of Directors; provided, however, that
for purposes of this clause (iii), each director who is first
elected by the board (or first nominated by the board for election
by the members) by a vote of at least two-thirds (2/3) of the
directors who were directors at the beginning of the two-year
period shall be deemed to have also been a director at the
beginning of such period; or
|
|
|
iii.
|
Sale of
Assets : The Bank or the
Holding Company sells to a third party all or substantially all of
its assets.
|
Notwithstanding anything in this
Section 2, a “Change in Control” for purposes of
this Agreement shall not include any corporate restructuring
transaction by the Bank or the Holding Company in mutual or stock
form, including but not limited to a mutual to stock conversion or
mutual holding company reorganization or minority stock offering,
provided that the Board of Directors of the Bank and the Holding
Company immediately preceding such transaction constitutes at least
a majority of the Board of Directors of the Bank and the Holding
Company after such transaction.
(d) Executive shall not have the
right to receive termination benefits pursuant to Section 3
hereof upon termination for Cause. Termination for Cause shall
mean: termination because of, in the good faith determination of
the Board, Executive’s personal dishonesty, incompetence,
willful misconduct, any breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic
violations or similar offenses), final cease and desist order, or
any material breach of any provision of this Agreement.
2
(e) Notwithstanding paragraph
(d) above, Executive shall not be deemed to have been
terminated for Cause unless and until (i) in the case of any
failure or breach by Executive in the performance of
Executive’s duties to the Bank, the Bank shall have provided
Executive with (30) days written notice of such failure or
breach and Executive shall have had an opportunity to cure such
failure or breach within such (30) day period, and
(ii) there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of a majority of
the entire membership of the Board of Directors at a meeting of the
Board of Directors called and held for that purpose, finding that
in the good faith opinion of the Board of Directors, Executive was
guilty of conduct justifying termination for Cause and specifying
the particulars thereof. Executive shall not have the right to
receive compensation or other benefits following termination for
Cause.
(a) Upon the occurrence of a Change
in Control, followed by the Executive’s voluntary termination
for Good Reason (as defined in Section 2(b) of this Agreement)
or involuntary termination within two (2) years of the Change
in Control, other than a termination for Cause (as defined in
Section 2(c) of the Agreement), the Bank and the Holding
Company shall be obligated to pay or provide Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or
his estate as the case may be:
|
|
i.
|
A severance
benefit equal to two (2) times the Executive’s
“base amount” as defined in Section 280G(b)(3) of
the Internal Revenue Code (the “Code”) and the sum of
any other “parachute payments” as defined under
Section 280G(b)(2) of the Code. Such payment shall be made in
a lump sum within ten (10) calendar days of the
Executive’s termination of employment; and
|
|
|
ii.
|
Continued
health, dental and life insurance coverage following
Executive’s termination of employment. Said coverage shall be
provided under the same terms and conditions in effect on the date
of Executive’s termination of employment. To the extent that
benefits required under this Section 3(a)(ii) cannot be
provided under the terms of any Bank health and welfare plans, the
Bank shall enter into alternative arrangements that will provide
Executive with comparable benefits. The coverage or other
arrangements provided under this Section 3(a)(ii) shall cease
upon the earlier of (i) the Executive’s death;
(ii) his employment by another employer other than one of
which he is the majority owner; or (iii) the expiration of 24
months.
|
(c) Notwithstanding the preceding
provisions of this Section 3, in no event shall the aggregate
payments or benefits to be made or afforded to Executive under said
paragraphs (the “Termination Benefits”) constitute an
“excess parachute payment” under Section 280G of
the Code or any successor thereto, and in order to avoid such a
result, Termination Benefits will be reduced, if necessary, to an
amount (the “Non-Triggering Amount”), the value of
which is one dollar ($1.00) less than an amount equal to three
(3) times Executive’s “base amount,” as
determined in accordance with said Section 280G. The
allocation of the reduction required among the Termination
Benefits
