THIS EMPLOYMENT AGREEMENT (the
“Agreement”), between The Bank of the Pacific, a Washington business corporation
(“The Bank”) and Xxxxxxxx X. Xxxxx (“Executive”) is dated as of
December 20th, 2005 and will be effective January 1, 2006.
RECITALS
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A. |
The Bank of the Pacific is a Washington banking corporation. The Bank is engaged
in the business of commercial banking in Grays Harbor County, Pacific County,
Skagit County, Whatcom County, and Wahkiakum County, Washington. The Bank also
engages business in Oregon Counties. |
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B. |
The Executive represents that he has considerable experience, expertise and
training in technology related to banking and services offered by The Bank. The
Bank desires and intends to employ the Executive pursuant to the terms and
conditions set forth in this Agreement. |
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C. |
Both The Bank and the Executive have read and understand the terms and
provisions set forth in this Agreement, and have been afforded a reasonable
opportunity to review this Agreement and to consult with an attorney. |
AGREEMENT
The parties agree as follows:
| 1. |
Employment. The Bank will employ the Executive for the Term,
except as specifically stated herein, and the Executive accepts employment with
The Bank on the terms and conditions set forth in this Agreement. The
Executive’s title will be Executive Vice President. |
| 2. |
Effective Date and Term. |
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(a) |
Effective
Date. This Agreement is effective as of the 1st day of January
1, 2006 |
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(b) |
Term. The
initial term of this Agreement is two years (24 months), beginning on the
Effective Date stated in paragraph 2(a), after which it shall renew annually
for a term of one year (12 months) unless notice of termination or nonrenewal
is provided by either party pursuant to paragraph 5(a). |
| 3. |
Duties. The Executive will serve as the Executive Vice President
& Real Estate Division Manager for the Bank and faithfully and diligently
perform the duties assigned to the Executive by the Chief Executive Officer
(“CEO”) of The Bank. The Executive will report directly to the CEO of
The Bank. The Executive will use his best efforts to perform his duties and will
devote all his working time and attention to these duties. |
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(a) |
Salary. Initially,
the Executive will receive an annualized salary of $120,000.00 per year,
to be paid at regular intervals by The Bank in accordance with its regular
payroll schedules. |
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(b) |
Incentive
Compensation. Executive will be eligible to participate in an
incentive plan relative to The Bank’s Mortgage Division’s
approved plan. The plan will be approved each year by The Bank’s
board of directors. No incentive compensation bonus shall be paid for any
calendar year or portion thereof, in which this Agreement is terminated or
not renewed, or in which notice of nonrenewal or termination is given,
regardless of reasons for termination or nonrenewal, and regardless of
which party terminates or declines to renew this Agreement. The Executive
will also be entitled to participate in stock bonus or option plans
generally available to senior executives of The Bank. |
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(c) |
Standard
Benefits. The Bank will provide to the Executive the standard
Executive benefits provided in accordance with The Bank’s benefit
plans and policies, including but not limited to health insurance,
disability insurance, life insurance and four (4) weeks of paid vacation
per year accrued in accordance with The Bank’s benefit plans and
policies. The Executive also will be entitled to participate in retirement
plans, including 401(k) plans. |
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(d) |
Auto
Allowance The Executive will be entitled to an automobile allowance in
the amount of $500.00 per month. In lieu of an automobile allowance, The Bank
may provide the Executive with the use of an automobile, of a model
typically appropriate for the performance of the services by a similarly
situated executive. |
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(e) |
Expense. The
Bank will reimburse the Executive for all reasonable expenses that the
Executive may incur in the performance of his duties including monthly
country club dues. The Executive will request reimbursement and provide
documentation of such expenses within a reasonable time, but no later than
90 days after the expense has been incurred. |
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(f) |
Annual Review
and Adjustment. The Executive’s compensation as set forth in this
Section 4(a), will be subject to annual review and adjustment by the CEO. In no
case, however, will the Executive’s salary, vacation, and expense
reimbursement be less than the amounts set forth in this section 4. |
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(a) |
Notice
of Termination or Nonrenewal. Either party may unilaterally terminate
or decline to renew this Agreement for any reason by providing the other
party with written notice of the termination or nonrenewal no less than
ninety (90) days prior to the termination date or the final date of the
then current Term of this Agreement. |
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(b) |
Termination
or Nonrenewal by The Bank Without Cause: In the event that the Bank
provides the Executive with a notice of termination without cause or
nonrenewal under paragraph 5(a), The Bank will pay to the Executive his
salary from the date of the notice for the balance of the then current
Term or for twelve (12) months from the date of the notice, whichever is
greater, and in its discretion will advise the Executive of those duties
and responsibilities, if any, it wants him to perform during this time.
Such duties and responsibilities will be in Bellingham, Washington and
reasonably commensurate with the duties and responsibilities he held prior
to the notice of termination or nonrenewal. All forfeiture provisions
regarding restricted stock awards and all vesting requirements regarding
stock options shall lapse or be deemed fully completed. |
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(c) |
Termination
or Nonrenewal by the Executive: In the event the Executive seeks to
terminate or refuses to renew this Agreement without providing at least
(90) days’ written notice prior to the termination date of final date
of the then current term, the Executive will pay to The Bank liquidated
damages as follows: (A) in the event the Executive provides notice of
termination or nonrenewal 29 days or less prior to the termination date of
the Agreement, the Executive shall pay The Bank $25,000 in liquidated
damages; (B) in the event the Executive provides notice of termination or
nonrenewal at least 30 days but not more than 59 days prior to the
termination date of the Agreement, the Executive shall pay The Bank
$20,000 in liquidated damages; (C) in the event the Executive provides
notice of termination or nonrenewal at least 60 days but not more than 89
days prior to termination of this Agreement, the Executive shall pay to The
Bank $15,000 in liquidated damages. This paragraph shall not apply to any
termination or nonrenewal by the Executive is based upon a breach of this
agreement by the Bank. |
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(d) |
Termination
by the Bank for Cause. Notwithstanding paragraph 5(a), The Bank may
immediately terminate this Agreement with no advance notice if termination
is for cause. For purposes of this Agreement, “cause” means
dishonesty; fraud; commission of a felony or of a crime involving moral
turpitude; deliberate violation of statutes, regulations, or orders
pertaining to financial institutions or reckless disregard of such
statutes, regulations, or orders; destruction or theft of Bank property or
assets of customers of The Bank; physical attack of a fellow Executive or
a customer; intoxication at work; use of narcotics or alcohol to an extent
that materially impairs Executive’s performance of his duties;
willful malfeasance or gross negligence in the performance of Executive’s
duties; violation of law in the course of employment that has a material
adverse impact on The Bank, its Executives, or its customers; Executive’s
refusal to perform Executive’s duties; Executive’s refusal to
follow reasonable instructions or directions; misconduct materially
injurious to The Bank; significant neglect of duty; or any material breach
of Executive’s duties or obligations to The Bank that results in
material harm to The Bank. If termination occurs under this paragraph, the
Executive will be entitled to receive only the salary earned through the
date this Agreement is terminated and shall not be entitled to any payment
pursuant to paragraph 5(b), and except as otherwise provided by law,
participation in benefit plans ceases upon termination of this Agreement. |
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(e) |
Death
or Disability. Notwithstanding paragraph 5(a), this Agreement will
terminate immediately upon the Executive’s death. Notwithstanding
paragraph 5(a), if the Executive is unable to perform his duties and
obligations under this Agreement for a period of 90 days as a result of a
disability that substantially limits one or more of his major life
activities, this Agreement will terminate immediately upon expiration of
such 90 day period unless Executive is thereafter able to perform the
essential functions of the position referenced in paragraph 2(c) with or
without a reasonable accommodation. If termination occurs under this
paragraph, the Executive or his estate will be entitled to receive only
the salary earned through the date this Agreement is terminated and shall
not be entitled to any payment pursuant to paragraph 4(a), and except as
otherwise provided by law, participation in benefit plans ceases upon
termination of this Agreement, except that as of such termination date, all
vesting requirements regarding then currently pending stock options shall
be deemed fully completed. |
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(f) |
Termination
Related to a Change in Control. This paragraph will apply to any
termination related to a Change in Control, as set forth herein. |
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i. |
“Change
in Control” means a change “in the ownership or effective control” or
“in the ownership of a substantial portion of the assets” of The
Bank, within the meaning of Section 280G of the Internal Revenue Code. An
initial public offering by The Bank will not, however, be deemed to be a
Change in Control under this Agreement. |
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ii. |
Termination
by the Bank. Notwithstanding the provisions of paragraph 5(a), if The
Bank or its successors in interest by merger, or their transferees in the
event of a purchase and assumption transaction, and for reasons other than
the provisions in paragraphs 5(c) and 5(d) terminates this Agreement within
twenty-four (24) months following a Change in Control, The Bank will pay
the Executive twenty four (24) times the base compensation received by the
Executive during the most recent calendar month ending on or prior to the
effective date of termination, less statutory payroll deductions. Payment
under this paragraph shall be made in accordance with The Bank’s
ordinary payroll policies and procedures, unless the parties mutually
agree to a different payment schedule. |
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iii. |
Executive
Assignment Related to Change in Control. If the assignment to the
Executive by The Bank or its successors in interest by merger, or their
transferees in the event of a purchase and assumption transaction, is (i)
other than the position of Executive Vice President & Real Estate
Division Manager or (ii) not in Bellingham, Washington, without the
Executive’s expressed written consent, then the provisions of
paragraph 5(f)(ii) shall apply. |
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iv. |
Limitations
on Payments Related to Change in Control. The following apply
notwithstanding any other provision of this Agreement: |
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1. |
The payment described in Section 5(f)(ii) shall be less than the amount that
would cause it to be a “parachute payment” within the meaning of
Section 280G (b)(2)(A) of the Internal Revenue Code; and |
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2. |
The
Executive’s right to receive the payment described in Section 5(f)(ii)
terminates (a) immediately if before the Change in Control transaction
closes, the Executive terminates his employment without good reason or the
Company terminates the Executive’s employment for cause, or (b) two
years after Change in Control occurs |
| 6. |
Confidentiality.The
Executive will not, after signing this Agreement, including during and
after its Term, disclose to any other person or entity any confidential
information concerning The Bank or its business operations or customers,
or use for his own purposes or permit or assist in the use of such
confidential information by third parties unless The Bank consents to the
use or disclosures of their respective information, or disclosure is
required by law or court order. The provisions of this paragraph survive
the termination of the Executives employment by The Bank. |
| 7. |
Noncompetition
during Term of this Agreement.During the Term of this Agreement,
the Executive will not become involved with a Competing Business or serve,
directly or indirectly, a Competing Business in any matter. “Competing
Business” means any company that competes with or will compete with
The Bank in Grays Harbor, Pacific, Wahkiakum, Whatcom, and Skagit
Counties, or any other Washington or Oregon county in which The Bank
maintains a banking office(s) at the time of the termination of this
Agreement. “Competing Business” includes, without limitation,
any existing or newly formed financial institution or trust company |
| 8. |
Noncompetition
in the event of termination and Xxxxxxxxxx.Xx the event this
Agreement is terminated or not renewed regardless of reasons for
termination or non renewal, and regardless of which party terminates or
declines to renew this Agreement, the Executive will not become involved
with a Competing Business (as the term is defined above) for the number of
months of salary he is provided (either as a lump sum or a monthly
payment) pursuant to paragraph 5(b) or otherwise after the termination or
nonrenewal but in no event exceeding 24 months. It is the intent of the
parties that upon termination or nonrenewal The Bank may purchase up to 24
months of noncompetition from the Executive by paying the Executive his
then current monthly salary for the period of noncompetition |
| 9. |
Enforcement.The
Bank and the Executive agree that, in light of all of the facts and
circumstances of the relationship between The Bank and the Executive, the
agreements referred to in paragraphs 5(a), 6 and 7 are fair and reasonably
necessary for the protection |
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of
The Bank’s confidential information, goodwill and other protectible interests. The
parties acknowledge and agree that the time and expense involved in proving in any forum
the actual damage or loss suffered by The Bank if there is a breach of paragraphs 5(a), 6
or 7 make this case appropriate for liquidated damages. Accordingly, The Bank and the
Executive agree that the following schedule of liquidated damages is reasonable and fair,
and shall be the amount of damages which the Executive shall pay to The Bank for each,
separate breach of paragraphs 5(a), 6 or 7 by the Executive: |
| a. |
for
a breach of paragraph 5(a), the sum of $25,000; |
| b. |
for
a breach of paragraph 6, the sum of $75,000; |
| c. |
for
a breach of paragraph 7, the sum of $150,000. |
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For purposes of paragraph 7, a “separate breach” shall
be deemed to have occurred with each Competing Business with which the Executive becomes
involved or serves in violation of paragraph 7. |
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Neither
the breach of paragraphs 5(a), 6 or 7, nor the payment of liquidated damages by the
Executive, shall affect the continuing validity or enforceability of this Agreement, or
The Bank’s right to seek and obtain injunctive relief. If a court of competent
jurisdiction should decline to enforce any of these covenants and agreements, the
Executive and the Bank hereby stipulate that the Court shall reform these provisions to
restrict the Executive’s use of confidential information and the Executive’s
ability to compete with The Bank to the maximum extent, in time, scope of activities, and
geography, as the court finds enforceable. |
| 10. |
Adequate
Consideration.The Executive specifically acknowledges the receipt of
adequate consideration for the covenants contained in paragraph 5(a), 6, and 7,
and that The Bank is entitled to require him to comply with these paragraphs.
These paragraphs will survive termination of this agreement. The Executive
represents that if his employment is terminated, whether voluntarily or
involuntarily, the Executive has experience and capabilities sufficient to
enable the Executive to obtain employment in areas which do not violate this
Agreement and that The Bank’s enforcement of a remedy by way of injunction
will not prevent the Executive from earning a livelihood. |
| 11. |
Miscellaneous Provisions. This Agreement constitutes the entire
understanding between the parties concerning its subject matter. This Agreement
will bind and inure to the benefit of The Bank’s and the Executive’s
heirs, legal representatives, successors and assigns. This Agreement may be
modified only through a written instrument signed by both parties. This
Agreement will be governed and construed in accordance with Washington law,.
except that certain matters may be governed by federal law. Venue for
enforcement of any terms of this Agreement shall be in Grays Harbor County,
Washington Superior Court. |
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Signed as of December 20th, 2005:
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| THE BANK OF THE PACIFIC |
EXECUTIVE |
____________________ |
____________________ |
| Xxxxxx X. Xxxx, CEO |
Xxxxxxxx X. Xxxxx |
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