EXHIBIT 10.1
THIS
EMPLOYMENT AGREEMENT (the “Agreement”), between The Bank of the Pacific, a
Washington business corporation (“the Bank”) and Xxxxxx X. Xxxx
(“Executive”) is dated as of June 30, 2005 and will be effective July 1, 2005.
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. |
| B. |
The
Executive represents he 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:
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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 “Chief Executive Officer” for the Bank. |
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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 three years, 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 three 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 Chief Executive Officer and faithfully and
diligently perform the duties assigned to the Executive by The Bank’s
Board of Directors. The Executive will use his best efforts to perform his
duties and will devote all his working time and attention to these duties.
These duties will include, without limitation, the following: |
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(a) |
Company
Performance. The Executive will be responsible for all aspects of The
Bank’s performance, including, without limitation, directing so that
daily operational and managerial matters are performed in a manner
consistent with The Bank’s policies. These duties will also include
formulating and implementing The Bank’s expansion strategies,
performing all tasks in connection with The Bank’s management and
affairs that are normal and customary to the Chief Executive Officer’s
position. |
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(b) |
Modification
of Duties. The Executive will perform such other duties as may be
appropriate to his office and as may be prescribed from time to time by
The Bank’s Board of Directors. New duties and responsibilities
prescribed to the Executive will be consistent with the Executive’s
position as The Bank’s Chief Executive Officer, and shall not include
immoral or unlawful acts. |
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(a) |
Salary. Initially,
the employee will receive a salary of $181,900.00 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(g). |
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(b) |
Director
Fees. As a Company Director, Executive will receive director fees
including annual retainer and regular meeting attendance. |
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(c) |
Incentive
Compensation. Executive will be eligible to participate in the
Executive bonus program. 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 stock option plans
generally available to senior executives of the Bank. |
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(d) |
Standard
Benefits. The Bank will provide to the Executive the standard benefits
provided in accordance with the Bank’s benefit plans and policies,
including but not limited to health insurance, disability insurance, life
insurance and five (5) weeks of paid vacation per year accrued in
accordance with the Bank’s benefit plans and policies. The Executive
will also be entitled to participate in retirement plans, including 401(K)
plans and deferred compensation plans, and including any supplements or
additions to such plans, which are generally available to senior
executives of the Bank. |
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(e) |
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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(f) |
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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(g) |
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 Executive
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 that the Executive seeks
to terminate or refuse to renew this Agreement without providing at least
ninety (90) days’ written notice prior to the termination date of
final date of the then current Term, the Executive shall 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 that 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 to the Bank $20,000 in liquidated damages; (C) in the event that
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 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 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 3 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 5(b), 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 two (2) years following a Change in Control, or terminates this
Agreement before a Change in Control and a Change in Control occurs within
nine (9) months after the termination, The Bank will pay the Executive
three (3) times the highest amount of W-2 compensation received by the
Executive during any of the three most recent calendar years ending on or
prior to the effective date of termination, less statutory payroll
deductions, and as of such date, all forfeiture provisions regarding
restricted stock awards and all vesting requirements regarding then
currently pending stock options shall be deemed fully completed. 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 CEO of The Bank and its Holding Company without
the Executive’s express 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 a
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 two (2) years 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, Skagit, Whatcom, and Wahkiakum 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 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 $100,000; |
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c. for
a breach of paragraph 7, the sum of $250,000. |
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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. Jurisdiction and venue for
enforcement of any terms of this Agreement shall be in Grays Harbor
County, Washington Superior Court. |
Signed as of June ___,
2005:
|
|
| THE BANK OF THE PACIFIC |
EXECUTIVE |
/s/ Xxxxxx X. Xxxxx |
/s/ Xxxxxx X. Xxxx |
| Xxxxxx X. Xxxxx, Chairman |
Xxxxxx X. Xxxx |
