2008
      SOX OFFICER INCENTIVE PLAN 

     

    
      	
            	I.	
              Trigger
                Point: After-Tax Return on Beginning Equity1
                must
                be greater than the
                Peer Group 50 Percentile Return on
                Equity.

            


    

     

    Pre-tax
      Earnings are adjusted as follows:

    


    
      	(A)  	
              Tax-exempt
                income is grossed up to a fully taxable
                equivalent.

            


    

    


    
      	(B)  	
              Incentive/Expense
                accrual is added back to pre-tax
                earnings.

            


    

    


    
      	(C)  	
              Trust
                Preferred Interest is added back to pre-tax
                earnings.

            


    

    


    
      	(D)  	
              Loan
                Loss Recoveries are added back relative to prior year
                adjustment.

            


    

    


    
      	(E)  	
              Extra-ordinary
                income and expense not directly associated with operating the Bank,
                is
                excluded from pre-tax earnings.

            


    

    


    1Comprehensive
      Income (Loss) & Goodwill is adjusted out of Beginning Equity. Trust
      Preferred Securities are treated as Equity.

    


    
      	II.  	
              Pool
                Formula

            


    

    


    
      	1.  	
              Trigger
                Point must be achieved (50th
                percentile for after tax earnings).

            


    

    


    
      	2.  	
              Pool
                is funded using peer group data derived from BancIntelligence.com
                (Calculations assume a 35% tax rate and excludes Mutual’s & Sub
                S’s):

            


    

    


    
      	(A)  	
              5%
                of Pacific Financial’s pretax earnings that place The Company up to the 50
                percentile for Pre-tax Return on Equity (rounded up to the next 1⁄4%) for
                banks between $500 and $1,000 million.


            


    

    


    
      	(B)  	
              10%
                of the pretax earnings above
                the 50 percentile and less than the Pre-tax Return on Beginning Equity
                (rounded up to the next 1⁄4%) that places The Company among the top 10% of
                banks between $500 and $1,000
                million.

            


    

     

    
      	(C)  	
              15%
                of the amount of pretax earnings that places the Company above the
                90
                percentile for Return on Equity (rounded up to the next 1⁄4%) for banks
                between $500 and $1,000
                million.

            


    


    
      
        
        

      

      
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      	III.  	
              Pool
                Distribution 

            


    

    


    
      	(A)  	
              The
                pool is divided among SOX officers based on position weighting and
                performance. 

            


    

    


    
      	(B)  	
              Each
                year The Board will initiate specific objectives that can increase
                or
                decrease the SOX officer’s incentive compensation based on achievement of
                the objectives.

            


    

    


    
      	(C)  	
              Anyone
                with less than satisfactory performance during the year which includes
                probation for performance will not
                participate.

            


    

    


    
      	(D)  	
              Employees
                who terminate employment prior to Incentive Pool payout are ineligible
                to
                participate.

            


    

    


    
      	(E)  	
              New
                employees are eligible to participate, however, after 90 days of
                employment. Participation is pro-rated beginning the 91st
                day of employment.

            


    

    


    
      	(F)  	
              Retiring
                employees participate pro-rata based on their last day of
                employment.

            


    

    


    
      	(G)  	
              Should
                The Bank achieve an after tax return on equity of equal to or greater
                than
                25%, Officers will be awarded a “Special Achievement Award”. The “Special
                Achievement Award” will be in the form of a Hawaiian travel voucher
                covering air, hotel accommodations, and a rental car, however, not
                to
                exceed $2500 in total value. Normal vacation time will be used to
                facilitate use of the travel
                voucher.

            


    

    


    
      	(H)  	
              The
                Board of Directors reserves the right to alter, change, or eliminate
                the
                continuation of the SOX Officer Incentive Plan at any time and at
                the
                Board of Director’s sole
                discretion.

            


    

     

    
      
        
        

      

      
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