Exhibit 10.3
TERRITORIAL BANCORP
INC.
EMPLOYMENT
AGREEMENT
THIS
AGREEMENT (the “Agreement”) is
made and entered into this th day
of
, 2009, by and between Territorial Bancorp Inc., a corporation
located at 1132 Bishop Street, 22 nd Floor, Honolulu, Hawaii 96813
(the “Company”), and Vernon Hirata
(“Executive”).
WITNESSETH
WHEREAS , Executive is currently employed as Co-Chief
Operating Officer, General Counsel and Corporate Secretary of
Territorial Savings Bank (the “Bank”); and
WHEREAS , the Company desires to assure itself of the
continued availability of the Executive’s services as
provided in this Agreement; and
WHEREAS , Executive is willing to serve the Company on
the terms and conditions hereinafter set forth; and
WHEREAS , Executive has previously entered into a
separate employment agreement with the Bank.
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
. During the term of this Agreement,
which is effective as of the date first set forth above (the
“Commencement Date”), Executive shall serve in the
capacity of Co-Chief Operating Officer, General Counsel and
Corporate Secretary of the Company. Executive shall render such
administrative and management services to the Company as are
currently rendered and as are customarily performed by persons
situated in a similar executive capacity. Executive shall promote
the business of the Company. Executive’s other duties shall
be such as the Board of Directors of the Company (the “Board
of Directors” or “Board”) may from time to time
reasonably direct, including normal duties as an officer of the
Company.
2. Base Compensation
. The Company agrees to pay
Executive during the Term of this Agreement (as hereinafter defined
in Section 6) a base salary at the rate of $
per annum, payable in accordance with the customary payroll
practices of the Company; provided, however, that the rate of
Executive’s base salary shall be reviewed by the Board of
Directors not less often than annually, and Executive shall be
entitled to receive annual increases at such percentage or in such
an amount as the Board of Directors, in its sole discretion, may
decide.
3. Discretionary Bonus
. Executive shall be entitled to
receive an annual bonus in an amount which is based on the bonus
program maintained by the Company as of the date of this Agreement
and shall be eligible to participate in any future bonus program
adopted by the
Company in an equitable manner. No other
compensation provided for in this Agreement shall be deemed a
substitute for Executive’s right to receive bonuses when and
as declared by the Board of Directors or as provided for by any
plan or program of the Company.
4. Expenses
. During the term of this Agreement,
Executive shall be entitled to receive prompt reimbursement of all
reasonable expenses incurred (in accordance with the policies and
procedures of the Company) in performing services under this
Agreement, provided that Executive properly accounts for expenses
in accordance with the policies of the Company and provided further
that all such reimbursements pursuant to this Section 4 shall
be paid promptly by the Company and in any event no later than
March 15 of the year immediately following the year in which
the expense was incurred.
(a) Participation in
Retirement and Executive Benefit Plans . Executive shall be
entitled, while employed under the terms of this Agreement, to
receive all benefits under any tax-qualified or non-qualified
employee benefit plan or arrangement in effect as of the date of
this Agreement or that the Company implements at any time during
the term of this Agreement. Executive shall be entitled to
participate in such future plans or arrangements on the same terms
as other employees of the Company or as established by the Company
for Executive or other selected employees.
(b) Fringe Benefits .
Executive shall be entitled to receive any benefits under any
fringe benefit plan or policy that is in effect as of the date of
this Agreement, including any discount or reduced fee employee loan
program, or that the Company implements at any time during the term
of this Agreement, on the same terms as the Company’s senior
management employees. Nothing paid to Executive under any plan or
arrangement presently in effect or made available in the future
will be deemed to be in lieu of base salary or other compensation
to Executive under this Agreement.
(c) Automobile, Cellular Phone
Use, Computer and Memberships . The Company or the Bank
shall provide Executive with the use of an automobile in accordance
with the Company’s or the Bank’s automobile policy for
executive vice presidents and above, as in effect from time to
time. The Company or the Bank shall annually include on
Executive’s Form W-2 any amount attributable to
Executive’s personal use of such automobile. The Company or
the Bank shall also provide Executive with the use of a cellular
phone and shall pay (or reimburse Executive) for all reasonable
expenses related to the use of such phone. The Company or the Bank
shall also provide Executive with the use of a personal digital
assistant or similar device, and home, portable and office
computers and shall pay (or reimburse Executive) for all reasonable
expenses related to the use of such computers or devices. In
addition, the Company or the Bank shall reimburse or pay Executive
amounts sufficient to establish or maintain membership in any club
or organization (business, social or otherwise) which will benefit
the Company or the Bank or is related to the practice of law
(including such fees or dues relating to the use of the club or
organization).
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(d) Paid Leave Time .
Executive shall be entitled to leave time in accordance with the
standard policies or practices of the Company for senior executive
officers, as in effect from time to time.
6. Term of Agreement
. Executive’s employment under
this Agreement shall be deemed to have commenced as of the
Commencement Date and shall continue for a period of thirty-six
(36) calendar months from the Commencement Date. Commencing on
the first anniversary of the Commencement Date and continuing on
each anniversary thereafter (each an “Anniversary
Date”), the disinterested members of the Board of Directors
of the Company 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 14 of this Agreement. The Board of Directors of the
Company 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 Company shall give written notice to Executive as soon as
possible after such review as to whether the Agreement is to be
extended; provided, however, if the Board fails to conduct such
review or if written notice of nonrenewal is provided to Executive,
then in such case the term of this Agreement shall become fixed and
shall cease at the end of thirty-six (36) full calendar months
following the Anniversary Date.
7. Noncompetition and
Confidentiality .
(a) Executive shall devote his full
time and attention to the performance of his employment under this
Agreement. Upon any termination of Executive’s employment
hereunder pursuant to Section 8(b) of this Agreement (other
than a termination which occurs after the effective date of a
Change in Control), Executive agrees not to compete with the
Company or any subsidiary of the Company for a period of one
(1) year following such termination in any city, town or
county in which Executive’s normal business office is located
or in which the Company or any subsidiary of the Company has an
office or has filed an application for regulatory approval to
establish an office, determined as of the effective date of such
termination, except as agreed to pursuant to a resolution duly
adopted by the Board of Directors. Executive agrees that during
such period and within said cities, towns and counties, Executive
shall not work for or advise, consult or otherwise serve with,
directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities
of the Company or any subsidiary of the Company. The parties
hereto, recognizing that irreparable injury will result to the
Company or any subsidiary of the Company, and their business and
property in the event of Executive’s breach of this
Section 7(a), agree that in the event of any such breach by
Executive, the Company will be entitled, in addition to any other
remedies and damages available, to an injunction to restrain the
violation hereof by Executive, Executive’s partners, agents,
servants, employees and all persons acting for or under the
direction of Executive. Executive represents and admits that in the
event he terminates employment with the Company pursuant to
Section 8(b) of this Agreement, Executive’s experience
and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than
the Company, and that the enforcement of a remedy by way of
injunction will not prevent Executive from earning a livelihood.
Nothing herein will be construed as prohibiting the Company from
pursuing any other remedies available to the Company for breach or
threatened breach, including the recovery of damages from
Executive.
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(b) Executive recognizes and
acknowledges that the knowledge of the business activities and
plans for business activities of the Company is a valuable, special
and unique asset of the business of the Company. Executive will
not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business
activities of the Company to any person, firm, corporation, or
other entity for any reason or purpose whatsoever. Notwithstanding
the foregoing, Executive may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and
activities of the Company. Further, Executive may disclose
information regarding the business activities of the Company to the
Office of Thrift Supervision (“OTS”) or other
regulatory or judicial body pursuant to a formal regulatory request
or subpoena.
(c) Nothing contained in this
Section 7 shall be deemed to prevent or limit the right of
Executive to invest in any entity which conducts business similar
to that of the Company, solely as a passive or minority
investor.
8. Termination.
Executive’s employment under
this Agreement shall be terminated upon any of the following
occurrences:
(a) Death .
Executive’s employment under this Agreement shall terminate
upon his death. Executive’s estate shall be entitled to
receive payments of base salary, payable in accordance with the
regular payroll practices of the Company, for sixty (60) days
immediately following the date of Executive’s death and any
other compensation accrued as of the date of death.
(b) Termination of Employment
by the Board of Directors Without Just Cause or by the Executive
for Good Reason . In the event that (i) the Board of
Directors terminates Executive’s employment without
“Just Cause” (as defined in Section 8(d)) or
(ii) such employment is terminated by the Executive for
“Good Reason” (as defined in Section 8(b)(iii),
Executive shall be entitled to:
(i) his base salary for the
remaining term of the Agreement, including any renewals or
extensions thereof, at the current rate in effect pursuant to
Section 2 of this Agreement, plus the amount of the annual
cash bonus earned in the calendar year preceding the year of
termination, and a cash equivalent amount equal to the additional
retirement benefits under any retirement program (whether
tax-qualified or non-qualified) that Executive would have been
entitled to had his employment continued through the remaining term
of the Agreement (with the amount of 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).
(ii) coverage under the
Company’s life insurance plans and non-taxable medical,
health, and dental plans (each being a “Welfare Plan”)
in the same
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manner in which Executive received
coverage on the last day of his employment with the Company.
Execut
