EXECUTIVE SUPPLEMENTAL COMPENSATION AGREEMENT
This
Executive Supplemental Compensation Agreement (hereinafter “Agreement”) is made
and entered into effective as of January 1, 2007 by and between Bank of the
Pacific, with its principal offices located in the Aberdeen, Washington ("the
Bank" or “Employer”) and, Xxxx X. Van Dijk, an individual residing in the State
of Washington ("the Executive").
RECITALS
WHEREAS,
the Executive is an employee of the Employer, serving since May 1996,
WHEREAS,
the Employer desires to establish a compensation benefit program as a fringe
benefit for executive officers of the Employer in order to attract and retain
individuals with extensive and valuable experience in the banking
industry;
WHEREAS,
the Executive's experience and knowledge of the affairs of the Employer and
the
banking industry are extensive and valuable;
WHEREAS,
it is deemed to be in the best interests of the Employer to provide the
Executive with certain fringe benefits, on the terms and conditions set forth
herein, in order to reasonably induce the Executive to remain in the Employer's
employment; and
WHEREAS,
the Executive and the Employer wish to specify in writing the terms and
conditions upon which this additional compensatory incentive will be provided
to
the Executive;
NOW,
THEREFORE, in consideration of the services to be performed by the Executive
in
the future, as well as the mutual promises and covenants contained herein,
the
Executive and the Employer agree as follows:
AGREEMENT
1. Terms
and Definitions.
1.1 Accrued
Liability Balance.
For the
purposes of this Agreement, means the liability that should be accrued by the
Company, under Generally Accepted Accounting Principles (“GAAP”), for the
Company’s obligation to the Executive under this Agreement, by applying
Accounting Principles Board Opinion Number 12 (“APB 12”) as amended by Statement
of Financial Accounting Standards Number 106 (“FAS 106”) and the Discount Rate.
Any one of a variety of amortization methods may be used to determine the
Accrual Balance. However, once chosen, the method must be consistently applied.
1.2 Administrator.
The
Bank
shall be the "Administrator" and, solely for the purposes of ERISA as defined
in
paragraph 1.9 below, the "fiduciary" of this Agreement where a fiduciary is
required by ERISA.
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1.3 Applicable
Percentage.
The
term
“Applicable Percentage” is the percentage of the Executive Benefit to which
Executive shall be entitled based on (a) the date on which the Executive
Separates From Service or Terminates Employment with the Bank or (b) the greater
of fifty percent (50%) or the actual Applicable Percentage, as stipulated herein
for certain described events (such as Involuntary Termination within two years
following a Change in Control, or the Executive's Disability). Subject to the
forgoing, the Applicable Percentage shall be as follows:
|
DATE
OF SEPARATION FROM SERVICE
|
APPLICABLE
PERCENTAGE
|
|||
|
January
1, 2007-December 31, 2009
|
0
|
%
|
||
|
January
1, 2010-December 31, 2010
|
30
|
%
|
||
|
January
1, 2011-December 31, 2011
|
40
|
%
|
||
|
January
1, 2012-December 31, 2012
|
50
|
%
|
||
|
January
1, 2013-December 31, 2013
|
60
|
%
|
||
|
January
1, 2014-December 31, 2014
|
70
|
%
|
||
|
January
1, 2015-December 31, 2015
|
80
|
%
|
||
|
January
1, 2016-December 31, 2016
|
90
|
%
|
||
|
January
1, 2017 and beyond:
|
100
|
%
|
1.4
Beneficiary.
Beneficiary
(ies)” shall refer to the person, persons or entity designated in writing by the
Executive on forms provided by the Administrator to receive the benefits payable
under this Agreement/Plan. An Executive may change his Beneficiary from time
to
time, so long as permissible, by filing a new written designation with the
Administrator, and such designation shall be effective upon receipt by the
Administrator. If an Executive has not validly designated a beneficiary, or
if a
designated Beneficiary predeceases the Executive, then any benefit owed pursuant
to this plan Agreement shall be made to Executive’s estate.
1.5 Board
of Directors. The
Board
of Directors shall mean the Board of Directors for The Bank, hereinafter “the
Board”.
1.6 Change
in Control.
For
the
purpose of this Agreement, a Change in Control means the occurrence of any
of
the following events:
A. A
Change in the Ownership of a Corporation.
A
change in the ownership of a corporation occurs on the date that any one person
or persons acting as a group (as defined in IRC 409A), acquires ownership of
stock of the corporation that, together with stock held by such person or group,
constitutes more than fifty percent (50%) of the total fair market value or
total voting power of the stock of such corporation. The acquisition of
additional stock by the same person or group is not considered to cause a change
in the ownership of the corporation.
B.
Change
in the Effective Control of a Corporation.
A change
in the effective control of the corporation shall be deemed to occur on either
of the following dates:
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(i)
The
date any one person, or persons acting as a group acquires (or has acquired
during the twelve (12) month period ending on the date of the most recent
acquisition by such person or group) ownership of stock of the corporation
possessing thirty percent (30%) or more of the total voting power of the stock
of such corporation; or
(ii)
The
date a majority of members of the corporation’s board of directors is replaced
during any twelve (12) month period by directors whose appointment or election
is not endorsed by a majority of the members of the corporation’s board of
directors before the date of the appointment or election.
C.
Change
in the Ownership of a Substantial Portion of a Corporation’s
Assets.
A
change in the ownership of a substantial portion of a corporation’s assets shall
be deemed to occur on the date that any one person or group acquires (or has
acquired during the twelve (12) month period ending on the date of the most
recent acquisition by such person or persons) assets from the corporation that
have a total gross fair market value equal to or more than forty percent (40%)
of the total gross fair market value of all of the assets of the corporation
immediately before such acquisition or acquisitions. No Change in Control shall
result if the assets are transferred to certain entities controlled directly
or
indirectly by the shareholders of the transferring corporation.
1.7 The
Code.
The
"Code" shall mean the Internal Revenue Code of 1986, as amended (the
“Code").
1.8 Disability/Disabled.
For
the
purposes of this Agreement, Executive will be considered Disabled
if:
(A)
The
Executive is unable to engage in any substantial gainful activity by reason
of
any medically determinable physical or mental impairment that can be expected
to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months; or
(B)
The
Executive is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, receiving income
replacement benefits for a period of not less than three (3) months under an
accident and health plan covering employees of the Employee’s employer.
The
determination of whether an Executive is Disabled shall be determined by a
physician mutually agreed on by the parties subject to the provisions of IRC
409A.
1.9 Early
Retirement Date/ Early Retirement Age.
The
term
“Early Retirement Date” shall mean Retirement (as defined below) of the
Executive at anytime prior to the attainment of age Sixty-Nine (69) after the
attainment of age Sixty Five (65).
-3-
1.10 Effective
Date.
The
term
"Effective Date" shall mean the date first written above.
1.11 ERISA.
The
term
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.12 Executive
Benefit.
The
term
"Executive Benefit” shall mean the annual benefit amounts determined pursuant to
Paragraphs 1 through 4 (including sub-paragraphs, as applicable), subject to
forfeiture, reduction or adjustment as (a) required under the other provisions
of this Agreement; (b) required by reason of the lawful order of any regulatory
agency or body having jurisdiction over the Employer; or (c) required in order
for the Employer to comply with any and all applicable state and federal laws,
including, but not limited to, income, employment and disability income tax
laws
(e.g.,
FICA,
FUTA, SDI).
Subject
to the forgoing, in the event the Executive obtains an Applicable Percentage
of
one hundred percent (100%), then the annual Executive Benefit paid by the Bank
to the Employee pursuant to this Agreement shall be the lesser of forty percent
(40%) of the average of the Executive’s three final years of base salary or an
amount equal to Ninety Three Thousand One Hundred Fifty Four Dollars
($93,154.00). This Executive Benefit shall be paid in twelve (12) substantially
equal monthly installments, for a period of fifteen (15) years (180 months).
1.13 Involuntary
Separation From Service.
In
accordance with IRC 409A, the term “Involuntary Separation from Service” shall
mean a Separation From Service due to the independent exercise of the unilateral
authority of the Bank to terminate the Executive’s services, other than due to
the Executive’s implicit or explicit request, where the Executive was willing
and able to continue performing services.
1.14 IRC
409A.
The term
“IRC 409A” shall refer to the final regulations issued by the IRS and the
Treasury Department under Section 409A of the Code.
1.15 Normal
Retirement Date Normal Retirement Age .
The
term
"Normal Retirement Date" shall mean the Retirement (as defined below) of the
Executive on or after the attainment of age Sixty-Nine (69)
1.16 Retirement.
The
Term
"Retirement" or "Retires" shall refer to the date on which the Executive
voluntarily Separates From Service (other than due to a Termination for Cause)
on or after attaining the Early or Normal Retirement Age.
1.17 Separation
From Service/ Termination of Employment.
The
terms Separation From Service (Separates From Service) and Termination of
Employment shall be used interchangeably for the purposes of this Agreement
and
shall be interpreted in accordance with the provisions of IRC 409A. Whether
a
termination of employment has occurred is determined based on whether the facts
and circumstances indicate that the Bank and the Executive reasonably anticipate
that no further services will be performed after a certain date or that the
level of bona fide services the employee will perform after such date (whether
as an employee or as an independent contractor) will permanently decrease to
no
more than twenty (20%) percent of the average level of bona fide services
performed (as an employee or an independent contractor) over the immediately
preceding 36-month period (or the full period of services to the employer if
the
employee has been providing services to the employer less than 36 months).
There
shall be no Separation From Service while the Executive is on military leave,
sick leave or other bona fide leave of absence, as long as such leave does
not
exceed six months, or if longer, so long as the individual retains a right
to
re-employment with the service recipient under an applicable statute or by
contract.
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1.18 Specified
Employee.
The term
“Specified Employee” means an employee who, as of the date of the employee’s
Separation from Service, is a key employee of an employer of which any stock
is
publicly traded on an established securities market or otherwise. An employee
is
a key employee if the employee meets the requirements of section
416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations
thereunder and disregarding section 416(i)(5)) at any time during the twelve
(12) month period ending on a specified employee identification date. If
Executive is a key employee as of a specified employee identification date,
then
Executive shall be treated as a key employee for the entire twelve (12) month
period beginning on the specified employee effective date.
1.19 Termination
for Cause.
The
term
“Termination for Cause” shall mean a written termination of Employment of the
Executive by the Employer, adopted in advance by resolution of a majority of
the
Board of Directors of the Employer (the “Resolution”), for any one or more of
the following reasons, which reasons shall be cited in the Resolution and
presented promptly to the Executive:
(a)
the
Executive’s willful and material breach of duty in the course of his Employment,
such breach having a material adverse effect on the Bank;
(b) the
Executive's willful violation of any laws, rules or regulations of any
regulatory agency or governmental authority having jurisdiction over the
Employer, or of any Bank policies or resolutions adopted by the Board of
Directors of the Bank, which violation has a material adverse effect on the
Bank;
(c) the
Executive is convicted of any felony or a crime involving moral turpitude or
commits a fraudulent or dishonest act, which conviction or act has a material
adverse effect on the Bank;
1.20
Termination
for Good Reason.
For the
purposes of this Agreement, a voluntary termination by the Executive within
two
(2) years following a Change in Control Event shall be deemed “for Good Reason”
if one or more of the following conditions arise without the consent of the
Executive:
(A)
A
material diminution in the Executive’s base compensation;
(B)
A
material diminution in the Executive’s authority, duties, or
responsibilities;
(C)
A
material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report, including a requirement
that an Executive report to a corporate officer or employee instead of reporting
directly to the board of directors of a corporation (or similar governing body
with respect to an entity other than a corporation);
-5-
(D)
A
material diminution in the budget over which the Executive retains
authority;
(E)
A
material change in the geographic location at which the Executive must perform
the services;
(F)
Any
other action or inaction that constitutes a material breach by the Employer
of
the agreement under which the Executive provides services.
2. Scope,
Purpose and Effect.
2.1 Contract
of Employment.
Although
this Agreement is intended to provide the Executive with an additional incentive
to remain in the employ of the Employer, this Agreement shall not be deemed
to
constitute a contract of employment between the Executive and the Employer
nor
shall any provision of this Agreement restrict or expand the right of the
Employer to terminate the Executive's employment. This Agreement shall have
no
impact or effect upon any separate written Employment Agreement which the
Executive may have with the Employer, it being the parties' intention and
agreement that unless this Agreement is specifically referenced in said
Employment Agreement (or any modification thereto), this Agreement (and the
Employer's obligations hereunder) shall stand separate and apart and shall
have
no effect on or be affected by, the terms and provisions of said Employment
Agreement.
2.2 Fringe
Benefit.
The
benefits provided by this Agreement are granted by the Bank as a fringe benefit
to the Executive and are not a part of any salary reduction plan or any
arrangement deferring a bonus or a salary increase. The Executive has no option
to take any current payments or bonus in lieu of the benefits provided by this
Agreement.
2.3 Prohibited
Payments. Notwithstanding
anything in this Agreement to the contrary, if any payment made under this
Agreement is a “golden parachute payment” as defined in Section 28(k) of the
Federal Deposit Insurance Act (12 U.S.C. section 1828(k) and Part 359 of the
Rules and Regulations of the Federal Deposit Insurance Corporation
(collectively, the “FDIC Rules”) or is otherwise prohibited, restricted or
subject to the prior approval of a Bank Regulator, no payment shall be made
hereunder without complying with said FDIC Rules.
3. Delay
in Payments for Specified Employee in the Event of a Separation From
Service.
In
the
case of any Employee who is a Specified Employee as of the date of a Separation
from Service, then a payment conditioned upon a Separation from Service may
not
be made before the date that is six (6) months after the date of Separation
from
Service (or, if earlier than the end of the six-month period, the date of death
of the Specified Employee).
In
the
event payments to which the Executive would otherwise be entitled during the
first six (6) months are subject to this six (6) month delay in payment, then
such payments shall be accumulated and paid on the first day of the seventh
month following the date of Separation from Service. Payments will then continue
thereafter as called for pursuant to the terms of this Agreement.
-6-
4. Executive
Benefit Payments Upon Retirement.
4.1 Payments
Commence Upon Early Retirement Date .
In
the
event the Executive elects to Retire on a date which constitutes an Early
Retirement Date, as defined in herein, then the Executive shall be entitled
to
be paid the Applicable Percentage of the Executive Benefit, as corresponds
with
the date of his Retirement. Payments shall commence on the first day of the
month following the month in which the Executive Retires and shall continue
for
a period of one hundred and eighty (180) months.
4.2 Payments
Commence Upon Normal Retirement.
In
the
event the Executive remains in the continuous employment of the Bank until
attaining at least the Normal Retirement Age, then the Executive shall be
entitled to be paid a one hundred percent (100%) Applicable Percentage of the
Executive Benefit. Payments shall commence on the first day of the month
following the month in which the Executive Retires and shall continue for a
period of one hundred and eighty (180) months.
4.3 Payments
in the Event of the Executive’s Death After Retirement.
Upon the
death of the Executive after electing Early or Normal Retirement, then
Executive’s designated Beneficiary shall be paid the remainder of any unpaid or
outstanding Executive Benefit payments. The payments shall commence no later
than thirty (30) days after Executive’s death and shall continue until the total
one hundred and eighty (180) payments have been made.
5. Payments
in the Event Executive’s Employment Terminates Prior to
Retirement.
As
indicated above, the Employer reserves the right to terminate the Executive's
employment, with or without Cause but subject to any written employment
agreement which may then exist, at any time prior to the Executive's Retirement.
In the event that the Executive’s Employment Terminates before Executive
qualifies for Early or Normal Retirement (other than by reason of a termination
for Cause), then this Agreement shall terminate upon the date of such
Termination of Employment; provided, however, that the Executive shall be
entitled to the following benefits as may be applicable depending upon the
circumstances surrounding the Termination:
5.1
Payments
in the Event Disability Occurs Prior to Early or Normal
Retirement.
In the
event the Executive becomes Disabled while actively employed by the Bank at
any
time after the Effective Date of this Agreement but prior to Early or Normal
Retirement, then Executive shall be entitled to be paid the Accrued
Liability Balance in lump sum within thirty (30) days after the determination
of
Disability.
5.2 Payments
in the Event of the Executive’s Death prior to
Retirement.
Upon the
death of the Executive prior to electing Early or Normal Retirement, then
Executive’s designated Beneficiary shall be paid death benefit in the amount of
Ninety Three Thousand One Hundred Fifty Four Dollars ($93,154.00) per year.
The
payments shall commence no later than thirty (30) days after Executive’s death.
These payments shall be made in twelve (12) substantially equal monthly
installments, for a period of fifteen (15) years (180 months).
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5.3 Termination
Without Cause.
If
the
Executive's employment is terminated by the Employer without cause prior to
qualifying for Early or Normal Retirement, and such termination is not subject
to the provisions of paragraph 5.5 below, then the Executive shall be entitled
to be paid the Applicable Percentage of the Executive Benefit, in substantially
equal monthly installments on the first day of each month, beginning with the
month following the month in which the Executive attains the Normal Retirement
Age.
5.4 Voluntary
Termination by the Executive.
In
the
event the Executive voluntarily Terminates Employment with the Bank prior to
qualifying for Early or Normal Retirement, then the Executive Benefit shall
be
determined in accordance with the following:
(A)
If
the Applicable Percentage is one hundred percent (100%), the Executive shall
be
entitled to be paid the Applicable Percentage of the Executive Benefit, in
substantially equal monthly installments on the first day of each month,
beginning with the month following the month in which the Executive attains
the
Normal Retirement Age.
(B)
If
the Executive voluntarily Terminates Employment with the Bank prior to the
date
specified in Paragraph 1.3 which corresponds to an Applicable Percentage of
one
hundred percent (100%), and such termination is not subject to the provisions
of
paragraph 5.5 below, the Executive shall forfeit any and all rights and benefits
he may have under the terms of this Agreement and shall have no right to be
paid
any of the amounts which would otherwise be due or paid to the Executive by
the
Bank pursuant to the terms of this Agreement.
5.5 Involuntary
Termination Within Two Years Following a Change in
Control.
.In
the
event the Executive is Involuntarily Terminated within two (2) years following
a
Change in Control Event, or in the event the Executive Terminates for Good
Reason within two (2) years following a Change in Control Event, then Executive
shall be entitled to receive the greater of the actual Applicable Percentage
as
of the termination date or 50% of the Executive Benefit. This benefit payment
shall commence on the first day of each month, beginning with the month
following the month in which the Executive attains the Normal Retirement
Age.
6. Termination
for Cause.
The
Executive agrees that if his employment with the Bank is terminated at any
time
"for Cause," as defined herein, he shall forfeit any and all rights and benefits
he may have under the terms of this Agreement and shall have no right to be
paid
any of the amounts which would otherwise be due or paid to the Executive by
the
Bank pursuant to the terms of this Agreement. Furthermore, this forfeiture
in
the event of a termination For Cause shall occur regardless of whether Executive
has attained the Early or Normal Retirement Age, and for as long as Executive
remains employed by the Bank.
-8-
7. Change
in Time or Form of Payment.
The date
on which distributions are to commence may be postponed by amendment provided
the following conditions are satisfied (and in accordance with IRC
409A):
(A)
The
election to defer or postpone payment may not take effect until at least twelve
(12) months after the date on which the election is made;
(B)
The
payment with respect to which such election is made must be deferred for a
period of not less than five (5) years from the date such payment would
otherwise have been paid.
(C)
Any
election relating to a payment to be made a specified time or pursuant to a
fixed schedule must be made at least twelve (12) months before the date the
payment is scheduled to be paid .
8. Right
To Determine Funding Methods.
The Bank
reserves the right to determine, in its sole and absolute discretion, whether,
to what extent and by what method, if any, to provide for the payment of the
amounts which may be payable to the Executive, under the terms of this
Agreement. In the event that the Bank elects to fund this Agreement, in whole
or
in part, through the use of life insurance or annuities, or both, the Bank
shall
determine the ownership and beneficial interests of any such policy of life
insurance or annuity. The Bank further reserves the right, in its sole and
absolute discretion, to terminate any such policy, and any other devise used
to
fund its obligations under this Agreement, at any time, in whole or in part.
The
Executive shall have no right, title or interest in or to any funding source
or
amount utilized by the Bank pursuant to this Agreement, and any such funding
source or amount shall not constitute security for the performance of the Bank's
obligations pursuant to this Agreement. In connection with the foregoing, the
Executive agrees to execute such documents and undergo such medical examinations
or tests which the Bank may request and which may be reasonably necessary to
facilitate any funding for this Agreement including, without limitation, the
Bank's acquisition of any policy of insurance or annuity.
9. Administrative
and Claims Provision.
9.1
Named
Fiduciary and Plan Administrator. The
“Named Fiduciary and Plan Administrator” of this executive plan shall be the
Bank until its resignation or removal by the Board of Directors. As Named
Fiduciary and Plan Administrator, the Bank shall be responsible for the
management, control and administration of this executive plan. The Named
Fiduciary may delegate to others certain aspects of the management and operation
responsibilities of the plan, including employment of advisors and the
delegation of ministerial duties to qualified individuals.
9.2
Claims
Procedure.
In the
event a dispute arises over the benefits under this executive plan and benefits
are not paid to the Executive (or to the Executive’s beneficiary[ies], if
applicable) and such claimants feel they are entitled to receive such benefits,
then a written claim must be made to the Named Fiduciary and Plan Administrator
named above within forty-five (45) days from the date payments are refused.
The
Named Fiduciary and Plan Administrator shall review the written claim and if
the
claim is denied, in whole or in part, they shall provide in writing within
forty-five (45) days of receipt of such claim the specific reasons for such
denial, reference to the provision of the plan agreement upon which the denial
is based and any additional material or information necessary to perfect the
claim. Such written notice shall further indicate the additional steps to be
taken by claimants if further review of the claim denial is desired. Any
decision by the Bank denying a claim by the Executive for benefits under this
Agreement shall be stated in writing and delivered or mailed, via registered
or
certified mail, to the Executive, the Executive's spouse or the Executive's
beneficiaries, as the case may be. Furthermore, a claim shall be deemed denied
if the Named Fiduciary and Plan Administrator fail to take any action within
the
aforesaid forty-five (45) day period.
-9-
If
claimants desire a second review, they shall notify the Named Fiduciary and
Plan
Administrator in writing within forty-five (45) days of the first claim denial.
Claimants may review this Executive Plan or any documents relating thereto
and
submit any written issues and comments they may feel appropriate. In their
sole
discretion, the Named Fiduciary and Plan Administrator shall then review the
second claim and provide a written decision within forty-five (45) days of
receipt of such claim. This decision shall likewise state the specific reasons
for the decision and shall include reference to specific provisions of the
plan
agreement upon which the decision is based.
9.3
Arbitration
of Disputes.
All
claims, disputes and other matters in question arising out of or relating to
this Agreement or the breach or interpretation thereof, other than those matters
which are to be determined by the Bank in its sole and absolute discretion,
shall be resolved by binding arbitration before a representative member,
selected by the mutual agreement of the parties, of the Judicial Arbitration
and
Mediation Services, Inc. ("JAMS"), located in Seattle, Washington. Notice of
the
demand for arbitration shall be filed in writing with the other party to this
Agreement and with JAMS. In no event shall the demand for arbitration be made
after the date when institution of legal or equitable proceedings based on
such
claim, dispute or other matter in question would be barred by the applicable
statute of limitations. The arbitration shall be subject to such rules of
procedure used or established by JAMS. Any award rendered by JAMS shall be
final
and binding upon the parties, and as applicable, their respective heirs,
beneficiaries, legal representatives, agents, successors and assigns, and may
be
entered in any court having jurisdiction thereof. Any arbitration hereunder
shall be conducted in Aberdeen, Washington, unless otherwise agreed to by the
parties.
9.4
Attorneys'
Fees.
In the
event of any arbitration or litigation concerning any controversy, claim or
dispute between the parties hereto, arising out of or relating to this Agreement
or the breach hereof, or the interpretation hereof, (a) each party shall pay
his
own attorneys’ arbitration fees incurred (pursuant to paragraph 9.3); (b) the
prevailing party shall be entitled to recover from the other party reasonable
expenses, attorneys' fees and costs incurred in the enforcement or collection
of
any judgment or award rendered. The "prevailing party" means any party (one
party or both parties, as the case may be) determined by the arbitrator(s)
or
court to be entitled to money payments from the other, not necessarily the
party
in whose favor a judgment is rendered.
10. Status
as an Unsecured General Creditor and Rabbi Trust.
Notwithstanding
anything contained herein to the contrary: (i) the Executive shall have no
legal
or equitable rights, interests or claims in or to any specific property or
assets of the Employer as a result of this Agreement; (ii) none of the Bank’s
assets shall be held in or under any trust for the benefit of the Executive
or
held in any way as security for the fulfillment of the obligations of the Bank
under this Agreement; (iii) all of the Bank’s assets shall be and remain the
general unpledged and unrestricted assets of the Bank; (iv) the Bank’s
obligation under this Agreement shall be that of an unfunded and unsecured
promise by the Bank to pay money in the future; and (v) the Executive shall
be
an unsecured general creditor with respect to any benefits which may be payable
under the terms of this Agreement.
-10-
Notwithstanding
subparagraphs (i) through (v) above, the Bank and the Executive acknowledge
and
agree that, in the event of a Change in Control, upon request of the Executive,
or in the Bank’s discretion if the Executive does not so request and the Bank
nonetheless deems it appropriate, the Bank shall establish, not later than
the
effective date of the Change in Control, a Rabbi Trust or multiple Rabbi Trusts
(the "Trust" or "Trusts") upon such terms and conditions as the Bank, in its
sole discretion, deems appropriate and in compliance with applicable provisions
of the Code, in order to permit the Bank to make contributions and/or transfer
assets to the Trust or Trusts to discharge its obligations pursuant to this
Agreement. The principal of the Trust or Trusts and any earnings thereon shall
be held separate and apart from other funds of the Bank to be used exclusively
for discharge of the Bank’s obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Bank’s general creditors until paid
to the Executive in such manner and at such times as specified in this
Agreement.
11. Miscellaneous.
11.1 Opportunity
To Consult With Independent Advisors.
The
Executive acknowledges that he has been afforded the opportunity to consult
with
independent advisors of his choosing including, without limitation, accountants
or tax advisors and counsel regarding both the benefits granted to him under
the
terms of this Agreement and the (i) terms and conditions which may affect the
Executive's right to these benefits and (ii) personal tax effects of such
benefits including, without limitation, the effects of any federal or state
taxes, Section 280G of the Code, and any other taxes, costs, expenses or
liabilities whatsoever related to such benefits, which in any of the foregoing
instances the Executive acknowledges and agrees shall be the sole responsibility
of the Executive notwithstanding any other term or provision of this Agreement.
The Executive further acknowledges and agrees that the Bank shall have no
liability whatsoever related to any such personal tax effects or other personal
costs, expenses, or liabilities applicable to the Executive and further
specifically waives any right for himself or herself, and his or her heirs,
beneficiaries, legal representatives, agents, successor and assign to claim
or
assert liability on the part of the Bank related to the matters described above
in this paragraph 11.1. The Executive further acknowledges that he has read,
understands and consents to all of the terms and conditions of this Agreement,
and that he enters into this Agreement with a full understanding of its terms
and conditions.
11.2 Notice.
Any
notice required or permitted of either the Executive or the Bank under this
Agreement shall be deemed to have been duly given, if by personal delivery,
upon
the date received by the party or its authorized representative; if by
facsimile, upon transmission to a telephone number previously provided by the
party to whom the facsimile is transmitted as reflected in the records of the
party transmitting the facsimile and upon reasonable confirmation of such
transmission; and if by mail, on the third day after mailing via U.S. first
class mail, registered or certified, postage prepaid and return receipt
requested, and addressed to the party at the address given below for the receipt
of notices, or such changed address as may be requested in writing by a
party.
-11-
If
to the
Bank: Bank
of
the Pacific
Attention:
President and CEO
000
Xxxx
Xxxxxx Xxxxxx
00000
If
to the
Executive: Xxxx
X.
Van Dijk
00
Xxxxxxx Xxxx #00
Xxxxxxxxx,
XX 00000
11.3 Assignment.
The
Executive shall have no power or right to transfer, assign, anticipate,
hypothecate, modify or otherwise encumber any part or all of the amounts payable
hereunder, nor, prior to payment in accordance with the terms of this Agreement,
shall any portion of such amounts be: (i) subject to seizure by any creditor
of
the Executive, by a proceeding at law or in equity, for the payment of any
debts, judgments, alimony or separate maintenance obligations which may be
owed
by the Executive; or (ii) transferable by operation of law in the event of
bankruptcy, insolvency or otherwise. Any such attempted assignment or transfer
shall be void.
11.4 IRS
Section 280G Issues.
If
all or
any portion of the amounts payable to the Executive under this Agreement, either
alone or together with other payments which the Executive has the right to
receive from the Employer, constitute "excess parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), that are subject to the excise tax imposed by Section 4999 of the
Code
(or similar tax and/or assessment), Executive shall be responsible for the
payment of such excise tax and Employer (and its successor) shall be responsible
for any loss of deductibility related thereto; provided, however, that Employer
and Executive shall cooperate with each other and use all reasonable efforts
to
minimize to the fullest extent possible the amount of excise tax imposed by
Section 4999 of the Code. If, at a later date, it is determined (pursuant to
final regulations or published rulings of the Internal Revenue Service, final
judgment of a court of competent jurisdiction, or otherwise) that the amount
of
excise taxes payable by the Executive is greater than the amount initially
so
determined, then the Executive shall pay an amount equal to the sum of such
additional excise taxes and any interest, fines and penalties resulting from
such underpayment. The determination of the amount of any such excise taxes
shall be made by the independent accounting firm employed by the Employer
immediately prior to the change in control or such other independent accounting
firm or advisor as may be mutually agreeable to Employer and Executive in the
exercise of their reasonable good faith judgment.
11.5 Binding
Effect/Merger or Reorganization.
This
Agreement shall be binding upon and inure to the benefit of the Executive and
the Bank. Accordingly, the Bank shall not merge or consolidate into or with
another corporation, or reorganize or sell substantially all of its assets
to
another corporation, firm or person, unless and until such succeeding or
continuing corporation, firm or person agrees to assume and discharge the
obligations of the Bank under this Agreement. In the alternative, the Holding
Company may agree to assume and discharge the obligation of the Bank under
this
Agreement. Upon the occurrence of such event, the term "Bank" as used in this
Agreement shall be deemed to refer to such surviving or successor firm, person,
entity or corporation, or the Holding Company, as the case may be.
-12-
11.6 Nonwaiver.
The
failure of either party to enforce at any time or for any period of time any
one
or more of the terms or conditions of this Agreement shall not be a waiver
of
such term(s) or condition(s) or of that party's right thereafter to enforce
each
and every term and condition of this Agreement.
11.7 Partial
Invalidity.
If any
terms, provision, covenant, or condition of this Agreement is determined by
an
arbitrator or a court, as the case may be, to be invalid, void, or
unenforceable, such determination shall not render any other term, provision,
covenant or condition invalid, void or unenforceable, and the Agreement shall
remain in full force and effect notwithstanding such partial
invalidity.
11.8 Entire
Agreement.
This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties with respect to the subject matter of this Agreement and
contains all of the covenants and agreements between the parties with respect
thereto. Each party to this Agreement acknowledges that no other
representations, inducements, promises, or agreements, oral or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are
not
set forth herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding on either
party.
11.9 Modifications.
Any
modification of this Agreement shall be effective only if it is in writing
and
signed by each party or such party's authorized representative, and only to
the
extent that it is compliant with all applicable codes and statutes, including
but not limited to IRS Code Section 409A.
11.10 Paragraph
Headings.
The
paragraph headings used in this Agreement are included solely for the
convenience of the parties and shall not affect or be used in connection with
the interpretation of this Agreement.
11.11 No
Strict Construction.
The
language used in this Agreement shall be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any person.
11.12 Governing
Law.
The laws
of the State of Washington, other than those laws denominated choice of law
rules, and where applicable, the rules and regulations of the Board of Governors
of the Federal Reserve System, Federal Deposit Insurance Corporation, Office
of
the Comptroller of the Currency, or any other regulatory agency or governmental
authority having jurisdiction over the Bank or the Holding Company, shall govern
the validity, interpretation, construction and effect of this
Agreement.
-13-
IN
WITNESS WHEREOF, the Bank and the Executive have executed this Agreement on
the
date first above-written in the City of Aberdeen, Washington.
| BANK | EXECUTIVE | |||
| By: | /s/ Xxxxxx Xxxxxx | /s/ Xxxx X. Van Dijk | ||
| Xxxxxx Xxxxxx | Xxxx X. Van Dijk | |||
| Vice Chairman of the Board of Directors | ||||
| Chairman of the Compensation Committee | ||||
| Date: 11/6/2007 | Date: 11/2/2007 | |||
-14-
BENEFICIARY
DESIGNATION FORM
PRIMARY
DESIGNATION
(You
may refer to the beneficiary designation information prior to completion of
this
form.)
A. Person(s)
as a Primary Designation:
(Please indicate the percentage for each beneficiary.)
Name___________________________________
Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________
Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________
Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________
Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
B. Estate
as a Primary Designation:
My
Primary Beneficiary is The Estate of ______________________________________
as
set forth in the last will and testament dated the _____ day of _____________,
_____ and any codicils thereto.
C. Trust
as a Primary Designation:
Name
of
the Trust:
____________________________________________________________
Execution
Date of the Trust:
_____ /
_____ / _________
Name
of
the Trustee:
__________________________________________________________
Beneficiary(ies)
of the Trust (please indicate the percentage for each beneficiary):
___________________________________________________________________________
___________________________________________________________________________
Is
this
an Irrevocable Life Insurance Trust? ________ Yes
________
No
(If
yes
and this designation is for a Split Dollar agreement, an Assignment of Rights
form should be completed.)
-15-
II.
SECONDARY
(CONTINGENT) DESIGNATION
A. Person(s)
as a Secondary (Contingent) Designation:
(Please indicate the percentage for each beneficiary.)
Name___________________________________
Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________
Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________
Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________
Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
B. Estate
as a Secondary (Contingent) Designation:
My
Secondary Beneficiary is The Estate of _____________________________________
as
set forth in my last will and testament dated the _____ day of ___________,
_____ and any codicils thereto.
C. Trust
as a Secondary (Contingent) Designation:
Name
of
the Trust:
____________________________________________________________
Execution
Date of the Trust:
_____ /
_____ / _________
Name
of
the Trustee:
__________________________________________________________
Beneficiary(ies)
of the Trust (please indicate the percentage for each beneficiary):
___________________________________________________________________________
___________________________________________________________________________
All
sums
payable under the Executive Supplemental Compensation Agreement by reason of
my
death shall be paid to the Primary Beneficiary(ies), if he or she survives
me,
and if no Primary Beneficiary(ies) shall survive me, then to the Secondary
(Contingent) Beneficiary(ies). This beneficiary designation is valid until
the
participant notifies the bank in writing.
| Insured | Date |
NOTE***
IF YOU RESIDE IN A COMMUNITY PROPERTY STATE (ARIZONA, CALIFORNIA, IDAHO,
LOUISIANA, NEVADA, NEW MEXICO, TEXAS, WASHINGTON OR WISCONSIN), AND YOU ARE
DESIGNATING A BENEFICIARY OTHER
THAN YOUR SPOUSE, THEN YOUR SPOUSE MUST ALSO SIGN THE BENEFICIARY DESIGNATION
FORM.
-16-
I
am
aware that my spouse, the above named Insured has designated someone other
than
me to be the beneficiary and waive any rights I may have to the proceeds of
such
insurance under applicable community property laws. I understand that this
consent and waiver supersedes any prior spousal consent or waiver under this
plan.
Spouse
Signature:______________________________ Date:_________________
Witness
(other than insured) : ___________________________
-17-
