Attached files
| file | filename |
|---|---|
| 10-K - FORM 10-K - Newport Bancorp Inc | form10k-105965_newp.htm |
| EX-32.0 - EXHIBIT 32.0 - Newport Bancorp Inc | ex32_0.htm |
| EX-10.3 - EXHIBIT 10.3 - Newport Bancorp Inc | ex10_3.htm |
| EX-31.1 - EXHIBIT 31.1 - Newport Bancorp Inc | ex31_1.htm |
| EX-31.2 - EXHIBIT 31.2 - Newport Bancorp Inc | ex31_2.htm |
| EX-21.0 - EXHIBIT 21.0 - Newport Bancorp Inc | ex21_0.htm |
| EX-10.2 - EXHIBIT 10.2 - Newport Bancorp Inc | ex10_2.htm |
| EX-23.0 - EXHIBIT 23.0 - Newport Bancorp Inc | ex23_0.htm |
Exhibit
10.4
Form of
Amended and Restated Employment Agreement between Newport Bancorp, Inc. and
Executives
NEWPORT
BANCORP, INC.
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT BETWEEN
KEVIN
M MCCARTHY, NINO MOSCARDI, RAY GILMORE AND BRUCE WALSH
On December 11, 2008, Newport Bancorp,
Inc. amended the employment agreements with Messrs. McCarthy, Moscardi, Gilmore
and Walsh to comply with Section 409A of the Internal Revenue Code. Messrs.
McCarthy, Moscardi and Gilmore have a three year agreements and Mr. Walsh has a
two year agreement.
This Amended and Restated Three-Year
Employment Agreement (the “Agreement”), by and among Newport Bancorp, Inc., a
Maryland corporation (the “Company”), and ______________
(“Executive”), is hereby amended and restated effective as of __________ (the
“Effective Date”). References to the “Bank” herein shall mean Newport
Federal Savings Bank.
WHEREAS, the Executive is
currently employed as _____________________________ of the Company pursuant to
an employment agreement between the Company and the Executive entered into as of
July 18, 2006 (the “Prior Agreement”); and
WHEREAS, the Company 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
Company. Executive shall perform all duties and shall have all powers
which are commonly incident to the offices of _____________________________ of
the Company or which, consistent with those offices, are delegated to him by the
Board of Directors of the Company. During the term of this Agreement, Executive
also agrees to serve, if elected, as an officer and/or director of any
subsidiary of the Company and in such capacity carry out such duties and
responsibilities reasonably appropriate to that office.
2.
Location
and Facilities. The 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 Company, or at
such other site or sites customary for such offices.
3.
Term. The period of
Executive’s employment under this Agreement shall be deemed to have commenced as
of the date written above and shall continue for a period of thirty-six (36)
full calendar months (24 in the case of Mr. Walsh), provided, however, that all
changes intended to comply with Code Section 409A shall be effective
retroactively to July 18, 2006; and provided further, that no retroactive
changes shall affect the compensation or benefits previously provided to the
Executive. The term of this Agreement shall be extended for one day
each day so that a constant thirty-six (36) calendar month term (24 in the case
of Mr. Walsh) shall remain in effect, until such time as the Board of Directors
of the Company (the “Board”) or Executive elects not to extend
the
term of
the Agreement by giving written notice to the other party in accordance with the
terms of this Agreement, in which case the term of this Agreement shall be fixed
and shall end on the third anniversary of the date of such written
notice
4. Base
Compensation.
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a.
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The
Company agrees to pay the 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 the Executive’s base salary based upon
factors they deem relevant, and may maintain or increase his salary,
provided that no such action shall reduce the rate of salary below the
rate in effect on the Effective Date. The Board review shall
occur each December during the term of this
Agreement.
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c.
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In
the absence of action by the Board, the Executive shall continue to
receive his 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. The Executive
shall be entitled to participate in discretionary bonuses or other incentive
compensation programs that the Company 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 Company 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. The 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 Company or
its affiliates for the benefit of its employees.
7.
Vacation and
Leave.
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a.
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The
Executive shall be entitled to vacation 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 vacation and other leave, the 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 the Executive a
leave or leaves of absence, with or without pay, at such time or times and
upon such terms and conditions as the Board in its discretion may
determine.
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8.
Expense
Payments and Reimbursements. The 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
Company. Such reimbursements and payments shall be made promptly by
the Company 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 Company or the Bank, including insurance, maintenance and work-related
fuel expenses, or, in the alternative and the sole discretion of the Bank or the
Company, the Executive shall be entitled to
an
automobile allowance which would approximate the expense of a Bank-provided or
Company 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 or
the Company from time to time, and the Bank or the Company shall annually
include on Executive’s Form W-2 any amount of income attributable to Executive’s
personal use of such automobile. Payments, if any, made under this
Section 9 shall be made promptly by the Company and, in any event, not later
than March 15 of the year immediately following the year 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 Company 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 Company 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 of any business dissimilar
from that of the Company, 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 Company and 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 Company and its affiliates to which
he may be exposed during the course of his employment. The
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 Company and the Bank.
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11.
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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 the 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. Executive will
receive the compensation due to him through his retirement
date.
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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
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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 Company; 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 Company will pay
Executive, as Disability pay, an amount equal to 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 Company in the same capacity as he was employed prior to
his termination for Disability; (B) his death; (C) upon 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 the Executive under any other disability
programs sponsored by the Company or its affiliates. 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
non-taxable medical and dental insurance plans) of the Company and its
affiliates, in which Executive participated prior to his Disability on the
same terms as if Executive were actively employed by the
Company.
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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 the Executive in the form and manner
specified in this paragraph, terminate his employment at any time, for
“Cause”. The Executive shall have no right to receive
compensation or other benefits for any period after termination for
Cause. 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;
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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 Company
and 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 Company unless there shall have been delivered to Executive a
copy of a resolution duly adopted at a meeting of such Board where 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, in which case Executive shall receive
only his compensation, vested rights and employee benefits up to the date
of his termination. 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
(i) his base salary in effect as of his termination date for the remaining
term of the Agreement, and (ii) the value of the benefits he would have
received during the remaining term of the Agreement under any retirement
programs (whether tax-qualified or non-qualified) in which Executive
participated prior to his termination (with the amount of the benefits
determined by reference to the benefits received by the Executive or
accrued on his behalf under such programs during the twelve (12) months
preceding his termination), payable in a single cash lump sum distribution
within ten (10) calendar days following such termination. In
addition, the Executive shall continue to participate in any
benefit plans of the Company or its affiliates that provide life insurance
and non-taxable medical and dental insurance, or similar coverage upon
terms no less favorable than the most favorable terms provided to senior
executives of the Company or its affiliates during such
period. In the event that the Company or its affiliates are
unable to provide such coverage by reason of Executive no longer being an
employee, the Company 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
Company materially breach any of their respective 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 Company, or a material diminution
in the authority, duties or responsibilities of the officer to whom the
Executive is required to
report;
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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 the Executive to be nominated or re-nominated 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 he 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 of the Company
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 Company, 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 Company within ninety (90) days following the initial existence of the
condition, describing the existence of such condition, and the Company shall
thereafter have the right to remedy the condition within thirty (30) days of the
date the Company received the written notice from the Executive. If
the Company 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 Company 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 the Executive’s benefits
under one or more benefit plans maintained by the Company or an affiliate
as part of a good faith, overall reduction or elimination of such plans or
plans or benefits thereunder applicably 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 Company or any affiliate 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
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and the
regulations promulgated thereunder, such that the Company 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.
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Continuing Covenant
Not to Compete or Interfere with
Relationships. Regardless of anything herein to the
contrary, following a termination by the Company 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, the
Executive shall not serve as an officer, director or employee of any bank
holding company, bank, savings bank, 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 Company or its subsidiaries or affiliates from any office within fifty
(50) miles from the main office of the Company or any branch of the Bank
and, further, Executive shall not interfere with the relationship of the
Company, its subsidiaries or affiliates and any of its employees, agents,
or representatives.
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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
Company merges into or consolidates with another corporation, or merges
another corporation into the Company, and as a result less than a majority
of the combined voting power of the resulting corporation immediately
after the merger or consolidation is held by persons who were stockholders
of the Company immediately before the merger or
consolidation.
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(ii)
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Acquisition of
Significant Share Ownership: There is filed or required
to be filed 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 (b) 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 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 Company’s Board of Directors; provided, however,
that for purposes of this clause (iii), each director who is first elected
by the board (or first nominated by the board for election by the
stockholders) 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 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
Company shall terminate the Executive’s employment Without Cause, or (ii)
Executive voluntarily terminates his employment With Good Reason, the
Company shall, within ten (10) calendar days following the termination of
Executive’s employment, make a single lump sum cash payment to him equal
to three (3) times the 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(a) 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, the
Executive shall, for a thirty-six (36) month period following his
termination of employment, receive the value of the benefits he would have
received over such period under any retirement programs (whether
tax-qualified or nonqualified) in which the Executive participated prior
to his termination (with the amount of the benefits determined by
reference to the benefits received by the Executive or accrued on his
behalf under such programs during the twelve (12) months preceding the
Change in Control), payable as a single cash lump sum distribution within
ten (10) calendar days following such termination. In addition,
the Executive shall and continue to participate in any benefit plans of
the Company and/or the Bank that provide life insurance and non-taxable
medical and dental insurance or similar coverage upon terms no less
favorable than the most favorable terms provided to senior executives of
the Company or its subsidiaries during such period. In the
event that the Company or its subsidiaries are unable to provide such
coverage by reason of the Executive no longer being an employee, the
Company 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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c.
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The
provisions of Section 12 and Sections 14 through 27, including the defined
terms used is such sections, shall continue in effect until the later of
the expiration of this Agreement or two (2) years following a Change in
Control.
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13.
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Indemnification
and Liability Insurance. Subject to,
and limited by Section 27(b) of this Agreement, the Company shall provide
the following:
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a.
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Indemnification. The
Company agrees to indemnify the 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 Company or any
affiliate or subsidiary of the Company (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 costs, and attorney’s fees and the cost of reasonable
settlements, such settlements to be approved by the Board, if such action
is brought against the Executive in his capacity as an Executive or
director of the Company or any affiliate or subsidiary of the
Company. Indemnification for expense shall not extend to
matters for which the 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 the Executive is required under
this Section, the Company shall provide the Executive (and his heirs,
executors, and administrators) with coverage under a directors’ and
Executives’ liability policy at the expense of the Company, at least
equivalent to such coverage provided to directors and senior Executives of
the Company and subsidiaries.
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14. Reimbursement
of Executive’s Expenses to Enforce this Agreement. The Company shall
reimburse the Executive for all reasonable out-of-pocket expenses, including,
without limitation, reasonable attorney’s fees, incurred by the Executive in
connection with successful enforcement by the Executive of the obligations of
the Company to the Executive under this Agreement. The Company 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 Company take some action specified by this
Agreement: (i) as a result of court order; or (ii) otherwise by the
Company following an initial failure of the Company to pay such money or take
such action promptly after written demand therefor from the Executive stating
the reason that such money or action was due under this Agreement at or prior to
the time of such demand.
15. Adjustment of Certain
Payments and Benefits.
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a.
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Tax
Indemnification. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it
shall be determined that any payment, benefit or distribution made or
provided by the Company to or for the benefit of the Executive (whether
made or provided pursuant to the terms of this Agreement or otherwise)
(each referred to herein as a “Payment”), would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”) or any interest or penalties are incurred by the
Executive with respect to such excise tax (the excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the “Excise Tax”), the Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that, after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
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b.
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Determination of
Gross-Up Payment. Subject to the provisions of Section
15(c) of this Agreement, all determinations required to be made under this
Section 15, including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by a certified public
accounting firm or independent tax counsel reasonably acceptable to the
Company as may be designated by the Executive (the “Consulting Firm”)
which shall provide detailed supporting calculations to the Company and
the Executive within fifteen (15) business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. All fees and expenses of the
Consulting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 15, shall be paid
by the Company to the Executive within five (5) business days of the later
of (i) the due date for the payment of any Excise Tax, and (ii) the
receipt of the Consulting Firm’s determination, provided however that the
Gross-Up Payment shall be made no later than December 31 of the calendar
year immediately following the calendar year in which the Executive remits
the Excise Tax to the applicable taxing authority. Any
determination by the Consulting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code, at the time of the initial
determination by the Consulting Firm hereunder, it is possible that a
Gross-Up Payment will not have been made by the Company which should have
been made (an “Underpayment”), consistent with the calculations required
to be made hereunder. In the
event
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that the
Company exhausts its remedies pursuant to Section 15(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Consulting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
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c.
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Treatment of
Claims. The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful,
would require a Gross-Up Payment to be made. Such notification
shall be given as soon as practicable, but no later than ten (10) business
days, after the Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the thirty (30) day period following the
date on which it gives such notice to the Company (or any shorter period
ending on the date that payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to
the expiration of this period that it desires to contest such claim, the
Executive shall:
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i.
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give
the Company any information reasonably requested by the Company relating
to such claim;
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ii.
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take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the
Company;
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iii.
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cooperate
with the Company in good faith in order to effectively contest such claim;
and
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iv.
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permit
the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and indemnity and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or related taxes,
interest or penalties imposed as a result of such representation and
payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 15(c) of this Agreement, the Company
shall control all proceedings taken in connection with such contest and,
at their option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority with
respect to such claim and may, at their option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner. Further, the Executive agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis (including interest or penalties with respect
thereto). Furthermore, the Company’s control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issues raised by the Internal
Revenue Service or any other taxing
authority.
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d.
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Adjustments to the
Gross-Up Payment. If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 15(c) of this
Agreement, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company’s
compliance with the requirements of Section 15(c) of this Agreement)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after applicable taxes). If,
after the receipt by the Executive of an amount advanced by the
Company
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pursuant
to Section 15(c) of this Agreement, a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and such denial
of refund occurs prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of the Gross-Up Payment required to be paid.
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 Company shall be entitled to injunctive relief restraining the 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 the Executive, without limitation, shall be entitled to
injunctive relief to enforce the obligations of the Company 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 Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the
Company.
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b.
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Since
the Company 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 Company.
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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
Company at their principal business offices and to Executive at his home address
as maintained in the records of the Company.
20. No Plan
Created by this Agreement. Executive and the
Company 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 Maryland 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. Source of
Payments. Notwithstanding
any provision in this Agreement to the contrary, to the extent payments and
benefits, as provided for under this Agreement, are paid or received by
Executive under the Employment Agreement in effect between Executive and the
Bank, the payments and benefits paid by the Bank will be subtracted from any
amount or benefit due simultaneously to Executive under similar provisions of
this Agreement. Payments will be allocated in proportion to the level
of activity and the time expended by Executive on activities related to the
Company and the Bank, respectively, as determined by the Company and the
Bank.
27. Miscellaneous. In
the event any of the foregoing provisions of this Section 27 are in conflict
with the terms of this Agreement, this Section 27 shall prevail.
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a.
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The
Board may terminate Executive’s employment at any time, but any
termination by the Company, 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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Any
payments made to employees pursuant to this Agreement, or otherwise, are
subject to and conditioned upon their compliance with 12 U.S.C. §1828(k)
and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and
Indemnification Payments.
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c.
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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 Company or the Bank
is or becomes a publicly traded
company.
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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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EXECUTIVE
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By:
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Date
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