FIRST AMENDMENT TO 

AMENDED AND RESTATED 


EMPLOYMENT AGREEMENT


 


THIS FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this "Amendment") is effective January 11, 2013, by and between The Bank of the Pacific, a Washington corporation ("The
Bank"), and Bruce D. MacNaughton (the "Executive").


 


RECITAL


 


The Bank and Executive wish to amend the
Executive’s Amended and Restated Employment Agreement dated effective December 29, 2008 (the "Employment Agreement").


 


AGREEMENT


 


NOW, THEREFORE, the Employment Agreement is
hereby amended as follows:


 


1.                 
A new paragraph 4(g) is added to the Employment Agreement as follows:


 


“Reimbursements. If the value
of any reimbursement or in-kind benefit provided under this paragraph 4 is includible in the Executive’s taxable income,
then: (i) the reimbursement or in-kind benefit provided shall be paid no later than the last day of the calendar year after the
calendar year in which the expense was incurred (or such earlier time as specifically provided for in this paragraph 4), (ii) the
amount eligible for reimbursement or in-kind benefit provided in one calendar year will not affect the amount eligible for reimbursement
or in-kind benefit provided in any other calendar year, and (iii) the right to reimbursement or in-kind benefits is not subject
to liquidation or exchange for another benefit.”


 


2.                 
The reference in the first sentence of paragraph 5(d) of the Employment Agreement shall be to paragraph “5(a)”
rather than to paragraph “4(a).”


 


3.                 
Paragraph 5(f)(iii) of the Employment Agreement is amended in full as follows:


 


“Change in Assignment Related to
Change in Control. A termination by the Executive will be deemed to have been for "good reason" and the provisions
of paragraph 5(f)(ii) shall apply if: (A) within 24 months following a Change in Control, and without the Executive's express written
consent, the Executive's assignment with The Bank is changed in a way that results in (I) a material diminution in the Executive's
base compensation, (II) a material diminution of the Executive's authority, duties, or responsibilities, (III) a material diminution
in the authority, duties, or responsibilities of the supervisor to whom the Executive reports, including a requirement that the
Executive report to a corporate officer or employee instead of reporting directly to The Bank's Board of Directors, (IV) a material
diminution in the budget over which the Executive retains authority, (V) a material change in the geographic location at which
the Executive must perform the services, or (VI) any other action or inaction that constitutes a material breach by The Bank of
this Agreement; (B) the Executive provides notice to The Bank of his objection to the change within 90 days of such change; (C)
The Bank fails to remedy the change within 30 days of the notice provided pursuant to subparagraph (B) of this paragraph 5(f)(iii);
and (D) the Executive voluntarily terminates his employment with The Bank within 30 days of the expiration of the period described
in subparagraph (C) of this paragraph 5(f)(iii).”


 


 






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4.                 
This Amendment may be executed in any number of counterparts and by different parties
in separate counterparts, each of which will be deemed an original, but all of which together will constitute one and the same
instrument. Facsimile and PDF signatures delivered hereunder will be deemed originals.


 


IN WITNESS WHEREOF, The Bank and the Executive
hereby execute this Amendment as of the date first written above.


 


	
        THE BANK:

         

        The Bank of The Pacific, a Washington corporation

         

        /s/Dennis A. Long

        Dennis A. Long

        Chief Executive Officer

         
	
        EXECUTIVE:

         

        

        

        /s/Bruce D. MacNaughton

        Bruce D. MacNaughton



 


 







 


 






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