PREMIERWEST BANK

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

(SERP)

 

THIS SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT (this “Agreement”) is
effective as of January 23, 2013, by and between PremierWest Bancorp, an Oregon
corporation (“Bancorp”), PremierWest Bank, an Oregon state-chartered,
FDIC-insured bank with its main office in Medford, Oregon (the “Bank,” and
collectively with Bancorp, “PremierWest”), and Steven R. Erb (“Executive”).

 

WHEREAS, the Executive is an executive eligible for Supplemental Executive
Retirement Plan (“SERP”) benefits having served as an officer over the requisite
three years;

 

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank
is willing to provide SERP benefits to the Executive, payable out of the Bank’s
general assets, pursuant to the standard supplemental executive retirement plan
benefits approved by the Compensation Committee of the Board of Directors of the
Bank on January 14, 2008 and reflected on the attached Exhibit A;

 

WHEREAS, this Agreement constitutes a plan of deferred compensation;

 

WHEREAS, this Agreement is intended to comply with § 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and any ambiguity hereunder shall
be interpreted in such a way as to comply, to the extent necessary, with Code §
409A and the regulations thereunder; and

 

NOW THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

 

ARTICLE 1

DEFINITIONS

 

Whenever used in this Agreement, the following terms shall have the meanings
specified:

 

1.1 “Adjusted Base Salary” means the highest amount of Base Salary paid to the
Executive during employment with the Bank.

 

1.2 “Base Salary” means the annual base compensation, not including any bonuses
or benefits, paid to the Executive.

 

1.3 “Cause” for an Executive’s termination for Cause will exist upon the
occurrence of one or more of the following events:

 

(a) Fraudulent Conduct. An act of fraud, embezzlement, or theft by Executive in
the course of his employment with PremierWest;

 

(b) Breach of Agreement. A breach by Executive of this Agreement or any
employment agreement with PremierWest if such breach is not remedied or is not
being remedied to the Bank’s satisfaction within 30 days after written notice,
including a description of the breach, has been delivered to Executive;

 

 

 

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(c) Gross Negligence/Insubordination. Gross negligence or insubordination by
Executive in the performance of his duties as an officer if such gross
negligence or insubordination is not remedied or is not being remedied to
PremierWest’s satisfaction within 30 days after written notice, including a
description of the gross negligence or insubordination, has been delivered to
Executive;

 

(d) Breach of Fiduciary Duties. A breach by Executive of his fiduciary duties to
PremierWest or its shareholders or misconduct involving dishonesty;

 

(e) Criminal Conviction. Conviction of Executive for a felony or conviction of
Executive for a misdemeanor involving moral turpitude;

 

(f) Violation of Law. Intentional violation of any federal or state law or
regulation, or significant policy of, PremierWest committed in connection with
Executive’s employment, which adversely affects PremierWest;

 

(g) FDIC Removal Order. Removal of Executive from office or prohibition of
Executive from participating in the conduct of the Bank’s affairs by an order
issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. 1818(e)(4) or (g)(1); or

 

(h) Unsatisfactory Performance. If Executive’s performance review results in a
rating of less than “consistently meets expectations” and Executive’s
performance is not brought to at least such rating within 90 days after the
performance review is complete and thereafter sustained at such rating.

 

1.4 “Change in Control” means the first of the following to occur to Bancorp (or
to the Bank as set forth in more detail below): (1) a ‘change in the ownership,’
(2) a ‘change in the effective control,’ or (3) a ‘change in the ownership of a
substantial portion of the assets’ (as those terms are defined in Treas. Reg.
1.409A-3(i)(5)). A Change in Control as defined above includes items (a) through
(e) below, provided, however, that (i) the placement of the Bank into
receivership or conservatorship by the Federal Deposit Insurance Corporation or
a state or federal banking regulatory agency with jurisdiction over the Bank;
(ii) the acquisition of all or a substantial portion of the Bank’s assets or
assumption of all or a substantial portion of the Bank’s deposit liabilities in
an FDIC-assisted transaction; and (iii) a change in the composition of Bank’s or
the Bancorp’s board of directors at the direction of a state or federal banking
regulatory authority having jurisdiction over the Bank or Bancorp, shall not
constitute a Change in Control.

 

(a) the date any one person, or more than one person acting as a group (as
determined under Treas. Reg. 1.409A-3(i)(5)(v)(B)), acquires ownership of stock
of the Bank (or Bancorp) that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power
of the stock of Bancorp or the Bank;

 

(b) the date on which the Bancorp or the Bank merges or consolidates with
another entity and as a result less than 50% of the total fair market value or
total voting power of the stock of the resulting entity immediately after the
merger or consolidation is held by any one person, or more than one person
acting as a group (as determined under Treas. Reg. 1.409A-3(i)(5)(v)(B)), who
were the holders of Bancorp’s or the Bank’s voting securities immediately before
the merger or consolidation;

 

 

 

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(c) the date any one person, or more than one person acting as a group (as
determined under Treas. Reg. 1.409A-3(i)(5)(v)(B)), acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) ownership of stock of Bancorp possessing 30% or more of
the total voting power of the stock of Bancorp;

 

(d) the date a majority of members of Bancorp’s board of directors is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of Bancorp’s board of directors before the
date of the appointment or election (except for a change in the composition of
Bancorp’s board of directors at the direction of a state or federal banking
regulatory authority having jurisdiction over PremierWest); or

 

(e) the date any one person, or more than one person acting as a group (as
determined under Treas. Reg. 1.409A-3(i)(5)(v)(B)), acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) assets from PremierWest that have a total gross fair
market value (the value of the assets of Bank or Bancorp, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets) equal to or more than 40% of the total gross fair
market value of all of the assets of the Bank or Bancorp immediately before such
acquisition or acquisitions. However, a Change in Control does not occur to the
extent that ownership of assets is transferred to: (A) a Bancorp shareholder
(immediately before the asset transfer) in exchange for or with respect to his
or her Bancorp stock; (B) an entity, 50% or more of the total value or voting
power of which is owned directly or indirectly by Bancorp; (C) a person, or more
than one person acting as a group, that owns directly or indirectly 50% or more
of the total value or voting power of Bancorp; or (D) an entity, at least 50% of
the total value or voting power of which is owned directly or indirectly by a
person described in (C).

 

1.5 “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 the Bank.

 

1.6 “Disability Retirement” means termination of the Executive’s employment due
to Disability.

 

1.7 “Early Retirement” means the Executive’s Termination of Employment with the
Bank before Normal Retirement Age for reasons other than death, Disability,
Termination under Article 5 of this Agreement, termination without Cause or
termination with Good Reason.

 

1.8 “Early Retirement Date” means the month, day and year in which Early
Retirement occurs.

 

1.9 “Effective Date” means the date indicated in the first paragraph hereof.

 

 

 

 

 

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1.10 “Good Reason” for Executive’s Termination of Employment by resignation will
exist upon the occurrence, without Executive’s consent, of one or more of the
following events, if Executive has informed PremierWest in writing of the
circumstances described below in this Section that could give rise to
Termination of Employment for Good Reason within 30 days of the event and
PremierWest has not removed the circumstances (or notified Executive that
PremierWest disputes that such circumstances qualify as a Good Reason) within 60
days of the written notice and Executive terminates his employment within 180
days of the occurrence of the Good Reason event:

 

(a) Reduction in Base Salary. A material reduction of Executive’s Base Salary;

 

(b) Failure to Obtain Assumption Agreement. The failure of a successor or assign
of PremierWest to assume and agree to perform this Agreement, if assignment and
assumption does not automatically occur under operation of law;

 

(c) Material Breach. A material breach of this Agreement by PremierWest that is
not corrected within a reasonable time; or

 

(d) Relocation of Executive. Requiring Executive to change his principal work
location to any location that is more than 25 miles from the location of the
Bank’s principal executive offices on the Effective Date.

 

1.11 “Normal Retirement Date” means the Executive’s 65th birthday.

 

1.12 “Person” means an individual, corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship, unincorporated organization
or other entity.

 

1.13 “Plan Year” means a twelve-month period commencing on January 1, and ending
on the last day of December of each year. The initial Plan Year shall commence
on the Effective Date of this Agreement.

 

1.14 “Specified Employee” means an individual who, as of the date of his or her
Separation from Service, meets the requirements to be a “key employee” as
defined in Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance
with the regulations thereunder and without regard to Section 416(i)(5)) at any
time during the 12-month period ending on the Specified Employee Identification
Date. For purposes of this determination, the Specified Employee Identification
Date is each December 31 and the Specified Employee Effective Date is the April
1 following such Identification Date. If the individual is a key employee as of
a Specified Employee Identification Date, the individual is treated as a “key
employee” for purposes of this section for the entire 12-month period beginning
on the Specified Employee Effective Date. The terms “Identification Date” and
“Effective Date” for purposes of this paragraph have the meanings specified in
Treas. Reg. 1.409A-1(i)(3) and (4).

 

1.15 “Separation from Service” means the date on which an Executive dies,
retires or otherwise has a termination of employment with PremierWest. Whether a
termination of employment has occurred is determined based on whether the facts
and circumstances indicate that PremierWest and the 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
(as an employee or independent contractor) would permanently decrease to no more
than twenty percent (20%) of the average level of bona fide services performed
over the immediately preceding thirty-six (36) month period (or the full period
in which the Executive provided services to PremierWest if the Executive has
been providing services for less than thirty-six (36) months). An Executive will
not be deemed to have experienced a Separation from Service if such Executive is
on military leave, sick leave, or other bona fide leave of absence, to the
extent such leave does not exceed a period of six (6) months or, if longer,

 

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such longer period of time during which a right to re-employment is protected by
either statute or contract. If the period of leave exceeds six (6) months and
the individual does not retain a right to re-employment under an applicable
statute or by contract, the employment relationship is deemed to terminate on
the first date immediately following such 6-month period. For purposes of
determining if there has been a Separation from Service, PremierWest is defined
to include all members of a controlled group of corporations or other business
entities within the meaning of Code Sections 414(b) and (c) that includes the
Bank, as modified by this Section. An Executive shall be considered to be in the
employ of PremierWest and its related affiliates and subsidiaries as long as he
remains an employee of the Bank, any subsidiary corporation of the Bank, or any
corporation to which substantially all of the assets and business of the Bank
are transferred. For this purpose, a subsidiary corporation of the Bank is any
corporation (other than the Bank) in an unbroken chain of corporations beginning
with the Bank if, as of the date such determination is to be made, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing greater than 50 percent of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

 

1.16 “TARP Period” means the period ending on the last date upon which any
obligation arising from financial assistance received by Bancorp under the U.S.
Treasury’s Troubled Asset Relief Program Capital Purchase Program remains
outstanding (disregarding any warrants to purchase common stock of Bancorp that
the U.S. Treasury may hold).

 

1.17 “Termination of Employment” with the Bank means a Separation from Service.

 

ARTICLE 2

LIFETIME BENEFITS

 

2.1 Normal Retirement Benefit. Upon the Executive’s Termination of Employment on
or after the Normal Retirement Date for reasons other than death or Disability,
the Bank shall pay to the Executive the benefit described in this Section 2.1
instead of any other benefit under this Agreement.

 

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 shall be
calculated as a percentage of Base Salary. The applicable percentage is the
percentage corresponding to the Plan Year in which the Executive’s Termination
of Employment (for reasons other than death or Disability) on or after the
Normal Retirement Date occurs as shown on Exhibit A.

 

2.1.2 Payment of Benefit. The payment of benefits under this Section 2.1 shall
begin on the first day of the seventh month after the Executive’s Termination of
Employment. The Bank shall pay the annual benefit to the Executive in 12 equal
monthly installments on the first day of each month for a period of 15 years
(with 6 monthly payments accumulated and paid on the commencement date and one
payment made each month thereafter for the next 14 years and 6 months). The
monthly payments made hereunder shall be considered a series of separate
payments for purposes of Code § 409A.

 

2.2 Early Retirement Benefit. Upon Early Retirement the Bank shall pay to the
Executive the benefit described in this Section 2.2 instead of any other benefit
under this Agreement.

 

2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is calculated
as a percentage of Base Salary. The applicable percentage is the percentage
corresponding to the Plan Year in which Early Retirement occurs as shown on
Exhibit A.

 

2.2.2 Payment of Benefit. The payment of benefits under this Section 2.2 shall
begin on the later of: (i) Executive’s Normal Retirement Date or (ii) the first
day of the seventh month after the Executive’s Termination of Employment. The
Bank shall pay the annual benefit to the Executive in 12 equal monthly
installments on the first day of each month for a period of 15 years (with 6
monthly

 

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payments accumulated and paid on the commencement date and one payment made each
month thereafter for the next 14 years and 6 months). The monthly payments made
hereunder shall be considered a series of separate payments for purposes of Code
§ 409A.

 

2.3 Premature Termination Benefit. If the Executive’s employment with the Bank
is terminated by the Bank without Cause or by the Executive for Good Reason, the
Bank shall pay to the Executive the benefit described in this Section 2.3
instead of any other benefit under this Agreement.

 

2.3.1 Amount of Benefit. The annual benefit under this Section 2.3 is calculated
as a percentage of the Adjusted Base Salary. The applicable percentage is the
percentage corresponding to the Plan Year in which the Termination of Employment
by the Bank without Cause or by the Executive for Good Reason occurs, as shown
on Exhibit A.

 

2.3.2 Payment of Benefit. The payment of benefits under this Section shall begin
on the first day of the seventh month after the Executive’s Termination of
Employment. The Bank shall pay the annual benefit to the Executive in 12 equal
monthly installments on the first day of each month for a period of 15 years
(with 6 monthly payments accumulated and paid on the commencement date and one
payment made each month thereafter for the next 14 years and six months). The
monthly payments made hereunder shall be considered a series of separate
payments for purposes of Code § 409A.

 

2.4 Disability Retirement Benefit. Upon the Executive’s Disability Retirement,
the Bank shall pay to the Executive the benefit described in this Section 2.4
instead of any other benefit under this Agreement.

 

2.4.1 Amount of Benefit. The annual benefit under this Section 2.4 is calculated
as a percentage of Base Salary. The applicable percentage is the percentage
corresponding to the Plan Year in which Disability Retirement occurs as shown on
Exhibit A.

 

2.4.2 Payment of Benefit. The payment of the benefits under this Section 2.4
shall begin on the first day of the month following the month in which
Disability Retirement occurs. The Bank shall pay the annual benefit to the
Executive in 12 equal monthly installments on the first day of each month for a
period of 15 years.

 

ARTICLE 3

DEATH BENEFITS

 

3.1 Death During Active Service. If the Executive dies in active service to the
Bank before the Normal Retirement Date, the Executive’s designated beneficiary
is entitled to receive the benefit in this Section 3.1 instead of any other
benefit under this Agreement.

 

3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is calculated
as a percentage of the Adjusted Base Salary. The applicable percentage is the
percentage corresponding to year in which the Normal Retirement Date would have
occurred. In its sole discretion, the Bank’s board of directors may increase the
applicable percentage and such increase shall be reflected in a revised Exhibit
A.

 

3.1.2 Payment of Benefit. Beginning with the month after the Executive’s death,
the Bank shall pay the annual benefit to the Executive’s designated beneficiary
in 12 monthly installments on the first day of each month. The annual benefit
shall be paid to the Executive’s designated beneficiary for 15 years.

 

 

 

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3.2 Death During Benefit Period. If the Executive dies after benefit payments
under Article 2 have commenced, and if benefit payments have been paid to
Executive for less than 15 years, the Bank shall pay to the Executive’s
beneficiary(ies) at the same time and in the same amounts the benefits that
would have been paid to Executive, had the Executive survived, but the total
period of payments to Executive and Executive’s beneficiary(ies) shall not
exceed 15 years.

 

3.3 Death After Termination of Employment But Before Benefit Payments Commence.
If the Executive is entitled to benefit payments under Article 2, but dies
before payments commence, the benefits shall be payable to the Executive’s
beneficiary(ies), but the payments shall commence on the first day of the month
after the date of the Executive’s death, and payments shall be paid to the
beneficiary(ies) for 15 years. Annual payments shall be in the same amounts they
would have been paid to the Executive had the Executive survived.

 

ARTICLE 4

BENEFICIARIES

 

4.1 Beneficiary Designations. The Executive shall designate a beneficiary or
beneficiaries by filing a written designation with the Bank. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will be effective only if signed by the Executive and
accepted by the Bank during the Executive’s lifetime. The Executive’s
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive’s estate.

 

4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Bank may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incapacitated
person or incapable person. The Bank may require such proof of incapacity,
minority or guardianship as the Bank deems appropriate before distribution of
the benefit. Distribution shall completely discharge the Bank from all liability
for such benefit.

 

ARTICLE 5

GENERAL LIMITATIONS; TARP RESTRICTIONS

 

5.1 Removal. If the Executive is removed from office or permanently prohibited
from participating in the conduct of the Bank’s affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order.

 

5.2 Insolvency. If the Commissioner of the Oregon Department of Banking appoints
the Federal Deposit Insurance Corporation as receiver for the Bank under Oregon
Revised Statutes section 711.405, all obligations under this Agreement shall
terminate as of the date of the Bank’s declared insolvency.

 

5.3 TARP. During the TARP Period, the provisions of Exhibit B to this Agreement
shall control; in the event of conflict between Exhibit B and the remainder of
this Agreement during the TARP Period, the provisions of Exhibit B shall
prevail.

 

 

 

 

 

 

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ARTICLE 6

CLAIMS AND REVIEW PROCEDURES

 

6.1 Claims Procedure. If the Executive or his beneficiary (“claimant”) has not
received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:

 

6.1.1 Initiation – Written Claim. The claimant initiates a claim by submitting
to the Bank a written claim for the benefits.

 

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90
days after receiving the claim. If the Bank determines that special
circumstances require additional time for processing the claim, the Bank can
extend the response period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 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 Bank expects to render its decision.

 

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

 

6.1.3.1 The specific reasons for the denial;

 

6.1.3.2 A reference to the specific provisions of the Agreement on which the
denial is based;

 

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

 

6.1.3.4 An explanation of the Agreement’s review procedures and the time limits
applicable to such procedures; and

 

6.1.3.5 A statement of the claimant’s right to bring a civil action under ERISA
(Employees Retirement Income Security Act) Section 502(a) following an adverse
benefit determination on review.

 

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

 

6.2.1 Initiation – Written Request. To initiate the review, the claimant, within
60 days after receiving the Bank’s notice of denial, must file with the Bank a
written request for review.

 

6.2.2 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 Bank 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.

 

6.2.3 Considerations on Review. In considering the review, the Bank 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.

 

 

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6.2.4 Timing of Bank Response. The Bank shall respond in writing to such
claimant within 60 days after receiving the request for review. If the Bank
determines that special circumstances require additional time for processing the
claim, the Bank can extend the response period by an additional 60 days by
notifying the claimant in writing, prior to the end of the initial 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 Bank expects to render
its decision.

 

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

 

6.2.5.1 The specific reasons for the denial;

 

6.2.5.2 A reference to the specific provisions of the Agreement on which the
denial is based;

 

6.2.5.3 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

 

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

 

ARTICLE 7

MISCELLANEOUS

 

7.1 Amendments and Termination. This Agreement may be amended or terminated only
by a written agreement signed by the Bank and the Executive.

 

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

 

7.3 No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the
Bank, nor does it interfere with the Bank’s right to discharge the Executive. It
also does not require the Executive to remain an employee nor interfere with the
Executive’s right to terminate employment at any time.

 

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

 

7.5 Successors; Binding Agreement. If any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Bank does not assume this Agreement by operation
of law, the Bank shall require such successor to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the Bank
would be required to perform this Agreement if no such succession had occurred.
The Bank’s failure to obtain an assumption agreement, if necessary, before the
succession becomes effective shall be considered a breach of this Agreement and
shall entitle the Executive to the right to payments specified in Section 2.5.
This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Bank, by any merger, consolidation or acquisition where the
Bank is not the surviving corporation, by any transfer of all or substantially
all of the Bank’s assets, or by any other change in the Bank’s structure or the
manner in which the Bank’s business or assets are held. The Executive shall not
be deemed to have had a Termination of Employment upon the occurrence of one of
the foregoing events.

 

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7.6 Tax Withholding. The Bank shall withhold any taxes that are required to be
withheld from the benefits provided under this Agreement.

 

7.7 Applicable Law. Except to the extent preempted by the laws of the United
States of America, the validity, interpretation, construction, and performance
of this Agreement shall be governed by and construed in accordance with the laws
of the State of Oregon, without giving effect to the principles of conflict of
laws of such state.

 

7.8 Unfunded Arrangement. The Executive and the Executive’s beneficiary(ies) are
general unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay 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 is a general
asset of the Bank to which the Executive and beneficiary(ies) have no preferred
or secured claim.

 

7.9 Administration. The Bank shall have the powers that are necessary to
administer this Agreement, including but not limited to the power to:

 

(a) interpret the provisions of the Agreement;

 

(b) establish and revise the method of accounting for the Agreement;

 

(c) maintain a record of benefit payments; and

 

(d) establish rules and prescribe forms necessary or desirable to administer the
Agreement.

 

7.10 Named Fiduciary. The Bank shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan,
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

 

7.11 Severability. If for any reason any provision of this Agreement is held
invalid, such invalidity shall not affect any other provision of this Agreement,
and each such other provision shall continue in full force and effect to the
full extent consistent with law. If any provision of this Agreement is held
invalid in part, such invalidity shall in no way affect the remainder of the
provision, and the remainder of such provision, together with all other
provisions of this Agreement shall continue in full force and effect to the full
extent consistent with law.

 

7.12 Headings. The headings of sections herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.

 

7.13 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered by
hand or mailed, certified or registered mail, return receipt requested, with
postage prepaid. If the communication is to the Bank, it should be directed to
the Bank’s Chief Executive Officer and addressed to the Bank’s corporate office.
If the communication is to the Executive, it should be addressed to the most
recent address provided by the Executive to the Bank.

 

 

 

 

 

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7.14 IRC § 1035 Exchanges. The Executive recognizes and agrees that after this
Agreement is adopted the Bank may wish to exchange the policy of life insurance
on the Executive’s life, to be used to fund the benefit under Article 2 of this
Agreement for another contract of life insurance insuring the Executive’s life.
Provided that the policy is replaced (or intended to be replaced) with a
comparable policy of life insurance, the Executive agrees to provide medical
information and cooperate with medical insurance-related testing required by a
prospective insurer for implementing the policy or, if necessary, for modifying
or updating to a comparable insurer.

 

7.15 Entire Agreement. This Agreement constitutes the entire agreement between
the Bank and the Executive concerning the subject matter hereof. No rights are
granted to the Executive under this Agreement other than those specifically set
forth herein.

 

ARTICLE 8

409A

 

8.1 409A Delay in Commencement of Payments. Notwithstanding any provision to the
contrary, if, at the time of Executive’s termination, he or she is a Specified
Employee, then to the extent necessary to avoid subjecting the Executive to the
imposition of any additional income tax under Code section 409A(a), amounts that
would otherwise be payable hereunder during the six-month period immediately
following Executive’s Separation from Service shall not be paid to the Executive
during such period, but shall instead be accumulated and paid to the Executive
(or, in the event of the Executive’s death, the Executive’s estate) in a lump
sum on the first business day after the earlier of the date that is six (6)
months and one (1) day following the Executive’s Separation from Service or the
Executive’s death.

 

8.2 Changing the Time or Form of Distribution. This Agreement does not permit
the Executive to change the time or form of any distribution. If this Agreement
is amended to permit such changes, the time and form of payment elected cannot
be changed by the Executive except as follows: (a) for a scheduled distribution,
his change must filed with the Bank no later than the last day of the plan year
that ends at least 12 months before the payment commencement date; (b) his
change cannot take effect earlier than twelve months after the change is
requested; and (c) except where related to death or disability, the payment
under the newly elected form of payment cannot be made sooner than five years
after the payment commencement date for the form of payment that the Executive
has elected to change. The payment commencement date for a series of installment
payments is treated as the date on which the first of such installment payments
would be made under the terms of this agreement. Where the payment commencement
date is stated as a period of time (e.g., a 90-day period following a
distribution event), the payment commencement date for purposes of this section
is the first day of such period.

 

 

  

 

 

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IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have signed
this Agreement the day and year first written above.

 

 

THE EXECUTIVE: THE BANK:

PREMIERWEST BANK

 

 

___________________________________ By: ________________________________

Steven R. Erb Its: President & Chief Executive Officer

 

BANCORP:

PremierWest Bancorp

 

 

By:________________________________

Its: President & Chief Executive Officer

 

Agreement to Cooperate with Insurance Underwriting Incident to I.R.C. § 1035
Exchange

 

I acknowledge that I have read this Agreement and agree to be bound by its
terms, particularly the covenant on my part set forth in Section 7.14 to provide
medical information and cooperate with medical insurance-related testing
required by an insurer to issue a comparable insurance policy to cover the
benefit provided under Article 2 of this Agreement.

 

 

_________________________________ __________________________________

Witness Steven R. Erb

 

 

 

 

 

 

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BENEFICIARY DESIGNATION

PREMIERWEST BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

(SERP)

 

 

I designate the following as beneficiary of any death benefits under this
Supplemental Executive Retirement Plan Agreement:

 

 

Primary: _____________________________________________________

 

Contingent: ___________________________________________________

 

Note:To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.

 

I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.

 

 

Signature: ____________________________________________

Steven R. Erb

 

Date: ________________________________________________

 

 

Accepted by the Bank this ________ day of ________________, 2013.

 

 

By: _________________________________

 

Title: ________________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

 

 

The following schedule sets forth the applicable percentage for purposes of
calculating the annual benefits, as referenced in Article 2 of the Agreement.

 

 

 

 

 

Plan Year Year ended December 31, Executive’s Age at End of Period Applicable
Percentage %* 1 2013 51 14 2 2014 52 16 3 2015 53 18 4 2016 54 20 5 2017 55 22 6
2018 56 24 7 2019 57 26 8 2020 58 28 9 2021 59 30 10 2022 60 32 11 2023 61 34 12
2024 62 36 13 2025 63 38 14 2026 64 40 15 2027 65 42 * If Executive continues
employment beyond December 31, 2027, the Applicable Percentage increases each
year by adding 1%.  For example, if Executive terminates employment in 2028
pursuant to Article 2 of the Agreement, the Applicable Percentage is 43%.

 

 

 

 

  

 

 

 

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EXHIBIT B

 

1 Definitions. As used in this Exhibit B, the following terms have the meanings
specified:

 

(a) “ARRA” means the American Recovery and Reinvestment Act of 2009;

 

(b) “CPP” means the Capital Purchase Program component of the TARP;

 

(c) “EESA” means the Emergency Economic Stabilization Act of 2008;

 

(d) “TARP” means the Troubled Asset Relief Program established by the Treasury
pursuant to the EESA;

 

(e) “TARP Compensation Standards” means provisions of the EESA and the ARRA
governing compensation and associated regulations, interpretations and guidance
that are now, or may in the future be, issued, including the Treasury’s Interim
Final Rule under 31 CFR Part 30; and

 

(f) “Treasury” means the United States Department of the Treasury.

 

Capitalized terms used but not defined in this Exhibit B have the meanings set
forth in the TARP Compensation Standards.

 

2 TARP Compensation Standards. As a participant in the CPP, PremierWest is
subject to various executive compensation restrictions under the TARP
Compensation Standards. Among other requirements, the TARP Compensation
Standards:

 

(a) prohibit PremierWest from making any Golden Parachute Payment to its Senior
Executive Officers or any of the next five Most Highly-Compensated Employees;

 

(b) prohibit PremierWest from paying or accruing any Bonus Payment to the five
Most Highly-Compensated Employees, except as permitted by the TARP Compensation
Standards;

 

(c) require PremierWest to recover or “clawback” any Bonus Payment to its Senior
Executive Officers or any of the next 20 Most Highly-Compensated Employees if
payment was based on materially inaccurate financial statements or performance
metric criteria;

 

(d) prohibit PremierWest from maintaining any Employee Compensation Plan that
would encourage the manipulation of reported earnings to enhance the
compensation of any employee;

 

(e) prohibit PremierWest from maintaining any Compensation Plan that encourages
Senior Executive Officers to take unnecessary and excessive risks that threaten
the value of PremierWest; and

 

(f) prohibit PremierWest from providing Gross-Ups to its Senior Executive
Officers or the next 20 Most Highly-Compensated Employees.

 

 

 

 

 

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This Exhibit B evidences Executive’s and PremierWest’s intent to comply with the
TARP Compensation Standards.

 

3 Amendment and Modification. In the event that all or any portion of this
Agreement is found to be in conflict with the requirements of the TARP
Compensation Standards, this Agreement shall be automatically amended or
modified to the extent necessary to comply with the TARP Compensation Standards,
and this Agreement shall be interpreted and administered accordingly. To the
extent that future revisions of this Agreement are required to give effect to or
for PremierWest to comply with the TARP Compensation Standards, Executive shall
accept such revisions promptly.

 

4 Golden Parachute Restriction. In the event Executive’s employment terminates
and at such time (a) Executive is one of the Senior Executive Officers or
employees that PremierWest is prohibited from making a Golden Parachute Payment
to under the TARP Compensation Standards and (b) any payment under this
Agreement is a Golden Parachute Payment under the TARP Compensation Standards,
Executive shall not be entitled to receive such payment only to the extent such
payment is prohibited by the TARP Compensation Standards.

 

5 Bonus Payment Restriction. In the event that any payment or accrual under this
Agreement is a Bonus Payment under the TARP Compensation Standards and at the
time such Bonus Payment is to be paid or accrual is to be made Executive is one
of the employees that PremierWest is prohibited from making a Bonus Payment to
under the TARP Compensation Standards, Executive shall not be entitled to
receive such payment or accrual only to the extent such payment or accrual is
prohibited by the TARP Compensation Standards.

 

6 Clawback. Notwithstanding any provision in this Agreement to the contrary, if
it is later determined that payments under this Agreement were based on
materially inaccurate financial statements or performance metric criteria, the
full amount of any and all payment(s) that have been made to Executive under
this Agreement shall become immediately due and owing to PremierWest, and
Executive shall repay the full amount of such payment(s) to PremierWest in
accordance with and in a manner that complies with the requirements of the TARP
Compensation Standards. Notwithstanding the foregoing, any such recovery shall
be required hereunder only to the minimum extent necessary to comply with the
applicable requirements of the TARP Compensation Standards.

 

7 Waiver. In consideration for the benefits Executive will receive as a result
of PremierWest Bancorp’s participation in the United States Department of the
Treasury’s TARP Capital Purchase Program, Executive hereby voluntarily waives
any claim against the United States or PremierWest for any changes to my
compensation or benefits that are required to comply with regulations issued by
the Department of the Treasury. Executive acknowledges that such regulations may
require modification of the compensation, bonus, incentive and other benefit
plans, arrangements, policies and agreements that Executive has with PremierWest
or in which Executive participate as they relate to the period the United States
holds any equity securities of Executive acquired through the TARP Capital
Purchase Program. This waiver includes all claims Executive may have under the
laws of the United States or any state related to the requirements imposed by
the aforementioned regulation, including without limitation a claim for any
compensation or other payments Executive would otherwise receive, any challenge
to the process by which this regulation was adopted and any tort or
constitutional claim about the effect of these regulations on Executive’s
employment relationship.

 

8 Miscellaneous. This Exhibit B shall remain in force and effect only during the
TARP Period. This Exhibit B is not determinative of Executive’s status as a
Senior Executive Officer or as an employee affected by the TARP Compensation
Standards, and Executive reserves the right to contest his designation as such
now or in the future. Executive shall not be deemed to waive any right to
contest the

 

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determination of PremierWest or the Treasury as to the amounts owed to Executive
by PremierWest pursuant to this Agreement. In the event that any of the TARP
Compensation Standards are overturned by a non-appealable determination of a
court of competent jurisdiction or otherwise rescinded or revised, with the
effect that all or any portion of any formerly withheld or recovered payment
could be made to Executive, such amount shall become immediately due and payable
to Executive.

 

  

 

 

 

 

 

 

 

 

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