Exhibit 10.20
PREMIERWEST BANK
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
THIS EXECUTIVE DEFERRED COMPENSATION
AGREEMENT (this “ Agreement
”) is made this 22
nd day of January, 2009 by and among PremierWest
Bancorp, an Oregon corporation (“ Bancorp ”),
PremierWest Bank, an Oregon state-chartered bank (the “
Bank ,” and collectively with Bancorp, “
PremierWest ”), and T. Joe
Danelson (“ Executive ”).
RECITALS
To encourage the Executive to remain
an employee of the Bank, the Bank is willing to provide to the
Executive a deferred compensation opportunity. The Bank will pay
the Executive’s benefits from the Bank’s general
assets. This Agreement will govern any deferral of compensation by
the Executive after the effective date hereof.
This Agreement is intended to comply
with Section 409A of the Internal Revenue Code. Any ambiguity
hereunder shall be interpreted in such a way as to comply, to the
extent necessary, with Section 409A and the regulations
thereunder.
AGREEMENT
The Executive and the Bank agree as follows:
Article 1
Definitions
Whenever used in this Agreement, the
following words and phrases shall have the meanings
specified:
1.1
“ Change in Control” means any of the
following events occur:
(a)
Merger . Bancorp merges
into or consolidates with another corporation, or merges another
corporation into Bancorp, and as a result less than 50% of the
combined voting power of the resulting corporation immediately
after the merger or consolidation is held by persons who were the
holders of Bancorp’s voting securities immediately before the
merger or consolidation. For purposes of this Agreement, the term
“person” means an individual, corporation, partnership,
trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or other
entity,
(b)
Acquisition of Significant Share Ownership . A report on
Schedule 13D or another form or schedule (other than Schedule 13G)
is filed or is required to be filed under Sections 13(d) or 14(d)
of the Securities Exchange Act of 1934, if the schedule discloses
that the filing person or persons acting in concert has or have
become the beneficial owner of 30% or more of a class of
Bancorp’s voting securities, but this paragraph (b) shall not
apply to beneficial ownership of voting shares of Bancorp held in a
fiduciary capacity by an entity in which Bancorp directly or
indirectly beneficially owns 50% or more of the outstanding voting
securities,
(c)
Change in Board Composition. During any period of two
consecutive years, individuals who constitute Bancorp's board of
directors at the beginning of the two-year period cease for any
reason to constitute at least a majority thereof; provided,
however, that, for purposes of this paragraph
(c), each
director who is first elected by the board (or first nominated by
the board for election by stockholders) by a vote of at least
two-thirds (2/3) of the directors who were directors at the
beginning of the period shall be deemed to have been a director at
the beginning of the two-year period, or
(d)
Sale of Assets . Bancorp sells to a third party all or
substantially all of Bancorp's assets. For this purpose, sale of
all or substantially all of Bancorp's assets includes sale of the
shares or substantially all of the assets of the Bank.
1.2
“ Code ” means the Internal Revenue Code of
1986, as amended.
1.3
“Compensation ” means both salary and bonus
compensation that would be paid to the Executive during a Plan
Year.
1.4
“ Deferral Account” means the Bank's accounting
of the Executive's accumulated Deferrals plus accrued
interest.
1.5
“ Deferrals ” means the amount of the
Executive's Compensation that the Executive elects to defer
according to this Agreement.
1.6 “
Disability ” means the Executive (i) is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (ii) is, by reason
of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under
an accident and health plan covering employees of
PremierWest.
1.7
“ Effective Date ” means
January 22, 2009.
1.8 “
Election Form ” means the
Form attached as Exhibit 1.
1.9 “
Normal Retirement Age ” means the
Executive’s 65 th birthday.
1.10
“Normal Retirement Date” means the later of the
Normal Retirement Age or Termination of Employment.
1.11
“ Plan Year ” means the
calendar year.
1.12
“ Termination for Cause ” means the definition
of termination for cause specified in any employment agreement
existing on the date hereof or hereafter entered into between the
Executive and Bancorp or the Bank. If the Executive is not a party
to an employment agreement containing a definition of termination
for cause, Termination for Cause means the Bank has terminated the
Executive's employment for any of the following reasons:
(a) gross negligence or gross neglect of duties,
(b) commission of a felony or
commission of a misdemeanor involving moral turpitude,
or
(c) fraud, disloyalty or willful
violation of any law or significant Bank policy committed in
connection with the Executive's employment and resulting in an
adverse effect on the Bank.
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1.13 “
Termination of Employment ” means a separation from
service under Section 409A of the Code and the regulations
thereunder, as such regulations may change from time to time, or
any successor provision of the Internal Revenue Code and
regulations.
1.14
“ Unforeseeable Emergency ” means severe
financial hardship of the Executive resulting from an illness or
accident of the Executive, the Executive’s spouse or a
dependent (as defined in Section 152(a) of the Code), loss of the
Executive’s property due to casualty (including the need to
rebuild a home not otherwise covered by insurance), or other
similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Executive. Except as
otherwise provided in this Section 1.14, the purchase of a home and
the payment of college tuition are not unforeseeable
emergencies.
Article 2
Deferral Election
2.1
Initial Election . The Executive shall make an initial
deferral election under this Agreement by filing with the Bank a
signed Election Form within 30 days after the Effective Date of
this Agreement. The Election Form shall set forth the amount of
Compensation to be deferred and shall be effective to defer only
Compensation earned after the date the Election Form is received by
the Bank. In no event can the Executive's Deferrals for any Plan
Year exceed 75% of the Executive's Compensation for that Plan
Year.
2.2
Election Changes.
2.2.1
Generally. Upon the
Bank’s approval, the Executive may modify the amount of
Compensation to be deferred annually by filing a new Election Form
with the Bank prior to the beginning of the Plan Year in which the
Compensation is to be deferred. The modified deferral election
shall not be effective until the calendar year following the year
in which the subsequent Election Form is received and approved by
the Bank.
2.2.2
Hardship. If an Unforeseeable
Emergency occurs, the Executive, by written instructions to the
Bank, may cancel future deferrals under this Agreement for the
remainder of the calendar year in which the Unforeseeable Emergency
arose as soon as is practically possible for the Bank to process
such instruction.
2.3
Change in Time and Form of Distribution . The timing of a
distribution of the Deferral Account may not be accelerated except
as set forth in Section 4.4. Any change which delays the timing of
distributions or changes the form of distributions may only be made
by a written agreement signed by the Bank and the Executive and
only if the following requirements are met:
2.3.1 Any election to change the time and form of distribution may
not take effect until at least 12 months after the date on which
the election is made;
2.3.2 Other than in the event of death, Disability or Unforeseeable
Emergency, the first payment with respect to such election must be
deferred for a period of at least 5 years from the date such
payment otherwise would have been made; and
2.3.3 Any election related to a payment to be made at a specified
time may not be made less than 12 months prior to the date of the
first scheduled payment.
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Article 3
Deferral Account
3.1
Establishing and Crediting . The Bank shall establish a
Deferral Account on its books for the Executive and shall credit to
the Deferral Account the following amounts:
3.1.1
Deferrals . The portion of the
Compensation deferred by the Executive as of the time the
Compensation would have otherwise been paid to the
Executive.
3.1.2
Interest . At the end of each
Plan Year under this Agreement but only until commencement of the
benefit payments under this Agreement or until a Change in Control
has occurred, interest is to be credited on the account balance at
an annual rate equal to the Bank’s ROE (return on equity) for
that Plan Year, compounded monthly, with a maximum crediting rate
of 18%. In the event the Executive and the Bank do not agree on
what the Bank's ROE was for a particular Plan Year, the Executive
and the Bank agree that the ROE shall be derived from the quarterly
report of condition filed by the Bank with the Federal Deposit
Insurance Corporation under Section 7(a) of the Federal Deposit
Insurance Act for the fourth quarter of any year. If a Change in
Control has occurred or if benefit payments have commenced, the
Bank will not continue to credit interest pursuant to the ROE
formula but rather will credit interest at an annual rate of
interest, compounded monthly, on the remaining account balance
during any applicable installment period, equal to the highest
“Prime Rate” as published in the Wall Street Journal's
“Money Rates” section. The interest credited each Plan
Year shall be determined by reference to the “Prime
Rate” as of the last business day of the preceding Plan
Year.
3.2
Statement of Accounts . Within 120 days after the end of
each Plan Year, the Bank shall provide to the Executive a statement
setting forth the Deferral Account balance.
3.3
Accounting Device Only . The Deferral Account is solely a
device for measuring amounts to be paid under this Agreement. The
Deferral Account is not a trust fund of any kind. The Executive is
a general unsecured creditor of the Bank for the payment of
benefits. The benefits represent the mere promise of the Bank to
pay such benefits. The Executive's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by the
Executive’s creditors.
Article 4
Benefits During
Lifetime
4.1
Normal Retirement Benefit . Upon the Normal Retirement Date,
the Bank shall pay to the Executive the benefit described in this
Section 4.1 in lieu of any other benefit under this
Agreement.
4.1.1
Amount of Benefit . The benefit under this Section 4.1 is
the Deferral Account balance at the date of the Executive's
Termination of Employment.
4.1.2
Payment of Benefit . The Bank shall pay the benefit to the
Executive in the form elected by the Executive in the Election Form
commencing on the first day of the seventh month following the
Executive’s Normal Retirement Date. If the Executive elects
payment of the benefit as other than a lump sum, the Bank will not
continue to credit interest pursuant to the ROE formula of Section
3.1.2 but rather will credit interest at Prime Rate as defined in
Section 3.1.2. In the event the Executive elects a fixed number of
monthly installment payments, the first installment shall be six
months of installments (that is, six times the monthly amount, with
the remaining number of installments equal to the total number of
monthly installments elected minus six). In the event the Executive
elects a fixed
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number of
annual installments, the first installment shall be a single annual
insta
