| THIS POLICY is hereby adopted
and approved by Redwood Financial, Inc. in order to fulfill
the requirement under of Section 111 of the Emergency Economic
Stabilization Act of 2008, as amended by the American Recovery
Investment Act of 2009 or otherwise from time to time and
rules, regulations, guidance or other requirements issued
thereunder (collectively, the “EESA Restrictions”)
that an “excessive or luxury expenditures policy”
be adopted, which Policy shall apply to Redwood Financial,
Inc. and to each of its affiliates treated as being the same
employer under the EESA Restrictions, including Hometown Bank
(collectively, the “Company”).
The Company prohibits any excessive or luxury expenditures
relating to entertainment or events, office and facility renovations,
aviation or other transportation services and other items,
activities or events that are not reasonable expenditures
for staff development, reasonable performance incentives or
other similar measures conducted in the normal course of business
operations.
Entertainment or Events: This category of expenditure relates
to activities that any officer or employee would use corporate
funds for business development purposes relating to current
or prospective customers or to further marketing efforts on
behalf of the Company.
It is the Company’s expectation that all expenses incurred
in this category will be for company purposes and used to
generate business for the Company. Occasional events such
as taking customers or prospects to sporting events, playing
golf, dinners or other meals or similar events or parties
that might build or enhance the relationship with the customer/prospect
is a normal and necessary part of the Company’s marketing
efforts and are not considered to be in violation of this
Policy. The expenses related to these events should be documented
and detailed by the officer or employee through the normal
reimbursement process. “Out of town” events will
require prior approval of the Board of Directors. Also, the
costs for all activities should be kept in mind and monitored
and should avoid the appearance to the Company’s shareholders
or the public of being extraordinary or excessive.
Office and Facility Renovations: Renovations should relate
to projects approved by the Board of Directors and included
in the capital expenditure plan for the Company. Approved
renovations should avoid the appearance of being extraordinary
or excessive from the perspective of the shareholders or general
public. Exceptions to approved projects will be permitted
if management must deal with an emergency situation, such
as the need to make a facility operational for customer use.
Aviation and Transportation Services: Transportation for officers
and employees of the Company should be conducted in the most
cost appropriate way for the Company. For certain officers/employees
this may include the use of a company car. Modes of transportation
to be used may consist of car, commercial air or rail service.
The selection of transportation services should consider the
cost, efficiency and timeliness of the travel as well as confidentiality
needs for customer information. Private air services will
not be allowed without prior approval of the Board of Directors.
Other Activities: Activities such as conferences and board
or management retreats are a normal and expected practice
for the Company and at times it may be appropriate that spouses
attend along with the officers/employees. The Company recognizes
that these activities provide significant educational, business
planning and team building benefits to the Company and therefore
should not be discouraged. Likewise, employee recognition
and holiday parties, including reasonable service awards and
nominal door prizes are part of the Company’s normal
operations and will not violate the Policy. However, the costs
for all of these activities should be kept in mind and monitored
and should avoid the appearance to the shareholders or general
public of being extraordinary or excessive.
Compliance with this Policy will be monitored by Chief Operating
Officer, by report to the Board of Directors. Any noncompliance
will be promptly reported to the Board of Directors. Any officer
or employee who engages in extravagant spending will be subject
to appropriate discipline up to and including termination.
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