Bank of the Cascades

Supplemental Employee Retirement Plan

 

BANK OF THE CASCADES

SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN

 

This SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN (this “Agreement”) is adopted this
28th day of February, 2008, by and between BANK OF THE CASCADES, an Oregon
corporation located in Bend, Oregon (the “Bank”), and Patricia L. Moss (the
“Executive”).

 

This Agreement amends and restates the prior Salary Continuation Agreement dated
October 1, 1995 and Supplemental Employee Retirement Plan, dated March 9, 2004,
between the Bank and the Executive (the “Prior Agreements”). The parties intend
this Agreement to be a material modification of the Prior Agreements such that
all amounts earned and vested prior to December 31, 2004 shall be subject to the
provisions of Code Section 409A.

 

The purpose of this Agreement is to provide specified benefits to the Executive,
a member of a select group of management or highly compensated employees who
contribute materially to the continued growth, development and future business
success of the Bank. This Agreement shall be unfunded for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of 1974
(“ERISA”), as amended from time to time.

 

Article 1

Definitions

 

Whenever used in this Agreement, the following words and phrases shall have the
meanings specified:

 

1.1         “Bancorp” means Cascade Bancorp.

 

1.2         “Account Value” means the amount shown on Schedule A under the
heading Account Value. The parties expressly acknowledge that the Account Value
may be different than the liability that should be accrued by the Bank under
Generally Accepted Accounting Principles for the Bank’s obligation to the
Executive under this Agreement.

 

1.3         “Beneficiary” means each designated person or entity, or the estate
of the deceased Executive, entitled to any benefits upon the death of the
Executive pursuant to Article 4.

 

1.4         “Beneficiary Designation Form” means the form established from time
to time by the Plan Administrator that the Executive completes, signs and
returns to the Plan Administrator to designate one or more Beneficiaries.

 

1.5         “Board” means the Board of Directors of the Bank as from time to
time constituted.

 

1.6         “Change in Control” means the occurrence of any of the following
events:

 

 

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

 

(a)          Any person acting individually or as a “group” for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) becomes the “beneficial owner” (as defined in Rule 13d(3) of the Exchange
Act), directly or indirectly, of securities of Bancorp representing fifty
percent (50%) or more of the total voting power represented by Bancorp’s then
outstanding voting securities;

(b)          The consummation of the sale, liquidation or disposition by Bancorp
of all or substantially all of Bancorp’s or the Bank’s assets; or

(c)          The consummation of a share exchange, merger or consolidation of
Bancorp or the Bank with any other corporation, other than a share exchange,
merger or consolidation which would result in the voting securities of Bancorp
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total voting
power represented by the voting securities of Bancorp or such surviving entity
or its parent outstanding immediately after such share exchange, merger or
consolidation.

 

Notwithstanding the foregoing, for the purposes of this Agreement, no
transaction, series of transactions or change in the composition of the Board or
of the board of directors of Bancorp shall be considered a Change in Control
unless it meets the requirements of Code Section 409A(a)(2)(A)(v).

 

1.7         “Code” means the Internal Revenue Code of 1986, as amended.

 

1.8         “Early Retirement” means Separation from Service after the Executive
attains age fifty (50) and completes fifteen (15) Years of Service except when
such Separation from Service occurs within eighteen (18) months following a
Change in Control.

 

1.9         “Normal Retirement Age” means the Executive attaining age fifty-nine
(59).

 

1.10       “Plan Administrator” means the Board or such committee or person as
the Board shall appoint.

 

1.11       “Plan Year” means each twelve (12) month period commencing on January
1 and ending on December 31 of each year.

 

1.12       “Schedule A” means the schedule attached to this Agreement and made a
part hereof. Schedule A shall be updated upon a change in any of the benefits
under Articles 2 or 3.

 

1.13       “Separation from Service” means termination of the Executive’s
employment with the Bank for reasons other than death. Whether a Separation from
Service has occurred is determined in accordance with the requirements of Code
Section 409A based on whether the facts and circumstances indicate that the Bank
and Executive reasonably anticipated that no further services would be performed
after a certain date or that the level of bona fide services the Executive would
perform after such date would permanently decrease to no more than twenty
percent (20%) of the average level of bona fide services performed (as an
employee or thirty-three percent (33%) of the average level of bona fide
services performed as an independent contractor) over the immediately preceding
thirty-six (36) month period (or the full period of services to the Bank if the
Executive has been providing services to the Bank less than thirty-six (36)
months).

 

2

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

 

1.14        “Specified Employee” means an employee who at the time of Separation
from Service is a key employee of the Bank, if any stock of the Bank is publicly
traded on an established securities market or otherwise. For purposes of this
Agreement, an employee is a key employee if the employee meets the requirements
of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the
regulations thereunder and disregarding section 416(i)(5)) at any time during
the twelve (12) month period ending on December 31 (the “identification
period”). If the employee is a key employee during an identification period, the
employee is treated as a key employee for purposes of this Agreement during the
twelve (12) month period that begins on the first day of April following the
close of the identification period.

 

1.15       “Termination for Cause” means Separation from Service for:

 

(a)          a material violation of any key policy or guideline of the Bank or
Bancorp that has a material adverse effect on the Bank or Bancorp or the
reputation of Bank or Bancorp;

 

(b)          Executive fails to materially comply with any applicable law
related to Executive’s employment relationship with the Bank or Bancorp, which
has a material adverse effect on the Bank or Bancorp;

 

(c)          conviction of, or entry of a plea of nolo contendere or guilty to,
a felony or a crime of moral turpitude; or

 

(d)          engaging in fraud, misappropriation, embezzlement, conduct
involving moral turpitude, or act or acts of dishonesty resulting or intended to
result directly or indirectly in a gain or personal enrichment to the Executive
at the expense of the Bank or Bancorp or a subsidiary of Bank or Bancorp or that
otherwise has a material adverse effect on the Bank or Bancorp or the operations
of either.

 

1.16       “Year of Service” means the twelve (12) consecutive month period
beginning on the Executive’s date of hire and any twelve (12) month anniversary
thereof during the entirety of which time the Executive is an employee of the
Bank.

 

Article 2

Distributions During Lifetime

2.1          Normal Retirement Benefit. Upon Separation from Service after
Normal Retirement Age, the Bank shall distribute the benefit described in this
Section 2.1 in lieu of any other benefit under this Article.

 

2.1.1       Amount of Benefit. The annual benefit under this Section 2.1 is Two
Hundred Twenty-Six Thousand Seven Hundred Dollars ($226,700).

 

3

 

Bank of the Cascades

Supplemental Employee Retirement Plan

  

2.1.2       Distribution of Benefit. The Bank shall distribute the annual
benefit to the Executive in twelve (12) equal monthly installments commencing on
the first day of the month following Separation from Service. The annual benefit
shall be distributed to the Executive for the Executive’s life, but not less
than twenty (20) years.

 

2.1.3       Benefit Inflator. Commencing on the first anniversary of the first
benefit payment under this Section 2.1 and continuing on each subsequent
anniversary, the benefit shall increase by two and one-half percent (2.5%) from
the previous anniversary date.

 

2.2          Early Retirement Benefit. Upon Early Retirement, the Bank shall
distribute the benefit described in this Section 2.2 in lieu of any other
benefit under this Article.

 

2.2.1Amount of Benefit. The benefit under this Section 2.2 is the amount shown
on Schedule A.

 

2.2.2       Distribution of Benefit. The Bank shall distribute the benefit to
the Executive in two hundred forty (240) equal monthly installments commencing
on the first day of the month following Separation from Service.

 

2.3          Change in Control Benefit. If a Change in Control occurs followed
by Separation from Service prior to Normal Retirement Age (provided the
Separation from Service occurs within eighteen (18) months following a Change in
Control), the Bank shall distribute the benefit described in this Section 2.3 in
lieu of any other benefit under this Article.

 

2.3.1      Amount of Benefit. The benefit under this Section 2.3 is the amount
shown on Schedule A.

 

2.3.2      Distribution of Benefit. The Bank shall distribute the benefit to the
Executive in a lump sum within thirty (30) days following Separation from
Service.

 

2.4          Restriction on Commencement of Distributions.  Notwithstanding any
provision of this Agreement to the contrary, if the Executive is considered a
Specified Employee, the provisions of this Section 2.4 shall govern all
distributions hereunder. If benefit distributions which would otherwise be made
to the Executive due to Separation from Service are limited because the
Executive is a Specified Employee, then such distributions shall not be made
during the first six (6) months following Separation from Service. Any
distribution which would otherwise be paid to the Executive during such period
shall be accumulated and paid to the Executive in a lump sum on the first day of
the seventh month following Separation from Service. All subsequent
distributions shall be paid in the manner specified.

 

2.5         Distributions Upon Taxation of Amounts Deferred. If, pursuant to
Code Section 409A, the Federal Insurance Contributions Act or other state, local
or foreign tax, the Executive becomes subject to tax on the amounts deferred
hereunder, then the Bank may make a limited distribution to the Executive in a
manner that conforms to the requirements of Code Section 409A. Any such
distribution will decrease the Executive’s benefits distributable under this
Agreement.

 

4

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

  

2.6         Change in Form or Timing of Distributions.  For distribution of
benefits under this Article 2, the Executive and the Bank may, subject to the
terms of Section 8.1, amend this Agreement to delay the timing or change the
form of distributions.  Any such amendment:

 

(a)          may not accelerate the time or schedule of any distribution, except
as provided in Code Section 409A;

(b)          must, for benefits distributable under Sections 2.1, 2.2 and 2.3,
delay the commencement of distributions for a minimum of five (5) years from the
date the first distribution was originally scheduled to be made; and

(c)          must take effect not less than twelve (12) months after the
amendment is made.

 

Article 3

Distribution at Death

 

3.1         Death During Active Service. If the Executive dies prior to
Separation from Service and Disability, the Bank shall distribute to the
Beneficiary the benefit described in this Section 3.1. This benefit shall be
distributed in lieu of any benefit under Article 2.

 

3.1.1        Amount of Benefit. The benefit under this Section 3.1 is the Normal
Retirement Benefit amount described in Section 2.1.1.

 

3.1.2       Distribution of Benefit. The Bank shall distribute the annual
benefit to the Beneficiary in twelve (12) equal monthly installments for twenty
(20) years commencing on the first day of the fourth month following the
Executive’s death. The Beneficiary shall be required to provide the Executive’s
death certificate to the Bank.

 

3.1.3       Benefit Inflator. Commencing on the first anniversary of the first
benefit payment under this Section 3.1 and continuing on each subsequent
anniversary, the benefit shall increase by two and one-half percent (2.5%) from
the previous anniversary date.

 

3.2          Death During Distribution of a Benefit. If the Executive dies after
any benefit distributions have commenced under this Agreement but before
receiving all such distributions, the Bank shall distribute to the Beneficiary
the remaining benefits at the same time and in the same amounts as the benefits
would have been distributed to the Executive had the Executive survived;
provided, however, for benefits payable under Section 2.1, if the Executive has
received less than two hundred forty (240) monthly installments, the Beneficiary
shall continue to receive the same amounts at the same times until the sum of
the installments to the Beneficiary and Executive total two hundred forty (240).

 

5

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

 

3.3          Death after Separation from Service and prior to Commencement of
Benefit Distributions. If the Executive is entitled to benefit distributions
under this Agreement but dies prior to the date that commencement of any benefit
distributions is scheduled to be made under this Agreement, the Bank shall
distribute to the Beneficiary the same benefits to which the Executive would
have been entitled prior to death, except that the benefit distributions shall
be paid in the manner specified in Section 3.1.2 and shall commence on the first
day of the fourth month following the Executive’s death for a total of two
hundred forty (240) equal consecutive monthly installments.

 

Article 4

Beneficiaries

 

4.1          In General. The Executive shall have the right, at any time, to
designate a Beneficiary to receive any benefit distributions under this
Agreement upon the death of the Executive. The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designated under
any other plan of the Bank in which the Executive participates.

 

4.2          Designation. The Executive shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form and delivering it to the
Plan Administrator or its designated agent. If the Executive names someone other
than the Executive’s spouse as a Beneficiary, the Plan Administrator may, in its
sole discretion, determine that spousal consent is required to be provided in a
form designated by the Plan Administrator, executed by the Executive’s spouse
and returned to the Plan Administrator. The Executive's beneficiary designation
shall be deemed automatically revoked with respect to a Beneficiary if the
Beneficiary predeceases the Executive or if the Executive names a spouse as
Beneficiary and the marriage is subsequently dissolved. The Executive shall have
the right to change a Beneficiary by completing, signing and otherwise complying
with the terms of the Beneficiary Designation Form and the Plan Administrator’s
rules and procedures. Upon the acceptance by the Plan Administrator of a new
Beneficiary Designation Form, all Beneficiary designations previously filed
shall be cancelled. The Plan Administrator shall be entitled to rely on the last
Beneficiary Designation Form filed by the Executive and accepted by the Plan
Administrator prior to the Executive’s death.

 

4.3          Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted and acknowledged in
writing by the Plan Administrator or its designated agent.

 

4.4          No Beneficiary Designation. If the Executive dies without an
acknowledged beneficiary designation, or if all designated Beneficiaries
predecease the Executive, then the Executive’s spouse shall be the designated
Beneficiary. If the Executive has no surviving spouse, any benefit shall be paid
to the Executive's estate.

 

6

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

  

4.5          Facility of Distribution. If the Plan Administrator determines in
its discretion that a benefit is to be distributed to a Beneficiary who is a
minor, incapacitated, under legal disability or considered by the Plan
Administrator to be incapable of handling receipt of the benefits hereunder if
paid to the Beneficiary directly, the Plan Administrator may direct distribution
of such benefit to the guardian, legal representative or person having the care
or custody of such individual. The Plan Administrator may require proof of
incompetence, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Any distribution of a benefit shall be a
distribution for the account of the Executive and the Beneficiary, as the case
may be, and shall completely discharge any liability under this Agreement for
such distribution amount.

 

Article 5

General Limitations

 

5.1          Termination for Cause. Notwithstanding any provision of this
Agreement to the contrary, the Bank shall not distribute any benefit under this
Agreement if the Executive’s employment with the Bank is terminated by the Bank
or an applicable regulator due to a Termination for Cause.

 

5.2          Misstatement. No benefit shall be distributed if an insurance
company which issued a life insurance policy covering the Executive and owned by
the Bank denies coverage (i) for material misstatements of fact made by the
Executive on an application for such life insurance, or (ii) for any other
reason.

 

5.3          Removal. Notwithstanding any provision of this Agreement to the
contrary, the Bank shall not distribute any benefit under this Agreement if the
Executive is subject to a final removal or prohibition order issued by an
appropriate federal banking agency pursuant to Section 8(e) of the Federal
Deposit Insurance Act.

 

5.4          Golden Parachute Indemnification Payments. Notwithstanding anything
herein to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, shall be subject to and conditioned upon compliance
with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359, Golden Parachute
Indemnification Payments and any other regulations or guidance promulgated
thereunder.

 

5.5          Forfeiture Provisions.

 

(a)          Prior to Separation from Service and during the eighteen (18) month
period thereafter, if the Executive directly or indirectly advises, invests in,
owns, manages, operates, controls, is employed by, provides services to, lends
money to, guarantees any obligation of, lends Executive’s name to, or otherwise
assists any person engaged in or planning to be engaged in any business whose
products, services, or activities compete or will compete in whole or in part
with the Bank’s products, services, or activities in Oregon or Idaho, the
Executive shall forfeit any benefits hereunder and shall be obligated to repay
any benefits already paid. Notwithstanding the forgoing, the Executive may own
up to 1% of any class of securities of any issuer if the securities are listed
on a national or regional securities exchange or have been registered under
Section 12(g) of the Exchange Act without losing the right to any payments
hereunder.

 

7

 

  

Bank of the Cascades

Supplemental Employee Retirement Plan

 

(b)          Prior to Separation from Service and during the eighteen (18) month
period thereafter, if the Executive breaches the Confidentiality and
Nonsolicitation Agreement between the Executive and Bank, the Executive shall
forfeit any benefits hereunder and shall be obligated to repay any benefits
already paid.

 

(c)          Prior to Separation from Service and during the eighteen (18) month
period thereafter, if the Executive transacts business of a nature similar to
the Bank’s or Bancorp’s business with customers of the Bank or Bancorp, the
Executive shall forfeit any benefits hereunder and shall be obligated to repay
any benefits already paid.

 

Article 6

Administration of Agreement

 

6.1          Plan Administrator Duties. The Plan Administrator shall administer
this Agreement according to its express terms and shall also have the discretion
and authority to (i) make, amend, interpret and enforce rules and regulations
for the administration of this Agreement and (ii) decide or resolve any and all
questions, including interpretations of this Agreement, as may arise in
connection with this Agreement to the extent the exercise of such discretion and
authority does not conflict with Code Section 409A.

 

6.2          Agents. In the administration of this Agreement, the Plan
Administrator may employ agents and delegate to them such administrative duties
as the Plan Administrator sees fit, including acting through a duly appointed
representative, and may from time to time consult with counsel who may be
counsel to the Bank.

 

6.3          Binding Effect of Decisions. Any decision or action of the Plan
Administrator with respect to any question arising out of or in connection with
the administration, interpretation or application of this Agreement and the
rules and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in this Agreement.

 

6.4          Indemnity of Plan Administrator. The Bank shall indemnify and hold
harmless the Plan Administrator and its agents against any and all claims,
losses, damages, expenses or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator.

 

6.5          Bank Information. The Bank shall supply full and timely information
to the Plan Administrator on all matters relating to the date and circumstances
of the Executive’s death, Disability or Separation from Service, and such other
pertinent information as the Plan Administrator or its agents may reasonably
require.

 

6.6          Annual Statement. The Plan Administrator shall provide to the
Executive, within one hundred twenty (120) days after the end of each Plan Year,
a statement setting forth the benefits to be distributed under this Agreement. 

 

8

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

 

Article 7

Claims And Review Procedures

 

7.1          Claims Procedure. An Executive or Beneficiary (“claimant”) who has
not received benefits under this Agreement that he or she believes should be
distributed shall make a claim for such benefits as follows:

 

7.1.1       Initiation – Written Claim. The claimant initiates a claim by
submitting to the Plan Administrator a written claim for the benefits. If such a
claim relates to the contents of a notice received by the claimant, the claim
must be made within sixty (60) days after such notice was received by the
claimant. All other claims must be made within one hundred eighty (180) days of
the date on which the event that caused the claim to arise occurred. The claim
must state with particularity the determination desired by the claimant.

 

7.1.2       Timing of Plan Administrator Response. The Plan Administrator shall
respond to such claimant within ninety (90) days after receiving the claim. If
the Plan Administrator determines that special circumstances require additional
time for processing the claim, the Plan Administrator can extend the response
period by an additional ninety (90) days by notifying the claimant in writing,
prior to the end of the initial ninety (90) day period, that an additional
period is required. The notice of extension must set forth the special
circumstances and the date by which the Plan Administrator expects to render its
decision.

 

7.1.3       Notice of Decision. If the Plan Administrator denies part or all of
the claim, the Plan Administrator shall notify the claimant in writing of such
denial. The Plan Administrator shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set forth:

 

(a)          The specific reasons for the denial;

(b)          A reference to the specific provisions of this Agreement on which
the denial is based;

(c)          A description of any additional information or material necessary
for the claimant to perfect the claim and an explanation of why it is needed;

(d)          An explanation of this Agreement’s review procedures and the time
limits applicable to such procedures; and

(e)          A statement of the claimant’s right to bring a civil action under
ERISA Section 502(a) following an adverse benefit determination on review.

 

7.2          Review Procedure. If the Plan Administrator denies part or all of
the claim, the claimant shall have the opportunity for a full and fair review by
the Plan Administrator of the denial as follows:

 

7.2.1       Initiation – Written Request. To initiate the review, the claimant,
within sixty (60) days after receiving the Plan Administrator’s notice of
denial, must file with the Plan Administrator a written request for review. 

 

9

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

  

7.2.2       Additional Submissions – Information Access. The claimant shall then
have the opportunity to submit written comments, documents, records and other
information relating to the claim. The Plan Administrator shall also provide the
claimant, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

 

7.2.3       Considerations on Review. In considering the review, the Plan
Administrator shall take into account all materials and information the claimant
submits relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.

 

7.2.4       Timing of Plan Administrator Response. The Plan Administrator shall
respond in writing to such claimant within sixty (60) days after receiving the
request for review. If the Plan Administrator determines that special
circumstances require additional time for processing the claim, the Plan
Administrator can extend the response period by an additional sixty (60) days by
notifying the claimant in writing, prior to the end of the initial sixty (60)
day period, that an additional period is required. The notice of extension must
set forth the special circumstances and the date by which the Plan Administrator
expects to render its decision.

 

7.2.5       Notice of Decision. The Plan Administrator shall notify the claimant
in writing of its decision on review. The Plan Administrator shall write the
notification in a manner calculated to be understood by the claimant. The
notification shall set forth:

 

(a)          The specific reasons for a denial;

(b)          A reference to the specific provisions of this Agreement on which
the a denial is based;

(c)          A statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant (as defined in applicable ERISA regulations) to
the claimant’s claim for benefits; and

(d)          A statement of the claimant’s right to bring a civil action under
ERISA Section 502(a).

 

Article 8

Amendments and Termination

 

8.1          Amendments. This Agreement may be amended only by a written
agreement signed by the Bank and the Executive. However, the Bank may
unilaterally amend this Agreement to conform with written directives to the Bank
from its auditors or banking regulators or to comply with legislative changes or
tax law.

 

10

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

 

8.2          Plan Termination Generally. This Agreement may be terminated only
by a written agreement signed by the Bank and the Executive. The benefit shall
be the Account Value as of the date this Agreement is terminated. Except as
provided in Section 8.3, the termination of this Agreement shall not cause a
distribution of benefits under this Agreement. Rather, upon such termination
benefit distributions will be made at the earliest distribution event permitted
under Article 2 or Article 3.

 

8.3          Plan Terminations Under Code Section 409A. Notwithstanding anything
to the contrary in Section 8.2, if this Agreement in the following
circumstances:

 

(a)          Within thirty (30) days before or twelve (12) months after a Change
in Control, provided that all distributions are made no later than twelve (12)
months following such termination of this Agreement and further provided that
all the Bank's arrangements which are substantially similar to this Agreement
are terminated so the Executive and all participants in the similar arrangements
are required to receive all amounts of compensation deferred under the
terminated arrangements within twelve (12) months of such termination; 

(b)          Upon the Bank’s dissolution or with the approval of a bankruptcy
court provided that the amounts deferred under this Agreement are included in
the Executive's gross income in the latest of (i) the calendar year in which
this Agreement terminates; (ii) the calendar year in which the amount is no
longer subject to a substantial risk of forfeiture; or (iii) the first calendar
year in which the distribution is administratively practical; or

(c)          Upon the Bank’s termination of this and all other arrangements that
would be aggregated with this Agreement pursuant to Treasury Regulations Section
1.409A-1(c) if the Executive participated in such arrangements (“Similar
Arrangements”), provided that (i) the termination and liquidation does not occur
proximate to a downturn in the financial health of the Bank, (ii) all
termination distributions are made no earlier than twelve (12) months and no
later than twenty-four (24) months following such termination, and (iii) the
Bank does not adopt any new arrangement that would be a Similar Arrangement for
a minimum of three (3) years following the date the Bank takes all necessary
action to irrevocably terminate and liquidate the Agreement;

 

the Bank may distribute the Account Value, determined as of the date of the
termination of this Agreement, to the Executive in a lump sum subject to the
above terms.

 

Article 9

Miscellaneous

 

9.1         Binding Effect. This Agreement shall bind the Executive and the Bank
and their beneficiaries, survivors, executors, administrators and transferees.

 

9.2          No Guarantee of Employment. This Agreement is not a contract for
employment. It does not give the Executive the right to remain as an employee of
the Bank nor interfere with the Bank's right to discharge the Executive. It does
not require the Executive to remain an employee nor interfere with the
Executive's right to terminate employment at any time.

  

11

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

 

9.3          Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

 

9.4          Tax Withholding and Reporting. The Bank shall withhold any taxes
that are required to be withheld from the benefits provided under this
Agreement. The Executive acknowledges that the Bank’s sole liability regarding
taxes is to forward any amounts withheld to the appropriate taxing authorities.
The Bank shall satisfy all applicable reporting requirements.

 

9.5          Applicable Law. This Agreement and all rights hereunder shall be
governed by the laws of the State of Oregon without giving effect to any
conflict-of-law principle that would result in the laws of any other
jurisdiction governing this Agreement, except to the extent preempted by the
laws of the United States of America.

 

9.6          Unfunded Arrangement. The Executive and the Beneficiary are general
unsecured creditors of the Bank for the distribution of benefits under this
Agreement. The benefits represent the mere promise by the Bank to distribute
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors. Any insurance on the Executive's life or
other informal funding asset is a general asset of the Bank to which the
Executive and Beneficiary have no preferred or secured claim.

 

9.7          Reorganization. The Bank shall not merge or consolidate into or
with another bank, or reorganize, or sell substantially all of its assets to
another bank, firm or person unless such succeeding or continuing bank, firm or
person agrees to assume and discharge the obligations of the Bank under this
Agreement. Upon the occurrence of such an event, the term “Bank” as used in this
Agreement shall be deemed to refer to the successor or survivor entity.

 

9.8          Entire Agreement. This Agreement constitutes the entire agreement
between the Bank and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.

 

9.9          Interpretation. Wherever the fulfillment of the intent and purpose
of this Agreement requires and the context will permit, the use of the masculine
gender includes the feminine and use of the singular includes the plural.

 

9.10        Alternative Action. In the event it shall become impossible for the
Bank or the Plan Administrator to perform any act required by this Agreement due
to regulatory or other constraints, the Bank or Plan Administrator may perform
such alternative act as most nearly carries out the intent and purpose of this
Agreement and is in the best interests of the Bank, provided that such
alternative act does not violate Code Section 409A.

 

9.11        Headings. Article and section headings are for convenient reference
only and shall not control or affect the meaning or construction of any
provision herein.

 

12

 

 

Bank of the Cascades

Supplemental Employee Retirement Plan

 

9.12        Validity. If any provision of this Agreement shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Agreement shall be construed and enforced as if
such illegal or invalid provision had never been included herein.

 

9.13        Notice. Any notice or filing required or permitted to be given to
the Bank or Plan Administrator under this Agreement shall be sufficient if in
writing and hand-delivered or sent by registered or certified mail to the
address below:

 

                 

 

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.

 

Any notice or filing required or permitted to be given to the Executive under
this Agreement shall be sufficient if in writing and hand-delivered or sent by
mail to the last known address of the Executive.

 

9.14        Deduction Limitation on Benefit Payments. If the Bank reasonably
anticipates that the Bank’s deduction with respect to any distribution under
this Agreement would be limited or eliminated by application of Code Section
162(m), then to the extent deemed necessary by the Bank to ensure that the
entire amount of any distribution from this Agreement is deductible, the Bank
may delay payment of any amount that would otherwise be distributed under this
Agreement. The delayed amounts shall be distributed to the Executive (or the
Beneficiary in the event of the Executive's death) at the earliest date the Bank
reasonably anticipates that the deduction of the payment of the amount will not
be limited or eliminated by application of Code Section 162(m).

 

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the
Bank have signed this Agreement.

 

EXECUTIVE   BANK       /s/ Patricia L. Moss   By: /s/ Peggy L. Biss Patricia L.
Moss   Title: EVP

 

13