EXHIBIT 10.3
THIS EMPLOYMENT AGREEMENT (the
“Agreement”), between The Bank of the Pacific, a Washington business corporation
(“The Bank”) and Xxxxx X. XxxXxxxxxxx (“Executive”) is dated as of
June 15, 2005 and will be effective July 1, 2005.
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 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:
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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 & Chief Credit
Officer”. |
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2. |
Effective Date and Term. |
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(a) |
Effective Date. This Agreement is effective as of the 1st day
of July, 2005. |
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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), 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 or nonrenewal is provided by either party pursuant
to paragraph 5(a). |
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3. |
Duties.The Executive will serve as the Executive Vice
President and Chief Credit 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 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 $116,400.00 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 section 4(f). |
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(b) |
Incentive Compensation. Executive will be eligible to participate in an
incentive plan relative to The Bank’s approved 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 his area of responsibility and his 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 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) |
Automobile. The Bank will 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) |
Expenses. 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 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 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: 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. 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 or 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. |
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(d) |
Termination by The Bank for Cause. Notwithstanding paragraph 4(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 employee 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 4(a), 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 4(a), this Agreement will
terminate immediately upon the Executive’s death. Notwithstanding paragraph
4(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(d) and 5(e) 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 other than
the position of Executive Vice President and Chief Credit Officer, 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. |
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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. |
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7. |
Noncompetition. During the Term and for twenty-four (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. |
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8. |
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 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: |
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a. for a breach of paragraph 5(a), the sum of $25,000; |
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b. for a breach of paragraph 6, the sum of $75,000; |
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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. |
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9. |
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. |
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10. |
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 June
_______, 2005:
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| THE BANK OF THE PACIFIC |
EXECUTIVE |
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| /s/ Xxxxxx X. Xxxx |
/s/ Xxxxx X. XxxXxxxxxxx |
Xxxxxx X. Xxxx
Chief Executive Officer |
Xxxxx X. XxxXxxxxxxx |
