Exhibit 10.1

Northeast Bancorp

500 Canal Street

Lewiston, ME 04240

(207) 786-3245

March 30, 2010

Mr. James D. Delamater

424 Pleasant Street

Oxford, Maine 04270

Dear Jim:

As you are aware, FHB Formation LLC intends to merge with Northeast Bancorp
(“Northeast”) and its wholly-owned subsidiary Northeast Bank (the “Bank,” and
together with Northeast, the “Company”) by way of merger (the “Merger”). It is
my pleasure to extend to you this offer to continue employment with the Bank
following the consummation of the Merger on the terms and conditions set forth
in this letter agreement (the “Agreement”).

 

  1. Employment. You will continue to be employed by the Bank commencing upon
the closing date of the Merger (the “Commencement Date”) for a term of one year
(the “Term”). Upon expiration of such Term, this Agreement shall be renewed for
successive Terms of one year, unless either you or the Bank gives written notice
not less than 90 days prior to the date of any such anniversary of the election
not to extend the Term (a “Non-Renewal Election”). You will serve on a full time
basis as Chief Executive Officer of the Community Banking Division of the Bank
and shall have all duties and responsibilities consistent with this position.
You shall report directly to the Chief Executive Officer of the Bank and you
agree to devote your full business time, best efforts, skill, knowledge,
attention and energies to the advancement of the Company’s business and
interests and to the performance of your duties and responsibilities as an
employee of the Bank. You agree to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein that may be adopted from time to time by the Company. While employed by
the Bank, you will not engage in any competitive business or operations.

 

  2. Base Salary. Your annualized base salary will be $269,946, less all
applicable taxes and withholdings, to be paid in installments in accordance with
the Bank’s regular payroll practices. Such base salary may be increased from
time to time in accordance with normal business practices and in the sole
discretion of the Bank. The base salary in effect at any given time is referred
to herein as “Base Salary.” The Bank will make available to you a non-qualified
deferred compensation plan that is similar to the Bank’s prior non-qualified
deferred compensation plan that you participated in.

 

  3.

Bonus. You will be eligible to participate in the Company’s non-equity incentive
compensation plan as determined by the Chief Executive Officer of the Bank and
the

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Compensation Committee of the Bank from time to time. To earn incentive
compensation, you must be employed by the Bank on the day such incentive
compensation is paid.

 

  4. Equity. In connection with the Merger, Northeast intends to implement the
2010 Stock Option and Incentive Plan (the “Plan”). You will receive an option to
purchase 21,600 shares of Northeast’s common stock, $0.01 par value per share,
subject to five-year annual vesting (20% per year) and the terms and conditions
of the Plan and the applicable award agreement (the “Stock Options”); provided,
however, to the extent TARP (as defined herein) prohibits the Company from
granting you the Stock Options, the Company shall not be obligated to grant you
the Stock Options and shall grant you such other equity award as may be allowed
under TARP that would provide you with a similar economic benefit as the Stock
Options, as determined by the Company in its sole discretion.

 

  5. Benefits. You will continue to participate in any and all benefit programs
that the Bank establishes and makes available to its employees from time to
time, provided that you are eligible under (and subject to all provisions of)
the plan documents that govern those programs. Benefits are subject to change at
any time in the Bank’s sole discretion.

 

  6. Vacation. You will be eligible for a maximum of five (5) weeks of paid
vacation per calendar year to be taken at such times as may be approved in
advance by the Bank. Vacation accrual and usage will be in accordance with Bank
policy.

 

  7. Confidential Information, Nonsolicitation and Cooperation.

 

  (a) Confidential Information. As used in this Agreement, “Confidential
Information” means information belonging to the Company which is of value to the
Company in the course of conducting its business and the disclosure of which
could result in a competitive or other disadvantage to the Company. Confidential
Information includes, without limitation, financial information, reports, and
forecasts; inventions, improvements and other intellectual property; trade
secrets; know-how; designs, processes or formulae; software; market or sales
information or plans; customer lists; and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses or
facilities) which have been discussed or considered by the management of the
Company. Confidential Information includes information developed by you in the
course of your employment by the Company, as well as other information to which
you may have access in connection with your employment. Confidential Information
also includes the confidential information of others with which the Company has
a business relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of your
duties under Section 7(b).

 

  (b)

Confidentiality. You understand and agree that your employment creates a
relationship of confidence and trust between you and the Company with respect to
all Confidential Information. At all times, both during your employment with

 

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the Company and after its termination, you will keep in confidence and trust all
such Confidential Information, and will not use or disclose any such
Confidential Information without the written consent of the Company, except as
may be necessary in the ordinary course of performing your duties to the
Company.

 

  (c) Documents, Records, etc. All documents, records, data, apparatus,
equipment and other physical property, whether or not pertaining to Confidential
Information, which are furnished to you by the Company or are produced by you in
connection with your employment will be and remain the sole property of the
Company. You will return to the Company all such materials and property as and
when requested by the Company. In any event, you will return all such materials
and property immediately upon termination of your employment for any reason. You
will not retain any such material or property or any copies thereof after such
termination.

 

  (d) Nonsolicitation. During your employment with the Bank and for 12 months
thereafter, regardless of the reason for the termination, you, either alone or
in the association of others, (i) will refrain from directly or indirectly
employing, attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Company (other than
terminations of employment of subordinate employees undertaken in the course of
your employment with the Bank); and (ii) will refrain from soliciting or
encouraging any client, customer, account or business partner or prospective
client, customer, account or business partner to terminate or otherwise modify
adversely its business relationship with the Company. You understand that the
restrictions set forth in this Section 7(d) are intended to protect the
Company’s interest in its Confidential Information and established employee,
customer and supplier relationships and goodwill, and agrees that such
restrictions are reasonable and appropriate for this purpose.

 

  (e) Third-Party Agreements and Rights. You hereby confirm that you are not
bound by the terms of any agreement with any previous employer or other party
which restricts in any way your use or disclosure of information or your
engagement in any business. You represent to the Company that your execution of
this Agreement, your employment with the Bank and the performance of your
proposed duties for the Bank will not violate any obligations you may have to
any such previous employer or other party. In your work for the Bank, you will
not disclose or make use of any information in violation of any agreements with
or rights of any such previous employer or other party, and you will not bring
to the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.

 

  (f)

Litigation and Regulatory Cooperation. During and after your employment, you
shall cooperate fully with the Company in the defense or prosecution of any
claims or actions now in existence or which may be brought in the future against
or on behalf of the Company which relate to events or occurrences that
transpired

 

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while you were employed by the Bank. Your full cooperation in connection with
such claims or actions shall include, but not be limited to, being available to
meet with counsel to prepare for discovery or trial and to act as a witness on
behalf of the Company at mutually convenient times. During and after your
employment, you also shall cooperate fully with the Company in connection with
any investigation or review of any federal, state or local regulatory authority
as any such investigation or review relates to events or occurrences that
transpired while you were employed by the Company. The Company shall reimburse
you for any reasonable out-of-pocket expenses incurred in connection with the
performance of your obligations pursuant to this Section 7(f).

 

  (g) Injunction. You agree that it would be difficult to measure any damages
caused to the Company which might result from any breach by you of the promises
set forth in this Section 7, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, you agree that if you
breach, or propose to breach, any portion of this Agreement, the Company shall
be entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Company.

 

  8.

Severance. If during the Term the Bank terminates your employment without Cause
(and not as a result of your death or disability) or you resign from the Bank
with “Good Reason”, or the Bank makes a Non-Renewal Election, you shall be
eligible to receive an amount equal to the remaining salary you would have
received if you had been employed through the end of the Term, plus an
additional amount equal to the salary you would have received for the one-year
period following the expiration of the Term (this one year-period together with
the remainder of the Term, the “Severance Period”), less applicable taxes and
withholdings, payable in accordance with our regular payroll procedures over the
Severance Period beginning on the first payroll date that occurs 60 days after
your employment ends, provided that you execute and allow to become binding a
release of claims (the “Release”) prepared by the Company by a date no later
than the earlier of the date specified on the release and 60 days after your
employment ends. In addition to the foregoing, the Company shall, for a period
of 18 months commencing on the date of termination, pay 100 percent of the
monthly premiums for single or family health insurance coverage (whichever was
in effect immediately prior to the date of termination) in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”);
provided, however, that the continuation of health benefits under this Section
shall reduce and count against your rights under COBRA. For purposes of this
Agreement, “Cause” for termination shall be deemed to exist upon (a) your
continued non-performance of your duties hereunder (other than by reason of your
physical or mental illness, incapacity or disability) which has continued for
more than 30 days following written notice of such non-performance from the
Chief Executive Officer of the Bank or the Board of Directors of the Bank;
(b) your commission of any crime involving moral turpitude or any felony;
(c) your violation of any of the terms of Section 7 of this Agreement; (d) your
material violation of the Bank’s policies or rules material to your employment,
which has continued for more than 30 days following written notice of such
violation from the Chief Executive

 

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Officer of the Bank or the Board of Directors of the Bank; (e) a good faith
finding by the Board of Directors of the Bank that you engaged in deliberate
dishonesty with regard to the Company or (f) failure to cooperate with a bona
fide internal investigation or an investigation by regulatory or law enforcement
authorities, after being instructed by the Company to cooperate, or the willful
destruction or failure to preserve documents or other materials known to be
relevant to such investigation or the inducement of others to fail to cooperate
or to produce documents or other materials in connection with such
investigation. For purposes of this Agreement, “Good Reason”, means any of the
following, without your consent, provided the Company has not cured such matter
within 30 days of notice by you to the Company and you provide such notice
within 60 days of the first occurrence of such matter: (a) requiring your
primary work location (excluding business travel) to be more than 50 miles from
the corporate offices in Lewiston, Maine, (b) the material failure of the
Company to pay the compensation in the amounts and manner and at the times set
forth in this Agreement, or (c) a material diminution in your responsibilities,
authority or duties.

 

  9. Compliance with EESA; TARP Waiver Agreement. You acknowledge and understand
that (a) Northeast is currently a participant in the Capital Purchase Program,
developed pursuant to the United States Department of Treasury’s Troubled Asset
Relief Program (“TARP”) under the Emergency Economic Stabilization Act of 2008
(“EESA”), (b) under the EESA, as amended by the American Recovery and
Reinvestment Act of 2009, and as clarified and expanded through an Interim Final
Rule published June 15, 2009, certain executive compensation restrictions and
prohibitions have been imposed on all TARP participants, including Northeast;
and (c) such restrictions and limitations apply or may apply to you and/or your
compensation hereunder whether as a result of your role as Chief Executive
Officer of the Community Banking Division of the Bank or otherwise on or after
the Commencement Date. In light of the foregoing, you hereby agree to execute
and return to the Company on or prior to the Commencement Date the TARP Waiver
Agreement attached hereto as Exhibit A.

 

  10. Choice of Law. This Agreement shall be interpreted and construed by the
laws of the State of Maine, without regard to conflict of laws provisions. You
hereby irrevocably submit to and acknowledge and recognize the jurisdiction of
the courts of the State of Maine, or if appropriate, a federal court located in
Maine (which courts, for purposes of this letter agreement, are the only courts
of competent jurisdiction), over any suit, action or other proceeding arising
out of, under or in connection with this letter agreement or the subject matter
hereof.

 

  11. Effect of Section 409A.

 

  (a)

Six Month Delay. For purposes of this Agreement, a termination of employment
shall mean a “separation from service” as defined in Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”). If and to the extent any
portion of any payment, compensation or other benefit provided to you in
connection with your separation from service (as defined in Section 409A of the
Code) is determined to constitute “nonqualified deferred compensation” within

 

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the meaning of Section 409A of the Code and you are a specified employee as
defined in Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in
accordance with its procedures, by which determination you hereby agree that you
are bound, such portion of the payment, compensation or other benefit will not
be paid before the earlier of (i) the day that is six months plus one day after
the date of separation from service (as determined under Section 409A of the
Code) or (ii) the tenth day after the date of your death (as applicable, the
“New Payment Date”). The aggregate of any payments that otherwise would have
been paid to you during the period between the date of separation from service
and the New Payment Date will be paid to you in a lump sum on the first payroll
date after such New Payment Date, and any remaining payments will be paid on
their original schedule.

 

  (b) General 409A Principles. For purposes of this Agreement, each amount to be
paid or benefit to be provided will be construed as a separate identified
payment for purposes of Section 409A of the Code, and any payments that are due
within the “short term deferral period” as defined in Section 409A of the Code
or are paid in a manner covered by Treas. Reg. Section 1.409A-1(b)(iii) will not
be treated as deferred compensation unless applicable law requires otherwise.
Neither the Company nor you will have the right to accelerate or defer the
delivery of any such payments or benefits except to the extent specifically
permitted or required by Section 409A of the Code. This Agreement is intended to
comply with the provisions of Section 409A of the Code and the Agreement will,
to the extent practicable, be construed in accordance therewith. Terms defined
in the Agreement will have the meanings given such terms under Section 409A of
the Code if and to the extent required to comply with Section 409A of the Code.
In any event, the Company makes no representations or warranty and will have no
liability to you or any other person, other than with respect to payments made
by the Company in violation of the provisions of this Agreement, if any
provisions of or payments under this Agreement are determined to constitute
deferred compensation subject to Section 409A of the Code but not to satisfy the
conditions of that section.

 

  (c) Expense Timing. Payments with respect to reimbursements of business
expenses will be made in the ordinary course of business and in any case on or
before the last day of the calendar year following the calendar year in which
the relevant expense is incurred. The amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year. The right to reimbursement or in-kind
benefits pursuant to this Agreement is not subject to liquidation or exchange
for another benefit.

If this letter correctly sets forth the terms under which you will be employed
by the Bank, please sign the enclosed duplicate of this letter in the space
provided below and return it to me. You understand and agree that, in the event
the merger agreement governing the Merger is terminated, this Agreement will be
null and void and of no further force and effect.

 

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Sincerely, By:  

 

  Judith W. Kelley   Chairman of the Board

The foregoing correctly sets forth the terms of my employment with the Bank. I
am not relying on any representations other than those set forth above.

 

 

   

 

James D. Delamater     Date

 

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EXHIBIT A

March 30, 2010

Mr. James D. Delamater

424 Pleasant Street

Oxford, Maine 04270

 

  Re: TARP Executive Compensation Restrictions

Dear Jim:

As you know, Northeast Bancorp (“Northeast”) is currently a participant in the
Capital Purchase Program, developed pursuant to the United States Department of
Treasury’s Troubled Asset Relief Program (“TARP”) under the Emergency Economic
Stabilization Act of 2008 (“EESA”). Under the EESA, as amended by the American
Recovery and Reinvestment Act of 2009 (“ARRA”), certain executive compensation
restrictions and prohibitions have been imposed on TARP participants, including
Northeast. The Department of Treasury subsequently clarified and expanded upon
these executive compensation restrictions through an Interim Final Rule (the
“Rule”).

Generally, and depending on the particular restriction, these executive
compensation restrictions apply to Northeast’s “named executive officers”
(“NEOs”) and up to 20 of the “most highly compensated employees” of Northeast,
Northeast Bank (the “Bank”) and its other subsidiaries. Under the Rule, the most
highly compensated employees are determined on a fiscal year basis based on
prior fiscal year compensation. The group of most highly compensated employees
may change from fiscal year to fiscal year.

This letter agreement (this “Agreement”) shall set forth an understanding
between you and Northeast with respect to the applicability of the executive
compensation restrictions and prohibitions described in EESA, ARRA, the Rule and
any additional guidance and interpretation thereunder (collectively, the “TARP
Restrictions”). You and the Bank hereby acknowledge and agree that during the
period in which Northeast is a TARP participant, as determined in accordance
with the Rule (the “TARP Period”), you may be or become subject to some or all
of the TARP Restrictions. Specifically, and notwithstanding the terms of any
agreement between you, the Bank and/or Northeast or any of its other
subsidiaries to the contrary, during the TARP period you hereby acknowledge and
agree:

1. In any year that you are the most highly compensated employee, except to the
extent permitted by the Rule, you shall be prohibited from receiving or accruing
(and the Bank, Northeast and its other subsidiaries shall be prohibited from
paying you or accruing on your

 

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behalf) any bonus, retention award, or incentive compensation (as such terms are
defined in the Rule). If you receive or are paid any such prohibited bonus,
retention award or incentive compensation, then you agree to promptly return or
repay to Northeast or the Bank (as applicable) such prohibited amounts. If you
earn any such bonus, retention award or incentive compensation in a year or for
any period in which you are not subject to this TARP Restriction, but such
payment is payable during a time when you are subject to this TARP Restriction,
then such payment may be made to you at the earliest time permitted under the
Rule.

2. In any year during the TARP Period that you are an NEO or one of the five
most highly compensated employees, except to the extent permitted by the Rule,
you shall be prohibited from receiving (and the Bank, Northeast and its other
subsidiaries shall be prohibited from paying you or accruing on your behalf) any
“golden parachute payment” (as such term is defined in the Rule), which shall
include any amount accrued or paid on account of your departure from the Bank,
Northeast or any of its subsidiaries for any reason and any amount accrued or
paid in connection with a change in control of the Bank, Northeast or any of its
other subsidiaries, except for payments for services performed or benefits
accrued.

3. If you are an NEO or one of the 20 most highly compensated employees, to the
extent required under the Rule, any bonus, retention award or incentive
compensation (as such terms are defined in the Rule) paid or accrued to you
during the TARP Period shall be subject to recovery or “clawback” by Northeast
if such payments or accruals were based on materially inaccurate financial
statements or any other materially inaccurate performance metric criteria. You
and the Bank hereby agree to cooperate with Northeast to effect any clawback of
compensation required by the TARP Restrictions.

4. In any year during the TARP Period that you are an NEO or one of the 20 most
highly compensated employees, except to the extent permitted under the Rule, you
shall not be permitted to receive (and the Bank, Northeast and its other
subsidiaries shall not be permitted to pay you or accrue on your behalf) any tax
“gross-up” (as such term is defined in the Rule), including any reimbursement
for the payment of taxes relating to severance payments, perquisites, a change
in control of the Bank, Northeast or any of its subsidiaries, or any other form
of compensation.

5. In any year that you are an NEO and the most highly compensated employee, you
acknowledge and agree that Northeast will be required to publicly disclose and
describe any perquisites paid to or accrued by you with an aggregate value for
such year that exceeds $25,000.

6. If requested by the Department of Treasury in connection with Northeast’s
participation in TARP, you hereby agree to grant to the Department of Treasury a
waiver releasing the United States, the Bank, Northeast and its other
subsidiaries from any claims related to any TARP Restriction, and Northeast’s
participation in TARP that you may otherwise have, including, without
limitation, any claims for compensation you would otherwise receive, but for
such requirements.

7. You and the Bank hereby agree to cooperate with Northeast and timely provide
all documents and information as reasonably requested by Northeast, its
Compensation Committee, its Chief Executive Officer or its Chief Financial
Officer (as applicable) in

 

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connection with (i) Northeast’s determination of its most highly compensated
employees, (ii) all compensation or compensation plan reviews and assessments
required under the Rule, and (iii) all certifications and disclosures required
under the Rule.

As noted above, the Rule is subject to revision by the Department of Treasury.
You agree that this Agreement shall be amended as may be necessary to fully
comply with all relevant provisions of EESA, ARRA, and the Rule and any further
interpretation thereunder.

This Agreement shall not be construed as creating any contract for continued
services between you and the Bank, Northeast or any of its other subsidiaries
and nothing herein contained shall give you the right to be retained as an
employee of the Bank, Northeast or any of its other subsidiaries.

Please countersign this Agreement in the space provided below and return this
Agreement to Northeast. If you have any questions regarding this Agreement or
the TARP executive compensation restrictions, please contact Rick Wayne at
(617) 697-2005.

 

NORTHEAST BANCORP By:  

 

  Name:   Judith W. Kelley   Title:   Chairman of the Board

 

Acknowledged, Accepted and Agreed to:

 

James D. Delamater NORTHEAST BANK By:  

 

  Name:   Judith W. Kelley   Title:   Chairman of the Board

 

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