Exhibit 10.3(a)
NEWPORT FEDERAL SAVINGS & LOAN ASSOCIATION
__________________________
Employment Agreement with
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
__________________________
AGREEMENT entered into and effective this 19th day of August, 1997, by
and between Newport Federal Savings & Loan Association (the "Association")
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Employee").
WHEREAS, the Employee has heretofore been employed by the Association as
its President and is experienced in all phases of the business of the
Association; and
WHEREAS, the Board of Directors (the "Board") of the Association believes
it is in the best interests of the Association to enter into this Agreement
with the Employee in order to assure continuity of management of the
Association and to reinforce and encourage the continued attention and
dedication of the Employee to his assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Association and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
When used anywhere in this Agreement, the following terms shall have the
meaning set forth herein.
(a) "Change in Control" shall mean any one of the following events:
(i) the acquisition of ownership, holding or power to vote more than 25% of
the voting stock of the Association or the Company, (ii) the acquisition of
the ability to control the election of a majority of the Association's or the
Company's directors, (iii) the acquisition of a controlling influence over
the management or policies of the Association or of the Company by any person
or by persons acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934), or (iv) during any period of two
consecutive years, individuals (the "Continuing Directors") who at the
beginning of such period constitute the Board of Directors of the Association
or of the Company (the "Existing Board") cease for any reason to constitute
at least two-thirds thereof, provided that any individual whose election or
nomination for election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in office shall
be considered a Continuing Director. Notwithstanding the foregoing, the
Company's ownership of the Association shall not of itself constitute a
Change in Control for purposes of the Agreement.
For purposes of this paragraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any
other form of entity not specifically listed herein.
(b) "Company" shall mean United Tennessee Bankshares, Inc.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Disability" shall mean a physical or mental infirmity which
impairs the Employee's ability to substantially perform his duties under this
Agreement and which results in the Employee becoming eligible for long-term
disability benefits under the Association's long-term disability plan (or, if
the Association has no such plan in effect, which impairs the Employee's
ability to substantially perform his duties under this Agreement for a period
of 180 consecutive days).
(f) "Effective Date" shall mean the date referenced in the opening
paragraph of this Agreement.
(g) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move his personal residence, or perform his
principal executive functions, more than thirty (30) miles from his primary
office as of the later of the Effective Date and the most recent voluntary
relocation by the Employee; (ii) a material reduction in the Employee's base
compensation under this Agreement as the same may be increased from time to
time; (iii) the failure by the Association or the Company to continue to
provide the Employee with compensation and benefits provided under this
Agreement as the same may be increased from time to time, or with benefits
substantially similar to those provided to him under any of the employee
benefit plans in which the Employee now or hereafter becomes a participant,
or the taking of any action by the Association or the Company which would
directly or indirectly reduce any of such benefits or deprive the Employee of
any material fringe benefit enjoyed by him under this Agreement; (iv) the
assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position; (v) a failure to
reelect the Employee to the Board of Directors of the Association or the
Company, if the Employee has served on such Board at any time during the term
of the Agreement; or (vi) a material diminution or reduction in the
Employee's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Association.
(h) "Just Cause" shall mean, in the good faith determination of the
Association's Board of Directors, the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. The Employee shall have no right
to receive compensation or other benefits for any period after termination
for Just Cause. No act, or failure to act, on the Employee's part shall be
considered "willful" unless he 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 Association and the Company.
(i) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(j) "Trust" shall mean the Newport Federal Savings & Loan
Association Grantor Trust Agreement.
2. Employment. The Employee is employed as the President of the
Association. The Employee shall render such administrative and management
services for the Association as are currently rendered and as are customarily
performed by persons situated in a similar executive capacity. The Employee
shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Association. The Employee's other
duties shall be such as the Board may from time to time reasonably direct,
including normal duties as an officer of the Association.
3. Base Compensation. The Association agrees to pay the Employee
during the term of this Agreement a salary at the rate of $69,131 per annum,
payable in cash not less frequently than monthly. The Board shall review,
not less often than annually, the rate of the Employee's salary, and in its
sole discretion may decide to increase his salary.
4. Discretionary Bonuses. The Employee shall participate in an
equitable manner with all other senior management employees of the
Association in discretionary bonuses that the Board may award from time to
time to the Association's senior management employees. No other compensation
provided for in this Agreement shall be deemed a substitute for the
Employee's right to participate in such discretionary bonuses.
5. Participation in Retirement, Medical and Other Plans.
(a) The Employee shall be eligible to participate in any of the
following plans or programs that the Association may now or in the future
maintain: group hospitalization, disability, health, dental, sick leave,
life insurance, travel and/or accident insurance, auto allowance/auto lease,
retirement, pension, and/or other present or future qualified or nonqualified
plans provided by the Association, generally which benefits, taken as a
whole, must be at least as favorable as those in effect on the Effective Date.
(b) The Employee shall also be eligible to participate in any
fringe benefits which are or may become available to the Association's senior
management employees, including
for example: any stock option or incentive compensation plans, and any other
benefits which are commensurate with the responsibilities and functions to be
performed by the Employee under this Agreement. The Employee shall be
reimbursed for all reasonable out-of-pocket business expenses which he shall
incur in connection with his services under this Agreement upon
substantiation of such expenses in accordance with the policies of the
Association.
6. Term. The Association hereby employs the Employee, and the Employee
hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending 36 months thereafter (or such
earlier date as is determined in accordance with Section 10 or 12 hereof).
Additionally, on each annual anniversary date from the Effective Date, the
Employee's term of employment shall be extended for an additional one-year
period beyond the then effective expiration date, provided the Board
determines in a duly adopted resolution that the performance of the Employee
has met the Board's requirements and standards, and that this Agreement shall
be extended. Only those members of the Board of Directors who have no
personal interest in this Employment Agreement shall discuss and vote on the
approval and subsequent review of this Agreement.
7. Loyalty; Noncompetition.
(a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time, attention, skill, and
efforts to the faithful performance of his duties hereunder; provided,
however, from time to time, Employee may serve on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which
will not present any conflict of interest with the Association or any of its
subsidiaries or affiliates, or unfavorably affect the performance of
Employee's duties pursuant to this Agreement, or will not violate any
applicable statute or regulation. "Full business time" is hereby defined as
that amount of time usually devoted to like companies by similarly situated
executive officers. During the term of his employment under this Agreement,
the Employee shall not engage in any business or activity contrary to the
business affairs or interests of the Association.
(b) Nothing contained in this Section shall be deemed to prevent or
limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Association, or, solely as a
passive or minority investor, in any business.
8. Standards. The Employee shall perform his duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Association will provide Employee with the
working facilities and staff customary for similar executives and necessary
for him to perform his duties.
9. Vacation and Sick Leave. At such reasonable times as the Board
shall in its discretion permit, the Employee shall be entitled, without loss
of pay, to absent himself voluntarily from the performance of his employment
under this Agreement, all such voluntary absences to count as vacation time,
provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for
senior management employees of the Association.
(b) The Employee shall not receive any additional compensation from
the Association on account of his failure to take a vacation or sick leave,
and the Employee shall not accumulate unused vacation or sick leave from one
fiscal year to the next, except in either case to the extent authorized by
the Board.
(c) In addition to the aforesaid paid vacations, the Employee shall
be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Association for such additional
periods of time and for such valid and legitimate reasons as the Board may in
its discretion determine. Further, the Board may grant to the Employee a
leave or leaves of absence, with or without pay, at such time or times and
upon such terms and conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
10. Termination and Termination Pay. Subject to Section 12 hereof, the
Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in which event
the Employee's estate shall be entitled to receive the compensation due the
Employee through the last day of the calendar month in which his death
occurred.
(b) Disability. (1) The Association may terminate the Employee's
employment after having established the Employee's Disability, in which event
the Employee shall be entitled to the compensation and benefits provided for
under this Agreement for (i) any period during the term of this Agreement and
prior to the establishment of the Employee's Disability during which the
Employee is unable to work due to the physical or mental infirmity, and (ii)
any period of Disability which is prior to the Employee's termination of
employment pursuant to this Section 10(b); provided that any benefits paid
pursuant to the Association's long term disability plan will continue as
provided in such plan without reduction for payments made pursuant to this
Agreement.
(2) During any period that the Employee shall receive
disability benefits and to the extent that the Employee shall be physically
and mentally able to do so, he shall furnish such information, assistance and
documents so as to assist in the continued ongoing business of the
Association and, if able, shall make himself available to the Association to
undertake reasonable assignments consistent with his prior position and his
physical and mental health. The Association shall pay all reasonable
expenses incident to the performance of any assignment given to the Employee
during the disability period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The
Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause.
(d) Without Just Cause; Constructive Discharge. The Board may, by
written notice to the Employee, immediately terminate his employment at any
time for a reason other than his Disability or Just Cause, in which event the
Employee shall be entitled to receive the following compensation and benefits
(unless such termination occurs during the Protected Period, in which event
the benefits and compensation provided for in Section 12 shall apply): (i)
the salary provided pursuant to Section 3 hereof, up to the expiration date
of this Agreement, including any renewal term (the "Expiration Date"), plus
said salary for an additional 12-month period, and (ii) at the Employee's
election either (A) cash in an amount equal to the cost to the Employee of
obtaining all health, life, disability and other benefits which the Employee
would have been eligible to participate in through the Expiration Date based
upon the benefit levels substantially equal to those that the Association
provided for the Employee at the date of termination of employment or (B)
continued participation under such Association benefit plans through the
Expiration Date, but only to the extent the Employee continues to qualify for
participation therein. All amounts payable to the Employee shall be paid, at
the option of the Employee, either (I) in periodic payments through the
Expiration Date, or (II) in one lump sum within ten days of such termination.
(e) Good Reason. The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d) hereof in the event
that the Employee voluntarily terminates employment within 90 days of an
event that constitutes Good Reason (unless such voluntary termination occurs
during the Protected Period, in which event the benefits and compensation
provided for in Section 12 shall apply).
(f) Termination or Suspension Under Federal Law. (1) If the
Employee is removed and/or permanently prohibited from participating in the
conduct of the Association's affairs by an order issued under Sections
8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C.
1818(e)(4) and (g)(1)), all obligations of the Association under this
Agreement shall terminate, as of the effective date of the order, but vested
rights of the parties shall not be affected.
(2) If the Association is in default (as defined in Section
3(x)(1) of FDIA), all obligations under this Agreement shall terminate as of
the date of default; however, this Paragraph shall not affect the vested
rights of the parties.
(3) If a notice served under Section 8(e)(3) or (g)(1) of the
FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits
the Employee from participating in the conduct of the Association's affairs,
the Association's obligations under this Agreement shall be suspended as of
the date of such service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Association may in its discretion
(i) pay the Employee all or part of the compensation withheld while its
contract obligations were suspended, and (ii) reinstate (in whole or in part)
any of its obligations which were suspended.
(4) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with both 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder, and Regulatory Bulletin 27A, but only to the extent required
thereunder on the date any payment is required pursuant to this Agreement.
(g) Voluntary Termination by Employee. Subject to Section 12
hereof, the Employee may voluntarily terminate employment with the
Association during the term of this Agreement, upon at least 90 days' prior
written notice to the Board of Directors, in which case the Employee shall
receive only his compensation, vested rights and employee benefits up to the
date of his termination (unless such termination occurs pursuant to Section
10(d) hereof or within the Protected Period, in Section 12(a) hereof, in
which event the benefits and compensation provided for in Sections 10(d) or
12, as applicable, shall apply).
(h) Post-termination Health Insurance. If the Employee's
employment terminates with the Association or the Company for any reason
other than Just Cause, the Employee shall be entitled to purchase from the
Association, at the Employee's own expense which shall not exceed applicable
COBRA rates, family medical insurance under any group health plan that the
Association or the Company maintains for its employees. This right shall be
(i) in addition to, and not in lieu of, any other rights that the Employee
has under this Agreement, and (ii) shall continue until the Employee first
becomes eligible for participation in Medicare.
11. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Employee in any
subsequent employment.
12. Change in Control.
(a) Trigger Events. The Employee shall be entitled to collect the
severance benefits set forth in subsection (b) hereof in the event that
either (i) the Employee voluntarily terminates employment for any reason
within the 30-day period beginning on the date of a Change in Control, (ii)
the Employee voluntarily terminates employment within 90 days of an event
that both occurs during the Protected Period and constitutes Good Reason, or
(iii) the Association or the Company or their successor(s) in interest
terminate the Employee's employment without his written consent and for any
reason other than Just Cause during the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes entitled
to collect severance benefits pursuant to Section 12(a) hereof, the
Association shall:
(i) pay the Employee a severance benefit equal to the difference
between the Code Section 280G Maximum and the sum of any other
"parachute payments" as defined under Code Section 280G(b)(2) that the
Employee receives on account of the Change in Control, and
(ii) pay for long-term disability and provide such medical
benefits as are available to the Employee under the provisions of
COBRA, for eighteen (18) months (or such longer period, up to 24
months, if COBRA is amended).
The amount payable under Section 12(b)(i) shall be paid in one lump sum
within ten days of the later of the date of the Change in Control and the
Employee's last day of employment with the Association or the Company. In
the event that the Employee, the Association, and the Company jointly agree
that the Employee has collected an amount exceeding the Code Section 280G
Maximum, the parties may agree in writing that such excess shall be treated
as a loan ab initio, which the Employee shall repay to the Association, on
terms and conditions mutually agreeable to the parties, together with
interest at the applicable federal rate provided for in Section 7872(f)(2)(B)
of the Code.
(c) Funding of Grantor Trust upon Change in Control. Not later than
ten business days after a Change in Control, the Association shall (i)
deposit in a Trust an amount equal to the Code Section 280G Maximum, unless
the Employee has previously provided a written release of any claims under
this Agreement, and (ii) provide the trustee of the Trust with a written
direction to hold said amount and any investment return thereon in a
segregated account for the benefit of the Employee, and to follow the
procedures set forth in the next paragraph as to the payment of such amounts
from the Trust. Upon the later of the Trust's final payment of all amounts
due under the following paragraph or the date twelve months after the Change
in Control, the trustee of the Trust shall pay to the Association the entire
balance remaining in the segregated account maintained for the benefit of the
Employee. The Employee shall thereafter have no further interest in the
Trust.
During the 15-consecutive month period after a Change in Control, the
Employee may provide the trustee of the Trust with a written notice
requesting that the trustee pay to the Employee an amount designated in the
notice as being payable pursuant to this Agreement. Within three business
days after receiving said notice, the trustee of the Trust shall send a copy
of the notice to the Association via overnight and registered mail return
receipt requested. On the tenth (10th) business day after mailing said
notice to the Association, the trustee of the Trust shall pay the Employee
the amount designated therein in immediately available funds, unless prior
thereto the Association provides the trustee with a written notice directing
the trustee to withhold such payment. In the latter event, the trustee shall
submit the dispute to non-appealable binding arbitration for a determination
of the amount payable to the Employee pursuant to this Agreement, and the
costs of such arbitration shall be paid by the Association. The trustee
shall choose the arbitrator to settle the dispute, and such arbitrator shall
be bound by the rules of the American Arbitration Association in making his
determination. The parties and the trustee shall be bound by the results of
the arbitration and, within three days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be
paid to the Employee and/or the Association, and in no event shall the
trustee be liable to either party for making the payments as determined by
the arbitrator.
13. Indemnification. The Association and the Company agree that their
respective Bylaws shall continue to provide for indemnification of directors,
officers, employees and agents
of the Association and the Company, including the Employee during the full
term of this Agreement, and to at all times provide adequate insurance for
such purposes.
14. Reimbursement of Employee for Enforcement Proceedings. In the event
that any dispute arises between the Employee and the Association as to the
terms or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to
defend against any action taken by the Association or the Company, the
Employee shall be reimbursed for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Employee obtains either a written settlement or a final judgement by
a court of competent jurisdiction substantially in his favor. Such
reimbursement shall be paid within ten days of Employee's furnishing to the
Association written evidence, which may be in the form, among other things,
of a cancelled check or receipt, of any costs or expenses incurred by the
Employee.
15. Federal Income Tax Withholding. The Association may withhold all
federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation
or ruling.
16. Successors and Assigns.
(a) Association. This Agreement shall not be assignable by the
Association, provided that this Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Association which
shall acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Association.
(b) Employee. Since the Association is contracting for the unique
and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties hereunder without first
obtaining the written consent of the Association; provided, however, that
nothing in this paragraph shall preclude (i) the Employee from designating a
beneficiary to receive any benefit payable hereunder upon his death, or (ii)
the executors, administrators, or other legal representatives of the Employee
or his estate from assigning any rights hereunder to the person or persons
entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation
or to exclusion, attachment, levy or similar process or assignment by
operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
17. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal law, the
laws of the State of Tennessee shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
19. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto and shall
supersede any prior agreement between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: NEWPORT FEDERAL SAVINGS & LOAN
ASSOCIATION
/s/ ▇. ▇. ▇▇▇▇▇ By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Secretary Its Chairman of the Board
WITNESS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
NEWPORT FEDERAL SAVINGS & LOAN ASSOCIATION
__________________________
Employment Agreement with
▇▇▇▇▇ ▇▇▇▇▇▇
__________________________
AGREEMENT entered into and effective this 19th day of August, 1997, by
and between Newport Federal Savings & Loan Association (the "Association")
and ▇▇▇▇▇ ▇▇▇▇▇▇ (the "Employee").
WHEREAS, the Employee has heretofore been employed by the Association as
Vice President and Treasurer and is experienced in all phases of the business
of the Association; and
WHEREAS, the Board of Directors (the "Board") of the Association believes
it is in the best interests of the Association to enter into this Agreement
with the Employee in order to assure continuity of management of the
Association and to reinforce and encourage the continued attention and
dedication of the Employee to her assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Association and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
When used anywhere in this Agreement, the following terms shall have the
meaning set forth herein.
(a) "Change in Control" shall mean any one of the following events:
(i) the acquisition of ownership, holding or power to vote more than 25% of
the voting stock of the Association or the Company, (ii) the acquisition of
the ability to control the election of a majority of the Association's or the
Company's directors, (iii) the acquisition of a controlling influence over
the management or policies of the Association or of the Company by any person
or by persons acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934), or (iv) during any period of two
consecutive years, individuals (the "Continuing Directors") who at the
beginning of such period constitute the Board of Directors of the Association
or of the Company (the "Existing Board") cease for any reason to constitute
at least two-thirds thereof, provided that any individual whose election or
nomination for election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in office shall
be considered a Continuing Director. Notwithstanding the foregoing, the
Company's ownership of the Association shall not of itself constitute a
Change in Control for purposes of the Agreement.
For purposes of this paragraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any
other form of entity not specifically listed herein.
(b) "Company" shall mean United Tennessee Bankshares, Inc.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Disability" shall mean a physical or mental infirmity which
impairs the Employee's ability to substantially perform her duties under this
Agreement and which results in the Employee becoming eligible for long-term
disability benefits under the Association's long-term disability plan (or, if
the Association has no such plan in effect, which impairs the Employee's
ability to substantially perform her duties under this Agreement for a period
of 180 consecutive days).
(f) "Effective Date" shall mean the date referenced in the opening
paragraph of this Agreement.
(g) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move her personal residence, or perform her
principal executive functions, more than thirty (30) miles from her primary
office as of the later of the Effective Date and the most recent voluntary
relocation by the Employee; (ii) a material reduction in the Employee's base
compensation under this Agreement as the same may be increased from time to
time; (iii) the failure by the Association or the Company to continue to
provide the Employee with compensation and benefits provided under this
Agreement as the same may be increased from time to time, or with benefits
substantially similar to those provided to her under any of the employee
benefit plans in which the Employee now or hereafter becomes a participant,
or the taking of any action by the Association or the Company which would
directly or indirectly reduce any of such benefits or deprive the Employee of
any material fringe benefit enjoyed by her under this Agreement; (iv) the
assignment to the Employee of duties and responsibilities materially
different from those normally associated with her position; (v) a failure to
reelect the Employee to the Board of Directors of the Association or the
Company, if the Employee has served on such Board at any time during the term
of the Agreement; or (vi) a material diminution or reduction in the
Employee's responsibilities or authority (including reporting
responsibilities) in connection with her employment with the Association.
(h) "Just Cause" shall mean, in the good faith determination of the
Association's Board of Directors, the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. The Employee shall have no right
to receive compensation or other benefits for any period after termination
for Just Cause. No act, or failure to act, on the Employee's part shall be
considered "willful" unless she has acted, or failed to act, with an absence
of good faith and without a reasonable belief that her action or failure to
act was in the best interest of the Association and the Company.
(i) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(j) "Trust" shall mean the Newport Federal Savings & Loan
Association Grantor Trust Agreement.
2. Employment. The Employee is employed as the Vice President and
Treasurer of the Association. The Employee shall render such administrative
and management services for the Association as are currently rendered and as
are customarily performed by persons situated in a similar executive
capacity. The Employee shall also promote, by entertainment or otherwise, as
and to the extent permitted by law, the business of the Association. The
Employee's other duties shall be such as the Board may from time to time
reasonably direct, including normal duties as an officer of the Association.
3. Base Compensation. The Association agrees to pay the Employee
during the term of this Agreement a salary at the rate of $37,178 per annum,
payable in cash not less frequently than monthly. The Board shall review,
not less often than annually, the rate of the Employee's salary, and in its
sole discretion may decide to increase her salary.
4. Discretionary Bonuses. The Employee shall participate in an
equitable manner with all other senior management employees of the
Association in discretionary bonuses that the Board may award from time to
time to the Association's senior management employees. No other compensation
provided for in this Agreement shall be deemed a substitute for the
Employee's right to participate in such discretionary bonuses.
5. Participation in Retirement, Medical and Other Plans.
(a) The Employee shall be eligible to participate in any of the
following plans or programs that the Association may now or in the future
maintain: group hospitalization, disability, health, dental, sick leave,
life insurance, travel and/or accident insurance, auto allowance/auto lease,
retirement, pension, and/or other present or future qualified or nonqualified
plans provided by the Association, generally which benefits, taken as a
whole, must be at least as favorable as those in effect on the Effective Date.
(b) The Employee shall also be eligible to participate in any
fringe benefits which are or may become available to the Association's senior
management employees, including
for example: any stock option or incentive compensation plans, and any other
benefits which are commensurate with the responsibilities and functions to be
performed by the Employee under this Agreement. The Employee shall be
reimbursed for all reasonable out-of-pocket business expenses which she shall
incur in connection with her services under this Agreement upon
substantiation of such expenses in accordance with the policies of the
Association.
6. Term. The Association hereby employs the Employee, and the Employee
hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending eighteen (18) months thereafter
(or such earlier date as is determined in accordance with Section 10 or 12
hereof). Additionally, on each annual anniversary date from the Effective
Date, the Employee's term of employment shall be extended for an additional
one-year period beyond the then effective expiration date, provided the Board
determines in a duly adopted resolution that the performance of the Employee
has met the Board's requirements and standards, and that this Agreement shall
be extended. Only those members of the Board of Directors who have no
personal interest in this Employment Agreement shall discuss and vote on the
approval and subsequent review of this Agreement.
7. Loyalty; Noncompetition.
(a) During the period of her employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all her full business time, attention, skill, and
efforts to the faithful performance of her duties hereunder; provided,
however, from time to time, Employee may serve on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which
will not present any conflict of interest with the Association or any of its
subsidiaries or affiliates, or unfavorably affect the performance of
Employee's duties pursuant to this Agreement, or will not violate any
applicable statute or regulation. "Full business time" is hereby defined as
that amount of time usually devoted to like companies by similarly situated
executive officers. During the term of her employment under this Agreement,
the Employee shall not engage in any business or activity contrary to the
business affairs or interests of the Association.
(b) Nothing contained in this Section shall be deemed to prevent or
limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Association, or, solely as a
passive or minority investor, in any business.
8. Standards. The Employee shall perform her duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Association will provide Employee with the
working facilities and staff customary for similar executives and necessary
for her to perform her duties.
9. Vacation and Sick Leave. At such reasonable times as the Board
shall in its discretion permit, the Employee shall be entitled, without loss
of pay, to absent himself voluntarily from the performance of her employment
under this Agreement, all such voluntary absences to count as vacation time,
provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for
senior management employees of the Association.
(b) The Employee shall not receive any additional compensation from
the Association on account of her failure to take a vacation or sick leave,
and the Employee shall not accumulate unused vacation or sick leave from one
fiscal year to the next, except in either case to the extent authorized by
the Board.
(c) In addition to the aforesaid paid vacations, the Employee shall
be entitled without loss of pay, to absent himself voluntarily from the
performance of her employment with the Association for such additional
periods of time and for such valid and legitimate reasons as the Board may in
its discretion determine. Further, the Board may grant to the Employee a
leave or leaves of absence, with or without pay, at such time or times and
upon such terms and conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
10. Termination and Termination Pay. Subject to Section 12 hereof, the
Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon her death during the term of this Agreement, in which event
the Employee's estate shall be entitled to receive the compensation due the
Employee through the last day of the calendar month in which her death
occurred.
(b) Disability. (1) The Association may terminate the Employee's
employment after having established the Employee's Disability, in which event
the Employee shall be entitled to the compensation and benefits provided for
under this Agreement for (i) any period during the term of this Agreement and
prior to the establishment of the Employee's Disability during which the
Employee is unable to work due to the physical or mental infirmity, and (ii)
any period of Disability which is prior to the Employee's termination of
employment pursuant to this Section 10(b); provided that any benefits paid
pursuant to the Association's long term disability plan will continue as
provided in such plan without reduction for payments made pursuant to this
Agreement.
(2) During any period that the Employee shall receive
disability benefits and to the extent that the Employee shall be physically
and mentally able to do so, she shall furnish such information, assistance
and documents so as to assist in the continued ongoing business of the
Association and, if able, shall make himself available to the Association to
undertake reasonable assignments consistent with her prior position and her
physical and mental health. The Association shall pay all reasonable
expenses incident to the performance of any assignment given to the Employee
during the disability period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate her employment at any time, for Just Cause. The
Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause.
(d) Without Just Cause; Constructive Discharge. The Board may, by
written notice to the Employee, immediately terminate her employment at any
time for a reason other than her Disability or Just Cause, in which event the
Employee shall be entitled to receive the following compensation and benefits
(unless such termination occurs during the Protected Period, in which event
the benefits and compensation provided for in Section 12 shall apply): the
salary provided pursuant to Section 3 hereof, up to the expiration date of
this Agreement, including any renewal term (the "Expiration Date"), plus said
salary for an additional 12-month period. All amounts payable to the
Employee shall be paid, at the option of the Employee, either (I) in periodic
payments through the Expiration Date, or (II) in one lump sum within ten days
of such termination.
(e) Good Reason. The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d) hereof in the event
that the Employee voluntarily terminates employment within 90 days of an
event that constitutes Good Reason (unless such voluntary termination occurs
during the Protected Period, in which event the benefits and compensation
provided for in Section 12 shall apply).
(f) Termination or Suspension Under Federal Law. (1) If the
Employee is removed and/or permanently prohibited from participating in the
conduct of the Association's affairs by an order issued under Sections
8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C.
1818(e)(4) and (g)(1)), all obligations of the Association under this
Agreement shall terminate, as of the effective date of the order, but vested
rights of the parties shall not be affected.
(2) If the Association is in default (as defined in Section
3(x)(1) of FDIA), all obligations under this Agreement shall terminate as of
the date of default; however, this Paragraph shall not affect the vested
rights of the parties.
(3) If a notice served under Section 8(e)(3) or (g)(1) of the
FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits
the Employee from participating in the conduct of the Association's affairs,
the Association's obligations under this Agreement shall be suspended as of
the date of such service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Association may in its discretion
(i) pay the Employee all or part of the compensation withheld while its
contract obligations were suspended, and (ii) reinstate (in whole or in part)
any of its obligations which were suspended.
(4) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with both 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder, and Regulatory Bulletin 27A, but only to the extent required
thereunder on the date any payment is required pursuant to this Agreement.
(g) Voluntary Termination by Employee. Subject to Section 12
hereof, the Employee may voluntarily terminate employment with the
Association during the term of this Agreement, upon at least 90 days' prior
written notice to the Board of Directors, in which case the Employee shall
receive only her compensation, vested rights and employee benefits up to the
date of her termination (unless such termination occurs pursuant to Section
10(d) hereof or within the Protected Period, in Section 12(a) hereof, in
which event the benefits and compensation provided for in Sections 10(d) or
12, as applicable, shall apply).
11. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Employee in any
subsequent employment.
12. Change in Control.
(a) Trigger Events. The Employee shall be entitled to collect the
severance benefits set forth in subsection (b) hereof in the event that
either (i) the Employee voluntarily terminates employment for any reason
within the 30-day period beginning on the date of a Change in Control, (ii)
the Employee voluntarily terminates employment within 90 days of an event
that both occurs during the Protected Period and constitutes Good Reason, or
(iii) the Association or the Company or their successor(s) in interest
terminate the Employee's employment without her written consent and for any
reason other than Just Cause during the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes entitled
to collect severance benefits pursuant to Section 12(a) hereof, the
Association shall:
(i) pay the Employee a severance benefit equal to 1.5 times her
base salary then in effect, but in no event greater than the
difference between the Code Section 280G Maximum and the sum of any
other "parachute payments" as defined under Code Section 280G(b)(2)
that the Employee receives on account of the Change in Control, and
(ii) pay for long-term disability and provide such medical
benefits as are available to the Employee under the provisions of
COBRA, for eighteen (18) months (or such longer period, up to 24
months, if COBRA is amended).
The amount payable under Section 12(b)(i) shall be paid in one lump sum
within ten days of the later of the date of the Change in Control and the
Employee's last day of employment with the Association or the Company. In
the event that the Employee, the Association, and the Company jointly agree
that the Employee has collected an amount exceeding the Code Section 280G
Maximum, the parties may agree in writing that such excess shall be treated
as a loan ab initio, which the Employee shall repay to the Association, on
terms and conditions mutually agreeable to the parties, together with
interest at the applicable federal rate provided for in Section 7872(f)(2)(B)
of the Code.
(c) Funding of Grantor Trust upon Change in Control. Not later than
ten business days after a Change in Control, the Association shall (i)
deposit in a Trust an amount equal to the Code Section 280G Maximum, unless
the Employee has previously provided a written release of any claims under
this Agreement, and (ii) provide the trustee of the Trust with a written
direction to hold said amount and any investment return thereon in a
segregated account for the benefit of the Employee, and to follow the
procedures set forth in the next paragraph as to the payment of such amounts
from the Trust. Upon the later of the Trust's final payment of all amounts
due under the following paragraph or the date twelve months after the Change
in Control, the trustee of the Trust shall pay to the Association the entire
balance remaining in the segregated account maintained for the benefit of the
Employee. The Employee shall thereafter have no further interest in the
Trust.
During the 15-consecutive month period after a Change in Control, the
Employee may provide the trustee of the Trust with a written notice
requesting that the trustee pay to the Employee an amount designated in the
notice as being payable pursuant to this Agreement. Within three business
days after receiving said notice, the trustee of the Trust shall send a copy
of the notice to the Association via overnight and registered mail return
receipt requested. On the tenth (10th) business day after mailing said
notice to the Association, the trustee of the Trust shall pay the Employee
the amount designated therein in immediately available funds, unless prior
thereto the Association provides the trustee with a written notice directing
the trustee to withhold such payment. In the latter event, the trustee shall
submit the dispute to non-appealable binding arbitration for a determination
of the amount payable to the Employee pursuant to this Agreement, and the
costs of such arbitration shall be paid by the Association. The trustee
shall choose the arbitrator to settle the dispute, and such arbitrator shall
be bound by the rules of the American Arbitration Association in making his
determination. The parties and the trustee shall be bound by the results of
the arbitration and, within three days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be
paid to the Employee and/or the Association, and in no event shall the
trustee be liable to either party for making the payments as determined by
the arbitrator.
13. Indemnification. The Association and the Company agree that their
respective Bylaws shall continue to provide for indemnification of directors,
officers, employees and agents of the Association and the Company, including
the Employee during the full term of this Agreement, and to at all times
provide adequate insurance for such purposes.
14. Reimbursement of Employee for Enforcement Proceedings. In the event
that any dispute arises between the Employee and the Association as to the
terms or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to
defend against any action taken by the Association or the Company, the
Employee shall be reimbursed for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Employee obtains either a written settlement or a final judgement by
a court of competent jurisdiction substantially in her favor. Such
reimbursement shall be paid within ten days of Employee's furnishing to the
Association written evidence, which may be in the form, among other things,
of a cancelled check or receipt, of any costs or expenses incurred by the
Employee.
15. Federal Income Tax Withholding. The Association may withhold all
federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation
or ruling.
16. Successors and Assigns.
(a) Association. This Agreement shall not be assignable by the
Association, provided that this Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Association which
shall acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Association.
(b) Employee. Since the Association is contracting for the unique
and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating her rights or duties hereunder without first
obtaining the written consent of the Association; provided, however, that
nothing in this paragraph shall preclude (i) the Employee from designating a
beneficiary to receive any benefit payable hereunder upon her death, or (ii)
the executors, administrators, or other legal representatives of the Employee
or her estate from assigning any rights hereunder to the person or persons
entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation
or to exclusion, attachment, levy or similar process or assignment by
operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
17. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal law, the
laws of the State of Tennessee shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
19. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto and shall
supersede any prior agreement between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: NEWPORT FEDERAL SAVINGS & LOAN
ASSOCIATION
/s/ ▇. ▇. ▇▇▇▇▇ By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------- ---------------------------------
Secretary Its Chairman of the Board
WITNESS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- --------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
EMPLOYMENT AGREEMENT
BETWEEN
NEWPORT FEDERAL SAVINGS & LOAN ASSOCIATION AND ▇▇▇▇▇ ▇▇▇▇▇▇
AND ▇▇▇▇▇ ▇▇▇▇▇▇▇
1997 AMENDMENT
__________________________
WHEREAS, on September 9, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Savings & Loan Association
(the "Association") entered into an Employment Agreement (the "Agreement")
with ▇▇▇▇▇ ▇▇▇▇▇▇ (the "Employee"); and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
WHEREAS, the Board of Directors of the Association and the Employee have
determined that it is in the best interests of the Association and the
Employee to amend the Agreement.
NOW, THEREFORE, the Agreement shall be amended as follows, with such
amendment to become effective immediately upon execution hereof:
1. The first sentence of Section 10(d) of the Agreement shall be amended
in its entirety to provide as follows:
The Board may, by written notice to the Employee, immediately
terminate her employment at any time for a reason other than her
Disability or Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits (unless
such termination occurs during the Protected Period, in which event
the benefits and compensation provided for in Section 12 shall apply):
(i) the salary provided pursuant to Section 3 hereof, up to the
expiration date of this Agreement, including any renewal term (the
"Expiration Date"), plus said salary for an additional 12-month
period, and (ii) at the Employee's election either (A) cash in an
amount equal to the cost to the Employee of obtaining all health,
life, disability and other benefits which the Employee would have been
eligible to participate in through the Expiration Date based upon the
benefit levels substantially equal to those that the Association
provided for the Employee at the date of termination of employment, or
(B) continued participation under such Association benefit plans
through the Expiration Date, but only to the extent the Employee
continues to qualify for participation therein.
2. Section 10 of the Agreement shall be further amended by adding the
following subsection (h) immediately at the end thereof:
(h) Post-termination Health Insurance. If the Employee's
employment terminates with the Association or the Company for any
reason other
1997 Amendment
Page 2
than Just Cause, the Employee shall be entitled to purchase from the
Association, at the Employee's own expense which shall not exceed
applicable COBRA rates, family medical insurance under any group
health plan that the Association or the Company maintains for its
employees. This right shall be (i) in addition to, and not in lieu
of, any other rights that the Employee has under this Agreement, and
(ii) shall continue until the Employee first becomes eligible for
participation in Medicare.
3. Nothing contained herein shall be held to alter, vary or affect any
of the terms, provisions, or conditions of the Agreement other than as stated
above.
WHEREFORE, the undersigned hereby approve this 1997 Amendment to the
Agreement.
Date of Execution: September 9, 1997
[EXECUTIVE]
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
NEWPORT FEDERAL SAVINGS & LOAN ASSOCIATION
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Attest:
-------------------------------- -----------------------
Its President
----------------------------
CORPORATE SEAL
NEWPORT FEDERAL SAVINGS & LOAN ASSOCIATION
__________________________
Employment Agreement with
▇▇▇▇▇ ▇▇▇▇▇▇▇
__________________________
AGREEMENT entered into and effective this 19th day of August, 1997, by
and between Newport Federal Savings & Loan Association (the "Association")
and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Employee").
WHEREAS, the Employee has heretofore been employed by the Association as
Branch Manager and Assistant Secretary and is experienced in all phases of
the business of the Association; and
WHEREAS, the Board of Directors (the "Board") of the Association
believes it is in the best interests of the Association to enter into this
Agreement with the Employee in order to assure continuity of management of
the Association and to reinforce and encourage the continued attention and
dedication of the Employee to her assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Association and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
When used anywhere in this Agreement, the following terms shall have the
meaning set forth herein.
(a) "Change in Control" shall mean any one of the following
events: (i) the acquisition of ownership, holding or power to vote more than
25% of the voting stock of the Association or the Company, (ii) the
acquisition of the ability to control the election of a majority of the
Association's or the Company's directors, (iii) the acquisition of a
controlling influence over the management or policies of the Association or
of the Company by any person or by persons acting as a "group" (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934), or (iv)
during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Association or of the Company (the "Existing Board") cease
for any reason to constitute at least two-thirds thereof, provided that any
individual whose election or nomination for election as a member of the
Existing Board was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a Continuing
Director. Notwithstanding the foregoing, the Company's ownership of the
Association shall not of itself constitute a Change in Control for purposes
of the Agreement.
For purposes of this paragraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any
other form of entity not specifically listed herein.
(b) "Company" shall mean United Tennessee Bankshares, Inc.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Disability" shall mean a physical or mental infirmity which
impairs the Employee's ability to substantially perform her duties under this
Agreement and which results in the Employee becoming eligible for long-term
disability benefits under the Association's long-term disability plan (or, if
the Association has no such plan in effect, which impairs the Employee's
ability to substantially perform her duties under this Agreement for a period
of 180 consecutive days).
(f) "Effective Date" shall mean the date referenced in the opening
paragraph of this Agreement.
(g) "Good Reason" shall mean any of the following events, which
has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move her personal residence, or perform her
principal executive functions, more than thirty (30) miles from her primary
office as of the later of the Effective Date and the most recent voluntary
relocation by the Employee; (ii) a material reduction in the Employee's base
compensation under this Agreement as the same may be increased from time to
time; (iii) the failure by the Association or the Company to continue to
provide the Employee with compensation and benefits provided under this
Agreement as the same may be increased from time to time, or with benefits
substantially similar to those provided to her under any of the employee
benefit plans in which the Employee now or hereafter becomes a participant,
or the taking of any action by the Association or the Company which would
directly or indirectly reduce any of such benefits or deprive the Employee of
any material fringe benefit enjoyed by her under this Agreement; (iv) the
assignment to the Employee of duties and responsibilities materially
different from those normally associated with her position; (v) a failure to
reelect the Employee to the Board of Directors of the Association or the
Company, if the Employee has served on such Board at any time during the term
of the Agreement; or (vi) a material diminution or reduction in the
Employee's responsibilities or authority (including reporting
responsibilities) in connection with her employment with the Association.
(h) "Just Cause" shall mean, in the good faith determination of
the Association's Board of Directors, the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. The Employee shall have no right
to receive compensation or other benefits for any period after termination
for Just Cause. No act, or failure to act, on the Employee's part shall be
considered "willful" unless she has acted, or failed to act, with an absence
of good faith and without a reasonable belief that her action or failure to
act was in the best interest of the Association and the Company.
(i) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(j) "Trust" shall mean the Newport Federal Savings & Loan
Association Grantor Trust Agreement.
2. Employment. The Employee is employed as the Branch Manager and
Assistant Secretary of the Association. The Employee shall render such
administrative and management services for the Association as are currently
rendered and as are customarily performed by persons situated in a similar
executive capacity. The Employee shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the
Association. The Employee's other duties shall be such as the Board may from
time to time reasonably direct, including normal duties as an officer of the
Association.
3. Base Compensation. The Association agrees to pay the Employee
during the term of this Agreement a salary at the rate of $33,376 per annum,
payable in cash not less frequently than monthly. The Board shall review,
not less often than annually, the rate of the Employee's salary, and in its
sole discretion may decide to increase her salary.
4. Discretionary Bonuses. The Employee shall participate in an
equitable manner with all other senior management employees of the
Association in discretionary bonuses that the Board may award from time to
time to the Association's senior management employees. No other compensation
provided for in this Agreement shall be deemed a substitute for the
Employee's right to participate in such discretionary bonuses.
5. Participation in Retirement, Medical and Other Plans.
(a) The Employee shall be eligible to participate in any of the
following plans or programs that the Association may now or in the future
maintain: group hospitalization, disability, health, dental, sick leave,
life insurance, travel and/or accident insurance, auto allowance/auto lease,
retirement, pension, and/or other present or future qualified or nonqualified
plans provided by the Association, generally which benefits, taken as a
whole, must be at least as favorable as those in effect on the Effective Date.
(b) The Employee shall also be eligible to participate in any
fringe benefits which are or may become available to the Association's senior
management employees, including
for example: any stock option or incentive compensation plans, and any other
benefits which are commensurate with the responsibilities and functions to be
performed by the Employee under this Agreement. The Employee shall be
reimbursed for all reasonable out-of-pocket business expenses which she shall
incur in connection with her services under this Agreement upon
substantiation of such expenses in accordance with the policies of the
Association.
6. Term. The Association hereby employs the Employee, and the
Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending eighteen (18) months thereafter
(or such earlier date as is determined in accordance with Section 10 or 12
hereof). Additionally, on each annual anniversary date from the Effective
Date, the Employee's term of employment shall be extended for an additional
one-year period beyond the then effective expiration date, provided the Board
determines in a duly adopted resolution that the performance of the Employee
has met the Board's requirements and standards, and that this Agreement shall
be extended. Only those members of the Board of Directors who have no
personal interest in this Employment Agreement shall discuss and vote on the
approval and subsequent review of this Agreement.
7. Loyalty; Noncompetition.
(a) During the period of her employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all her full business time, attention, skill, and
efforts to the faithful performance of her duties hereunder; provided,
however, from time to time, Employee may serve on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which
will not present any conflict of interest with the Association or any of its
subsidiaries or affiliates, or unfavorably affect the performance of
Employee's duties pursuant to this Agreement, or will not violate any
applicable statute or regulation. "Full business time" is hereby defined as
that amount of time usually devoted to like companies by similarly situated
executive officers. During the term of her employment under this Agreement,
the Employee shall not engage in any business or activity contrary to the
business affairs or interests of the Association.
(b) Nothing contained in this Section shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other
securities of any business dissimilar from that of the Association, or,
solely as a passive or minority investor, in any business.
8. Standards. The Employee shall perform her duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Association will provide Employee with the
working facilities and staff customary for similar executives and necessary
for her to perform her duties.
9. Vacation and Sick Leave. At such reasonable times as the Board
shall in its discretion permit, the Employee shall be entitled, without loss
of pay, to absent himself voluntarily from the performance of her employment
under this Agreement, all such voluntary absences to count as vacation time,
provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for
senior management employees of the Association.
(b) The Employee shall not receive any additional compensation
from the Association on account of her failure to take a vacation or sick
leave, and the Employee shall not accumulate unused vacation or sick leave
from one fiscal year to the next, except in either case to the extent
authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee
shall be entitled without loss of pay, to absent himself voluntarily from the
performance of her employment with the Association for such additional
periods of time and for such valid and legitimate reasons as the Board may in
its discretion determine. Further, the Board may grant to the Employee a
leave or leaves of absence, with or without pay, at such time or times and
upon such terms and conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
10. Termination and Termination Pay. Subject to Section 12 hereof, the
Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon her death during the term of this Agreement, in which event
the Employee's estate shall be entitled to receive the compensation due the
Employee through the last day of the calendar month in which her death
occurred.
(b) Disability. (1) The Association may terminate the Employee's
employment after having established the Employee's Disability, in which event
the Employee shall be entitled to the compensation and benefits provided for
under this Agreement for (i) any period during the term of this Agreement and
prior to the establishment of the Employee's Disability during which the
Employee is unable to work due to the physical or mental infirmity, and (ii)
any period of Disability which is prior to the Employee's termination of
employment pursuant to this Section 10(b); provided that any benefits paid
pursuant to the Association's long term disability plan will continue as
provided in such plan without reduction for payments made pursuant to this
Agreement.
(2) During any period that the Employee shall receive
disability benefits and to the extent that the Employee shall be physically
and mentally able to do so, she shall furnish such information, assistance
and documents so as to assist in the continued ongoing business of the
Association and, if able, shall make himself available to the Association to
undertake reasonable assignments consistent with her prior position and her
physical and mental health. The Association shall pay all reasonable
expenses incident to the performance of any assignment given to the Employee
during the disability period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate her employment at any time, for Just Cause. The
Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause.
(d) Without Just Cause; Constructive Discharge. The Board may,
by written notice to the Employee, immediately terminate her employment at
any time for a reason other than her Disability or Just Cause, in which event
the Employee shall be entitled to receive the following compensation and
benefits (unless such termination occurs during the Protected Period, in
which event the benefits and compensation provided for in Section 12 shall
apply): the salary provided pursuant to Section 3 hereof, up to the
expiration date of this Agreement, including any renewal term (the
"Expiration Date"), plus said salary for an additional 12-month period. All
amounts payable to the Employee shall be paid, at the option of the Employee,
either (I) in periodic payments through the Expiration Date, or (II) in one
lump sum within ten days of such termination.
(e) Good Reason. The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d) hereof in the event
that the Employee voluntarily terminates employment within 90 days of an
event that constitutes Good Reason (unless such voluntary termination occurs
during the Protected Period, in which event the benefits and compensation
provided for in Section 12 shall apply).
(f) Termination or Suspension Under Federal Law. (1) If the
Employee is removed and/or permanently prohibited from participating in the
conduct of the Association's affairs by an order issued under Sections
8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C.
1818(e)(4) and (g)(1)), all obligations of the Association under this
Agreement shall terminate, as of the effective date of the order, but vested
rights of the parties shall not be affected.
(2) If the Association is in default (as defined in Section
3(x)(1) of FDIA), all obligations under this Agreement shall terminate as of
the date of default; however, this Paragraph shall not affect the vested
rights of the parties.
(3) If a notice served under Section 8(e)(3) or (g)(1) of the
FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits
the Employee from participating in the conduct of the Association's affairs,
the Association's obligations under this Agreement shall be suspended as of
the date of such service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Association may in its discretion
(i) pay the Employee all or part of the compensation withheld while its
contract obligations were suspended, and (ii) reinstate (in whole or in part)
any of its obligations which were suspended.
(4) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with both 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder, and Regulatory Bulletin 27A, but only to the extent required
thereunder on the date any payment is required pursuant to this Agreement.
(g) Voluntary Termination by Employee. Subject to Section 12
hereof, the Employee may voluntarily terminate employment with the
Association during the term of this Agreement, upon at least 90 days' prior
written notice to the Board of Directors, in which case the Employee shall
receive only her compensation, vested rights and employee benefits up to the
date of her termination (unless such termination occurs pursuant to Section
10(d) hereof or within the Protected Period, in Section 12(a) hereof, in
which event the benefits and compensation provided for in Sections 10(d) or
12, as applicable, shall apply).
11. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Employee in any
subsequent employment.
12. Change in Control.
(a) Trigger Events. The Employee shall be entitled to collect the
severance benefits set forth in subsection (b) hereof in the event that
either (i) the Employee voluntarily terminates employment for any reason
within the 30-day period beginning on the date of a Change in Control, (ii)
the Employee voluntarily terminates employment within 90 days of an event
that both occurs during the Protected Period and constitutes Good Reason, or
(iii) the Association or the Company or their successor(s) in interest
terminate the Employee's employment without her written consent and for any
reason other than Just Cause during the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes entitled
to collect severance benefits pursuant to Section 12(a) hereof, the
Association shall:
(i) pay the Employee a severance benefit equal to 1.5 times her
base salary then in effect, but in no event greater than the
difference between the Code Section 280G Maximum and the sum of any
other "parachute payments" as defined under Code Section 280G(b)(2)
that the Employee receives on account of the Change in Control, and
(ii) pay for long-term disability and provide such medical
benefits as are available to the Employee under the provisions of
COBRA, for eighteen (18) months (or such longer period, up to 24
months, if COBRA is amended).
The amount payable under Section 12(b)(i) shall be paid in one lump sum
within ten days of the later of the date of the Change in Control and the
Employee's last day of employment with the Association or the Company. In
the event that the Employee, the Association, and the Company jointly agree
that the Employee has collected an amount exceeding the Code Section 280G
Maximum, the parties may agree in writing that such excess shall be treated
as a loan ab initio, which the Employee shall repay to the Association, on
terms and conditions mutually agreeable to the parties, together with
interest at the applicable federal rate provided for in Section 7872(f)(2)(B)
of the Code.
(c) Funding of Grantor Trust upon Change in Control. Not later
than ten business days after a Change in Control, the Association shall (i)
deposit in a Trust an amount equal to the Code Section 280G Maximum, unless
the Employee has previously provided a written release of any claims under
this Agreement, and (ii) provide the trustee of the Trust with a written
direction to hold said amount and any investment return thereon in a
segregated account for the benefit of the Employee, and to follow the
procedures set forth in the next paragraph as to the payment of such amounts
from the Trust. Upon the later of the Trust's final payment of all amounts
due under the following paragraph or the date twelve months after the Change
in Control, the trustee of the Trust shall pay to the Association the entire
balance remaining in the segregated account maintained for the benefit of the
Employee. The Employee shall thereafter have no further interest in the
Trust.
During the 15-consecutive month period after a Change in Control, the
Employee may provide the trustee of the Trust with a written notice
requesting that the trustee pay to the Employee an amount designated in the
notice as being payable pursuant to this Agreement. Within three business
days after receiving said notice, the trustee of the Trust shall send a copy
of the notice to the Association via overnight and registered mail return
receipt requested. On the tenth (10th) business day after mailing said
notice to the Association, the trustee of the Trust shall pay the Employee
the amount designated therein in immediately available funds, unless prior
thereto the Association provides the trustee with a written notice directing
the trustee to withhold such payment. In the latter event, the trustee shall
submit the dispute to non-appealable binding arbitration for a determination
of the amount payable to the Employee pursuant to this Agreement, and the
costs of such arbitration shall be paid by the Association. The trustee
shall choose the arbitrator to settle the dispute, and such arbitrator shall
be bound by the rules of the American Arbitration Association in making his
determination. The parties and the trustee shall be bound by the results of
the arbitration and, within three days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be
paid to the Employee and/or the Association, and in no event shall the
trustee be liable to either party for making the payments as determined by
the arbitrator.
13. Indemnification. The Association and the Company agree that their
respective Bylaws shall continue to provide for indemnification of directors,
officers, employees and agents of the Association and the Company, including
the Employee during the full term of this Agreement, and to at all times
provide adequate insurance for such purposes.
14. Reimbursement of Employee for Enforcement Proceedings. In the
event that any dispute arises between the Employee and the Association as to
the terms or interpretation of this Agreement, whether instituted by formal
legal proceedings or otherwise, including any action that the Employee takes
to defend against any action taken by the Association or the Company, the
Employee shall be reimbursed for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Employee obtains either a written settlement or a final judgement by
a court of competent jurisdiction substantially in her favor. Such
reimbursement shall be paid within ten days of Employee's furnishing to the
Association written evidence, which may be in the form, among other things,
of a cancelled check or receipt, of any costs or expenses incurred by the
Employee.
15. Federal Income Tax Withholding. The Association may withhold all
federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation
or ruling.
16. Successors and Assigns.
(a) Association. This Agreement shall not be assignable by the
Association, provided that this Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Association which
shall acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Association.
(b) Employee. Since the Association is contracting for the unique
and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating her rights or duties hereunder without first
obtaining the written consent of the Association; provided, however, that
nothing in this paragraph shall preclude (i) the Employee from designating a
beneficiary to receive any benefit payable hereunder upon her death, or (ii)
the executors, administrators, or other legal representatives of the Employee
or her estate from assigning any rights hereunder to the person or persons
entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation
or to exclusion, attachment, levy or similar process or assignment by
operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
17. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal law, the
laws of the State of Tennessee shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
19. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto and shall
supersede any prior agreement between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: NEWPORT FEDERAL SAVINGS & LOAN
ASSOCIATION
/s/ ▇. ▇. ▇▇▇▇▇ By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------- -------------------------------------
Secretary Its Chairman of the Board
WITNESS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------- -------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
EMPLOYMENT AGREEMENT
BETWEEN
NEWPORT FEDERAL SAVINGS & LOAN ASSOCIATION AND ▇▇▇▇▇ ▇▇▇▇▇▇
AND ▇▇▇▇▇ ▇▇▇▇▇▇▇
1997 AMENDMENT
___________________
WHEREAS, on September 9, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Savings & Loan
Association (the "Association") entered into an Employment Agreement (the
"Agreement") with ▇▇▇▇▇ ▇▇▇▇▇▇ (the "Employee"); and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
WHEREAS, the Board of Directors of the Association and the Employee have
determined that it is in the best interests of the Association and the
Employee to amend the Agreement.
NOW, THEREFORE, the Agreement shall be amended as follows, with such
amendment to become effective immediately upon execution hereof:
1. The first sentence of Section 10(d) of the Agreement shall be
amended in its entirety to provide as follows:
The Board may, by written notice to the Employee, immediately
terminate her employment at any time for a reason other than her
Disability or Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits (unless
such termination occurs during the Protected Period, in which event
the benefits and compensation provided for in Section 12 shall
apply): (i) the salary provided pursuant to Section 3 hereof, up to
the expiration date of this Agreement, including any renewal term
(the "Expiration Date"), plus said salary for an additional 12-month
period, and (ii) at the Employee's election either (A) cash in an
amount equal to the cost to the Employee of obtaining all health,
life, disability and other benefits which the Employee would have
been eligible to participate in through the Expiration Date based
upon the benefit levels substantially equal to those that the
Association provided for the Employee at the date of termination of
employment, or (B) continued participation under such Association
benefit plans through the Expiration Date, but only to the extent
the Employee continues to qualify for participation therein.
2. Section 10 of the Agreement shall be further amended by adding the
following subsection (h) immediately at the end thereof:
(h) Post-termination Health Insurance. If the Employee's
employment terminates with the Association or the Company for any
reason other
1997 Amendment
Page 2
than Just Cause, the Employee shall be entitled to purchase from the
Association, at the Employee's own expense which shall not exceed
applicable COBRA rates, family medical insurance under any group
health plan that the Association or the Company maintains for its
employees. This right shall be (i) in addition to, and not in lieu
of, any other rights that the Employee has under this Agreement, and
(ii) shall continue until the Employee first becomes eligible for
participation in Medicare.
3. Nothing contained herein shall be held to alter, vary or affect any
of the terms, provisions, or conditions of the Agreement other than as stated
above.
WHEREFORE, the undersigned hereby approve this 1997 Amendment to the
Agreement.
Date of Execution: September 9, 1997
[EXECUTIVE]
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
NEWPORT FEDERAL SAVINGS & LOAN ASSOCIATION
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------- ------------------------
Its President
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CORPORATE SEAL