FORM OF NEWPORT FEDERAL SAVINGS BANK AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.3
Form of
Amended and Restated Employment Agreement between Newport Federal Savings Bank
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇▇.
On December 11, 2008, Newport Federal
Savings Bank amended Executive Employment Agreements to comply with Section 409A
of the Internal Revenue Code.
FORM
OF
NEWPORT
FEDERAL SAVINGS BANK
AMENDED
AND RESTATED
This
Amended and Restated Employment Agreement (the “Agreement”), by
and between, Newport Federal Savings
Bank, a federally
chartered savings bank (the “Bank”), and ______________ (the “Executive”), is
hereby amended and restated effective as of __________,
____. Any references to the “Company” shall mean Newport Bancorp,
Inc., the stock holding company of the Bank.
WHEREAS, the Executive is
currently employed as _______________________________ of the Bank pursuant to an
employment agreement between the Bank and the Executive entered into as of
October 14, 2005 (the “Prior Agreement”);
WHEREAS, the Bank desires to
amend and restate the Prior Agreement in order to comply with the final
regulations issued under Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) in April 2007; and
WHEREAS, the Executive has
agreed to such changes.
NOW, THEREFORE, in
consideration of the mutual covenants herein contained, and upon the other terms
and conditions hereinafter provided, the parties hereby agree as
follows:
1.
Employment. Executive is
employed as the _______________________________ of the
Bank. Executive shall perform all duties and shall have all powers
which are commonly incident to the offices of _________________________________
or which, consistent with those offices, are delegated to him by the Board of
Directors of the Bank. During the term of this Agreement, Executive
also agrees to serve, if elected, as an officer and/or director of any
subsidiary or affiliate of the Bank and in such capacity will carry out such
duties and responsibilities reasonably appropriate to that office.
2.
Location
and Facilities. Executive will be
furnished with the working facilities and staff customary for executive officers
with the title and duties set forth in Section 1 and as are necessary for him to
perform his duties. The location of such facilities and staff shall
be at the principal administrative offices of the Bank, or at such other site or
sites customary for such offices.
3.
Term.
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a.
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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 3,
provided, however, that all changes intended to comply with Code Section
409A shall be effective retroactively to October 14, 2005; and provided
further, that no retroactive changes shall affect the compensation or
benefits previously provided to the
Executive.
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b.
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Commencing
December 2006 and each December thereafter, the disinterested members of
the boards of directors of the Bank may extend the Agreement an additional
year such that the remaining term of the Agreement shall be thirty-six
(36) months, unless Executive elects not to extend the term of this
Agreement by giving written notice in accordance with Section 19 of this
Agreement. The Board of Directors of the Bank (the “Board”)
will review the Agreement and Executive’s performance annually for
purposes of determining whether to extend the Agreement and the rationale
and results thereof shall be included in the minutes of the Board’s
meeting. The Board of Directors of the Bank shall give notice
to Executive as soon as possible after such review as to whether the
Agreement is to be extended.
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4.
Base
Compensation.
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a.
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The
Bank agrees to pay Executive during the term of this Agreement a base
salary at the rate of $_______________ per year, payable in accordance
with customary payroll practices.
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b.
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The
Board shall review the rate of Executive’s base salary at least annually
based upon factors they deem relevant, and may maintain or increase his
base salary, provided that no such action shall reduce the rate of base
salary below the rate in effect on the Effective
Date.
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c.
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In
the absence of action by the Board, Executive shall continue to receive
base salary at the annual rate specified on the Effective Date or, if
another rate has been established under the provisions of this Section 4,
the rate last properly established by action of the Board under the
provisions of this Section 4.
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5. Bonuses. Executive shall
be entitled to participate in discretionary bonuses or other incentive
compensation programs that the Bank may award from time to time to senior
management employees pursuant to bonus plans or otherwise. Any
bonuses or other payments made pursuant to this Section 5 shall be
paid promptly by the Bank, and in any event no later than March 15 of
the year immediately following the end of the calendar year for which such
amounts were payable.
6.
Benefit
Plans. Executive shall
be entitled to participate in such life insurance, medical, dental, pension,
profit sharing, retirement and stock-based compensation plans and other programs
and arrangements as may be approved from time to time by the Bank for the
benefit of their employees.
7.
Vacation and
Leave.
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a.
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Executive
shall be entitled to vacations and other leave in accordance with policy
for senior executives, or otherwise as approved by the
Board.
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b.
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In
addition to paid vacations and other leave, Executive shall be entitled,
without loss of pay, to absent himself voluntarily from the performance of
his employment 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 Executive a leave or
leaves of absence, with or without pay,
at
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such time
or times and upon such terms and conditions as the Board in its discretion may
determine.
8.
Expense
Payments and Reimbursements. Executive shall
be reimbursed for all reasonable out-of-pocket business expenses that he shall
incur in connection with his services under this Agreement upon substantiation
of such expenses in accordance with applicable policies of the
Bank. Such reimbursements and payments shall be made promptly by the
Bank and, in any event, not later than March 15 of the year immediately
following the year in which Executive incurred such expense.
9.
Automobile
Allowance. During the term
of this Agreement, Executive shall be entitled to use of an automobile provided
by the Bank, including insurance, maintenance and work-related fuel expenses,
or, in the alternative and the sole discretion of the Bank, the Executive shall
be entitled to an automobile allowance which would approximate the expense of a
Bank-provided automobile and related insurance, maintenance and fuel
costs. Executive shall comply with reasonable reporting and expense
limitations on the use of such automobile as may be established by the Bank from
time to time, and the Bank shall annually include on Executive’s Form W-2 any
amount of income attributable to Executive’s personal use of such
automobile. Such payments, if any, made under this Section 9 shall be
made promptly by the Bank and, in any event, not later than March 15 of the year
immediately following the year in which the expense was incurred.
10. Loyalty and
Confidentiality.
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a.
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During
the term of this Agreement, Executive: (i) shall devote all his time,
attention, skill, and efforts to the faithful performance of his duties
hereunder; provided, however, that from time to time, Executive 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 Bank or any of its subsidiaries or affiliates, unfavorably affect
the performance of Executive’s duties pursuant to this Agreement, or
violate any applicable statute or regulation and (ii) shall not engage in
any business or activity contrary to the business affairs or interests of
the Bank or any of its subsidiaries or
affiliates.
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b.
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Nothing
contained in this Agreement shall prevent or limit Executive’s right to
invest in the capital stock or other securities or interests of any
business dissimilar from that of the Bank, or, solely as a passive,
minority investor, in any business.
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c.
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Executive
agrees to maintain the confidentiality of any and all information
concerning the operation or financial status of the Bank; the names or
addresses of any of its borrowers, depositors and other customers; any
information concerning or obtained from such customers; and any other
information concerning the Bank or its subsidiaries or affiliates to which
he may be exposed during the course of his
employment. Executive further agrees that, unless required by
law or specifically permitted by the Board in writing, he will not
disclose to any person or entity, either during or subsequent to his
employment, any of the above-mentioned information which is not generally
known to the public, nor shall he employ such information in any way other
than for the benefit of the Bank.
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11. Termination
and Termination Pay. Subject to
Section 12 of this Agreement, Executive’s employment under this Agreement may be
terminated in the following circumstances:
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a.
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Death. Executive’s
employment under this Agreement shall terminate upon his death during the
term of this Agreement, in which event Executive’s estate shall be
entitled to receive the compensation due to Executive through the last day
of the calendar month in which his death
occurred.
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b.
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Retirement. This
Agreement shall be terminated upon Executive’s retirement under the
retirement benefit plan or plans in which he participates pursuant to
Section 6 of this Agreement or
otherwise.
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c.
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Disability.
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i.
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The
Board or Executive may terminate Executive’s employment after having
determined Executive has a Disability. For these purposes, the
Executive shall be deemed to have a “Disability” in any case in which it
is determined the Executive (A) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death, or last for a
continuous period of not less than twelve (12) months; (B) by reason of
any medically determinable physical or mental impairment which can be
expected to result in death, or last for a continuous period of not less
than twelve (12) months, is receiving income replacement benefits for a
period of not less than three months under an accident and health plan
covering employees of the Bank; or (C) is totally disabled by the Social
Security Administration. As a condition to any benefits, the
Board may require Executive to submit to such physical or mental
evaluations and tests as it deems reasonably
appropriate.
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ii.
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In
the event of such Disability, Executive’s obligation to perform services
under this Agreement will terminate. The Bank will pay
Executive, as Disability pay, an amount equal to seventy-five percent
(75%) of Executive’s bi-weekly rate of base salary in effect as of the
date of his termination of employment due to Disability. Disability
payments will be made on a monthly basis and will commence on the first
day of the month following the effective date of Executive’s termination
of employment for Disability and end on the earlier of: (A) the date he
returns to full-time employment at the Bank in the same capacity as he was
employed prior to his termination for Disability; (B) his death; (C) upon
his attainment of age 65 or (D) the date this Agreement would have expired
had Executive’s employment not terminated by reason of disability. Such
payments shall be reduced by the amount of any short- or long-term
disability benefits payable to Executive under any other disability
programs sponsored by the Bank. In addition, during any period
of Executive’s Disability, Executive and his dependents shall, to the
greatest extent possible, continue to be covered under all non-taxable
benefit plans (including life insurance and medical and dental insurance
plans) of the Bank, in which Executive participated prior to his
Disability on the same terms as if Executive were actively employed by the
Bank.
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d.
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Termination for
Cause.
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i.
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The
Board may, by written notice to Executive in the form and manner specified
in this paragraph, immediately terminate his employment at any time, for
“Cause.” Executive shall have no right to receive compensation
or other benefits for any period after termination for Cause except for
vested benefits. Termination for Cause shall mean termination
because of, in the good faith determination of the Board,
Executive’s:
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(1)
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Personal
dishonesty;
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(2)
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Incompetence;
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(3)
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Willful
misconduct;
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(4)
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Breach
of fiduciary duty involving personal
profit;
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(5)
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Intentional
failure to perform stated duties under this
Agreement;
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(6)
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Willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) that reflects adversely on the reputation of the Bank,
any felony conviction, any violation of law involving moral turpitude, or
any violation of a final cease-and-desist order;
or
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(7)
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Material
breach by Executive of any provision of this
Agreement.
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ii.
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Notwithstanding
the foregoing, Executive shall not be deemed to have been terminated for
Cause by the Bank unless there shall have been delivered to Executive a
copy of a resolution duly adopted by the affirmative vote of a majority of
the entire membership of the Board at a meeting of such Board called and
held for the purpose of finding that, in the good faith opinion of the
Board, Executive was guilty of the conduct described above and specifying
the particulars thereof.
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e.
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Voluntary Termination
by Executive. In addition to his other rights to
terminate under this Agreement, Executive may voluntarily terminate
employment during the term of this Agreement upon at least sixty (60) days
prior written notice to the Board. Following a voluntary termination of
employment under this Section 11(e), Executive will be subject to the
restrictions set forth in Sections 11(g)(i) and 11(g)(ii) of this
Agreement for a period of one (1) year from his termination
date.
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f.
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Without Cause or With
Good Reason.
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i.
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In
addition to termination pursuant to Sections 11(a) through 11(e), the
Board may, by written notice to Executive, immediately terminate his
employment at any time for a reason other than Cause (a termination
“Without Cause”) and Executive may, by written notice to the
Board, immediately terminate this Agreement at any time for “Good Reason”
(as defined below).
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ii.
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Subject
to Section 12 of this Agreement, in the event of termination under this
Section 11(f), Executive shall be entitled to receive an amount equal to
his base salary for the remaining term of the Agreement payable in a
single cash lump sum distribution within ten (10) calendar days
following such termination. Also, in such event, Executive
shall, for the remaining term of the Agreement, continue to participate in
any benefit plans of the Bank including life insurance and non-taxable
medical and dental insurance coverage, upon terms and conditions no less
favorable than the most favorable terms and conditions provided to senior
executives of the Bank during such period. In the event that
the Bank is unable to provide such coverage by reason of Executive no
longer being an employee, the Bank shall pay the Executive the value of
such benefits in a single cash lump sum distribution within ten (10)
calendar days following his
termination.
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iii.
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“Good
Reason” shall exist if, without Executive’s express written consent, the
Bank materially breaches any of its obligations under this
Agreement. Without limitation, such a material breach shall be
deemed to occur upon the occurrence of any of the
following:
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(1)
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A
material reduction in Executive’s responsibilities or authority in
connection with his employment with the
Bank;
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(2)
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Assignment
to Executive of duties of a non-executive nature or duties for which he is
not reasonably equipped by his skills and
experience;
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(3)
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Failure
of Executive to be nominated or renominated to the Board to the extent
Executive is a Board member prior to the Effective
Date;
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(4)
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A
material reduction in Executive’s salary or benefits contrary to the terms
of this Agreement, or following a Change in Control as defined in Section
12 of this Agreement, any reduction in salary or material reduction in
benefits below the amounts to which Executive was entitled prior to the
Change in Control;
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(5)
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Termination
of incentive and benefit plans (other than the Bank’s tax-qualified
plans), programs or arrangements, or reduction of Executive’s
participation to such an extent as to materially reduce their aggregate
value below their aggregate value as of the Effective
Date;
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(6)
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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 and any branch
of the Bank, or the assignment to Executive of duties that would
reasonably require such a relocation;
or
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(7)
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Liquidation
or dissolution of the Bank, other than liquidations or dissolutions that
are caused by reorganizations that do not negatively affect the status
of the Executive,
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provided,
however, that prior to any termination of employment for Good Reason (a
termination “With Good Reason”), the Executive must first provide written notice
to the Bank within ninety (90) days following the initial existence of the
condition, describing the existence of such condition, and the Bank shall
thereafter have the right to remedy the condition within thirty (30) days of the
date the Bank received the written notice from the Executive. If the
Bank remedies the condition within such thirty (30) day cure period, then no
Good Reason shall be deemed to exist with respect to such
condition. If the Bank does not remedy the condition within such
thirty (30) day cure period, then the Executive may deliver a Notice of
Termination for Good Reason at any time within sixty (60) days following the
expiration of such cure period.
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iv.
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Notwithstanding
the foregoing, a reduction or elimination of Executive’s benefits under
one or more benefit plans maintained by the Bank as part of a good faith,
overall reduction or elimination of such plans or plans or benefits
thereunder applicable to all participants in a manner that does not
discriminate against Executive (except as such discrimination may be
necessary to comply with law) shall not constitute an event of Good Reason
or a material breach of this Agreement, provided that benefits of the type
or to the general extent as those offered under such plans prior to such
reduction or elimination are not available to other officers of the Bank
or any company that controls either of them under a plan or plans in or
under which Executive is not entitled to
participate.
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v.
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For
purposes of this Agreement, any termination of Executive’s employment
shall be construed to require a “Separation from Service” in accordance
with Code Section 409A and the regulations promulgated thereunder, such
that the Bank and Executive reasonably anticipate that the level of bona
fide services Executive would perform after termination would permanently
decrease to a level that is less than 50% of the average level of bona
fide services performed (whether as an employee or an independent
contractor) over the immediately preceding thirty-six (36)-month
period.
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g. Continuing Covenant Not to
Compete or Interfere with Relationships. Regardless of
anything herein to the contrary, following a termination by the Bank or
Executive pursuant to Section 11(f):
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i.
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Executive’s
obligations under Section 10(c) of this Agreement will continue in effect;
and
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ii.
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During
the period ending on the first anniversary of such termination, Executive
shall not serve as an officer, director or employee of any bank or its
subsidiaries or affiliates holding company, bank, savings association,
savings and loan holding company, or mortgage company (any of which, a
“Financial Institution”) which Financial Institution offers products or
services competing with those offered by the Bank from any office within
fifty (50) miles from the main office or any branch of the Bank and shall
not interfere with the relationship of the Bank, its subsidiaries or
affiliates and any of their employees, agents, or
representatives.
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h.
To the extent Executive is a member of the
Board, on the date of termination of employment with the Bank, Executive shall
resign from the Board immediately following such termination of employment with
the Bank. Executive shall be obligated to tender such resignation
regardless of the method or manner of termination, and such resignation shall
not be conditioned upon any event or payment.
12. Termination in Connection
with a Change in Control.
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a.
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For
purposes of this Agreement, a “Change in Control” means any of the
following events:
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i.
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Merger: The
Bank or the Company merges into or consolidates with another entity, or
merges another entity into the Bank or the 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 Company immediately before the merger or
consolidation;
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ii.
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Acquisition of
Significant Share Ownership: The Company files, or is
required to file, a report on Schedule 13D or another form or schedule
(other than Schedule 13G) required under Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934, if the schedule discloses
that the filing person or persons acting in concert has or have
become the beneficial owner of 25% or more of a class of the Company’s
voting securities, but this clause (ii) shall not apply to beneficial
ownership of Company voting shares held in a fiduciary capacity by an
entity of which the Company directly or indirectly beneficially owns 50%
or more of its outstanding voting
securities.
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iii.
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Change in Board
Composition: During any period of two consecutive years,
individuals who constitute the Bank’s or the 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 Company’s Board of Directors;
provided, however, that for purposes of this clause
(iii),
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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
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iv.
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Sale of
Assets: The Bank or the Company sells to a third party
all or substantially all of its
assets.
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b.
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Termination. If
within the period ending two (2) years after a Change in Control, (i) the
Bank shall terminate Executive’s employment Without Cause, or (ii)
Executive voluntarily terminates his employment With Good Reason, the Bank
shall, within ten (10) calendar days following the termination of
Executive’s employment, make a single lump sum cash payment to him equal
to 2.99 times Executive’s average Annual Compensation (as defined in this
Section 12(b)) over the five (5) most recently completed calendar years
ending with the year immediately preceding the effective date of the
Change in Control. In determining Executive’s average Annual
Compensation, Annual Compensation shall include base salary and any other
taxable income, including, but not limited to, amounts related to the
granting, vesting or exercise of restricted stock or stock option awards,
commissions, bonuses (whether paid or accrued for the applicable period),
as well as, retirement benefits, director or committee fees and fringe
benefits paid or to be paid to Executive or paid for Executive’s benefit
during any such year, profit sharing, employee stock ownership plan and
other retirement contributions or benefits, including to any tax-qualified
plan or arrangement (whether or not taxable) made or accrued on behalf of
Executive of such year. The cash payment
made under this Section 12(b) shall be made in lieu of any payment also
required under Section 11(f) of this Agreement because of a termination in
such period. Executive’s rights under Section 11(f ) are not
otherwise affected by this Section 12. Also, in such event,
Executive shall, following his termination of employment, continue to
participate in any benefit plans of the Bank that provide life insurance
and non-taxable medical and dental insurance coverage upon terms no less
favorable than the most favorable terms provided to senior executives
during such period. In the event that the Bank is unable to
provide such coverage by reason of Executive no longer being an employee,
the Bank shall pay the Executive the value of such benefits in a single
cash lump sum distribution within ten (10) calendar days following his
termination. The life and non-taxable medical and dental
insurance coverage or other arrangement provided under this Section 12(b)
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 thirty-six (36) months from his
termination of employment.
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c.
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The
provisions of Section 12 and Sections 14 through 25, including the defined
terms used in such sections, shall continue in effect until the later of
the expiration of this Agreement or two years following a Change in
Control.
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d.
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Notwithstanding
anything in this Section 12, a “Change in Control” for purposes of this
Agreement shall not include any corporate restructuring transaction by the
Bank 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
immediately preceding such transaction constitutes at least a majority of
the Board of Directors of the Bank after such
transaction.
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13.
Indemnification and
Liability Insurance.
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a.
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Indemnification. The
Bank agrees to indemnify Executive (and his heirs, executors, and
administrators), and to advance expenses related thereto, to the fullest
extent permitted under applicable law and regulations against any and all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit, or proceeding in which he may be involved
by reason of his having been a director or Executive of the Bank or any of
its subsidiaries
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(whether
or not he continues to be a director or Executive at the time of incurring any
such expenses or liabilities) such expenses and liabilities to include, but not
be limited to, judgments, court cost, and attorney’s fees and the costs of
reasonable settlements, such settlements to be approved by the Board, if such
action is brought against Executive in his capacity as an Executive or director
of the Bank or any of its subsidiaries. Indemnification for expenses shall not
extend to matters for which Executive has been terminated for
Cause. Nothing contained herein shall be deemed to provide
indemnification prohibited by applicable law or
regulation. Notwithstanding anything herein to the contrary, the
obligations of this Section 13 shall survive the term of this Agreement by a
period of six (6) years.
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b.
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Insurance. During
the period in which indemnification of Executive is required under this
Section, the Bank shall provide Executive (and his heirs, executors, and
administrators) with coverage under a directors’ and officers’ liability
policy at the expense of the Bank, at least equivalent to such coverage
provided to directors and senior executives of the
Bank.
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14. Reimbursement
of Executive’s Expenses to Enforce this Agreement. The Bank shall
reimburse Executive for all out-of-pocket expenses, including, without
limitation, reasonable attorney’s fees, incurred by Executive in connection with
successful enforcement by Executive of the obligations of the Bank to Executive
under this Agreement. The Bank shall make such payments promptly and,
in any event, not later than March 15 of the year immediately following the year
in which such expense was incurred by Executive. Successful
enforcement shall mean the grant of an award of money or the requirement that
the Bank take some action specified by this Agreement: (i) as a result of court
order; or (ii) otherwise by the Bank following an initial failure of the Bank to
pay such money or take such action promptly after written demand therefor from
Executive stating the reason that such money or action was due under this
Agreement at or prior to the time of such demand.
15. Limitation
of Benefits under Certain Circumstances. If the payments
and benefits pursuant to Section 12 of this Agreement, either alone or together
with other payments and benefits which Executive has the right to receive from
the Bank, would constitute a “parachute payment” under Section 280G of the Code,
the payments and benefits pursuant to Section 12 shall be reduced or revised by
the amount, if any, which is the minimum necessary to result in no portion of
the payments and benefits under Section 12 being non-deductible to the Bank
pursuant to Section 280G of the Code and subject to the excise tax imposed under
Section 4999 of the Code. For purposes of the prior sentence, the
reduction in specific benefits shall be determined by Executive, provided,
however, that if such reduction violates Code Section 409A, then the reduction
shall be applied to the severance benefits otherwise payable under Section 12(b)
hereof. The determination of any reduction in the payments and
benefits to be made pursuant to Section 12 shall be based upon the opinion of
the Bank’s counsel or independent public accountants which such opinion shall be
paid for by the Bank. In the event that the Bank and/or Executive do
not agree with the opinion of such counsel or independent accountants, (i) the
Bank shall pay to Executive the maximum amount of payments and benefits pursuant
to Section 12, as selected by Executive, but only to the extent that such
opinion indicates there is a high probability that such payments and benefits do
not result in any of such payments and benefits being non-deductible to the Bank
and subject to the imposition of the excise tax imposed under Section 4999 of
the Code and (ii) the Bank may request, and Executive shall have the right to
demand that the Bank request, a ruling from the IRS as to whether the disputed
payments and benefits pursuant to Section 12 have such consequences. Any such
request for a ruling from the IRS shall be promptly prepared and filed by the
Bank, but in no event later than thirty (30) days from the date of the opinion
of counsel or independent accountants referred to above, and shall be subject to
Executive’s approval prior to filing, which shall not be unreasonably
withheld. The Bank and Executive agree to be bound by any ruling
received from the IRS and to make appropriate payments to each other to reflect
any such rulings, together with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code. Nothing contained herein shall
result in a reduction of any payments or benefits to which Executive may be
entitled upon termination of employment other than pursuant to Section 12
hereof, or a reduction in the payments and benefits specified in Section 12
below zero.
16. Injunctive
Relief. If there is a
breach or threatened breach of Section 11(g) of this Agreement or the
prohibitions upon disclosure contained in Section 10(c) of this Agreement, the
parties agree that there is no adequate remedy at law for such breach, and that
the Bank shall be entitled to injunctive relief restraining
Executive
from such
breach or threatened breach, but such relief shall not be the exclusive remedy
hereunder for such breach. The parties hereto likewise agree that
Executive, without limitation, shall be entitled to injunctive relief to enforce
the obligations of the Bank under this Agreement.
17. Successors and
Assigns.
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a.
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This
Agreement shall inure to the benefit of and be binding upon any corporate
or other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the
Bank.
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b.
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Since
the Bank is contracting for the unique and personal skills of Executive,
Executive shall be precluded from assigning or delegating his rights or
duties hereunder without first obtaining the written consent of the
Bank.
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18. No
Mitigation. Executive 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
Executive in any subsequent employment.
19. Notices. All notices,
requests, demands and other communications in connection with this Agreement
shall be made in writing and shall be deemed to have been given when delivered
by hand or 48 hours after mailing at any general or branch United States Post
Office, by registered or certified mail, postage prepaid, addressed to the Bank
at their principal business offices and to Executive at his home address as
maintained in the records of the Bank.
20. No Plan
Created by this Agreement. Executive and the
Bank expressly declare and agree that this Agreement was negotiated among them
and that no provision or provisions of this Agreement are intended to, or shall
be deemed to, create any plan for purposes of the Employee Retirement Income
Security Act or any other law or regulation, and each party expressly waives any
right to assert the contrary. Any assertion in any judicial or
administrative filing, hearing, or process that such a plan was so created by
this Agreement shall be deemed a material breach of this Agreement by the party
making such an assertion.
21. 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.
22. Applicable
Law. Except to the
extent preempted by Federal law, the laws of the State of Rhode Island shall
govern this Agreement in all respects, whether as to its validity, construction,
capacity, performance or otherwise.
23. 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.
24. Headings. Headings
contained herein are for convenience of reference only.
25. Entire
Agreement. This Agreement,
together with any understanding or modifications thereof as agreed to in writing
by the parties, shall constitute the entire agreement among the parties hereto
with respect to the subject matter hereof, other than written agreements with
respect to specific plans, programs or arrangements described in Sections 5 and
6.
26. Required
Provisions. In the event any
of the foregoing provisions of this Section 26 are in conflict with the terms of
this Agreement, this Section 26 shall prevail.
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a.
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The
Bank may terminate Executive’s employment at any time, but any termination
by the Bank, other than Termination for Cause, shall not prejudice
Executive’s right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive
compensation or other benefits for any period after Termination for Cause
as defined in Section 11(d)
hereinabove.
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b.
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If
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served
under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. Section 1818(e)(3) or (g)(1); the Bank’s obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are
dismissed, the Bank may, in its discretion: (i) pay Executive
all or part of the compensation withheld while their contract obligations
were suspended; and (ii) reinstate (in whole or in part) any of the
obligations which were suspended.
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c.
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If
Executive is removed and/or permanently prohibited from participating in
the conduct of the Bank’s affairs by an order issued under Section 8(e)(4)
or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Section
1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order, but vested rights
of the contracting parties shall not be
affected.
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d.
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If
the Bank is in default as defined in Section 3(x)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. Section 1813(x)(1) all obligations of the
Bank under this Agreement shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting
parties.
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e.
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All
obligations of the Bank under this Agreement shall be terminated, except
to the extent determined that continuation of the contract is necessary
for the continued operation of the institution: (i) by the
Director of the OTS (or his designee) or the FDIC, at the time the FDIC
enters into an agreement to provide assistance to or on behalf of the Bank
under the authority contained in Section 13(c) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1823(c); or (ii) by the Director of the
OTS (or his designee) at the time the Director (or his designee) approves
a supervisory merger to resolve problems related to the operations of the
Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by such
action.
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f.
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Any
payments made to Executive pursuant to this Agreement, or otherwise, are
subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k)
and 12 C.F.R. Section 545.121 and any rules and regulations promulgated
thereunder.
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g.
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Notwithstanding
the foregoing, in the event the Executive is a Specified Employee (as
defined herein), then, solely, to the extent required to avoid penalties
under Code Section 409A, the Executive’s payments shall be paid on the
first day of the seventh month following the Executive’s Separation from
Service (together with interest thereon at the prevailing prime
rate). A “Specified Employee” shall be interpreted to comply
with Code Section 409A and shall mean a key employee within the meaning of
Code Section 416(i) (without regard to paragraph 5 thereof), but an
individual shall be a “Specified Employee” only if the Bank, or the
Company, is or becomes a publicly traded
company.
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27. Source of
Payments.
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a.
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All
payments provided for in this Agreement shall be timely made in cash or
check from the general funds of the Bank. The Company, however,
unconditionally guarantees payment and provision of all amounts and
benefits due hereunder to Executive and, if such amounts and benefits due
from the Bank are not timely paid or provided by the Bank, such amounts
and benefits shall be paid or provided by the
Company.
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b.
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Notwithstanding
any provision herein to the contrary, to the extent that payments and
benefits, as provided by this Agreement, are paid to or received by
Executive under the Employment Agreement in effect between Executive and
the Company (the “Company Agreement”), such compensation payments and
benefits paid by the Company will be subtracted from any amount due
simultaneously to Executive under similar provisions of this
Agreement. Payments pursuant to this Agreement and the Company
Agreement shall be allocated in proportion to the level of activity and
the time expended on such activities by Executive as determined by the
Company and the Bank.
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[signature
page follows]
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date first set forth
below.
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NEWPORT
FEDERAL SAVINGS BANK
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By:
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Date
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For
the Entire Board of Directors
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EXECUTIVE
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By:
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Date
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