AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT 10.4
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), between The Bank of
the Pacific, a Washington business corporation ("The Bank"), and Xxxxxx Xxxxxxxx
("Executive"), initially entered into effective July 1, 2005, is being
amended and restated as set forth herein effective December 29,
2008.
RECITALS
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 in business in Oregon
counties.
B. The
Executive represents that she has considerable experience, expertise and
training in management 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.
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
"Senior Vice President and Chief Financial Officer" for The Bank.
2. Effective Date and
Term.
(a) Effective
Date. This Agreement is effective as of the 1st day of
July, 2005.
(b) Term. The
initial term of this Agreement is two years (24 months), beginning on the
Effective Date stated in paragraph 2(a), and shall automatically renew for
an additional term of one year on each anniversary date of the Agreement, so as
to create a two-year term on each anniversary date, unless notice of termination
is provided by either party pursuant to paragraph 5(a).
3. Duties. The
Executive will serve as the Senior Vice President and Chief Financial Officer
for The Bank and faithfully and diligently perform the duties assigned to the
Executive by the Chief Executive Officer ("CEO"). The Executive will
report directly to the CEO of The Bank. The Executive will use her
best efforts to perform her duties and will devote all her working time and
attention to these duties.
-1-
4. Compensation.
(a) Salary. Initially,
the Executive will receive an annualized salary of $85,000 per year, to be paid
at regular intervals by The Bank in accordance with its regular payroll
schedules. The Executive's salary will be subject to annual review
and adjustment as set forth in paragraph 4(f).
(b) Incentive
Compensation. Executive will be eligible to participate in The
Bank's approved incentive plan. A disinterested majority of The
Bank's Board of Directors will determine the amount of the bonus pool, if any,
based on the profitability, safety, and soundness of The Bank. The
Executive's bonus, if any, will reflect the Executive's performance in her area
of responsibility and her contribution to the overall performance of The Bank
during the year, as determined in the sole discretion of 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 in
which notice of termination is given, regardless of reasons for termination, and
regardless of which party terminates this Agreement. The Executive
will also be entitled to participate in stock bonus or option plans generally
available to senior executives of The Bank.
(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 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.
(d) Automobile. The
Bank will provide the Executive with an automobile allowance of $250 per
month, unless a bank-owned vehicle is assigned to the Executive in lieu of an
automobile allowance.
(e) Expenses. The
Bank will reimburse the Executive for all reasonable expenses that the Executive
may incur in the performance of her 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.
(f) Annual Review and
Adjustment. The Executive's compensation as set forth in this
paragraph 4(a), will be subject to annual review and adjustment by a
disinterested majority of The Bank's Board of Directors or Compensation
Committee. In no case, however, will the Executive's salary, vacation
and expense reimbursement be less than the amounts set forth in
paragraphs 4(a)-(e).
5. Termination.
(a) Notice of
Termination. Either party may unilaterally terminate this
Agreement for any reason by providing the other party with written notice of the
termination no less than 90 days prior to the termination
date.
(b) Termination by The
Bank. In the event that The Bank provides the Executive with a
notice of termination without cause under paragraph 5(a), The
Bank will pay to the Executive an amount equal to the salary she would have
received from the date of termination through the end of the then-current
Term. Such payment will be made in equal monthly payments beginning
on the 15th day of
the calendar month immediately following the termination date and ending on the
date which is the 15th day of
the third calendar month of the calendar year immediately following the
termination date. All forfeiture provisions affecting restricted
stock awards and all vesting requirements affecting stock options shall lapse or
be deemed fully completed.
-2-
(c) Termination by the
Executive. If the Executive voluntarily terminates employment
with The Bank, other than for "good reason" as provided in paragraph 5(f),
the Executive will be entitled to salary through the date of termination and to
such other benefits as may be provided under the terms of The Bank benefit
plans. In the event the Executive seeks to terminate this Agreement
without providing at least 90 days' written notice prior to the termination
date, the Executive will pay to The Bank liquidated damages as
follows: (i) in the event the Executive provides notice of
termination 29 days or less prior to the termination date, the Executive
shall pay The Bank $25,000 in liquidated damages; (ii) in the event the
Executive provides notice of termination at least 30 days but not more than
59 days prior to the termination date, the Executive shall pay The Bank
$20,000 in liquidated damages; (iii) in the event the Executive provides
notice of termination at least 60 days but not more than 89 days prior
to termination date, the Executive shall pay to The Bank $15,000 in liquidated
damages.
(d) Termination by The Bank for
Cause. Notwithstanding paragraph 4(a), The Bank may
immediately terminate this Agreement without advance notice if the 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 property or assets of The Bank or its
customers; physical attack of a fellow employee or a customer; intoxication at
work; use of narcotics or alcohol to an extent that materially impairs
Executive's performance of her 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 employees, 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 except as otherwise provided by law, participation
in benefit plans ceases upon termination of this Agreement.
(e) Death or
Disability. Notwithstanding paragraph 5(a), this
Agreement will terminate immediately upon:
(i) The
Executive's death; or
(ii) If
the Executive is unable to perform her 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 her major life activities.
-3-
If
termination occurs under this paragraph 5(e): (A) the
Executive or her estate will be entitled to receive only the salary earned
through the date this Agreement is terminated; (B) except as otherwise
provided by law, participation in benefit plans ceases upon termination of this
Agreement; and (C) as of such termination date, all vesting requirements
affecting outstanding stock options shall lapse or be deemed fully
completed.
(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.
(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.
(ii)
Termination by The
Bank. In the event The Bank or its successors in interest
terminates this Agreement within 24 months following a Change in Control
for reasons other than for cause pursuant to paragraph 5(d), or as the
result of the Executive's death or disability pursuant to paragraph 5(e),
The Bank will pay the Executive 18 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 in equal monthly
payments beginning on the 15th day of
the calendar month immediately following the termination date and ending on the
date which is the 15th day of
the third calendar month of the calendar year immediately following the
termination date.
(iii)
Change in Assignment
Related to Change in Control. If, within 24 months
following a Change in Control, the Executive's assignment with The Bank is
changed in a way that results in a material diminution of Executive's authority,
duties, or responsibilities, without the Executive's express written consent,
then any termination by Executive within 90 days of such reassignment will
be deemed to have been for "good reason" and the provisions of
paragraph 5(f)(ii) shall apply.
(iv)
Limitations on
Payments Related to Change in Control. Notwithstanding the
foregoing, the payment described in paragraph 5(f)(ii) shall be
automatically reduced to an amount that is 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.
6. Compliance with IRC
Section 409A. To the extent required by IRC
Section 409A, and regulations thereunder, payment of severance benefits to
Executive under any provision of paragraph 5 of this Agreement will not be
paid, or commenced, until the expiration of six months following the date of
termination of Executive's employment with Corporation. If monthly
payments are deferred pursuant to this paragraph, all such deferred amounts will
be paid in a lump sum on the first business day following the expiration of the
six-month period.
7. 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 her 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 Executive's employment by The Bank.
-4-
8. Noncompetition. During
the Term and for 24 months after the Executive's employment with The Bank
ends, 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.
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), 7, and 8 are fair and
reasonably necessary for the protection 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), 7, or 8 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), 7, or 8 by the
Executive:
(a) for a
breach of paragraph 5(a), up to the sum of $25,000 as described in
paragraph 5(c);
(b) for a
breach of paragraph 7, the sum of $50,000;
(c) for a
breach of paragraph 8, the sum of $100,000.
For
purposes of paragraph 8, 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 8.
Neither
the breach of paragraphs 5(a), 7, or 8, 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
paragraphs 5(a), 7, and 8, and that The Bank is entitled to require
her to comply with these paragraphs. These paragraphs will survive
termination of this agreement. The Executive represents that if her
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.
-5-
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.
Signed as
of December 29, 2008:
| THE BANK OF THE PACIFIC | EXECUTIVE |
| /s/ Xxxxxx X. Xxxx |
/s/
Xxxxxx
Xxxxxxxx
|
|
Xxxxxx
X. Xxxx
Chief
Executive Officer
|
Xxxxxx
Xxxxxxxx
|
-6-
