Exhibit 10.02

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

This First Amendment to certain Employment Agreement (“First Amendment”) is
entered into as of the date indicated below, by and among BANK OF GUAM, a Guam
banking company (“Bank”) and Francisco M. Atalig (“Employee”).

 

RECITALS

 

A.  Bank and Employee entered into a certain Employment Agreement dated 1st day
of January, 2017 (“Employment Agreement”).

 

B.  The parties wish to mutually modify the Employment Agreement so that
contract employees who are considered senior managers have a uniform bonus
structure.

 

NOW THEREFORE, in consideration of the premises, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Bank and Employee agree that the Employment Agreement is amended as follows:

 

1.Employment.   Bank hereby designates and employs Employee, and Employee hereby
accepts employment with Bank, as its Senior Vice President and Chief Financial
Officer.

2.Term.   This Agreement shall be for a term commenced on July 1, 2019, and
terminating on December 31, 2021.

3.Duties.   Employee shall be the Chief Financial Officer of the Bank, and
shall, subject to the control of management of said Bank, have general
supervision, direction and control of the business and affairs of the
Bank.  Employee shall have the general powers and duties of management usually
vested in the office of the Employee of a corporation, and shall have such other
powers and duties as may be prescribed by the Chief Executive Officer or Chief
Operating Officer of the Bank, or the By-Laws.  In connection therewith, upon
direction of the Chief Executive Officer or Chief Operating Officer, Employee
shall make necessary and reasonable business trips for which he will be
reimbursed or expenses will be provided in

 

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accordance with such regulations as may be established by the Chief Executive
Officer or Chief Operating Officer.  Included herewith shall be trips to visit
with officials of correspondent banks and technical seminars as may be
available.

4.Extent of Services.   Employee shall devote his full time, attention and
energy to the business of Bank and shall not, during the term of this Agreement,
be engaged in any other business activities, unless such activities are
reasonably determined by the Chief Executive Officer or Chief Operating Officer
of Bank not to be in competition or in conflict with the commercial banking
business of Bank.

5.Termination of Employment. Employee’s employment hereunder may be terminated
by either the Bank or the Employee at any time and for any reason; provided
that, unless otherwise provided herein, either party shall be required to give
the other party at least 60 days advance written notice of any termination of
the Employee’s employment. Upon termination of the Employee’s employment during
the term of this Agreement, the Employee shall be entitled to the compensation
and benefits described below and shall have no further rights to any
compensation or any other benefits from the Bank or any of its affiliates.

(a)If the Employee’s employment is terminated by the Bank for Cause, by the
Employee without Good Reason or upon the Employee’s death, the Employee shall be
entitled to receive (i) accrued but unpaid Base Compensation which shall be paid
on the pay date immediately following the termination date in accordance with
the Bank’s customary payroll procedures, (ii) reimbursement for unreimbursed
business expenses properly incurred by the Employee and (iii) such employee
benefits, if any, as to which the Employee may be entitled under the Bank’s
employee benefit plans, including the Survivor Income Plan and the SERP (items
(i) through (iii) are referred to collectively as the "Accrued Amounts").

 

 

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(b)If the Employee’s employment is terminated by the Bank without Cause or by
the Employee for Good Reason, the Employee shall be entitled to receive (i) the
Accrued Amounts and (ii) the Adjusted Base Compensation, together with all
Incentive Bonuses, for the remainder of the term of this Agreement.

(c)For purposes of this Agreement, "Cause" shall mean: (i) the Employee’s
willful failure to perform his duties (other than any such failure resulting
from incapacity due to physical or mental illness); (ii) the Employee’s willful
failure to comply with any valid and legal directive of the Chief Executive
Officer or Chief Operating Officer or any material policy of the Bank; (iii) the
Employee’s willful engagement in dishonesty, illegal conduct, or gross
misconduct which is, in each case, injurious to the Bank or its affiliates; (iv)
the Employee’s embezzlement, misappropriation, or fraud, whether or not related
to the Employee’s employment with the Bank; (v) the Employee’s conviction of or
plea of guilty or nolo contendere to a crime that constitutes a felony (or state
law equivalent); or (vi) the Employee’s material breach of any material
obligation under this Agreement or any other written agreement between the
Employee and the Bank or its affiliates.

(d)For purposes of this Agreement, "Good Reason" shall mean the occurrence of
any of the following during the term of this Agreement, in each case without the
Employee’s written consent: (i) a material reduction in the Employee’s Base
Compensation; (ii) a material reduction in the Employee’s Incentive Bonus
opportunity; (iii) a relocation of the Employee’s principal place of employment
by more than 100 miles; (iv) a material breach by the Bank of any material
provision of this Agreement or any material provision of any other agreement
between the Employee and the Bank or its affiliates; or (vii) a material,
adverse change in the Employee’s title or authority (other than temporarily
while the Executive is physically or mentally incapacitated or as required by
applicable law). The Employee cannot terminate his employment for Good Reason
unless he has provided written notice to the Bank of the existence

 

 

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of the circumstances providing grounds for termination for Good Reason within 30
days of the initial existence of such grounds and the Bank has had at least 30
days from the date on which such notice is provided to cure such circumstances.

6.Base Compensation.   As regular compensation for Employee's services
hereunder, Bank shall pay Employee an annual base salary of Two Hundred Twenty
Thousand Dollars ($220,000.00) during each year of the term hereof, payable in
equal installments not less frequently than bi-weekly (herein called "Base
Compensation").

7.Adjustments to Base Compensation.   The Base Compensation shall be adjusted
annually to reflect the increase, if any, in the cost-of-living by adding
thereto an amount obtained by multiplying the Base Compensation by the
percentage of which the level of the Consumer Price Index for the United States
has increased over its level as of the date of commencement of the term of
Agreement (herein called, together with Base Compensation, the "Adjusted Base
Compensation").

Following the end of each year of this Agreement and within thirty (30) days
after the release of the United States Bureau of Labor Statistics of the figures
for such year, Bank shall pay to the Employee the amount of any additional
compensation to which he is entitled as a result of such cost-of-living
adjustment.

8.Incentive Bonus.   As an incentive to Employee for his continuing services and
contributions to the growth and profitability of Bank, Employee shall be paid,
in addition to his Adjusted Base Compensation, an Incentive Bonus as follows:

(a)Subject to the quarterly adjustments at Section 9 below, an amount equal to
one hundred fifty basis points (1.50%) of current net profits of the Bank after
taxes or One Hundred Fifty Thousand Dollars ($150,000.00) whichever is
less.  However such

 

 

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Incentive Bonus is subject to a minimum payment of $30,000 per year after all
quarterly adjustments are computed pursuant to Section 9 below. The maximum
amount shall be subject to review by the Chief Executive Officer or Chief
Operating Officer of Bank annually and appropriate adjustments shall then be
made.

(b)   The Incentive Bonus shall be computed and payable quarterly, within
fifteen (15) days following each quarter except that each of the first quarterly
payments of the Incentive Bonus shall be subject to adjustment, either increase
or decrease, depending on the Bank’s final audited financial statements of the
preceding year by the Bank’s independent accountants.

9.Adjustments to Bonus.  On an annual basis, bank management shall submit an
annual budget and strategic plan to the Board.  Based upon the criteria
contained within the budget and strategic plan, the Incentive Bonus of the
Employee shall be adjusted on a quarterly basis as follows:

(a)If the then current Return on Equity (ROE) of the Bank is 5 basis points or
more below the preceding three-year average ROE of the Bank, then the Incentive
Bonus shall be reduced by five percent (5%); if such ROE is 10 basis points or
more below the preceding three-year average ROE of the Bank, then the Incentive
Bonus shall be reduced by fifteen percent (15%); if such ROE is 20 basis points
or more below the preceding three-year average ROE of the Bank, then the
Incentive Bonus shall be reduced by twenty-five percent (25%);

(b)If the then current Return on Assets (ROA) of the Bank is 25 basis points or
more below the Bank’s peer group as published in the Federal Deposit Insurance
Corporation’s (FDIC) Uniform Bank Performance Report, then the Incentive Bonus
shall be

 

 

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reduced by five percent (5%); if such ROA is 30 basis points or more below peer
group, then the Incentive Bonus shall be reduced by fifteen percent (15%);
if  such ROA is 40 basis points or more below peer group, then the Incentive
Bonus shall be reduced by twenty-five percent (25%);

(c)If the ratio of the then current Total Adversely Classified  Assets of the
Bank to Tier 1 Capital and Allowance for Loan and Lease Losses is greater than
or equal to twenty-six percent (26%), then the Incentive Bonus shall be reduced
by five percent (5%); if such ratio is greater than or equal to thirty-five
percent (35%), then the Incentive Bonus shall be reduced by fifteen percent
(15%); if such ratio is greater than or equal to forty percent (40%), then the
Incentive Bonus shall be reduced by twenty-five percent (25%).  If, however, if
the ratio of the then current Total Adversely Classified Items to Tier 1 Capital
and Allowance for Loan Lease Losses is eighteen percent (18%) and below, then
the Incentive Bonus shall be increased by twelve and a half percent (12.5%); if
such ratio is twenty percent (20%) and below, then an increase of 10%, if such
ratio is twenty three percent (23%) and below, an increase by 5%;

(d)The Incentive Bonus shall be adjusted as follows based on the Bank’s
quarterly Efficiency Ratio:

If such ratio is:Incentive Bonus adjustment:

 

68% or lowerIncrease of 10%

69%Increase of 5%

70%No adjustment

71%Reduction of 5%

72%Reduction of 15%

73% or moreReduction of 25%

For purposes of this Section 8, the ROA, ROE, Total Adversely Classified Items
to Tier 1 Capital, Allowance for Loan and Lease Losses and Efficiency Ratio
shall all be

 

 

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derived from any report of management submitted to the Chief Executive Officer
or Chief Operating Officer at the Board Meeting immediately preceding the date
of any adjustment.  If any dispute arises as to the calculations of any of such
figures, the Compensation Committee, subject to Board approval, shall make the
sole determination of such figures using whatever resources the Committee shall
deem reasonably necessary.  Attached to this Agreement and made a part hereof by
this reference as Exhibit A, is a worksheet, which shall be used by the Bank to
calculate the Incentive Bonus of the Employee.  

10.Other Compensation or Benefits.   In addition to the Adjusted Base
Compensation and Incentive Bonus and any other compensation provided hereunder,
Bank shall provide Employee with the following:

(a)A five-week vacation, at full pay;

(b)A health insurance, an accident insurance and disability insurance of a type
and in an amount generally made available by Bank to its executive employees, at
Bank's sole cost and expense;

(c)A group term life insurance that is generally available to Bank's executive
employees, at Bank's sole expense and cost; and

(d)A Survivor Income Plan with a death benefit of $1,060,606.00 that is or will
be made generally available to Bank's executive employees, at Bank's sole
expense and cost.

11.Business Expenses.   Bank shall pay or reimburse Employee upon submission of
an itemized account by him for all reasonable business expenses incurred by
Employee in promoting, pursuing or otherwise furthering the business of Bank,
including, but not limited to expenses for travel, meals, hotel accommodations,
entertainment, gifts and the like.

 

 

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12.Payments Following Disability.  Upon the permanent disability of the
Employee, Bank shall pay to the Employee, or his assigns, the Adjusted Base
Compensation, together with all Incentive Bonuses, for the remainder of the term
of this Contract.

13.Successors and Assigns.   This Agreement and all the terms and conditions
hereof shall be binding upon and inure to the benefit of the Bank, including any
successor entity to Bank by liquidation, merger, consolidation, reorganization,
sale of assets or otherwise, and to the Employee, and when applicable, to his
heirs, successors and assigns.

14.Retirement Plans.   Employee may participate in any retirement plan of Bank
and to receive payments thereunder which includes a Supplemental Executive
Retirement Plan (“SERP”) which pays out for a period of 15 years the amount of
$50,000 per annum after 10 years from the date of SERP contract, at the Bank’s
sole expense and cost, which benefit is generally made available to the Bank’s
executive employees, as described in the attached Exhibit B.

15.Non-Assumption.   The services to be performed by Employee under this
Agreement are personal to him, and may not be assumed by any other party except
with Bank's prior written consent.

16.Entire Agreement.   The making and execution of this Agreement by the parties
hereto have been induced by no representations, statements, warranties or
agreements other than those expressed herein.  This Agreement embodies the
entire understanding of the parties, and there are no further or other
agreements or understandings, written or oral, in effect between the parties
relating to the subject matter hereof, unless specifically referred to herein by
reference.

 

 

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17.Amendments.   This Agreement and any term hereof may be changed, waived,
discharged, or terminated only by an instrument in writing signed by the party
against whom enforcement of such change, waiver, discharge or termination is or
would be sought and without the necessity of additional consideration.

18.Notices.   All communications and notices hereunder shall be deemed to have
been properly given or served for all purposes when personally delivered to the
party to whom it is directed, or in lieu of such personal service, if received
by certified or registered United States mail, postage prepaid, at the following
addresses:

If to Bank at:P.O. Box BW

Hagatna, Guam 96932

 

If to Employee residence at:138 Agaga AvenueYigo, Guam 96929

 

If to Employee mailing at:P.O. Box 218080

Barrigada, Guam 96921

 

Either party may change the address provided above by giving written notice of
such change to the other party as herein provided.

19.Severability.   Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited or invalid under such
law, such provision shall be ineffective to the extent of the prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Agreement.

20.Law.   This Agreement shall be governed under and construed in accordance
with the law of Guam.

21.Attorney's Fees.   In the event of any action, suit or proceeding brought
under or in connection with this Agreement, the prevailing party therein shall
be entitled to recover,

 

 

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and the other party thereto agrees to pay, costs and expenses in connection
therewith including reasonable attorney's fees, disbursements and expenses.

22.Headings.   The headings of the sections of this Agreement have been included
for convenience of reference only and shall in no way restrict or modify any of
the terms or provisions thereof.

23.Compliance with Section 409A. The intent of the parties is that payments and
benefits under this Agreement comply with Section 409A of the Internal Revenue
Code of 1986, as amended, and the regulations and guidance promulgated
thereunder (“Section 409A”), to the extent applicable, and this Agreement be
interpreted and administered to be in compliance with Section 409A.
Notwithstanding anything in this Agreement to the contrary, the Employee shall
not be considered to have terminated employment with the Bank for purposes of
any payments under this Agreement which are subject to Section 409A until the
Employee would be considered to have a “separation from service” from the Bank
within the meaning of Section 409A. Each amount to be paid or benefit to be
provided under this Agreement shall be construed as a separate and distinct
payment for purposes of Section 409A. To the extent required to avoid
accelerated taxation and/or tax penalties under Section 409A, amounts that would
otherwise be payable and benefits that would otherwise be provided pursuant to
this Agreement or any other arrangement between the Employee and the Bank during
the six (6) month period immediately following the Employee’s separation from
service shall instead be paid on the first business day after the date that is
six (6) months following the Employee’s separation from service. The Bank makes
no representation that any or all of the payments described in this Agreement
will be exempt from or comply with Section 409A. The Employee shall be solely
responsible for the payment of any taxes,

 

 

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penalties, interest or other expenses incurred by the Employee on account of
non-compliance with Section 409A.

In witness thereof, the parties have executed this First Amendment to be
effective on the date written below.

 

DATED: July 1, 2019

 

EMPLOYEE:

 

 

            /s/ Francisco M. Atalig    

Francisco M. Atalig

 

Date:   July 1, 2019  

 

 

BANK OF GUAM

 

 

By:      /s/ Joaquin P.L.G. Cook

Joaquin P.L.G. Cook

Its Authorized Representative

 

 

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