EXHIBIT 10.1

 

PREMIERWEST BANK

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

(SERP)

 

THIS SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT (this “Agreement”) is
effective as of May 16, 2011, 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 T. Joe Danelson (“Executive”). 

 

WHEREAS, the Executive is an executive eligible for Supplemental Executive
Retirement Plan (“SERP”) benefits having served as an executive for 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, 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.

 

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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.  

 

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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 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. 

 

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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.

 

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
Bshall 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.

 

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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.

 

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.

 

10

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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 purchase or exchange a 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; provided, further, that any
amount payable hereunder that is subject to the foregoing restrictions on
Specified Employees may not be paid before the later of (a) the date that is
eighteen months following the effective date of the Compensation Modification
Agreement dated December 31, 2010, or (b) the date provided in the previous
sentence, with suspended payments accumulated and paid in a lump sum on the
first business day after the date that is six (or eighteen, if applicable)
months and one (1) day following the Executive’s Separation from Service. 

 

            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:
________________________________

T Joe Danelson                                                             Its:
________________________________

 

 

                                                                        BANCORP:

                                                                       
PremierWest Bancorp

 

 

                                                                       
By:________________________________

                                                                        Its:
________________________________

 

 

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                                                                                   
T. Joe Danelson

 

 

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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: ____________________________________________

                        T. Joe Danelson

 

Date: ________________________________________________

 

 

Accepted by the Bank this ________ day of ________________, 2011.

 

 

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 SERP
Agreement.

 

 

 

 

 

Plan Year

Year ended December 31,

Executive’s Age at End of Period

Applicable Percentage %

1

2011

53

14

2

2012

54

16

3

2013

55

18

4

2014

56

20

5

2015

57

22

6

2016

58

24

7

2017

59

26

8

2018

60

28

9

2019

61

30

10

2020

62

32

11

2021

63

34

12

2022

64

36

13

2023

65

38

 

 

14

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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 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.

 

16

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