SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-26556
KLAMATH FIRST BANCORP, INC.
(Exact name of registrant as specified in its charter)
Oregon 93-1180440
- --------------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) I.D. Number)
540 Main Street, Klamath Falls, Oregon 97601
- --------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (541) 882-3444
- --------------------------------------------------- -------------------
Securities registered pursuant to
Section 12 (b) of the Act: None
- --------------------------------- -------------------
Securities registered pursuant to
Section 12 (g) of the Act: Common Stock, par value $.01 per share
- --------------------------------- --------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO .
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). YES X NO
As of July 31, 2003, there were issued 6,980,635 shares of the
Registrant's Common Stock. The Registrant's voting common stock is traded
over-the-counter and is listed on the Nasdaq National Market under the symbol
"KFBI."
KLAMATH FIRST BANCORP, INC.
QUARTERLY REPORT ON FORM 10-Q/A
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
EXPANATORY NOTE
The purpose of this Form 10-Q/A ("Form 10-Q/A") is to amend Part II - Other
Information, Item 6 Exhibits and Reports on Form 8-K Exhibits a) 10(a) through
Exhibits 10(h) of the Quarterly Report on Form 10-Q of Klamath First Bancorp,
Inc. for the quarterly period ended June 30, 2003, to include copies of all the
participants employment agreements, salary continuation agreements, and director
fee continuation agreements finalized and executed during the quarter.
KLAMATH FIRST BANCORP, INC.
TABLE OF CONTENTS
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits
Exhibit Number Description
- --------------- -----------
Exhibit 10(a).1 Employment Agreement for Kermit K. Houser
Exhibit 10(a).2 First amendment to employment agreement
for Kermit K. Houser
Exhibit 10(a).3 Salary continuation agreement for Kermit K. Houser
Exhibit 10(b).1 Employment Agreement for Marshall J. Alexander
Exhibit 10(b).2 First amendment to employment agreement
for Marshall J. Alexander
Exhibit 10(b).3 Salary continuation agreement for Marshall J. Alexander
Exhibit 10(c).1 Employment Agreement for Ben A. Gay
Exhibit 10(c).2 First amendment to employment agreement for Ben A. Gay
Exhibit 10(c).3 Salary continuation agreement for Ben A. Gay
Exhibit 10(d).1 Employment Agreement for Frank X. Hernandez
Exhibit 10(d).2 First amendment to employment agreement
for Frank X. Hernandez
Exhibit 10(d).3 Salary continuation agreement for Frank X. Hernandez
Exhibit 10(d).4 First amendment to salary continuation agreement
for Frank X. Hernandez
Exhibit 10(e).1 Employment Agreement for Craig M Moore
Exhibit 10(e).2 First amendment to employment agreement
for Craig M Moore
Exhibit 10(e).3 Salary continuation agreement for Craig M Moore
Exhibit 10(e).4 First amendment to salary continuation agreement
for Craig M Moore
Exhibit 10(f).1 Employment Agreement for James E. Essany
Exhibit 10(f).2 First amendment to employment agreement
for James E. Essany
Exhibit 10(f).3 Salary continuation agreement for James E. Essany
Exhibit 10(f).4 First amendment to salary continuation agreement
for James E. Essany
Exhibit 10(g).1 Employment Agreement for Walter F. Dodrill
Exhibit 10(g).2 First amendment to employment agreement
for Walter F. Dodrill
Exhibit 10(g).3 Salary continuation agreement for Walter F. Dodrill
Exhibit 10(g).4 First amendment to salary continuation agreement
for Walter F. Dodrill
Exhibit 10(h).1 Employment Agreement for Nina G. Drake
Exhibit 10(h).2 First amendment to employment agreement
for Nina G. Drake
Exhibit 10(h).3 Salary continuation agreement for Nina G. Drake
Exhibit 10(h).4 First amendment to salary continuation agreement
for Nina G. Drake
Exhibit 10(i).1 Employment Agreement for Jeffrey D. Schlenker
Exhibit 10(i).2 First amendment to employment agreement
for Jeffrey D. Schlenker
Exhibit 10(i).3 Salary continuation agreement for Jeffrey D. Schlenker
Exhibit 10(i).4 First amendment to salary continuation agreement
for Jeffrey D. Schlenker
Exhibit 10(j).1 Director fee continuation agreement
for Rodney N. Murray
Exhibit 10(j).2 Director fee continuation agreement
for Bernard Z Agrons
Exhibit 10(j).3 Director fee continuation agreement
for Timothy A. Bailey
Exhibit 10(j).4 Director fee continuation agreement
for James D. Bocchi
Exhibit 10(j).5 Director fee continuation agreement
for Donald N. Bauhofer
Exhibit 10(j).6 Director fee continuation agreement
for William C. Dalton
Exhibit 10(j).7 Director fee continuation agreement
for Dianne E. Spires
Exhibit 31 Section 302 Certification *
Exhibit 32 Section 906 Certification *
Signatures
* Previously filed on August 14, 2003
Exhibit 10(a).1
EMPLOYMENT AGREEMENT
Amended and Restated May 9, 2003
THIS AGREEMENT is made effective as of November 15, 2002, by and among
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION ("Association"), Klamath
Falls, Oregon; KLAMATH FIRST BANCORP, INC. ("Company"), an Oregon corporation;
and KERMIT HOUSER ("Executive").
WHEREAS, Association and Company wish to assure for themselves the services
of Executive for the period provided in the Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Association and
Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and upon the other terms and conditions hereinafter provided, the parties agree
as follows:
1. POSITION.
During the term of Executive's employment under this Agreement, Association
agrees to employ Executive and Executive agrees to serve as President and Chief
Executive Officer of Association and Company. During said term, Executive also
agrees to serve, if elected, without separate compensation, as an officer and/or
director of company and/or Association or any subsidiary or affiliate of Company
or Association.
2. DUTIES.
As President and Chief Executive Officer of Association and Company,
Executive shall have such powers and duties and appropriate to that office (a)
as may be provided by the articles and/or bylaws of Association and Company and
(b) as determined by the board of directors of Association and Company, or
either of them, respectively, from time to time. Executive shall at all times
discharge his duties in consultation with and under the supervision and
direction of the board of directors of Association and Company. Subject to the
provisions of the Agreement, Executive's duties may be changed from time to time
during the term of the Agreement, and Executive's place of work may be relocated
at the sole discretion of the board of directors of Association and Company, or
either of them.
3. TERM.
The term of Executive's employment under the Agreement shall commence as of
the date first written above and shall continue for a period of two years at
which time it will end, unless sooner termination in accordance with the terms
of this Agreement or extended as provided below. Beginning on the first
anniversary date of the Agreement, and continuing at each anniversary date
thereafter, the board of directors of Association and Company, or either of
them, may in their sole discretion extend Executive's employment under this
Agreement for an additional one-year period. Prior to the extension of
Executive's employment under this Agreement as provided in this Section, the
board of directors of Association and Company, or either of them, may in their
sole discretion conduct a performance evaluation of Executive for purposes of
determining whether to extend this Agreement. Executive may terminate this
Agreement at any time, after providing at least sixty (60) days' written notice
to the chair of the board of directors of Association and Company, or either of
them. In such event, Executive will remain subject to the post termination
provisions set forth in this Agreement.
4. OUTSIDE ACTIVITIES.
During the term of his employment under this Agreement, Executive shall
devote all his business time, attention, skill, and efforts to the faithful
performance of his duties under this Agreement. Executive shall obtain the
consent of the board of directors of Association and Company before he engages
in any other professional or business activities that may require an appreciable
portion of Executive's time or effort to the detriment of the Association's or
Company's business or that of their affiliates.
5. COMPENSATION AND FRINGE BENEFITS.
(a) As compensation for services under the Agreement, Association and
Company shall pay to Executive an annual salary of $200,000, less
legally required deductions and withholdings ("Basic Salary").
Executive's Base Salary shall be payable in accordance with the usual
payroll practices of Association and Company. During the term of
Executive's employment under this Agreement, Executive's Base Salary
shall be reviewed at least annually by the board of directors of
Association and Company and the board of directors of Association and
Company, or either of them, may in their sole discretion adjust
Executive's Base Salary from time to time.
(b) In addition to the Base Salary provided in Section 5(a), Executive
shall be eligible to receive an annual bonus payable within 30 days of
each anniversary date of this Agreement. Executive's entitlement to
and the specific amount of any such annual bonus shall be at the
discretion of the board of directors of Association and company (or
their duly convened committee), based upon and subject to Executive's
satisfactorily meeting certain goals and objectives mutually
established and agreed to in writing by the board of directors of
Association and Company and Executive.
(c) In addition to the compensation described above, to the extent
otherwise eligible, Executive shall be entitled to receive or
participate in, at not cost to Executive, all such other benefits,
including without limitation pension plans, employee stock option
plans, and health and welfare plans as may from time to time be made
available to other senior management employees of Association and
Company.
6. EXPENSES.
Association and Company shall reimburse Executive for all reasonable
and necessary expenses incurred by Executive in carrying out his duties
under this Agreement. Executive shall present to Association and company
from time to time an itemized account of such expenses in such form as may
be required by Association and Company, or either of them.
7. PAYMENTS TO EXECUTIVE UPON EVENT OF TERMINATION.
(a) For purposes of the Agreement, "Event of Termination" means any one or
more of the following: (i) termination of Association or Company of
Executive's employment under this Agreement for any reason other than
a Change in Control (as defined in Section 8), disability (as provided
in Section 9), or death (as provided in Section 10); or (ii)
termination by Executive of Executive's employment under this
Agreement in accordance with the provisions of this Section upon (A)
unless consented to the Executive, a material change in Executive's
title or job duties, which change would cause Executive's position to
become one of materially lesser responsibility from the position and
duties described in Sections 1 and 2, or the assignment to the
Executive of any duties or responsibilities substantially inconsistent
with the Executive's title or duties, or a relocation of Executive's
principal place of work by more than 35 miles from its location at the
effective date of the Agreement; (B) unless consented to by Executive,
any reduction in Executive's Base Salary; (C) the liquidation of the
dissolution of Association and Company; or (D) any material breach of
the Agreement by Association and Company. Upon the occurrence of any
event described in clauses (A), (B), (C), or (D) of clause (ii) above,
Executive shall have the right to elect to terminate his employment
under this Agreement upon not less than 60 days' prior written notice
to the board of directors of Association and Company, and each of
them, given within a reasonable period of time not to exceed four
calendar months after the event giving rise to said right to elect.
(b) Upon termination of employment following occurrence of an Event of
Termination other than for Cause or for Neglect (as described in
Sections 11 or 12 hereof), or upon failure to extend Executive's
employment for additional one-year period, Association and Company
shall pay to Executive a sum equal to (i) the amount of Executive's
Base Salary (at the then current rate) for the remainder of the term
of this Agreement following the Date of Termination (as described
below), and (ii) the value of any employer contributions that would
have been made by Association and Company on Executive's behalf over
the remaining term of Executive's employment under this Agreement to
any retirement plan sponsored by Association and Company as of the
Date of Termination (as defined below); provided, however, that if
Association or Company is not in compliance with its minimum capital
requirements of if such payment would cause Association's or Company's
capital to be reduced below its minimum capital requirements, such
payment shall not be made until such time as Association and Company
are in capital compliance. Additionally, Executive shall be entitled
to receive the stock option and grant described under Section 5(c) and
5(d). The payment described in this Section 7(b) shall be made in a
single lump sum within 30 days of the Date of Termination.
8. CHANGE OF CONTROL
(a) For purposes of the Agreement, a "Change in Control" of Company or
Association shall be deemed to occur if and when (a) an offeror other
than Company purchases shares of the common stock of Company or
Association pursuant to a tender or exchange offer for such shares,
(b) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) is or becomes the beneficial
owner, directly or indirectly, of securities of Company or Association
representing 25% or more of the combined voting power of the Company's
then outstanding securities, (c) the membership of the board of
directors of Company or Association changes as the result of a
contested election, such that individuals who were directors at the
beginning of any twenty-four month period do not constitute a majority
of the board of directors at the end of such period, or (d)
shareholders of Company or Association approve a merger,
consolidation, sale or disposition of all or substantially all of
Company's or Association's assets, or a plan of partial or complete
liquidation.
(b) In the event of a Change in Control, in lieu of amounts payable
pursuant to Section 7(b), Executive shall be entitled to the payment
provided in Section 8(c) upon his subsequent involuntary termination
of employment at any time during the term of his employment under this
Agreement, unless such termination is because of Executive's death,
disability (as provided in Section 9), or for Cause (as defined in
Section 11).
(c) Upon a Change in Control followed by the involuntary termination of
Executive's employment as provided in Section 8(b), Association and
Company shall pay to Executive a sum equal to (i) 2.00 times
Executive's "base amount," within the meaning of Section 280G(b)(3) of
the Internal Revenue Code of 1986, as amended ("Code"); (ii) his stock
option and grant described under Section 5(c) and 5(d); and (iii) the
value of any employer contributions that would have been made by
Association and Company on Executive's behalf over the remaining term
of Executive's employment under this Agreement to any retirement plan
sponsored by Association and Company as of the Date of Termination.
Such payment shall be made in a single lump sum within 30 days of the
Date of Termination.
(d) IRS Section 280G Issues. If 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 Company
or Association, 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 Company or
Association (and their successor) shall be responsible for any loss of
deductibility related thereto; provided, however, that Company or
Association 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 Company or Association immediately
prior to the change in control or such other independent accounting
firm or advisor as may be mutually agreeable to Company or Association
and Executive in the exercise of their reasonable good faith judgment.
9. TERMINATION UPON DISABILITY OF EXECUTIVE.
(a) If Executive shall become disabled as defined in Association's and
Company's then current disability plan (or, if no such plan is then in
effect, if Executive is permanently and totally disabled with the
meaning of Code Section 22(e(3)) and unable to perform the essential
functions of his position even with reasonable accommodation,
Association and Company, or either of them, may terminate Executive's
employment for disability. (b) Upon termination of Executive's
employment for disability, Association and Company will pay to
Executive, as disability pay, a bi-weekly payment equal to
three-quarters of Executive's bi-weekly rate of base Salary on the
Date of Termination. The disability payments shall commence on the
Date of Termination and will end on the earlier of (i) the date
Executive returns to employment with Association and Company; (ii)
Executive's employment by another employer; (iii) Executive attaining
age 65; (iv) Executive's death; or (v) the expiration of the term of
Executive's employment under this Agreement. The disability payments
shall also be reduced by the amount, if any, paid to Executive under
any plan of Association and Company providing disability benefits to
Executive.
10. TERMINATION UPON DEATH OF EXECUTIVE.
Upon the death of Executive during the term of his employment under
this Agreement, this Agreement shall terminate immediately and Executive's
Base Salary pursuant to Section 5(a) shall be prorated and payable until
the date of termination of this Agreement.
11. TERMINATION FOR CAUSE.
Association and Company, or either of them, may terminate Executive's
employment under this Agreement at any time for Cause. For purposes of this
Agreement, "Cause" means any fraud or dishonesty by Executive; the
Executive's willful misconduct, incompetence, or intentional failure to
perform stated duties; any failure by or refusal of Executive to comply
with any instructions or directives of the board of directors of
Association or Company, or either of them, any breach of fiduciary duty by
Executive; willful violation of any law or government regulation (other
than misdemeanor traffic violations or similar misdemeanor offenses) by
Executive; any other willful conduct by Executive which materially
adversely reflects or impacts on Association's or Company's reputation or
business; or any material breach of the Agreement by Executive. For
purposes of this Section, no act, or the failure to act, on Executive's
part shall be "willful" unless done, or omitted to be done, not in good
faith and without reasonable belief that the action or omission was in the
best interest of the Association or its affiliates. Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated by Cause
unless and until there shall have been sent to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the board of directors of Association and Company, or
either of them, (after reasonable notice to Executive and an opportunity
for Executive, together with counsel, to be heard before the board of
directors of Association and Company), finding that in the good faith
opinion of the board of directors of Association and Company, Executive
engaged in conduct justifying termination for Cause and describing
specifically the conduct. Executive shall not have the right to receive any
compensation or other benefits for any period after termination of his
employment for Cause. Any stock options granted to Executive under any
stock option plan that have vested shall remain the property of Executive,
but any unvested awards granted under any other stocks benefit plan of
Association, Company, or any subsidiary or affiliate thereof, shall become
null and void effective upon Executive's receipt of Notice of Termination
(as defined below) for Cause and shall not be exercisable by Executive at
any time subsequent to such termination for Cause.
12. TERMINATION FOR NEGLECT.
The Association and Company, or either of them may terminate Executive's
employment under this Agreement at any time for Neglect. For purposes of
this Agreement, "Neglect" means the failure of Executive to give due care
to stated duties or to comply with instructions or directives of the Board
of Directors of the Association or Company or either of them, but where
such failure is not determined to be willful or intentional as defined in
Section 11. Termination for Neglect includes termination as the result of
any continuing or repeated problems with Executive's job performance or
conduct after written notice specifying such problem with performance or
conduct, and where such continuing and repeated problems were not
determined to be willful or intentional, or where the conduct was not
deemed to have a material adverse impact on the Association or Company.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated by Neglect unless and until there shall have been sent to
Executive a copy of a resolution duly adopted by a majority of the Board of
Directors of the Association and Company, or either of them (excluding the
Executive in counting the majority if the Executive is then on the board of
directors, and after reasonable notice to Executive and an opportunity for
Executive to be heard before the board of directors), finding that in the
good faith opinion of the board of directors of the Association and
Company, or either of them, Executive engaged in conduct justifying
termination for Neglect and describing specifically the conduct. Executive
shall not have the right to receive any salary or bonus for any period
after termination of employment for Neglect. Executive shall retain any
vested benefits in defined benefit plans, defined contribution plans,
supplemental executive retirement plans, stock option plans, restricted
stock plans, or other such benefits, but shall forfeit any rights that have
not vested.
13. REQUIRED PROVISIONS.
(a) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of Association's or Company's, or either
of their, affairs by a notice served under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act ("FDIA"), Association's and
Company's obligations under this Agreement shall be suspended as of
the date of service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, Association and Company, or
either of them, may, in their discretion, (i) pay Executive all or
part of the compensation withheld while its contract obligations were
suspended and (ii) reinstate (in whole or in part) any of its
obligations that were suspended.
(b) If Executive is removed and/or permanently prohibited from
participating in the conduct of Association's or Company's, or either
of their, affairs by an order issued under Section 8(e)(4) or (g)(1)
of the FDIA, all obligations of Association and Company under this
Agreement shall terminate as of the effective date of the order, but
vested rights of the contracting parties shall not be affected.
(c) If Association or Company is in default (as defined in Section 3
(x)(1) of the FDIA), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not
affect any vested rights of the parties.
(d) All obligations under this Agreement shall be terminated (except to
the extent determined that continuation of the Agreement is necessary
for the continued operation of Association and Company, or either of
them): (i) by the Director of the Office of the Thrift Supervision
(the "Director") or his or her designee at the time the Federal
Deposit Insurance Corporation or the Resolution Trust Corporation
enters into an agreement to provide assistance to or on behalf of the
Association or Company under the authority contained in Section 13(c)
of the FDIA; or (ii) by the Director, or his or her designee at the
time the Director or such designee approves a supervisory merger to
resolve problems related to operation of Association or Company or
when Association and Company, or either of them, is determined by the
Director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by
such action.
(e) Any payments made to Executive pursuant to the Agreement, or
otherwise, are subject to and conditioned upon compliance with Section
18(k) of the FDIA and any regulations promulgated thereunder.
14. NOTICE.
(a) Any purported termination of Executive's employment under this
Agreement (except by reason of Executive's death) by Association and
Company, or either of them, or by Executive shall be communicated by
Notice of Termination to the other party. For purposes of this
Agreement, "Notice of Termination" means a written notice which shall
state the specific termination provision in this Agreement relied upon
and the effective date of the termination of Executive's employment.
(b) For purposes of this Agreement, "Date of Termination" means the
effective date of the termination of Executive's employment specified
in the Notice of Termination.
15. NONCOMPETITION AND CONFIDENTIALITY.
(a) During the term of Executive's employment under this Agreement and for
a period of one year following an Event of Termination as defined in
Section 7(a) of this Agreement, Executive will not compete with
Association and/or Company in any city, town or county in which
Association and/or Company has an office or has filed an application
for regulatory approval to establish an office. Executive agrees that
during such period and within said cities, towns and counties,
Executive shall not work for, advise, consult, or otherwise serve
with, directly or indirectly, any entity whose business materially
competes with the depository, lending, or other business activities of
the Association and/or Company. The parties, recognizing that
irreparable injury will result to Association and/or Company in the
event of Executive's breach of this Section 14(a), agree that in the
event of any such breach or threatened breach by Executive,
Association and/or Company will be entitled, in addition to any other
remedies and damages available, to a temporary restraining order and a
preliminary and permanent injunction to restrain the violation or
threatened violation hereof by Executive and Executive's partners,
agents, employers, employees, and all persons acting for or with
Executive. Executive represents and admits that in the event of a
termination of his employment under this Agreement, Executives'
experience and capabilities are such that Executive can obtain
employment in a business engaged in other lines and/or of a different
nature that Association's and/or Company, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning
a livelihood. Nothing herein may be construed as prohibiting
Association and/or Company from pursuing any other remedies available
to Association and Company for such breach or threatened breach,
including recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of Association
and Company, or either of them, and affiliates of either, as it may
exist from time to time, is a valuable, special and unique asset of
the business of Association and Company. Executive will not, at any
time during or after the term of his employment under this Agreement,
use or disclose to any person or entity for any reason whatsoever any
knowledge of the past, present, planned, or considered business
activities of Association and Company, or either of them, or
affiliates of either. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which were not derived from the business
plans and activities of Association or Company. This provision is in
addition to and not in lieu of any duties or obligations of Executive
under any applicable statute or common law. In the event of a breach
or threatened breach by Executive of the provisions of this Section,
Association and Company, or either of them, will be entitled to a
temporary restraining order and a preliminary and permanent injunction
restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business
activities of Association and Company, or either of them or affiliates
of either. Nothing herein will be construed as prohibiting Association
and Company, or either of them, from pursuing any other remedies
available to Association or Company for such breach or threatened
breach, including the recovery of damages from Executive.
16. EFFECT ON PRIOR AGREEMENTS.
This agreement contains the entire understanding between the parties
concerning the subject matter hereof and supersedes any prior
agreements (express or implied, oral or written) among Association,
Company, and Executive concerning the subject matter of this
Agreement.
17. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of any successor or assigns
of the Association or Company. In case of any termination in which a
successor would not by the foregoing sentence or operation of law be
bound by this Agreement, Company shall require such successor to
expressly and unconditionally assume this Agreement and perform
Company's obligations under this Agreement.
18. MODIFICATION AND WAIVER
(a) This Agreement may be modified or amended only by a written instrument
signed by the parties.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by a written instrument signed by
the part charged with such waiver or estoppel. No such written waiver
shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the specific
term or condition waived and shall not constitute a waiver of such
term or condition for the future as to any act other than that
specifically waived.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of
any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not
held so invalid, and each such other provision and part thereof shall
to the full extent consistent with law continue in full force and
effect.
20. HEADINGS FOR REFERENCE ONLY.
The heading of sections herein are included solely for convenience of
reference and shall not control the meaning or interpretation of any
of the provisions of this Agreement.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the state of Oregon.
22. ARBITRATION.
Any dispute or controversy arising out of or in any way related to
this Agreement or Executive's employment under this Agreement or the
termination of that employment, except a claim by Association and/or
Company of a breach or threatened breach by Executive of any of the
provisions of Section 14, shall be submitted to binding arbitration,
conducted in Portland, Oregon, in accordance with the then current
rules of the American Arbitration Association. Such arbitration shall
be the exclusive remedy for any such dispute or controversy, and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
23. ATTORNEY FEES.
If any action (including any arbitration) is brought to enforce or
interpret the terms of this Agreement or any part of it, the
prevailing party shall be entitled to recover from the other party its
reasonable attorney fees and costs incurred therein, including all
attorney fees and costs on appeal.
24. INDEMNIFICATION.
Association and Company, or either of them, shall provide Executive
(including his heirs, executors and administrators) with coverage
under a standard directors' and officers' liability insurance policy
at its expense, or in lieu thereof, shall indemnify Executive (and his
heirs, executors and administrators) to the fullest extent permitted
under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suit, or
proceedings in which he may be involved by reason of his having been a
director or officer of Association or Company, or either of them
(whether or not he continues to be a director or officer at the time
of incurring such expenses or liabilities), such as expenses and
liabilities to include without limitation judgment, court costs, and
attorney fees and the cost of reasonable settlements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer or director of the
Association and the Company, and Executive has signed this Agreement,
all on the 9th day of May, 2003.
KLAMATH FIRST BANCORP, INC. KLAMATH FIRST FEDERAL SAVINGS
AND LOAN ASSOCIATION
BY: /s/ Rodney N. Murray BY: /s/ Rodney N. Murray
Rodney N. Murray, Chairman Rodney N. Murray, Chairman
/s/ Nina G. Drake /s/ Kermit K. Houser
WITNESS: Kermit K. Houser
Exhibit 10(a).2
FIRST AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Association"), Klamath First Bancorp,
Inc., ("Company") and the undersigned executive officer of Association and
Company (the "Executive").
WHEREAS, Association, Company and Executive entered into an Amended and
Restated Employment Agreement dated May 9, 2003, (the "Employment Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger dated as
of July 14, 2003, (the "Merger Agreement") with Sterling Financial Corporation
("Sterling") with respect to a proposed transaction (the "Transaction") whereby
Sterling will acquire all of the outstanding shares of Company common stock in a
stock merger;
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable his change in control of benefits to be
triggered under the Employment Agreement and his Executive Salary Continuation
Agreement, and to enhance the value of shares of common stock of Company owned
by the Executive and the value of his stock options to acquire common stock of
Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise, shall
have the meaning ascribed to them in the Employment Agreement.
2. Section 8(c) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as severance pay or
liquidated damages, or both (the "Base Severance Amount"), an amount equal
to $400,000. In the event that all conditions to closing under the Merger
Agreement have been satisfied during calendar year 2003, then Association
shall make payment of the Base Severance Amount plus the Additional
Severance Amount (as defined below) to the Executive on December 31, 2003.
In the event such closing conditions are not satisfied during calendar year
2003, then the payments contemplated herein shall be made within 10 days
after consummation of the merger contemplated by the Merger Agreement.
Notwithstanding the foregoing, if the Executive enters into a new written
employment agreement with Sterling or Sterling Savings Bank prior to
December 31, 2003 (but effective upon completion of the merger contemplated
by the Merger Agreement), then the Severance Amount and Additional
Severance Amount shall not be paid pursuant to the terms hereof and any
severance to be provided to the Executive, if any, shall be set forth in
such new written employment agreement. In addition, upon the occurrence of
a Change in Control arising from or related to the Merger Agreement,
Association shall pay the Executive as additional severance the amount of
$5,750 (the "Additional Severance Amount") in lieu of any obligation to pay
the Executive the value of employer contributions that would have been made
on the Executive's behalf over the remaining term of the agreement to any
tax-qualified retirement plan. The Additional Severance Amount shall be
paid at the time the Base Severance Amount is paid. Upon the Executive's
termination of service in connection with or following a Change in Control
arising from or relating to the Merger Agreement, Sterling Savings Bank, as
successor-in-interest to the Association, shall provide the Executive with
continued life, medical, dental and disability coverage as is then provided
by Sterling Savings Bank to its full-time employees, as the same may be
changed from time to time, during the 36 month period next following the
Executive's Date of Termination with the cost to be absorbed by the
Executive being equal to the lesser of (i) the employee cost of coverage
currently being borne by the Executive or (ii) the employee cost of
coverage borne by full-time employees of Sterling Savings Bank receiving
the same coverage; provided if the cost of coverage to be borne by the
Executive is determined under subpart (i), then such cost shall be subject
to pro rata adjustment based upon the pro rata adjustment in cost of
coverage that is borne by full-time employees of Sterling Savings Bank
receiving the same coverage after completion of the merger contemplated by
the Merger Agreement."
3. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall not have a right to
participate in the long term medical care program to be implemented by
Association."
4. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
5. Except as specifically set forth herein, the Employment Agreement shall
continue in full force and effect. To the extent that any provision
contained in this Agreement is inconsistent with any of the provisions of
the Employment Agreement, including but not limited to, Section 8(b)
thereof, the provisions contained in this Agreement shall be controlling.
6. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
7. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Craig M Moore
Craig M Moore SVP/Chief Auditor
By: /s/ Marshall J. Alexander
Marshall J. Alexander EVP/CFO
KLAMATH FIRST BANCORP, INC.
By: /s/ Craig M Moore
Craig M Moore SVP/Chief Auditor
EXECUTIVE:
By: /s/ Kermit K. Houser
Kermit K. Houser President/CEO
Exhibit 10(a).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
Kermit K. Houser, an Employee of the Employer (hereinafter referred to as the
"Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate the
Employee's employment. This Agreement shall have no impact or effect upon
any separate written Employment Agreement which the Employee 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 from, and shall have no effect
upon, or be affected by, the terms and provisions of said Employment
Agreement.
Except as otherwise set forth in this Agreement, the term "Employer" shall
mean Klamath First Federal Savings and Loan Association; provided, further,
that for purposes of this Agreement, the term "Employer" shall mean Klamath
First Bancorp, Inc. and its subsidiaries and affiliated entities, including
any parent holding company and its subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are granted by
the Employer as a fringe benefit to the Employee and are not part of any
salary reduction plan or an arrangement deferring a bonus or a salary
increase. The Employee has no option to take any current payment or bonus
in lieu of these salary continuation benefits except as set forth
hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-five ("65") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as defined
above, of the Employee on, or after the Employee achieves fifty-five
(55) years of age, but has not yet reached sixty-five (65) years of
age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-five (65), the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A, payable in substantially equal monthly installments on the
first day of each month, beginning with the month following the month
in which the Employee Retires (or on such later date as may be
mutually agreed upon by the Employee and the Employer in advance of
said Retirement date) payable until the Employee's death. After
commencement of payments, the Normal Retirement Benefit will increase
by two percent (2%) per year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph III
(B) above. In the event the Employee elects to Retire on a date which
constitutes an Early Retirement Date, and said early retirement is not
pursuant to a Change in Control as defined in paragraph VI below, the
Employee shall be entitled to be paid the "Normal Retirement Benefit"
specified in Schedule A for the date the Retirement occurs, but
reduced by a factor of one-half of one percent (.5%) per month for
each month or portion thereof that the Early Retirement occurs prior
to the Retirement Date. The benefit shall be payable in substantially
equal monthly installments on the first day of each month, beginning
with the month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by the
Employee and the Employer in advance of such Early Retirement Date).
After commencement of payments, the Early Retirement benefit will
increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's 63rd
birthday and if the Retirement Date in Section III.A. above is at age
65, the Normal Retirement Benefit specified in Schedule "A" as of the
Employee's 63rd birthday would be reduced by 12% [.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to the
Employee's Retirement. In the event that the employment of the
Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining sixty-five
(65) years of age, then this Agreement shall terminate on the date of
such termination of employment; provided, however, that the Employee
shall be entitled to the following benefits as may be applicable
depending upon the circumstances surrounding the Employee's
termination:
(i) Termination for Other Than Disability, Change in Control or
Cause:
If the Employee's employment is terminated by the Employee or by the
Employer for any reason other than Disability, "Change in Control" or
"Termination for Cause," the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A as of the date of
termination, payable in substantially equal monthly installments on
the first day of each month, beginning with the month following the
month in which the Employee attains sixty-five (65) years of age (or
on such later date as may be mutually agreed upon by the Employee and
the Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon achieving
age fifty-five (55) but before achieving age sixty-five (65), the
Employee may choose to receive the Early Retirement Benefit with the
reductions from the "Normal Retirement Benefit" as of the date of
termination, and as described in Section IV.B. of this Agreement. The
benefit shall be payable in substantially equal monthly installments
on the first day of each month, beginning with the month following the
month in which the Early Retirement Date occurs (or on such later date
as may be mutually agreed upon by the Employee and the Employer not
less than fifteen (15) days prior to such commencement date) payable
to the Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this Agreement,
elect below either the "Lump Sum Payment" or the "Annuity for Life"
option in the event the Employee becomes disabled at any time after
the Effective Date of this Agreement but prior to Retirement. The term
"Disability" or "Disabled" shall have the same meaning given such
terms in any policy of disability insurance maintained by the Employer
for the benefit of employees including the Employee. In the absence of
such a policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental or
physical) which wholly and continuously prevents the performance of
the Employee's duties to the Employer for at least one hundred twenty
(120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as of
the earlier of the date of disability or date the Employee
otherwise terminated service with the Employer other than for
Cause. The lump sum shall be payable 60 days from the date the
Employer has received a written request to commence benefits,
along with documentation showing that the Employee has become
disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity from
an insurance company with an A. M. Best or Moody's rating of no
less than AA and using the amount of "Disability Benefit"
specified in Schedule A, determined as of the earlier of the date
of disability or the date the Employee otherwise terminated
service with the Employer other than for Cause. The Employer
shall purchase the annuity within 60 days from the date the
Employer has received a written request to commence benefits,
along with documentation showing that the Employee has become
Disabled. Nevertheless, if the amount of the applicable
"Disability Benefit" specified in Schedule A is $50,000.00 or
less, the payment shall be as a lump sum to the Employee and not
the purchase of an annuity for life.
(iii)Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please sign
on applicable line):
______________________ Lump Sum Benefit.
__________X____________ Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the "Company")
or Klamath First Federal Savings and Loan Association (the
"Association") shall be deemed to occur if and when (a) an offeror
other than the Company purchases shares of the common stock of the
Company or the Association pursuant to a tender or exchange offer for
such shares, (b) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
or the Association representing 25% or more of the combined voting
power of the Company's or the Association's then outstanding
securities, (c) the membership of the board of directors of the
Company or the Association changes as the result of a contested
election, such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or after the
effective date of this Agreement) do not constitute a majority of the
Board at the end of such period, or (d) shareholders of the Company or
the Association approve a merger, consolidation, sale or disposition
of all or substantially all of the Company's or the Association's
assets, or a plan of partial or complete liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is terminated
by the Employer in connection with a Change in Control, the Employee
shall be immediately vested in the "Normal Retirement Benefit"
specified in Schedule A for the date the Employee achieves age
sixty-five (65). The Employee shall be entitled to be paid the "Change
in Control Benefit" specified in Schedule A, in substantially equal
monthly installments on the first day of each month, beginning no
sooner than the month following the month in which the Employee
attains age fifty-five (55), as requested in writing by the Employee
and delivered to the Employer or its successor thirty (30) days prior
to the commencement of installment payments; provided, however, that
in the event the Employee does not request a commencement date as
specified, such installments shall be paid on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-five (65) years of age. Upon the commencement
of payments, the installments shall be payable until the Employee's
death, and shall increase by two percent (2%) per year.
A termination shall be deemed to be in connection with a Change in
Control if, within two (2) years following the occurrence of a Change
in Control: (a) the Employee's employment with the Employer is
terminated by the Employer other than a Termination for Cause; or (b)
by reason of the Employer's actions any adverse change occurs in the
scope of the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c) the
Employer causes an event to occur which reasonably constitutes or
results in a demotion, loss of title, a significant diminution of
responsibilities or authority, or a constructive termination (by
forcing a resignation or otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the regulatory accounting
principles of the Employer's primary federal regulator. The Employer shall
establish an accrued liability retirement account for the Employee into
which appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Employee Plan.
The Employee, her or his beneficiary (ies), or any successor in interest
shall be and remain simply a general creditor of the Employer in the same
manner as any other creditor having a general claim for matured and unpaid
compensation. The Employer reserves the absolute right, at its sole
discretion, to either fund the obligations undertaken by this Employee Plan
or to refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Employer elect to fund this Employee
Plan, in whole or in part, through the purchase of life insurance, mutual
funds, disability policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at any time, in
whole or in part. At no time shall any Employee be deemed to have any lien,
right, title or interest in any specific funding investment or assets of
the Employer.
If the Employer elects to invest in a life insurance, disability or annuity
policy on the life of the Employee, then the Employee shall assist the
Employer by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the Employer and the
Employee acknowledge and agree that, in the event of a Change in Control
and at the written request of the Employee, the Employer 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 Employer in its sole discretion deems appropriate and in
compliance with applicable provisions of the Internal Revenue Code of 1986,
as amended (the "Code") in order to permit the Employer 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 Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall continue to be
subject to the claims of the Employer's general creditors until paid to the
Employee or its beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise
encumber in advance any of the benefits payable hereunder nor shall
any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the Employee
nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal of the
benefits hereunder, the Employer's liabilities shall forthwith cease
and terminate.
B. Binding Obligation of the Employer and any Successor in Interest:
The Employer shall not merge or consolidate into or with another
Employer or sell substantially all of its assets to another Employer,
firm or person until such Employer, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of the
Employer under this Employee Plan. This Employee Plan shall be binding
upon the parties hereto, their successors, beneficiaries, heirs and
personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during the
lifetime of the Employee, this Employee Plan may be amended or revoked
at any time or times, in whole or in part, by the mutual written
consent of the Employee and the Employer.
D. Gender:
Whenever in this Employee Plan words are used in the masculine or
neuter gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the right of the
Employee to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Employer's existing or future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted for
reference and convenience only and shall not be deemed a part of this
Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity and
interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this Employee Plan
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 Employee Plan shall remain in full force and
effect notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract of
employment between the parties hereto, nor shall any provision hereof
restrict the right of the Employer to discharge the Employee, or
restrict the right of the Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or the
Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: Kermit K. Houser
10131 Mourning Dove
Klamath Falls, OR 97601
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been afforded the
opportunity to consult with independent advisors of his or her
choosing including, without limitation, accountants or tax advisors
and counsel regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions which may
affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of the
Employee notwithstanding any other term or provision of this
Agreement. The Employee further acknowledges and agrees that the
Employer shall have no liability whatsoever related to any such
personal tax effects or other personal costs, expenses, or liabilities
applicable to the Employee and further specifically waives any right
for the Employee and his or her heirs, beneficiaries, legal
representatives, agents, successors, and assigns to claim or assert
liability on the part of the Employer related to the matters described
above in this subparagraph. The Employee further acknowledges and
agrees that the Employee has read, understands and consents to all of
the terms and conditions of this Agreement, and that the Employee
enters into this Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this Employee Plan
shall be Klamath First Bancorp, Inc., until its resignation or removal
by the Board. As Named Fiduciary and Plan Administrator, the Employer
shall be responsible for the management, control and administration of
the Employee Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Employee Plan including the employment of advisors and the delegation
of ministerial duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this Employee Plan
and benefits are not paid to the Employee and the claimant feels he is
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 provisions of this
Employee Plan 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 a further review of the claim denial is desired. A claim
shall be deemed denied if the Named Fiduciary and Plan Administrator
fail to take any action within the aforesaid forty-five-day period.
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 Employee
Plan or any documents relating thereto and submit any written issues
and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or unwilling to
conduct the arbitration provided for under the terms of this
Paragraph, or has discontinued its business, the parties agree that a
representative member, selected by the mutual agreement of the
parties, of the American Arbitration Association ("AAA"), shall
conduct the binding arbitration referred to in this Paragraph. Notice
of the demand for arbitration shall be filed in writing with the other
party to this Agreement and with JAMS (or AAA, if necessary). 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, or if there are none, the
rules of procedure used or established by AAA. Any award rendered by
JAMS or AAA 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 Klamath Falls, Oregon, unless otherwise agreed to by
the parties.
D. 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, the prevailing party shall be entitled to
recover from the non-prevailing party reasonable expenses, attorneys'
fees and costs incurred in connection therewith or in the enforcement
or collection of any judgment or award rendered therein. The
"prevailing party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed, even if such
party did not prevail in all matters, not necessarily the one in whose
favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee under this
Agreement, either alone or together with other payments which the Employee
has the right to receive from the Employer, constitute "excess parachute
payments" within the meaning of Section 280G of the Code, that are subject
to the excise tax imposed by Section 4999 of the Code (or similar tax
and/or assessment), the Employer (and its successor) and the Employee each
agree to pay their share of any taxes that may be imposed as a result of
payments made pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount
initially so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Rodney N. Murray /s/ Nina G. Drake
Rodney Murray Witness
Chairman of the Board
/s/ Kermit K. Houser /s/ Nina G. Drake
Kermit K. Houser Witness
SCHEDULE A
EXECUTIVE BENEFIT SCHEDULE
KERMIT HOUSER
DATE OF BIRTH: JULY 9, 1943
HIRED ON: NOVEMBER 15, 2000
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $29,390 $113,150 $0 $1,616,430 $293,896
January 1, 2004 $58,779 $122,849 $250,056 $1,616,430 $587,793
January 1, 2005 $88,169 $132,546 $530,957 $1,616,430 $881,689
January 1, 2006 $117,559 $142,246 $845,558 $1,616,430 $1,175,585
January 1, 2007 $146,948 $151,944 $1,196,947 $1,616,430 $1,469,482
January 1, 2008 $161,642 $161,642 $1,588,465 $1,616,430 $1,616,420
and thereafter $161,642 $161,642 na see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-five (65). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ Kermit K. Houser 5/9/03 /s/ Rodney N. Murray 5/9/03
Kermit K. Houser Date Rodney N. Murray, Chairman of Board Date
Exhibit 10(b).1
EMPLOYMENT AGREEMENT
Amended and Restated May 23, 2003
THIS AGREEMENT is made effective as of October 1, 2002, by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"), Klamath
Falls, Oregon; KLAMATH FIRST BANCORP, INC. (the "Company"), an Oregon
corporation; and Marshall J. Alexander (the "Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Association
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President of the Association. During said period, Executive also
agrees to serve, if elected, as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of twenty-four (24)
full calendar months thereafter. Commencing on the first anniversary date, and
continuing at each anniversary date thereafter, the Board of Directors of the
Association (the "Board") or its Compensation Committee may extend the Agreement
for an additional year. Prior to the extension of the Agreement as provided
herein, the Board of Directors of the Association will review the Executive's
performance evaluation for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board's meeting.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which,
in such Board's judgment, will not present any conflict of interest with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2. The
Association shall pay Executive as compensation a salary of $138,000 per year
("Base Salary") effective 11/1/2002. Such Base Salary shall be payable in
accordance with the customary payroll practices of the Association. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by the Board or its
Compensation Committee, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to regular salaried employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. However, changes in Association-sponsored group insurance
plan premiums, deductibles, co-payments and related coverage limits or
conditions are excluded from the prior sentence for any such change which is
consistently applied to or available to regular salaried Association employees.
Without limiting the generality of the foregoing provisions of this Subsection
(b), Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to, and on a basis consistent
with, the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan, or pursuant to any arrangement of the Association, in
which Executive is eligible to participate. Nothing paid to the Executive under
any such plan or arrangement will be deemed to be in lieu of other compensation
to which the Executive is entitled under this Agreement, except as provided
under Section 5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from time
to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; or retirement, as defined
in Section 7 hereof; (ii) Executive's resignation from the Association's employ,
upon (A) unless consented to by the Executive, a material change in Executive's
function, duties, or responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Sections 1 and 2, above, (any such
material change shall be deemed a continuing breach of this Agreement), (B) a
relocation of Executive's principal place of employment by more than 35 miles
from its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those being provided
as of the effective date of this Agreement, (C) the liquidation or dissolution
of the Association, or (D) any breach of this Agreement by the Association. Upon
the occurrence of any event described in clauses (A), (B), (C), or (D), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days prior written notice
given within a reasonable period of time not to exceed, except in case of a
continuing breach, four calendar months after the event giving rise to said
right to elect.
(b) Upon the occurrence of an Event of Termination other than for Cause of
for Neglect (as described in Sections 8 and 9 hereof), the Association shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due to the Executive for the
remaining term of the Agreement, including Base Salary, bonuses, and any other
cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Association as of the Date of Termination), to the Executive
for the term of the Agreement provided, however, that if the Association is not
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. All payments made pursuant to this Section 4(b) shall
be paid in substantially equal monthly installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year (determined as of
the Executive's Date of Termination), such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or the Association. For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election, such that individuals who were directors at the beginning of any
twenty-four month period (whether commencing before or after the effective date
of this Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association approve a merger,
consolidation, sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Association or the Company
has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent involuntary termination of employment at any time during
the term of this Agreement (or voluntary termination following a Change of
Control following any demotion, loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the Change in Control), unless such termination is because of his death,
retirement as provided in Section 7, termination for Cause, or termination for
Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
2.00 times the Executive's "base amount," within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended. Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer contributions that
would have been made on the Executive's behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the Association as
of the Date of Termination. Such coverage and payments shall cease upon the
expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association on his behalf, pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Association or the Company on the Executive's behalf to the
extent that such benefits are not otherwise paid to the Executive upon a Change
in Control.
(f) IRS Section 280G Issues. If 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 Company or Association,
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 Company or Association (and their successor) shall be responsible for any
loss of deductibility related thereto; provided, however, that Company or
Association 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 Company or
Association immediately prior to the change in control or such other independent
accounting firm or advisor as may be mutually agreeable to Company or
Association and Executive in the exercise of their reasonable good faith
judgment.
6. TERMINATION FOR DISABILITY.
(a) If the Executive shall become disabled as defined in the Association's
then current disability plan (or, if no such plan is then in effect, if the
Executive is permanently and totally disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician designated by the Board), the
Association may terminate Executive's employment for "Disability."
(b) Upon the Executive's termination of employment for Disability, the
Association will pay Executive, as disability pay, a semi-monthly payment equal
to three-quarters (3/4) of Executive's semi-monthly rate of Base Salary on the
effective date of such termination. These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed prior to his termination for Disability and
pursuant to an employment agreement between Executive and the Association; (ii)
Executive's full-time employment by another employer; (iii) Executive attaining
the age of 65; or (iv) Executive's death; or (v) the expiration of the term of
this Agreement. The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date Executive returns to
the full-time employment of the Association, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Association; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Association of Executive based on "Retirement" shall
mean retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Association or the Company and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Association shall pay to Executive's estate the compensation due
to the Executive through the last day of the calendar month in which his death
occurred.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. In addition, "Termination for Cause" shall include
termination because of the Executive's intentional failure to perform stated
duties, such as the refusal of the Executive to comply with the Association's or
the Company's instructions, policies or rules or other willful conduct of the
Executive which materially adversely reflects on the Association's or the
Company 's reputation or operation. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive shall
not have the right to receive compensation or other benefits for any period
after termination for Cause. Any stock options granted to Executive under any
stock option plan or any unvested awards granted under any other stock benefit
plan of the Association, the Company, or any subsidiary or affiliate thereof,
shall become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 9 hereof, and shall not be exercisable
by Executive at any time subsequent to such Termination for Cause.
9. TERMINATION FOR NEGLECT.
The Association and Company, or either of them may terminate Executive's
employment under this Agreement at any time for Neglect. For purposes of this
Agreement, "Neglect" means the failure of Executive to give due care to stated
duties or to comply with instructions or directives of the Board of Directors of
the Association or Company or either of them, but where such failure is not
determined to be willful or intentional as defined in Section 8. Termination for
Neglect includes termination as the result of any continuing or repeated
problems with Executive's job performance or conduct after written notice
specifying such problem with performance or conduct, and where such continuing
and repeated problems were not determined to be willful or intentional, or where
the conduct was not deemed to have a material adverse impact on the Association
or Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated by Neglect unless and until there shall have been sent to
Executive a copy of a resolution duly adopted by a majority of the Board of
Directors of the Association and Company, or either of them (excluding the
Executive in counting the majority if the Executive is then on the board of
directors, and after reasonable notice to Executive and an opportunity for
Executive to be heard before the board of directors), finding that in the good
faith opinion of the board of directors of the Association and Company, or
either of them, Executive engaged in conduct justifying termination for Neglect
and describing specifically the conduct. Executive shall not have the right to
receive any salary or bonus for any period after termination of employment for
Neglect. Executive shall retain any vested benefits in defined benefit plans,
defined contribution plans, supplemental executive retirement plans, stock
option plans, restricted stock plans, or other such benefits, but shall forfeit
any rights that have not vested.
10. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than as described in Section 8 or
Section 9 of this Agreement, shall not prejudice Executive's right to
compensation or other benefits under this Agreement. Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause as defined in Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the Association's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may, in its discretion, (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the Association is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated (except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Association): (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Association
or when the Association is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
11. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Association will continue
to pay Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
12. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Association
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination. Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the Association and/or the Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Company
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive, Executive's partners,
agents, servants, employers, employees and all persons acting for or with
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 8 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Association and/or the
Company, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Association and/or the Company from pursuing any other remedies
available to the Association and/or the Company for such breach or threatened
breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section, the Association will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
activities of the Association or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein will be construed as prohibiting the Association from pursuing
any other remedies available to the Association for such breach or threatened
breach, including the recovery of damages from Executive.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Company, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to Executive and, if such payments are not timely paid or provided by
the Association, such amounts and benefits shall be paid or provided by the
Company.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect. (b) This Agreement shall be binding upon, and inure to
the benefit of, Executive, the Association, the Company and their respective
successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law or
regulation, the provisions of such law or regulation shall prevail.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association, if successful pursuant to a legal judgment,
arbitration or settlement.
22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suite or proceeding in
which he may be involved by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or liabilities), such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.
The Association and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Association or the
Company, expressly and unconditionally to assume and agree to perform the
Association's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Association or the Company would be
required to perform if no such succession or assignment had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or director of the Association and the
Company, and Executive has signed this Agreement, all on the 19th day of May,
2003.
KLAMATH FIRST BANCORP, INC. KLAMATH FIRST FEDERAL SAVINGS
AND LOAN ASSOCIATION
BY: /s/ Kermit K. Houser BY: /s/ Kermit K. Houser
Kermit K. Houser, President & CEO Kermit K. Houser President & CEO
/s/ Nina G. Drake /s/ Marshall J. Alexander
WITNESS: Marshall J. Alexander EVP/CFO
Exhibit 10(b).2
FIRST AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Association"), Klamath First Bancorp,
Inc., ("Company") and the undersigned executive officer of Association and
Company (the "Executive").
WHEREAS, Association, Company and Executive entered into an Amended and
Restated Employment Agreement dated May 19, 2003, (the "Employment Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger dated as
of July 14, 2003, (the "Merger Agreement") with Sterling Financial Corporation
("Sterling") with respect to a proposed transaction (the "Transaction") whereby
Sterling will acquire all of the outstanding shares of Company common stock in a
stock merger;
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable his change in control of benefits to be
triggered under the Employment Agreement and his Executive Salary Continuation
Agreement, and to enhance the value of shares of common stock of Company owned
by the Executive and the value of his stock options to acquire common stock of
Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise, shall
have the meaning ascribed to them in the Employment Agreement.
2. Section 5(c) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as severance pay or
liquidated damages, or both (the "Base Severance Amount"), an amount equal
to $276,000. In the event that all conditions to closing under the Merger
Agreement have been satisfied during calendar year 2003, then Association
shall make payment of the Base Severance Amount plus the Additional
Severance Amount (as defined in Section 5(d) below) to the Executive on
December 31, 2003. In the event such closing conditions are not satisfied
during calendar year 2003, then the payments contemplated herein shall be
made within 10 days after consummation of the merger contemplated by the
Merger Agreement. Notwithstanding the foregoing, if the Executive enters
into a new written employment agreement with Sterling or Sterling Savings
Bank prior to December 31, 2003 (but effective upon completion of the
merger contemplated by the Merger Agreement), then the Severance Amount and
Additional Severance Amount shall not be paid pursuant to the terms hereof
and any severance to be provided to the Executive, if any, shall be set
forth in such new written employment agreement."
Section 5(d) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as additional
severance the amount of $5,750 (the "Additional Severance Amount") in lieu
of any obligation to pay the Executive the value of employer contributions
that would have been made on the Executive's behalf over the remaining term
of the agreement to any tax-qualified retirement plan. The Additional
Severance Amount shall be paid at the time the Base Severance Amount is
paid pursuant to Section 5(c) above. Upon the Executive's termination of
service in connection with or following a Change in Control arising from or
relating to the Merger Agreement, Sterling Savings Bank, as
successor-in-interest to the Association, shall provide the Executive with
continued life, medical, dental and disability coverage as is then provided
by Sterling Savings Bank to its full-time employees, as the same may be
changed from time to time, during the 36 month period next following the
Executive's Date of Termination with the cost to be absorbed by the
Executive being equal to the lesser of (i) the employee cost of coverage
currently being borne by the Executive or (ii) the employee cost of
coverage borne by full-time employees of Sterling Savings Bank receiving
the same coverage; provided if the cost of coverage to be borne by the
Executive is determined under subpart (i), then such cost shall be subject
to pro rata adjustment based upon the pro rata adjustment in cost of
coverage that is borne by full-time employees of Sterling Savings Bank
receiving the same coverage after completion of the merger contemplated by
the Merger Agreement."
3. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall have a right to
participate in the long term medical care program to be implemented by
Association if the Executive meets the eligibility requirements of the
insurer. If the Executive meets the eligibility requirements of the insurer
and becomes a participant in the long term medical care program, then in
that event, his Base Severance Amount shall be reduced by the single
premium cost paid by Association for such long term medical care on behalf
of the Executive (which is estimated to be $67,000) and the Executive shall
have no obligation to reimburse Association for any premium cost relating
to such program after the Executive's termination of employment."
4. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
5. Except as specifically set forth herein, the Employment Agreement shall
continue in full force and effect. To the extent that any provision
contained in this Agreement is inconsistent with any of the provisions of
the Employment Agreement, including but not limited to, Section 5(b)
thereof, the provisions contained in this Agreement shall be controlling.
6. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
7. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
KLAMATH FIRST BANCORP, INC.
By: /s/ Craig M Moore
Craig M Moore
SVP/Chief Auditor
EXECUTIVE:
By: /s/ Marshall J. Alexander
Marshall J. Alexander EVP/CFO
Exhibit 10(b).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
Marshall J. Alexander, an Employee of the Employer (hereinafter referred to as
the "Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate
the Employee's employment. This Agreement shall have no impact or
effect upon any separate written Employment Agreement which the
Employee 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 from, and shall have no effect upon, or be affected
by, the terms and provisions of said Employment Agreement.
Except as otherwise set forth in this Agreement, the term "Employer"
shall mean Klamath First Federal Savings and Loan Association;
provided, further, that for purposes of this Agreement, the term
"Employer" shall mean Klamath First Bancorp, Inc. and its subsidiaries
and affiliated entities, including any parent holding company and its
subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Employee and are
not part of any salary reduction plan or an arrangement deferring a
bonus or a salary increase. The Employee has no option to take any
current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-two ("62") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as
defined above, of the Employee on, or after the Employee achieves
fifty-five (55) years of age, but has not yet reached sixty-two
(62) years of age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-two (62), the Employee shall
be entitled to be paid the "Normal Retirement Benefit" specified
in Schedule A, payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Employee Retires (or on
such later date as may be mutually agreed upon by the Employee
and the Employer in advance of said Retirement date) payable
until the Employee's death. After commencement of payments, the
Normal Retirement Benefit will increase by two percent (2%) per
year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph
III (B) above. In the event the Employee elects to Retire on a
date which constitutes an Early Retirement Date, and said early
retirement is not pursuant to a Change in Control as defined in
paragraph VI below, the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A for the date
the Retirement occurs, but reduced by a factor of one-half of one
percent (.5%) per month for each month or portion thereof that
the Early Retirement occurs prior to the Retirement Date. The
benefit shall be payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by
the Employee and the Employer in advance of such Early Retirement
Date). After commencement of payments, the Early Retirement
benefit will increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's
60th birthday and if the Retirement Date in Section III.A. above
is at age 62, the Normal Retirement Benefit specified in Schedule
"A" as of the Employee's 60th birthday would be reduced by 12%
[.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to
Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to
the Employee's Retirement. In the event that the employment of
the Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining
sixty-two (62) years of age, then this Agreement shall terminate
on the date of such termination of employment; provided, however,
that the Employee shall be entitled to the following benefits as
may be applicable depending upon the circumstances surrounding
the Employee's termination:
(i) Termination for Other Than Disability, Change in Control
or Cause:
If the Employee's employment is terminated by the Employee or by
the Employer for any reason other than Disability, "Change in
Control" or "Termination for Cause," the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A as of the date of termination, payable in
substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-two (62) years of age (or on such later
date as may be mutually agreed upon by the Employee and the
Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon
achieving age fifty-five (55) but before achieving age sixty-two
(62), the Employee may choose to receive the Early Retirement
Benefit with the reductions from the "Normal Retirement Benefit"
as of the date of termination, and as described in Section IV.B.
of this Agreement. The benefit shall be payable in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Early
Retirement Date occurs (or on such later date as may be mutually
agreed upon by the Employee and the Employer not less than
fifteen (15) days prior to such commencement date) payable to the
Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this
Agreement, elect below either the "Lump Sum Payment" or the
"Annuity for Life" option in the event the Employee becomes
disabled at any time after the Effective Date of this Agreement
but prior to Retirement. The term "Disability" or "Disabled"
shall have the same meaning given such terms in any policy of
disability insurance maintained by the Employer for the benefit
of employees including the Employee. In the absence of such a
policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental
or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least
one hundred twenty (120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or date the
Employee otherwise terminated service with the Employer
other than for Cause. The lump sum shall be payable 60 days
from the date the Employer has received a written request to
commence benefits, along with documentation showing that the
Employee has become disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity
from an insurance company with an A. M. Best or Moody's
rating of no less than AA and using the amount of
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or the date the
Employee otherwise terminated service with the Employer
other than for Cause. The Employer shall purchase the
annuity within 60 days from the date the Employer has
received a written request to commence benefits, along with
documentation showing that the Employee has become Disabled.
Nevertheless, if the amount of the applicable "Disability
Benefit" specified in Schedule A is $50,000.00 or less, the
payment shall be as a lump sum to the Employee and not the
purchase of an annuity for life.
(iii) Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please
sign on applicable line):
______________________ Lump Sum Benefit.
/s/ Marshall J. Alexander Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the
"Company") or Klamath First Federal Savings and Loan
Association (the "Association") shall be deemed to occur if
and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association
pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company or the Association representing
25% or more of the combined voting power of the Company's or
the Association's then outstanding securities, (c) the
membership of the board of directors of the Company or the
Association changes as the result of a contested election,
such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or
after the effective date of this Agreement) do not
constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the
Association approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's or
the Association's assets, or a plan of partial or complete
liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is
terminated by the Employer in connection with a Change in
Control, the Employee shall be immediately vested in the
"Normal Retirement Benefit" specified in Schedule A for the
date the Employee achieves age sixty-two (62). The Employee
shall be entitled to be paid the "Change in Control Benefit"
specified in Schedule A, in substantially equal monthly
installments on the first day of each month, beginning no
sooner than the month following the month in which the
Employee attains age fifty-five (55), as requested in
writing by the Employee and delivered to the Employer or its
successor thirty (30) days prior to the commencement of
installment payments; provided, however, that in the event
the Employee does not request a commencement date as
specified, such installments shall be paid on the first day
of each month, beginning with the month following the month
in which the Employee attains sixty-two (62) years of age.
Upon the commencement of payments, the installments shall be
payable until the Employee's death, and shall increase by
two percent (2%) per year.
A termination shall be deemed to be in connection with a
Change in Control if, within two (2) years following the
occurrence of a Change in Control: (a) the Employee's
employment with the Employer is terminated by the Employer
other than a Termination for Cause; or (b) by reason of the
Employer's actions any adverse change occurs in the scope of
the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c)
the Employer causes an event to occur which reasonably
constitutes or results in a demotion, loss of title, a
significant diminution of responsibilities or authority, or
a constructive termination (by forcing a resignation or
otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the
regulatory accounting principles of the Employer's primary
federal regulator. The Employer shall establish an accrued
liability retirement account for the Employee into which
appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark
or entrust any fund or money with which to pay its
obligations under this Employee Plan. The Employee, her or
his beneficiary (ies), or any successor in interest shall be
and remain simply a general creditor of the Employer in the
same manner as any other creditor having a general claim for
matured and unpaid compensation. The Employer reserves the
absolute right, at its sole discretion, to either fund the
obligations undertaken by this Employee Plan or to refrain
from funding the same and to determine the extent, nature
and method of such funding. Should the Employer elect to
fund this Employee Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability
policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Employee
be deemed to have any lien, right, title or interest in any
specific funding investment or assets of the Employer.
If the Employer elects to invest in a life insurance,
disability or annuity policy on the life of the Employee,
then the Employee shall assist the Employer by freely
submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the
Employer and the Employee acknowledge and agree that, in the
event of a Change in Control and at the written request of
the Employee, the Employer 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 Employer in its sole discretion
deems appropriate and in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended
(the "Code") in order to permit the Employer 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
Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Employer's
general creditors until paid to the Employee or its
beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify
or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Employee nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Employer's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Employer and any Successor in
Interest:
The Employer shall not merge or consolidate into or with
another Employer or sell substantially all of its assets to
another Employer, firm or person until such Employer, firm
or person expressly agree, in writing, to assume and
discharge the duties and obligations of the Employer under
this Employee Plan. This Employee Plan shall be binding upon
the parties hereto, their successors, beneficiaries, heirs
and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Employee, this Employee Plan may be
amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Employee and the
Employer.
D. Gender:
Whenever in this Employee Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever
they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the
right of the Employee to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Employer's existing or
future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity
and interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this
Employee Plan 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 Employee Plan shall remain in full force and effect
notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to
discharge the Employee, or restrict the right of the
Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or
the Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: Marshall J. Alexander
P.O. Box 1925
Klamath Falls, OR 97601
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been
afforded the opportunity to consult with independent
advisors of his or her choosing including, without
limitation, accountants or tax advisors and counsel
regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions
which may affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of
the Employee notwithstanding any other term or provision of
this Agreement. The Employee further acknowledges and agrees
that the Employer shall have no liability whatsoever related
to any such personal tax effects or other personal costs,
expenses, or liabilities applicable to the Employee and
further specifically waives any right for the Employee and
his or her heirs, beneficiaries, legal representatives,
agents, successors, and assigns to claim or assert liability
on the part of the Employer related to the matters described
above in this subparagraph. The Employee further
acknowledges and agrees that the Employee has read,
understands and consents to all of the terms and conditions
of this Agreement, and that the Employee enters into this
Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this
Employee Plan shall be Klamath First Bancorp, Inc., until
its resignation or removal by the Board. As Named Fiduciary
and Plan Administrator, the Employer shall be responsible
for the management, control and administration of the
Employee Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation
responsibilities of the Employee Plan including the
employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this
Employee Plan and benefits are not paid to the Employee and
the claimant feels he is 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
provisions of this Employee Plan 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 a
further review of the claim denial is desired. A claim shall
be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid
forty-five-day period.
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 Employee Plan or any documents relating
thereto and submit any written issues and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business,
the parties agree that a representative member, selected by
the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), shall conduct the binding
arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the
other party to this Agreement and with JAMS (or AAA, if
necessary). 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, or if there are
none, the rules of procedure used or established by AAA. Any
award rendered by JAMS or AAA 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
Klamath Falls, Oregon, unless otherwise agreed to by the
parties.
D. 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, the prevailing party
shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees and costs incurred in
connection therewith or in the enforcement or collection of
any judgment or award rendered therein. The "prevailing
party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed,
even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other
payments which the Employee has the right to receive from
the Employer, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Employer (and its
successor) and the Employee each agree to pay their share of
any taxes that may be imposed as a result of payments made
pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount initially
so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Kermit K. Houser /s/ Nina G. Drake
Kermit K. Houser Witness
President and CEO
/s/ Marshall J. Alexander /s/ Nina G. Drake
Marshall J. Alexander EVP/CFO Witness
SCHEDULE A
EMPLOYEE BENEFIT SCHEDULE
MARSHALL ALEXANDER
DATE OF BIRTH: January 20, 1951
HIRED ON: December 15, 1986
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $20,021 NA $0 $1,492,090 $200,209
January 1, 2004 $40,042 NA $130,124 $1,492,090 $400,417
January 1, 2005 $60,063 NA $276,300 $1,492,090 $600,626
January 1, 2006 $80,083 $86,541 $440,012 $1,492,090 $800,834
January 1, 2007 $100,104 $95,494 $622,868 $1,492,090 $1,001,043
January 1, 2008 $120,125 $104,446 $826,606 $1,492,090 $1,201,251
January 1, 2009 $140,146 $113,398 $1,053,107 $1,492,090 $1,401,460
January 1, 2010 $142,267 $122,351 $1,304,404 $1,492,090 $1,422,668
January 1, 2011 $149,209 $131,304 $1,582,693 $1,492,090 $1,492,090
January 1, 2012 $149,209 $140,256 $1,621,647 $1,492,090 $1,492,090
January 1, 2013 $149,209 $149,209 $1,648,165 $1,492,090 $1,492,090
and thereafter $149,209 $149,209 NA see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-two (62). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ Marshall Alexander 5/23/03 /s/ Kermit K. Houser 5/29/03
Marshall Alexander Date Bank Officer Date
Exhibit 10(c).1
EMPLOYMENT AGREEMENT
Amended and Restated May 14, 2003
THIS AGREEMENT is made effective as of October 1, 2002, by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"), Klamath
Falls, Oregon; KLAMATH FIRST BANCORP, INC. (the "Company"), an Oregon
corporation; and Ben A. Gay (the "Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Association
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Senior Vice President of the Association. During said period, Executive also
agrees to serve, if elected, as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of twenty-four (24)
full calendar months thereafter. Commencing on the first anniversary date, and
continuing at each anniversary date thereafter, the Board of Directors of the
Association (the "Board") or its Compensation Committee may extend the Agreement
for an additional year. Prior to the extension of the Agreement as provided
herein, the Board of Directors of the Association will review the Executive's
performance evaluation for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board's meeting.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which,
in such Board's judgment, will not present any conflict of interest with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2. The
Association shall pay Executive as compensation a salary of $138,000 per year
("Base Salary") effective 11/1/2002. Such Base Salary shall be payable in
accordance with the customary payroll practices of the Association. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by the Board or its
Compensation Committee, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to regular salaried employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. However, changes in Association-sponsored group insurance
plan premiums, deductibles, co-payments and related coverage limits or
conditions are excluded from the prior sentence for any such change which is
consistently applied to or available to regular salaried Association employees.
Without limiting the generality of the foregoing provisions of this Subsection
(b), Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to, and on a basis consistent
with, the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan, or pursuant to any arrangement of the Association, in
which Executive is eligible to participate. Nothing paid to the Executive under
any such plan or arrangement will be deemed to be in lieu of other compensation
to which the Executive is entitled under this Agreement, except as provided
under Section 5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from time
to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; or retirement, as defined
in Section 7 hereof; (ii) Executive's resignation from the Association's employ,
upon (A) unless consented to by the Executive, a material change in Executive's
function, duties, or responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Sections 1 and 2, above, (any such
material change shall be deemed a continuing breach of this Agreement), (B) a
relocation of Executive's principal place of employment by more than 35 miles
from its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those being provided
as of the effective date of this Agreement, (C) the liquidation or dissolution
of the Association, or (D) any breach of this Agreement by the Association. Upon
the occurrence of any event described in clauses (A), (B), (C), or (D), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days prior written notice
given within a reasonable period of time not to exceed, except in case of a
continuing breach, four calendar months after the event giving rise to said
right to elect.
(b) Upon the occurrence of an Event of Termination other than for Cause of
for Neglect (as described in Sections 8 and 9 hereof), the Association shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due to the Executive for the
remaining term of the Agreement, including Base Salary, bonuses, and any other
cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Association as of the Date of Termination), to the Executive
for the term of the Agreement provided, however, that if the Association is not
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. All payments made pursuant to this Section 4(b) shall
be paid in substantially equal monthly installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year (determined as of
the Executive's Date of Termination), such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or the Association. For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election, such that individuals who were directors at the beginning of any
twenty-four month period (whether commencing before or after the effective date
of this Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association approve a merger,
consolidation, sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Association or the Company
has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent involuntary termination of employment at any time during
the term of this Agreement (or voluntary termination following a Change of
Control following any demotion, loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the Change in Control), unless such termination is because of his death,
retirement as provided in Section 7, termination for Cause, or termination for
Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
2.00 times the Executive's "base amount," within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended. Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer contributions that
would have been made on the Executive's behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the Association as
of the Date of Termination. Such coverage and payments shall cease upon the
expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association on his behalf, pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Association or the Company on the Executive's behalf to the
extent that such benefits are not otherwise paid to the Executive upon a Change
in Control.
(f) IRS Section 280G Issues. If 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 Company or Association,
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 Company or Association (and their successor) shall be responsible for any
loss of deductibility related thereto; provided, however, that Company or
Association 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 Company or
Association immediately prior to the change in control or such other independent
accounting firm or advisor as may be mutually agreeable to Company or
Association and Executive in the exercise of their reasonable good faith
judgment.
6. TERMINATION FOR DISABILITY.
(a) If the Executive shall become disabled as defined in the Association's
then current disability plan (or, if no such plan is then in effect, if the
Executive is permanently and totally disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician designated by the Board), the
Association may terminate Executive's employment for "Disability."
(b) Upon the Executive's termination of employment for Disability, the
Association will pay Executive, as disability pay, a semi-monthly payment equal
to three-quarters (3/4) of Executive's semi-monthly rate of Base Salary on the
effective date of such termination. These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed prior to his termination for Disability and
pursuant to an employment agreement between Executive and the Association; (ii)
Executive's full-time employment by another employer; (iii) Executive attaining
the age of 65; or (iv) Executive's death; or (v) the expiration of the term of
this Agreement. The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date Executive returns to
the full-time employment of the Association, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Association; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Association of Executive based on "Retirement" shall
mean retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Association or the Company and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Association shall pay to Executive's estate the compensation due
to the Executive through the last day of the calendar month in which his death
occurred.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. In addition, "Termination for Cause" shall include
termination because of the Executive's intentional failure to perform stated
duties, such as the refusal of the Executive to comply with the Association's or
the Company's instructions, policies or rules or other willful conduct of the
Executive which materially adversely reflects on the Association's or the
Company 's reputation or operation. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive shall
not have the right to receive compensation or other benefits for any period
after termination for Cause. Any stock options granted to Executive under any
stock option plan or any unvested awards granted under any other stock benefit
plan of the Association, the Company, or any subsidiary or affiliate thereof,
shall become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 9 hereof, and shall not be exercisable
by Executive at any time subsequent to such Termination for Cause.
9. TERMINATION FOR NEGLECT.
The Association and Company, or either of them may terminate Executive's
employment under this Agreement at any time for Neglect. For purposes of this
Agreement, "Neglect" means the failure of Executive to give due care to stated
duties or to comply with instructions or directives of the Board of Directors of
the Association or Company or either of them, but where such failure is not
determined to be willful or intentional as defined in Section 8. Termination for
Neglect includes termination as the result of any continuing or repeated
problems with Executive's job performance or conduct after written notice
specifying such problem with performance or conduct, and where such continuing
and repeated problems were not determined to be willful or intentional, or where
the conduct was not deemed to have a material adverse impact on the Association
or Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated by Neglect unless and until there shall have been sent to
Executive a copy of a resolution duly adopted by a majority of the Board of
Directors of the Association and Company, or either of them (excluding the
Executive in counting the majority if the Executive is then on the board of
directors, and after reasonable notice to Executive and an opportunity for
Executive to be heard before the board of directors), finding that in the good
faith opinion of the board of directors of the Association and Company, or
either of them, Executive engaged in conduct justifying termination for Neglect
and describing specifically the conduct. Executive shall not have the right to
receive any salary or bonus for any period after termination of employment for
Neglect. Executive shall retain any vested benefits in defined benefit plans,
defined contribution plans, supplemental executive retirement plans, stock
option plans, restricted stock plans, or other such benefits, but shall forfeit
any rights that have not vested.
10. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than as described in Section 8 or
Section 9 of this Agreement, shall not prejudice Executive's right to
compensation or other benefits under this Agreement. Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause as defined in Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the Association's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may, in its discretion, (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the Association is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated (except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Association): (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Association
or when the Association is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
11. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Association will continue
to pay Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
12. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Association
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination. Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the Association and/or the Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Company
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive, Executive's partners,
agents, servants, employers, employees and all persons acting for or with
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 8 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Association and/or the
Company, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Association and/or the Company from pursuing any other remedies
available to the Association and/or the Company for such breach or threatened
breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section, the Association will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
activities of the Association or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein will be construed as prohibiting the Association from pursuing
any other remedies available to the Association for such breach or threatened
breach, including the recovery of damages from Executive.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Company, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to Executive and, if such payments are not timely paid or provided by
the Association, such amounts and benefits shall be paid or provided by the
Company.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect. (b) This Agreement shall be binding upon, and inure to
the benefit of, Executive, the Association, the Company and their respective
successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law or
regulation, the provisions of such law or regulation shall prevail.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association, if successful pursuant to a legal judgment,
arbitration or settlement.
22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suite or proceeding in
which he may be involved by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or liabilities), such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.
The Association and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Association or the
Company, expressly and unconditionally to assume and agree to perform the
Association's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Association or the Company would be
required to perform if no such succession or assignment had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or director of the Association and the
Company, and Executive has signed this Agreement, all on the 19th day of May,
2003.
KLAMATH FIRST BANCORP, INC. KLAMATH FIRST FEDERAL SAVINGS
AND LOAN ASSOCIATION
BY: /s/ Kermit K. Houser BY: /s/ Kermit K. Houser
Kermit K. Houser, President & CEO Kermit K. Houser President & CEO
/s/ Nina G. Drake /s/ Ben A. Gay
WITNESS: Ben A. Gay EVP/CCO
Exhibit 10(c).2
FIRST AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Association"), Klamath First Bancorp,
Inc., ("Company") and the undersigned executive officer of Association and
Company (the "Executive").
WHEREAS, Association, Company and Executive entered into an Amended and
Restated Employment Agreement dated May 19, 2003, (the "Employment Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger dated as
of July 14, 2003, (the "Merger Agreement") with Sterling Financial Corporation
("Sterling") with respect to a proposed transaction (the "Transaction") whereby
Sterling will acquire all of the outstanding shares of Company common stock in a
stock merger;
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable his change in control of benefits to be
triggered under the Employment Agreement and his Executive Salary Continuation
Agreement, and to enhance the value of shares of common stock of Company owned
by the Executive and the value of his stock options to acquire common stock of
Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise, shall
have the meaning ascribed to them in the Employment Agreement.
2. Section 5(c) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as severance pay or
liquidated damages, or both (the "Base Severance Amount"), an amount equal
to $276,000. In the event that all conditions to closing under the Merger
Agreement have been satisfied during calendar year 2003, then Association
shall make payment of the Base Severance Amount plus the Additional
Severance Amount (as defined in Section 5(d) below) to the Executive on
December 31, 2003. In the event such closing conditions are not satisfied
during calendar year 2003, then the payments contemplated herein shall be
made within 10 days after consummation of the merger contemplated by the
Merger Agreement. Notwithstanding the foregoing, if the Executive enters
into a new written employment agreement with Sterling or Sterling Savings
Bank prior to December 31, 2003 (but effective upon completion of the
merger contemplated by the Merger Agreement), then the Severance Amount and
Additional Severance Amount shall not be paid pursuant to the terms hereof
and any severance to be provided to the Executive, if any, shall be set
forth in such new written employment agreement."
Section 5(d) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as additional
severance the amount of $5,750 (the "Additional Severance Amount") in lieu
of any obligation to pay the Executive the value of employer contributions
that would have been made on the Executive's behalf over the remaining term
of the agreement to any tax-qualified retirement plan. The Additional
Severance Amount shall be paid at the time the Base Severance Amount is
paid pursuant to Section 5(c) above. Upon the Executive's termination of
service in connection with or following a Change in Control arising from or
relating to the Merger Agreement, Sterling Savings Bank, as
successor-in-interest to the Association, shall provide the Executive with
continued life, medical, dental and disability coverage as is then provided
by Sterling Savings Bank to its full-time employees, as the same may be
changed from time to time, during the 36 month period next following the
Executive's Date of Termination with the cost to be absorbed by the
Executive being equal to the lesser of (i) the employee cost of coverage
currently being borne by the Executive or (ii) the employee cost of
coverage borne by full-time employees of Sterling Savings Bank receiving
the same coverage; provided if the cost of coverage to be borne by the
Executive is determined under subpart (i), then such cost shall be subject
to pro rata adjustment based upon the pro rata adjustment in cost of
coverage that is borne by full-time employees of Sterling Savings Bank
receiving the same coverage after completion of the merger contemplated by
the Merger Agreement."
3. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall have a right to
participate in the long term medical care program to be implemented by
Association if the Executive meets the eligibility requirements of the
insurer. If the Executive meets the eligibility requirements of the insurer
and becomes a participant in the long term medical care program, then in
that event, his Base Severance Amount shall be reduced by the single
premium cost paid by Association for such long term medical care on behalf
of the Executive (which is estimated to be $54,500) and the Executive shall
have no obligation to reimburse Association for any premium cost relating
to such program after the Executive's termination of employment."
4. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
5. Except as specifically set forth herein, the Employment Agreement shall
continue in full force and effect. To the extent that any provision
contained in this Agreement is inconsistent with any of the provisions of
the Employment Agreement, including but not limited to, Section 5(b)
thereof, the provisions contained in this Agreement shall be controlling.
6. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
7. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
KLAMATH FIRST BANCORP, INC.
By: /s/ Craig M Moore
Craig M Moore
SVP/Chief Auditor
EXECUTIVE:
By: /s/ Ben A. Gay
Ben A. Gay EVP/CCO
Exhibit 10(c).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
Ben A. Gay, an Employee of the Employer (hereinafter referred to as the
"Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate
the Employee's employment. This Agreement shall have no impact or
effect upon any separate written Employment Agreement which the
Employee 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 from, and shall have no effect upon, or be affected
by, the terms and provisions of said Employment Agreement.
Except as otherwise set forth in this Agreement, the term "Employer"
shall mean Klamath First Federal Savings and Loan Association;
provided, further, that for purposes of this Agreement, the term
"Employer" shall mean Klamath First Bancorp, Inc. and its subsidiaries
and affiliated entities, including any parent holding company and its
subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Employee and are
not part of any salary reduction plan or an arrangement deferring a
bonus or a salary increase. The Employee has no option to take any
current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-two ("62") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as
defined above, of the Employee on, or after the Employee achieves
fifty-five (55) years of age, but has not yet reached sixty-two
(62) years of age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-two (62), the Employee shall
be entitled to be paid the "Normal Retirement Benefit" specified
in Schedule A, payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Employee Retires (or on
such later date as may be mutually agreed upon by the Employee
and the Employer in advance of said Retirement date) payable
until the Employee's death. After commencement of payments, the
Normal Retirement Benefit will increase by two percent (2%) per
year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph
III (B) above. In the event the Employee elects to Retire on a
date which constitutes an Early Retirement Date, and said early
retirement is not pursuant to a Change in Control as defined in
paragraph VI below, the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A for the date
the Retirement occurs, but reduced by a factor of one-half of one
percent (.5%) per month for each month or portion thereof that
the Early Retirement occurs prior to the Retirement Date. The
benefit shall be payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by
the Employee and the Employer in advance of such Early Retirement
Date). After commencement of payments, the Early Retirement
benefit will increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's
60th birthday and if the Retirement Date in Section III.A. above
is at age 62, the Normal Retirement Benefit specified in Schedule
"A" as of the Employee's 60th birthday would be reduced by 12%
[.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to
Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to
the Employee's Retirement. In the event that the employment of
the Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining
sixty-two (62) years of age, then this Agreement shall terminate
on the date of such termination of employment; provided, however,
that the Employee shall be entitled to the following benefits as
may be applicable depending upon the circumstances surrounding
the Employee's termination:
(i) Termination for Other Than Disability, Change in Control
or Cause:
If the Employee's employment is terminated by the Employee or by
the Employer for any reason other than Disability, "Change in
Control" or "Termination for Cause," the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A as of the date of termination, payable in
substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-two (62) years of age (or on such later
date as may be mutually agreed upon by the Employee and the
Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon
achieving age fifty-five (55) but before achieving age sixty-two
(62), the Employee may choose to receive the Early Retirement
Benefit with the reductions from the "Normal Retirement Benefit"
as of the date of termination, and as described in Section IV.B.
of this Agreement. The benefit shall be payable in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Early
Retirement Date occurs (or on such later date as may be mutually
agreed upon by the Employee and the Employer not less than
fifteen (15) days prior to such commencement date) payable to the
Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this
Agreement, elect below either the "Lump Sum Payment" or the
"Annuity for Life" option in the event the Employee becomes
disabled at any time after the Effective Date of this Agreement
but prior to Retirement. The term "Disability" or "Disabled"
shall have the same meaning given such terms in any policy of
disability insurance maintained by the Employer for the benefit
of employees including the Employee. In the absence of such a
policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental
or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least
one hundred twenty (120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or date the
Employee otherwise terminated service with the Employer
other than for Cause. The lump sum shall be payable 60 days
from the date the Employer has received a written request to
commence benefits, along with documentation showing that the
Employee has become disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity
from an insurance company with an A. M. Best or Moody's
rating of no less than AA and using the amount of
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or the date the
Employee otherwise terminated service with the Employer
other than for Cause. The Employer shall purchase the
annuity within 60 days from the date the Employer has
received a written request to commence benefits, along with
documentation showing that the Employee has become Disabled.
Nevertheless, if the amount of the applicable "Disability
Benefit" specified in Schedule A is $50,000.00 or less, the
payment shall be as a lump sum to the Employee and not the
purchase of an annuity for life.
(iii) Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please
sign on applicable line):
/s/ Ben A. Gay Lump Sum Benefit.
_______________ Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the
"Company") or Klamath First Federal Savings and Loan
Association (the "Association") shall be deemed to occur if
and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association
pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company or the Association representing
25% or more of the combined voting power of the Company's or
the Association's then outstanding securities, (c) the
membership of the board of directors of the Company or the
Association changes as the result of a contested election,
such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or
after the effective date of this Agreement) do not
constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the
Association approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's or
the Association's assets, or a plan of partial or complete
liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is
terminated by the Employer in connection with a Change in
Control, the Employee shall be immediately vested in the
"Normal Retirement Benefit" specified in Schedule A for the
date the Employee achieves age sixty-two (62). The Employee
shall be entitled to be paid the "Change in Control Benefit"
specified in Schedule A, in substantially equal monthly
installments on the first day of each month, beginning no
sooner than the month following the month in which the
Employee attains age fifty-five (55), as requested in
writing by the Employee and delivered to the Employer or its
successor thirty (30) days prior to the commencement of
installment payments; provided, however, that in the event
the Employee does not request a commencement date as
specified, such installments shall be paid on the first day
of each month, beginning with the month following the month
in which the Employee attains sixty-two (62) years of age.
Upon the commencement of payments, the installments shall be
payable until the Employee's death, and shall increase by
two percent (2%) per year.
A termination shall be deemed to be in connection with a
Change in Control if, within two (2) years following the
occurrence of a Change in Control: (a) the Employee's
employment with the Employer is terminated by the Employer
other than a Termination for Cause; or (b) by reason of the
Employer's actions any adverse change occurs in the scope of
the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c)
the Employer causes an event to occur which reasonably
constitutes or results in a demotion, loss of title, a
significant diminution of responsibilities or authority, or
a constructive termination (by forcing a resignation or
otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the
regulatory accounting principles of the Employer's primary
federal regulator. The Employer shall establish an accrued
liability retirement account for the Employee into which
appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark
or entrust any fund or money with which to pay its
obligations under this Employee Plan. The Employee, her or
his beneficiary (ies), or any successor in interest shall be
and remain simply a general creditor of the Employer in the
same manner as any other creditor having a general claim for
matured and unpaid compensation. The Employer reserves the
absolute right, at its sole discretion, to either fund the
obligations undertaken by this Employee Plan or to refrain
from funding the same and to determine the extent, nature
and method of such funding. Should the Employer elect to
fund this Employee Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability
policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Employee
be deemed to have any lien, right, title or interest in any
specific funding investment or assets of the Employer.
If the Employer elects to invest in a life insurance,
disability or annuity policy on the life of the Employee,
then the Employee shall assist the Employer by freely
submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the
Employer and the Employee acknowledge and agree that, in the
event of a Change in Control and at the written request of
the Employee, the Employer 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 Employer in its sole discretion
deems appropriate and in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended
(the "Code") in order to permit the Employer 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
Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Employer's
general creditors until paid to the Employee or its
beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify
or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Employee nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Employer's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Employer and any Successor in
Interest:
The Employer shall not merge or consolidate into or with
another Employer or sell substantially all of its assets to
another Employer, firm or person until such Employer, firm
or person expressly agree, in writing, to assume and
discharge the duties and obligations of the Employer under
this Employee Plan. This Employee Plan shall be binding upon
the parties hereto, their successors, beneficiaries, heirs
and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Employee, this Employee Plan may be
amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Employee and the
Employer.
D. Gender:
Whenever in this Employee Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever
they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the
right of the Employee to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Employer's existing or
future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity
and interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this
Employee Plan 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 Employee Plan shall remain in full force and effect
notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to
discharge the Employee, or restrict the right of the
Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or
the Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: Ben A. Gay
23019 SE 41st PL
Sammamish, WA 98075
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been
afforded the opportunity to consult with independent
advisors of his or her choosing including, without
limitation, accountants or tax advisors and counsel
regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions
which may affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of
the Employee notwithstanding any other term or provision of
this Agreement. The Employee further acknowledges and agrees
that the Employer shall have no liability whatsoever related
to any such personal tax effects or other personal costs,
expenses, or liabilities applicable to the Employee and
further specifically waives any right for the Employee and
his or her heirs, beneficiaries, legal representatives,
agents, successors, and assigns to claim or assert liability
on the part of the Employer related to the matters described
above in this subparagraph. The Employee further
acknowledges and agrees that the Employee has read,
understands and consents to all of the terms and conditions
of this Agreement, and that the Employee enters into this
Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this
Employee Plan shall be Klamath First Bancorp, Inc., until
its resignation or removal by the Board. As Named Fiduciary
and Plan Administrator, the Employer shall be responsible
for the management, control and administration of the
Employee Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation
responsibilities of the Employee Plan including the
employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this
Employee Plan and benefits are not paid to the Employee and
the claimant feels he is 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
provisions of this Employee Plan 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 a
further review of the claim denial is desired. A claim shall
be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid
forty-five-day period.
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 Employee Plan or any documents relating
thereto and submit any written issues and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business,
the parties agree that a representative member, selected by
the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), shall conduct the binding
arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the
other party to this Agreement and with JAMS (or AAA, if
necessary). 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, or if there are
none, the rules of procedure used or established by AAA. Any
award rendered by JAMS or AAA 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
Klamath Falls, Oregon, unless otherwise agreed to by the
parties.
D. 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, the prevailing party
shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees and costs incurred in
connection therewith or in the enforcement or collection of
any judgment or award rendered therein. The "prevailing
party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed,
even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other
payments which the Employee has the right to receive from
the Employer, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Employer (and its
successor) and the Employee each agree to pay their share of
any taxes that may be imposed as a result of payments made
pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount initially
so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Kermit K. Houser /s/ Nina G. Drake
Kermit K. Houser Witness
President and CEO
/s/ Ben A. Gay /s/ Nina G. Drake
Ben A. Gay EVP/CCO Witness
SCHEDULE A
EMPLOYEE BENEFIT SCHEDULE
BEN GAY
DATE OF BIRTH: DECEMBER 24, 1946
HIRED ON: SEPTEMBER 24, 2001
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $17,408 $73,112 $0 $1,044,460 $174,077
January 1, 2004 $34,815 $79,379 $144,462 $1,044,460 $348,153
January 1, 2005 $52,223 $85,646 $306,743 $1,044,460 $522,230
January 1, 2006 $69,631 $91,912 $488,494 $1,044,460 $696,307
January 1, 2007 $87,038 $98,179 $691,498 $1,044,460 $870,383
January 1, 2008 $104,446 $104,446 $917,685 $1,044,460 $1,044,460
and thereafter $104,446 $104,446 NA see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-two (62). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ Ben A. Gay 5/14/03 /s/ Nina G. Drake 5/16/03
Ben A. Gay Date Bank Officer Date
Exhibit 10(d).1
EMPLOYMENT AGREEMENT
Amended and Restated May 19, 2003
THIS AGREEMENT is made effective as of October 1, 2002, by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"), Klamath
Falls, Oregon; KLAMATH FIRST BANCORP, INC. (the "Company"), an Oregon
corporation; and Frank X. Hernandez (the "Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Association
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Senior Vice President of the Association. During said period, Executive also
agrees to serve, if elected, as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of twenty-four (24)
full calendar months thereafter. Commencing on the first anniversary date, and
continuing at each anniversary date thereafter, the Board of Directors of the
Association (the "Board") or its Compensation Committee may extend the Agreement
for an additional year. Prior to the extension of the Agreement as provided
herein, the Board of Directors of the Association will review the Executive's
performance evaluation for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board's meeting.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which,
in such Board's judgment, will not present any conflict of interest with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2. The
Association shall pay Executive as compensation a salary of $108,000 per year
("Base Salary") effective 11/1/2002. Such Base Salary shall be payable in
accordance with the customary payroll practices of the Association. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by the Board or its
Compensation Committee, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to regular salaried employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. However, changes in Association-sponsored group insurance
plan premiums, deductibles, co-payments and related coverage limits or
conditions are excluded from the prior sentence for any such change which is
consistently applied to or available to regular salaried Association employees.
Without limiting the generality of the foregoing provisions of this Subsection
(b), Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to, and on a basis consistent
with, the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan, or pursuant to any arrangement of the Association, in
which Executive is eligible to participate. Nothing paid to the Executive under
any such plan or arrangement will be deemed to be in lieu of other compensation
to which the Executive is entitled under this Agreement, except as provided
under Section 5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from time
to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; or retirement, as defined
in Section 7 hereof; (ii) Executive's resignation from the Association's employ,
upon (A) unless consented to by the Executive, a material change in Executive's
function, duties, or responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Sections 1 and 2, above, (any such
material change shall be deemed a continuing breach of this Agreement), (B) a
relocation of Executive's principal place of employment by more than 35 miles
from its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those being provided
as of the effective date of this Agreement, (C) the liquidation or dissolution
of the Association, or (D) any breach of this Agreement by the Association. Upon
the occurrence of any event described in clauses (A), (B), (C), or (D), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days prior written notice
given within a reasonable period of time not to exceed, except in case of a
continuing breach, four calendar months after the event giving rise to said
right to elect.
(b) Upon the occurrence of an Event of Termination other than for Cause of
for Neglect (as described in Sections 8 and 9 hereof), the Association shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due to the Executive for the
remaining term of the Agreement, including Base Salary, bonuses, and any other
cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Association as of the Date of Termination), to the Executive
for the term of the Agreement provided, however, that if the Association is not
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. All payments made pursuant to this Section 4(b) shall
be paid in substantially equal monthly installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year (determined as of
the Executive's Date of Termination), such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or the Association. For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election, such that individuals who were directors at the beginning of any
twenty-four month period (whether commencing before or after the effective date
of this Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association approve a merger,
consolidation, sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Association or the Company
has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent involuntary termination of employment at any time during
the term of this Agreement (or voluntary termination following a Change of
Control following any demotion, loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the Change in Control), unless such termination is because of his death,
retirement as provided in Section 7, termination for Cause, or termination for
Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
1.50 times the Executive's "base amount," within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended. Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer contributions that
would have been made on the Executive's behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the Association as
of the Date of Termination. Such coverage and payments shall cease upon the
expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association on his behalf, pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Association or the Company on the Executive's behalf to the
extent that such benefits are not otherwise paid to the Executive upon a Change
in Control.
(f) IRS Section 280G Issues. If 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 Company or Association,
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 Company or Association (and their successor) shall be responsible for any
loss of deductibility related thereto; provided, however, that Company or
Association 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 Company or
Association immediately prior to the change in control or such other independent
accounting firm or advisor as may be mutually agreeable to Company or
Association and Executive in the exercise of their reasonable good faith
judgment.
6. TERMINATION FOR DISABILITY.
(a) If the Executive shall become disabled as defined in the Association's
then current disability plan (or, if no such plan is then in effect, if the
Executive is permanently and totally disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician designated by the Board), the
Association may terminate Executive's employment for "Disability."
(b) Upon the Executive's termination of employment for Disability, the
Association will pay Executive, as disability pay, a semi-monthly payment equal
to three-quarters (3/4) of Executive's semi-monthly rate of Base Salary on the
effective date of such termination. These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed prior to his termination for Disability and
pursuant to an employment agreement between Executive and the Association; (ii)
Executive's full-time employment by another employer; (iii) Executive attaining
the age of 65; or (iv) Executive's death; or (v) the expiration of the term of
this Agreement. The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date Executive returns to
the full-time employment of the Association, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Association; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Association of Executive based on "Retirement" shall
mean retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Association or the Company and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Association shall pay to Executive's estate the compensation due
to the Executive through the last day of the calendar month in which his death
occurred.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. In addition, "Termination for Cause" shall include
termination because of the Executive's intentional failure to perform stated
duties, such as the refusal of the Executive to comply with the Association's or
the Company's instructions, policies or rules or other willful conduct of the
Executive which materially adversely reflects on the Association's or the
Company 's reputation or operation. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive shall
not have the right to receive compensation or other benefits for any period
after termination for Cause. Any stock options granted to Executive under any
stock option plan or any unvested awards granted under any other stock benefit
plan of the Association, the Company, or any subsidiary or affiliate thereof,
shall become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 9 hereof, and shall not be exercisable
by Executive at any time subsequent to such Termination for Cause.
9. TERMINATION FOR NEGLECT.
The Association and Company, or either of them may terminate Executive's
employment under this Agreement at any time for Neglect. For purposes of this
Agreement, "Neglect" means the failure of Executive to give due care to stated
duties or to comply with instructions or directives of the Board of Directors of
the Association or Company or either of them, but where such failure is not
determined to be willful or intentional as defined in Section 8. Termination for
Neglect includes termination as the result of any continuing or repeated
problems with Executive's job performance or conduct after written notice
specifying such problem with performance or conduct, and where such continuing
and repeated problems were not determined to be willful or intentional, or where
the conduct was not deemed to have a material adverse impact on the Association
or Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated by Neglect unless and until there shall have been sent to
Executive a copy of a resolution duly adopted by a majority of the Board of
Directors of the Association and Company, or either of them (excluding the
Executive in counting the majority if the Executive is then on the board of
directors, and after reasonable notice to Executive and an opportunity for
Executive to be heard before the board of directors), finding that in the good
faith opinion of the board of directors of the Association and Company, or
either of them, Executive engaged in conduct justifying termination for Neglect
and describing specifically the conduct. Executive shall not have the right to
receive any salary or bonus for any period after termination of employment for
Neglect. Executive shall retain any vested benefits in defined benefit plans,
defined contribution plans, supplemental executive retirement plans, stock
option plans, restricted stock plans, or other such benefits, but shall forfeit
any rights that have not vested.
10. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than as described in Section 8 or
Section 9 of this Agreement, shall not prejudice Executive's right to
compensation or other benefits under this Agreement. Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause as defined in Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the Association's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may, in its discretion, (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the Association is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated (except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Association): (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Association
or when the Association is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
11. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Association will continue
to pay Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
12. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Association
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination. Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the Association and/or the Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Company
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive, Executive's partners,
agents, servants, employers, employees and all persons acting for or with
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 8 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Association and/or the
Company, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Association and/or the Company from pursuing any other remedies
available to the Association and/or the Company for such breach or threatened
breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section, the Association will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
activities of the Association or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein will be construed as prohibiting the Association from pursuing
any other remedies available to the Association for such breach or threatened
breach, including the recovery of damages from Executive.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Company, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to Executive and, if such payments are not timely paid or provided by
the Association, such amounts and benefits shall be paid or provided by the
Company.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect. (b) This Agreement shall be binding upon, and inure to
the benefit of, Executive, the Association, the Company and their respective
successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law or
regulation, the provisions of such law or regulation shall prevail.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association, if successful pursuant to a legal judgment,
arbitration or settlement.
22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suite or proceeding in
which he may be involved by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or liabilities), such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.
The Association and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Association or the
Company, expressly and unconditionally to assume and agree to perform the
Association's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Association or the Company would be
required to perform if no such succession or assignment had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or director of the Association and the
Company, and Executive has signed this Agreement, all on the 19th day of May,
2003.
KLAMATH FIRST BANCORP, INC. KLAMATH FIRST FEDERAL SAVINGS
AND LOAN ASSOCIATION
BY: /s/ Kermit K. Houser BY: /s/ Kermit K. Houser
Kermit K. Houser, President & CEO Kermit K. Houser President & CEO
/s/ Nina G. Drake /s/ Frank X. Hernandez
WITNESS: Frank X. Hernandez
Exhibit 10(d).2
FIRST AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Association"), Klamath First Bancorp,
Inc., ("Company") and the undersigned executive officer of Association and
Company (the "Executive").
WHEREAS, Association, Company and Executive entered into an Amended and
Restated Employment Agreement dated May 19, 2003, (the "Employment Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger dated as
of July 14, 2003, (the "Merger Agreement") with Sterling Financial Corporation
("Sterling") with respect to a proposed transaction (the "Transaction") whereby
Sterling will acquire all of the outstanding shares of Company common stock in a
stock merger;
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable his change in control of benefits to be
triggered under the Employment Agreement and his Executive Salary Continuation
Agreement, and to enhance the value of shares of common stock of Company owned
by the Executive and the value of his stock options to acquire common stock of
Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise, shall
have the meaning ascribed to them in the Employment Agreement.
2. Section 5(c) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as severance pay or
liquidated damages, or both (the "Base Severance Amount"), an amount equal
to $162,000. In the event that all conditions to closing under the Merger
Agreement have been satisfied during calendar year 2003, then Association
shall make payment of the Base Severance Amount plus the Additional
Severance Amount (as defined in Section 5(d) below) to the Executive on
December 31, 2003. In the event such closing conditions are not satisfied
during calendar year 2003, then the payments contemplated herein shall be
made within 10 days after consummation of the merger contemplated by the
Merger Agreement. Notwithstanding the foregoing, if the Executive enters
into a new written employment agreement with Sterling or Sterling Savings
Bank prior to December 31, 2003 (but effective upon completion of the
merger contemplated by the Merger Agreement), then the Severance Amount and
Additional Severance Amount shall not be paid pursuant to the terms hereof
and any severance to be provided to the Executive, if any, shall be set
forth in such new written employment agreement."
Section 5(d) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as additional
severance the amount of $5,750 (the "Additional Severance Amount") in lieu
of any obligation to pay the Executive the value of employer contributions
that would have been made on the Executive's behalf over the remaining term
of the agreement to any tax-qualified retirement plan. The Additional
Severance Amount shall be paid at the time the Base Severance Amount is
paid pursuant to Section 5(c) above. Upon the Executive's termination of
service in connection with or following a Change in Control arising from or
relating to the Merger Agreement, Sterling Savings Bank, as
successor-in-interest to the Association, shall provide the Executive with
continued life, medical, dental and disability coverage as is then provided
by Sterling Savings Bank to its full-time employees, as the same may be
changed from time to time, during the 36 month period next following the
Executive's Date of Termination with the cost to be absorbed by the
Executive being equal to the lesser of (i) the employee cost of coverage
currently being borne by the Executive or (ii) the employee cost of
coverage borne by full-time employees of Sterling Savings Bank receiving
the same coverage; provided if the cost of coverage to be borne by the
Executive is determined under subpart (i), then such cost shall be subject
to pro rata adjustment based upon the pro rata adjustment in cost of
coverage that is borne by full-time employees of Sterling Savings Bank
receiving the same coverage after completion of the merger contemplated by
the Merger Agreement."
3. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall have a right to
participate in the long term medical care program to be implemented by
Association if the Executive meets the eligibility requirements of the
insurer. If the Executive meets the eligibility requirements of the insurer
and becomes a participant in the long term medical care program, then in
that event, his Base Severance Amount shall be reduced by the single
premium cost paid by Association for such long term medical care on behalf
of the Executive (which is estimated to be $50,000) and the Executive shall
have no obligation to reimburse Association for any premium cost relating
to such program after the Executive's termination of employment."
4. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
5. Except as specifically set forth herein, the Employment Agreement shall
continue in full force and effect. To the extent that any provision
contained in this Agreement is inconsistent with any of the provisions of
the Employment Agreement, including but not limited to, Section 5(b)
thereof, the provisions contained in this Agreement shall be controlling.
6. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
7. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
KLAMATH FIRST BANCORP, INC.
By: /s/ Craig M Moore
Craig M Moore
SVP/Chief Auditor
EXECUTIVE:
By: /s/ Frank X Hernandez
Frank X. Hernandez
SVP/COO
Exhibit 10(d).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
Frank X. Hernandez, an Employee of the Employer (hereinafter referred to as the
"Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate
the Employee's employment. This Agreement shall have no impact or
effect upon any separate written Employment Agreement which the
Employee 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 from, and shall have no effect upon, or be affected
by, the terms and provisions of said Employment Agreement.
Except as otherwise set forth in this Agreement, the term "Employer"
shall mean Klamath First Federal Savings and Loan Association;
provided, further, that for purposes of this Agreement, the term
"Employer" shall mean Klamath First Bancorp, Inc. and its subsidiaries
and affiliated entities, including any parent holding company and its
subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Employee and are
not part of any salary reduction plan or an arrangement deferring a
bonus or a salary increase. The Employee has no option to take any
current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-two ("62") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as
defined above, of the Employee on, or after the Employee achieves
fifty-five (55) years of age, but has not yet reached sixty-two
(62) years of age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-two (62), the Employee shall
be entitled to be paid the "Normal Retirement Benefit" specified
in Schedule A, payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Employee Retires (or on
such later date as may be mutually agreed upon by the Employee
and the Employer in advance of said Retirement date) payable
until the Employee's death. After commencement of payments, the
Normal Retirement Benefit will increase by two percent (2%) per
year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph
III (B) above. In the event the Employee elects to Retire on a
date which constitutes an Early Retirement Date, and said early
retirement is not pursuant to a Change in Control as defined in
paragraph VI below, the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A for the date
the Retirement occurs, but reduced by a factor of one-half of one
percent (.5%) per month for each month or portion thereof that
the Early Retirement occurs prior to the Retirement Date. The
benefit shall be payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by
the Employee and the Employer in advance of such Early Retirement
Date). After commencement of payments, the Early Retirement
benefit will increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's
60th birthday and if the Retirement Date in Section III.A. above
is at age 62, the Normal Retirement Benefit specified in Schedule
"A" as of the Employee's 60th birthday would be reduced by 12%
[.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to
Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to
the Employee's Retirement. In the event that the employment of
the Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining
sixty-two (62) years of age, then this Agreement shall terminate
on the date of such termination of employment; provided, however,
that the Employee shall be entitled to the following benefits as
may be applicable depending upon the circumstances surrounding
the Employee's termination:
(i) Termination for Other Than Disability, Change in Control
or Cause:
If the Employee's employment is terminated by the Employee or by
the Employer for any reason other than Disability, "Change in
Control" or "Termination for Cause," the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A as of the date of termination, payable in
substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-two (62) years of age (or on such later
date as may be mutually agreed upon by the Employee and the
Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon
achieving age fifty-five (55) but before achieving age sixty-two
(62), the Employee may choose to receive the Early Retirement
Benefit with the reductions from the "Normal Retirement Benefit"
as of the date of termination, and as described in Section IV.B.
of this Agreement. The benefit shall be payable in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Early
Retirement Date occurs (or on such later date as may be mutually
agreed upon by the Employee and the Employer not less than
fifteen (15) days prior to such commencement date) payable to the
Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this
Agreement, elect below either the "Lump Sum Payment" or the
"Annuity for Life" option in the event the Employee becomes
disabled at any time after the Effective Date of this Agreement
but prior to Retirement. The term "Disability" or "Disabled"
shall have the same meaning given such terms in any policy of
disability insurance maintained by the Employer for the benefit
of employees including the Employee. In the absence of such a
policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental
or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least
one hundred twenty (120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or date the
Employee otherwise terminated service with the Employer
other than for Cause. The lump sum shall be payable 60 days
from the date the Employer has received a written request to
commence benefits, along with documentation showing that the
Employee has become disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity
from an insurance company with an A. M. Best or Moody's
rating of no less than AA and using the amount of
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or the date the
Employee otherwise terminated service with the Employer
other than for Cause. The Employer shall purchase the
annuity within 60 days from the date the Employer has
received a written request to commence benefits, along with
documentation showing that the Employee has become Disabled.
Nevertheless, if the amount of the applicable "Disability
Benefit" specified in Schedule A is $50,000.00 or less, the
payment shall be as a lump sum to the Employee and not the
purchase of an annuity for life.
(iii) Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please
sign on applicable line):
______________________ Lump Sum Benefit.
/s/ Frank X. Hernandez Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the
"Company") or Klamath First Federal Savings and Loan
Association (the "Association") shall be deemed to occur if
and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association
pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company or the Association representing
25% or more of the combined voting power of the Company's or
the Association's then outstanding securities, (c) the
membership of the board of directors of the Company or the
Association changes as the result of a contested election,
such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or
after the effective date of this Agreement) do not
constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the
Association approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's or
the Association's assets, or a plan of partial or complete
liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is
terminated by the Employer in connection with a Change in
Control, the Employee shall be immediately vested in the
"Normal Retirement Benefit" specified in Schedule A for the
date the Employee achieves age sixty-two (62). The Employee
shall be entitled to be paid the "Change in Control Benefit"
specified in Schedule A, in substantially equal monthly
installments on the first day of each month, beginning no
sooner than the month following the month in which the
Employee attains age fifty-five (55), as requested in
writing by the Employee and delivered to the Employer or its
successor thirty (30) days prior to the commencement of
installment payments; provided, however, that in the event
the Employee does not request a commencement date as
specified, such installments shall be paid on the first day
of each month, beginning with the month following the month
in which the Employee attains sixty-two (62) years of age.
Upon the commencement of payments, the installments shall be
payable until the Employee's death, and shall increase by
two percent (2%) per year.
A termination shall be deemed to be in connection with a
Change in Control if, within two (2) years following the
occurrence of a Change in Control: (a) the Employee's
employment with the Employer is terminated by the Employer
other than a Termination for Cause; or (b) by reason of the
Employer's actions any adverse change occurs in the scope of
the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c)
the Employer causes an event to occur which reasonably
constitutes or results in a demotion, loss of title, a
significant diminution of responsibilities or authority, or
a constructive termination (by forcing a resignation or
otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the
regulatory accounting principles of the Employer's primary
federal regulator. The Employer shall establish an accrued
liability retirement account for the Employee into which
appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark
or entrust any fund or money with which to pay its
obligations under this Employee Plan. The Employee, her or
his beneficiary (ies), or any successor in interest shall be
and remain simply a general creditor of the Employer in the
same manner as any other creditor having a general claim for
matured and unpaid compensation. The Employer reserves the
absolute right, at its sole discretion, to either fund the
obligations undertaken by this Employee Plan or to refrain
from funding the same and to determine the extent, nature
and method of such funding. Should the Employer elect to
fund this Employee Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability
policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Employee
be deemed to have any lien, right, title or interest in any
specific funding investment or assets of the Employer.
If the Employer elects to invest in a life insurance,
disability or annuity policy on the life of the Employee,
then the Employee shall assist the Employer by freely
submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the
Employer and the Employee acknowledge and agree that, in the
event of a Change in Control and at the written request of
the Employee, the Employer 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 Employer in its sole discretion
deems appropriate and in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended
(the "Code") in order to permit the Employer 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
Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Employer's
general creditors until paid to the Employee or its
beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify
or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Employee nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Employer's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Employer and any Successor in
Interest:
The Employer shall not merge or consolidate into or with
another Employer or sell substantially all of its assets to
another Employer, firm or person until such Employer, firm
or person expressly agree, in writing, to assume and
discharge the duties and obligations of the Employer under
this Employee Plan. This Employee Plan shall be binding upon
the parties hereto, their successors, beneficiaries, heirs
and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Employee, this Employee Plan may be
amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Employee and the
Employer.
D. Gender:
Whenever in this Employee Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever
they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the
right of the Employee to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Employer's existing or
future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity
and interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this
Employee Plan 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 Employee Plan shall remain in full force and effect
notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to
discharge the Employee, or restrict the right of the
Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or
the Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: Frank X. Hernandez
316 West Oregon Avenue
Klamath Falls, OR 97601
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been
afforded the opportunity to consult with independent
advisors of his or her choosing including, without
limitation, accountants or tax advisors and counsel
regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions
which may affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of
the Employee notwithstanding any other term or provision of
this Agreement. The Employee further acknowledges and agrees
that the Employer shall have no liability whatsoever related
to any such personal tax effects or other personal costs,
expenses, or liabilities applicable to the Employee and
further specifically waives any right for the Employee and
his or her heirs, beneficiaries, legal representatives,
agents, successors, and assigns to claim or assert liability
on the part of the Employer related to the matters described
above in this subparagraph. The Employee further
acknowledges and agrees that the Employee has read,
understands and consents to all of the terms and conditions
of this Agreement, and that the Employee enters into this
Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this
Employee Plan shall be Klamath First Bancorp, Inc., until
its resignation or removal by the Board. As Named Fiduciary
and Plan Administrator, the Employer shall be responsible
for the management, control and administration of the
Employee Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation
responsibilities of the Employee Plan including the
employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this
Employee Plan and benefits are not paid to the Employee and
the claimant feels he is 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
provisions of this Employee Plan 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 a
further review of the claim denial is desired. A claim shall
be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid
forty-five-day period.
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 Employee Plan or any documents relating
thereto and submit any written issues and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business,
the parties agree that a representative member, selected by
the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), shall conduct the binding
arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the
other party to this Agreement and with JAMS (or AAA, if
necessary). 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, or if there are
none, the rules of procedure used or established by AAA. Any
award rendered by JAMS or AAA 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
Klamath Falls, Oregon, unless otherwise agreed to by the
parties.
D. 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, the prevailing party
shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees and costs incurred in
connection therewith or in the enforcement or collection of
any judgment or award rendered therein. The "prevailing
party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed,
even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other
payments which the Employee has the right to receive from
the Employer, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Employer (and its
successor) and the Employee each agree to pay their share of
any taxes that may be imposed as a result of payments made
pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount initially
so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Kermit K. Houser /s/ Nina G. Drake
Kermit K. Houser Witness
President and CEO
/s/ Frank X. Hernandez /s/ Nina G. Drake
Frank X. Hernandez Witness
SCHEDULE A
EMPLOYEE BENEFIT SCHEDULE
FRANK HERNANDEZ
DATE OF BIRTH: MARCH 28, 1955
HIRED ON: JULY 1, 1992
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $1,495 NA $0 $1,064,980 $100,000
January 1, 2004 $4,484 NA $7,571 $1,064,980 $100,000
January 1, 2005 $8,968 NA $24,113 $1,064,980 $100,000
January 1, 2006 $14,947 NA $51,199 $1,064,980 $149,471
January 1, 2007 $22,421 NA $90,596 $1,064,980 $224,206
January 1, 2008 $31,389 NA $144,275 $1,064,980 $313,889
January 1, 2009 $41,852 NA $214,443 $1,064,980 $418,518
January 1, 2010 $53,810 $61,769 $303,559 $1,064,980 $538,095
January 1, 2011 $67,262 $68,159 $414,362 $1,064,980 $672,619
January 1, 2012 $74,735 $74,549 $549,899 $1,064,980 $747,354
January 1, 2013 $82,209 $80,938 $648,684 $1,064,980 $822,090
January 1, 2014 $89,683 $87,328 $757,563 $1,064,980 $896,825
January 1, 2015 $97,156 $93,718 $877,405 $1,064,980 $971,561
January 1, 2016 $104,630 $100,108 $1,009,148 $1,064,980 $1,046,296
January 1, 2017 $106,498 $106,498 $1,153,804 $1,064,980 $1,064,980
and thereafter $106,498 $106,498 NA see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-two (62). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ Frank X. Hernandez 5/19/03 /s/ Kermit K. Houser 5/19/03
Frank X. Hernandez Date Bank Officer Date
1
Exhibit 10(d).4
FIRST AMENDMENT TO executive salary continuation AGREEMENT
This FIRST AMENDMENT TO EXECUTIVE SALARY CONTINUATION AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Employer") and the undersigned executive
officer of Employer ("Employee").
WHEREAS, Employer and Employee entered into an Executive Salary
Continuation Agreement (the "SCA") effective January 1, 2003;
WHEREAS, Klamath First Bancorp, Inc. ("Company"), the parent company of
Employer, has entered into an Agreement and Plan of Merger dated as of July 14,
2003, (the "Merger Agreement") with Sterling Financial Corporation ("Sterling")
with respect to a proposed transaction (the "Transaction") whereby Sterling will
acquire all of the outstanding shares of Company common stock in a stock merger;
WHEREAS, Employer desire to enter into this Agreement to facilitate the
Transaction; and
WHEREAS, Employee desires to enter into this Agreement to facilitate the
Transaction so as to enable Employee (a) to receive a cash-out of his benefits
under the SCA as provided herein, (b) to receive change in control benefits
under his employment agreement and (c) to enhance the value of shares of common
stock of Company owned by Employee and the value of his stock options to acquire
common stock of Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Notwithstanding anything contained in the SCA to the contrary, Employer
shall have the right to pay Employee at any time from the date hereof
through December 31, 2003 the amount of $548,847 less all tax withholding
obligations with respect thereto (the "Cash-Out Amount") in full and
complete satisfaction of all obligations of Employer under the SCA and all
rights of Employee under the SCA. Upon Employer making payment of the
Cash-Out Amount to Employee as provided herein, the SCA shall terminate and
shall have no further force or effect.
2. Upon payment of the Cash-Out Amount to Employee by Employer as provided in
paragraph 1 above, Employee does hereby release and forever discharge
Employer, its affiliates, and their respective assigns, directors,
officers, employees and agents from any and all claims, demands, causes of
action and rights that Employee has or might have under the SCA of any kind
or character whatsoever, whether known or unknown.
3. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
4. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and both of which,
taken together, shall constitute one and the same agreement.
The parties have executed this Agreement on the day and year first above
written.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
EMPLOYEE:
By: /s/ Frank X. Hernandez
Frank X. Hernandez
SVP/COO
Exhibit 10(e).1
EMPLOYMENT AGREEMENT
Amended and Restated May 14, 2003
THIS AGREEMENT is made effective as of October 1, 2002, by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"), Klamath
Falls, Oregon; KLAMATH FIRST BANCORP, INC. (the "Company"), an Oregon
corporation; and Craig M Moore (the "Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Association
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Senior Vice President of the Association. During said period, Executive also
agrees to serve, if elected, as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of twenty-four (24)
full calendar months thereafter. Commencing on the first anniversary date, and
continuing at each anniversary date thereafter, the Board of Directors of the
Association (the "Board") or its Compensation Committee may extend the Agreement
for an additional year. Prior to the extension of the Agreement as provided
herein, the Board of Directors of the Association will review the Executive's
performance evaluation for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board's meeting.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which,
in such Board's judgment, will not present any conflict of interest with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2. The
Association shall pay Executive as compensation a salary of $117,000 per year
("Base Salary") effective 11/1/2002. Such Base Salary shall be payable in
accordance with the customary payroll practices of the Association. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by the Board or its
Compensation Committee, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to regular salaried employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. However, changes in Association-sponsored group insurance
plan premiums, deductibles, co-payments and related coverage limits or
conditions are excluded from the prior sentence for any such change which is
consistently applied to or available to regular salaried Association employees.
Without limiting the generality of the foregoing provisions of this Subsection
(b), Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to, and on a basis consistent
with, the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan, or pursuant to any arrangement of the Association, in
which Executive is eligible to participate. Nothing paid to the Executive under
any such plan or arrangement will be deemed to be in lieu of other compensation
to which the Executive is entitled under this Agreement, except as provided
under Section 5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from time
to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; or retirement, as defined
in Section 7 hereof; (ii) Executive's resignation from the Association's employ,
upon (A) unless consented to by the Executive, a material change in Executive's
function, duties, or responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Sections 1 and 2, above, (any such
material change shall be deemed a continuing breach of this Agreement), (B) a
relocation of Executive's principal place of employment by more than 35 miles
from its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those being provided
as of the effective date of this Agreement, (C) the liquidation or dissolution
of the Association, or (D) any breach of this Agreement by the Association. Upon
the occurrence of any event described in clauses (A), (B), (C), or (D), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days prior written notice
given within a reasonable period of time not to exceed, except in case of a
continuing breach, four calendar months after the event giving rise to said
right to elect.
(b) Upon the occurrence of an Event of Termination other than for Cause of
for Neglect (as described in Sections 8 and 9 hereof), the Association shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due to the Executive for the
remaining term of the Agreement, including Base Salary, bonuses, and any other
cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Association as of the Date of Termination), to the Executive
for the term of the Agreement provided, however, that if the Association is not
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. All payments made pursuant to this Section 4(b) shall
be paid in substantially equal monthly installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year (determined as of
the Executive's Date of Termination), such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or the Association. For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election, such that individuals who were directors at the beginning of any
twenty-four month period (whether commencing before or after the effective date
of this Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association approve a merger,
consolidation, sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Association or the Company
has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent involuntary termination of employment at any time during
the term of this Agreement (or voluntary termination following a Change of
Control following any demotion, loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the Change in Control), unless such termination is because of his death,
retirement as provided in Section 7, termination for Cause, or termination for
Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
1.50 times the Executive's "base amount," within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended. Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer contributions that
would have been made on the Executive's behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the Association as
of the Date of Termination. Such coverage and payments shall cease upon the
expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association on his behalf, pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Association or the Company on the Executive's behalf to the
extent that such benefits are not otherwise paid to the Executive upon a Change
in Control.
(f) IRS Section 280G Issues. If 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 Company or Association,
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 Company or Association (and their successor) shall be responsible for any
loss of deductibility related thereto; provided, however, that Company or
Association 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 Company or
Association immediately prior to the change in control or such other independent
accounting firm or advisor as may be mutually agreeable to Company or
Association and Executive in the exercise of their reasonable good faith
judgment.
6. TERMINATION FOR DISABILITY.
(a) If the Executive shall become disabled as defined in the Association's
then current disability plan (or, if no such plan is then in effect, if the
Executive is permanently and totally disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician designated by the Board), the
Association may terminate Executive's employment for "Disability."
(b) Upon the Executive's termination of employment for Disability, the
Association will pay Executive, as disability pay, a semi-monthly payment equal
to three-quarters (3/4) of Executive's semi-monthly rate of Base Salary on the
effective date of such termination. These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed prior to his termination for Disability and
pursuant to an employment agreement between Executive and the Association; (ii)
Executive's full-time employment by another employer; (iii) Executive attaining
the age of 65; or (iv) Executive's death; or (v) the expiration of the term of
this Agreement. The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date Executive returns to
the full-time employment of the Association, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Association; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Association of Executive based on "Retirement" shall
mean retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Association or the Company and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Association shall pay to Executive's estate the compensation due
to the Executive through the last day of the calendar month in which his death
occurred.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. In addition, "Termination for Cause" shall include
termination because of the Executive's intentional failure to perform stated
duties, such as the refusal of the Executive to comply with the Association's or
the Company's instructions, policies or rules or other willful conduct of the
Executive which materially adversely reflects on the Association's or the
Company 's reputation or operation. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive shall
not have the right to receive compensation or other benefits for any period
after termination for Cause. Any stock options granted to Executive under any
stock option plan or any unvested awards granted under any other stock benefit
plan of the Association, the Company, or any subsidiary or affiliate thereof,
shall become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 9 hereof, and shall not be exercisable
by Executive at any time subsequent to such Termination for Cause.
9. TERMINATION FOR NEGLECT.
The Association and Company, or either of them may terminate Executive's
employment under this Agreement at any time for Neglect. For purposes of this
Agreement, "Neglect" means the failure of Executive to give due care to stated
duties or to comply with instructions or directives of the Board of Directors of
the Association or Company or either of them, but where such failure is not
determined to be willful or intentional as defined in Section 8. Termination for
Neglect includes termination as the result of any continuing or repeated
problems with Executive's job performance or conduct after written notice
specifying such problem with performance or conduct, and where such continuing
and repeated problems were not determined to be willful or intentional, or where
the conduct was not deemed to have a material adverse impact on the Association
or Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated by Neglect unless and until there shall have been sent to
Executive a copy of a resolution duly adopted by a majority of the Board of
Directors of the Association and Company, or either of them (excluding the
Executive in counting the majority if the Executive is then on the board of
directors, and after reasonable notice to Executive and an opportunity for
Executive to be heard before the board of directors), finding that in the good
faith opinion of the board of directors of the Association and Company, or
either of them, Executive engaged in conduct justifying termination for Neglect
and describing specifically the conduct. Executive shall not have the right to
receive any salary or bonus for any period after termination of employment for
Neglect. Executive shall retain any vested benefits in defined benefit plans,
defined contribution plans, supplemental executive retirement plans, stock
option plans, restricted stock plans, or other such benefits, but shall forfeit
any rights that have not vested.
10. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than as described in Section 8 or
Section 9 of this Agreement, shall not prejudice Executive's right to
compensation or other benefits under this Agreement. Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause as defined in Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the Association's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may, in its discretion, (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the Association is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated (except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Association): (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Association
or when the Association is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
11. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Association will continue
to pay Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
12. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Association
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination. Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the Association and/or the Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Company
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive, Executive's partners,
agents, servants, employers, employees and all persons acting for or with
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 8 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Association and/or the
Company, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Association and/or the Company from pursuing any other remedies
available to the Association and/or the Company for such breach or threatened
breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section, the Association will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
activities of the Association or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein will be construed as prohibiting the Association from pursuing
any other remedies available to the Association for such breach or threatened
breach, including the recovery of damages from Executive.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Company, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to Executive and, if such payments are not timely paid or provided by
the Association, such amounts and benefits shall be paid or provided by the
Company.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect. (b) This Agreement shall be binding upon, and inure to
the benefit of, Executive, the Association, the Company and their respective
successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law or
regulation, the provisions of such law or regulation shall prevail.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association, if successful pursuant to a legal judgment,
arbitration or settlement.
22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suite or proceeding in
which he may be involved by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or liabilities), such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.
The Association and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Association or the
Company, expressly and unconditionally to assume and agree to perform the
Association's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Association or the Company would be
required to perform if no such succession or assignment had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or director of the Association and the
Company, and Executive has signed this Agreement, all on the 19th day of May,
2003.
KLAMATH FIRST BANCORP, INC. KLAMATH FIRST FEDERAL SAVINGS
AND LOAN ASSOCIATION
BY: /s/ Kermit K. Houser BY: /s/ Kermit K. Houser
Kermit K. Houser, President & CEO Kermit K. Houser President & CEO
/s/ Kathryn Rutledge /s/ Craig M Moore
WITNESS: Craig M Moore SVP/Chief Auditor
Exhibit 10(e).2
FIRST AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Association"), Klamath First Bancorp,
Inc., ("Company") and the undersigned executive officer of Association and
Company (the "Executive").
WHEREAS, Association, Company and Executive entered into an Amended and
Restated Employment Agreement dated May 19, 2003, (the "Employment Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger dated as
of July 14, 2003, (the "Merger Agreement") with Sterling Financial Corporation
("Sterling") with respect to a proposed transaction (the "Transaction") whereby
Sterling will acquire all of the outstanding shares of Company common stock in a
stock merger;
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable his change in control of benefits to be
triggered under the Employment Agreement and his Executive Salary Continuation
Agreement, and to enhance the value of shares of common stock of Company owned
by the Executive and the value of his stock options to acquire common stock of
Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise, shall
have the meaning ascribed to them in the Employment Agreement.
2. Section 5(c) of the Employment Agreement is amended in full as follows:
"During the period of July, 2003 through December 2003, the Association
shall pay the Executive $8,333 per month as additional compensation for the
extra services to be performed by the Executive on behalf of Association
and Company to faciliate the transactions contemplated under the Agreement
and Plan of Merger dated July 14, 2003 between Company and Sterling
Financial Corporation. The payments provided in the preceding sentence are
not contingent upon completion of the transactions contemplated under the
Agreement and Plan of Merger, and such payments are being provided to
compensate the Executive for additional services actually being performed
by him."
3. Section 5(c) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as severance pay or
liquidated damages, or both (the "Base Severance Amount"), an amount equal
to $125,500. In the event that all conditions to closing under the Merger
Agreement have been satisfied during calendar year 2003, then Association
shall make payment of the Base Severance Amount plus the Additional
Severance Amount (as defined in Section 5(d) below) to the Executive on
December 31, 2003. In the event such closing conditions are not satisfied
during calendar year 2003, then the payments contemplated herein shall be
made within 10 days after consummation of the merger contemplated by the
Merger Agreement. Notwithstanding the foregoing, if the Executive enters
into a new written employment agreement with Sterling or Sterling Savings
Bank prior to December 31, 2003 (but effective upon completion of the
merger contemplated by the Merger Agreement), then the Severance Amount and
Additional Severance Amount shall not be paid pursuant to the terms hereof
and any severance to be provided to the Executive, if any, shall be set
forth in such new written employment agreement."
Section 5(d) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as additional
severance the amount of $5,750 (the "Additional Severance Amount") in lieu
of any obligation to pay the Executive the value of employer contributions
that would have been made on the Executive's behalf over the remaining term
of the agreement to any tax-qualified retirement plan. The Additional
Severance Amount shall be paid at the time the Base Severance Amount is
paid pursuant to Section 5(c) above. Upon the Executive's termination of
service in connection with or following a Change in Control arising from or
relating to the Merger Agreement, Sterling Savings Bank, as
successor-in-interest to the Association, shall provide the Executive with
continued life, medical, dental and disability coverage as is then provided
by Sterling Savings Bank to its full-time employees, as the same may be
changed from time to time, during the 36 month period next following the
Executive's Date of Termination with the cost to be absorbed by the
Executive being equal to the lesser of (i) the employee cost of coverage
currently being borne by the Executive or (ii) the employee cost of
coverage borne by full-time employees of Sterling Savings Bank receiving
the same coverage; provided if the cost of coverage to be borne by the
Executive is determined under subpart (i), then such cost shall be subject
to pro rata adjustment based upon the pro rata adjustment in cost of
coverage that is borne by full-time employees of Sterling Savings Bank
receiving the same coverage after completion of the merger contemplated by
the Merger Agreement."
4. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall have a right to
participate in the long term medical care program to be implemented by
Association if the Executive meets the eligibility requirements of the
insurer. If the Executive meets the eligibility requirements of the insurer
and becomes a participant in the long term medical care program, then in
that event, his Base Severance Amount shall be reduced by the single
premium cost paid by Association for such long term medical care on behalf
of the Executive (which is estimated to be $33,000) and the Executive shall
have no obligation to reimburse Association for any premium cost relating
to such program after the Executive's termination of employment."
5. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
6. Except as specifically set forth herein, the Employment Agreement shall
continue in full force and effect. To the extent that any provision
contained in this Agreement is inconsistent with any of the provisions of
the Employment Agreement, including but not limited to, Section 5(b)
thereof, the provisions contained in this Agreement shall be controlling.
7. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
8. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
KLAMATH FIRST BANCORP, INC.
By: /s/ Marshall J. Alexander
Marshall J. Alexander
EVP/Chief Financial Officer
EXECUTIVE:
By: /s/ Craig M Moore
Craig M Moore SVP/Chief Auditor
Exhibit 10(e).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
Craig M Moore, an Employee of the Employer (hereinafter referred to as the
"Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate
the Employee's employment. This Agreement shall have no impact or
effect upon any separate written Employment Agreement which the
Employee 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 from, and shall have no effect upon, or be affected
by, the terms and provisions of said Employment Agreement.
Except as otherwise set forth in this Agreement, the term "Employer"
shall mean Klamath First Federal Savings and Loan Association;
provided, further, that for purposes of this Agreement, the term
"Employer" shall mean Klamath First Bancorp, Inc. and its subsidiaries
and affiliated entities, including any parent holding company and its
subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Employee and are
not part of any salary reduction plan or an arrangement deferring a
bonus or a salary increase. The Employee has no option to take any
current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-two ("62") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as
defined above, of the Employee on, or after the Employee achieves
fifty-five (55) years of age, but has not yet reached sixty-two
(62) years of age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-two (62), the Employee shall
be entitled to be paid the "Normal Retirement Benefit" specified
in Schedule A, payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Employee Retires (or on
such later date as may be mutually agreed upon by the Employee
and the Employer in advance of said Retirement date) payable
until the Employee's death. After commencement of payments, the
Normal Retirement Benefit will increase by two percent (2%) per
year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph
III (B) above. In the event the Employee elects to Retire on a
date which constitutes an Early Retirement Date, and said early
retirement is not pursuant to a Change in Control as defined in
paragraph VI below, the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A for the date
the Retirement occurs, but reduced by a factor of one-half of one
percent (.5%) per month for each month or portion thereof that
the Early Retirement occurs prior to the Retirement Date. The
benefit shall be payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by
the Employee and the Employer in advance of such Early Retirement
Date). After commencement of payments, the Early Retirement
benefit will increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's
60th birthday and if the Retirement Date in Section III.A. above
is at age 62, the Normal Retirement Benefit specified in Schedule
"A" as of the Employee's 60th birthday would be reduced by 12%
[.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to
Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to
the Employee's Retirement. In the event that the employment of
the Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining
sixty-two (62) years of age, then this Agreement shall terminate
on the date of such termination of employment; provided, however,
that the Employee shall be entitled to the following benefits as
may be applicable depending upon the circumstances surrounding
the Employee's termination:
(i) Termination for Other Than Disability, Change in Control
or Cause:
If the Employee's employment is terminated by the Employee or by
the Employer for any reason other than Disability, "Change in
Control" or "Termination for Cause," the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A as of the date of termination, payable in
substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-two (62) years of age (or on such later
date as may be mutually agreed upon by the Employee and the
Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon
achieving age fifty-five (55) but before achieving age sixty-two
(62), the Employee may choose to receive the Early Retirement
Benefit with the reductions from the "Normal Retirement Benefit"
as of the date of termination, and as described in Section IV.B.
of this Agreement. The benefit shall be payable in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Early
Retirement Date occurs (or on such later date as may be mutually
agreed upon by the Employee and the Employer not less than
fifteen (15) days prior to such commencement date) payable to the
Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this
Agreement, elect below either the "Lump Sum Payment" or the
"Annuity for Life" option in the event the Employee becomes
disabled at any time after the Effective Date of this Agreement
but prior to Retirement. The term "Disability" or "Disabled"
shall have the same meaning given such terms in any policy of
disability insurance maintained by the Employer for the benefit
of employees including the Employee. In the absence of such a
policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental
or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least
one hundred twenty (120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or date the
Employee otherwise terminated service with the Employer
other than for Cause. The lump sum shall be payable 60 days
from the date the Employer has received a written request to
commence benefits, along with documentation showing that the
Employee has become disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity
from an insurance company with an A. M. Best or Moody's
rating of no less than AA and using the amount of
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or the date the
Employee otherwise terminated service with the Employer
other than for Cause. The Employer shall purchase the
annuity within 60 days from the date the Employer has
received a written request to commence benefits, along with
documentation showing that the Employee has become Disabled.
Nevertheless, if the amount of the applicable "Disability
Benefit" specified in Schedule A is $50,000.00 or less, the
payment shall be as a lump sum to the Employee and not the
purchase of an annuity for life.
(iii) Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please
sign on applicable line):
______________________ Lump Sum Benefit.
/s/ Craig M Moore Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the
"Company") or Klamath First Federal Savings and Loan
Association (the "Association") shall be deemed to occur if
and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association
pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company or the Association representing
25% or more of the combined voting power of the Company's or
the Association's then outstanding securities, (c) the
membership of the board of directors of the Company or the
Association changes as the result of a contested election,
such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or
after the effective date of this Agreement) do not
constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the
Association approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's or
the Association's assets, or a plan of partial or complete
liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is
terminated by the Employer in connection with a Change in
Control, the Employee shall be immediately vested in the
"Normal Retirement Benefit" specified in Schedule A for the
date the Employee achieves age sixty-two (62). The Employee
shall be entitled to be paid the "Change in Control Benefit"
specified in Schedule A, in substantially equal monthly
installments on the first day of each month, beginning no
sooner than the month following the month in which the
Employee attains age fifty-five (55), as requested in
writing by the Employee and delivered to the Employer or its
successor thirty (30) days prior to the commencement of
installment payments; provided, however, that in the event
the Employee does not request a commencement date as
specified, such installments shall be paid on the first day
of each month, beginning with the month following the month
in which the Employee attains sixty-two (62) years of age.
Upon the commencement of payments, the installments shall be
payable until the Employee's death, and shall increase by
two percent (2%) per year.
A termination shall be deemed to be in connection with a
Change in Control if, within two (2) years following the
occurrence of a Change in Control: (a) the Employee's
employment with the Employer is terminated by the Employer
other than a Termination for Cause; or (b) by reason of the
Employer's actions any adverse change occurs in the scope of
the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c)
the Employer causes an event to occur which reasonably
constitutes or results in a demotion, loss of title, a
significant diminution of responsibilities or authority, or
a constructive termination (by forcing a resignation or
otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the
regulatory accounting principles of the Employer's primary
federal regulator. The Employer shall establish an accrued
liability retirement account for the Employee into which
appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark
or entrust any fund or money with which to pay its
obligations under this Employee Plan. The Employee, her or
his beneficiary (ies), or any successor in interest shall be
and remain simply a general creditor of the Employer in the
same manner as any other creditor having a general claim for
matured and unpaid compensation. The Employer reserves the
absolute right, at its sole discretion, to either fund the
obligations undertaken by this Employee Plan or to refrain
from funding the same and to determine the extent, nature
and method of such funding. Should the Employer elect to
fund this Employee Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability
policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Employee
be deemed to have any lien, right, title or interest in any
specific funding investment or assets of the Employer.
If the Employer elects to invest in a life insurance,
disability or annuity policy on the life of the Employee,
then the Employee shall assist the Employer by freely
submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the
Employer and the Employee acknowledge and agree that, in the
event of a Change in Control and at the written request of
the Employee, the Employer 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 Employer in its sole discretion
deems appropriate and in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended
(the "Code") in order to permit the Employer 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
Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Employer's
general creditors until paid to the Employee or its
beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify
or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Employee nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Employer's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Employer and any Successor in
Interest:
The Employer shall not merge or consolidate into or with
another Employer or sell substantially all of its assets to
another Employer, firm or person until such Employer, firm
or person expressly agree, in writing, to assume and
discharge the duties and obligations of the Employer under
this Employee Plan. This Employee Plan shall be binding upon
the parties hereto, their successors, beneficiaries, heirs
and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Employee, this Employee Plan may be
amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Employee and the
Employer.
D. Gender:
Whenever in this Employee Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever
they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the
right of the Employee to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Employer's existing or
future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity
and interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this
Employee Plan 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 Employee Plan shall remain in full force and effect
notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to
discharge the Employee, or restrict the right of the
Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or
the Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: Craig M Moore
7808 Hilyard Avenue
Klamath Falls, OR 97603
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been
afforded the opportunity to consult with independent
advisors of his or her choosing including, without
limitation, accountants or tax advisors and counsel
regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions
which may affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of
the Employee notwithstanding any other term or provision of
this Agreement. The Employee further acknowledges and agrees
that the Employer shall have no liability whatsoever related
to any such personal tax effects or other personal costs,
expenses, or liabilities applicable to the Employee and
further specifically waives any right for the Employee and
his or her heirs, beneficiaries, legal representatives,
agents, successors, and assigns to claim or assert liability
on the part of the Employer related to the matters described
above in this subparagraph. The Employee further
acknowledges and agrees that the Employee has read,
understands and consents to all of the terms and conditions
of this Agreement, and that the Employee enters into this
Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this
Employee Plan shall be Klamath First Bancorp, Inc., until
its resignation or removal by the Board. As Named Fiduciary
and Plan Administrator, the Employer shall be responsible
for the management, control and administration of the
Employee Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation
responsibilities of the Employee Plan including the
employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this
Employee Plan and benefits are not paid to the Employee and
the claimant feels he is 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
provisions of this Employee Plan 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 a
further review of the claim denial is desired. A claim shall
be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid
forty-five-day period.
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 Employee Plan or any documents relating
thereto and submit any written issues and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business,
the parties agree that a representative member, selected by
the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), shall conduct the binding
arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the
other party to this Agreement and with JAMS (or AAA, if
necessary). 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, or if there are
none, the rules of procedure used or established by AAA. Any
award rendered by JAMS or AAA 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
Klamath Falls, Oregon, unless otherwise agreed to by the
parties.
D. 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, the prevailing party
shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees and costs incurred in
connection therewith or in the enforcement or collection of
any judgment or award rendered therein. The "prevailing
party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed,
even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other
payments which the Employee has the right to receive from
the Employer, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Employer (and its
successor) and the Employee each agree to pay their share of
any taxes that may be imposed as a result of payments made
pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount initially
so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Kermit K. Houser /s/ Nin G. Drake
Kermit K. Houser Witness
President and CEO
/s/ Craig M Moore /s/ Kathryn Rutledge
Craig M. Moore SVP/Chief Auditor Witness
EMPLOYEE BENEFIT SCHEDULE
CRAIG MOORE
DATE OF BIRTH: APRIL 3, 1957
HIRED ON: JUNE 16, 1997
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $1,637 NA $0 $1,329,820 $100,000
January 1, 2004 $4,910 NA $7,318 $1,329,820 $100,000
January 1, 2005 $9,820 NA $23,308 $1,329,820 $100,000
January 1, 2006 $16,367 NA $49,491 $1,329,820 $163,670
January 1, 2007 $24,551 NA $87,573 $1,329,820 $245,505
January 1, 2008 $34,371 NA $139,461 $1,329,820 $343,707
January 1, 2009 $45,828 NA $207,287 $1,329,820 $458,276
January 1, 2010 $58,921 NA $293,430 $1,329,820 $589,213
January 1, 2011 $73,652 NA $400,536 $1,329,820 $736,516
January 1, 2012 $81,835 $77,130 $531,550 $1,329,820 $818,351
January 1, 2013 $90,019 $85,108 $627,039 $1,329,820 $900,186
January 1, 2014 $98,202 $93,087 $732,285 $1,329,820 $982,021
January 1, 2015 $106,386 $101,066 $848,128 $1,329,820 $1,063,856
January 1, 2016 $114,569 $109,045 $975,475 $1,329,820 $1,145,691
January 1, 2017 $122,753 $117,024 $1,115,305 $1,329,820 $1,227,526
January 1, 2018 $130,936 $125,003 $1,268,673 $1,329,820 $1,309,361
January 1, 2019 $132,982 $132,982 $1,436,716 $1,329,820 $1,329,820
and thereafter $132,982 $132,982 NA see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-two (62). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ Craig M Moore 5/14/03 /s/ Kermit K. Houser 5/19/03
Craig M Moore Date Bank Officer Date
Exhibit 10(e).4
FIRST AMENDMENT TO executive salary continuation AGREEMENT
This FIRST AMENDMENT TO EXECUTIVE SALARY CONTINUATION AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Employer") and the undersigned executive
officer of Employer ("Employee").
WHEREAS, Employer and Employee entered into an Executive Salary
Continuation Agreement (the "SCA") effective January 1, 2003;
WHEREAS, Klamath First Bancorp, Inc. ("Company"), the parent company of
Employer, has entered into an Agreement and Plan of Merger dated as of July 14,
2003, (the "Merger Agreement") with Sterling Financial Corporation ("Sterling")
with respect to a proposed transaction (the "Transaction") whereby Sterling will
acquire all of the outstanding shares of Company common stock in a stock merger;
WHEREAS, Employer desire to enter into this Agreement to facilitate the
Transaction; and
WHEREAS, Employee desires to enter into this Agreement to facilitate the
Transaction so as to enable Employee (a) to receive a cash-out of his benefits
under the SCA as provided herein, (b) to receive change in control benefits
under his employment agreement and (c) to enhance the value of shares of common
stock of Company owned by Employee and the value of his stock options to acquire
common stock of Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Notwithstanding anything contained in the SCA to the contrary, Employer
shall have the right to pay Employee at any time from the date hereof
through December 31, 2003 the amount of $606,309 less all tax
withholding obligations with respect thereto (the "Cash-Out Amount") in
full and complete satisfaction of all obligations of Employer under the SCA
and all rights of Employee under the SCA. Upon Employer making payment of
the Cash-Out Amount to Employee as provided herein, the SCA shall terminate
and shall have no further force or effect.
2. Upon payment of the Cash-Out Amount to Employee by Employer as provided in
paragraph 1 above, Employee does hereby release and forever discharge
Employer, its affiliates, and their respective assigns, directors,
officers, employees and agents from any and all claims, demands, causes of
action and rights that Employee has or might have under the SCA of any kind
or character whatsoever, whether known or unknown.
3. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
4. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and both of which,
taken together, shall constitute one and the same agreement.
The parties have executed this Agreement on the day and year first above
written.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
EMPLOYEE:
By: /s/ Craig M Moore
Craig M Moore SVP/Chief Auditor
Exhibit 10(f).1
EMPLOYMENT AGREEMENT
Amended and Restated May 13, 2003
THIS AGREEMENT is made effective as of October 1, 2002, by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"), Klamath
Falls, Oregon; KLAMATH FIRST BANCORP, INC. (the "Company"), an Oregon
corporation; and James E. Essany (the "Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Association
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Senior Vice President of the Association. During said period, Executive also
agrees to serve, if elected, as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of twenty-four (24)
full calendar months thereafter. Commencing on the first anniversary date, and
continuing at each anniversary date thereafter, the Board of Directors of the
Association (the "Board") or its Compensation Committee may extend the Agreement
for an additional year. Prior to the extension of the Agreement as provided
herein, the Board of Directors of the Association will review the Executive's
performance evaluation for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board's meeting.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which,
in such Board's judgment, will not present any conflict of interest with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2. The
Association shall pay Executive as compensation a salary of $95,000 per year
("Base Salary") effective 11/1/2002. Such Base Salary shall be payable in
accordance with the customary payroll practices of the Association. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by the Board or its
Compensation Committee, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to regular salaried employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. However, changes in Association-sponsored group insurance
plan premiums, deductibles, co-payments and related coverage limits or
conditions are excluded from the prior sentence for any such change which is
consistently applied to or available to regular salaried Association employees.
Without limiting the generality of the foregoing provisions of this Subsection
(b), Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to, and on a basis consistent
with, the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan, or pursuant to any arrangement of the Association, in
which Executive is eligible to participate. Nothing paid to the Executive under
any such plan or arrangement will be deemed to be in lieu of other compensation
to which the Executive is entitled under this Agreement, except as provided
under Section 5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from time
to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; or retirement, as defined
in Section 7 hereof; (ii) Executive's resignation from the Association's employ,
upon (A) unless consented to by the Executive, a material change in Executive's
function, duties, or responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Sections 1 and 2, above, (any such
material change shall be deemed a continuing breach of this Agreement), (B) a
relocation of Executive's principal place of employment by more than 35 miles
from its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those being provided
as of the effective date of this Agreement, (C) the liquidation or dissolution
of the Association, or (D) any breach of this Agreement by the Association. Upon
the occurrence of any event described in clauses (A), (B), (C), or (D), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days prior written notice
given within a reasonable period of time not to exceed, except in case of a
continuing breach, four calendar months after the event giving rise to said
right to elect.
(b) Upon the occurrence of an Event of Termination other than for Cause of
for Neglect (as described in Sections 8 and 9 hereof), the Association shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due to the Executive for the
remaining term of the Agreement, including Base Salary, bonuses, and any other
cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Association as of the Date of Termination), to the Executive
for the term of the Agreement provided, however, that if the Association is not
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. All payments made pursuant to this Section 4(b) shall
be paid in substantially equal monthly installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year (determined as of
the Executive's Date of Termination), such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or the Association. For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election, such that individuals who were directors at the beginning of any
twenty-four month period (whether commencing before or after the effective date
of this Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association approve a merger,
consolidation, sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Association or the Company
has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent involuntary termination of employment at any time during
the term of this Agreement (or voluntary termination following a Change of
Control following any demotion, loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the Change in Control), unless such termination is because of his death,
retirement as provided in Section 7, termination for Cause, or termination for
Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
1.50 times the Executive's "base amount," within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended. Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer contributions that
would have been made on the Executive's behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the Association as
of the Date of Termination. Such coverage and payments shall cease upon the
expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association on his behalf, pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Association or the Company on the Executive's behalf to the
extent that such benefits are not otherwise paid to the Executive upon a Change
in Control.
(f) IRS Section 280G Issues. If 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 Company or Association,
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 Company or Association (and their successor) shall be responsible for any
loss of deductibility related thereto; provided, however, that Company or
Association 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 Company or
Association immediately prior to the change in control or such other independent
accounting firm or advisor as may be mutually agreeable to Company or
Association and Executive in the exercise of their reasonable good faith
judgment.
6. TERMINATION FOR DISABILITY.
(a) If the Executive shall become disabled as defined in the Association's
then current disability plan (or, if no such plan is then in effect, if the
Executive is permanently and totally disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician designated by the Board), the
Association may terminate Executive's employment for "Disability."
(b) Upon the Executive's termination of employment for Disability, the
Association will pay Executive, as disability pay, a semi-monthly payment equal
to three-quarters (3/4) of Executive's semi-monthly rate of Base Salary on the
effective date of such termination. These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed prior to his termination for Disability and
pursuant to an employment agreement between Executive and the Association; (ii)
Executive's full-time employment by another employer; (iii) Executive attaining
the age of 65; or (iv) Executive's death; or (v) the expiration of the term of
this Agreement. The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date Executive returns to
the full-time employment of the Association, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Association; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Association of Executive based on "Retirement" shall
mean retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Association or the Company and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Association shall pay to Executive's estate the compensation due
to the Executive through the last day of the calendar month in which his death
occurred.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. In addition, "Termination for Cause" shall include
termination because of the Executive's intentional failure to perform stated
duties, such as the refusal of the Executive to comply with the Association's or
the Company's instructions, policies or rules or other willful conduct of the
Executive which materially adversely reflects on the Association's or the
Company 's reputation or operation. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive shall
not have the right to receive compensation or other benefits for any period
after termination for Cause. Any stock options granted to Executive under any
stock option plan or any unvested awards granted under any other stock benefit
plan of the Association, the Company, or any subsidiary or affiliate thereof,
shall become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 9 hereof, and shall not be exercisable
by Executive at any time subsequent to such Termination for Cause.
9. TERMINATION FOR NEGLECT.
The Association and Company, or either of them may terminate Executive's
employment under this Agreement at any time for Neglect. For purposes of this
Agreement, "Neglect" means the failure of Executive to give due care to stated
duties or to comply with instructions or directives of the Board of Directors of
the Association or Company or either of them, but where such failure is not
determined to be willful or intentional as defined in Section 8. Termination for
Neglect includes termination as the result of any continuing or repeated
problems with Executive's job performance or conduct after written notice
specifying such problem with performance or conduct, and where such continuing
and repeated problems were not determined to be willful or intentional, or where
the conduct was not deemed to have a material adverse impact on the Association
or Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated by Neglect unless and until there shall have been sent to
Executive a copy of a resolution duly adopted by a majority of the Board of
Directors of the Association and Company, or either of them (excluding the
Executive in counting the majority if the Executive is then on the board of
directors, and after reasonable notice to Executive and an opportunity for
Executive to be heard before the board of directors), finding that in the good
faith opinion of the board of directors of the Association and Company, or
either of them, Executive engaged in conduct justifying termination for Neglect
and describing specifically the conduct. Executive shall not have the right to
receive any salary or bonus for any period after termination of employment for
Neglect. Executive shall retain any vested benefits in defined benefit plans,
defined contribution plans, supplemental executive retirement plans, stock
option plans, restricted stock plans, or other such benefits, but shall forfeit
any rights that have not vested.
10. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than as described in Section 8 or
Section 9 of this Agreement, shall not prejudice Executive's right to
compensation or other benefits under this Agreement. Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause as defined in Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the Association's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may, in its discretion, (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the Association is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated (except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Association): (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Association
or when the Association is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
11. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Association will continue
to pay Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
12. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Association
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination. Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the Association and/or the Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Company
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive, Executive's partners,
agents, servants, employers, employees and all persons acting for or with
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 8 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Association and/or the
Company, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Association and/or the Company from pursuing any other remedies
available to the Association and/or the Company for such breach or threatened
breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section, the Association will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
activities of the Association or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein will be construed as prohibiting the Association from pursuing
any other remedies available to the Association for such breach or threatened
breach, including the recovery of damages from Executive.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Company, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to Executive and, if such payments are not timely paid or provided by
the Association, such amounts and benefits shall be paid or provided by the
Company.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect. (b) This Agreement shall be binding upon, and inure to
the benefit of, Executive, the Association, the Company and their respective
successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law or
regulation, the provisions of such law or regulation shall prevail.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association, if successful pursuant to a legal judgment,
arbitration or settlement.
22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suite or proceeding in
which he may be involved by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or liabilities), such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.
The Association and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Association or the
Company, expressly and unconditionally to assume and agree to perform the
Association's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Association or the Company would be
required to perform if no such succession or assignment had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or director of the Association and the
Company, and Executive has signed this Agreement, all on the 19th day of May,
2003.
KLAMATH FIRST BANCORP, INC. KLAMATH FIRST FEDERAL SAVINGS
AND LOAN ASSOCIATION
BY: /s/ Kermit K. Houser BY: /s/ Kermit Houser
Kermit K. Houser, President & CEO Kermit K. Houser President & CEO
/s/ Kathryn Rutledge /s/ James E. Essany
WITNESS: James E. Essany SVP/Marketing
Exhibit 10(f).2
FIRST AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Association"), Klamath First Bancorp,
Inc., ("Company") and the undersigned executive officer of Association and
Company (the "Executive").
WHEREAS, Association, Company and Executive entered into an Amended and
Restated Employment Agreement dated May 19, 2003, (the "Employment Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger dated as
of July 14, 2003, (the "Merger Agreement") with Sterling Financial Corporation
("Sterling") with respect to a proposed transaction (the "Transaction") whereby
Sterling will acquire all of the outstanding shares of Company common stock in a
stock merger;
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable his change in control of benefits to be
triggered under the Employment Agreement and his Executive Salary Continuation
Agreement, and to enhance the value of shares of common stock of Company owned
by the Executive and the value of his stock options to acquire common stock of
Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise, shall
have the meaning ascribed to them in the Employment Agreement.
2. Section 5(c) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as severance pay or
liquidated damages, or both (the "Base Severance Amount"), an amount equal
to $142,500. In the event that all conditions to closing under the Merger
Agreement have been satisfied during calendar year 2003, then Association
shall make payment of the Base Severance Amount plus the Additional
Severance Amount (as defined in Section 5(d) below) to the Executive on
December 31, 2003. In the event such closing conditions are not satisfied
during calendar year 2003, then the payments contemplated herein shall be
made within 10 days after consummation of the merger contemplated by the
Merger Agreement. Notwithstanding the foregoing, if the Executive enters
into a new written employment agreement with Sterling or Sterling Savings
Bank prior to December 31, 2003 (but effective upon completion of the
merger contemplated by the Merger Agreement), then the Severance Amount and
Additional Severance Amount shall not be paid pursuant to the terms hereof
and any severance to be provided to the Executive, if any, shall be set
forth in such new written employment agreement."
Section 5(d) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as additional
severance the amount of $5,750 (the "Additional Severance Amount") in lieu
of any obligation to pay the Executive the value of employer contributions
that would have been made on the Executive's behalf over the remaining term
of the agreement to any tax-qualified retirement plan. The Additional
Severance Amount shall be paid at the time the Base Severance Amount is
paid pursuant to Section 5(c) above. Upon the Executive's termination of
service in connection with or following a Change in Control arising from or
relating to the Merger Agreement, Sterling Savings Bank, as
successor-in-interest to the Association, shall provide the Executive with
continued life, medical, dental and disability coverage as is then provided
by Sterling Savings Bank to its full-time employees, as the same may be
changed from time to time, during the 36 month period next following the
Executive's Date of Termination with the cost to be absorbed by the
Executive being equal to the lesser of (i) the employee cost of coverage
currently being borne by the Executive or (ii) the employee cost of
coverage borne by full-time employees of Sterling Savings Bank receiving
the same coverage; provided if the cost of coverage to be borne by the
Executive is determined under subpart (i), then such cost shall be subject
to pro rata adjustment based upon the pro rata adjustment in cost of
coverage that is borne by full-time employees of Sterling Savings Bank
receiving the same coverage after completion of the merger contemplated by
the Merger Agreement."
3. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall not have a right to
participate in the long term medical care program to be implemented by
Association."
4. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
5. Except as specifically set forth herein, the Employment Agreement shall
continue in full force and effect. To the extent that any provision
contained in this Agreement is inconsistent with any of the provisions of
the Employment Agreement, including but not limited to, Section 5(b)
thereof, the provisions contained in this Agreement shall be controlling.
6. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
7. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
KLAMATH FIRST BANCORP, INC.
By: /s/ Craig M Moore
Craig M Moore
SVP/Chief Auditor
EXECUTIVE:
By: /s/ James E. Essany
James E. Essany SVP/Marketing
Exhibit 10(f).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
James E. Essany, an Employee of the Employer (hereinafter referred to as the
"Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate
the Employee's employment. This Agreement shall have no impact or
effect upon any separate written Employment Agreement which the
Employee 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 from, and shall have no effect upon, or be affected
by, the terms and provisions of said Employment Agreement.
Except as otherwise set forth in this Agreement, the term "Employer"
shall mean Klamath First Federal Savings and Loan Association;
provided, further, that for purposes of this Agreement, the term
"Employer" shall mean Klamath First Bancorp, Inc. and its subsidiaries
and affiliated entities, including any parent holding company and its
subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Employee and are
not part of any salary reduction plan or an arrangement deferring a
bonus or a salary increase. The Employee has no option to take any
current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-two ("62") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as
defined above, of the Employee on, or after the Employee achieves
fifty-five (55) years of age, but has not yet reached sixty-two
(62) years of age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-two (62), the Employee shall
be entitled to be paid the "Normal Retirement Benefit" specified
in Schedule A, payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Employee Retires (or on
such later date as may be mutually agreed upon by the Employee
and the Employer in advance of said Retirement date) payable
until the Employee's death. After commencement of payments, the
Normal Retirement Benefit will increase by two percent (2%) per
year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph
III (B) above. In the event the Employee elects to Retire on a
date which constitutes an Early Retirement Date, and said early
retirement is not pursuant to a Change in Control as defined in
paragraph VI below, the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A for the date
the Retirement occurs, but reduced by a factor of one-half of one
percent (.5%) per month for each month or portion thereof that
the Early Retirement occurs prior to the Retirement Date. The
benefit shall be payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by
the Employee and the Employer in advance of such Early Retirement
Date). After commencement of payments, the Early Retirement
benefit will increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's
60th birthday and if the Retirement Date in Section III.A. above
is at age 62, the Normal Retirement Benefit specified in Schedule
"A" as of the Employee's 60th birthday would be reduced by 12%
[.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to
Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to
the Employee's Retirement. In the event that the employment of
the Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining
sixty-two (62) years of age, then this Agreement shall terminate
on the date of such termination of employment; provided, however,
that the Employee shall be entitled to the following benefits as
may be applicable depending upon the circumstances surrounding
the Employee's termination:
(i) Termination for Other Than Disability, Change in Control
or Cause:
If the Employee's employment is terminated by the Employee or by
the Employer for any reason other than Disability, "Change in
Control" or "Termination for Cause," the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A as of the date of termination, payable in
substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-two (62) years of age (or on such later
date as may be mutually agreed upon by the Employee and the
Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon
achieving age fifty-five (55) but before achieving age sixty-two
(62), the Employee may choose to receive the Early Retirement
Benefit with the reductions from the "Normal Retirement Benefit"
as of the date of termination, and as described in Section IV.B.
of this Agreement. The benefit shall be payable in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Early
Retirement Date occurs (or on such later date as may be mutually
agreed upon by the Employee and the Employer not less than
fifteen (15) days prior to such commencement date) payable to the
Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this
Agreement, elect below either the "Lump Sum Payment" or the
"Annuity for Life" option in the event the Employee becomes
disabled at any time after the Effective Date of this Agreement
but prior to Retirement. The term "Disability" or "Disabled"
shall have the same meaning given such terms in any policy of
disability insurance maintained by the Employer for the benefit
of employees including the Employee. In the absence of such a
policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental
or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least
one hundred twenty (120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or date the
Employee otherwise terminated service with the Employer
other than for Cause. The lump sum shall be payable 60 days
from the date the Employer has received a written request to
commence benefits, along with documentation showing that the
Employee has become disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity
from an insurance company with an A. M. Best or Moody's
rating of no less than AA and using the amount of
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or the date the
Employee otherwise terminated service with the Employer
other than for Cause. The Employer shall purchase the
annuity within 60 days from the date the Employer has
received a written request to commence benefits, along with
documentation showing that the Employee has become Disabled.
Nevertheless, if the amount of the applicable "Disability
Benefit" specified in Schedule A is $50,000.00 or less, the
payment shall be as a lump sum to the Employee and not the
purchase of an annuity for life.
(iii) Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please
sign on applicable line):
/s/ James E. Essany Lump Sum Benefit.
___________________ Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the
"Company") or Klamath First Federal Savings and Loan
Association (the "Association") shall be deemed to occur if
and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association
pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company or the Association representing
25% or more of the combined voting power of the Company's or
the Association's then outstanding securities, (c) the
membership of the board of directors of the Company or the
Association changes as the result of a contested election,
such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or
after the effective date of this Agreement) do not
constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the
Association approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's or
the Association's assets, or a plan of partial or complete
liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is
terminated by the Employer in connection with a Change in
Control, the Employee shall be immediately vested in the
"Normal Retirement Benefit" specified in Schedule A for the
date the Employee achieves age sixty-two (62). The Employee
shall be entitled to be paid the "Change in Control Benefit"
specified in Schedule A, in substantially equal monthly
installments on the first day of each month, beginning no
sooner than the month following the month in which the
Employee attains age fifty-five (55), as requested in
writing by the Employee and delivered to the Employer or its
successor thirty (30) days prior to the commencement of
installment payments; provided, however, that in the event
the Employee does not request a commencement date as
specified, such installments shall be paid on the first day
of each month, beginning with the month following the month
in which the Employee attains sixty-two (62) years of age.
Upon the commencement of payments, the installments shall be
payable until the Employee's death, and shall increase by
two percent (2%) per year.
A termination shall be deemed to be in connection with a
Change in Control if, within two (2) years following the
occurrence of a Change in Control: (a) the Employee's
employment with the Employer is terminated by the Employer
other than a Termination for Cause; or (b) by reason of the
Employer's actions any adverse change occurs in the scope of
the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c)
the Employer causes an event to occur which reasonably
constitutes or results in a demotion, loss of title, a
significant diminution of responsibilities or authority, or
a constructive termination (by forcing a resignation or
otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the
regulatory accounting principles of the Employer's primary
federal regulator. The Employer shall establish an accrued
liability retirement account for the Employee into which
appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark
or entrust any fund or money with which to pay its
obligations under this Employee Plan. The Employee, her or
his beneficiary (ies), or any successor in interest shall be
and remain simply a general creditor of the Employer in the
same manner as any other creditor having a general claim for
matured and unpaid compensation. The Employer reserves the
absolute right, at its sole discretion, to either fund the
obligations undertaken by this Employee Plan or to refrain
from funding the same and to determine the extent, nature
and method of such funding. Should the Employer elect to
fund this Employee Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability
policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Employee
be deemed to have any lien, right, title or interest in any
specific funding investment or assets of the Employer.
If the Employer elects to invest in a life insurance,
disability or annuity policy on the life of the Employee,
then the Employee shall assist the Employer by freely
submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the
Employer and the Employee acknowledge and agree that, in the
event of a Change in Control and at the written request of
the Employee, the Employer 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 Employer in its sole discretion
deems appropriate and in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended
(the "Code") in order to permit the Employer 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
Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Employer's
general creditors until paid to the Employee or its
beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify
or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Employee nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Employer's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Employer and any Successor in
Interest:
The Employer shall not merge or consolidate into or with
another Employer or sell substantially all of its assets to
another Employer, firm or person until such Employer, firm
or person expressly agree, in writing, to assume and
discharge the duties and obligations of the Employer under
this Employee Plan. This Employee Plan shall be binding upon
the parties hereto, their successors, beneficiaries, heirs
and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Employee, this Employee Plan may be
amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Employee and the
Employer.
D. Gender:
Whenever in this Employee Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever
they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the
right of the Employee to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Employer's existing or
future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity
and interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this
Employee Plan 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 Employee Plan shall remain in full force and effect
notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to
discharge the Employee, or restrict the right of the
Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or
the Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: James E. Essany
6133 Coopers Hawk Road
Klamath Falls, OR 97601
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been
afforded the opportunity to consult with independent
advisors of his or her choosing including, without
limitation, accountants or tax advisors and counsel
regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions
which may affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of
the Employee notwithstanding any other term or provision of
this Agreement. The Employee further acknowledges and agrees
that the Employer shall have no liability whatsoever related
to any such personal tax effects or other personal costs,
expenses, or liabilities applicable to the Employee and
further specifically waives any right for the Employee and
his or her heirs, beneficiaries, legal representatives,
agents, successors, and assigns to claim or assert liability
on the part of the Employer related to the matters described
above in this subparagraph. The Employee further
acknowledges and agrees that the Employee has read,
understands and consents to all of the terms and conditions
of this Agreement, and that the Employee enters into this
Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this
Employee Plan shall be Klamath First Bancorp, Inc., until
its resignation or removal by the Board. As Named Fiduciary
and Plan Administrator, the Employer shall be responsible
for the management, control and administration of the
Employee Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation
responsibilities of the Employee Plan including the
employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this
Employee Plan and benefits are not paid to the Employee and
the claimant feels he is 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
provisions of this Employee Plan 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 a
further review of the claim denial is desired. A claim shall
be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid
forty-five-day period.
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 Employee Plan or any documents relating
thereto and submit any written issues and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business,
the parties agree that a representative member, selected by
the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), shall conduct the binding
arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the
other party to this Agreement and with JAMS (or AAA, if
necessary). 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, or if there are
none, the rules of procedure used or established by AAA. Any
award rendered by JAMS or AAA 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
Klamath Falls, Oregon, unless otherwise agreed to by the
parties.
D. 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, the prevailing party
shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees and costs incurred in
connection therewith or in the enforcement or collection of
any judgment or award rendered therein. The "prevailing
party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed,
even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other
payments which the Employee has the right to receive from
the Employer, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Employer (and its
successor) and the Employee each agree to pay their share of
any taxes that may be imposed as a result of payments made
pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount initially
so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Kermit K. Houser /s/ Nina G. Drake
Kermit K. Houser Witness
President and CEO
/s/ James E. Essany /s/ Kathryn Rutledge
James E. Essany SVP/Marketing Witness
SCHEDULE A
EMPLOYEE BENEFIT SCHEDULE
JAMES ESSANY
DATE OF BIRTH: SEPTEMBER 20, 1954
HIRED ON: MAY 15, 2000
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $1,393 NA $0 $957,420 $100,000
January 1, 2004 $4,178 NA $7,268 $957,420 $100,000
January 1, 2005 $8,356 NA $23,148 $957,420 $100,000
January 1, 2006 $13,926 NA $49,151 $957,420 $139,261
January 1, 2007 $20,889 NA $86,971 $957,420 $208,892
January 1, 2008 $29,245 NA $138,503 $957,420 $292,448
January 1, 2009 $38,993 $55,530 $205,864 $957,420 $389,931
January 1, 2010 $50,134 $61,275 $291,415 $957,420 $501,340
January 1, 2011 $62,667 $67,019 $397,786 $957,420 $626,675
January 1, 2012 $69,631 $72,764 $527,901 $957,420 $696,305
January 1, 2013 $76,594 $78,508 $622,734 $957,420 $765,936
January 1, 2014 $83,557 $84,253 $727,258 $957,420 $835,567
January 1, 2015 $90,520 $89,997 $842,305 $957,420 $905,197
January 1, 2016 $95,742 $95,742 $968,778 $957,420 $957,420
and thereafter $95,742 $95,742 NA see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-two (62). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ James E. Essany 5/13/03 /s/ Kermit K. Houser 5/19/03
James E. Essany Date Bank Officer Date
Exhibit 10(f).4
FIRST AMENDMENT TO executive salary continuation AGREEMENT
This FIRST AMENDMENT TO EXECUTIVE SALARY CONTINUATION AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Employer") and the undersigned executive
officer of Employer ("Employee").
WHEREAS, Employer and Employee entered into an Executive Salary
Continuation Agreement (the "SCA") effective January 1, 2003;
WHEREAS, Klamath First Bancorp, Inc. ("Company"), the parent company of
Employer, has entered into an Agreement and Plan of Merger dated as of July 14,
2003, (the "Merger Agreement") with Sterling Financial Corporation ("Sterling")
with respect to a proposed transaction (the "Transaction") whereby Sterling will
acquire all of the outstanding shares of Company common stock in a stock merger;
WHEREAS, Employer desire to enter into this Agreement to facilitate the
Transaction; and
WHEREAS, Employee desires to enter into this Agreement to facilitate the
Transaction so as to enable Employee (a) to receive a cash-out of his benefits
under the SCA as provided herein, (b) to receive change in control benefits
under his employment agreement and (c) to enhance the value of shares of common
stock of Company owned by Employee and the value of his stock options to acquire
common stock of Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Notwithstanding anything contained in the SCA to the contrary, Employer
shall have the right to pay Employee at any time from the date hereof
through December 31, 2003 the amount of $524,293 less all tax
withholding obligations with respect thereto (the "Cash-Out Amount") in
full and complete satisfaction of all obligations of Employer under the SCA
and all rights of Employee under the SCA. Upon Employer making payment of
the Cash-Out Amount to Employee as provided herein, the SCA shall terminate
and shall have no further force or effect.
2. Upon payment of the Cash-Out Amount to Employee by Employer as provided in
paragraph 1 above, Employee does hereby release and forever discharge
Employer, its affiliates, and their respective assigns, directors,
officers, employees and agents from any and all claims, demands, causes of
action and rights that Employee has or might have under the SCA of any kind
or character whatsoever, whether known or unknown.
3. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
4. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and both of which,
taken together, shall constitute one and the same agreement.
The parties have executed this Agreement on the day and year first above
written.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
EMPLOYEE:
By: James E. Essany
James E. Essany SVP/Marketing
Exhibit 10(g).1
EMPLOYMENT AGREEMENT
Amended and Restated May 21, 2003
THIS AGREEMENT is made effective as of January 2, 2003, by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"), Klamath
Falls, Oregon; KLAMATH FIRST BANCORP, INC. (the "Company"), an Oregon
corporation; and Walter F. Dodrill (the "Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Association
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Senior Vice President of the Association. During said period, Executive also
agrees to serve, if elected, as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of twenty-four (24)
full calendar months thereafter. Commencing on the first anniversary date, and
continuing at each anniversary date thereafter, the Board of Directors of the
Association (the "Board") or its Compensation Committee may extend the Agreement
for an additional year. Prior to the extension of the Agreement as provided
herein, the Board of Directors of the Association will review the Executive's
performance evaluation for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board's meeting.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which,
in such Board's judgment, will not present any conflict of interest with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2. The
Association shall pay Executive as compensation a salary of $119,000 per year
("Base Salary"). Such Base Salary shall be payable in accordance with the
customary payroll practices of the Association. During the period of this
Agreement, Executive's Base Salary shall be reviewed at least annually; the
first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by the Board or its Compensation
Committee, and the Board may increase Executive's Base Salary. In addition to
the Base Salary provided in this Section 3(a), the Association shall provide
Executive at no cost to Executive with all such other benefits as are provided
uniformly to regular salaried employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. However, changes in Association-sponsored group insurance
plan premiums, deductibles, co-payments and related coverage limits or
conditions are excluded from the prior sentence for any such change which is
consistently applied to or available to regular salaried Association employees.
Without limiting the generality of the foregoing provisions of this Subsection
(b), Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to, and on a basis consistent
with, the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan, or pursuant to any arrangement of the Association, in
which Executive is eligible to participate. Nothing paid to the Executive under
any such plan or arrangement will be deemed to be in lieu of other compensation
to which the Executive is entitled under this Agreement, except as provided
under Section 5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from time
to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; or retirement, as defined
in Section 7 hereof; (ii) Executive's resignation from the Association's employ,
upon (A) unless consented to by the Executive, a material change in Executive's
function, duties, or responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Sections 1 and 2, above, (any such
material change shall be deemed a continuing breach of this Agreement), (B) a
relocation of Executive's principal place of employment by more than 35 miles
from its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those being provided
as of the effective date of this Agreement, (C) the liquidation or dissolution
of the Association, or (D) any breach of this Agreement by the Association. Upon
the occurrence of any event described in clauses (A), (B), (C), or (D), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days prior written notice
given within a reasonable period of time not to exceed, except in case of a
continuing breach, four calendar months after the event giving rise to said
right to elect.
(b) Upon the occurrence of an Event of Termination other than for Cause of
for Neglect (as described in Sections 8 and 9 hereof), the Association shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due to the Executive for the
remaining term of the Agreement, including Base Salary, bonuses, and any other
cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Association as of the Date of Termination), to the Executive
for the term of the Agreement provided, however, that if the Association is not
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. All payments made pursuant to this Section 4(b) shall
be paid in substantially equal monthly installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year (determined as of
the Executive's Date of Termination), such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or the Association. For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election, such that individuals who were directors at the beginning of any
twenty-four month period (whether commencing before or after the effective date
of this Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association approve a merger,
consolidation, sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Association or the Company
has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent involuntary termination of employment at any time during
the term of this Agreement (or voluntary termination following a Change of
Control following any demotion, loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the Change in Control), unless such termination is because of his death,
retirement as provided in Section 7, termination for Cause, or termination for
Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
1.50 times the Executive's "base amount," within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended. Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer contributions that
would have been made on the Executive's behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the Association as
of the Date of Termination. Such coverage and payments shall cease upon the
expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association on his behalf, pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Association or the Company on the Executive's behalf to the
extent that such benefits are not otherwise paid to the Executive upon a Change
in Control.
(f) IRS Section 280G Issues. If 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 Company or Association,
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 Company or Association (and their successor) shall be responsible for any
loss of deductibility related thereto; provided, however, that Company or
Association 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 Company or
Association immediately prior to the change in control or such other independent
accounting firm or advisor as may be mutually agreeable to Company or
Association and Executive in the exercise of their reasonable good faith
judgment.
6. TERMINATION FOR DISABILITY.
(a) If the Executive shall become disabled as defined in the Association's
then current disability plan (or, if no such plan is then in effect, if the
Executive is permanently and totally disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician designated by the Board), the
Association may terminate Executive's employment for "Disability."
(b) Upon the Executive's termination of employment for Disability, the
Association will pay Executive, as disability pay, a semi-monthly payment equal
to three-quarters (3/4) of Executive's semi-monthly rate of Base Salary on the
effective date of such termination. These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed prior to his termination for Disability and
pursuant to an employment agreement between Executive and the Association; (ii)
Executive's full-time employment by another employer; (iii) Executive attaining
the age of 65; or (iv) Executive's death; or (v) the expiration of the term of
this Agreement. The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date Executive returns to
the full-time employment of the Association, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Association; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Association of Executive based on "Retirement" shall
mean retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Association or the Company and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Association shall pay to Executive's estate the compensation due
to the Executive through the last day of the calendar month in which his death
occurred.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. In addition, "Termination for Cause" shall include
termination because of the Executive's intentional failure to perform stated
duties, such as the refusal of the Executive to comply with the Association's or
the Company's instructions, policies or rules or other willful conduct of the
Executive which materially adversely reflects on the Association's or the
Company 's reputation or operation. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive shall
not have the right to receive compensation or other benefits for any period
after termination for Cause. Any stock options granted to Executive under any
stock option plan or any unvested awards granted under any other stock benefit
plan of the Association, the Company, or any subsidiary or affiliate thereof,
shall become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 9 hereof, and shall not be exercisable
by Executive at any time subsequent to such Termination for Cause.
9. TERMINATION FOR NEGLECT.
The Association and Company, or either of them may terminate Executive's
employment under this Agreement at any time for Neglect. For purposes of this
Agreement, "Neglect" means the failure of Executive to give due care to stated
duties or to comply with instructions or directives of the Board of Directors of
the Association or Company or either of them, but where such failure is not
determined to be willful or intentional as defined in Section 8. Termination for
Neglect includes termination as the result of any continuing or repeated
problems with Executive's job performance or conduct after written notice
specifying such problem with performance or conduct, and where such continuing
and repeated problems were not determined to be willful or intentional, or where
the conduct was not deemed to have a material adverse impact on the Association
or Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated by Neglect unless and until there shall have been sent to
Executive a copy of a resolution duly adopted by a majority of the Board of
Directors of the Association and Company, or either of them (excluding the
Executive in counting the majority if the Executive is then on the board of
directors, and after reasonable notice to Executive and an opportunity for
Executive to be heard before the board of directors), finding that in the good
faith opinion of the board of directors of the Association and Company, or
either of them, Executive engaged in conduct justifying termination for Neglect
and describing specifically the conduct. Executive shall not have the right to
receive any salary or bonus for any period after termination of employment for
Neglect. Executive shall retain any vested benefits in defined benefit plans,
defined contribution plans, supplemental executive retirement plans, stock
option plans, restricted stock plans, or other such benefits, but shall forfeit
any rights that have not vested.
10. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than as described in Section 8 or
Section 9 of this Agreement, shall not prejudice Executive's right to
compensation or other benefits under this Agreement. Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause as defined in Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the Association's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may, in its discretion, (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the Association is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated (except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Association): (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Association
or when the Association is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
11. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Association will continue
to pay Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
12. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Association
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination. Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the Association and/or the Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Company
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive, Executive's partners,
agents, servants, employers, employees and all persons acting for or with
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 8 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Association and/or the
Company, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Association and/or the Company from pursuing any other remedies
available to the Association and/or the Company for such breach or threatened
breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section, the Association will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
activities of the Association or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein will be construed as prohibiting the Association from pursuing
any other remedies available to the Association for such breach or threatened
breach, including the recovery of damages from Executive.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Company, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to Executive and, if such payments are not timely paid or provided by
the Association, such amounts and benefits shall be paid or provided by the
Company.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect. (b) This Agreement shall be binding upon, and inure to
the benefit of, Executive, the Association, the Company and their respective
successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law or
regulation, the provisions of such law or regulation shall prevail.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association, if successful pursuant to a legal judgment,
arbitration or settlement.
22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suite or proceeding in
which he may be involved by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or liabilities), such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.
The Association and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Association or the
Company, expressly and unconditionally to assume and agree to perform the
Association's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Association or the Company would be
required to perform if no such succession or assignment had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or director of the Association and the
Company, and Executive has signed this Agreement, all on the 19th day of May,
2003.
KLAMATH FIRST BANCORP, INC. KLAMATH FIRST FEDERAL SAVINGS
AND LOAN ASSOCIATION
BY: /s/ Kermit K. Houser BY: /s/ Kermit K. Houser
Kermit K. Houser, President & CEO Kermit K. Houser President & CEO
/s/ Kathryn Rutledge /s/ Walter F. Dodrill
WITNESS: Walter F. Dodrill SVP/Business Banking
Exhibit 10(g).2
FIRST AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Association"), Klamath First Bancorp,
Inc., ("Company") and the undersigned executive officer of Association and
Company (the "Executive").
WHEREAS, Association, Company and Executive entered into an Amended and
Restated Employment Agreement dated May 19, 2003, (the "Employment Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger dated as
of July 14, 2003, (the "Merger Agreement") with Sterling Financial Corporation
("Sterling") with respect to a proposed transaction (the "Transaction") whereby
Sterling will acquire all of the outstanding shares of Company common stock in a
stock merger;
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable his change in control of benefits to be
triggered under the Employment Agreement and his Executive Salary Continuation
Agreement, and to enhance the value of shares of common stock of Company owned
by the Executive and the value of his stock options to acquire common stock of
Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise, shall
have the meaning ascribed to them in the Employment Agreement.
2. Section 5(c) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as severance pay or
liquidated damages, or both (the "Base Severance Amount"), an amount equal
to $178,500. In the event that all conditions to closing under the Merger
Agreement have been satisfied during calendar year 2003, then Association
shall make payment of the Base Severance Amount plus the Additional
Severance Amount (as defined in Section 5(d) below) to the Executive on
December 31, 2003. In the event such closing conditions are not satisfied
during calendar year 2003, then the payments contemplated herein shall be
made within 10 days after consummation of the merger contemplated by the
Merger Agreement. Notwithstanding the foregoing, if the Executive enters
into a new written employment agreement with Sterling or Sterling Savings
Bank prior to December 31, 2003 (but effective upon completion of the
merger contemplated by the Merger Agreement), then the Severance Amount and
Additional Severance Amount shall not be paid pursuant to the terms hereof
and any severance to be provided to the Executive, if any, shall be set
forth in such new written employment agreement."
3. Section 5(d) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as additional
severance the amount of $18,338 (the "Additional Severance Amount") in lieu
of any obligation to pay the Executive the value of employer contributions
that would have been made on the Executive's behalf over the remaining term
of the agreement to any tax-qualified retirement plan or to provide
continuing insurance coverage under the Employment Agreement after his
termination of employment. The Additional Severance Amount shall be paid at
the time the Base Severance Amount is paid pursuant to Section 5(c) above."
4. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall not have a right to
participate in the long term medical care program to be implemented by
Association."
5. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
6. Except as specifically set forth herein, the Employment Agreement shall
continue in full force and effect. To the extent that any provision
contained in this Agreement is inconsistent with any of the provisions of
the Employment Agreement, including but not limited to, Section 5(b)
thereof, the provisions contained in this Agreement shall be controlling.
7. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
8. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
KLAMATH FIRST BANCORP, INC.
By: /s/ Craig M Moore
Craig M Moore
SVP/Chief Auditor
EXECUTIVE:
By: Walter F. Dodrill
Walter F. Dodrill SVP/Business Banking
Exhibit 10(g).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
Walter F. Dodrill, an Employee of the Employer (hereinafter referred to as the
"Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate
the Employee's employment. This Agreement shall have no impact or
effect upon any separate written Employment Agreement which the
Employee 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 from, and shall have no effect upon, or be affected
by, the terms and provisions of said Employment Agreement.
Except as otherwise set forth in this Agreement, the term "Employer"
shall mean Klamath First Federal Savings and Loan Association;
provided, further, that for purposes of this Agreement, the term
"Employer" shall mean Klamath First Bancorp, Inc. and its subsidiaries
and affiliated entities, including any parent holding company and its
subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Employee and are
not part of any salary reduction plan or an arrangement deferring a
bonus or a salary increase. The Employee has no option to take any
current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-two ("62") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as
defined above, of the Employee on, or after the Employee achieves
fifty-five (55) years of age, but has not yet reached sixty-two
(62) years of age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-two (62), the Employee shall
be entitled to be paid the "Normal Retirement Benefit" specified
in Schedule A, payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Employee Retires (or on
such later date as may be mutually agreed upon by the Employee
and the Employer in advance of said Retirement date) payable
until the Employee's death. After commencement of payments, the
Normal Retirement Benefit will increase by two percent (2%) per
year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph
III (B) above. In the event the Employee elects to Retire on a
date which constitutes an Early Retirement Date, and said early
retirement is not pursuant to a Change in Control as defined in
paragraph VI below, the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A for the date
the Retirement occurs, but reduced by a factor of one-half of one
percent (.5%) per month for each month or portion thereof that
the Early Retirement occurs prior to the Retirement Date. The
benefit shall be payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by
the Employee and the Employer in advance of such Early Retirement
Date). After commencement of payments, the Early Retirement
benefit will increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's
60th birthday and if the Retirement Date in Section III.A. above
is at age 62, the Normal Retirement Benefit specified in Schedule
"A" as of the Employee's 60th birthday would be reduced by 12%
[.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to
Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to
the Employee's Retirement. In the event that the employment of
the Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining
sixty-two (62) years of age, then this Agreement shall terminate
on the date of such termination of employment; provided, however,
that the Employee shall be entitled to the following benefits as
may be applicable depending upon the circumstances surrounding
the Employee's termination:
(i) Termination for Other Than Disability, Change in Control
or Cause:
If the Employee's employment is terminated by the Employee or by
the Employer for any reason other than Disability, "Change in
Control" or "Termination for Cause," the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A as of the date of termination, payable in
substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-two (62) years of age (or on such later
date as may be mutually agreed upon by the Employee and the
Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon
achieving age fifty-five (55) but before achieving age sixty-two
(62), the Employee may choose to receive the Early Retirement
Benefit with the reductions from the "Normal Retirement Benefit"
as of the date of termination, and as described in Section IV.B.
of this Agreement. The benefit shall be payable in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Early
Retirement Date occurs (or on such later date as may be mutually
agreed upon by the Employee and the Employer not less than
fifteen (15) days prior to such commencement date) payable to the
Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this
Agreement, elect below either the "Lump Sum Payment" or the
"Annuity for Life" option in the event the Employee becomes
disabled at any time after the Effective Date of this Agreement
but prior to Retirement. The term "Disability" or "Disabled"
shall have the same meaning given such terms in any policy of
disability insurance maintained by the Employer for the benefit
of employees including the Employee. In the absence of such a
policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental
or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least
one hundred twenty (120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or date the
Employee otherwise terminated service with the Employer
other than for Cause. The lump sum shall be payable 60 days
from the date the Employer has received a written request to
commence benefits, along with documentation showing that the
Employee has become disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity
from an insurance company with an A. M. Best or Moody's
rating of no less than AA and using the amount of
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or the date the
Employee otherwise terminated service with the Employer
other than for Cause. The Employer shall purchase the
annuity within 60 days from the date the Employer has
received a written request to commence benefits, along with
documentation showing that the Employee has become Disabled.
Nevertheless, if the amount of the applicable "Disability
Benefit" specified in Schedule A is $50,000.00 or less, the
payment shall be as a lump sum to the Employee and not the
purchase of an annuity for life.
(iii) Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please
sign on applicable line):
______________________ Lump Sum Benefit.
/s/ Walter F. Dodrill Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the
"Company") or Klamath First Federal Savings and Loan
Association (the "Association") shall be deemed to occur if
and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association
pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company or the Association representing
25% or more of the combined voting power of the Company's or
the Association's then outstanding securities, (c) the
membership of the board of directors of the Company or the
Association changes as the result of a contested election,
such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or
after the effective date of this Agreement) do not
constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the
Association approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's or
the Association's assets, or a plan of partial or complete
liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is
terminated by the Employer in connection with a Change in
Control, the Employee shall be immediately vested in the
"Normal Retirement Benefit" specified in Schedule A for the
date the Employee achieves age sixty-two (62). The Employee
shall be entitled to be paid the "Change in Control Benefit"
specified in Schedule A, in substantially equal monthly
installments on the first day of each month, beginning no
sooner than the month following the month in which the
Employee attains age fifty-five (55), as requested in
writing by the Employee and delivered to the Employer or its
successor thirty (30) days prior to the commencement of
installment payments; provided, however, that in the event
the Employee does not request a commencement date as
specified, such installments shall be paid on the first day
of each month, beginning with the month following the month
in which the Employee attains sixty-two (62) years of age.
Upon the commencement of payments, the installments shall be
payable until the Employee's death, and shall increase by
two percent (2%) per year.
A termination shall be deemed to be in connection with a
Change in Control if, within two (2) years following the
occurrence of a Change in Control: (a) the Employee's
employment with the Employer is terminated by the Employer
other than a Termination for Cause; or (b) by reason of the
Employer's actions any adverse change occurs in the scope of
the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c)
the Employer causes an event to occur which reasonably
constitutes or results in a demotion, loss of title, a
significant diminution of responsibilities or authority, or
a constructive termination (by forcing a resignation or
otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the
regulatory accounting principles of the Employer's primary
federal regulator. The Employer shall establish an accrued
liability retirement account for the Employee into which
appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark
or entrust any fund or money with which to pay its
obligations under this Employee Plan. The Employee, her or
his beneficiary (ies), or any successor in interest shall be
and remain simply a general creditor of the Employer in the
same manner as any other creditor having a general claim for
matured and unpaid compensation. The Employer reserves the
absolute right, at its sole discretion, to either fund the
obligations undertaken by this Employee Plan or to refrain
from funding the same and to determine the extent, nature
and method of such funding. Should the Employer elect to
fund this Employee Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability
policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Employee
be deemed to have any lien, right, title or interest in any
specific funding investment or assets of the Employer.
If the Employer elects to invest in a life insurance,
disability or annuity policy on the life of the Employee,
then the Employee shall assist the Employer by freely
submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the
Employer and the Employee acknowledge and agree that, in the
event of a Change in Control and at the written request of
the Employee, the Employer 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 Employer in its sole discretion
deems appropriate and in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended
(the "Code") in order to permit the Employer 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
Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Employer's
general creditors until paid to the Employee or its
beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify
or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Employee nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Employer's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Employer and any Successor in
Interest:
The Employer shall not merge or consolidate into or with
another Employer or sell substantially all of its assets to
another Employer, firm or person until such Employer, firm
or person expressly agree, in writing, to assume and
discharge the duties and obligations of the Employer under
this Employee Plan. This Employee Plan shall be binding upon
the parties hereto, their successors, beneficiaries, heirs
and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Employee, this Employee Plan may be
amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Employee and the
Employer.
D. Gender:
Whenever in this Employee Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever
they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the
right of the Employee to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Employer's existing or
future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity
and interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this
Employee Plan 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 Employee Plan shall remain in full force and effect
notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to
discharge the Employee, or restrict the right of the
Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or
the Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: Walter F. Dodrill
P.O. Box 1529
Bandon, OR 97411
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been
afforded the opportunity to consult with independent
advisors of his or her choosing including, without
limitation, accountants or tax advisors and counsel
regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions
which may affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of
the Employee notwithstanding any other term or provision of
this Agreement. The Employee further acknowledges and agrees
that the Employer shall have no liability whatsoever related
to any such personal tax effects or other personal costs,
expenses, or liabilities applicable to the Employee and
further specifically waives any right for the Employee and
his or her heirs, beneficiaries, legal representatives,
agents, successors, and assigns to claim or assert liability
on the part of the Employer related to the matters described
above in this subparagraph. The Employee further
acknowledges and agrees that the Employee has read,
understands and consents to all of the terms and conditions
of this Agreement, and that the Employee enters into this
Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this
Employee Plan shall be Klamath First Bancorp, Inc., until
its resignation or removal by the Board. As Named Fiduciary
and Plan Administrator, the Employer shall be responsible
for the management, control and administration of the
Employee Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation
responsibilities of the Employee Plan including the
employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this
Employee Plan and benefits are not paid to the Employee and
the claimant feels he is 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
provisions of this Employee Plan 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 a
further review of the claim denial is desired. A claim shall
be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid
forty-five-day period.
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 Employee Plan or any documents relating
thereto and submit any written issues and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business,
the parties agree that a representative member, selected by
the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), shall conduct the binding
arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the
other party to this Agreement and with JAMS (or AAA, if
necessary). 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, or if there are
none, the rules of procedure used or established by AAA. Any
award rendered by JAMS or AAA 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
Klamath Falls, Oregon, unless otherwise agreed to by the
parties.
D. 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, the prevailing party
shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees and costs incurred in
connection therewith or in the enforcement or collection of
any judgment or award rendered therein. The "prevailing
party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed,
even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other
payments which the Employee has the right to receive from
the Employer, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Employer (and its
successor) and the Employee each agree to pay their share of
any taxes that may be imposed as a result of payments made
pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount initially
so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Kermit K. Houser /s/ Nina G. Drake
Kermit K. Houser Witness
President and CEO
/s/ Walter F. Dodrill /s/ Kathryn Rutledge
Walter F. Dodrill SVP/Business Banking Witness
SCHEDULE A
EMPLOYEE BENEFIT SCHEDULE
WALTER DODRILL
DATE OF BIRTH: JULY 20, 1951
HIRED ON: JANUARY 2, 2002
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $0 NA $0 $882,230 $100,000
January 1, 2004 $3,334 NA $0 $882,230 $100,000
January 1, 2005 $7,502 NA $22,330 $882,230 $100,000
January 1, 2006 $13,338 $51,169 $53,342 $882,230 $133,377
January 1, 2007 $20,840 $56,473 $100,678 $882,230 $208,401
January 1, 2008 $30,010 $61,756 $167,013 $882,230 $300,097
January 1, 2009 $40,847 $67,049 $255,331 $882,230 $408,466
January 1, 2010 $53,351 $72,343 $368,970 $882,230 $533,506
January 1, 2011 $67,522 $77,636 $511,643 $882,230 $675,219
January 1, 2012 $83,360 $82,930 $687,488 $882,230 $833,603
January 1, 2013 $88,223 $88,223 $901,099 $882,230 $882,230
and thereafter $88,223 $88,223 NA see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-two (62). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ Walter F Dodrill 5/21/03 /s/ Kermit K. Houser 5/29/03
Walter F. Dodrill Date Bank Officer Date
Exhibit 10(g).4
FIRST AMENDMENT TO executive salary continuation AGREEMENT
This FIRST AMENDMENT TO EXECUTIVE SALARY CONTINUATION AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Employer") and the undersigned executive
officer of Employer ("Employee").
WHEREAS, Employer and Employee entered into an Executive Salary
Continuation Agreement (the "SCA") effective January 1, 2003;
WHEREAS, Klamath First Bancorp, Inc. ("Company"), the parent company of
Employer, has entered into an Agreement and Plan of Merger dated as of July 14,
2003, (the "Merger Agreement") with Sterling Financial Corporation ("Sterling")
with respect to a proposed transaction (the "Transaction") whereby Sterling will
acquire all of the outstanding shares of Company common stock in a stock merger;
WHEREAS, Employer desire to enter into this Agreement to facilitate the
Transaction; and
WHEREAS, Employee desires to enter into this Agreement to facilitate the
Transaction so as to enable Employee (a) to receive a cash-out of his benefits
under the SCA as provided herein, (b) to receive change in control benefits
under his employment agreement and (c) to enhance the value of shares of common
stock of Company owned by Employee and the value of his stock options to acquire
common stock of Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Notwithstanding anything contained in the SCA to the contrary, Employer
shall have the right to pay Employee at any time from the date hereof
through December 31, 2003 the amount of $582,214 less all tax
withholding obligations with respect thereto (the "Cash-Out Amount") in
full and complete satisfaction of all obligations of Employer under the SCA
and all rights of Employee under the SCA. Upon Employer making payment of
the Cash-Out Amount to Employee as provided herein, the SCA shall terminate
and shall have no further force or effect.
2. Upon payment of the Cash-Out Amount to Employee by Employer as provided in
paragraph 1 above, Employee does hereby release and forever discharge
Employer, its affiliates, and their respective assigns, directors,
officers, employees and agents from any and all claims, demands, causes of
action and rights that Employee has or might have under the SCA of any kind
or character whatsoever, whether known or unknown.
3. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
4. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and both of which,
taken together, shall constitute one and the same agreement.
The parties have executed this Agreement on the day and year first above
written.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
EMPLOYEE:
By: Walter F. Dodrill
Walter F. Dodrill SVP/Business Banking
Exhibit 10(h).1
EMPLOYMENT AGREEMENT
Amended and Restated May 14, 2003
THIS AGREEMENT is made effective as of October 1, 2002, by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"), Klamath
Falls, Oregon; KLAMATH FIRST BANCORP, INC. (the "Company"), an Oregon
corporation; and Nina G. Drake (the "Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Association
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, Executive agrees to serve as
Vice President of the Association. During said period, Executive also agrees to
serve, if elected, as an officer of the Company or any subsidiary or affiliate
of the Company or the Association.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of twenty-four (24)
full calendar months thereafter. Commencing on the first anniversary date, and
continuing at each anniversary date thereafter, the Board of Directors of the
Association (the "Board") or its Compensation Committee may extend the Agreement
for an additional year. Prior to the extension of the Agreement as provided
herein, the Board of Directors of the Association will review the Executive's
performance evaluation for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board's meeting.
(b) During the period of her employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all her business time,
attention, skill, and efforts to the faithful performance of her duties
hereunder including activities and services related to the organization,
operation and management of the Association; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which,
in such Board's judgment, will not present any conflict of interest with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2. The
Association shall pay Executive as compensation a salary of $99,000 per year
("Base Salary") effective December 1, 2002. Such Base Salary shall be payable in
accordance with the customary payroll practices of the Association. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by the Board or its
Compensation Committee, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to regular salaried employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. However, changes in Association-sponsored group insurance
plan premiums, deductibles, co-payments and related coverage limits or
conditions are excluded from the prior sentence for any such change which is
consistently applied to or available to regular salaried Association employees.
Without limiting the generality of the foregoing provisions of this Subsection
(b), Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to, and on a basis consistent
with, the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan, or pursuant to any arrangement of the Association, in
which Executive is eligible to participate. Nothing paid to the Executive under
any such plan or arrangement will be deemed to be in lieu of other compensation
to which the Executive is entitled under this Agreement, except as provided
under Section 5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from time
to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; or retirement, as defined
in Section 7 hereof; (ii) Executive's resignation from the Association's employ,
upon (A) unless consented to by the Executive, a material change in Executive's
function, duties, or responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Sections 1 and 2, above, (any such
material change shall be deemed a continuing breach of this Agreement), (B) a
relocation of Executive's principal place of employment by more than 35 miles
from its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those being provided
as of the effective date of this Agreement, (C) the liquidation or dissolution
of the Association, or (D) any breach of this Agreement by the Association. Upon
the occurrence of any event described in clauses (A), (B), (C), or (D), above,
Executive shall have the right to elect to terminate her employment under this
Agreement by resignation upon not less than sixty (60) days prior written notice
given within a reasonable period of time not to exceed, except in case of a
continuing breach, four calendar months after the event giving rise to said
right to elect.
(b) Upon the occurrence of an Event of Termination other than for Cause of
for Neglect (as described in Sections 8 and 9 hereof), the Association shall pay
Executive, or, in the event of her subsequent death, her beneficiary or
beneficiaries, or her estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due to the Executive for the
remaining term of the Agreement, including Base Salary, bonuses, and any other
cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Association as of the Date of Termination), to the Executive
for the term of the Agreement provided, however, that if the Association is not
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. All payments made pursuant to this Section 4(b) shall
be paid in substantially equal monthly installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year (determined as of
the Executive's Date of Termination), such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to her termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or the Association. For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election, such that individuals who were directors at the beginning of any
twenty-four month period (whether commencing before or after the effective date
of this Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association approve a merger,
consolidation, sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Association or the Company
has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon her subsequent involuntary termination of employment at any time during
the term of this Agreement (or voluntary termination following a Change of
Control following any demotion, loss of title, office or significant authority,
reduction in her annual compensation or benefits, or relocation of her principal
place of employment by more than 35 miles from its location immediately prior to
the Change in Control), unless such termination is because of her death,
retirement as provided in Section 7, termination for Cause, or termination for
Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of her subsequent death, her beneficiary or beneficiaries, or her estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
1.50 times the Executive's "base amount," within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended. Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to her severance. In addition,
Executive shall be entitled to receive the value of employer contributions that
would have been made on the Executive's behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the Association as
of the Date of Termination. Such coverage and payments shall cease upon the
expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association on her behalf, pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Association or the Company on the Executive's behalf to the
extent that such benefits are not otherwise paid to the Executive upon a Change
in Control.
(f) IRS Section 280G Issues. If 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 Company or Association,
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 Company or Association (and their successor) shall be responsible for any
loss of deductibility related thereto; provided, however, that Company or
Association 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 Company or
Association immediately prior to the change in control or such other independent
accounting firm or advisor as may be mutually agreeable to Company or
Association and Executive in the exercise of their reasonable good faith
judgment.
6. TERMINATION FOR DISABILITY.
(a) If the Executive shall become disabled as defined in the Association's
then current disability plan (or, if no such plan is then in effect, if the
Executive is permanently and totally disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician designated by the Board), the
Association may terminate Executive's employment for "Disability."
(b) Upon the Executive's termination of employment for Disability, the
Association will pay Executive, as disability pay, a semi-monthly payment equal
to three-quarters (3/4) of Executive's semi-monthly rate of Base Salary on the
effective date of such termination. These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Association in the
same capacity as she was employed prior to her termination for Disability and
pursuant to an employment agreement between Executive and the Association; (ii)
Executive's full-time employment by another employer; (iii) Executive attaining
the age of 65; or (iv) Executive's death; or (v) the expiration of the term of
this Agreement. The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to her termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date Executive returns to
the full-time employment of the Association, in the same capacity as she was
employed prior to her termination for Disability and pursuant to an employment
agreement between Executive and the Association; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing her duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Association of Executive based on "Retirement" shall
mean retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Association or the Company and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Association shall pay to Executive's estate the compensation due
to the Executive through the last day of the calendar month in which her death
occurred.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. In addition, "Termination for Cause" shall include
termination because of the Executive's intentional failure to perform stated
duties, such as the refusal of the Executive to comply with the Association's or
the Company's instructions, policies or rules or other willful conduct of the
Executive which materially adversely reflects on the Association's or the
Company 's reputation or operation. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive shall
not have the right to receive compensation or other benefits for any period
after termination for Cause. Any stock options granted to Executive under any
stock option plan or any unvested awards granted under any other stock benefit
plan of the Association, the Company, or any subsidiary or affiliate thereof,
shall become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 9 hereof, and shall not be exercisable
by Executive at any time subsequent to such Termination for Cause.
9. TERMINATION FOR NEGLECT.
The Association and Company, or either of them may terminate Executive's
employment under this Agreement at any time for Neglect. For purposes of this
Agreement, "Neglect" means the failure of Executive to give due care to stated
duties or to comply with instructions or directives of the Board of Directors of
the Association or Company or either of them, but where such failure is not
determined to be willful or intentional as defined in Section 8. Termination for
Neglect includes termination as the result of any continuing or repeated
problems with Executive's job performance or conduct after written notice
specifying such problem with performance or conduct, and where such continuing
and repeated problems were not determined to be willful or intentional, or where
the conduct was not deemed to have a material adverse impact on the Association
or Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated by Neglect unless and until there shall have been sent to
Executive a copy of a resolution duly adopted by a majority of the Board of
Directors of the Association and Company, or either of them (excluding the
Executive in counting the majority if the Executive is then on the board of
directors, and after reasonable notice to Executive and an opportunity for
Executive to be heard before the board of directors), finding that in the good
faith opinion of the board of directors of the Association and Company, or
either of them, Executive engaged in conduct justifying termination for Neglect
and describing specifically the conduct. Executive shall not have the right to
receive any salary or bonus for any period after termination of employment for
Neglect. Executive shall retain any vested benefits in defined benefit plans,
defined contribution plans, supplemental executive retirement plans, stock
option plans, restricted stock plans, or other such benefits, but shall forfeit
any rights that have not vested.
10. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than as described in Section 8 or
Section 9 of this Agreement, shall not prejudice Executive's right to
compensation or other benefits under this Agreement. Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause as defined in Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the Association's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may, in its discretion, (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the Association is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated (except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Association): (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Association
or when the Association is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
11. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that she shall not have returned to the performance of her
duties on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Association will continue
to pay Executive her full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
12. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Association
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination. Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the Association and/or the Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Company
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive, Executive's partners,
agents, servants, employers, employees and all persons acting for or with
Executive. Executive represents and admits that in the event of the termination
of her employment pursuant to Section 8 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Association and/or the
Company, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Association and/or the Company from pursuing any other remedies
available to the Association and/or the Company for such breach or threatened
breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of her employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section, the Association will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
activities of the Association or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein will be construed as prohibiting the Association from pursuing
any other remedies available to the Association for such breach or threatened
breach, including the recovery of damages from Executive.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Company, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to Executive and, if such payments are not timely paid or provided by
the Association, such amounts and benefits shall be paid or provided by the
Company.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect. (b) This Agreement shall be binding upon, and inure to
the benefit of, Executive, the Association, the Company and their respective
successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law or
regulation, the provisions of such law or regulation shall prevail.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association, if successful pursuant to a legal judgment,
arbitration or settlement.
22. INDEMNIFICATION.
The Association shall provide Executive (including her heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and her heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suite or proceeding in
which she may be involved by reason of her having been a director or officer of
the Association (whether or not she continues to be a directors or officer at
the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgment, court costs and
attorneys' fees and the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.
The Association and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Association or the
Company, expressly and unconditionally to assume and agree to perform the
Association's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Association or the Company would be
required to perform if no such succession or assignment had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or director of the Association and the
Company, and Executive has signed this Agreement, all on the 19th day of May,
2003.
KLAMATH FIRST BANCORP, INC. KLAMATH FIRST FEDERAL SAVINGS
AND LOAN ASSOCIATION
BY: /s/ Kermit K. Houser BY: /s/ Kermit K. Houser
Kermit K. Houser, President & CEO Kermit K. Houser President & CEO
/s/ Kathryn Rutledge /s/ Nina G. Drake
WITNESS: Nina G. Drake
Exhibit 10(h).2
FIRST AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Association"), Klamath First Bancorp,
Inc., ("Company") and the undersigned executive officer of Association and
Company (the "Executive").
WHEREAS, Association, Company and Executive entered into an Amended and
Restated Employment Agreement dated May 19, 2003, (the "Employment Agreement");
WHEREAS, the Executive desires to enter into this Agreement to faciliate
the Transaction so as to enable her change in control of benefits to be
triggered under the Employment Agreement and her Executive Salary Continuation
Agreement.
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable her change in control of benefits to be
triggered under the Employment Agreement and her Executive Salary Continuation
Agreement, and to enhance the value of shares of common stock of Company owned
by the Executive and the value of her stock options to acquire common stock of
Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise, shall
have the meaning ascribed to them in the Employment Agreement.
2. Section 5(c) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as severance pay or
liquidated damages, or both (the "Base Severance Amount"), an amount equal
to $148,500. In the event that all conditions to closing under the Merger
Agreement have been satisfied during calendar year 2003, then Association
shall make payment of the Base Severance Amount plus the Additional
Severance Amount (as defined in Section 5(d) below) to the Executive on
December 31, 2003. In the event such closing conditions are not satisfied
during calendar year 2003, then the payments contemplated herein shall be
made within 10 days after consummation of the merger contemplated by the
Merger Agreement. Notwithstanding the foregoing, if the Executive enters
into a new written employment agreement with Sterling or Sterling Savings
Bank prior to December 31, 2003 (but effective upon completion of the
merger contemplated by the Merger Agreement), then the Severance Amount and
Additional Severance Amount shall not be paid pursuant to the terms hereof
and any severance to be provided to the Executive, if any, shall be set
forth in such new written employment agreement."
Section 5(d) of the Employment Agreement is amended in full as follows:
"Upon the occurrence of a Change in Control arising from or related to the
Merger Agreement, Association shall pay the Executive as additional
severance the amount of $5,750 (the "Additional Severance Amount") in lieu
of any obligation to pay the Executive the value of employer contributions
that would have been made on the Executive's behalf over the remaining term
of the agreement to any tax-qualified retirement plan. The Additional
Severance Amount shall be paid at the time the Base Severance Amount is
paid pursuant to Section 5(c) above. Upon the Executive's termination of
service in connection with or following a Change in Control arising from or
relating to the Merger Agreement, Sterling Savings Bank, as
successor-in-interest to the Association, shall provide the Executive with
continued life, medical, dental and disability coverage as is then provided
by Sterling Savings Bank to its full-time employees, as the same may be
changed from time to time, during the 36 month period next following the
Executive's Date of Termination with the cost to be absorbed by the
Executive being equal to the lesser of (i) the employee cost of coverage
currently being borne by the Executive or (ii) the employee cost of
coverage borne by full-time employees of Sterling Savings Bank receiving
the same coverage; provided if the cost of coverage to be borne by the
Executive is determined under subpart (i), then such cost shall be subject
to pro rata adjustment based upon the pro rata adjustment in cost of
coverage that is borne by full-time employees of Sterling Savings Bank
receiving the same coverage after completion of the merger contemplated by
the Merger Agreement."
3. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall have a right to
participate in the long term medical care program to be implemented by
Association if the Executive meets the eligibility requirements of the
insurer. If the Executive meets the eligibility requirements of the insurer
and becomes a participant in the long term medical care program, then in
that event, her Base Severance Amount shall be reduced by the single
premium cost paid by Association for such long term medical care on behalf
of the Executive (which is estimated to be $54,000) and the Executive shall
have no obligation to reimburse Association for any premium cost relating
to such program after the Executive's termination of employment."
4. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
5. Except as specifically set forth herein, the Employment Agreement shall
continue in full force and effect. To the extent that any provision
contained in this Agreement is inconsistent with any of the provisions of
the Employment Agreement, including but not limited to, Section 5(b)
thereof, the provisions contained in this Agreement shall be controlling.
6. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
7. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
KLAMATH FIRST BANCORP, INC.
By: /s/ Craig M Moore
Craig M Moore
SVP/Chief Auditor
EXECUTIVE:
By: Nina G. Drake
Nina G. Drake VP/Human Resources
Exhibit 10(h).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
Nina G. Drake, an Employee of the Employer (hereinafter referred to as the
"Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate
the Employee's employment. This Agreement shall have no impact or
effect upon any separate written Employment Agreement which the
Employee 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 from, and shall have no effect upon, or be affected
by, the terms and provisions of said Employment Agreement.
Except as otherwise set forth in this Agreement, the term "Employer"
shall mean Klamath First Federal Savings and Loan Association;
provided, further, that for purposes of this Agreement, the term
"Employer" shall mean Klamath First Bancorp, Inc. and its subsidiaries
and affiliated entities, including any parent holding company and its
subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Employee and are
not part of any salary reduction plan or an arrangement deferring a
bonus or a salary increase. The Employee has no option to take any
current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-two ("62") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as
defined above, of the Employee on, or after the Employee achieves
fifty-five (55) years of age, but has not yet reached sixty-two
(62) years of age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-two (62), the Employee shall
be entitled to be paid the "Normal Retirement Benefit" specified
in Schedule A, payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Employee Retires (or on
such later date as may be mutually agreed upon by the Employee
and the Employer in advance of said Retirement date) payable
until the Employee's death. After commencement of payments, the
Normal Retirement Benefit will increase by two percent (2%) per
year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph
III (B) above. In the event the Employee elects to Retire on a
date which constitutes an Early Retirement Date, and said early
retirement is not pursuant to a Change in Control as defined in
paragraph VI below, the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A for the date
the Retirement occurs, but reduced by a factor of one-half of one
percent (.5%) per month for each month or portion thereof that
the Early Retirement occurs prior to the Retirement Date. The
benefit shall be payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by
the Employee and the Employer in advance of such Early Retirement
Date). After commencement of payments, the Early Retirement
benefit will increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's
60th birthday and if the Retirement Date in Section III.A. above
is at age 62, the Normal Retirement Benefit specified in Schedule
"A" as of the Employee's 60th birthday would be reduced by 12%
[.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to
Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to
the Employee's Retirement. In the event that the employment of
the Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining
sixty-two (62) years of age, then this Agreement shall terminate
on the date of such termination of employment; provided, however,
that the Employee shall be entitled to the following benefits as
may be applicable depending upon the circumstances surrounding
the Employee's termination:
(i) Termination for Other Than Disability, Change in Control
or Cause:
If the Employee's employment is terminated by the Employee or by
the Employer for any reason other than Disability, "Change in
Control" or "Termination for Cause," the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A as of the date of termination, payable in
substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-two (62) years of age (or on such later
date as may be mutually agreed upon by the Employee and the
Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon
achieving age fifty-five (55) but before achieving age sixty-two
(62), the Employee may choose to receive the Early Retirement
Benefit with the reductions from the "Normal Retirement Benefit"
as of the date of termination, and as described in Section IV.B.
of this Agreement. The benefit shall be payable in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Early
Retirement Date occurs (or on such later date as may be mutually
agreed upon by the Employee and the Employer not less than
fifteen (15) days prior to such commencement date) payable to the
Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this
Agreement, elect below either the "Lump Sum Payment" or the
"Annuity for Life" option in the event the Employee becomes
disabled at any time after the Effective Date of this Agreement
but prior to Retirement. The term "Disability" or "Disabled"
shall have the same meaning given such terms in any policy of
disability insurance maintained by the Employer for the benefit
of employees including the Employee. In the absence of such a
policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental
or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least
one hundred twenty (120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or date the
Employee otherwise terminated service with the Employer
other than for Cause. The lump sum shall be payable 60 days
from the date the Employer has received a written request to
commence benefits, along with documentation showing that the
Employee has become disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity
from an insurance company with an A. M. Best or Moody's
rating of no less than AA and using the amount of
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or the date the
Employee otherwise terminated service with the Employer
other than for Cause. The Employer shall purchase the
annuity within 60 days from the date the Employer has
received a written request to commence benefits, along with
documentation showing that the Employee has become Disabled.
Nevertheless, if the amount of the applicable "Disability
Benefit" specified in Schedule A is $50,000.00 or less, the
payment shall be as a lump sum to the Employee and not the
purchase of an annuity for life.
(iii) Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please
sign on applicable line):
______________________ Lump Sum Benefit.
/s/ Nina G. Drake Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the
"Company") or Klamath First Federal Savings and Loan
Association (the "Association") shall be deemed to occur if
and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association
pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company or the Association representing
25% or more of the combined voting power of the Company's or
the Association's then outstanding securities, (c) the
membership of the board of directors of the Company or the
Association changes as the result of a contested election,
such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or
after the effective date of this Agreement) do not
constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the
Association approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's or
the Association's assets, or a plan of partial or complete
liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is
terminated by the Employer in connection with a Change in
Control, the Employee shall be immediately vested in the
"Normal Retirement Benefit" specified in Schedule A for the
date the Employee achieves age sixty-two (62). The Employee
shall be entitled to be paid the "Change in Control Benefit"
specified in Schedule A, in substantially equal monthly
installments on the first day of each month, beginning no
sooner than the month following the month in which the
Employee attains age fifty-five (55), as requested in
writing by the Employee and delivered to the Employer or its
successor thirty (30) days prior to the commencement of
installment payments; provided, however, that in the event
the Employee does not request a commencement date as
specified, such installments shall be paid on the first day
of each month, beginning with the month following the month
in which the Employee attains sixty-two (62) years of age.
Upon the commencement of payments, the installments shall be
payable until the Employee's death, and shall increase by
two percent (2%) per year.
A termination shall be deemed to be in connection with a
Change in Control if, within two (2) years following the
occurrence of a Change in Control: (a) the Employee's
employment with the Employer is terminated by the Employer
other than a Termination for Cause; or (b) by reason of the
Employer's actions any adverse change occurs in the scope of
the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c)
the Employer causes an event to occur which reasonably
constitutes or results in a demotion, loss of title, a
significant diminution of responsibilities or authority, or
a constructive termination (by forcing a resignation or
otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the
regulatory accounting principles of the Employer's primary
federal regulator. The Employer shall establish an accrued
liability retirement account for the Employee into which
appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark
or entrust any fund or money with which to pay its
obligations under this Employee Plan. The Employee, her or
her beneficiary (ies), or any successor in interest shall be
and remain simply a general creditor of the Employer in the
same manner as any other creditor having a general claim for
matured and unpaid compensation. The Employer reserves the
absolute right, at its sole discretion, to either fund the
obligations undertaken by this Employee Plan or to refrain
from funding the same and to determine the extent, nature
and method of such funding. Should the Employer elect to
fund this Employee Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability
policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Employee
be deemed to have any lien, right, title or interest in any
specific funding investment or assets of the Employer.
If the Employer elects to invest in a life insurance,
disability or annuity policy on the life of the Employee,
then the Employee shall assist the Employer by freely
submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the
Employer and the Employee acknowledge and agree that, in the
event of a Change in Control and at the written request of
the Employee, the Employer 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 Employer in its sole discretion
deems appropriate and in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended
(the "Code") in order to permit the Employer 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
Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Employer's
general creditors until paid to the Employee or its
beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify
or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Employee nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Employer's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Employer and any Successor in
Interest:
The Employer shall not merge or consolidate into or with
another Employer or sell substantially all of its assets to
another Employer, firm or person until such Employer, firm
or person expressly agree, in writing, to assume and
discharge the duties and obligations of the Employer under
this Employee Plan. This Employee Plan shall be binding upon
the parties hereto, their successors, beneficiaries, heirs
and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Employee, this Employee Plan may be
amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Employee and the
Employer.
D. Gender:
Whenever in this Employee Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever
they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the
right of the Employee to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Employer's existing or
future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity
and interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this
Employee Plan 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 Employee Plan shall remain in full force and effect
notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to
discharge the Employee, or restrict the right of the
Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or
the Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: Nina G. Drake
1003 Wild Plum Drive
Klamath Falls, OR 97601
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been
afforded the opportunity to consult with independent
advisors of her or her choosing including, without
limitation, accountants or tax advisors and counsel
regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions
which may affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of
the Employee notwithstanding any other term or provision of
this Agreement. The Employee further acknowledges and agrees
that the Employer shall have no liability whatsoever related
to any such personal tax effects or other personal costs,
expenses, or liabilities applicable to the Employee and
further specifically waives any right for the Employee and
her or her heirs, beneficiaries, legal representatives,
agents, successors, and assigns to claim or assert liability
on the part of the Employer related to the matters described
above in this subparagraph. The Employee further
acknowledges and agrees that the Employee has read,
understands and consents to all of the terms and conditions
of this Agreement, and that the Employee enters into this
Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this
Employee Plan shall be Klamath First Bancorp, Inc., until
its resignation or removal by the Board. As Named Fiduciary
and Plan Administrator, the Employer shall be responsible
for the management, control and administration of the
Employee Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation
responsibilities of the Employee Plan including the
employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this
Employee Plan and benefits are not paid to the Employee and
the claimant feels she is 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
provisions of this Employee Plan 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 a
further review of the claim denial is desired. A claim shall
be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid
forty-five-day period.
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 Employee Plan or any documents relating
thereto and submit any written issues and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business,
the parties agree that a representative member, selected by
the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), shall conduct the binding
arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the
other party to this Agreement and with JAMS (or AAA, if
necessary). 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, or if there are
none, the rules of procedure used or established by AAA. Any
award rendered by JAMS or AAA 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
Klamath Falls, Oregon, unless otherwise agreed to by the
parties.
D. 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, the prevailing party
shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees and costs incurred in
connection therewith or in the enforcement or collection of
any judgment or award rendered therein. The "prevailing
party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed,
even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other
payments which the Employee has the right to receive from
the Employer, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Employer (and its
successor) and the Employee each agree to pay their share of
any taxes that may be imposed as a result of payments made
pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount initially
so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Kermit K. Houser /s/ Kelly A. Male
Kermit K. Houser Witness
President and CEO
/s/ Nina G. Drake /s/ Kathyn Rutledge
Nina G. Drake VP/Human Resources Witness
SCHEDULE A
EMPLOYEE BENEFIT SCHEDULE
NINA DRAKE
DATE OF BIRTH: DECEMBER 8, 1952
HIRED ON: JUNE 3, 2002
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $0 NA $0 $763,570 $100,000
January 1, 2004 $2,563 NA $0 $763,570 $100,000
January 1, 2005 $5,767 NA $17,937 $763,570 $100,000
January 1, 2006 $10,252 NA $42,847 $763,570 $102,521
January 1, 2007 $16,019 $44,287 $80,871 $763,570 $160,190
January 1, 2008 $23,067 $48,868 $134,155 $763,570 $230,673
January 1, 2009 $31,397 $53,450 $205,098 $763,570 $313,971
January 1, 2010 $41,009 $58,031 $296,379 $763,570 $410,085
January 1, 2011 $51,901 $62,613 $410,983 $763,570 $519,014
January 1, 2012 $64,076 $67,194 $552,232 $763,570 $640,758
January 1, 2013 $70,483 $71,776 $723,818 $763,570 $704,834
January 1, 2014 $76,357 $76,357 $845,307 $763,570 $763,570
and thereafter $76,357 $76,357 NA see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-two (62). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ Nina G. Drake 5/14/03 /s/ Kermit K. Houser 5/19/03
Nina G. Drake Date Bank Officer Date
Exhibit 10(h).4
FIRST AMENDMENT TO executive salary continuation AGREEMENT
This FIRST AMENDMENT TO EXECUTIVE SALARY CONTINUATION AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between Klamath
Federal Savings and Loan Association ("Employer") and the undersigned executive
officer of Employer ("Employee").
WHEREAS, Employer and Employee entered into an Executive Salary
Continuation Agreement (the "SCA") effective January 1, 2003;
WHEREAS, Klamath First Bancorp, Inc. ("Company"), the parent company of
Employer, has entered into an Agreement and Plan of Merger dated as of July 14,
2003, (the "Merger Agreement") with Sterling Financial Corporation ("Sterling")
with respect to a proposed transaction (the "Transaction") whereby Sterling will
acquire all of the outstanding shares of Company common stock in a stock merger;
WHEREAS, Employer desire to enter into this Agreement to facilitate the
Transaction; and
WHEREAS, Employee desires to enter into this Agreement to faciliate the
Transaction so as to enable Employee (a) to receive a cash-out of her benefits
under the SCA as provided herein and (b) to receive change in control benefits
under her employment agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Notwithstanding anything contained in the SCA to the contrary, Employer
shall have the right to pay Employee at any time from the date hereof
through December 31, 2003 the amount of $473,327 less all tax
withholding obligations with respect thereto (the "Cash-Out Amount") in
full and complete satisfaction of all obligations of Employer under the SCA
and all rights of Employee under the SCA. Upon Employer making payment of
the Cash-Out Amount to Employee as provided herein, the SCA shall terminate
and shall have no further force or effect.
2. Upon payment of the Cash-Out Amount to Employee by Employer as provided in
paragraph 1 above, Employee does hereby release and forever discharge
Employer, its affiliates, and their respective assigns, directors,
officers, employees and agents from any and all claims, demands, causes of
action and rights that Employee has or might have under the SCA of any kind
or character whatsoever, whether known or unknown.
3. In the event the Merger Agreement is terminated, then this Agreement shall
have no further force or effect.
4. This Agreement may be executed in counterparts by the parties hereto, each
of which when so executed shall be deemed an original and both of which,
taken together, shall constitute one and the same agreement.
The parties have executed this Agreement on the day and year first above
written.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser
President/CEO
EMPLOYEE:
By: /s/ Nina G. Drake
Nina G. Drake VP/Human Resources
Exhibit 10(i).1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of January 1, 2003, by and between
KLAMATH FIRST FINANCIAL SERVICES, INC. (the "Company"), an Oregon
corporation; and Jeffrey D. Schlenker (the "Executive").
WHEREAS, the Company wishes to assure itself of the services of Executive
for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Company on
a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties
hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
President & Program Manager of the Company. During said period, Executive
also agrees to serve, if elected, as an officer of the Company or any
affiliate of the Company.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of
twenty-four (24) full calendar months thereafter. Commencing on the
first anniversary date, and continuing at each anniversary date
thereafter, the Board of Directors of the Company (the "Board") or its
parent companies' Compensation Committee may extend the Agreement for
an additional year. Prior to the extension of the Agreement as
provided herein, the Board of Directors of the Company will review the
Executive's performance evaluation for purposes of determining whether
to extend the Agreement, and the results thereof shall be included in
the minutes of the Board's meeting.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all
his business time, attention, skill, and efforts to the faithful
performance of his duties hereunder including activities and services
related to the organization, operation and management of the Company;
provided, however, that, with the approval of the Board, as evidenced
by a resolution of such Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which, in
such Board's judgment, will not present any conflict of interest with
the Company, or materially affect the performance of Executive's
duties pursuant to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2.
The Company shall pay Executive as compensation a salary of $ 45,000
per year ("Base Salary") effective 1/1/2003. Such Base Salary shall be
payable in accordance with the customary payroll practices of the
Company. During the period of this Agreement, Executive's Base Salary
shall be reviewed at least annually; the first such review will be
made no later than one year from the date of this Agreement. Such
review shall be conducted by the Board or its parent companies'
Compensation Committee, and the Board may increase Executive's Base
Salary. In addition to the Base Salary provided in this Section 3(a),
the Company shall provide Executive at no cost to Executive with all
such other benefits as are provided uniformly to regular salaried
employees of the Company.
(b) The Company will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in
which Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and
the Company will not, without Executive's prior written consent, make
any changes in such plans, arrangements or perquisites which would
adversely affect Executive's rights or benefits thereunder. However,
changes in Company-sponsored group insurance plan premiums,
deductibles, co-payments and related coverage limits or conditions are
excluded from the prior sentence for any such change which is
consistently applied to or available to regular salaried Company
employees. Without limiting the generality of the foregoing provisions
of this Subsection (b), Executive will be entitled to participate in
or receive benefits under any employee benefit plans including, but
not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, health-and-accident plan, medical
coverage or any other employee benefit plan or arrangement made
available by the Company in the future to its senior executives and
key management employees, subject to, and on a basis consistent with,
the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and
bonuses as provided in any plan, or pursuant to any arrangement of the
Company, in which Executive is eligible to participate. Nothing paid
to the Executive under any such plan or arrangement will be deemed to
be in lieu of other compensation to which the Executive is entitled
under this Agreement, except as provided under Section 5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Company shall pay or reimburse Executive for all
reasonable travel and other obligations under this Agreement and may
provide such additional compensation in such form and such amounts as
the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an
"Event of Termination" shall mean and include any one or more of the
following: (i) the termination by the Company of Executive's full-time
employment hereunder for any reason other than a Change in Control, as
defined in Section 5(a) hereof; disability, as defined in Section 6(a)
hereof; death; or retirement, as defined in Section 7 hereof; (ii)
Executive's resignation from the Company's employ, upon (A) unless
consented to by the Executive, a material change in Executive's
function, duties, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility,
importance, or scope from the position and attributes thereof
described in Sections 1 and 2, above, (any such material change shall
be deemed a continuing breach of this Agreement), (B) a relocation of
Executive's principal place of employment by more than 35 miles from
its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those
being provided as of the effective date of this Agreement, (C) the
liquidation or dissolution of the Company, or (D) any breach of this
Agreement by the Company. Upon the occurrence of any event described
in clauses (A), (B), (C), or (D), above, Executive shall have the
right to elect to terminate his employment under this Agreement by
resignation upon not less than sixty (60) days prior written notice
given within a reasonable period of time not to exceed, except in case
of a continuing breach, four calendar months after the event giving
rise to said right to elect.
(b) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Company
shall pay Executive, or, in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to the
payments due to the Executive for the remaining term of the Agreement,
including Base Salary, bonuses, and any other cash or deferred
compensation paid or to be paid (including the value of employer
contributions that would have been made on the Executive's behalf over
the remaining term of the agreement to any tax-qualified retirement
plan sponsored by the Company as of the Date of Termination), to the
Executive for the term of the Agreement provided, however, that if the
Company or its affiliates are not in compliance with their minimum
capital requirements or if such payments would cause the Company's or
its affiliates' capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the
Company or its affiliates are in capital compliance. All payments made
pursuant to this Section 4(b) shall be paid in substantially equal
monthly installments over the remaining term of this Agreement
following the Executive's termination; provided, however, that if the
remaining term of the Agreement is less than one (1) year (determined
as of the Executive's Date of Termination), such payments and benefits
shall be paid to the Executive in a lump sum within 30 days of the
Date of Termination.
(c) Upon the occurrence of an Event of Termination other than for Cause or
for Neglect (as described in Sections 8 and 9 hereof), the Company
will cause to be continued life, medical, dental and disability
coverage substantially identical to the coverage maintained by the
Company for Executive prior to his termination. Such coverage shall
cease upon the expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or its parent companies,
Klamath First Federal Savings and Loan Association or Klamath First
Bancorp, Inc. For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to occur if and when (a) an offeror other
than the Company or its parent companies purchases shares of the
common stock of the Company or its parent companies pursuant to a
tender or exchange offer for such shares, (b) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) is or becomes the beneficial owner, directly or indirectly,
of securities of the Company or its parent companies representing 25%
or more of the combined voting power of the Company's or its parent
companies' then outstanding securities, (c) the membership of the
board of directors of the Company or its parent companies changes as
the result of a contested election, such that individuals who were
directors at the beginning of any twenty-four month period (whether
commencing before or after the effective date of this Agreement) do
not constitute a majority of the Board at the end of such period, or
(d) shareholders of the Company or its parent companies approve a
merger, consolidation, sale or disposition of all or substantially all
of the Company's or its parent companies' assets, or a plan of partial
or complete liquidation.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Company has
determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of
this Section 5 upon his subsequent involuntary termination of
employment at any time during the term of this Agreement (or voluntary
termination following a Change of Control following any demotion, loss
of title, office or significant authority, reduction in his annual
compensation or benefits, or relocation of his principal place of
employment by more than 35 miles from its location immediately prior
to the Change in Control), unless such termination is because of his
death, retirement as provided in Section 7, termination for Cause, or
termination for Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Company shall pay Executive, or in the event of
his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
1.50 times the "base salary" as defined in Section 3.c as above, as amended.
Such payment shall be made in a lump sum paid within ten (10) days of the
Executive's Date of Termination.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Company will cause to be continued
life, medical, dental and disability coverage substantially identical
to the coverage maintained by the Company or its parent companies for
Executive prior to his severance. In addition, Executive shall be
entitled to receive the value of employer contributions that would
have been made on the Executive's behalf over the remaining term of
the agreement to any tax-qualified retirement plan sponsored by the
Company as of the Date of Termination. Such coverage and payments
shall cease upon the expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the
Company or its parent companies on his behalf, pursuant to any
retirement, incentive, profit sharing, bonus, performance, disability
or other employee benefit plan maintained by the Company or its parent
companies on the Executive's behalf to the extent that such benefits
are not otherwise paid to the Executive upon a Change in Control.
(f) IRS Section 280G Issues. If 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 Company
or its parent companies, 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 Company
(and its successor) shall be responsible for any loss of deductibility
related thereto; provided, however, that Company 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
Company immediately prior to the change in control or such other
independent accounting firm or advisor as may be mutually agreeable to
Company and Executive in the exercise of their reasonable good faith
judgment.
6. TERMINATION FOR DISABILITY.
(a) If the Executive shall become disabled as defined in the Company's
then current disability plan (or, if no such plan is then in effect,
if the Executive is permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code as determined by a physician
designated by the Board), the Company may terminate Executive's
employment for "Disability."
(b) Upon the Executive's termination of employment for Disability, the
Company will pay Executive, as disability pay, a semi-monthly payment
equal to three-quarters (3/4) of Executive's semi-monthly rate of Base
Salary on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's
termination and will end on the earlier of (i) the date Executive
returns to the full-time employment of the Company in the same
capacity as he was employed prior to his termination for Disability
and pursuant to an employment agreement between Executive and the
Company; (ii) Executive's full-time employment by another employer;
(iii) Executive attaining the age of 65; or (iv) Executive's death; or
(v) the expiration of the term of this Agreement. The disability pay
shall be reduced by the amount, if any, paid to the Executive under
any plan of the Company providing disability benefits to the
Executive.
(c) The Company will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained
by the Company for Executive prior to his termination for Disability.
This coverage and payments shall cease upon the earlier of (i) the
date Executive returns to the full-time employment of the Company, in
the same capacity as he was employed prior to his termination for
Disability and pursuant to an employment agreement between Executive
and the Company; (ii) Executive's full-time employment by another
employer; (iii) Executive's attaining the age of 65; or (iv) the
Executive's death; or (v) the expiration of the term of this
Agreement.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during
which Executive is incapable of performing his duties hereunder by
reason of temporary disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Company of Executive based on "Retirement" shall mean
retirement at age 65 or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination
of Executive upon Retirement, Executive shall be entitled to all benefits
under any retirement plan of the Company or the Company and other plans to
which Executive is a party. Upon the death of the Executive during the term
of this Agreement, the Company shall pay to Executive's estate the
compensation due to the Executive through the last day of the calendar
month in which his death occurred.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this Agreement. In addition,
"Termination for Cause" shall include termination because of the
Executive's intentional failure to perform stated duties, such as the
refusal of the Executive to comply with the Company's or its parent
companies' instructions, policies or rules or other willful conduct of the
Executive which materially adversely reflects on the Company's or its
parent companies' reputation or operation. For purposes of this Section, no
act, or the failure to act, on Executive's part shall be "willful" unless
done, or omitted to be done, not in good faith and without reasonable
belief that the action or omission was in the best interest of the Company
or its affiliates. Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive
shall not have the right to receive compensation or other benefits for any
period after termination for Cause. Any stock options granted to Executive
under any stock option plan or any unvested awards granted under any other
stock benefit plan of the Company, the Company, or any subsidiary or
affiliate thereof, shall become null and void effective upon Executive's
receipt of Notice of Termination for Cause pursuant to Section 9 hereof,
and shall not be exercisable by Executive at any time subsequent to such
Termination for Cause.
9. TERMINATION FOR NEGLECT.
The Company and its parent companies or any of them may terminate
Executive's employment under this Agreement at any time for Neglect. For
purposes of this Agreement, "Neglect" means the failure of Executive to
give due care to stated duties or to comply with instructions or directives
of the Board of Directors of the Company or its parent companies or any of
them, but where such failure is not determined to be willful or intentional
as defined in Section 8. Termination for Neglect includes termination as
the result of any continuing or repeated problems with Executive's job
performance or conduct after written notice specifying such problem with
performance or conduct, and where such continuing and repeated problems
were not determined to be willful or intentional, or where the conduct was
not deemed to have a material adverse impact on the Company or its
affiliates. Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated by Neglect unless and until there shall have been sent
to Executive a copy of a resolution duly adopted by a majority of the Board
of Directors of the Company or its parent companies, or any of them
(excluding the Executive in counting the majority if the Executive is then
on the board of directors, and after reasonable notice to Executive and an
opportunity for Executive to be heard before the board of directors),
finding that in the good faith opinion of the board of directors of the
Company or its parent companies, or any of them, Executive engaged in
conduct justifying termination for Neglect and describing specifically the
conduct. Executive shall not have the right to receive any salary or bonus
for any period after termination of employment for Neglect. Executive shall
retain any vested benefits in defined benefit plans, defined contribution
plans, supplemental executive retirement plans, stock option plans,
restricted stock plans, or other such benefits, but shall forfeit any
rights that have not vested.
10. REQUIRED PROVISIONS.
(a) The Company or its parent companies may terminate Executive's
employment at any time, but any termination by the Company or its
parent companies, other than as described in Section 8 or Section 9 of
this Agreement, shall not prejudice Executive's right to compensation
or other benefits under this Agreement. Executive shall not have the
right to receive compensation or other benefits for any period after
Termination for Cause as defined in Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Company's or its parent companies'
affairs by a notice served under Section 8(e)(3) or (g)(1) of the
Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(3) and
(g)(1)), the Company's obligations under the Agreement shall be
suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Company
may, in its discretion, (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended
and (ii) reinstate (in whole or in part) any of its obligations that
were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Company's or its parent companies'
affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA
(12 U.S.C. 1818(e)(4) or (g)(1)), all obligations of the Company under
the Agreement shall terminate as of the effective date of the order,
but vested rights of the contracting parties shall not be affected.
(d) If the Company or its parent companies are in default (as defined in
Section 3(x)(1) of the FDIA), all obligations under this Agreement
shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated (except to
the extent determined that continuation of the Agreement is necessary
for the continued operation of the Company or its parent companies):
(i) by the Director of the Office of Thrift Supervision (the
"Director") or his or her designee at the time the Federal Deposit
Insurance Corporation or the Resolution Trust Corporation enters into
an agreement to provide assistance to or on behalf of the Company or
its parent companies under the authority contained in Section 13(c) of
the FDIA or (ii) by the Director, or his or her designee at the time
the Director or such designee approves a supervisory merger to resolve
problems related to operation of the Company or its parent companies,
or when the Company or its parent companies are determined by the
Director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by
such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12
U.S.C. section 1828(k) and any regulations promulgated thereunder.
11. NOTICE.
(a) Any purported termination by the Company or by Executive shall be
communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination
of Executive's employment under the provision so indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of
Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such thirty (30)
day period), and (B) if his employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the
case of a Termination for Cause, shall not be less than thirty (30)
days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, except upon
the occurrence of a Change in Control and voluntary termination by the
Executive in which case the Date of Termination shall be the date
specified in the Notice, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent jurisdiction
(the time for appeal there from having expired and no appeal having
been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given
in good faith and the party giving such notice pursues the resolution
of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Company will continue to pay
Executive his full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, Base Salary)
and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of
dispute was given, until the dispute is finally resolved in accordance
with this Agreement. Amounts paid under this Section are in addition
to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
12. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to
an Event of Termination as provided in Section 4 hereof, Executive
agrees not to compete with the Company and/or its parent companies for
a period of one (1) year following such termination in any city, town
or county in which the Company and/or its parent companies have an
office or have filed an application for regulatory approval to
establish an office, determined as of the effective date of such
termination. Executive agrees that during such period and within said
cities, towns and counties, Executive shall not work for or advise,
consult or otherwise serve with, directly or indirectly, any entity
whose business materially competes with the depository, lending or
other business activities of the Company and/or its parent companies.
The parties hereto, recognizing that irreparable injury will result to
the Company and/or its parent companies, their business and property
in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Company and/or its
parent companies will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation
hereof by Executive, Executive's partners, agents, servants,
employers, employees and all persons acting for or with Executive.
Executive represents and admits that in the event of the termination
of his employment pursuant to Section 8 hereof, Executive's experience
and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the
Company and/or its parent companies, and that the enforcement of a
remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the
Company and/or its parent companies from pursuing any other remedies
available to them for such breach or threatened breach, including the
recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Company
and affiliates thereof, as it may exist from time to time, is a
valuable, special and unique asset of the business of the Company.
Executive will not, during or after the term of his employment,
disclose any knowledge of the past, present, planned or considered
business activities of the Company or affiliates thereof to any
person, firm, corporation, or other entity for any reason or purpose
whatsoever. Notwithstanding the foregoing, Executive may disclose any
knowledge of banking, financial and/or economic principles, concepts
or ideas which are not solely and exclusively derived from the
business plans and activities of the Company. In the event of a breach
or threatened breach by the Executive of the provisions of this
Section, the Company and/or its affiliates will be entitled to an
injunction restraining Executive from disclosing, in whole or in part,
the knowledge of the past, present, planned or considered business
activities of the Company or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such
knowledge, in whole or in part, has been disclosed or is threatened to
be disclosed. Nothing herein will be construed as prohibiting the
Company and/or its affiliates from pursuing any other remedies
available to them for such breach or threatened breach, including the
recovery of damages from Executive.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Company or any
predecessor of the Company and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement
shall be interpreted to mean that Executive is subject to receiving fewer
benefits than those available to him without reference to this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation, or to
execution, attachment, levy, or similar process or assignment by
operation of law, and any attempt, voluntary or involuntary, to affect
any such action shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Company, the Company and their respective successors
and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party
charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and
each such waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or
condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full
extent consistent with law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein; provided, however, that in the event of a
conflict between the terms of this Agreement and any applicable federal or
state law or regulation, the provisions of such law or regulation shall
prevail.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by the employee
within one hundred (100) miles from the location of the Company, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that Executive shall be entitled to
seek specific performance of his right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be
paid or reimbursed by the Company, if successful pursuant to a legal
judgment, arbitration or settlement.
22. INDEMNIFICATION.
The Company or its parent companies shall provide Executive (including his
heirs, executors and administrators) with coverage under a standard
directors' and officers' liability insurance policy at its expense, or in
lieu thereof, shall indemnify Executive (and his heirs, executors and
administrators) to the fullest extent permitted under law against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suite or proceeding in which he may be involved
by reason of his having been a director or officer of the Company (whether
or not he continues to be a directors or officer at the time of incurring
such expenses or liabilities), such expenses and liabilities to include,
but not be limited to, judgment, court costs and attorneys' fees and the
cost of reasonable settlements.
23. SUCCESSOR TO THE COMPANY.
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company or its parent
companies, expressly and unconditionally to assume and agree to perform the
Company's obligations under this Agreement, in the same manner and to the
same extent that the Company would be required to perform if no such
succession or assignment had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer or director of the Company, and
Executive has signed this Agreement, all on the 14th day of July, 2003.
KLAMATH FIRST FINANCIAL SERVICES, INC.
BY: /s/ Kermit K. Houser
Kermit K. Houser, Chairman of the Board
/s/ Jeffrey D. Schlenker /s/ Nina G. Drake
Jeffrey D. Schlenker WITNESS:
Exhibit 10(i).2
FIRST AMENDMENT TO employment AGREEMENT
This FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into on July 14, 2003, by and between Klamath Federal Savings and
Loan Association ("Association"), Klamath First Bancorp, Inc., ("Company")
and the undersigned executive officer of Association and Company (the
"Executive").
WHEREAS, Association, Company and Executive entered into an Employment
Agreement dated July 11, 2003, (the "Employment Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger dated as
of July 14, 2003, (the "Merger Agreement") with Sterling Financial
Corporation ("Sterling") with respect to a proposed transaction (the
"Transaction") whereby Sterling will acquire all of the outstanding shares
of Company common stock in a stock merger;
WHEREAS, Association and Company desire to enter into this Agreement to
facilitate the Transaction; and
WHEREAS, the Executive desires to enter into this Agreement to facilitate
the Transaction so as to enable his change in control of benefits to be
triggered under the Employment Agreement and his Executive Salary
Continuation Agreement, and to enhance the value of shares of common stock
of Company owned by the Executive and the value of his stock options to
acquire common stock of Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Capitalized terms used herein, to the extent not defined otherwise,
shall have the meaning ascribed to them in the Employment Agreement.
2. Section 5(c) of the Employment Agreement is amended in full as
follows:
"Upon the occurrence of a Change in Control arising from or related to
the Merger Agreement, Association shall pay the Executive as severance
pay or liquidated damages, or both (the "Base Severance Amount"), an
amount equal to $67,500. In the event that all conditions to closing
under the Merger Agreement have been satisfied during calendar year
2003, then Association shall make payment of the Base Severance Amount
plus the Additional Severance Amount (as defined in Section 5(d)
below) to the Executive on December 31, 2003. In the event such
closing conditions are not satisfied during calendar year 2003, then
the payments contemplated herein shall be made within 10 days after
consummation of the merger contemplated by the Merger Agreement.
Notwithstanding the foregoing, if the Executive enters into a new
written employment agreement with Sterling or Sterling Savings Bank
prior to December 31, 2003 (but effective upon completion of the
merger contemplated by the Merger Agreement), then the Severance
Amount and Additional Severance Amount shall not be paid pursuant to
the terms hereof and any severance to be provided to the Executive, if
any, shall be set forth in such new written employment agreement."
Section 5(d) of the Employment Agreement is amended in full as
follows:
"Upon the occurrence of a Change in Control arising from or related to
the Merger Agreement, Association shall pay the Executive as
additional severance the amount of $5,750 (the "Additional Severance
Amount") in lieu of any obligation to pay the Executive the value of
employer contributions that would have been made on the Executive's
behalf over the remaining term of the agreement to any tax-qualified
retirement plan. The Additional Severance Amount shall be paid at the
time the Base Severance Amount is paid pursuant to Section 5(c) above.
Upon the Executive's termination of service in connection with or
following a Change in Control arising from or relating to the Merger
Agreement, Sterling Savings Bank, as successor-in-interest to the
Association, shall provide the Executive with continued life, medical,
dental and disability coverage as is then provided by Sterling Savings
Bank to its full-time employees, as the same may be changed from time
to time, during the 36 month period next following the Executive's
Date of Termination with the cost to be absorbed by the Executive
being equal to the lesser of (i) the employee cost of coverage
currently being borne by the Executive or (ii) the employee cost of
coverage borne by full-time employees of Sterling Savings Bank
receiving the same coverage; provided if the cost of coverage to be
borne by the Executive is determined under subpart (i), then such cost
shall be subject to pro rata adjustment based upon the pro rata
adjustment in cost of coverage that is borne by full-time employees of
Sterling Savings Bank receiving the same coverage after completion of
the merger contemplated by the Merger Agreement."
3. New Section 24 is added to the Employment Agreement as follows:
"24. Long Term Medical Care. The Executive shall have a right to
participate in the long term medical care program to be implemented by
Association if the Executive meets the eligibility requirements of the
insurer. If the Executive meets the eligibility requirements of the
insurer and becomes a participant in the long term medical care
program, then in that event, his Base Severance Amount shall be
reduced by the single premium cost paid by Association for such long
term medical care on behalf of the Executive (which is estimated to be
$34,000) and the Executive shall have no obligation to reimburse
Association for any premium cost relating to such program after the
Executive's termination of employment."
4. The Employment Agreement shall be further amended by adding thereto an
"Exhibit A to the Employment Agreement" in the form attached hereto as
Appendix I.
5. Except as specifically set forth herein, the Employment Agreement
shall continue in full force and effect. To the extent that any
provision contained in this Agreement is inconsistent with any of the
provisions of the Employment Agreement, including but not limited to,
Section 5(b) thereof, the provisions contained in this Agreement shall
be controlling.
6. In the event the Merger Agreement is terminated, then this Agreement
shall have no further force or effect.
7. This Agreement may be executed in counterparts by the parties hereto,
each of which when so executed shall be deemed an original and all of
which, taken together, shall constitute one and the same agreement.
The parties have entered this Agreement on July 14, 2003.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser President/CEO
KLAMATH FIRST BANCORP, INC.
By: /s/ Craig M Moore
Craig M Moore Chief Auditor
EXECUTIVE:
By: /s/ Jeffery D. Schlenker
Jeffery D. Schlenker President of KFFS
Exhibit 10(i).3
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, entered into and effective this First day of January, 2003,
by and between Klamath First Federal Savings and Loan Association, a Federal
Savings and Loan Association (hereinafter referred to as the "Employer"), and
Jeffery D. Schlenker, an Employee of the Employer (hereinafter referred to as
the "Employee"), who resides in the State of Oregon.
W I T N E S S E T H:
WHEREAS, the Employee is an employee of the Employer and, since January 1,
2003 has become eligible to participate in the Executive Salary Continuation
Plan represented by this Agreement (the "Plan");
WHEREAS, the Employer desires to establish a compensation benefits program
as a fringe benefit for certain officers of the Employer in order to attract and
retain individuals with extensive and valuable experience in the banking
industry;
WHEREAS, the Employee'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 Employee with certain benefits, on the terms and conditions set
forth herein, in order to reasonably induce the Employee to remain in the
Employer's employment and to compensate the Employee for valuable services
heretofore rendered to the Employer; and
WHEREAS, the Employee and the Employer wish to specify in writing the terms
and conditions upon which this additional compensatory incentive will be
provided to the Employee, or to the Employee's spouse or the Employee's
designated beneficiaries, as the case may be;
FURTHERMORE, it is the intent of the parties hereto that this Employee Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Employee, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Employee is fully advised of the
Employer's financial status and the design and operation of this benefit plan;
and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
Although this Agreement is intended to provide the Employee 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 Employee and the Employer nor shall any provision of this
Agreement restrict or expand the right of the Employer to terminate
the Employee's employment. This Agreement shall have no impact or
effect upon any separate written Employment Agreement which the
Employee 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 from, and shall have no effect upon, or be affected
by, the terms and provisions of said Employment Agreement.
Except as otherwise set forth in this Agreement, the term "Employer"
shall mean Klamath First Federal Savings and Loan Association;
provided, further, that for purposes of this Agreement, the term
"Employer" shall mean Klamath First Bancorp, Inc. and its subsidiaries
and affiliated entities, including any parent holding company and its
subsidiaries.
II. FRINGE BENEFITS
The salary continuation benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Employee and are
not part of any salary reduction plan or an arrangement deferring a
bonus or a salary increase. The Employee has no option to take any
current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.
III. retirement date and early retirement date
A. Retirement Date:
The term "Retirement" or "Retires" shall refer to the date which the
Employee attains sixty-two ("62") years of age and acknowledges in
writing to the Employer to be the last day the Employee will provide
any significant personal services, whether as an employee or
independent consultant or contractor, to the Employer.
B. Early Retirement Date:
The term "Early Retirement Date" shall mean the Retirement, as
defined above, of the Employee on, or after the Employee achieves
fifty-five (55) years of age, but has not yet reached sixty-two
(62) years of age.
IV. retirement benefit and early retirement benefit
A. Retirement Benefit:
If the Employee shall remain in the continuous employment of the
Employer until attaining age sixty-two (62), the Employee shall
be entitled to be paid the "Normal Retirement Benefit" specified
in Schedule A, payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Employee Retires (or on
such later date as may be mutually agreed upon by the Employee
and the Employer in advance of said Retirement date) payable
until the Employee's death. After commencement of payments, the
Normal Retirement Benefit will increase by two percent (2%) per
year.
B. Early Retirement Benefit:
The Employee shall have the right to retire on a date which
constitutes an Early Retirement Date as defined in Subparagraph
III (B) above. In the event the Employee elects to Retire on a
date which constitutes an Early Retirement Date, and said early
retirement is not pursuant to a Change in Control as defined in
paragraph VI below, the Employee shall be entitled to be paid the
"Normal Retirement Benefit" specified in Schedule A for the date
the Retirement occurs, but reduced by a factor of one-half of one
percent (.5%) per month for each month or portion thereof that
the Early Retirement occurs prior to the Retirement Date. The
benefit shall be payable in substantially equal monthly
installments on the first day of each month, beginning with the
month following the month in which the Early Retirement Date
occurs (or on such later date as may be mutually agreed upon by
the Employee and the Employer in advance of such Early Retirement
Date). After commencement of payments, the Early Retirement
benefit will increase by two percent (2%) per year.
Example: If the Early Retirement Date occurs on the Employee's
60th birthday and if the Retirement Date in Section III.A. above
is at age 62, the Normal Retirement Benefit specified in Schedule
"A" as of the Employee's 60th birthday would be reduced by 12%
[.5% x 24 months].
V. other termination of EMPLOYMENT and DISABILITY
A. Payments in the Event Employment Is Terminated Prior to
Retirement:
The Employer reserves the right to terminate the Employee's
employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to
the Employee's Retirement. In the event that the employment of
the Employee shall be terminated, other than by reason of death,
Disability or Retirement, prior to the Employee's attaining
sixty-two (62) years of age, then this Agreement shall terminate
on the date of such termination of employment; provided, however,
that the Employee shall be entitled to the following benefits as
may be applicable depending upon the circumstances surrounding
the Employee's termination:
(i) Termination for Other Than Disability, Change in Control
or Cause:
If the Employee's employment is terminated by the Employee or by
the Employer for any reason other than Disability, "Change in
Control" or "Termination for Cause," the Employee shall be
entitled to be paid the "Normal Retirement Benefit" specified in
Schedule A as of the date of termination, payable in
substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Employee attains sixty-two (62) years of age (or on such later
date as may be mutually agreed upon by the Employee and the
Employer not less than fifteen (15) days prior to such
commencement date) payable until the Employee's death, and shall
increase by two percent (2%) per year. Alternatively, upon
achieving age fifty-five (55) but before achieving age sixty-two
(62), the Employee may choose to receive the Early Retirement
Benefit with the reductions from the "Normal Retirement Benefit"
as of the date of termination, and as described in Section IV.B.
of this Agreement. The benefit shall be payable in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Early
Retirement Date occurs (or on such later date as may be mutually
agreed upon by the Employee and the Employer not less than
fifteen (15) days prior to such commencement date) payable to the
Employee's death, and shall increase by two percent (2%) per
year.
(ii) Termination for Cause:
If the Employee suffers a "Termination for Cause", as defined
herein below, the Employee shall forfeit any and all rights and
benefits the Employee 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 Employee by the Employer pursuant
to the terms of this Agreement. The term "Termination for Cause"
shall have the definition provided in the Employee's Employment
Agreement, as amended from time to time with the Employer. If the
Employee has no Employment Agreement with the Employer,
"Termination for Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any
law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. For purposes
of this Section, no act, or the failure to act, on Employee's
part shall be "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief that the action or
omission was in the best interest of the Association or its
affiliates. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board, the Employee was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.
B. Payment in the Event of Disability Prior to Retirement:
The Employee shall, in connection with acceptance of this
Agreement, elect below either the "Lump Sum Payment" or the
"Annuity for Life" option in the event the Employee becomes
disabled at any time after the Effective Date of this Agreement
but prior to Retirement. The term "Disability" or "Disabled"
shall have the same meaning given such terms in any policy of
disability insurance maintained by the Employer for the benefit
of employees including the Employee. In the absence of such a
policy, which extends coverage to the Employee in the event of
disability, the terms shall mean bodily injury or disease (mental
or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least
one hundred twenty (120) days.
(i) Lump Sum Payment.
The Employee shall be entitled to be paid the lump sum
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or date the
Employee otherwise terminated service with the Employer
other than for Cause. The lump sum shall be payable 60 days
from the date the Employer has received a written request to
commence benefits, along with documentation showing that the
Employee has become disabled.
(ii) Annuity for Life.
The Employee shall be entitled to be paid an annuity for the
Employee's life. The Employer shall purchase such an annuity
from an insurance company with an A. M. Best or Moody's
rating of no less than AA and using the amount of
"Disability Benefit" specified in Schedule A, determined as
of the earlier of the date of disability or the date the
Employee otherwise terminated service with the Employer
other than for Cause. The Employer shall purchase the
annuity within 60 days from the date the Employer has
received a written request to commence benefits, along with
documentation showing that the Employee has become Disabled.
Nevertheless, if the amount of the applicable "Disability
Benefit" specified in Schedule A is $50,000.00 or less, the
payment shall be as a lump sum to the Employee and not the
purchase of an annuity for life.
(iii) Employee Election of Disability Benefit.
I elect to receive the following Disability Benefit (Please
sign on applicable line):
/s/ Jeffery D. Schlenker Lump Sum Benefit.
________________________ Annuity for Life.
VI. CHANGE OF CONTROL
A. Definition of Change In Control:
A "Change in Control" of Klamath First Bancorp, Inc. (the
"Company") or Klamath First Federal Savings and Loan
Association (the "Association") shall be deemed to occur if
and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Association
pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company or the Association representing
25% or more of the combined voting power of the Company's or
the Association's then outstanding securities, (c) the
membership of the board of directors of the Company or the
Association changes as the result of a contested election,
such that individuals who were directors at the beginning of
any twenty-four month period (whether commencing before or
after the effective date of this Agreement) do not
constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the
Association approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's or
the Association's assets, or a plan of partial or complete
liquidation.
B. Termination by the Employer on Account of or After a Change in
Control:
In the event the Employee's employment with the Employer is
terminated by the Employer in connection with a Change in
Control, the Employee shall be immediately vested in the
"Normal Retirement Benefit" specified in Schedule A for the
date the Employee achieves age sixty-two (62). The Employee
shall be entitled to be paid the "Change in Control Benefit"
specified in Schedule A, in substantially equal monthly
installments on the first day of each month, beginning no
sooner than the month following the month in which the
Employee attains age fifty-five (55), as requested in
writing by the Employee and delivered to the Employer or its
successor thirty (30) days prior to the commencement of
installment payments; provided, however, that in the event
the Employee does not request a commencement date as
specified, such installments shall be paid on the first day
of each month, beginning with the month following the month
in which the Employee attains sixty-two (62) years of age.
Upon the commencement of payments, the installments shall be
payable until the Employee's death, and shall increase by
two percent (2%) per year.
A termination shall be deemed to be in connection with a
Change in Control if, within two (2) years following the
occurrence of a Change in Control: (a) the Employee's
employment with the Employer is terminated by the Employer
other than a Termination for Cause; or (b) by reason of the
Employer's actions any adverse change occurs in the scope of
the Employee's position, material responsibilities and
duties, salary, benefits or location of employment; or (c)
the Employer causes an event to occur which reasonably
constitutes or results in a demotion, loss of title, a
significant diminution of responsibilities or authority, or
a constructive termination (by forcing a resignation or
otherwise) of the Employee's employment.
VII. benefit accounting
The Employer shall account for this benefit using the
regulatory accounting principles of the Employer's primary
federal regulator. The Employer shall establish an accrued
liability retirement account for the Employee into which
appropriate reserves shall be accrued.
VIII. restrictions on funding
The Employer shall have no obligation to set aside, earmark
or entrust any fund or money with which to pay its
obligations under this Employee Plan. The Employee, her or
his beneficiary (ies), or any successor in interest shall be
and remain simply a general creditor of the Employer in the
same manner as any other creditor having a general claim for
matured and unpaid compensation. The Employer reserves the
absolute right, at its sole discretion, to either fund the
obligations undertaken by this Employee Plan or to refrain
from funding the same and to determine the extent, nature
and method of such funding. Should the Employer elect to
fund this Employee Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability
policies or annuities, the Employer reserves the absolute
right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Employee
be deemed to have any lien, right, title or interest in any
specific funding investment or assets of the Employer.
If the Employer elects to invest in a life insurance,
disability or annuity policy on the life of the Employee,
then the Employee shall assist the Employer by freely
submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
Notwithstanding anything hereinabove to the contrary, the
Employer and the Employee acknowledge and agree that, in the
event of a Change in Control and at the written request of
the Employee, the Employer 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 Employer in its sole discretion
deems appropriate and in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended
(the "Code") in order to permit the Employer 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
Employer to be used exclusively for discharge of the
Employer's obligations pursuant to this Agreement and shall
continue to be subject to the claims of the Employer's
general creditors until paid to the Employee or its
beneficiaries in such manner and at such times as specified
in this Agreement
IX. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
The Employee shall have no power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify
or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Employee nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Employee attempts
assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Employer's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Employer and any Successor in
Interest:
The Employer shall not merge or consolidate into or with
another Employer or sell substantially all of its assets to
another Employer, firm or person until such Employer, firm
or person expressly agree, in writing, to assume and
discharge the duties and obligations of the Employer under
this Employee Plan. This Employee Plan shall be binding upon
the parties hereto, their successors, beneficiaries, heirs
and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Employee, this Employee Plan may be
amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Employee and the
Employer.
D. Gender:
Whenever in this Employee Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever
they should so apply.
E. Effect on Other Employer Benefit Plans:
Nothing contained in this Employee Plan shall affect the
right of the Employee to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Employer's existing or
future compensation structure.
F. Headings:
Headings and subheadings in this Employee Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Employee Plan.
G. Applicable Law:
The laws of the State of Oregon shall govern the validity
and interpretation of this Agreement.
H. Partial Invalidity:
If any term, provision, covenant, or condition of this
Employee Plan 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 Employee Plan shall remain in full force and effect
notwithstanding such partial invalidity.
I. Not a Contract of Employment:
This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to
discharge the Employee, or restrict the right of the
Employee to terminate employment.
J. Notices:
Any notice required or permitted of either the Employee or
the Employer 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.
If to the Employer: Klamath First Bancorp, Inc.
540 Main Street
Klamath Falls, Oregon 97601-6047
Attention: Human Resources
If to the Employee: Jeffery D. Schlenker
PO Box T
Klamath Falls, OR 97601
K. Opportunity To Consult With Independent Advisors:
The Employee acknowledges that the Employee has been
afforded the opportunity to consult with independent
advisors of his or her choosing including, without
limitation, accountants or tax advisors and counsel
regarding both the benefits granted to the Employee under
the terms of this Agreement and the (i) terms and conditions
which may affect the Employee'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 Employee
acknowledges and agrees shall be the sole responsibility of
the Employee notwithstanding any other term or provision of
this Agreement. The Employee further acknowledges and agrees
that the Employer shall have no liability whatsoever related
to any such personal tax effects or other personal costs,
expenses, or liabilities applicable to the Employee and
further specifically waives any right for the Employee and
his or her heirs, beneficiaries, legal representatives,
agents, successors, and assigns to claim or assert liability
on the part of the Employer related to the matters described
above in this subparagraph. The Employee further
acknowledges and agrees that the Employee has read,
understands and consents to all of the terms and conditions
of this Agreement, and that the Employee enters into this
Agreement with a full understanding of its terms and
conditions.
X. ADMINISTRATIVE AND CLAIMS PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this
Employee Plan shall be Klamath First Bancorp, Inc., until
its resignation or removal by the Board. As Named Fiduciary
and Plan Administrator, the Employer shall be responsible
for the management, control and administration of the
Employee Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation
responsibilities of the Employee Plan including the
employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure:
In the event a dispute arises over benefits under this
Employee Plan and benefits are not paid to the Employee and
the claimant feels he is 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
provisions of this Employee Plan 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 a
further review of the claim denial is desired. A claim shall
be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid
forty-five-day period.
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 Employee Plan or any documents relating
thereto and submit any written issues and comments it 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.
C. Arbitration:
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 Employer 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"). In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business,
the parties agree that a representative member, selected by
the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), shall conduct the binding
arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the
other party to this Agreement and with JAMS (or AAA, if
necessary). 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, or if there are
none, the rules of procedure used or established by AAA. Any
award rendered by JAMS or AAA 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
Klamath Falls, Oregon, unless otherwise agreed to by the
parties.
D. 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, the prevailing party
shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees and costs incurred in
connection therewith or in the enforcement or collection of
any judgment or award rendered therein. The "prevailing
party" means the party determined by the arbitrator(s) or
court, as the case may be, to have most nearly prevailed,
even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
XI. SECTION 280G BENEFITS ADJUSTMENT
If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other
payments which the Employee has the right to receive from
the Employer, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment), the Employer (and its
successor) and the Employee each agree to pay their share of
any taxes that may be imposed as a result of payments made
pursuant to this Agreement; provided, however, that Employer
and Employee 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 Employee is greater than the amount initially
so determined, then the Employee 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.
In witness whereof, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
Klamath First Federal Savings and Loan Association
/s/ Kermit K. Houser /s/ Nina G. Drake
Kermit K. Houser Witness
President and CEO
/s/ Jeffery D. Schlenker /s/ Nina G. Drake
Jeffery D. Schlenker Witness
SCHEDULE A
EMPLOYEE BENEFIT SCHEDULE
JEFF SCHLENKER
DATE OF BIRTH: JUNE 20, 1967
HIRED ON: JUNE 15, 2001
NORMAL CHANGE IN DEATH BENEFIT: DEATH BENEFIT:
VESTING RETIREMENT CONTROL DISABILITY DEATH WHILE AFTER
DATE (1) BENEFIT (2) BENEFIT (3) BENEFIT (4) EMPLOYED (5) TERMINATION (6)
January 1, 2003 $1,538 NA $0 $2,037,770 $100,000
January 1, 2004 $4,614 NA $3,742 $2,037,770 $100,000
January 1, 2005 $9,228 NA $11,918 $2,037,770 $100,000
January 1, 2006 $15,379 NA $25,307 $2,037,770 $153,794
January 1, 2007 $23,069 NA $44,779 $2,037,770 $230,691
January 1, 2008 $32,297 NA $71,312 $2,037,770 $322,967
January 1, 2009 $43,062 NA $105,994 $2,037,770 $430,623
January 1, 2010 $55,366 NA $150,043 $2,037,770 $553,658
January 1, 2011 $69,207 NA $204,810 $2,037,770 $692,073
January 1, 2012 $76,897 NA $271,803 $2,037,770 $768,970
January 1, 2013 $84,587 NA $320,631 $2,037,770 $845,867
January 1, 2014 $92,276 NA $374,447 $2,037,770 $922,764
January 1, 2015 $99,966 NA $433,682 $2,037,770 $999,661
January 1, 2016 $107,656 NA $498,800 $2,037,770 $1,076,558
January 1, 2017 $115,345 NA $570,301 $2,037,770 $1,153,455
January 1, 2018 $123,035 NA $648,724 $2,037,770 $1,230,352
January 1, 2019 $130,725 NA $734,651 $2,037,770 $1,307,249
January 1, 2020 $138,415 NA $828,711 $2,037,770 $1,384,146
January 1, 2021 $146,104 NA $931,578 $2,037,770 $1,461,043
January 1, 2022 $153,794 $118,191 $1,043,982 $2,037,770 $1,537,940
January 1, 2023 $161,484 $130,417 $1,166,708 $2,037,770 $1,614,837
January 1, 2024 $169,173 $142,644 $1,300,602 $2,037,770 $1,691,734
January 1, 2025 $176,863 $154,870 $1,446,573 $2,037,770 $1,768,631
January 1, 2026 $184,553 $167,097 $1,605,604 $2,037,770 $1,845,528
January 1, 2027 $192,242 $179,324 $1,778,748 $2,037,770 $1,922,425
January 1, 2028 $199,932 $191,550 $1,967,143 $2,037,770 $1,999,322
January 1, 2029 $203,777 $203,777 $2,172,011 $2,037,770 $2,037,770
and thereafter $203,777 $203,777 NA see #5 below see #5 below
<FN>
1. The date that Normal Retirement and Death benefits vest. See separate footnotes for Change in Control and
Disability Benefits.
2. Annual Retirement Benefits payable at age sixty-two (62). Benefits are payable for life and increase by 2% per
year after Retirement.
3. The Employee is eligible to retire following Termination pursuant to a Change in Control any time after the
attainment of age fifty five (55). This is the annual sum the Employee will be paid if the Employee elects to
receive Retirement Benefits on or after the Employee's birthday, but before the following anniversary. Once
payments begin, Benefits are payable for life and increase by 2% per year thereafter.
4. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty
Balance as of disability date. Disability Benefit value is determined by straight-line interpolation between the
amounts showing in this column for Jan 1 of the calendar year the disability occurs and Jan 1 of the following
calendar year. Benefit is paid as Employee elected in the Agreement. No post-retirement benefit.
5. Death benefit equals 10x initial Normal Retirement Benefit to age 70, 7x initial Normal Retirement Benefit to
Age 80, and 3 x initial Normal Retirement Benefit thereafter.
6. Unless termination is for Cause, the death benefit is the greater of $100,000 or 10x the vested annual retirement
benefit at the time of termination.
</FN>
/s/ Jeffrey D. Schlenker 5/16/03 /s/ Kermit K. Houser 5/19/03
Jeffrey D. Schlenker Date Bank Officer Date
Exhibit 10(i).4
FIRST AMENDMENT TO executive salary continuation AGREEMENT
This FIRST AMENDMENT TO EXECUTIVE SALARY CONTINUATION AGREEMENT (this
"Agreement") is made and entered into on July 14, 2003, by and between
Klamath Federal Savings and Loan Association ("Employer") and the
undersigned executive officer of Employer ("Employee").
WHEREAS, Employer and Employee entered into an Executive Salary
Continuation Agreement (the "SCA") effective January 1, 2003;
WHEREAS, Klamath First Bancorp, Inc. ("Company"), the parent company of
Employer, has entered into an Agreement and Plan of Merger dated as of July
14, 2003, (the "Merger Agreement") with Sterling Financial Corporation
("Sterling") with respect to a proposed transaction (the "Transaction")
whereby Sterling will acquire all of the outstanding shares of Company
common stock in a stock merger;
WHEREAS, Employer desire to enter into this Agreement to facilitate the
Transaction; and
WHEREAS, Employee desires to enter into this Agreement to facilitate the
Transaction so as to enable Employee (a) to receive a cash-out of his
benefits under the SCA as provided herein, (b) to receive change in control
benefits under his employment agreement and (c) to enhance the value of
shares of common stock of Company owned by Employee and the value of his
stock options to acquire common stock of Company.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed by the parties as follows:
1. Notwithstanding anything contained in the SCA to the contrary,
Employer shall have the right to pay Employee at any time from the
date hereof through December 31, 2003 the amount of $511,577 less all
tax withholding obligations with respect thereto (the "Cash-Out
Amount") in full and complete satisfaction of all obligations of
Employer under the SCA and all rights of Employee under the SCA. Upon
Employer making payment of the Cash-Out Amount to Employee as provided
herein, the SCA shall terminate and shall have no further force or
effect.
2. Upon payment of the Cash-Out Amount to Employee by Employer as
provided in paragraph 1 above, Employee does hereby release and
forever discharge Employer, its affiliates, and their respective
assigns, directors, officers, employees and agents from any and all
claims, demands, causes of action and rights that Employee has or
might have under the SCA of any kind or character whatsoever, whether
known or unknown.
3. In the event the Merger Agreement is terminated, then this Agreement
shall have no further force or effect.
4. This Agreement may be executed in counterparts by the parties hereto,
each of which when so executed shall be deemed an original and both of
which, taken together, shall constitute one and the same agreement.
The parties have executed this Agreement on the day and year first
above written.
KLAMATH FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Kermit K. Houser
Kermit K. Houser President/CEO
EMPLOYEE:
By: /s/ Jeffrey D. Schlenker
Jeffery D. Schlenker President of KFFS
Exhibit 10(j).1
DIRECTOR FEE CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this First Day of January, 2003, by
and between Klamath First Bancorp, Inc., a thrift holding company (hereinafter
referred to as the "Bank"), and Rodney N. Murray, a member of the Board of
Directors of the Bank (hereinafter referred to as the "Director").
WITNESSETH:
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Director's services to the Bank in the past
have been of exceptional merit and have constituted an invaluable contribution
to the general welfare of the Bank and in bringing it to its present status of
operating efficiency, and its present position in its field of activity;
WHEREAS, the Director's experience, knowledge of the affairs of the Bank,
reputation, and contacts in the industry are so valuable that assurance of the
Director's continued services is essential for the future growth and profits of
the Bank and it is in the best interests of the Bank to arrange terms of
continued service for the Director so as to reasonably assure the Director's
remaining in the Bank's service during the Director's lifetime or until the age
of retirement;
WHEREAS, it is the desire of the Bank that the Director's services be
retained as herein provided;
WHEREAS, the Director is willing to continue to serve the Bank provided the
Bank agrees to pay the Director or the Director's surviving spouse, certain
benefits in accordance with the terms and conditions hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director at retirement or the Director's surviving spouse in the event of the
Director's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of the
Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. SERVICE
The Director will continue to serve the Bank in such capacity and with such
duties and responsibilities as may be assigned, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank.
II. FRINGE BENEFITS
The fee continuation benefits provided by this Agreement are granted by the
Bank as a fringe benefit to the Director and are not part of any fee
reduction plan or an arrangement deferring a bonus or a fee increase. The
Director has no option to take any current payment or bonus in lieu of
these fee continuation benefits except as set forth hereinafter.
III. retirement date AND NORMAL RETIREMENT AGE
A. Retirement Date: If the Director continuously serves the Bank, the
Director shall be eligible to retire from active service with the Bank
upon the attainment of age fifty-five (55) and receive the benefits
described below, unless by action of the Board of Directors this
period of active service shall be shortened or extended.
B. Normal Retirement Age: Normal Retirement Age shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-eight (68).
C. Normal Retirement Age Following a Change in Control: The term "Normal
Retirement Age Following a Change in Control" shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-five (65).
D. Early Retirement Date: The term "Early Retirement Date" shall mean the
Retirement of the Director from active service with the Bank at the
beginning of any month after the Director achieves age 55, but before
attaining age sixty-eight (68), [sixty-five (65) following a Change in
Control].
IV. DIRECTOR BENEFITS - normal retirement age
A. Director Emeritus Benefits: Upon the attainment of age sixty-five
(65), the Director shall be entitled to serve the Bank as a Director
Emeritus in accordance with the procedures and policies established by
the Board of Directors of the Bank applicable to service as a Director
Emeritus. If the Director elects to serve as a Director Emeritus, the
Director shall be paid two thousand eight hundred thirty four dollars
($2,834) per month for a period of thirty-six (36) months, commencing
with the Retirement Date and continuing until the earlier of the third
anniversary thereof, or the death of the Director. Monthly payments
will be increased by two percent at the end of each calendar year. If
the Director declines or is unable to serve as Director Emeritus, the
Director shall forfeit any entitlement to the Director Emeritus
Benefits.
B. Director Retirement Benefits: After the expiration of the thirty-six
(36) month period described above in Paragraph IV A., the Bank shall
pay to the Director Retirement Benefit Payments equal to three
thousand seven dollars per month ($3,007) until the death of the
Director. Monthly payments shall increase by two percent at the end of
each calendar year.
V. DIRECTOR BENEFITS - EARLY RETIREMENT AGE
The Director shall have the right to retire on a date which constitutes an
Early Retirement Date as defined previously in Subparagraph III. D. In the
event the Director elects Early Retirement, the Director shall be entitled
to be paid Director Retirement Benefits equal to the "Early Retirement
Benefit" applicable for the calendar year in which the Director retires as
specified in Schedule "A". The benefit shall be payable in substantially
equal monthly installments on the first day of each month, beginning with
the month following the month the Director Retires (or on such later date
as may be mutually agreed upon by the Director and the Bank in advance of
such Early Retirement), payable until the Director's death.
VI. DIRECTOR DEATH BENEFITS - NORMAL RETIREMENT AGE
In the event the Director Retires on or after the Normal Retirement Age and
dies before receiving a total of thirty-six (36) monthly Director Emeritus
Benefits and twenty-four (24) monthly Director Retirement Benefits, the
Bank shall continue such monthly payments until the full number of sixty
(60) monthly payments have been made, or until the death of the Director's
surviving spouse, whichever occurs earlier. Said payments due hereunder
shall begin the first day of the month following the decease of the
Director.
VII. DIRECTOR DEATH BENEFITS - EARLY RETIREMENT AGE
In the event the Director Retires on a date that constitutes Early
Retirement and dies before receiving a total of sixty (60) monthly Director
Retirement Benefits, the Bank shall continue such monthly payments until
the full number of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier. Said
payments due hereunder shall begin the first day of the month following the
decease of the Director.
VIII. benefit accounting
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Director into
which appropriate reserves shall be accrued.
IX. vesting
Director's interest in the benefits that are the subject of this Agreement
shall be subject to a vesting schedule described in Schedule A.
X. other termination of SERVICE
A. Voluntary Resignation or failure to be re-elected: In the event that
the service of the Director shall terminate by the Director's
voluntary action, or by the Director's failure to be re-elected to the
Board without cause, prior to the Retirement Date described in III. A.
above, then this Agreement shall terminate upon the date of such
termination of service and the Bank shall pay to the Director a
monthly amount equal to one-twelfth (1/12) times the "Director
Retirement Benefit" as described in Schedule A and earned as of the
date of termination. Such benefits shall be payable commencing on the
first of the month after the Director reaches age 68 and continue
until the death of the Director. Monthly payments shall increase by
two percent at the end of each calendar year.
In the event the Director's death should occur after such severance
but prior to the completion of the monthly payments provided for in
this Paragraph IX, the Bank shall continue such monthly payments until
a total of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier.
Said payments due hereunder shall begin the first day of the month
following the decease of the Director.
B. Removal for Cause: "Removal for Cause" shall include the removal of
the Director because of the Director's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order. Notwithstanding the foregoing, Director shall
not be deemed to have been removed for Cause unless and until there
shall have been delivered to the Director a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the
remaining members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Director and an
opportunity, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Director was
guilty of conduct justifying removal for Cause and specifying the
reasons thereof. The Director shall not have the right to receive
compensation or other benefits for any period after the removal for
Cause. All rights under this Agreement shall be forfeited, whether or
not vested. Any stock options granted to the Director under any stock
option plan or any unvested awards granted under any other stock
benefit plan of the Bank, or any subsidiary or affiliate thereof,
shall become null and void effective upon Director's receipt of Notice
of Removal for Cause pursuant to paragraph IX(ii) hereof, and shall
not be exercisable by the Director at any time subsequent to such
Removal for Cause.
C. Payments in the Event of Disability Prior to Retirement. In the event
the Director becomes Disabled at any time after the Effective Date of
this Agreement but prior to Retirement, the Director shall be entitled
to be paid as a lump sum the "Disability Benefit" specified in
Schedule "A" as of the date of the disability. The lump sum shall be
payable 60 days from the date the Employer has received a written
request to commence benefits, along with documentation showing that
the Employee has become Disabled. Once the lump sum payment has been
made, this Agreement is terminated, and the Bank has no further
obligation to the Director or the Director's surviving spouse under
this plan.
The term "Disability" or "Disabled" shall have the same meaning given
such terms in any policy of disability insurance maintained by the
Employer for the benefit of its employees including the Director. In
the absence of such a policy which extends coverage to the Director in
the event of disability, the terms shall mean bodily injury or disease
(mental or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least one
hundred twenty (120) days.
XI. CHANGE OF CONTROL
A "Change in Control" of the Bank or of Klamath First Federal Savings
and Loan Association (the "Association") shall be deemed to occur if
and when (a) an offer or other than the Bank purchases shares of the
common stock of the Bank or the Association pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
is or becomes the beneficial owner, directly or indirectly, of
securities of the Bank or the Association representing 25% or more of
the combined voting power of the Bank's then outstanding securities,
(c) the membership of the board of directors of the Bank or the
Association changes as the result of a contested election, such that
individuals who were directors at the beginning of any twenty-four
month period (whether commencing before or after the effective date of
this Agreement) do not constitute a majority of the Board at the end
of such period, or (d) shareholders of the Bank or the Association
approve a merger, consolidation, sale or disposition of all or
substantially all of the Bank's or the Association's assets, or a plan
of partial or complete liquidation. For the purposes of this
Agreement, transfers made on account of deaths or gifts, transfers
between family members or transfers to a qualified retirement plan
maintained by the Bank or the Association, shall not be considered in
determining whether there has been a change in control.
Upon a Change of Control, if the Director subsequently suffers a
Termination of Service (voluntary or involuntary), except for cause,
then the Director shall be paid Director Retirement Benefits of two
thousand eight hundred thirty four ($2,834) per month, commencing with
the Retirement Date specified in paragraph III. C. above and
continuing until the death of the Director. Alternatively, the
Director may elect to receive the "Early Retirement Benefit: After
Change in Control" as specified in the Schedule A, as of the date
selected for early retirement. However, if the Director dies before
sixty monthly payments have been made, the Bank shall continue such
monthly payments until a total of sixty (60) monthly payments have
been made, or until the death of the Director's surviving spouse,
whichever occurs earlier. Monthly payments will be increased by two
percent at the end of each calendar year. Director Emeritus Benefits
provided for in paragraph VI above shall not be paid if the Director
receives benefits pursuant to termination following a Change in
Control.
XII. restrictions on funding
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Director
Plan. The Directors or their surviving spouse shall be and remain
simply a general creditor of the Bank in the same manner as any other
creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Director
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Director be deemed
to have any lien or right, title or interest in or to any specific
funding investment or assets of the Bank.
XIII. MISCELLANEOUS
A. Status as an Unsecured General Creditor: Notwithstanding anything
contained herein to the contrary: (i) neither the Director, nor
the Director's spouse shall have any legal or equitable rights,
interests, or claims in or to any specific property or assets of
the Bank 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
Director or the Director's spouse 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 Director and the Director's spouse shall be
unsecured general creditors with respect to any benefits which
may be payable under the terms of this Agreement.
Notwithstanding the above, the Director and the Bank acknowledge
and agree that, in the event of a Change in Control and at the
written request of the Director, 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 Director or his beneficiaries
in such manner and at such times as specified in this Agreement.
B. Binding Obligation of the Bank and any Successor in Interest: The
Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of
the Bank under this Director Plan. This Director Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
C. Amendment or Revocation: It is agreed by and between the parties
hereto that, during the lifetime of the Director, this Director
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Director and the
Bank.
D. Gender: Whenever in this Director Plan words are used in the
masculine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender, whenever they should
so apply.
E. Effect on Other Bank Benefit Plans: Nothing contained in this
Director Plan shall affect the right of the Director to
participate in or be covered by any qualified or non-qualified
pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the
Bank's existing or future compensation structure. However, in
connection with the establishment of this Director Plan, the
Director is waiving any rights under the Klamath First Federal
Savings and Loan Association Director Emeritus Plan dated August
20, 1996, which waiver is further documented in Schedule B.
F. Headings: Headings and subheadings in this Director Plan are
inserted for reference and convenience only and shall not be
deemed a part of this Director Plan.
G. Applicable Law: The validity and interpretation of this Agreement
shall be governed by the laws of the State of Oregon.
H. 12 U.S.C. Sec. 1828(k): Any payments made to the Director
pursuant to this Director Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Sec. 1828(k) or
any regulations promulgated thereunder.
I. Partial Invalidity: If any term, provision, covenant, or
condition of this Director Plan 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 Director Plan shall remain in full force
and effect notwithstanding such partial invalidity.
J. Continuation as Director: Neither this Agreement nor the payments
of any benefits hereunder shall be construed as giving to the
Director any right to be retained as a member of the Board of
Directors of the Bank.
XIV. ERISA PROVISION
A. Named Fiduciary and Plan Administrator: The "Named Fiduciary and
Plan Administrator" of this Director Plan shall be Klamath First
Bancorp, Inc., until its resignation or removal by the Board. As
Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Director Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Director Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration: In the event a dispute arises
over benefits under this Director Plan and benefits are not paid
to the Director (or to the Director's surviving spouse in the
case of the Director's death) 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 sixty (60) 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, it shall
provide in writing within sixty (60) days of receipt of such
claim its specific reasons for such denial, reference to the
provisions of this Director Plan 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 a further review of
the claim denial is desired. A claim shall be deemed denied if
the Named Fiduciary and Plan Administrator fail to take any
action within the aforesaid sixty-day period. If claimants desire
a second review they shall notify the Named Fiduciary and Plan
Administrator in writing within sixty (60) days of the first
claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and
comments it 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 sixty (60)
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.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree
that they and their heirs, personal representatives, successors
and assigns shall be bound by the decision of such arbitrator
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Director
"for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
In witness whereof, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the
first day set forth hereinabove, and that, upon execution, each has
received a conforming copy.
KLAMATH FIRST BANCORP, INC.
Klamath Falls, Oregon
/s/ Nina G. Drake By: /s/ Kermit K. Houser
Witness Kermit K. Houser, President and CEO
/s/ Nina G. Drake /s/ Rodney Murray
Witness Rodney Murray
SCHEDULE B
WAIVER OF PRIOR PLAN BENEFITS
In consideration for the benefits made available to the Director by
this Agreement, the Director and agrees as follows:
(a) The Director is party to that certain Agreement made with the
Bank entitled the Klamath First Federal Savings and Loan Association
Director Emeritus Plan dated August 20, 1996 (the "Prior Plan
Agreement");
(b) This Agreement and the benefits hereunder are provided as a
substitute for the Prior Plan Agreement and the benefits provided
thereunder;
(c) The Prior Plan Agreement and the benefits thereunder are
hereby terminated effective as of the date of this Agreement;
(d) The Director hereby waives and relinquishes for himself or
herself, and his or her heirs, beneficiaries, legal representatives,
agents, successors and assigns, any and all right, entitlement and
interest that the Director has or may have pursuant to the Prior Plan
Agreement and the benefits thereunder;
(e) The Director accepts the Director Benefits afforded by this
Agreement in full and complete substitution for the benefits otherwise
provided by the Prior Plan Agreement; and the Director acknowledges he
(i) has had an opportunity to consult with advisors of the Director's
own choice in determining to enter into this Agreement and this
Waiver, (ii) understands that the effect of this Waiver is to
terminate, waive and relinquish forever all rights, entitlements and
interests that the Director has or may have under the Prior Plan
Agreement and the benefits thereunder as a condition to receiving the
benefits under this Agreement; and (iii) the Director is entering into
this Agreement and this Waiver voluntarily and with full appreciation
of the effect of doing so.
Dated: 5/16/03 /s/ Rodney Murray
Rodney Murray
I consent to and agree to be bound by the foregoing Waiver:
/s/ Marie D. Murray /s/ Nina G. Drake
Director's Spouse Witness
SCHEDULE A
DIRECTOR BENEFIT SCHEDULE - RODNEY MURRAY
JOINED THE BOARD IN 1976
DATE OF BIRTH: January 6, 1928
DIRECTOR DIRECTOR CHANGE IN EARLY
EMERITUS RETIREMENT CONTROL RETIREMENT DISABILITY
RETIREMENT BENEFIT: BENEFIT: EARLY BENEFIT: BENEFIT: BENEFIT:
ON OR Payable Payable RETIREMENT Payable After Change Payable Upon
BEFORE Upon Retirement (1) Jan 1, 2006 (2) BENEFIT: (3) Upon Retirement (4) in Control Disability (5)
January 1, 2003 $34,008 $36,084 na $34,008 na $0
January 1, 2004 $34,008 $36,084 na $34,680 na $114,275
January 1, 2005 $34,008 $36,084 na $35,374 na $126,160
January 1, 2006 na $36,084 na $36,084 na $141,785
and thereafter na $36,084 na $36,084 na na
<FN>
1. The Director may retire and commence service as a Director Emeritus anytime after 1/1/2003.
Payments continue for thirty-six (36) months and increase by 2% per year.
2. Retirement Plan Benefits commence following service as a Director Emeritus. Benefits increase by 2% per year after Retirement.
3. Early Retirement Benefits payable commencing as of Director's birthday in the Calendar Year listed assuming
no interruption of service. Benefits increase by 2% per year after Retirement.
4. Retirement Benefits payable upon attainment of age 65 following a Change in Control. No Director Emeritus
benefits are payable under this circumstance. Benefits increase by 2% per year after Retirement.
5. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty Balance
as of disability date. Disability Benefit value is determined by straight-line interpolation between the amounts
showing in this column for Jan 1 of the year the disability occurs and Jan 1 of the following calendar year.
Disability Benefit is paid as a lump sum, with no further benefits. No post-retirement benefit.
</FN>
/s/ Rodney Murray 5/16/03 /s/ Kermit K. Houser 5/19/03
Rodney Murray Date Bank Officer Date
Exhibit 10(j).2
DIRECTOR FEE CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this First Day of January, 2003, by
and between Klamath First Bancorp, Inc., a thrift holding company (hereinafter
referred to as the "Bank"), and Bernard Agrons, a member of the Board of
Directors of the Bank (hereinafter referred to as the "Director").
WITNESSETH:
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Director's services to the Bank in the past
have been of exceptional merit and have constituted an invaluable contribution
to the general welfare of the Bank and in bringing it to its present status of
operating efficiency, and its present position in its field of activity;
WHEREAS, the Director's experience, knowledge of the affairs of the Bank,
reputation, and contacts in the industry are so valuable that assurance of the
Director's continued services is essential for the future growth and profits of
the Bank and it is in the best interests of the Bank to arrange terms of
continued service for the Director so as to reasonably assure the Director's
remaining in the Bank's service during the Director's lifetime or until the age
of retirement;
WHEREAS, it is the desire of the Bank that the Director's services be
retained as herein provided;
WHEREAS, the Director is willing to continue to serve the Bank provided the
Bank agrees to pay the Director or the Director's surviving spouse, certain
benefits in accordance with the terms and conditions hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director at retirement or the Director's surviving spouse in the event of the
Director's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of the
Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. SERVICE
The Director will continue to serve the Bank in such capacity and with such
duties and responsibilities as may be assigned, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank.
II. FRINGE BENEFITS
The fee continuation benefits provided by this Agreement are granted by the
Bank as a fringe benefit to the Director and are not part of any fee
reduction plan or an arrangement deferring a bonus or a fee increase. The
Director has no option to take any current payment or bonus in lieu of
these fee continuation benefits except as set forth hereinafter.
III. retirement date AND NORMAL RETIREMENT AGE
A. Retirement Date: If the Director continuously serves the Bank, the
Director shall be eligible to retire from active service with the Bank
upon the attainment of age fifty-five (55) and receive the benefits
described below, unless by action of the Board of Directors this
period of active service shall be shortened or extended.
B. Normal Retirement Age: Normal Retirement Age shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-eight (68).
C. Normal Retirement Age Following a Change in Control: The term "Normal
Retirement Age Following a Change in Control" shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-five (65).
D. Early Retirement Date: The term "Early Retirement Date" shall mean the
Retirement of the Director from active service with the Bank at the
beginning of any month after the Director achieves age 55, but before
attaining age sixty-eight (68), [sixty-five (65) following a Change in
Control].
IV. DIRECTOR BENEFITS - normal retirement age
A. Director Emeritus Benefits: Upon the attainment of age sixty-five
(65), the Director shall be entitled to serve the Bank as a Director
Emeritus in accordance with the procedures and policies established by
the Board of Directors of the Bank applicable to service as a Director
Emeritus. If the Director elects to serve as a Director Emeritus, the
Director shall be paid two thousand eight hundred thirty four dollars
($2,834) per month for a period of thirty-six (36) months, commencing
with the Retirement Date and continuing until the earlier of the third
anniversary thereof, or the death of the Director. Monthly payments
will be increased by two percent at the end of each calendar year. If
the Director declines or is unable to serve as Director Emeritus, the
Director shall forfeit any entitlement to the Director Emeritus
Benefits.
B. Director Retirement Benefits: After the expiration of the thirty-six
(36) month period described above in Paragraph IV A., the Bank shall
pay to the Director Retirement Benefit Payments equal to three
thousand seven dollars per month ($3,007) until the death of the
Director. Monthly payments shall increase by two percent at the end of
each calendar year.
V. DIRECTOR BENEFITS - EARLY RETIREMENT AGE
The Director shall have the right to retire on a date which constitutes an
Early Retirement Date as defined previously in Subparagraph III. D. In the
event the Director elects Early Retirement, the Director shall be entitled
to be paid Director Retirement Benefits equal to the "Early Retirement
Benefit" applicable for the calendar year in which the Director retires as
specified in Schedule "A". The benefit shall be payable in substantially
equal monthly installments on the first day of each month, beginning with
the month following the month the Director Retires (or on such later date
as may be mutually agreed upon by the Director and the Bank in advance of
such Early Retirement), payable until the Director's death.
VI. DIRECTOR DEATH BENEFITS - NORMAL RETIREMENT AGE
In the event the Director Retires on or after the Normal Retirement Age and
dies before receiving a total of thirty-six (36) monthly Director Emeritus
Benefits and twenty-four (24) monthly Director Retirement Benefits, the
Bank shall continue such monthly payments until the full number of sixty
(60) monthly payments have been made, or until the death of the Director's
surviving spouse, whichever occurs earlier. Said payments due hereunder
shall begin the first day of the month following the decease of the
Director.
VII. DIRECTOR DEATH BENEFITS - EARLY RETIREMENT AGE
In the event the Director Retires on a date that constitutes Early
Retirement and dies before receiving a total of sixty (60) monthly Director
Retirement Benefits, the Bank shall continue such monthly payments until
the full number of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier. Said
payments due hereunder shall begin the first day of the month following the
decease of the Director.
VIII. benefit accounting
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Director into
which appropriate reserves shall be accrued.
IX. vesting
Director's interest in the benefits that are the subject of this Agreement
shall be subject to a vesting schedule described in Schedule A.
X. other termination of SERVICE
A. Voluntary Resignation or failure to be re-elected: In the event that
the service of the Director shall terminate by the Director's
voluntary action, or by the Director's failure to be re-elected to the
Board without cause, prior to the Retirement Date described in III. A.
above, then this Agreement shall terminate upon the date of such
termination of service and the Bank shall pay to the Director a
monthly amount equal to one-twelfth (1/12) times the "Director
Retirement Benefit" as described in Schedule A and earned as of the
date of termination. Such benefits shall be payable commencing on the
first of the month after the Director reaches age 68 and continue
until the death of the Director. Monthly payments shall increase by
two percent at the end of each calendar year.
In the event the Director's death should occur after such severance
but prior to the completion of the monthly payments provided for in
this Paragraph IX, the Bank shall continue such monthly payments until
a total of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier.
Said payments due hereunder shall begin the first day of the month
following the decease of the Director.
B. Removal for Cause: "Removal for Cause" shall include the removal of
the Director because of the Director's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order. Notwithstanding the foregoing, Director shall
not be deemed to have been removed for Cause unless and until there
shall have been delivered to the Director a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the
remaining members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Director and an
opportunity, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Director was
guilty of conduct justifying removal for Cause and specifying the
reasons thereof. The Director shall not have the right to receive
compensation or other benefits for any period after the removal for
Cause. All rights under this Agreement shall be forfeited, whether or
not vested. Any stock options granted to the Director under any stock
option plan or any unvested awards granted under any other stock
benefit plan of the Bank, or any subsidiary or affiliate thereof,
shall become null and void effective upon Director's receipt of Notice
of Removal for Cause pursuant to paragraph IX(ii) hereof, and shall
not be exercisable by the Director at any time subsequent to such
Removal for Cause.
C. Payments in the Event of Disability Prior to Retirement. In the event
the Director becomes Disabled at any time after the Effective Date of
this Agreement but prior to Retirement, the Director shall be entitled
to be paid as a lump sum the "Disability Benefit" specified in
Schedule "A" as of the date of the disability. The lump sum shall be
payable 60 days from the date the Employer has received a written
request to commence benefits, along with documentation showing that
the Employee has become Disabled. Once the lump sum payment has been
made, this Agreement is terminated, and the Bank has no further
obligation to the Director or the Director's surviving spouse under
this plan.
The term "Disability" or "Disabled" shall have the same meaning given
such terms in any policy of disability insurance maintained by the
Employer for the benefit of its employees including the Director. In
the absence of such a policy which extends coverage to the Director in
the event of disability, the terms shall mean bodily injury or disease
(mental or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least one
hundred twenty (120) days.
XI. CHANGE OF CONTROL
A "Change in Control" of the Bank or of Klamath First Federal Savings
and Loan Association (the "Association") shall be deemed to occur if
and when (a) an offer or other than the Bank purchases shares of the
common stock of the Bank or the Association pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
is or becomes the beneficial owner, directly or indirectly, of
securities of the Bank or the Association representing 25% or more of
the combined voting power of the Bank's then outstanding securities,
(c) the membership of the board of directors of the Bank or the
Association changes as the result of a contested election, such that
individuals who were directors at the beginning of any twenty-four
month period (whether commencing before or after the effective date of
this Agreement) do not constitute a majority of the Board at the end
of such period, or (d) shareholders of the Bank or the Association
approve a merger, consolidation, sale or disposition of all or
substantially all of the Bank's or the Association's assets, or a plan
of partial or complete liquidation. For the purposes of this
Agreement, transfers made on account of deaths or gifts, transfers
between family members or transfers to a qualified retirement plan
maintained by the Bank or the Association, shall not be considered in
determining whether there has been a change in control.
Upon a Change of Control, if the Director subsequently suffers a
Termination of Service (voluntary or involuntary), except for cause,
then the Director shall be paid Director Retirement Benefits of two
thousand eight hundred thirty four ($2,834) per month, commencing with
the Retirement Date specified in paragraph III. C. above and
continuing until the death of the Director. Alternatively, the
Director may elect to receive the "Early Retirement Benefit: After
Change in Control" as specified in the Schedule A, as of the date
selected for early retirement. However, if the Director dies before
sixty monthly payments have been made, the Bank shall continue such
monthly payments until a total of sixty (60) monthly payments have
been made, or until the death of the Director's surviving spouse,
whichever occurs earlier. Monthly payments will be increased by two
percent at the end of each calendar year. Director Emeritus Benefits
provided for in paragraph VI above shall not be paid if the Director
receives benefits pursuant to termination following a Change in
Control.
XII. restrictions on funding
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Director
Plan. The Directors or their surviving spouse shall be and remain
simply a general creditor of the Bank in the same manner as any other
creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Director
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Director be deemed
to have any lien or right, title or interest in or to any specific
funding investment or assets of the Bank.
XIII. MISCELLANEOUS
A. Status as an Unsecured General Creditor: Notwithstanding anything
contained herein to the contrary: (i) neither the Director, nor
the Director's spouse shall have any legal or equitable rights,
interests, or claims in or to any specific property or assets of
the Bank 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
Director or the Director's spouse 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 Director and the Director's spouse shall be
unsecured general creditors with respect to any benefits which
may be payable under the terms of this Agreement.
Notwithstanding the above, the Director and the Bank acknowledge
and agree that, in the event of a Change in Control and at the
written request of the Director, 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 Director or his beneficiaries
in such manner and at such times as specified in this Agreement.
B. Binding Obligation of the Bank and any Successor in Interest: The
Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of
the Bank under this Director Plan. This Director Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
C. Amendment or Revocation: It is agreed by and between the parties
hereto that, during the lifetime of the Director, this Director
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Director and the
Bank.
D. Gender: Whenever in this Director Plan words are used in the
masculine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender, whenever they should
so apply.
E. Effect on Other Bank Benefit Plans: Nothing contained in this
Director Plan shall affect the right of the Director to
participate in or be covered by any qualified or non-qualified
pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the
Bank's existing or future compensation structure. However, in
connection with the establishment of this Director Plan, the
Director is waiving any rights under the Klamath First Federal
Savings and Loan Association Director Emeritus Plan dated August
20, 1996, which waiver is further documented in Schedule B.
F. Headings: Headings and subheadings in this Director Plan are
inserted for reference and convenience only and shall not be
deemed a part of this Director Plan.
G. Applicable Law: The validity and interpretation of this Agreement
shall be governed by the laws of the State of Oregon.
H. 12 U.S.C. Sec. 1828(k): Any payments made to the Director
pursuant to this Director Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Sec. 1828(k) or
any regulations promulgated thereunder.
I. Partial Invalidity: If any term, provision, covenant, or
condition of this Director Plan 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 Director Plan shall remain in full force
and effect notwithstanding such partial invalidity.
J. Continuation as Director: Neither this Agreement nor the payments
of any benefits hereunder shall be construed as giving to the
Director any right to be retained as a member of the Board of
Directors of the Bank.
XIV. ERISA PROVISION
A. Named Fiduciary and Plan Administrator: The "Named Fiduciary and
Plan Administrator" of this Director Plan shall be Klamath First
Bancorp, Inc., until its resignation or removal by the Board. As
Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Director Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Director Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration: In the event a dispute arises
over benefits under this Director Plan and benefits are not paid
to the Director (or to the Director's surviving spouse in the
case of the Director's death) 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 sixty (60) 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, it shall
provide in writing within sixty (60) days of receipt of such
claim its specific reasons for such denial, reference to the
provisions of this Director Plan 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 a further review of
the claim denial is desired. A claim shall be deemed denied if
the Named Fiduciary and Plan Administrator fail to take any
action within the aforesaid sixty-day period. If claimants desire
a second review they shall notify the Named Fiduciary and Plan
Administrator in writing within sixty (60) days of the first
claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and
comments it 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 sixty (60)
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.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree
that they and their heirs, personal representatives, successors
and assigns shall be bound by the decision of such arbitrator
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Director
"for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
In witness whereof, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the
first day set forth hereinabove, and that, upon execution, each has
received a conforming copy.
KLAMATH FIRST BANCORP, INC.
Klamath Falls, Oregon
/s/ Nina G. Drake By: /s/ Rodney Murray
Witness Rodney N. Murray, Chairman of Board
/s/ Kathryn Rutledge /s/ Bernard Z. Agrons
Witness Bernard Agrons
SCHEDULE B
WAIVER OF PRIOR PLAN BENEFITS
In consideration for the benefits made available to the Director by
this Agreement, the Director and agrees as follows:
(a) The Director is party to that certain Agreement made with the
Bank entitled the Klamath First Federal Savings and Loan Association
Director Emeritus Plan dated August 20, 1996 (the "Prior Plan
Agreement");
(b) This Agreement and the benefits hereunder are provided as a
substitute for the Prior Plan Agreement and the benefits provided
thereunder;
(c) The Prior Plan Agreement and the benefits thereunder are
hereby terminated effective as of the date of this Agreement;
(d) The Director hereby waives and relinquishes for himself or
herself, and his or her heirs, beneficiaries, legal representatives,
agents, successors and assigns, any and all right, entitlement and
interest that the Director has or may have pursuant to the Prior Plan
Agreement and the benefits thereunder;
(e) The Director accepts the Director Benefits afforded by this
Agreement in full and complete substitution for the benefits otherwise
provided by the Prior Plan Agreement; and the Director acknowledges he
(i) has had an opportunity to consult with advisors of the Director's
own choice in determining to enter into this Agreement and this
Waiver, (ii) understands that the effect of this Waiver is to
terminate, waive and relinquish forever all rights, entitlements and
interests that the Director has or may have under the Prior Plan
Agreement and the benefits thereunder as a condition to receiving the
benefits under this Agreement; and (iii) the Director is entering into
this Agreement and this Waiver voluntarily and with full appreciation
of the effect of doing so.
Dated: 5/21/03 /s/ Bernard Z. Agrons
Bernard Agrons
I consent to and agree to be bound by the foregoing Waiver:
/s/ Betty Jo Agrons by Bernard Z. Agrons, Atty in Fact /s/ Kathryn Rutledge
Director's Spouse Witness
SCHEDULE A
DIRECTOR BENEFIT SCHEDULE - BERNARD AGRONS
JOINED THE BOARD IN 1974
DATE OF BIRTH: JULY 2, 1922
DIRECTOR DIRECTOR CHANGE IN EARLY
EMERITUS RETIREMENT CONTROL RETIREMENT DISABILITY
RETIREMENT BENEFIT: BENEFIT: EARLY BENEFIT: BENEFIT: BENEFIT:
ON OR Payable Payable RETIREMENT Payable After Change Payable Upon
BEFORE Upon Retirement (1) Jan 1, 2006 (2) BENEFIT: (3) Upon Retirement (4) in Control Disability (5)
January 1, 2003 $34,008 $36,084 na $34,008 na $0
January 1, 2004 $34,008 $36,084 na $34,680 na $83,180
January 1, 2005 $34,008 $36,084 na $35,374 na $93,531
January 1, 2006 na $36,084 na $36,084 na $106,574
and thereafter na $36,084 na $36,084 na na
<FN>
1. The Director may retire and commence service as a Director Emeritus anytime after 1/1/2003.
Payments continue for thirty-six (36) months and increase by 2% per year.
2. Retirement Plan Benefits commence following service as a Director Emeritus. Benefits increase by 2% per year after Retirement.
3. Early Retirement Benefits payable commencing as of Director's birthday in the Calendar Year listed assuming
no interruption of service. Benefits increase by 2% per year after Retirement.
4. Retirement Benefits payable upon attainment of age 65 following a Change in Control. No Director Emeritus
benefits are payable under this circumstance. Benefits increase by 2% per year after Retirement.
5. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty Balance
as of disability date. Disability Benefit value is determined by straight-line interpolation between the amounts
showing in this column for Jan 1 of the year the disability occurs and Jan 1 of the following calendar year.
Disability Benefit is paid as a lump sum, with no further benefits. No post-retirement benefit.
</FN>
/s/ Bernard Z. Agrons 5/21/03 /s/ Rodney Murray 6/3/03
Bernard Agrons Date Bank Officer Date
Exhibit 10(j).3
DIRECTOR FEE CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this First Day of January, 2003, by
and between Klamath First Bancorp, Inc., a thrift holding company (hereinafter
referred to as the "Bank"), and Timothy A. Bailey, a member of the Board of
Directors of the Bank (hereinafter referred to as the "Director").
WITNESSETH:
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Director's services to the Bank in the past
have been of exceptional merit and have constituted an invaluable contribution
to the general welfare of the Bank and in bringing it to its present status of
operating efficiency, and its present position in its field of activity;
WHEREAS, the Director's experience, knowledge of the affairs of the Bank,
reputation, and contacts in the industry are so valuable that assurance of the
Director's continued services is essential for the future growth and profits of
the Bank and it is in the best interests of the Bank to arrange terms of
continued service for the Director so as to reasonably assure the Director's
remaining in the Bank's service during the Director's lifetime or until the age
of retirement;
WHEREAS, it is the desire of the Bank that the Director's services be
retained as herein provided;
WHEREAS, the Director is willing to continue to serve the Bank provided the
Bank agrees to pay the Director or the Director's surviving spouse, certain
benefits in accordance with the terms and conditions hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director at retirement or the Director's surviving spouse in the event of the
Director's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of the
Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. SERVICE
The Director will continue to serve the Bank in such capacity and with such
duties and responsibilities as may be assigned, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank.
II. FRINGE BENEFITS
The fee continuation benefits provided by this Agreement are granted by the
Bank as a fringe benefit to the Director and are not part of any fee
reduction plan or an arrangement deferring a bonus or a fee increase. The
Director has no option to take any current payment or bonus in lieu of
these fee continuation benefits except as set forth hereinafter.
III. retirement date AND NORMAL RETIREMENT AGE
A. Retirement Date: If the Director continuously serves the Bank, the
Director shall be eligible to retire from active service with the Bank
upon the attainment of age fifty-five (55) and receive the benefits
described below, unless by action of the Board of Directors this
period of active service shall be shortened or extended.
B. Normal Retirement Age: Normal Retirement Age shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-eight (68).
C. Normal Retirement Age Following a Change in Control: The term "Normal
Retirement Age Following a Change in Control" shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-five (65).
D. Early Retirement Date: The term "Early Retirement Date" shall mean the
Retirement of the Director from active service with the Bank at the
beginning of any month after the Director achieves age 55, but before
attaining age sixty-eight (68), [sixty-five (65) following a Change in
Control].
IV. DIRECTOR BENEFITS - normal retirement age
A. Director Emeritus Benefits: Upon the attainment of age sixty-five
(65), the Director shall be entitled to serve the Bank as a Director
Emeritus in accordance with the procedures and policies established by
the Board of Directors of the Bank applicable to service as a Director
Emeritus. If the Director elects to serve as a Director Emeritus, the
Director shall be paid two thousand eight hundred thirty four dollars
($2,834) per month for a period of thirty-six (36) months, commencing
with the Retirement Date and continuing until the earlier of the third
anniversary thereof, or the death of the Director. Monthly payments
will be increased by two percent at the end of each calendar year. If
the Director declines or is unable to serve as Director Emeritus, the
Director shall forfeit any entitlement to the Director Emeritus
Benefits.
B. Director Retirement Benefits: After the expiration of the thirty-six
(36) month period described above in Paragraph IV A., the Bank shall
pay to the Director Retirement Benefit Payments equal to three
thousand seven dollars per month ($3,007) until the death of the
Director. Monthly payments shall increase by two percent at the end of
each calendar year.
V. DIRECTOR BENEFITS - EARLY RETIREMENT AGE
The Director shall have the right to retire on a date which constitutes an
Early Retirement Date as defined previously in Subparagraph III. D. In the
event the Director elects Early Retirement, the Director shall be entitled
to be paid Director Retirement Benefits equal to the "Early Retirement
Benefit" applicable for the calendar year in which the Director retires as
specified in Schedule "A". The benefit shall be payable in substantially
equal monthly installments on the first day of each month, beginning with
the month following the month the Director Retires (or on such later date
as may be mutually agreed upon by the Director and the Bank in advance of
such Early Retirement), payable until the Director's death.
VI. DIRECTOR DEATH BENEFITS - NORMAL RETIREMENT AGE
In the event the Director Retires on or after the Normal Retirement Age and
dies before receiving a total of thirty-six (36) monthly Director Emeritus
Benefits and twenty-four (24) monthly Director Retirement Benefits, the
Bank shall continue such monthly payments until the full number of sixty
(60) monthly payments have been made, or until the death of the Director's
surviving spouse, whichever occurs earlier. Said payments due hereunder
shall begin the first day of the month following the decease of the
Director.
VII. DIRECTOR DEATH BENEFITS - EARLY RETIREMENT AGE
In the event the Director Retires on a date that constitutes Early
Retirement and dies before receiving a total of sixty (60) monthly Director
Retirement Benefits, the Bank shall continue such monthly payments until
the full number of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier. Said
payments due hereunder shall begin the first day of the month following the
decease of the Director.
VIII. benefit accounting
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Director into
which appropriate reserves shall be accrued.
IX. vesting
Director's interest in the benefits that are the subject of this Agreement
shall be subject to a vesting schedule described in Schedule A.
X. other termination of SERVICE
A. Voluntary Resignation or failure to be re-elected: In the event that
the service of the Director shall terminate by the Director's
voluntary action, or by the Director's failure to be re-elected to the
Board without cause, prior to the Retirement Date described in III. A.
above, then this Agreement shall terminate upon the date of such
termination of service and the Bank shall pay to the Director a
monthly amount equal to one-twelfth (1/12) times the "Director
Retirement Benefit" as described in Schedule A and earned as of the
date of termination. Such benefits shall be payable commencing on the
first of the month after the Director reaches age 68 and continue
until the death of the Director. Monthly payments shall increase by
two percent at the end of each calendar year.
In the event the Director's death should occur after such severance
but prior to the completion of the monthly payments provided for in
this Paragraph IX, the Bank shall continue such monthly payments until
a total of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier.
Said payments due hereunder shall begin the first day of the month
following the decease of the Director.
B. Removal for Cause: "Removal for Cause" shall include the removal of
the Director because of the Director's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order. Notwithstanding the foregoing, Director shall
not be deemed to have been removed for Cause unless and until there
shall have been delivered to the Director a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the
remaining members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Director and an
opportunity, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Director was
guilty of conduct justifying removal for Cause and specifying the
reasons thereof. The Director shall not have the right to receive
compensation or other benefits for any period after the removal for
Cause. All rights under this Agreement shall be forfeited, whether or
not vested. Any stock options granted to the Director under any stock
option plan or any unvested awards granted under any other stock
benefit plan of the Bank, or any subsidiary or affiliate thereof,
shall become null and void effective upon Director's receipt of Notice
of Removal for Cause pursuant to paragraph IX(ii) hereof, and shall
not be exercisable by the Director at any time subsequent to such
Removal for Cause.
C. Payments in the Event of Disability Prior to Retirement. In the event
the Director becomes Disabled at any time after the Effective Date of
this Agreement but prior to Retirement, the Director shall be entitled
to be paid as a lump sum the "Disability Benefit" specified in
Schedule "A" as of the date of the disability. The lump sum shall be
payable 60 days from the date the Employer has received a written
request to commence benefits, along with documentation showing that
the Employee has become Disabled. Once the lump sum payment has been
made, this Agreement is terminated, and the Bank has no further
obligation to the Director or the Director's surviving spouse under
this plan.
The term "Disability" or "Disabled" shall have the same meaning given
such terms in any policy of disability insurance maintained by the
Employer for the benefit of its employees including the Director. In
the absence of such a policy which extends coverage to the Director in
the event of disability, the terms shall mean bodily injury or disease
(mental or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least one
hundred twenty (120) days.
XI. CHANGE OF CONTROL
A "Change in Control" of the Bank or of Klamath First Federal Savings
and Loan Association (the "Association") shall be deemed to occur if
and when (a) an offer or other than the Bank purchases shares of the
common stock of the Bank or the Association pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
is or becomes the beneficial owner, directly or indirectly, of
securities of the Bank or the Association representing 25% or more of
the combined voting power of the Bank's then outstanding securities,
(c) the membership of the board of directors of the Bank or the
Association changes as the result of a contested election, such that
individuals who were directors at the beginning of any twenty-four
month period (whether commencing before or after the effective date of
this Agreement) do not constitute a majority of the Board at the end
of such period, or (d) shareholders of the Bank or the Association
approve a merger, consolidation, sale or disposition of all or
substantially all of the Bank's or the Association's assets, or a plan
of partial or complete liquidation. For the purposes of this
Agreement, transfers made on account of deaths or gifts, transfers
between family members or transfers to a qualified retirement plan
maintained by the Bank or the Association, shall not be considered in
determining whether there has been a change in control.
Upon a Change of Control, if the Director subsequently suffers a
Termination of Service (voluntary or involuntary), except for cause,
then the Director shall be paid Director Retirement Benefits of two
thousand eight hundred thirty four ($2,834) per month, commencing with
the Retirement Date specified in paragraph III. C. above and
continuing until the death of the Director. Alternatively, the
Director may elect to receive the "Early Retirement Benefit: After
Change in Control" as specified in the Schedule A, as of the date
selected for early retirement. However, if the Director dies before
sixty monthly payments have been made, the Bank shall continue such
monthly payments until a total of sixty (60) monthly payments have
been made, or until the death of the Director's surviving spouse,
whichever occurs earlier. Monthly payments will be increased by two
percent at the end of each calendar year. Director Emeritus Benefits
provided for in paragraph VI above shall not be paid if the Director
receives benefits pursuant to termination following a Change in
Control.
XII. restrictions on funding
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Director
Plan. The Directors or their surviving spouse shall be and remain
simply a general creditor of the Bank in the same manner as any other
creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Director
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Director be deemed
to have any lien or right, title or interest in or to any specific
funding investment or assets of the Bank.
XIII. MISCELLANEOUS
A. Status as an Unsecured General Creditor: Notwithstanding anything
contained herein to the contrary: (i) neither the Director, nor
the Director's spouse shall have any legal or equitable rights,
interests, or claims in or to any specific property or assets of
the Bank 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
Director or the Director's spouse 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 Director and the Director's spouse shall be
unsecured general creditors with respect to any benefits which
may be payable under the terms of this Agreement.
Notwithstanding the above, the Director and the Bank acknowledge
and agree that, in the event of a Change in Control and at the
written request of the Director, 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 Director or his beneficiaries
in such manner and at such times as specified in this Agreement.
B. Binding Obligation of the Bank and any Successor in Interest: The
Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of
the Bank under this Director Plan. This Director Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
C. Amendment or Revocation: It is agreed by and between the parties
hereto that, during the lifetime of the Director, this Director
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Director and the
Bank.
D. Gender: Whenever in this Director Plan words are used in the
masculine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender, whenever they should
so apply.
E. Effect on Other Bank Benefit Plans: Nothing contained in this
Director Plan shall affect the right of the Director to
participate in or be covered by any qualified or non-qualified
pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the
Bank's existing or future compensation structure. However, in
connection with the establishment of this Director Plan, the
Director is waiving any rights under the Klamath First Federal
Savings and Loan Association Director Emeritus Plan dated August
20, 1996, which waiver is further documented in Schedule B.
F. Headings: Headings and subheadings in this Director Plan are
inserted for reference and convenience only and shall not be
deemed a part of this Director Plan.
G. Applicable Law: The validity and interpretation of this Agreement
shall be governed by the laws of the State of Oregon.
H. 12 U.S.C. Sec. 1828(k): Any payments made to the Director
pursuant to this Director Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Sec. 1828(k) or
any regulations promulgated thereunder.
I. Partial Invalidity: If any term, provision, covenant, or
condition of this Director Plan 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 Director Plan shall remain in full force
and effect notwithstanding such partial invalidity.
J. Continuation as Director: Neither this Agreement nor the payments
of any benefits hereunder shall be construed as giving to the
Director any right to be retained as a member of the Board of
Directors of the Bank.
XIV. ERISA PROVISION
A. Named Fiduciary and Plan Administrator: The "Named Fiduciary and
Plan Administrator" of this Director Plan shall be Klamath First
Bancorp, Inc., until its resignation or removal by the Board. As
Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Director Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Director Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration: In the event a dispute arises
over benefits under this Director Plan and benefits are not paid
to the Director (or to the Director's surviving spouse in the
case of the Director's death) 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 sixty (60) 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, it shall
provide in writing within sixty (60) days of receipt of such
claim its specific reasons for such denial, reference to the
provisions of this Director Plan 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 a further review of
the claim denial is desired. A claim shall be deemed denied if
the Named Fiduciary and Plan Administrator fail to take any
action within the aforesaid sixty-day period. If claimants desire
a second review they shall notify the Named Fiduciary and Plan
Administrator in writing within sixty (60) days of the first
claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and
comments it 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 sixty (60)
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.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree
that they and their heirs, personal representatives, successors
and assigns shall be bound by the decision of such arbitrator
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Director
"for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
In witness whereof, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the
first day set forth hereinabove, and that, upon execution, each has
received a conforming copy.
KLAMATH FIRST BANCORP, INC.
Klamath Falls, Oregon
/s/ Nina G. Drake By: /s/ Rodney Murray
Witness Rodney N. Murray, Chairman of Board
/s/ Kristin A. Bring /s/ Timothy A. Bailey
Witness Timothy Bailey
SCHEDULE B
WAIVER OF PRIOR PLAN BENEFITS
In consideration for the benefits made available to the Director by
this Agreement, the Director and agrees as follows:
(a) The Director is party to that certain Agreement made with the
Bank entitled the Klamath First Federal Savings and Loan Association
Director Emeritus Plan dated August 20, 1996 (the "Prior Plan
Agreement");
(b) This Agreement and the benefits hereunder are provided as a
substitute for the Prior Plan Agreement and the benefits provided
thereunder;
(c) The Prior Plan Agreement and the benefits thereunder are
hereby terminated effective as of the date of this Agreement;
(d) The Director hereby waives and relinquishes for himself or
herself, and his or her heirs, beneficiaries, legal representatives,
agents, successors and assigns, any and all right, entitlement and
interest that the Director has or may have pursuant to the Prior Plan
Agreement and the benefits thereunder;
(e) The Director accepts the Director Benefits afforded by this
Agreement in full and complete substitution for the benefits otherwise
provided by the Prior Plan Agreement; and the Director acknowledges he
(i) has had an opportunity to consult with advisors of the Director's
own choice in determining to enter into this Agreement and this
Waiver, (ii) understands that the effect of this Waiver is to
terminate, waive and relinquish forever all rights, entitlements and
interests that the Director has or may have under the Prior Plan
Agreement and the benefits thereunder as a condition to receiving the
benefits under this Agreement; and (iii) the Director is entering into
this Agreement and this Waiver voluntarily and with full appreciation
of the effect of doing so.
Dated: 5/12/03 /s/ Timothy A. Bailey
Timothy Bailey
I consent to and agree to be bound by the foregoing Waiver:
/s/ Kristin L. Bailey /s/ Kristin A. Bring
Director's Spouse Witness
SCHEDULE A
DIRECTOR BENEFIT SCHEDULE - TIMOTHY BAILEY
JOINED THE BOARD IN 1993
DATE OF BIRTH: August 7, 1946
DIRECTOR DIRECTOR CHANGE IN EARLY
EMERITUS RETIREMENT CONTROL RETIREMENT DISABILITY
BENEFIT: BENEFIT: EARLY BENEFIT: BENEFIT: BENEFIT:
VESTING Payable Payable RETIREMENT Payable After Change Payable Upon
DATE Sept 1, 2011 (1) Sept 1, 2014 (2) BENEFIT: (3) Sept 1, 2011 (4) in Control Disability (5)
January 1, 2003 $0 $7,216 $2,454 $34,008 $17,680 $0
January 1, 2004 $0 $10,824 $4,330 $34,008 $19,720 $28,589
January 1, 2005 $0 $14,432 $6,639 $34,008 $21,760 $45,528
January 1, 2006 $0 $18,041 $9,381 $34,008 $23,800 $64,448
January 1, 2007 $0 $21,649 $12,556 $34,008 $25,840 $85,529
January 1, 2008 $0 $25,257 $16,164 $34,008 $27,880 $108,965
January 1, 2009 $0 $28,865 $20,205 $34,008 $29,920 $134,967
January 1, 2010 $0 $32,473 $24,679 $34,008 $31,960 $163,762
January 1, 2011 $34,008 $36,084 $29,586 $34,008 $34,008 $195,595
January 1, 2012 $34,008 $36,084 $31,751 na na $230,732
January 1, 2013 $34,008 $36,084 $33,916 na na $244,963
January 1, 2014 na $36,084 na na na $260,072
<FN>
1. In order to retire as a Director Emeritus, the Director must serve until attaining age sixty-five (65).
Payments continue for thirty-six (36) months and increase by 2% per year.
2. Retirement Plan Benefits commence at age sixty-eight (68). Benefits increase by 2% per year after Retirement.
3. Early Retirement Benefits payable commencing as of Director's birthday in the Calendar Year listed assuming
no interruption of service. Benefits increase by 2% per year after Retirement.
4. Retirement Benefits payable upon attainment of age 65 following a Change in Control. No Director Emeritus
benefits are payable under this circumstance. Benefits increase by 2% per year after Retirement.
5. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty Balance
as of disability date. Disability Benefit value is determined by straight-line interpolation between the amounts
showing in this column for Jan 1 of the year the disability occurs and Jan 1 of the following calendar year.
Disability Benefit is paid as a lump sum, with no further benefits. No post-retirement benefit.
</FN>
/s/ Timothy Bailey 5/13/03 /s/ Kermit K. Houser 5/19/03
Timothy Bailey Date Bank Officer Date
Exhibit 10(j).4
DIRECTOR FEE CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this First Day of January, 2003, by
and between Klamath First Bancorp, Inc., a thrift holding company (hereinafter
referred to as the "Bank"), and James D. Bocchi, a member of the Board of
Directors of the Bank (hereinafter referred to as the "Director").
WITNESSETH:
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Director's services to the Bank in the past
have been of exceptional merit and have constituted an invaluable contribution
to the general welfare of the Bank and in bringing it to its present status of
operating efficiency, and its present position in its field of activity;
WHEREAS, the Director's experience, knowledge of the affairs of the Bank,
reputation, and contacts in the industry are so valuable that assurance of the
Director's continued services is essential for the future growth and profits of
the Bank and it is in the best interests of the Bank to arrange terms of
continued service for the Director so as to reasonably assure the Director's
remaining in the Bank's service during the Director's lifetime or until the age
of retirement;
WHEREAS, it is the desire of the Bank that the Director's services be
retained as herein provided;
WHEREAS, the Director is willing to continue to serve the Bank provided the
Bank agrees to pay the Director or the Director's surviving spouse, certain
benefits in accordance with the terms and conditions hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director at retirement or the Director's surviving spouse in the event of the
Director's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of the
Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. SERVICE
The Director will continue to serve the Bank in such capacity and with such
duties and responsibilities as may be assigned, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank.
II. FRINGE BENEFITS
The fee continuation benefits provided by this Agreement are granted by the
Bank as a fringe benefit to the Director and are not part of any fee
reduction plan or an arrangement deferring a bonus or a fee increase. The
Director has no option to take any current payment or bonus in lieu of
these fee continuation benefits except as set forth hereinafter.
III. retirement date AND NORMAL RETIREMENT AGE
A. Retirement Date: If the Director continuously serves the Bank, the
Director shall be eligible to retire from active service with the Bank
upon the attainment of age fifty-five (55) and receive the benefits
described below, unless by action of the Board of Directors this
period of active service shall be shortened or extended.
B. Normal Retirement Age: Normal Retirement Age shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-eight (68).
C. Normal Retirement Age Following a Change in Control: The term "Normal
Retirement Age Following a Change in Control" shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-five (65).
D. Early Retirement Date: The term "Early Retirement Date" shall mean the
Retirement of the Director from active service with the Bank at the
beginning of any month after the Director achieves age 55, but before
attaining age sixty-eight (68), [sixty-five (65) following a Change in
Control].
IV. DIRECTOR BENEFITS - normal retirement age
A. Director Emeritus Benefits: Upon the attainment of age sixty-five
(65), the Director shall be entitled to serve the Bank as a Director
Emeritus in accordance with the procedures and policies established by
the Board of Directors of the Bank applicable to service as a Director
Emeritus. If the Director elects to serve as a Director Emeritus, the
Director shall be paid two thousand eight hundred thirty four dollars
($2,834) per month for a period of thirty-six (36) months, commencing
with the Retirement Date and continuing until the earlier of the third
anniversary thereof, or the death of the Director. Monthly payments
will be increased by two percent at the end of each calendar year. If
the Director declines or is unable to serve as Director Emeritus, the
Director shall forfeit any entitlement to the Director Emeritus
Benefits.
B. Director Retirement Benefits: After the expiration of the thirty-six
(36) month period described above in Paragraph IV A., the Bank shall
pay to the Director Retirement Benefit Payments equal to three
thousand seven dollars per month ($3,007) until the death of the
Director. Monthly payments shall increase by two percent at the end of
each calendar year.
V. DIRECTOR BENEFITS - EARLY RETIREMENT AGE
The Director shall have the right to retire on a date which constitutes an
Early Retirement Date as defined previously in Subparagraph III. D. In the
event the Director elects Early Retirement, the Director shall be entitled
to be paid Director Retirement Benefits equal to the "Early Retirement
Benefit" applicable for the calendar year in which the Director retires as
specified in Schedule "A". The benefit shall be payable in substantially
equal monthly installments on the first day of each month, beginning with
the month following the month the Director Retires (or on such later date
as may be mutually agreed upon by the Director and the Bank in advance of
such Early Retirement), payable until the Director's death.
VI. DIRECTOR DEATH BENEFITS - NORMAL RETIREMENT AGE
In the event the Director Retires on or after the Normal Retirement Age and
dies before receiving a total of thirty-six (36) monthly Director Emeritus
Benefits and twenty-four (24) monthly Director Retirement Benefits, the
Bank shall continue such monthly payments until the full number of sixty
(60) monthly payments have been made, or until the death of the Director's
surviving spouse, whichever occurs earlier. Said payments due hereunder
shall begin the first day of the month following the decease of the
Director.
VII. DIRECTOR DEATH BENEFITS - EARLY RETIREMENT AGE
In the event the Director Retires on a date that constitutes Early
Retirement and dies before receiving a total of sixty (60) monthly Director
Retirement Benefits, the Bank shall continue such monthly payments until
the full number of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier. Said
payments due hereunder shall begin the first day of the month following the
decease of the Director.
VIII. benefit accounting
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Director into
which appropriate reserves shall be accrued.
IX. vesting
Director's interest in the benefits that are the subject of this Agreement
shall be subject to a vesting schedule described in Schedule A.
X. other termination of SERVICE
A. Voluntary Resignation or failure to be re-elected: In the event that
the service of the Director shall terminate by the Director's
voluntary action, or by the Director's failure to be re-elected to the
Board without cause, prior to the Retirement Date described in III. A.
above, then this Agreement shall terminate upon the date of such
termination of service and the Bank shall pay to the Director a
monthly amount equal to one-twelfth (1/12) times the "Director
Retirement Benefit" as described in Schedule A and earned as of the
date of termination. Such benefits shall be payable commencing on the
first of the month after the Director reaches age 68 and continue
until the death of the Director. Monthly payments shall increase by
two percent at the end of each calendar year.
In the event the Director's death should occur after such severance
but prior to the completion of the monthly payments provided for in
this Paragraph IX, the Bank shall continue such monthly payments until
a total of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier.
Said payments due hereunder shall begin the first day of the month
following the decease of the Director.
B. Removal for Cause: "Removal for Cause" shall include the removal of
the Director because of the Director's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order. Notwithstanding the foregoing, Director shall
not be deemed to have been removed for Cause unless and until there
shall have been delivered to the Director a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the
remaining members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Director and an
opportunity, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Director was
guilty of conduct justifying removal for Cause and specifying the
reasons thereof. The Director shall not have the right to receive
compensation or other benefits for any period after the removal for
Cause. All rights under this Agreement shall be forfeited, whether or
not vested. Any stock options granted to the Director under any stock
option plan or any unvested awards granted under any other stock
benefit plan of the Bank, or any subsidiary or affiliate thereof,
shall become null and void effective upon Director's receipt of Notice
of Removal for Cause pursuant to paragraph IX(ii) hereof, and shall
not be exercisable by the Director at any time subsequent to such
Removal for Cause.
C. Payments in the Event of Disability Prior to Retirement. In the event
the Director becomes Disabled at any time after the Effective Date of
this Agreement but prior to Retirement, the Director shall be entitled
to be paid as a lump sum the "Disability Benefit" specified in
Schedule "A" as of the date of the disability. The lump sum shall be
payable 60 days from the date the Employer has received a written
request to commence benefits, along with documentation showing that
the Employee has become Disabled. Once the lump sum payment has been
made, this Agreement is terminated, and the Bank has no further
obligation to the Director or the Director's surviving spouse under
this plan.
The term "Disability" or "Disabled" shall have the same meaning given
such terms in any policy of disability insurance maintained by the
Employer for the benefit of its employees including the Director. In
the absence of such a policy which extends coverage to the Director in
the event of disability, the terms shall mean bodily injury or disease
(mental or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least one
hundred twenty (120) days.
XI. CHANGE OF CONTROL
A "Change in Control" of the Bank or of Klamath First Federal Savings
and Loan Association (the "Association") shall be deemed to occur if
and when (a) an offer or other than the Bank purchases shares of the
common stock of the Bank or the Association pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
is or becomes the beneficial owner, directly or indirectly, of
securities of the Bank or the Association representing 25% or more of
the combined voting power of the Bank's then outstanding securities,
(c) the membership of the board of directors of the Bank or the
Association changes as the result of a contested election, such that
individuals who were directors at the beginning of any twenty-four
month period (whether commencing before or after the effective date of
this Agreement) do not constitute a majority of the Board at the end
of such period, or (d) shareholders of the Bank or the Association
approve a merger, consolidation, sale or disposition of all or
substantially all of the Bank's or the Association's assets, or a plan
of partial or complete liquidation. For the purposes of this
Agreement, transfers made on account of deaths or gifts, transfers
between family members or transfers to a qualified retirement plan
maintained by the Bank or the Association, shall not be considered in
determining whether there has been a change in control.
Upon a Change of Control, if the Director subsequently suffers a
Termination of Service (voluntary or involuntary), except for cause,
then the Director shall be paid Director Retirement Benefits of two
thousand eight hundred thirty four ($2,834) per month, commencing with
the Retirement Date specified in paragraph III. C. above and
continuing until the death of the Director. Alternatively, the
Director may elect to receive the "Early Retirement Benefit: After
Change in Control" as specified in the Schedule A, as of the date
selected for early retirement. However, if the Director dies before
sixty monthly payments have been made, the Bank shall continue such
monthly payments until a total of sixty (60) monthly payments have
been made, or until the death of the Director's surviving spouse,
whichever occurs earlier. Monthly payments will be increased by two
percent at the end of each calendar year. Director Emeritus Benefits
provided for in paragraph VI above shall not be paid if the Director
receives benefits pursuant to termination following a Change in
Control.
XII. restrictions on funding
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Director
Plan. The Directors or their surviving spouse shall be and remain
simply a general creditor of the Bank in the same manner as any other
creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Director
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Director be deemed
to have any lien or right, title or interest in or to any specific
funding investment or assets of the Bank.
XIII. MISCELLANEOUS
A. Status as an Unsecured General Creditor: Notwithstanding anything
contained herein to the contrary: (i) neither the Director, nor
the Director's spouse shall have any legal or equitable rights,
interests, or claims in or to any specific property or assets of
the Bank 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
Director or the Director's spouse 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 Director and the Director's spouse shall be
unsecured general creditors with respect to any benefits which
may be payable under the terms of this Agreement.
Notwithstanding the above, the Director and the Bank acknowledge
and agree that, in the event of a Change in Control and at the
written request of the Director, 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 Director or his beneficiaries
in such manner and at such times as specified in this Agreement.
B. Binding Obligation of the Bank and any Successor in Interest: The
Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of
the Bank under this Director Plan. This Director Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
C. Amendment or Revocation: It is agreed by and between the parties
hereto that, during the lifetime of the Director, this Director
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Director and the
Bank.
D. Gender: Whenever in this Director Plan words are used in the
masculine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender, whenever they should
so apply.
E. Effect on Other Bank Benefit Plans: Nothing contained in this
Director Plan shall affect the right of the Director to
participate in or be covered by any qualified or non-qualified
pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the
Bank's existing or future compensation structure. However, in
connection with the establishment of this Director Plan, the
Director is waiving any rights under the Klamath First Federal
Savings and Loan Association Director Emeritus Plan dated August
20, 1996, which waiver is further documented in Schedule B.
F. Headings: Headings and subheadings in this Director Plan are
inserted for reference and convenience only and shall not be
deemed a part of this Director Plan.
G. Applicable Law: The validity and interpretation of this Agreement
shall be governed by the laws of the State of Oregon.
H. 12 U.S.C. Sec. 1828(k): Any payments made to the Director
pursuant to this Director Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Sec. 1828(k) or
any regulations promulgated thereunder.
I. Partial Invalidity: If any term, provision, covenant, or
condition of this Director Plan 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 Director Plan shall remain in full force
and effect notwithstanding such partial invalidity.
J. Continuation as Director: Neither this Agreement nor the payments
of any benefits hereunder shall be construed as giving to the
Director any right to be retained as a member of the Board of
Directors of the Bank.
XIV. ERISA PROVISION
A. Named Fiduciary and Plan Administrator: The "Named Fiduciary and
Plan Administrator" of this Director Plan shall be Klamath First
Bancorp, Inc., until its resignation or removal by the Board. As
Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Director Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Director Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration: In the event a dispute arises
over benefits under this Director Plan and benefits are not paid
to the Director (or to the Director's surviving spouse in the
case of the Director's death) 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 sixty (60) 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, it shall
provide in writing within sixty (60) days of receipt of such
claim its specific reasons for such denial, reference to the
provisions of this Director Plan 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 a further review of
the claim denial is desired. A claim shall be deemed denied if
the Named Fiduciary and Plan Administrator fail to take any
action within the aforesaid sixty-day period. If claimants desire
a second review they shall notify the Named Fiduciary and Plan
Administrator in writing within sixty (60) days of the first
claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and
comments it 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 sixty (60)
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.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree
that they and their heirs, personal representatives, successors
and assigns shall be bound by the decision of such arbitrator
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Director
"for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
In witness whereof, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the
first day set forth hereinabove, and that, upon execution, each has
received a conforming copy.
KLAMATH FIRST BANCORP, INC.
Klamath Falls, Oregon
/s/ Nina G. Drake By: /s/ Rodney Murray
Witness Rodney N. Murray, Chairman of Board
/s/ Kathryn Rutledge /s/ James Bocchi
Witness James Bocchi
SCHEDULE B
WAIVER OF PRIOR PLAN BENEFITS
In consideration for the benefits made available to the Director by
this Agreement, the Director and agrees as follows:
(a) The Director is party to that certain Agreement made with the
Bank entitled the Klamath First Federal Savings and Loan Association
Director Emeritus Plan dated August 20, 1996 (the "Prior Plan
Agreement");
(b) This Agreement and the benefits hereunder are provided as a
substitute for the Prior Plan Agreement and the benefits provided
thereunder;
(c) The Prior Plan Agreement and the benefits thereunder are
hereby terminated effective as of the date of this Agreement;
(d) The Director hereby waives and relinquishes for himself or
herself, and his or her heirs, beneficiaries, legal representatives,
agents, successors and assigns, any and all right, entitlement and
interest that the Director has or may have pursuant to the Prior Plan
Agreement and the benefits thereunder;
(e) The Director accepts the Director Benefits afforded by this
Agreement in full and complete substitution for the benefits otherwise
provided by the Prior Plan Agreement; and the Director acknowledges he
(i) has had an opportunity to consult with advisors of the Director's
own choice in determining to enter into this Agreement and this
Waiver, (ii) understands that the effect of this Waiver is to
terminate, waive and relinquish forever all rights, entitlements and
interests that the Director has or may have under the Prior Plan
Agreement and the benefits thereunder as a condition to receiving the
benefits under this Agreement; and (iii) the Director is entering into
this Agreement and this Waiver voluntarily and with full appreciation
of the effect of doing so.
Dated: 5/21/03 /s/ James Bocchi
James Bocchi
I consent to and agree to be bound by the foregoing Waiver:
/s/ Doralyn M Bocchi /s/ Tina M Tedeschi
Director's Spouse Witness
SCHEDULE A
DIRECTOR BENEFIT SCHEDULE - JAMES BOCCHI
JOINED THE BOARD IN 1984
DATE OF BIRTH: June 24, 1924
DIRECTOR DIRECTOR CHANGE IN EARLY
EMERITUS RETIREMENT CONTROL RETIREMENT DISABILITY
RETIREMENT BENEFIT: BENEFIT: EARLY BENEFIT: BENEFIT: BENEFIT:
ON OR Payable Payable RETIREMENT Payable After Change Payable Upon
BEFORE Upon Retirement (1) Jan 1, 2006 (2) BENEFIT: (3) Upon Retirement (4) in Control Disability (5)
January 1, 2003 $34,008 $36,084 na $34,008 na $0
January 1, 2004 $34,008 $36,084 na $34,680 na $92,364
January 1, 2005 $34,008 $36,084 na $35,374 na $116,241
January 1, 2006 na $36,084 na $36,084 na $145,498
and thereafter na $36,084 na $36,084 na na
<FN>
1. The Director may retire and commence service as a Director Emeritus anytime after 1/1/2003.
Payments continue for thirty-six (36) months and increase by 2% per year.
2. Retirement Plan Benefits commence following service as a Director Emeritus. Benefits increase by 2% per year after Retirement.
3. Early Retirement Benefits payable commencing as of Director's birthday in the Calendar Year listed assuming
no interruption of service. Benefits increase by 2% per year after Retirement.
4. Retirement Benefits payable upon attainment of age 65 following a Change in Control. No Director Emeritus
benefits are payable under this circumstance. Benefits increase by 2% per year after Retirement.
5. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty Balance
as of disability date. Disability Benefit value is determined by straight-line interpolation between the amounts
showing in this column for Jan 1 of the year the disability occurs and Jan 1 of the following calendar year.
Disability Benefit is paid as a lump sum, with no further benefits. No post-retirement benefit.
</FN>
/s/ James Bocchi 5/21/03 /s/ Rodney Murray 6/3/03
James Bocchi Date Bank Officer Date
Exhibit 10(j).5
DIRECTOR FEE CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this First Day of January, 2003, by
and between Klamath First Bancorp, Inc., a thrift holding company (hereinafter
referred to as the "Bank"), and Donald N. Bauhofer, a member of the Board of
Directors of the Bank (hereinafter referred to as the "Director").
WITNESSETH:
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Director's services to the Bank in the past
have been of exceptional merit and have constituted an invaluable contribution
to the general welfare of the Bank and in bringing it to its present status of
operating efficiency, and its present position in its field of activity;
WHEREAS, the Director's experience, knowledge of the affairs of the Bank,
reputation, and contacts in the industry are so valuable that assurance of the
Director's continued services is essential for the future growth and profits of
the Bank and it is in the best interests of the Bank to arrange terms of
continued service for the Director so as to reasonably assure the Director's
remaining in the Bank's service during the Director's lifetime or until the age
of retirement;
WHEREAS, it is the desire of the Bank that the Director's services be
retained as herein provided;
WHEREAS, the Director is willing to continue to serve the Bank provided the
Bank agrees to pay the Director or the Director's surviving spouse, certain
benefits in accordance with the terms and conditions hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director at retirement or the Director's surviving spouse in the event of the
Director's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of the
Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. SERVICE
The Director will continue to serve the Bank in such capacity and with such
duties and responsibilities as may be assigned, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank.
II. FRINGE BENEFITS
The fee continuation benefits provided by this Agreement are granted by the
Bank as a fringe benefit to the Director and are not part of any fee
reduction plan or an arrangement deferring a bonus or a fee increase. The
Director has no option to take any current payment or bonus in lieu of
these fee continuation benefits except as set forth hereinafter.
III. retirement date AND NORMAL RETIREMENT AGE
A. Retirement Date: If the Director continuously serves the Bank, the
Director shall be eligible to retire from active service with the Bank
upon the attainment of age fifty-five (55) and receive the benefits
described below, unless by action of the Board of Directors this
period of active service shall be shortened or extended.
B. Normal Retirement Age: Normal Retirement Age shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-eight (68).
C. Normal Retirement Age Following a Change in Control: The term "Normal
Retirement Age Following a Change in Control" shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-five (65).
D. Early Retirement Date: The term "Early Retirement Date" shall mean the
Retirement of the Director from active service with the Bank at the
beginning of any month after the Director achieves age 55, but before
attaining age sixty-eight (68), [sixty-five (65) following a Change in
Control].
IV. DIRECTOR BENEFITS - normal retirement age
A. Director Emeritus Benefits: Upon the attainment of age sixty-five
(65), the Director shall be entitled to serve the Bank as a Director
Emeritus in accordance with the procedures and policies established by
the Board of Directors of the Bank applicable to service as a Director
Emeritus. If the Director elects to serve as a Director Emeritus, the
Director shall be paid two thousand eight hundred thirty four dollars
($2,834) per month for a period of thirty-six (36) months, commencing
with the Retirement Date and continuing until the earlier of the third
anniversary thereof, or the death of the Director. Monthly payments
will be increased by two percent at the end of each calendar year. If
the Director declines or is unable to serve as Director Emeritus, the
Director shall forfeit any entitlement to the Director Emeritus
Benefits.
B. Director Retirement Benefits: After the expiration of the thirty-six
(36) month period described above in Paragraph IV A., the Bank shall
pay to the Director Retirement Benefit Payments equal to three
thousand seven dollars per month ($3,007) until the death of the
Director. Monthly payments shall increase by two percent at the end of
each calendar year.
V. DIRECTOR BENEFITS - EARLY RETIREMENT AGE
The Director shall have the right to retire on a date which constitutes an
Early Retirement Date as defined previously in Subparagraph III. D. In the
event the Director elects Early Retirement, the Director shall be entitled
to be paid Director Retirement Benefits equal to the "Early Retirement
Benefit" applicable for the calendar year in which the Director retires as
specified in Schedule "A". The benefit shall be payable in substantially
equal monthly installments on the first day of each month, beginning with
the month following the month the Director Retires (or on such later date
as may be mutually agreed upon by the Director and the Bank in advance of
such Early Retirement), payable until the Director's death.
VI. DIRECTOR DEATH BENEFITS - NORMAL RETIREMENT AGE
In the event the Director Retires on or after the Normal Retirement Age and
dies before receiving a total of thirty-six (36) monthly Director Emeritus
Benefits and twenty-four (24) monthly Director Retirement Benefits, the
Bank shall continue such monthly payments until the full number of sixty
(60) monthly payments have been made, or until the death of the Director's
surviving spouse, whichever occurs earlier. Said payments due hereunder
shall begin the first day of the month following the decease of the
Director.
VII. DIRECTOR DEATH BENEFITS - EARLY RETIREMENT AGE
In the event the Director Retires on a date that constitutes Early
Retirement and dies before receiving a total of sixty (60) monthly Director
Retirement Benefits, the Bank shall continue such monthly payments until
the full number of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier. Said
payments due hereunder shall begin the first day of the month following the
decease of the Director.
VIII. benefit accounting
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Director into
which appropriate reserves shall be accrued.
IX. vesting
Director's interest in the benefits that are the subject of this Agreement
shall be subject to a vesting schedule described in Schedule A.
X. other termination of SERVICE
A. Voluntary Resignation or failure to be re-elected: In the event that
the service of the Director shall terminate by the Director's
voluntary action, or by the Director's failure to be re-elected to the
Board without cause, prior to the Retirement Date described in III. A.
above, then this Agreement shall terminate upon the date of such
termination of service and the Bank shall pay to the Director a
monthly amount equal to one-twelfth (1/12) times the "Director
Retirement Benefit" as described in Schedule A and earned as of the
date of termination. Such benefits shall be payable commencing on the
first of the month after the Director reaches age 68 and continue
until the death of the Director. Monthly payments shall increase by
two percent at the end of each calendar year.
In the event the Director's death should occur after such severance
but prior to the completion of the monthly payments provided for in
this Paragraph IX, the Bank shall continue such monthly payments until
a total of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier.
Said payments due hereunder shall begin the first day of the month
following the decease of the Director.
B. Removal for Cause: "Removal for Cause" shall include the removal of
the Director because of the Director's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order. Notwithstanding the foregoing, Director shall
not be deemed to have been removed for Cause unless and until there
shall have been delivered to the Director a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the
remaining members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Director and an
opportunity, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Director was
guilty of conduct justifying removal for Cause and specifying the
reasons thereof. The Director shall not have the right to receive
compensation or other benefits for any period after the removal for
Cause. All rights under this Agreement shall be forfeited, whether or
not vested. Any stock options granted to the Director under any stock
option plan or any unvested awards granted under any other stock
benefit plan of the Bank, or any subsidiary or affiliate thereof,
shall become null and void effective upon Director's receipt of Notice
of Removal for Cause pursuant to paragraph IX(ii) hereof, and shall
not be exercisable by the Director at any time subsequent to such
Removal for Cause.
C. Payments in the Event of Disability Prior to Retirement. In the event
the Director becomes Disabled at any time after the Effective Date of
this Agreement but prior to Retirement, the Director shall be entitled
to be paid as a lump sum the "Disability Benefit" specified in
Schedule "A" as of the date of the disability. The lump sum shall be
payable 60 days from the date the Employer has received a written
request to commence benefits, along with documentation showing that
the Employee has become Disabled. Once the lump sum payment has been
made, this Agreement is terminated, and the Bank has no further
obligation to the Director or the Director's surviving spouse under
this plan.
The term "Disability" or "Disabled" shall have the same meaning given
such terms in any policy of disability insurance maintained by the
Employer for the benefit of its employees including the Director. In
the absence of such a policy which extends coverage to the Director in
the event of disability, the terms shall mean bodily injury or disease
(mental or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least one
hundred twenty (120) days.
XI. CHANGE OF CONTROL
A "Change in Control" of the Bank or of Klamath First Federal Savings
and Loan Association (the "Association") shall be deemed to occur if
and when (a) an offer or other than the Bank purchases shares of the
common stock of the Bank or the Association pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
is or becomes the beneficial owner, directly or indirectly, of
securities of the Bank or the Association representing 25% or more of
the combined voting power of the Bank's then outstanding securities,
(c) the membership of the board of directors of the Bank or the
Association changes as the result of a contested election, such that
individuals who were directors at the beginning of any twenty-four
month period (whether commencing before or after the effective date of
this Agreement) do not constitute a majority of the Board at the end
of such period, or (d) shareholders of the Bank or the Association
approve a merger, consolidation, sale or disposition of all or
substantially all of the Bank's or the Association's assets, or a plan
of partial or complete liquidation. For the purposes of this
Agreement, transfers made on account of deaths or gifts, transfers
between family members or transfers to a qualified retirement plan
maintained by the Bank or the Association, shall not be considered in
determining whether there has been a change in control.
Upon a Change of Control, if the Director subsequently suffers a
Termination of Service (voluntary or involuntary), except for cause,
then the Director shall be paid Director Retirement Benefits of two
thousand eight hundred thirty four ($2,834) per month, commencing with
the Retirement Date specified in paragraph III. C. above and
continuing until the death of the Director. Alternatively, the
Director may elect to receive the "Early Retirement Benefit: After
Change in Control" as specified in the Schedule A, as of the date
selected for early retirement. However, if the Director dies before
sixty monthly payments have been made, the Bank shall continue such
monthly payments until a total of sixty (60) monthly payments have
been made, or until the death of the Director's surviving spouse,
whichever occurs earlier. Monthly payments will be increased by two
percent at the end of each calendar year. Director Emeritus Benefits
provided for in paragraph VI above shall not be paid if the Director
receives benefits pursuant to termination following a Change in
Control.
XII. restrictions on funding
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Director
Plan. The Directors or their surviving spouse shall be and remain
simply a general creditor of the Bank in the same manner as any other
creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Director
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Director be deemed
to have any lien or right, title or interest in or to any specific
funding investment or assets of the Bank.
XIII. MISCELLANEOUS
A. Status as an Unsecured General Creditor: Notwithstanding anything
contained herein to the contrary: (i) neither the Director, nor
the Director's spouse shall have any legal or equitable rights,
interests, or claims in or to any specific property or assets of
the Bank 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
Director or the Director's spouse 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 Director and the Director's spouse shall be
unsecured general creditors with respect to any benefits which
may be payable under the terms of this Agreement.
Notwithstanding the above, the Director and the Bank acknowledge
and agree that, in the event of a Change in Control and at the
written request of the Director, 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 Director or his beneficiaries
in such manner and at such times as specified in this Agreement.
B. Binding Obligation of the Bank and any Successor in Interest: The
Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of
the Bank under this Director Plan. This Director Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
C. Amendment or Revocation: It is agreed by and between the parties
hereto that, during the lifetime of the Director, this Director
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Director and the
Bank.
D. Gender: Whenever in this Director Plan words are used in the
masculine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender, whenever they should
so apply.
E. Effect on Other Bank Benefit Plans: Nothing contained in this
Director Plan shall affect the right of the Director to
participate in or be covered by any qualified or non-qualified
pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the
Bank's existing or future compensation structure. However, in
connection with the establishment of this Director Plan, the
Director is waiving any rights under the Klamath First Federal
Savings and Loan Association Director Emeritus Plan dated August
20, 1996, which waiver is further documented in Schedule B.
F. Headings: Headings and subheadings in this Director Plan are
inserted for reference and convenience only and shall not be
deemed a part of this Director Plan.
G. Applicable Law: The validity and interpretation of this Agreement
shall be governed by the laws of the State of Oregon.
H. 12 U.S.C. Sec. 1828(k): Any payments made to the Director
pursuant to this Director Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Sec. 1828(k) or
any regulations promulgated thereunder.
I. Partial Invalidity: If any term, provision, covenant, or
condition of this Director Plan 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 Director Plan shall remain in full force
and effect notwithstanding such partial invalidity.
J. Continuation as Director: Neither this Agreement nor the payments
of any benefits hereunder shall be construed as giving to the
Director any right to be retained as a member of the Board of
Directors of the Bank.
XIV. ERISA PROVISION
A. Named Fiduciary and Plan Administrator: The "Named Fiduciary and
Plan Administrator" of this Director Plan shall be Klamath First
Bancorp, Inc., until its resignation or removal by the Board. As
Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Director Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Director Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration: In the event a dispute arises
over benefits under this Director Plan and benefits are not paid
to the Director (or to the Director's surviving spouse in the
case of the Director's death) 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 sixty (60) 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, it shall
provide in writing within sixty (60) days of receipt of such
claim its specific reasons for such denial, reference to the
provisions of this Director Plan 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 a further review of
the claim denial is desired. A claim shall be deemed denied if
the Named Fiduciary and Plan Administrator fail to take any
action within the aforesaid sixty-day period. If claimants desire
a second review they shall notify the Named Fiduciary and Plan
Administrator in writing within sixty (60) days of the first
claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and
comments it 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 sixty (60)
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.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree
that they and their heirs, personal representatives, successors
and assigns shall be bound by the decision of such arbitrator
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Director
"for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
In witness whereof, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the
first day set forth hereinabove, and that, upon execution, each has
received a conforming copy.
KLAMATH FIRST BANCORP, INC.
Klamath Falls, Oregon
/s/ Nina G. Drake By: /s/ Rodney Murray
Witness Rodney N. Murray, Chairman of Board
/s/ Nina G. Drake /s/ Donald Bauhofer
Witness Donald Bauhofer
SCHEDULE A
DIRECTOR BENEFIT SCHEDULE - DONALD BAUHOFER
JOINED THE BOARD IN 2002
DATE OF BIRTH: March 8, 1951
DIRECTOR DIRECTOR CHANGE IN EARLY
EMERITUS RETIREMENT CONTROL RETIREMENT DISABILITY
BENEFIT: BENEFIT: EARLY BENEFIT: BENEFIT: BENEFIT:
VESTING Payable Payable RETIREMENT Payable After Change Payable Upon
DATE April 1, 2016 (1) April 1, 2019 (2) BENEFIT: (3) April 1, 2016 (4) in Control Disability (5)
January 1, 2003 $0 $0 $0 $34,008 $0 $0
January 1, 2004 $0 $7,216 $0 $34,008 $0 $0
January 1, 2005 $0 $10,824 $0 $34,008 $0 $20,898
January 1, 2006 $0 $14,432 $3,175 $34,008 $13,600 $33,281
January 1, 2007 $0 $18,041 $5,051 $34,008 $15,640 $47,111
January 1, 2008 $0 $21,649 $7,361 $34,008 $17,680 $62,521
January 1, 2009 $0 $25,257 $10,103 $34,008 $19,720 $79,652
January 1, 2010 $0 $28,865 $13,278 $34,008 $21,760 $98,659
January 1, 2011 $0 $32,473 $16,886 $34,008 $23,800 $119,708
January 1, 2012 $0 $36,084 $20,927 $34,008 $25,840 $142,978
January 1, 2013 $0 $36,084 $23,092 $34,008 $27,880 $168,663
January 1, 2014 $0 $36,084 $25,257 $34,008 $29,920 $179,065
January 1, 2015 $0 $36,084 $27,422 $34,008 $31,960 $190,110
January 1, 2016 $34,008 $36,084 $29,586 $34,008 $34,008 $201,835
January 1, 2017 $34,008 $36,084 $31,751 na na $214,284
January 1, 2018 $34,008 $36,084 $33,916 na na $227,500
January 1, 2019 na $36,084 na na na $241,532
<FN>
1. In order to retire as a Director Emeritus, the Director must serve until attaining age sixty-five (65).
Payments continue for thirty-six (36) months and increase by 2% per year.
2. Retirement Plan Benefits commence at age sixty-eight (68). Benefits increase by 2% per year after Retirement.
3. Early Retirement Benefits payable commencing as of Director's birthday in the Calendar Year listed assuming
no interruption of service. Benefits increase by 2% per year after Retirement.
4. Retirement Benefits payable upon attainment of age 65 following a Change in Control. No Director Emeritus
benefits are payable under this circumstance. Benefits increase by 2% per year after Retirement.
5. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty Balance
as of disability date. Disability Benefit value is determined by straight-line interpolation between the amounts
showing in this column for Jan 1 of the year the disability occurs and Jan 1 of the following calendar year.
Disability Benefit is paid as a lump sum, with no further benefits. No post-retirement benefit.
</FN>
/s/ Donald Bauhofer 5/29/03 /s/ Rodney Murray 6/3/03
Donald Bauhofer Date Bank Officer Date
Exhibit 10(j).6
DIRECTOR FEE CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this First Day of January, 2003, by
and between Klamath First Bancorp, Inc., a thrift holding company (hereinafter
referred to as the "Bank"), and William C. Dalton, a member of the Board of
Directors of the Bank (hereinafter referred to as the "Director").
WITNESSETH:
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Director's services to the Bank in the past
have been of exceptional merit and have constituted an invaluable contribution
to the general welfare of the Bank and in bringing it to its present status of
operating efficiency, and its present position in its field of activity;
WHEREAS, the Director's experience, knowledge of the affairs of the Bank,
reputation, and contacts in the industry are so valuable that assurance of the
Director's continued services is essential for the future growth and profits of
the Bank and it is in the best interests of the Bank to arrange terms of
continued service for the Director so as to reasonably assure the Director's
remaining in the Bank's service during the Director's lifetime or until the age
of retirement;
WHEREAS, it is the desire of the Bank that the Director's services be
retained as herein provided;
WHEREAS, the Director is willing to continue to serve the Bank provided the
Bank agrees to pay the Director or the Director's surviving spouse, certain
benefits in accordance with the terms and conditions hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director at retirement or the Director's surviving spouse in the event of the
Director's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of the
Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. SERVICE
The Director will continue to serve the Bank in such capacity and with such
duties and responsibilities as may be assigned, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank.
II. FRINGE BENEFITS
The fee continuation benefits provided by this Agreement are granted by the
Bank as a fringe benefit to the Director and are not part of any fee
reduction plan or an arrangement deferring a bonus or a fee increase. The
Director has no option to take any current payment or bonus in lieu of
these fee continuation benefits except as set forth hereinafter.
III. retirement date AND NORMAL RETIREMENT AGE
A. Retirement Date: If the Director continuously serves the Bank, the
Director shall be eligible to retire from active service with the Bank
upon the attainment of age fifty-five (55) and receive the benefits
described below, unless by action of the Board of Directors this
period of active service shall be shortened or extended.
B. Normal Retirement Age: Normal Retirement Age shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-eight (68).
C. Normal Retirement Age Following a Change in Control: The term "Normal
Retirement Age Following a Change in Control" shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-five (65).
D. Early Retirement Date: The term "Early Retirement Date" shall mean the
Retirement of the Director from active service with the Bank at the
beginning of any month after the Director achieves age 55, but before
attaining age sixty-eight (68), [sixty-five (65) following a Change in
Control].
IV. DIRECTOR BENEFITS - normal retirement age
A. Director Emeritus Benefits: Upon the attainment of age sixty-five
(65), the Director shall be entitled to serve the Bank as a Director
Emeritus in accordance with the procedures and policies established by
the Board of Directors of the Bank applicable to service as a Director
Emeritus. If the Director elects to serve as a Director Emeritus, the
Director shall be paid two thousand eight hundred thirty four dollars
($2,834) per month for a period of thirty-six (36) months, commencing
with the Retirement Date and continuing until the earlier of the third
anniversary thereof, or the death of the Director. Monthly payments
will be increased by two percent at the end of each calendar year. If
the Director declines or is unable to serve as Director Emeritus, the
Director shall forfeit any entitlement to the Director Emeritus
Benefits.
B. Director Retirement Benefits: After the expiration of the thirty-six
(36) month period described above in Paragraph IV A., the Bank shall
pay to the Director Retirement Benefit Payments equal to three
thousand seven dollars per month ($3,007) until the death of the
Director. Monthly payments shall increase by two percent at the end of
each calendar year.
V. DIRECTOR BENEFITS - EARLY RETIREMENT AGE
The Director shall have the right to retire on a date which constitutes an
Early Retirement Date as defined previously in Subparagraph III. D. In the
event the Director elects Early Retirement, the Director shall be entitled
to be paid Director Retirement Benefits equal to the "Early Retirement
Benefit" applicable for the calendar year in which the Director retires as
specified in Schedule "A". The benefit shall be payable in substantially
equal monthly installments on the first day of each month, beginning with
the month following the month the Director Retires (or on such later date
as may be mutually agreed upon by the Director and the Bank in advance of
such Early Retirement), payable until the Director's death.
VI. DIRECTOR DEATH BENEFITS - NORMAL RETIREMENT AGE
In the event the Director Retires on or after the Normal Retirement Age and
dies before receiving a total of thirty-six (36) monthly Director Emeritus
Benefits and twenty-four (24) monthly Director Retirement Benefits, the
Bank shall continue such monthly payments until the full number of sixty
(60) monthly payments have been made, or until the death of the Director's
surviving spouse, whichever occurs earlier. Said payments due hereunder
shall begin the first day of the month following the decease of the
Director.
VII. DIRECTOR DEATH BENEFITS - EARLY RETIREMENT AGE
In the event the Director Retires on a date that constitutes Early
Retirement and dies before receiving a total of sixty (60) monthly Director
Retirement Benefits, the Bank shall continue such monthly payments until
the full number of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier. Said
payments due hereunder shall begin the first day of the month following the
decease of the Director.
VIII. benefit accounting
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Director into
which appropriate reserves shall be accrued.
IX. vesting
Director's interest in the benefits that are the subject of this Agreement
shall be subject to a vesting schedule described in Schedule A.
X. other termination of SERVICE
A. Voluntary Resignation or failure to be re-elected: In the event that
the service of the Director shall terminate by the Director's
voluntary action, or by the Director's failure to be re-elected to the
Board without cause, prior to the Retirement Date described in III. A.
above, then this Agreement shall terminate upon the date of such
termination of service and the Bank shall pay to the Director a
monthly amount equal to one-twelfth (1/12) times the "Director
Retirement Benefit" as described in Schedule A and earned as of the
date of termination. Such benefits shall be payable commencing on the
first of the month after the Director reaches age 68 and continue
until the death of the Director. Monthly payments shall increase by
two percent at the end of each calendar year.
In the event the Director's death should occur after such severance
but prior to the completion of the monthly payments provided for in
this Paragraph IX, the Bank shall continue such monthly payments until
a total of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier.
Said payments due hereunder shall begin the first day of the month
following the decease of the Director.
B. Removal for Cause: "Removal for Cause" shall include the removal of
the Director because of the Director's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order. Notwithstanding the foregoing, Director shall
not be deemed to have been removed for Cause unless and until there
shall have been delivered to the Director a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the
remaining members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Director and an
opportunity, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Director was
guilty of conduct justifying removal for Cause and specifying the
reasons thereof. The Director shall not have the right to receive
compensation or other benefits for any period after the removal for
Cause. All rights under this Agreement shall be forfeited, whether or
not vested. Any stock options granted to the Director under any stock
option plan or any unvested awards granted under any other stock
benefit plan of the Bank, or any subsidiary or affiliate thereof,
shall become null and void effective upon Director's receipt of Notice
of Removal for Cause pursuant to paragraph IX(ii) hereof, and shall
not be exercisable by the Director at any time subsequent to such
Removal for Cause.
C. Payments in the Event of Disability Prior to Retirement. In the event
the Director becomes Disabled at any time after the Effective Date of
this Agreement but prior to Retirement, the Director shall be entitled
to be paid as a lump sum the "Disability Benefit" specified in
Schedule "A" as of the date of the disability. The lump sum shall be
payable 60 days from the date the Employer has received a written
request to commence benefits, along with documentation showing that
the Employee has become Disabled. Once the lump sum payment has been
made, this Agreement is terminated, and the Bank has no further
obligation to the Director or the Director's surviving spouse under
this plan.
The term "Disability" or "Disabled" shall have the same meaning given
such terms in any policy of disability insurance maintained by the
Employer for the benefit of its employees including the Director. In
the absence of such a policy which extends coverage to the Director in
the event of disability, the terms shall mean bodily injury or disease
(mental or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least one
hundred twenty (120) days.
XI. CHANGE OF CONTROL
A "Change in Control" of the Bank or of Klamath First Federal Savings
and Loan Association (the "Association") shall be deemed to occur if
and when (a) an offer or other than the Bank purchases shares of the
common stock of the Bank or the Association pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
is or becomes the beneficial owner, directly or indirectly, of
securities of the Bank or the Association representing 25% or more of
the combined voting power of the Bank's then outstanding securities,
(c) the membership of the board of directors of the Bank or the
Association changes as the result of a contested election, such that
individuals who were directors at the beginning of any twenty-four
month period (whether commencing before or after the effective date of
this Agreement) do not constitute a majority of the Board at the end
of such period, or (d) shareholders of the Bank or the Association
approve a merger, consolidation, sale or disposition of all or
substantially all of the Bank's or the Association's assets, or a plan
of partial or complete liquidation. For the purposes of this
Agreement, transfers made on account of deaths or gifts, transfers
between family members or transfers to a qualified retirement plan
maintained by the Bank or the Association, shall not be considered in
determining whether there has been a change in control.
Upon a Change of Control, if the Director subsequently suffers a
Termination of Service (voluntary or involuntary), except for cause,
then the Director shall be paid Director Retirement Benefits of two
thousand eight hundred thirty four ($2,834) per month, commencing with
the Retirement Date specified in paragraph III. C. above and
continuing until the death of the Director. Alternatively, the
Director may elect to receive the "Early Retirement Benefit: After
Change in Control" as specified in the Schedule A, as of the date
selected for early retirement. However, if the Director dies before
sixty monthly payments have been made, the Bank shall continue such
monthly payments until a total of sixty (60) monthly payments have
been made, or until the death of the Director's surviving spouse,
whichever occurs earlier. Monthly payments will be increased by two
percent at the end of each calendar year. Director Emeritus Benefits
provided for in paragraph VI above shall not be paid if the Director
receives benefits pursuant to termination following a Change in
Control.
XII. restrictions on funding
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Director
Plan. The Directors or their surviving spouse shall be and remain
simply a general creditor of the Bank in the same manner as any other
creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Director
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Director be deemed
to have any lien or right, title or interest in or to any specific
funding investment or assets of the Bank.
XIII. MISCELLANEOUS
A. Status as an Unsecured General Creditor: Notwithstanding anything
contained herein to the contrary: (i) neither the Director, nor
the Director's spouse shall have any legal or equitable rights,
interests, or claims in or to any specific property or assets of
the Bank 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
Director or the Director's spouse 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 Director and the Director's spouse shall be
unsecured general creditors with respect to any benefits which
may be payable under the terms of this Agreement.
Notwithstanding the above, the Director and the Bank acknowledge
and agree that, in the event of a Change in Control and at the
written request of the Director, 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 Director or his beneficiaries
in such manner and at such times as specified in this Agreement.
B. Binding Obligation of the Bank and any Successor in Interest: The
Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of
the Bank under this Director Plan. This Director Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
C. Amendment or Revocation: It is agreed by and between the parties
hereto that, during the lifetime of the Director, this Director
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Director and the
Bank.
D. Gender: Whenever in this Director Plan words are used in the
masculine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender, whenever they should
so apply.
E. Effect on Other Bank Benefit Plans: Nothing contained in this
Director Plan shall affect the right of the Director to
participate in or be covered by any qualified or non-qualified
pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the
Bank's existing or future compensation structure. However, in
connection with the establishment of this Director Plan, the
Director is waiving any rights under the Klamath First Federal
Savings and Loan Association Director Emeritus Plan dated August
20, 1996, which waiver is further documented in Schedule B.
F. Headings: Headings and subheadings in this Director Plan are
inserted for reference and convenience only and shall not be
deemed a part of this Director Plan.
G. Applicable Law: The validity and interpretation of this Agreement
shall be governed by the laws of the State of Oregon.
H. 12 U.S.C. Sec. 1828(k): Any payments made to the Director
pursuant to this Director Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Sec. 1828(k) or
any regulations promulgated thereunder.
I. Partial Invalidity: If any term, provision, covenant, or
condition of this Director Plan 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 Director Plan shall remain in full force
and effect notwithstanding such partial invalidity.
J. Continuation as Director: Neither this Agreement nor the payments
of any benefits hereunder shall be construed as giving to the
Director any right to be retained as a member of the Board of
Directors of the Bank.
XIV. ERISA PROVISION
A. Named Fiduciary and Plan Administrator: The "Named Fiduciary and
Plan Administrator" of this Director Plan shall be Klamath First
Bancorp, Inc., until its resignation or removal by the Board. As
Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Director Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Director Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration: In the event a dispute arises
over benefits under this Director Plan and benefits are not paid
to the Director (or to the Director's surviving spouse in the
case of the Director's death) 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 sixty (60) 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, it shall
provide in writing within sixty (60) days of receipt of such
claim its specific reasons for such denial, reference to the
provisions of this Director Plan 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 a further review of
the claim denial is desired. A claim shall be deemed denied if
the Named Fiduciary and Plan Administrator fail to take any
action within the aforesaid sixty-day period. If claimants desire
a second review they shall notify the Named Fiduciary and Plan
Administrator in writing within sixty (60) days of the first
claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and
comments it 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 sixty (60)
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.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree
that they and their heirs, personal representatives, successors
and assigns shall be bound by the decision of such arbitrator
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Director
"for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
In witness whereof, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the
first day set forth hereinabove, and that, upon execution, each has
received a conforming copy.
KLAMATH FIRST BANCORP, INC.
Klamath Falls, Oregon
/s/ Nina G. Drake By: /s/ Rodney Murray
Witness Rodney N. Murray, Chairman of Board
/s/ Kathryn Rutledge /s/ William C. Dalton
Witness William Dalton
SCHEDULE B
WAIVER OF PRIOR PLAN BENEFITS
In consideration for the benefits made available to the Director by
this Agreement, the Director and agrees as follows:
(a) The Director is party to that certain Agreement made with the
Bank entitled the Klamath First Federal Savings and Loan Association
Director Emeritus Plan dated August 20, 1996 (the "Prior Plan
Agreement");
(b) This Agreement and the benefits hereunder are provided as a
substitute for the Prior Plan Agreement and the benefits provided
thereunder;
(c) The Prior Plan Agreement and the benefits thereunder are
hereby terminated effective as of the date of this Agreement;
(d) The Director hereby waives and relinquishes for himself or
herself, and his or her heirs, beneficiaries, legal representatives,
agents, successors and assigns, any and all right, entitlement and
interest that the Director has or may have pursuant to the Prior Plan
Agreement and the benefits thereunder;
(e) The Director accepts the Director Benefits afforded by this
Agreement in full and complete substitution for the benefits otherwise
provided by the Prior Plan Agreement; and the Director acknowledges he
(i) has had an opportunity to consult with advisors of the Director's
own choice in determining to enter into this Agreement and this
Waiver, (ii) understands that the effect of this Waiver is to
terminate, waive and relinquish forever all rights, entitlements and
interests that the Director has or may have under the Prior Plan
Agreement and the benefits thereunder as a condition to receiving the
benefits under this Agreement; and (iii) the Director is entering into
this Agreement and this Waiver voluntarily and with full appreciation
of the effect of doing so.
Dated: 5/21/03 /s/ William C. Dalton
William Dalton
I consent to and agree to be bound by the foregoing Waiver:
/s/ Joanne M. Dalton Kathryn Rutledge
Director's Spouse Witness
SCHEDULE A
DIRECTOR BENEFIT SCHEDULE - WILLIAM DALTON
JOINED THE BOARD IN 1972
DATE OF BIRTH: November 24, 1930
DIRECTOR DIRECTOR CHANGE IN EARLY
EMERITUS RETIREMENT CONTROL RETIREMENT DISABILITY
RETIREMENT BENEFIT: BENEFIT: EARLY BENEFIT: BENEFIT: BENEFIT:
ON OR Payable Payable RETIREMENT Payable After Change Payable Upon
BEFORE Upon Retirement (1) Jan 1, 2006 (2) BENEFIT: (3) Upon Retirement (4) in Control Disability (5)
January 1, 2003 $34,008 $36,084 na $34,008 na $0
January 1, 2004 $34,008 $36,084 na $34,680 na $125,069
January 1, 2005 $34,008 $36,084 na $35,374 na $170,738
January 1, 2006 na $36,084 na $36,084 na $225,027
and thereafter na $36,084 na $36,084 na na
<FN>
1. The Director may retire and commence service as a Director Emeritus anytime after 1/1/2003.
Payments continue for thirty-six (36) months and increase by 2% per year.
2. Retirement Plan Benefits commence following service as a Director Emeritus. Benefits increase by 2% per year after Retirement.
3. Early Retirement Benefits payable commencing as of Director's birthday in the Calendar Year listed assuming
no interruption of service. Benefits increase by 2% per year after Retirement.
4. Retirement Benefits payable upon attainment of age 65 following a Change in Control. No Director Emeritus
benefits are payable under this circumstance. Benefits increase by 2% per year after Retirement.
5. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty Balance
as of disability date. Disability Benefit value is determined by straight-line interpolation between the amounts
showing in this column for Jan 1 of the year the disability occurs and Jan 1 of the following calendar year.
Disability Benefit is paid as a lump sum, with no further benefits. No post-retirement benefit.
</FN>
/s/ William C. Dalton 5/21/03 /s/ Rodney Murray 6/3/03
William Dalton Date Bank Officer Date
Exhibit 10(j).7
DIRECTOR FEE CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this First Day of January, 2003, by
and between Klamath First Bancorp, Inc., a thrift holding company (hereinafter
referred to as the "Bank"), and Dianne E. Spires, a member of the Board of
Directors of the Bank (hereinafter referred to as the "Director").
WITNESSETH:
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Director's services to the Bank in the past
have been of exceptional merit and have constituted an invaluable contribution
to the general welfare of the Bank and in bringing it to its present status of
operating efficiency, and its present position in its field of activity;
WHEREAS, the Director's experience, knowledge of the affairs of the Bank,
reputation, and contacts in the industry are so valuable that assurance of the
Director's continued services is essential for the future growth and profits of
the Bank and it is in the best interests of the Bank to arrange terms of
continued service for the Director so as to reasonably assure the Director's
remaining in the Bank's service during the Director's lifetime or until the age
of retirement;
WHEREAS, it is the desire of the Bank that the Director's services be
retained as herein provided;
WHEREAS, the Director is willing to continue to serve the Bank provided the
Bank agrees to pay the Director or the Director's surviving spouse, certain
benefits in accordance with the terms and conditions hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director at retirement or the Director's surviving spouse in the event of the
Director's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of the
Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. SERVICE
The Director will continue to serve the Bank in such capacity and with such
duties and responsibilities as may be assigned, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank.
II. FRINGE BENEFITS
The fee continuation benefits provided by this Agreement are granted by the
Bank as a fringe benefit to the Director and are not part of any fee
reduction plan or an arrangement deferring a bonus or a fee increase. The
Director has no option to take any current payment or bonus in lieu of
these fee continuation benefits except as set forth hereinafter.
III. retirement date AND NORMAL RETIREMENT AGE
A. Retirement Date: If the Director continuously serves the Bank, the
Director shall be eligible to retire from active service with the Bank
upon the attainment of age fifty-five (55) and receive the benefits
described below, unless by action of the Board of Directors this
period of active service shall be shortened or extended.
B. Normal Retirement Age: Normal Retirement Age shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-eight (68).
C. Normal Retirement Age Following a Change in Control: The term "Normal
Retirement Age Following a Change in Control" shall mean the date on
which the Director Retires from service as a member of the Board of
Directors after attaining age sixty-five (65).
D. Early Retirement Date: The term "Early Retirement Date" shall mean the
Retirement of the Director from active service with the Bank at the
beginning of any month after the Director achieves age 55, but before
attaining age sixty-eight (68), [sixty-five (65) following a Change in
Control].
IV. DIRECTOR BENEFITS - normal retirement age
A. Director Emeritus Benefits: Upon the attainment of age sixty-five
(65), the Director shall be entitled to serve the Bank as a Director
Emeritus in accordance with the procedures and policies established by
the Board of Directors of the Bank applicable to service as a Director
Emeritus. If the Director elects to serve as a Director Emeritus, the
Director shall be paid two thousand eight hundred thirty four dollars
($2,834) per month for a period of thirty-six (36) months, commencing
with the Retirement Date and continuing until the earlier of the third
anniversary thereof, or the death of the Director. Monthly payments
will be increased by two percent at the end of each calendar year. If
the Director declines or is unable to serve as Director Emeritus, the
Director shall forfeit any entitlement to the Director Emeritus
Benefits.
B. Director Retirement Benefits: After the expiration of the thirty-six
(36) month period described above in Paragraph IV A., the Bank shall
pay to the Director Retirement Benefit Payments equal to three
thousand seven dollars per month ($3,007) until the death of the
Director. Monthly payments shall increase by two percent at the end of
each calendar year.
V. DIRECTOR BENEFITS - EARLY RETIREMENT AGE
The Director shall have the right to retire on a date which constitutes an
Early Retirement Date as defined previously in Subparagraph III. D. In the
event the Director elects Early Retirement, the Director shall be entitled
to be paid Director Retirement Benefits equal to the "Early Retirement
Benefit" applicable for the calendar year in which the Director retires as
specified in Schedule "A". The benefit shall be payable in substantially
equal monthly installments on the first day of each month, beginning with
the month following the month the Director Retires (or on such later date
as may be mutually agreed upon by the Director and the Bank in advance of
such Early Retirement), payable until the Director's death.
VI. DIRECTOR DEATH BENEFITS - NORMAL RETIREMENT AGE
In the event the Director Retires on or after the Normal Retirement Age and
dies before receiving a total of thirty-six (36) monthly Director Emeritus
Benefits and twenty-four (24) monthly Director Retirement Benefits, the
Bank shall continue such monthly payments until the full number of sixty
(60) monthly payments have been made, or until the death of the Director's
surviving spouse, whichever occurs earlier. Said payments due hereunder
shall begin the first day of the month following the decease of the
Director.
VII. DIRECTOR DEATH BENEFITS - EARLY RETIREMENT AGE
In the event the Director Retires on a date that constitutes Early
Retirement and dies before receiving a total of sixty (60) monthly Director
Retirement Benefits, the Bank shall continue such monthly payments until
the full number of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier. Said
payments due hereunder shall begin the first day of the month following the
decease of the Director.
VIII. benefit accounting
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Director into
which appropriate reserves shall be accrued.
IX. vesting
Director's interest in the benefits that are the subject of this Agreement
shall be subject to a vesting schedule described in Schedule A.
X. other termination of SERVICE
A. Voluntary Resignation or failure to be re-elected: In the event that
the service of the Director shall terminate by the Director's
voluntary action, or by the Director's failure to be re-elected to the
Board without cause, prior to the Retirement Date described in III. A.
above, then this Agreement shall terminate upon the date of such
termination of service and the Bank shall pay to the Director a
monthly amount equal to one-twelfth (1/12) times the "Director
Retirement Benefit" as described in Schedule A and earned as of the
date of termination. Such benefits shall be payable commencing on the
first of the month after the Director reaches age 68 and continue
until the death of the Director. Monthly payments shall increase by
two percent at the end of each calendar year.
In the event the Director's death should occur after such severance
but prior to the completion of the monthly payments provided for in
this Paragraph IX, the Bank shall continue such monthly payments until
a total of sixty (60) monthly payments have been made, or until the
death of the Director's surviving spouse, whichever occurs earlier.
Said payments due hereunder shall begin the first day of the month
following the decease of the Director.
B. Removal for Cause: "Removal for Cause" shall include the removal of
the Director because of the Director's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order. Notwithstanding the foregoing, Director shall
not be deemed to have been removed for Cause unless and until there
shall have been delivered to the Director a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the
remaining members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Director and an
opportunity, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Director was
guilty of conduct justifying removal for Cause and specifying the
reasons thereof. The Director shall not have the right to receive
compensation or other benefits for any period after the removal for
Cause. All rights under this Agreement shall be forfeited, whether or
not vested. Any stock options granted to the Director under any stock
option plan or any unvested awards granted under any other stock
benefit plan of the Bank, or any subsidiary or affiliate thereof,
shall become null and void effective upon Director's receipt of Notice
of Removal for Cause pursuant to paragraph IX(ii) hereof, and shall
not be exercisable by the Director at any time subsequent to such
Removal for Cause.
C. Payments in the Event of Disability Prior to Retirement. In the event
the Director becomes Disabled at any time after the Effective Date of
this Agreement but prior to Retirement, the Director shall be entitled
to be paid as a lump sum the "Disability Benefit" specified in
Schedule "A" as of the date of the disability. The lump sum shall be
payable 60 days from the date the Employer has received a written
request to commence benefits, along with documentation showing that
the Employee has become Disabled. Once the lump sum payment has been
made, this Agreement is terminated, and the Bank has no further
obligation to the Director or the Director's surviving spouse under
this plan.
The term "Disability" or "Disabled" shall have the same meaning given
such terms in any policy of disability insurance maintained by the
Employer for the benefit of its employees including the Director. In
the absence of such a policy which extends coverage to the Director in
the event of disability, the terms shall mean bodily injury or disease
(mental or physical) which wholly and continuously prevents the
performance of the Employee's duties to the Employer for at least one
hundred twenty (120) days.
XI. CHANGE OF CONTROL
A "Change in Control" of the Bank or of Klamath First Federal Savings
and Loan Association (the "Association") shall be deemed to occur if
and when (a) an offer or other than the Bank purchases shares of the
common stock of the Bank or the Association pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
is or becomes the beneficial owner, directly or indirectly, of
securities of the Bank or the Association representing 25% or more of
the combined voting power of the Bank's then outstanding securities,
(c) the membership of the board of directors of the Bank or the
Association changes as the result of a contested election, such that
individuals who were directors at the beginning of any twenty-four
month period (whether commencing before or after the effective date of
this Agreement) do not constitute a majority of the Board at the end
of such period, or (d) shareholders of the Bank or the Association
approve a merger, consolidation, sale or disposition of all or
substantially all of the Bank's or the Association's assets, or a plan
of partial or complete liquidation. For the purposes of this
Agreement, transfers made on account of deaths or gifts, transfers
between family members or transfers to a qualified retirement plan
maintained by the Bank or the Association, shall not be considered in
determining whether there has been a change in control.
Upon a Change of Control, if the Director subsequently suffers a
Termination of Service (voluntary or involuntary), except for cause,
then the Director shall be paid Director Retirement Benefits of two
thousand eight hundred thirty four ($2,834) per month, commencing with
the Retirement Date specified in paragraph III. C. above and
continuing until the death of the Director. Alternatively, the
Director may elect to receive the "Early Retirement Benefit: After
Change in Control" as specified in the Schedule A, as of the date
selected for early retirement. However, if the Director dies before
sixty monthly payments have been made, the Bank shall continue such
monthly payments until a total of sixty (60) monthly payments have
been made, or until the death of the Director's surviving spouse,
whichever occurs earlier. Monthly payments will be increased by two
percent at the end of each calendar year. Director Emeritus Benefits
provided for in paragraph VI above shall not be paid if the Director
receives benefits pursuant to termination following a Change in
Control.
XII. restrictions on funding
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Director
Plan. The Directors or their surviving spouse shall be and remain
simply a general creditor of the Bank in the same manner as any other
creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Director
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Director be deemed
to have any lien or right, title or interest in or to any specific
funding investment or assets of the Bank.
XIII. MISCELLANEOUS
A. Status as an Unsecured General Creditor: Notwithstanding anything
contained herein to the contrary: (i) neither the Director, nor
the Director's spouse shall have any legal or equitable rights,
interests, or claims in or to any specific property or assets of
the Bank 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
Director or the Director's spouse 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 Director and the Director's spouse shall be
unsecured general creditors with respect to any benefits which
may be payable under the terms of this Agreement.
Notwithstanding the above, the Director and the Bank acknowledge
and agree that, in the event of a Change in Control and at the
written request of the Director, 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 Director or his beneficiaries
in such manner and at such times as specified in this Agreement.
B. Binding Obligation of the Bank and any Successor in Interest: The
Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of
the Bank under this Director Plan. This Director Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
C. Amendment or Revocation: It is agreed by and between the parties
hereto that, during the lifetime of the Director, this Director
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Director and the
Bank.
D. Gender: Whenever in this Director Plan words are used in the
masculine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender, whenever they should
so apply.
E. Effect on Other Bank Benefit Plans: Nothing contained in this
Director Plan shall affect the right of the Director to
participate in or be covered by any qualified or non-qualified
pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the
Bank's existing or future compensation structure. However, in
connection with the establishment of this Director Plan, the
Director is waiving any rights under the Klamath First Federal
Savings and Loan Association Director Emeritus Plan dated August
20, 1996, which waiver is further documented in Schedule B.
F. Headings: Headings and subheadings in this Director Plan are
inserted for reference and convenience only and shall not be
deemed a part of this Director Plan.
G. Applicable Law: The validity and interpretation of this Agreement
shall be governed by the laws of the State of Oregon.
H. 12 U.S.C. Sec. 1828(k): Any payments made to the Director
pursuant to this Director Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Sec. 1828(k) or
any regulations promulgated thereunder.
I. Partial Invalidity: If any term, provision, covenant, or
condition of this Director Plan 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 Director Plan shall remain in full force
and effect notwithstanding such partial invalidity.
J. Continuation as Director: Neither this Agreement nor the payments
of any benefits hereunder shall be construed as giving to the
Director any right to be retained as a member of the Board of
Directors of the Bank.
XIV. ERISA PROVISION
A. Named Fiduciary and Plan Administrator: The "Named Fiduciary and
Plan Administrator" of this Director Plan shall be Klamath First
Bancorp, Inc., until its resignation or removal by the Board. As
Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Director Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Director Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration: In the event a dispute arises
over benefits under this Director Plan and benefits are not paid
to the Director (or to the Director's surviving spouse in the
case of the Director's death) 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 sixty (60) 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, it shall
provide in writing within sixty (60) days of receipt of such
claim its specific reasons for such denial, reference to the
provisions of this Director Plan 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 a further review of
the claim denial is desired. A claim shall be deemed denied if
the Named Fiduciary and Plan Administrator fail to take any
action within the aforesaid sixty-day period. If claimants desire
a second review they shall notify the Named Fiduciary and Plan
Administrator in writing within sixty (60) days of the first
claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and
comments it 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 sixty (60)
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.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree
that they and their heirs, personal representatives, successors
and assigns shall be bound by the decision of such arbitrator
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Director
"for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
In witness whereof, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the
first day set forth hereinabove, and that, upon execution, each has
received a conforming copy.
KLAMATH FIRST BANCORP, INC.
Klamath Falls, Oregon
/s/ Nina G. Drake By: /s/ Rodney Murray
Witness Rodney N. Murray, Chairman of Board
/s/ Kathryn Rutledge /s/ Dianne E. Spires
Witness Dianne Spires
SCHEDULE B
WAIVER OF PRIOR PLAN BENEFITS
In consideration for the benefits made available to the Director by
this Agreement, the Director and agrees as follows:
(a) The Director is party to that certain Agreement made with the
Bank entitled the Klamath First Federal Savings and Loan Association
Director Emeritus Plan dated August 20, 1996 (the "Prior Plan
Agreement");
(b) This Agreement and the benefits hereunder are provided as a
substitute for the Prior Plan Agreement and the benefits provided
thereunder;
(c) The Prior Plan Agreement and the benefits thereunder are
hereby terminated effective as of the date of this Agreement;
(d) The Director hereby waives and relinquishes for himself or
herself, and his or her heirs, beneficiaries, legal representatives,
agents, successors and assigns, any and all right, entitlement and
interest that the Director has or may have pursuant to the Prior Plan
Agreement and the benefits thereunder;
(e) The Director accepts the Director Benefits afforded by this
Agreement in full and complete substitution for the benefits otherwise
provided by the Prior Plan Agreement; and the Director acknowledges he
(i) has had an opportunity to consult with advisors of the Director's
own choice in determining to enter into this Agreement and this
Waiver, (ii) understands that the effect of this Waiver is to
terminate, waive and relinquish forever all rights, entitlements and
interests that the Director has or may have under the Prior Plan
Agreement and the benefits thereunder as a condition to receiving the
benefits under this Agreement; and (iii) the Director is entering into
this Agreement and this Waiver voluntarily and with full appreciation
of the effect of doing so.
Dated: 5/21/03 /s/ Dianne E. Spires
Dianne Spires
I consent to and agree to be bound by the foregoing Waiver:
/s/ Oliver Spires /s/ Janice Wachter
Director's Spouse Witness
SCHEDULE A
DIRECTOR BENEFIT SCHEDULE - DIANNE SPIRES
JOINED THE BOARD IN 1997
DATE OF BIRTH: MAY 30, 1954
DIRECTOR DIRECTOR CHANGE IN EARLY
EMERITUS RETIREMENT CONTROL RETIREMENT DISABILITY
BENEFIT: BENEFIT: EARLY BENEFIT: BENEFIT: BENEFIT:
VESTING Payable Payable RETIREMENT Payable After Change Payable Upon
DATE Jun 1, 2019 (1) Jun 1, 2022 (2) BENEFIT: (3) Jun 1, 2019 (4) in Control Disability (5)
January 1, 2003 $0 $7,216 $0 $34,008 $0 $0
January 1, 2004 $0 $10,824 $0 $34,008 $0 $21,167
January 1, 2005 $0 $14,432 $0 $34,008 $0 $33,709
January 1, 2006 $0 $18,041 $0 $34,008 $0 $47,718
January 1, 2007 $0 $21,649 $0 $34,008 $0 $63,327
January 1, 2008 $0 $25,257 $0 $34,008 $0 $80,679
January 1, 2009 $0 $28,865 $6,350 $34,008 $13,600 $99,931
January 1, 2010 $0 $32,473 $9,092 $34,008 $15,640 $121,251
January 1, 2011 $0 $36,084 $12,268 $34,008 $17,680 $144,820
January 1, 2012 $0 $36,084 $14,432 $34,008 $19,720 $170,836
January 1, 2013 $0 $36,084 $16,597 $34,008 $21,760 $181,373
January 1, 2014 $0 $36,084 $18,762 $34,008 $23,800 $192,560
January 1, 2015 $0 $36,084 $20,927 $34,008 $25,840 $204,436
January 1, 2016 $0 $36,084 $23,092 $34,008 $27,880 $217,045
January 1, 2017 $0 $36,084 $25,257 $34,008 $29,920 $230,432
January 1, 2018 $0 $36,084 $27,422 $34,008 $31,960 $244,645
January 1, 2019 $34,008 $36,084 $29,586 $34,008 $34,008 $259,734
January 1, 2020 $34,008 $36,084 $31,751 na na $275,754
January 1, 2021 $34,008 $36,084 $33,916 na na $292,762
January 1, 2022 na $36,084 na na na $310,819
<FN>
1. In order to retire as a Director Emeritus, the Director must serve until attaining age sixty-five (65).
Payments continue for thirty-six (36) months and increase by 2% per year.
2. Retirement Plan Benefits commence at age sixty-eight (68). Benefits increase by 2% per year after Retirement.
3. Early Retirement Benefits payable commencing as of Director's birthday in the Calendar Year listed assuming
no interruption of service. Benefits increase by 2% per year after Retirement.
4. Retirement Benefits payable upon attainment of age 65 following a Change in Control. No Director Emeritus
benefits are payable under this circumstance. Benefits increase by 2% per year after Retirement.
5. Accrued Liability Balance as of Jan 1 in the year specified. Disability benefit value is the Accrued Liaibilty Balance
as of disability date. Disability Benefit value is determined by straight-line interpolation between the amounts
showing in this column for Jan 1 of the year the disability occurs and Jan 1 of the following calendar year.
Disability Benefit is paid as a lump sum, with no further benefits. No post-retirement benefit.
</FN>
/s/ Dianne E. Spires 5/21/03 /s/ Rodney Murray 6/3/03
Dianne Spires Date Bank Officer Date
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KLAMATH FIRST BANCORP, INC.
Date: August 15, 2003 By: /s/ Kermit K. Houser
-------------------------
Kermit K. Houser, President and
Chief Executive Officer
Date: August 15, 2003 By: /s/ Marshall J. Alexander
------------------------------
Marshall J. Alexander, Executive Vice
President and Chief Financial Officer