Exhibit 10.3


 


HERITAGE BANK OF ST. TAMMANY


EMPLOYMENT AGREEMENT


 


This Agreement (this “Agreement”)
is made effective as of February 16, 2017 (the “Effective Date”), by and between Heritage Bank of St. Tammany (the
“Bank”), a federally-chartered institution, and Lisa Hughes (“Executive”).


 


WITNESSETH:


 


WHEREAS, the Bank wishes
to assure itself of the services of Executive for the period provided in this Agreement; and


 


WHEREAS, Executive is willing
to serve in the employ of the Bank on a full-time basis as its Senior Vice President and Chief Financial Officer on the terms and
conditions set forth in this Agreement.


 


NOW, THEREFORE, in consideration
of the mutual promises and covenants contained in this Agreement, and upon the other terms and conditions hereinafter provided,
the parties hereby agree as follows:


 


1.           POSITION
AND RESPONSIBILITIES


 


During the term of this
Agreement, Executive agrees to serve as Senior Vice President and Chief Financial Officer of the Bank and will perform the duties
and will have all powers associated with such position as set forth in any job description provided to Executive by the Bank, and
as may be set forth in the bylaws of the Bank. During the period provided in this Agreement, Executive also agrees to serve, if
elected, as an officer of any subsidiary or affiliate of the Bank and in that capacity carry out the duties and responsibilities
reasonably appropriate to that office.


 


2.           TERM
OF EMPLOYMENT


 


(a)           The
term of this Agreement will begin as of the Effective Date and will continue until the third anniversary of the Effective Date.
The Board of Directors (other than Executive, if applicable) will review the Agreement at least ninety (90) days prior the expiration
of the term for the purpose of determining whether to extend the term of the Agreement for another three years or such other time
period as mutually agreed upon by the parties. Nothing in this Agreement shall mandate or prohibit a continuation of Executive’s
employment following the expiration of the term of this Agreement, upon such terms and conditions as the Bank and Executive may
mutually agree.


 


(b)           Notwithstanding
anything contained in this Agreement to the contrary, either Executive or the Bank may terminate Executive’s employment with
the Bank at any time during the term of this Agreement, subject to the terms and conditions of this Agreement.


 


(c)           In
the event of the Executive’s termination of employment under this Agreement for any reason, the termination shall also constitute
the Executive’s resignation from the Board


 




     


     


    

  


of Directors of the Bank, as well as from the
board of directors of any holding company of the Bank, without any further action on the part of Executive.


 


3.           COMPENSATION
AND REIMBURSEMENT


 


(a)           The
compensation specified under this Agreement shall constitute consideration paid by the Bank in exchange for duties described in
Section 1 of this Agreement. The Bank shall pay Executive, as compensation, a salary of not less than $87,000 per year (“Base
Salary”). Base Salary shall include any amounts of compensation deferred by Executive under any employee benefit plan or
deferred compensation arrangement maintained by the Bank. Base Salary shall be payable in accordance with the Bank’s customary
payroll practices. During the term of this Agreement, Executive’s Base Salary shall be reviewed at least annually by December
31st of each year. The review shall be conducted by the Board of Directors or by a committee designated by the Board
of Directors. The committee or the Board of Directors may increase, but not decrease, Executive’s Base Salary at any time,
except for a decrease not in excess of any decrease generally applicable to all senior officers of the Bank. Any increase in Base
Salary shall become the “Base Salary” for purposes of this Agreement.


 


(b)           In
addition to the Base Salary provided for in Section 3(a), the Bank will provide Executive with the opportunity to participate
in employee benefit plans, arrangements and perquisites substantially equivalent to those in which Executive was participating
or otherwise deriving a benefit from immediately prior to the Effective Date, and any other employee benefit plans, arrangements
and perquisites suitable for the Bank’s senior executives adopted by the Bank subsequent to the Effective Date. Without limiting
the generality of the foregoing provisions of this Section 3(b), Executive shall be entitled to participate in or receive
benefits under any employee benefit plans, whether tax-qualified or otherwise, including, but not limited to, retirement plans,
supplemental retirement plans, deferred compensation plans, pension plans, profit-sharing plans, employee stock ownership plans,
stock award or stock option plans, health-and-accident plans, medical coverage or any other employee benefit plan or arrangement
made available by the Bank in the future to its senior executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of the plans and arrangements (including designation by the Board of Directors
of eligibility to participate, if applicable). Executive shall also be entitled to participate in any incentive compensation or
bonus plan or arrangement of the Bank in which Executive is eligible to participate. Nothing paid to Executive under the plans
or arrangements will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement.


 


(c)           In
addition to the Base Salary provided for by Section 3(a) and other compensation and benefits provided for by Section 3(b),
the Bank shall pay or reimburse Executive for all reasonable expenses incurred by Executive in performing her obligations under
this Agreement in accordance with the Bank’s reimbursement policies, provided that the reimbursement is made within one calendar
year following the date on which the expense was incurred and provided further that the right to reimbursement is not exchanged
for another benefit. The amount of expenses eligible for reimbursement during the calendar year may not affect the expenses eligible
for reimbursement in any other calendar year.


 




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(d)           Executive
shall be entitled to paid time off in accordance with the standard policies of the Bank. Executive shall receive her Base Salary
and other benefits during periods of paid leave. Executive shall also be entitled to paid legal holidays in accordance with the
policies of the Bank. Executive shall also be entitled to sick leave in accordance with the policies of the Bank, but in no event
less than the number of days of sick leave per year to which Executive was entitled at the Effective Date.


 


4.           OUTSIDE
ACTIVITIES


 


During the term of her
employment under this Agreement, except for periods of absence occasioned by illness, reasonable vacation periods and reasonable
leaves of absence approved by the Board of Directors, Executive shall devote substantially all her business time, attention, skill,
and efforts to the faithful performance of her duties hereunder. Executive also may serve as a member of the board of directors
of business organizations, trade associations, and community and charitable organizations, subject to the annual approval of the
Board of Directors; provided that in each case the service shall not materially interfere with the performance of her duties under
this Agreement, adversely affect the reputation of the Bank or present any conflict of interest. Executive shall provide to the
Board of Directors annually a list of all organizations for which Executive serves as a director or in a similar capacity for purposes
of obtaining the approval of the Board of Directors of Executive’s service on the boards of such organizations (it being
understood that membership in social, religious, charitable or similar organizations does not require approval of the Board of
Directors pursuant to this Section 4).


 


5.           PAYMENTS
TO EXECUTIVE UPON AN EVENT OF TERMINATION


 


(a)           Upon
the occurrence of an Event of Termination (as herein defined) during Executive’s term of employment under this Agreement,
the provisions of this Section 5 shall apply. As used in this Agreement, an “Event of Termination” shall mean
and include any of the following:


 


(i)           the
termination by the Bank of Executive’s full-time employment hereunder for any reason other than termination governed by Section 6
(Termination for Just Cause), or termination governed by Section 7 (Termination For Disability or Death), or termination governed
by Section 8 (Termination Upon Retirement); or


 


(ii)         Executive’s
resignation from the Bank’s employ for any of the following reasons (each shall be deemed a “Good Reason”):


 


(A)         the
failure to elect or reelect or to appoint or reappoint Executive to the position set forth under Section 1 of this Agreement;


 


(B)         a
material change in Executive’s functions, duties, or responsibilities with the Bank, which change would cause Executive’s
position to become one of lesser responsibility, importance, or scope from the position and attributes described in Section 1 of
this Agreement;


 




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(C)         a
relocation of Executive’s principal place of employment by more than 50 miles from the main office of the Bank;


 


(D)         a
material reduction in the benefits and perquisites of Executive from those being provided as of the Effective Date, other than
a reduction pursuant to Section 3(a) of this Agreement or a reduction that is part of a Bank-wide reduction in pay or benefits;


 


(E)         a
liquidation or dissolution of any holding company of the Bank or the Bank, other than a liquidation or dissolution which does not
affect the status of Executive; or


 


(F)         a
material breach of this Agreement by the Bank.


 


Upon the occurrence
of any event described in clauses (ii)(A), (B), (C), (D), (E) or (F), above, Executive shall have the right to elect to terminate
her employment under this Agreement by resignation upon not less than thirty (30) days prior written Notice of Termination,
as defined in Section 9(a), given within ninety (90) days after the event giving rise to said right to elect. Notwithstanding
the preceding sentence, Executive, after giving due notice within the prescribed time frame of an initial event specified above,
shall not waive any of her rights under this Agreement by virtue of the fact that Executive has submitted her resignation but has
remained in the employ of the Bank, provided Executive is engaged in good faith discussions to resolve the occurrence of any event
described in clauses (ii)(A), (B), (C), (D), (E) or (F) above. During this thirty (30) day period, the Bank shall have the right
to cure the Good Reason, and in the event that the Bank cures said Good Reason, Executive shall no longer have the right to terminate
employment and receive a payment under this Agreement.


 


(iii)        the
termination of Executive’s employment (other than Termination for Just Cause) by the Bank (or any successor thereto) on the
effective date of, or at any time following a Change in Control, or Executive’s resignation from the Bank’s employ
due to Good Reason (subject to Executive’s notice of Good Reason and the Bank’s right to cure, as set forth in Section
5(a)(ii)) on the effective date of, or at any time following a Change in Control, during the term of this Agreement. For these
purposes, a Change in Control shall mean the occurrence of any of the following events:


 


(A)         Merger:
The holding company of the Bank (for purposes of this Agreement, the “Company”) or the Bank merges into or consolidates
with another entity, or merges another bank or corporation into the Bank or 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 or the Bank immediately before the merger or consolidation;


 


(B)         Acquisition
of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or


 




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schedule (other than
Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, 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
or the Bank’s voting securities; provided, however, this clause (B) shall not apply to beneficial ownership of the Company’s
or the Bank’s 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;


 


(C)         Change
in Board Composition: Individuals who constitute the Company’s or the Bank’s Board of Directors on the Effective
Date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any
person becoming a director subsequent to the Effective Date whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board shall be considered, for purposes of this clause (C), as though he or she was a member
of the Incumbent Board; or


 


(D)         Sale
of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.


 


Notwithstanding anything
herein to the contrary, a Change in Control shall not be deemed to have occurred either: (i) upon the conversion of the Bank to
stock form (as a stand-alone stock bank or as the subsidiary of a mutual or stock holding company); or (ii) following the conversion
of the Bank to a subsidiary of a mutual holding company, upon the subsequent conversion of any mutual holding company to stock
form, or in connection with any reorganization used to effect such a conversion.


 


(b)           Upon
the occurrence of an Event of Termination under Sections 5(a)(i) or 5(a)(ii) above, on the Date of Termination, as defined in Section 9(b)
of this Agreement, the Bank shall be obligated to pay Executive, or, in the event of her subsequent death, her beneficiary or beneficiaries,
or her estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) her earned
but unpaid salary as of the date of her termination of employment with the Bank; (ii) the benefits, if any, to which she is entitled
as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit
of the Bank’s officers and employees; and (iii) the remaining payments of Base Salary that Executive would have earned, in
accordance with Section 3(a) if she had continued her employment with the Bank for the remaining term of this Agreement plus
the bonus or incentive award Executive would have received in each year during the remaining term in an amount equal to the average
bonus and/or incentive award earned by her over the three calendar years preceding the year in which the termination occurs (in
determining the bonus and/or incentive portion of the payment, the total amount will be determined by: adding the bonuses and/or
incentives earned in each of the last three years; dividing the total by 36; and then multiplying the result by the number of whole
months in the remaining unexpired term of


 




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this Agreement). Any payments
hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A
of the Internal Revenue Code of 1986, as amended (“Code”) applies to the payment, and Executive is considered a “Specified
Employee” under Code Section 409A, on the first day of the seventh month following the Date of Termination. The payments
shall not be reduced in the event Executive obtains other employment following termination of employment.


 


(c)           Upon
the occurrence of an Event of Termination under Section 5(a)(iii), on the Date of Termination, as defined in Section 9(b)
of this Agreement, the Bank shall be obligated to pay Executive, or, in the event of her subsequent death, her beneficiary or beneficiaries,
or her estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) her earned
but unpaid salary as of the date of her termination of employment with the Bank; (ii) the benefits, if any, to which she is entitled
as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit
of the Bank’s officers and employees; and (iii) an amount equal to three (3.0) times Executive’s “base amount,”
as that term is defined for purposes of Code Section 280G. Any payments hereunder shall be made in a lump sum within ten (10) days
after the Date of Termination, or in the event that Code Section 409A applies to the payment and Executive is considered a “Specified
Employee” under Code Section 409A, on the first day of the seventh month following the Date of Termination. The payments
shall not be reduced in the event Executive obtains other employment following termination of employment.


 


(d)        Upon
the occurrence of an Event of Termination, the Bank will cause to be continued at its expense non-taxable medical and dental coverage
and life insurance substantially identical to the coverage maintained by the Bank for Executive and her family prior to Executive’s
termination. The coverage shall continue for the remaining term of this Agreement in the case of an Event of Termination under
Sections 5(a)(i) or 5(a)(ii), and for a period of thirty-six (36) months from the Date of Termination in the case of an Event of
Termination under Section 5(a)(iii) of this Agreement. If the Bank cannot provide the benefits set forth in this Section 5(d) because
Executive is no longer an employee, applicable rules and regulations prohibit the benefits in the manner contemplated, or it would
subject the Bank to penalties, then the Bank shall pay Executive a cash lump sum payment reasonably estimated to be equal to the
value of such benefits or the value of the remaining benefits at the time of such determination. The cash payment shall be made
in a lump sum within thirty (30) days after the later of Executive’s date of termination or the effective date of the rules
or regulations prohibiting the benefits or subjecting the Bank to penalties.


 


(e)           Executive
shall be entitled to voluntarily terminate her employment other than for Good Reason at any time during the term of this Agreement,
provided, however, that Executive shall not be entitled to any compensation or benefits under this Section 5 as a result of such
termination.


 


(f)           Executive
shall not be entitled to any payments or benefits under Sections 5(a)(i) or 5(a)(ii) unless and until Executive executes a release
of her claims against the Bank and any affiliate, and their officers, directors, successors and assigns, releasing said persons
from any and all claims, rights, demands, causes of action, suits, arbitrations or grievances relating to the employment relationship,
including claims` under the Age Discrimination in Employment Act


 




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(“ADEA”),
but not including claims for benefits under tax-qualified plans or other benefit plans in which Executive is vested, claims for
benefits required by applicable law or claims with respect to obligations set forth in this Agreement that survive the termination
of this Agreement. In order to comply with the requirements of Code Section 409A and the ADEA, the release shall be provided to
Executive no later than the date of her Separation from Service (as defined herein) and Executive shall have no fewer than 21 days
to consider the release, and following Executive’s execution of the release, Executive shall have seven (7) days to revoke
said release. This Section 5(f) shall not apply with respect to payments or benefits under Section 5(a)(iii) of this Agreement.


 


6.           TERMINATION
FOR JUST CAUSE


 


(a)           The
term “Termination for Just Cause” shall mean termination because of Executive’s personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.


 


(b)           Notwithstanding
Section 6(a), the Bank may not terminate Executive for Just Cause unless and until there shall have been delivered to her
a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority
of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for that purpose, finding
that in the good faith opinion of the Board of Directors, Executive was guilty of conduct justifying Termination for Just Cause.
Executive shall not have the right to receive compensation or other benefits for any period after Termination for Just Cause. During
the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 6 hereof through the Date
of Termination, any unvested stock options and related limited rights granted to Executive under any stock option plan shall not
be exercisable nor shall any unvested awards granted to Executive under any stock benefit plan of the Bank or any subsidiary or
affiliate thereof, vest. At the Date of Termination, any such unvested stock options and related limited rights and any such unvested
awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to the Termination
for Just Cause. Executive shall not, as a result of Termination for Just Cause, forfeit any rights to compensation or benefits,
including benefits under qualified or non-qualified retirement or deferred compensation plans or programs, earned and vested as
of the date of termination.


 


7.           TERMINATION
FOR DISABILITY OR DEATH


 


(a)           The
Bank or Executive may terminate Executive’s employment after having established Executive’s Disability. For purposes
of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially
perform her duties under this Agreement and that results in Executive’s becoming eligible for long-term disability benefits
under a long-term disability plan of the Bank (or, if the Bank has no such plan in effect, that impairs Executive’s ability
to substantially perform her duties under this Agreement for a period of one hundred eighty (180) consecutive days), provided,
however, that in order to receive the payments from the Bank under Section 7(b) of this Agreement, Executive’s “Disability”
shall also satisfy the requirements of Code Section 409A. The Board of Directors shall determine in


 




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good faith, based upon competent
medical advice and other factors that they reasonably believe to be relevant, whether or not Executive is and continues to be disabled
for purposes of this Agreement. As a condition to any benefits, the Board of Directors may require Executive to submit to such
physical and/or mental evaluations and tests as it deems reasonably appropriate, at the Bank’s expense.


 


(b)           In
the event of Disability, Executive’s obligation to perform services under this Agreement will terminate. In the event of
such termination, Executive shall be entitled to receive benefits under any disability program sponsored by the Bank.


 


(c)           In
the event of Executive’s death during the term of this Agreement, her estate, legal representatives or named beneficiary
or beneficiaries (as directed by Executive in writing) shall be paid Executive’s Base Salary, as defined in Section 3(a),
at the rate in effect at the time of Executive’s death through the end of the calendar month in which Executive’s death
occurs, and the Bank will continue to provide Executive’s dependents the same medical, dental, and other health benefits
that were provided by the Bank to Executive’s dependents immediately prior to Executive’s death, on the same terms,
including cost, as if Executive were actively employed by the Bank, except to the extent the terms (including cost) of such benefits
are changed in their application to all continuing employees of the Bank, such coverage to continue for a period of one (1) year
after the date of Executive’s death. If the Bank cannot provide the benefits set forth in this paragraph because Executive
is no longer an employee, applicable rules and regulations prohibit the benefits in the manner contemplated, or it would subject
the Bank to penalties, then the Bank shall pay Executive’s dependents a cash lump sum payment reasonably estimated to be
equal to the value of the benefits or the value of the remaining benefits at the time of the determination. The cash payment shall
be made in a lump sum within thirty (30) days after the later of Executive’s date of death or the effective date of the rules
or regulations prohibiting the benefits or subjecting the Bank to penalties.


 


8.           TERMINATION
UPON RETIREMENT


 


Termination of Executive’s
employment based on “Retirement” shall mean termination of Executive’s employment by the Bank on or after age
72, Executive’s voluntary termination at any time after Executive reaches age 72, or retirement at any time as agreed upon
by the Board of Directors and Executive. Upon termination of Executive based on Retirement, no amounts or benefits shall be due
Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other
plans to which Executive is a party, or in accordance with any other retirement arrangements approved by the Board of Directors.


 


9.           NOTICE


 


(a)           Any
notice required under this Agreement shall be in writing and delivered to the other party. Any termination by the Bank or by Executive
shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination”
shall mean a written notice which shall indicate the specific termination provision in this Agreement pursuant to which the termination
of employment occurs.


 




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(b)          
“Date of Termination” shall mean (i) if Executive’s employment is terminated for Disability, thirty (30) days
after a Notice of Termination is given (provided that she shall not have returned to the performance of her duties on a full-time
basis during the thirty (30) day period), and (ii) if her employment is terminated for any other reason, the date specified in
the Notice of Termination, provided however, in either case, the “Date of Termination” shall not occur prior to the
date on which Executive has a “Separation from Service” within the meaning of Code Section 409A.


 


(c)           If
the party receiving a Notice of Termination desires to dispute or contest the basis or reasons for termination, the party receiving
the Notice of Termination must notify the other party within thirty (30) days after receiving the Notice of Termination that a
dispute exists, and shall pursue the resolution of the dispute in good faith and with reasonable diligence pursuant to Section 20
of this Agreement. During the pendency of any dispute, the Bank shall not be obligated to pay Executive compensation or other payments
beyond the Date of Termination.


 


10.         POST-TERMINATION
OBLIGATIONS


 


Executive shall, upon reasonable
notice, furnish any information and assistance honestly and in good faith to the Bank or the Company as may reasonably be required
by the Company or the Bank in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become,
a party. All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with this
Section 10 for three (3) full years after the earlier of the expiration of this Agreement or termination of Executive’s employment
with the Bank.


 


11.         NON-COMPETITION
AND NON-DISCLOSURE


 


(a)           As
a material inducement of the Bank to enter into this Agreement, upon any termination of Executive’s employment hereunder
pursuant to the terms of this Agreement, other than a termination of Executive’s employment under Section 5(a)(iii)
of this Agreement or a termination for Just Cause, Executive agrees not to compete with the Bank, the Company or any affiliate
of the Bank or the Company (collectively said entities are referred to as the “Bank” for purposes of this Section 11)
for a period of twelve (12) months following such termination within a fifty (50) mile radius of the main office of the Bank. Executive
agrees that during this period and within a fifty (50) mile radius of the main office of the Bank, 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 Bank. Executive further agrees that for a period of twelve (12) months following any
termination of employment, she shall not directly or indirectly, solicit, hire, or entice any of the following persons or entities
to cease, terminate, or reduce any relationship with the Bank or to divert any business from the Bank: (i) any person who was an
employee of the Bank during the term of this Agreement; or (ii) any customer or client of the Bank. Further, Executive will not
directly or indirectly disclose the names, addresses, telephone numbers, compensation, or other arrangements between the Bank and
any person or entity described in (a)(i) and (a)(ii) of this Section 11. The parties hereto, recognizing that irreparable injury
will result to the Bank, its business and property in the event of Executive’s breach of this Section 11(a), agree that in
the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available,
to an injunction to restrain the violation hereof by Executive,


 




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Executive’s partners,
agents, servants, employees and all persons acting for or under the direction of Executive. Nothing herein will be construed as
prohibiting the Bank from pursuing any other remedies available to the Bank for such breach or threatened breach, including the
recovery of damages from Executive.


 


(b)           Executive
recognizes and acknowledges that the knowledge of the business activities, plans for business activities, and all other proprietary
information of the Bank as it may exist from time to time, are valuable, special and unique assets of the business of the Bank.
Executive will not, during or after the term of her employment, disclose any knowledge of the past, present, planned or considered
business activities or any other similar proprietary information of the Bank to any person, firm, corporation, or other entity
for any reason or purpose whatsoever unless expressly authorized by the Board of Directors or required by law. 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 Bank. Further, Executive may disclose information
regarding the business activities of the Bank to any bank regulator having regulatory jurisdiction over the activities of the Bank,
pursuant to a formal regulatory request. In the event of a breach or threatened breach by Executive of the provisions of this Section
11, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the
past, present, planned or considered business activities of the Bank, or any other similar proprietary information, or from rendering
any services to any person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been disclosed
or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available
to the Bank for such breach or threatened breach, including the recovery of damages from Executive.


 


(c)           The
provisions of this Section 11 are intended to protect the business, operations and assets of the Bank, and are a material inducement
to the Bank to enter into this Agreement. Executive acknowledges that the provisions of this Section 11 are an essential part of
this Agreement and are reasonably necessary for the protection of the business, operations and assets of the Bank.


 


12.         SOURCE
OF PAYMENTS


 


All payments provided in
this Agreement shall be timely paid in cash or check from the general funds of the Bank.


 


13.         EFFECT
ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS


 


This Agreement contains
the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor
of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit, compensation, tax indemnification
or other provision inuring to the benefit of Executive under any agreement between Executive, the Bank or the Company. No provision
of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to her
without reference to this Agreement.


 




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14.         NO
ATTACHMENT


 


(a)           Except
as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment
by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.


 


(b)           This
Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns.


 


15.         MODIFICATION
AND WAIVER


 


(a)           This
Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.


 


(b)           No
term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No written
waiver shall be deemed a continuing waiver unless specifically stated therein, and each waiver shall operate only as to the specific
term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that
specifically waived.


 


16.         REQUIRED
PROVISIONS


 


(a)        The
Bank may terminate Executive’s employment at any time, but any termination by the Board of Directors other than Termination
for Just Cause as defined in Section 5 of this Agreement shall not prejudice Executive’s right to compensation or other benefits
under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination
for Just Cause.


 


(b)        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) [12 USC §1818(e)(3)] or 8(g)(1) [12 USC §1818(g)(1)] of the Federal Deposit
Insurance Act (the “FDI Act”), 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 its contract obligations were suspended and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.


 


(c)        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) [12 USC §1818(e)(4)] or 8(g)(1) [12 USC §1818(g)(1)] of the FDI Act, 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)        If
the Bank is in default as defined in Section 3(x)(1) [12 USC §1813(x)(1)] of the FDI Act, 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.


 


(e)        All
obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the Comptroller of the Currency (the “Comptroller”) or his or her designee,
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) [12 USC §1823(c)] of the FDI Act; or (ii) by the Comptroller or his or her designee at the time the Comptroller
or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined
by the Comptroller 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.


 


(f)        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 any rules and regulations promulgated thereunder, including 12 C.F.R. Part 359, and to the extent applicable,
12 C.F.R. §563.39.


 


(g)        Notwithstanding
anything else in this Agreement to the contrary, Executive’s employment shall not be deemed to have been terminated unless
and until Executive has a Separation from Service within the meaning of Code Section 409A. For purposes of this Agreement, a “Separation
from Service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be
performed by Executive after the date of termination (whether as an employee or as an independent contractor) or the level of further
services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately
preceding the termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent
with Treasury Regulation Section 1.409A-1(h)(ii).


 


17.         SEVERABILITY


 


If, for any reason, any
provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provisions
of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the
full extent consistent with law continue in full force and effect.


 


18.         HEADINGS
FOR REFERENCE ONLY


 


The headings of sections
and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any
of the provisions of this Agreement.


 


19.         GOVERNING
LAW


 


This Agreement shall be
governed by the laws of the State of Louisiana, without regard to its conflict of law principles, unless superseded by federal
law or otherwise specified herein.


 




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20.         ARBITRATION


 


Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil
litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator sitting in a location selected
by Executive and the Bank within fifty (50) miles from the main office of the Bank, in accordance with the rules of the American
Arbitration Bank’s National Rules for the Resolution of Employment Disputes (“National Rules”) then in effect.
The Bank shall provide a list of three or more arbitrators to Executive from which Executive shall select the arbitrator. If the
parties are unable to agree within fifteen (15) days from the date the Bank presents the list to Executive, the arbitrator shall
be appointed for them from a panel of arbitrators selected in accordance with the National Rules. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.


 


21.         PAYMENT
OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS


 


In the event any dispute
or controversy arising under or in connection with Executive’s termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment of: (i) all legal fees incurred by Executive in
resolving the dispute or controversy; (ii) any back-pay, including salary, bonuses and any other cash compensation, fringe benefits
and any compensation and benefits due Executive under this Agreement; and (iii) any other compensation otherwise due Executive
as a result of a breach of this Agreement by the Bank. In the event any dispute or controversy arising under or in connection with
Executive’s termination is resolved in favor of the Bank, whether by judgment, arbitration or settlement, each party shall
be responsible for its own legal fees incurred in resolving such dispute or controversy.


 


22.         INDEMNIFICATION


 


The Bank and the Company
shall provide Executive (including her heirs, executors and administrators) with coverage under a standard directors’ and
officers’ liability insurance policy at its expense. The Bank shall indemnify Executive (and her heirs, executors and administrators)
to the fullest extent permitted under its Articles of Incorporation, Bylaws and applicable law against all expenses and liabilities
reasonably incurred by her in connection with or arising out of any action, suit or proceeding in which she may be involved by
reason of her having been a director or officer of the Bank (whether or not she continues to be a director or officer at the time
of incurring the expenses or liabilities), the expenses and liabilities to include, but not be limited to, advancement of legal
fees and expenses, judgments, court costs and attorneys’ fees and the cost of reasonable settlements. Any such indemnification
shall be made consistent with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations
issued thereunder in 12 C.F.R. Part 359.


 


23.         SUCCESSOR
TO THE BANK


 


The Bank shall require
any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially
all the business or assets of the Bank,


 




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expressly and unconditionally
to assume and agree to perform the Bank’s obligations under this Agreement, in the same manner and to the same extent that
the Bank would be required to perform if no such succession or assignment had taken place.


 


24.         NON
WAIVER


 


The failure of one party
to insist upon or enforce strict performance by the others of any provision of this Agreement or to exercise any right, remedy
or provision of this Agreement will not be interpreted or construed as a waiver or relinquishment to any extent of such party’s
right to enforce or rely upon same in that or any other instance.


 




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IN WITNESS WHEREOF the
Bank and Executive have signed (or caused to be signed) this Agreement this 1st day of March, 2017.


 


	Attest:	 	HERITAGE BANK OF ST. TAMMANY 


 


	/s/ Dana Whitaker	 	By:	/s/ W. Thomas Ballantine, Jr.
	Secretary	 	Title: Chairman of the Compensation Committee
	 	 	 
	Attest:	 	EXECUTIVE
	 	 	 
	/s/ Dana Whitaker	 	/s/ Lisa B. Hughes
	Secretary	 	Lisa Hughes


 




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