Exhibit 10.6



 Exhibit 10.6 
 NEWPORT BANCORP, INC. 
 TWO-YEAR EMPLOYMENT AGREEMENT 
 THIS AGREEMENT (the “Agreement”), made this 18th day of July, 2006, by and 
 among
NEWPORT BANCORP, INC., a Maryland corporation (the “Company”), and BRUCE 
 A. WALSH (“Executive”).
References to the “Bank” herein shall mean NEWPORT 
 FEDERAL SAVINGS BANK. 
 W I T N E S S E T H 
 WHEREAS, Executive serves in a position of substantial responsibility; 
 WHEREAS, the Company wishes
to assure the services of Executive for the period 
 provided in this Agreement; and 
 WHEREAS, Executive is willing to serve in the employ of the Company on a full-time 
 basis for said period. 
 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 Senior
Vice President and Chief 
 Financial Officer of the Company. Executive shall perform all duties and shall have all powers 
 which are commonly incident to the office of Chief Financial Officer of the Company or which, 
 consistent with that office, are delegated to him by the Chief Executive Officer and/or Chief 
 Operating Officer of the Company. 
 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. 
 a. The term of this Agreement shall be (i) the initial term, consisting of the period 
 commencing on the date of this Agreement (the “Effective Date”) and ending on the second 
 anniversary of the Effective Date, plus (ii) any and all extensions of the initial term made 
 pursuant to this Section 3. 
 b. Commencing December 2006 and each December thereafter,
the disinterested 
 members of the Board of Director of the Company (the “Board”) may extend the Agreement 
 such that the remaining term of the Agreement shall be twenty-four (24) months, unless 
 Executive elects not to extend the term of this Agreement by giving written notice in accordance 
 with Section 19 of this Agreement. The Board 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

 shall give notice to Executive as soon as possible after such review as to whether the Agreement 
 is to be extended. 
 4.
Base Compensation. 
  

	 	 a.
	 The Company agrees to pay the Executive during the term of this Agreement a 


 base salary at the rate of $115,000 per year, payable in accordance with 
 customary payroll practices. 
  

	 	 b.
	 The Board shall review 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. 
  

	 	 c.
	 In the absence of action by the Board, the Executive shall continue to receive 


 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. 
 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. 
 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. 
  

	 	 a.
	 The Executive shall be entitled to vacation and other leave in accordance with 


 policy for senior executives, or otherwise as approved by the Board. 
  

	 	 b.
	 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 President and Chief Executive Officer or Chief Operating Officer 
 may in their discretion determine. Further, the President and Chief Executive 
 Officer or Chief Operating Officer 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 they, in their sole discretion may determine. 
 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 
  

 2 








 services under this Agreement upon substantiation of such expenses in accordance with 
 applicable policies of the Company. 
 9. Reserved. 
 10. Loyalty and Confidentiality. 
  

	 	 a.
	 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. 
  

	 	 b.
	 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. 
  

	 	 c.
	 Executive agrees to maintain the confidentiality of any and all information 


 concerning the operation or financial status of the Company and its affiliates, 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. 
 11. Termination and Termination Pay. Subject to Section 12 of this Agreement, 
 Executive’s employment under this Agreement may be terminated in the following 
 circumstances: 
  

	 	 a.
	 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. 
  

	 	 b.
	 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. 
  

 3 









	 	 c.
	 Disability. 


  

	 	 i.
	 The Board or Executive may terminate Executive’s employment after 


 having determined Executive has a Disability. For purposes of this 
 Agreement, “Disability” means a physical or mental infirmity that impairs 
 Executive’s ability to
substantially perform his duties under this 
 Agreement and that results in Executive becoming eligible for long-term

 disability benefits under any long-term disability plans of the Company 
 and its affiliates or subsidiaries (or, if there are no such plans in effect, that 
 impairs Executive’s ability to substantially perform his duties under this 
 Agreement for a period of one hundred eighty (180) consecutive days). 
 The Board shall determine whether or not Executive is and continues to be 
 permanently disabled for purposes of this Agreement in good faith, based 
 upon competent medical advice and other factors that they reasonably 
 believe to be relevant. 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. 
  

	 	 ii.
	 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) upon 
 termination of the Agreement. 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 benefit plans (including, without 
 limitation, retirement plans and medical, dental and life 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. 
  

	 	 d.
	 Termination for Cause. 


  

	 	 i.
	 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 
  

 4 








 “Cause” shall mean termination because of, in the good faith 
 determination of the Board, Executive’s: 
  

	 	 (1)
	 Personal dishonesty; 


  

	 	 (2)
	 Incompetence; 


  

	 	 (3)
	 Willful misconduct; 


  

	 	 (4)
	 Breach of fiduciary duty involving personal profit; 


  

	 	 (5)
	 Intentional failure to perform stated duties; 


  

	 	 (6)
	 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 
  

	 	 (7)
	 Material breach by Executive of any provision of this Agreement. 


  

	 	 ii.
	 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. 
  

	 	 e.
	 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 Section 11(g)(i) and 11(g)(ii) of this Agreement for a 
 period of one (1) year from his termination date. 
  

	 	 f.
	 Without Cause or With Good Reason. 


  

	 	 i.
	 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 within ninety (90) days 
 following an event constituting “Good Reason” as defined below (a 
 termination “With Good Reason”). 
  

 5 









	 	 ii.
	 Subject to Section 12 of this Agreement, in the event of termination under 


 this Section 11(f), Executive shall be entitled to receive his base salary in 
 effect as of his termination date for the remaining term of the Agreement 
 paid in one lump sum within ten (10) calendar days of such termination. 
 Also, in such event, Executive shall, for the remaining term of the 
 Agreement, receive 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) and 
 continue to participate in any benefit plans of the Company or its affiliates 
 that provide health (including medical and dental), or life 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 is unable to provide such 
 coverage by reason of Executive no longer being an employee, the 
 Company shall provide Executive with comparable coverage on an 
 individual policy basis. 
  

	 	 iii.
	 “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 any of the following: 
  

	 	 (1)
	 A material reduction in Executive’s responsibilities or authority in 


 connection with his employment with the Company; 
  

	 	 (2)
	 Assignment to Executive of duties of a non-executive nature or 


 duties for which he is not reasonably equipped by his skills and 
 experience; 
  

	 	 (3)
	 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; 
  

	 	 (4)
	 A reduction in 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; 
  

	 	 (5)
	 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 
  

 6 








 their aggregate value below their aggregate value as of the 
 Effective Date; 
  

	 	 (6)
	 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 
  

	 	 (7)
	 liquidation or dissolution of the Company. 


  

	 	 iv.
	 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. 
  

	 	 g.
	 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): 
  

	 	 i.
	 Executive’s obligations under Section 10(c) of this Agreement will 


 continue in effect; and 
  

	 	 ii.
	 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. 
 12. Termination in Connection with a Change in Control. 
  

	 	 a.
	 For purposes of this Agreement, a Change in Control means any of the following 


 events: 
  

 7 









	 	 (i)
	 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. 
  

	 	 (ii)
	 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. 
  

	 	 (iii)
	 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 
  

	 	 (iv)
	 Sale of Assets: The Company sells to a third party all or substantially all 


 of its assets. 
  

	 	 b.
	 Termination. If within the period ending two (2) years after a Change in Control, 


 (i) the Company terminates Executive’s employment Without Cause, or 
 (ii) Executive voluntarily terminates his employment With Good Reason, the 
 Company will, within ten (10) calendar days of the termination of Executive’s 
 employment, make a lump-sum cash payment to him equal to two (2) times 
 Executive’s average Annual Compensation 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 
  

 8 








 sharing, employee stock ownership plan and other retirement contributions or 

benefits, including to any tax-qualified plan or arrangement (whether or not 
 taxable) made or accrued on behalf of Executive of such year. The cash payment 
 made under this Section 12(b) shall be made in lieu of any payment also required 
 under Section 11(f) of this Agreement because of a termination in such period. 
 Executive’s rights under Section 11(f) are not otherwise affected by this 
 Section 12. Also, in such event, the Executive shall, for a twenty-four (24) month 
 period following his termination of employment, receive 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) and continue to 
 participate in any benefit plans of the Company and/or the Bank that provide 
 health (including medical and dental), or life 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 or its 
 subsidiaries shall provide the Executive with comparable coverage on an 
 individual policy. 
  

	 	 c.
	 The provisions of Section 12 and Sections 14 through 26, including the defined 


 terms used in such sections, shall continue in effect until the later of the expiration 
 of this Agreement or two (2) years following a Change in Control. 
 13. Indemnification and Liability Insurance. Subject to, and limited by 
 Section 26(f) of this Agreement, the Company shall provide the following: 
  

	 	 a.
	 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 affiliates or 
 subsidiaries 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 affiliates 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 
  

 9 








 this Section 13 shall survive the term of this Agreement by a period of six
(6)
 years. 
  

	 	 b.
	 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. 
 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. 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. Limitation of Benefits Under Certain Circumstances. If the payments and 
 benefits pursuant to Section 12 of this Agreement, either alone or together with other payments 
 and benefits which Executive
has the right to receive from the Company, would constitute a 
 “parachute payment” under Section 280G of the Code, the
payments and benefits pursuant to 
 Section 12 shall be reduced or revised, in the manner determined by Executive, by the amount, if

 any, which is the minimum necessary to result in no portion of the payments and benefits under 
 Section 12 being non-deductible to the Company pursuant to Section 280G of the Code and 
 subject to the excise tax imposed under Section 4999 of the Code. The Company’s independent 
 public accountants shall determine any reduction in the payments and benefits to be made 
 pursuant to
Section 12, and the Company shall pay for the accountant’s opinion with respect to 
 such reduction. If the Company and/or
Executive do not agree with the accountant’s opinion, the 
 Company shall pay to Executive the maximum amount of payments and benefits
pursuant to 
 Section 12, as selected by Executive, which the opinion indicates have a high probability of not 
 causing any of the payments and benefits to be non-deductible to the Company and subject to the 
 imposition of the excise tax imposed under Section 4999 of the Code. The Company may also 
 request, and Executive shall have the right to demand that they request, a ruling from the IRS as 
 to whether the disputed payments
and benefits pursuant to Section 12 have such tax 
 consequences. The Company shall promptly prepare and file the request for a ruling
from the 
 IRS, but in no event shall the Company make such filing later than thirty (30) days from the date 
 of the accountant’s opinion referred to above. The request shall also be subject to the 
 Executive’s approval prior to filing; Executive shall not unreasonably withhold his approval. 
 The Company and Executive agree to be bound by any ruling received from the IRS and to make 
 appropriate
payments to each other to reflect any IRS rulings, together with interest at the 
 applicable federal rate provided for in
Section 7872(f)(2) of the Code. Nothing contained in this 
 Agreement shall result in a reduction of any payments or benefits to which
Executive may be 
  

 10 








 entitled upon termination of employment other than pursuant to Section 12 hereof, or a reduction

 in the payments and benefits specified in Section 12, below zero. 
 16. Injunctive Relief. If there is a breach or threatened breach of Section 11(g) of 
 this Agreement or the prohibitions upon disclosure contained in Section 10(c) of this Agreement, 
 the parties agree that there is no adequate remedy at law for such breach, and that the 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 Bank under
this Agreement. 
 17. Successors and Assigns. 
  

	 	 a.
	 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. 
  

	 	 b.
	 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. 
 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. 
  

 11 








 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 Change in Control
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. 
 27. Section 409A. Notwithstanding anything in this Agreement to the contrary, if the 
 Company in good faith determines that amounts that, as of the effective date of the Executive’s 
 termination of employment are or may become payable to the Executive upon termination of his 
 employment hereunder are required to be suspended or delayed for six (6) months in order to 
 satisfy the requirements of Section 409A of the Internal Revenue Code, then the Company will 
 so advise
the Executive, and any such payments shall be suspended and accrued for six months, 
 whereupon they shall be paid to the Executive in a lump
sum (together with interest thereon at 
 the then-prevailing prime rate). 
  

 12 








 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date

 first set forth above. 
  

							
	 Attest:
	 		 	 NEWPORT BANCORP, INC.

				
	 /s/ Judy Tucker
	 		 	 By:
	 	 /s/ Peter W. Rector

		 		 		 	 Chairman of the Board of Directors

			
	 Witness:
	 		 	 EXECUTIVE

			
	 /s/ Judy Tucker
	 		 	 /s/ Bruce A. Walsh

		 		 	 Bruce A. Walsh


  

 13