SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, hereunto duly
authorized.
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BANNER
CORPORATION
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Date:
May 5, 2008
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By:
/s/ D. Michael
Jones
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D.
Michael Jones
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President
and Chief Executive Officer
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Exhibit
10.1
Banner Corporation Long-Term
Incentive Plan
,
as
amended and restated
BANNER
CORPORATION
LONG-TERM
INCENTIVE PLAN
Effective
April 1, 2006
As
Amended and Restated Effective May 5, 2008
1.
Purpose of
Plan
. The Banner Corporation Long-Term Incentive Plan (the
“Plan”) is intended to provide incentives to key employees of Banner Corporation
and its affiliates, including Banner Bank, to perform their duties in a manner
that enhances the value of the Banner Corporation Stock. This in turn
will provide Participants with the opportunity to earn significant benefits
commensurate with such performance and value creation, subject to the terms and
conditions of the Plan.
2.
Definitions
. The
following definitions are applicable to the Plan:
Affiliate
shall mean
an entity required to be treated as a single employer with the Corporation
pursuant to Section 414(b) or 414(c) of the Code.
Agreement
shall mean
the written agreement entered into between the Corporation and a Participant,
with respect to the grant of an Award or an entitlement to receive an
Award.
Annual Dividend
Amount
means the amount determined under Paragraph 9 hereof.
Award
shall mean the
grant of Phantom Stock to a Participant.
Bank
shall mean
Banner Bank, and any successor to all or substantially all of the Bank’s assets
or business.
Beneficiary
shall
mean one or more persons, estates or other entities, designated in accordance
with Paragraph 20 that are entitled to receive benefits under this Plan upon the
death of a Participant.
Board
shall mean the
board of directors of the Corporation or its affiliates.
Change in Control
shall mean the occurrence of a "change in the ownership of the Corporation", a
"change in the effective control of the Corporation”, or a "change in the
ownership of a substantial portion of the Corporation’s assets", as such phrases
are defined in Section 409A.
Code
shall mean the
Internal Revenue Code of 1986, as amended.
Committee
shall mean
the Compensation Committee of the Corporation.
Confidentiality and
Non-Solicitation Agreement
shall mean a confidentiality and
non-solicitation agreement that includes, in substance, the restrictions set
forth in Paragraph 13 hereof, in a form that is satisfactory to the
Bank.
Continuous Service
shall mean the absence of any interruption or termination of service as a
Participant. Continuous Service shall not be considered interrupted
in the case of sick leave, military leave or any other approved leave of
absence. Unless a Participant’s Agreement provides otherwise, only Continuous
Service after the Grant Date of the related Award shall be taken into
account. The
determination
of the length of a Participant’s Continuous Service shall be determined by the
Committee in its sole discretion, which determination shall be binding on all
persons.
Corporation
shall
mean Banner Corporation, and any successor to all or substantially all of the
Corporation’s assets or business.
Disability
means that
the Participant is unable to engage in any substantial activity by reason of any
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. The
determination of whether a Participant has a Disability shall be determined by
the Committee in its sole discretion.
Executive
shall mean
an officer of the Corporation or its affiliates who is designated as an
assistant vice president or above.
Grant Date
shall mean
the date on which an Award is granted to the Participant.
Long-Term Incentive
Benefit
shall mean, as of any date, the sum of (1) the excess of the
hypothetical value of a Participant’s Phantom Stock Account as of the most
recent Valuation Date over the hypothetical value of his Phantom Stock Account
as of the Grant Date (or, in the event the Award is repriced, as of the
Repricing Date), and (2) the cumulative amount of Annual Dividend Amounts
credited on behalf of that Participant. The Long-Term Incentive
Benefit may be determined separately with respect to each separate Award that is
granted under the Plan.
Monthly Benefit
shall
be the Long-Term Incentive Benefit divided by one hundred and twenty
(120). During the period while Monthly Benefits are paid, there shall
be no adjustment in the Long-Term Incentive Benefit to reflect changes in the
value of the Stock. Instead, as of each January 1, the amount of the
unpaid Long-Term Incentive Benefit shall be credited at a rate equal to the
Bank’s average earning assets rate during the preceding year. A
Participant’s Monthly Benefit shall be determined by the Committee in its sole
discretion.
Non-Competition
Agreement
shall mean a non-competition agreement in a form that is
satisfactory to the Bank.
Participant
shall
mean an Executive or a director of the Corporation or its affiliates
who is selected by the Committee to participate in the Plan and who enters into
an Agreement.
Phantom Stock
shall
mean the hypothetical shares of Stock awarded under the Plan that form the basis
of determining the Participant’s Phantom Stock Account. The
underlying value of each share of Phantom Stock shall be determined by reference
to one share of Stock, except as provided in Paragraph 7.
Phantom Stock Account
shall mean the account established and maintained for the Participant pursuant
to Paragraph 7 hereof.
Plan
shall mean this
Banner Corporation Long-Term Incentive Plan, as in effect from time to
time.
Repricing Date
shall
mean the date, if any, on which the Committee determines to reset the
hypothetical Grant Date value of a Participant’s Phantom Stock Award for
purposes of determining the Participant’s Long-Term Incentive
Benefit.
Section 409A
means
Section 409A of the Code and the regulations and guidance of general
applicability issued thereunder.
Separation from
Service
means the termination of the Executive’s employment with the
Corporation or an Affiliate for reasons other than death or
Disability. Whether a Separation from Service takes place is
determined based on the facts and circumstances surrounding the termination of
the Executive’s employment and whether it is intended that the Executive provide
significant services for the Corporation or an Affiliate following such
termination. A Separation from Service shall be deemed to occur only
if qualifies as such under Section 409A (taking into account the rules and
presumptions provided for in the Section 409A regulations).
Specified Employee
means a key employee (as defined in Section 416(i) of the Code without regard to
Paragraph 5 thereof) of the Corporation if any stock of the Corporation is
publicly traded on an established securities market or otherwise. A
person shall be a Specified Employee at any time during a calendar year if he is
a key employee (as herein defined) at any time during the preceding calendar
year.
Stock
means the
common stock of the Corporation.
Termination for Cause
shall mean a Participant’s Separation from Service on account of “cause”,
as that term (or a similar term) is defined in the Participant’s employment
contract with the Corporation or the Bank, as the case may be. If no such
employment contract is in effect, “cause”, prior to a Change in Control, shall
mean gross negligence in the performance of duties or gross neglect of duties;
termination of the Participant’s employment by the Corporation or the Bank for
poor performance, as determined by the Corporation or the Bank, respectively, in
their sole discretion; commission of a misdemeanor involving moral turpitude or
a felony; or fraud, disloyalty or willful violation of any law or significant
policy of the Corporation or the Bank committed in connection with the
Participant’s employment and resulting in an adverse effect on the Corporation
or the Bank.
After
a Change in Control, “cause” shall mean gross negligence in the performance of
duties or gross neglect of duties; commission of a misdemeanor involving moral
turpitude or a felony; or fraud, disloyalty or willful violation of any law or
significant policy of the Corporation or Bank committed in connection with the
Participant’s employment and resulting in an adverse effect on the Corporation
or Bank.
Valuation Date
shall
mean each December 31, the last day of the calendar month immediately preceding
a Change in Control, or the date the Participant satisfies his Vesting
Requirements. More frequent Valuation Dates may be used if
determined to be necessary or appropriate by the Committee.
Vesting Requirements
shall mean, with respect to any Participant, the date the Continuous Service
requirement as stated in Agreement, or as provided herein, is
satisfied. If the Participant’s Agreement does not specify a
Continuous Service requirement, then the Participant must complete 60 months of
Continuous Service in order to vest in his Plan benefit, unless the Committee
determines to waive the Continuous Service requirement (or as otherwise provided
in the Plan).
3.
Administration
. The
Plan shall be administered by the Committee. Except as limited by the express
provisions of the Plan, the Committee shall have sole and complete authority and
discretion to
(a)
select Participants; (b) determine the individual Awards granted under the Plan;
(c) determine the terms and conditions upon which Awards shall be granted under
the Plan; (d) prescribe the form and terms of the Agreements; (e) determine the
hypothetical value of the shares of Phantom Stock, Phantom Stock Accounts and of
Long-Term Incentive Benefits, including, without limitation, the authority to
reprice the hypothetical Grant Date value of a Participant’s Phantom Stock
Award; (f) make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of the Plan, and (g) decide or resolve any
and all questions, including interpretations of the Plan, as may arise in
connection with the Plan. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of the Committee without a meeting, shall be acts of the Committee. Members of
the Committee may participate under the Plan. Any individual serving
on the Committee who is a Participant in the Plan shall not vote or act on any
matter relating solely to himself. When making a determination or
calculation, the Committee shall be entitled to rely on information furnished by
the Corporation or the Bank, a Participant, the Board, or a professional advisor
to the Bank or the Board. The decision or action of the Committee
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon
all persons having any interest in the Plan. In the administration of
the Plan, the Committee may, from time to time, employ agents and delegate to
them such administrative duties as it sees fit (including acting through a duly
appointed representative) and may from time to time consult with legal counsel
who may be legal counsel to the Corporation or the Bank.
4.
Participation
. From
time to time the Committee may select Executives to become Participants in the
Plan. As a condition of participation, the Executive shall enter into
a Confidentiality and Non-Solicitation Agreement. The Executive’s participation
in the Plan shall be evidenced by his signed Agreement.
5.
Phantom Stock
Awards
. The number of shares of Phantom Stock to be awarded to
a Participant shall be determined by the Committee as of the applicable Grant
Date, and shall be set forth in the Participant’s Agreement. More
than one Award may be made to a Participant and any Award may have different
terms from any other Award. Phantom Stock, when granted, shall
evidence the right of a Participant to receive the Long-Term Incentive Benefit,
subject to the terms and conditions of the Plan and the Participant’s
Agreement.
6.
Elections
. No
later than 30 days after the Grant Date of an Award, (or other period permitted
by the Committee in accordance with Section 409A), the Participant may select
(a) the manner in which his Long-Term Incentive Benefit attributable to the
Award will be paid, subject to the terms and conditions of the Plan, and (b)
whether his vested Long-Term Incentive Benefit should be paid (or commence to be
paid) at a specific time, upon Separation From Service (subject to delay in the
event the Participant is a Specified Employee as required by Section 409A), or
upon the Participant’s completion of 60 months of Continuous
Service. The available distribution options are a lump sum
distribution or monthly installments over 120 months; provided, however, if the
Participant elects to receive his vested Long-Term Incentive Benefit at a
specific time or after the completion of 60 months of Continuous Service, it
shall be paid in a lump sum. If no election is made, the distribution
shall be made in a lump sum and the Long-Term Incentive Benefit shall be paid
upon Separation from Service (subject to delay in the event the Participant is a
Specified Employee). Any election (including a default election as
required by Section 409A) may be subsequently changed by a Participant by
delivering a new written election to the Committee. However,
except as may otherwise be provided in Section 409A, (x)
any such election change shall not take effect until at least twelve months
after the date the election is made, and (y)
payment of the amount with respect to which the form of
distribution is being changed shall commence no earlier than the fifth
anniversary of the date the Participant would otherwise have received the
distribution.
If the aggregate value of a Participant’s
Long-Term Incentive Benefit for all awards is less than $25,000 at the time the
distribution is to be made, then the distribution will be made in a lump sum,
notwithstanding any election by the Participant to the contrary. In
the event that an Award is repriced, so that the Participant’s Long-Term
Incentive Benefit is determined by reference the hypothetical value of the
Phantom Stock attributable to the Participant as of the repricing date rather
than the initial Grant Date, the Participant shall be deemed to have elected to
receive the additional value attributable to the repricing at the same time and
the same manner as his most recent election with respect to the initial
Award.
7.
Phantom Stock
Accounts
. Shares of Phantom Stock granted to a
Participant shall be credited to a Phantom Stock Account established and
maintained for the Participant. The Phantom Stock Account shall be
the record of Phantom Stock granted to a Participant for accounting purposes
only, and shall not constitute a segregation of assets of the Corporation or the
Bank. The Phantom Stock Account of a Participant shall be valued by
the Committee, as provided for herein, as of the Grant Date and on each
Valuation Date thereafter to reflect changes in the hypothetical value of the
Phantom Stock Account, additional Awards, and subsequent distributions to the
Participant.
8.
Adjustments in Phantom Stock
Accounts
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(a)
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As
soon as practicable after each Valuation Date, the Committee
shall adjust the value of each Participant’s Phantom Stock Account to
reflect changes in the value of the underlying Stock as of the Valuation
Date.
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(b)
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For
the year in which a Participant satisfies his Vesting Requirements, the
Committee shall adjust the value of the Participant’s Phantom Stock
Account to reflect changes in the value of the underlying Stock as of the
Valuation Date. For purposes of the preceding sentence, the
value of the underlying Stock as of the Valuation Date shall be deemed to
be the highest closing price during the ten days preceeding the date the
Participant satisfies the Vesting Requirements. If the Stock is
not publicly traded on any established exchange, the value of the Stock
shall be determined by any fair and reasonable means prescribed by the
Committee.
After the Vesting
Requirements are satisfied, the
value of the
Participant’s Phantom Stock Account shall be adjusted by a crediting rate
equal to the Bank’s average earning assets rate during the preceding year
(determined as of December 31 of such preceding year). In the
year in which the Vesting Requirements are satisfied, the earnings
adjustment shall be prorated for each full month during such year after
the date the Vesting Requirements are
satisfied.
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9.
Dividends
. As
of each December 31, the Committee shall determine an annual dividend amount
with respect to each share of Phantom Stock then outstanding, reflecting the
dividends paid on the underlying Stock by the Corporation for the
year. This amount, which shall comprise the Annual Dividend Amount,
shall be added to the Long-Term Incentive Benefit for the Participant for whom
the Phantom Stock has been credited.
10.
Vested Interest in Long-Term
Incentive Benefit; Forfeitures
. Except as otherwise set forth
in a Participant’s Agreement, and subject to the terms of this Plan, a
Participant shall vest in full in his Long-Term Incentive Benefit upon the date
his Vesting Requirements are satisfied A Participant who (i) has
attained age 65; (ii) voluntarily terminates his employment with the Corporation
and all Affiliates;
(iii) is
not vested at the time of such termination of employment; and (iv) enters into a
Non-Competition Agreement for a period equal to the greater of two years from
the Participant’s Separation From Service or the period of time necessary for
the Participant to fully vest in his Long-Term Incentive Benefit, shall have
Continuous Service credited on his behalf for vesting purposes for a period
equal to the term of the Non-Competition Agreement. The Non-Competition
Agreement shall continue the provisions of the Confidentiality and
Non-Solicitation Agreement during its term. The amount of Continuous
Service to be credited under the preceding sentence shall equal the length of
the agreement, and shall be credited only if the Participant complies with the
terms of the agreement for the entire length of the agreement. A Participant’s
Long-Term Incentive Benefit that does not vest in accordance with this Paragraph
10, or which is forfeited in accordance with Paragraphs 11, 12 and 13 shall be
deemed terminated and no longer outstanding.
11.
Forfeiture Upon Termination
for Cause or Involuntary Termination
. If a Participant
experiences a Termination for Cause, he shall forfeit his entire interest in his
Long-Term Incentive Benefit. If the Participant or his Beneficiary
has received any or all of his Long-Term Incentive Benefit and it is
subsequently determined that the Participant was Terminated for Cause, then the
Long-Term Incentive Benefit previously paid shall be returned by the Participant
or his Beneficiary to the Corporation at the Corporation’s request, and no
further Long-Term Incentive Benefits shall be payable to the Participant or his
Beneficiary. If a Participant’s employment with the Employer is involuntarily
terminated by the Employer for reasons other than Termination for Cause, he
shall forfeit his entire unvested interest in his Long-Term Incentive
Benefit.
12.
Regulatory
Restrictions
. The obligations to a Participant under the Plan are subject
to the following restrictions:
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(a)
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Temporary Suspension
or Prohibition
. If the Participant is suspended and/or
temporarily prohibited from participating in the conduct of the
Corporation or the Bank’s affairs by a notice served under Section 8(e)(3)
or (g)(1) of the Federal Deposit Insurance Act ("FDIA"), 12 U.S.C. §
1818(e)(3) and (g)(1), the obligations to such Participant
under the Plan shall be suspended as of the date of service of such
notice, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Corporation may in its discretion
reinstate in whole or in part any of its obligations which were
suspended.
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(b)
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Permanent Suspension
or Prohibition
. If the Participant is removed
and/or permanently prohibited from participating in the conduct of the
Corporation or the Bank’s affairs by an order issued under Section 8(e)(4)
or (g)(1) of the FDIA, 12 U.S.C. § 1818(e)(4) and (g)(1), all obligations
hereunder to such Participant shall terminate as of the effective date of
the order, but vested rights of the contracting parties shall not be
affected.
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(c)
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Default
. If
the Bank is in default (as defined in Section 3(x)(1) of the FDIA), all
obligations to Participants and their Beneficiaries hereunder shall
terminate as of the date of default, but this provision shall not affect
any vested rights of the contracting
parties.
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(d)
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Termination by
Regulators
. All obligations to Participants and their
Beneficiaries hereunder shall be terminated, except to the extent
determined that continuation of the Plan is necessary for the continued
operation of the Corporation or the Bank: (i) at the time the
Federal Deposit Insurance Corporation (“FDIC”) enters into an agreement to
provide assistance to or on behalf of the Corporation or the Bank under
the authority
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contained
in Section 13(c) of the FDIA; or (ii) by the FDIC at the time it approves
a supervisory merger to resolve problems related to operation of the
Corporation or the Bank. Any rights of the parties that have
already vested, however, shall not be affected by any such
action.
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(e)
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Other Regulatory
Restrictions on Payment
. Notwithstanding anything herein
to the contrary, (1) any payments made hereunder shall be subject to and
conditioned upon compliance with 12 U.S.C. § 1828(k) and any regulations
promulgated thereunder and (2) payments contemplated to be made hereunder
shall not be immediately payable to the extent such payments are barred or
prohibited by an action or order issued by the Director of Banks of the
Washington Department of Financial Institutions, or the
FDIC.
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(f)
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Recommencement of
Benefit
. Any benefit payment delayed in accordance with
this Paragraph 12 shall be paid at the earliest date at which the
Committee reasonably anticipates that such payment would be permissible,
consistent with the requirements of Section
409A.
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13.
Confidentiality and
Non-Solicitation, Etc.
The Executive shall forfeit his
Long-Term Incentive Benefit, or if distribution of his Long-Term Incentive
Benefit has commenced, any non-distributed benefits under this Agreement, if
within twenty-four (24) months following a Separation from Service, the
Executive, directly or indirectly, either as an individual or as a proprietor,
stockholder, partner, officer, director, employee, agent, consultant or
independent contractor of any individual, partnership, corporation or other
entity: (a) participates in any way in hiring or otherwise engaging, or
assisting any other person or entity in hiring or otherwise engaging, on a
temporary, part-time or permanent basis, any individual who was employed by the
Corporation or the Bank as of the date of the Executive’s Separation from
Service; (b) a
ssists, advises, or serves
in any capacity, representative or otherwise, any third party in any action
against the
Bank
or transaction involving
the Bank; (c)
sells, offers to sell, provides banking or other financial
services, assists any other person in selling or providing banking or other
financial services, or solicits or otherwise competes for, either directly or
indirectly, any orders, contract, or accounts for services of a kind or nature
like or substantially similar to the financial services performed or financial
products sold by the Bank or any Affiliate (the preceding hereinafter referred
to as “Services”), to or from any person or entity from whom the Executive or
the Bank or any Affiliate, to the knowledge of the Executive provided banking or
other financial services, sold, offered to sell or solicited orders, contracts
or accounts for Services during the three (3) year period immediately prior to
the Executive’s Separation from Service; or (d) divulges, discloses, or
communicates to others in any manner whatsoever, any confidential information of
the Bank or any Affiliate, to the knowledge of the Executive, including, but not
limited to, the names and addresses of customers or prospective customers, of
the Bank or any Affiliate, as they may have existed from time to time, of work
performed or services rendered for any customer, any method and/or procedures
relating to projects or other work developed for the Bank, earnings or other
information concerning the Bank. The restrictions contained in Subparagraph (d)
apply to all information regarding the Bank and its Affiliates, regardless of
the source who provided or compiled such information. Notwithstanding
anything to the contrary, all information referred to herein shall not be
disclosed unless and until it becomes known to the general public from sources
other than the Executive. This Section 13 does not of itself preclude
the Participant from engaging in the above activities, but rather only results
in the forfeiture of his Plan benefit hereunder as provided
above. This Section 13 shall not apply following a Change in
Control.
14.
Distribution of Long-Term
Incentive Benefit
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(a)
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Subject
to Paragraph 15, a Participant shall receive, or commence to receive in
accordance with a properly made election, his vested Long-Term Incentive
Benefit as of the first day of the second month following the earlier of
his Separation from Service, or the date specified by the Participant in
his Agreement or election form. Notwithstanding the preceding
sentence or any provision of this Agreement to the contrary, if the
Executive is considered a Specified Employee upon his Separation from
Service, distributions that are made upon Separation from Service may not
commence earlier than six months after the date of such Separation from
Service. If the Participant has elected to receive Monthly
Benefits, the payments that would have been paid but for the preceding
sentence shall be paid (along with the then-current payment) on the first
day of the seventh month following the Executive’s Separation from
Service.
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(b)
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If
the Executive dies after any benefit distributions have commenced under
this Agreement but before receiving all such distributions, the
Participant’s Beneficiary shall receive the remaining benefits at the same
time and in the same amounts they would have been distributed to the
Executive had the Executive survived.
If the Executive
dies prior to the commencement of benefits under the Plan, the Beneficiary
shall receive the same benefits that the Executive was entitled to prior
to death except that the benefit distributions shall commence within
thirty (30) days following receipt by the Committee of the Executive’s
death certificate.
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(c)
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All distributions from the Plan shall be in
cash.
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15.
Effect of Change in
Control
. In the event of a Change in Control, (i) the
Committee shall redetermine the value of the Long-Term Incentive Benefit for
each Participant who is actively employed on the date of the Change in Control,
irrespective of whether the Participant’s Vesting Requirements have been
satisfied, to reflect the value of the Stock on that date, (ii) each
Participant actively employed by the Corporation or an Affiliate on the date of
the Change in Control shall have a full vested interest in his Long-Term
Incentive Benefit, and (iii) no later than 60 days following the date of such
Change in Control, each such Participant shall receive a cash lump sum equal to
the value of his entire Long-Term Incentive Benefit, or in the case of a
Participant receiving his Phantom Stock in Monthly Benefits, the remaining value
of his Long-Term Incentive Benefit (notwithstanding any election by the
Participant to the contrary). Distributions on account of a Change in
Control shall be made in accordance with Paragraph 19.
16.
Assignments and
Transfers
. Except as necessary to satisfy the requirements of
a domestic relations order (within the meaning of Section 414(p)(1)(B) of the
Code), no right or interest of any Participant in the Plan will be assignable or
transferable or subject to any lien or encumbrance, whether directly or
indirectly, by operation of law or otherwise, including, without limitation,
execution, levy, garnishment, attachment, pledge, or bankruptcy except, in the
event of the death of a Participant, to his Beneficiary.
17.
Executive Rights Under the
Plan
. No Executive shall have a right to be selected as a
Participant, and no Executive or other person shall have any claim or right to
be granted an Award under the Plan or under any other incentive or similar plan
of the Corporation or the Bank. Neither the Plan nor
any
action taken hereunder shall be construed as giving any Participant any right to
be retained in the employ of the Corporation, the Bank or any
Affiliate.
18.
Withholding
Tax
. The Corporation and the Bank shall have the right
to deduct from all amounts paid under the Plan any taxes required by law to be
withheld with respect to such payments.
19.
Amendment or
Termination
. The Corporation shall have the right to modify,
amend or terminate the Plan by action of the Board. However, no
modification, amendment or termination shall adversely affect the then vested
interest of any Participant in Phantom Stock units previously granted and the
corresponding Long-Term Incentive Benefit relating thereto, unless the
Participant agrees in writing. Nor shall any amendment cause the Plan
to violate the requirements of Section 409A. The Corporation may unilaterally
amend this Agreement to conform with written directives from its auditors or
banking regulators or to comply with legislative or tax law, including without
limitation Section 409A. Notwithstanding anything to the contrary in Paragraph
15, the Corporation may make Plan termination distributions in the following
circumstances, in accordance with Section 409A:
(a) Within
thirty days before, or twelve months after a Change in Control, provided that
all distributions are made no later than twelve months following such
termination of the Plan and further provided that all the arrangements of the
Corporation or the Bank which are substantially similar to the Plan are
terminated so the Executive and all participants in the similar arrangements are
required to receive all amounts of compensation deferred under the terminated
arrangements within twelve months of the termination of the
arrangements;
(b) Upon
the Corporation or the Bank’s dissolution or with the approval of a bankruptcy
court provided that the amounts deferred under the Plan are included in the
Executive's gross income in the latest of: (i) the calendar year in which the
Plan terminates; (ii) the calendar year in which the amount is no longer subject
to a substantial risk of forfeiture; or (iii) the first calendar year in which
the payment is administratively practical; or
(c) Upon
the Corporation or the Bank’s termination of this and all other account balance
plans (as referenced in Section 409A), provided that all distributions are made
no earlier than twelve months and no later than twenty-four months following
such termination, and the Corporation or the Bank does not adopt any new account
balance plans for a minimum of three years following the date of such
termination, and the termination of the Plan is not proximate to a downturn in
the financial health of the Corporation;
the Bank
may distribute the Long-Term Incentive Benefits, determined as of the date of
the termination of the Plan, in a lump sum.
20.
Beneficiary
. Each
Participant shall have the right, at any time, to designate Beneficiary(ies)
(both primary as well as contingent) to receive any benefits payable under the
Plan upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the beneficiary designated
under any other plan of the Bank in which the Participant
participates. A Participant shall designate his Beneficiary by
completing and signing a beneficiary designation form and returning it to the
Committee. A Participant shall have the right to change a Beneficiary
by completing, signing and otherwise complying with the terms of the beneficiary
designation form and the Committee's rules and procedures, as in effect from
time to time. Upon the acceptance by the Committee of a
new
beneficiary
designation form, all Beneficiary designations previously filed shall be
canceled. The Committee shall be entitled to rely on the last beneficiary
designation form filed by the Participant and accepted by the Committee prior to
his death. In the event of the death of a Participant without a designated
Beneficiary, any benefits remaining to be paid under the Plan to such
Participant shall be paid to the Participant’s estate in the same manner as such
payments would have been paid to the Participant.
21.
No
Funding.
Nothing contained in the Plan and no action taken
hereunder will create or be construed to create a trust of any kind, or a
fiduciary relationship between the Corporation or the Bank and any Participant
or any other person. Amounts due under the Plan at any time and from
time to time will be paid from the general funds of the Corporation or the
Bank. To the extent that any person acquires a right to receive
payments hereunder, such right shall be that of an unsecured general creditor of
the Corporation or the Bank.
22.
Indemnification of
Committee.
No member of the Committee shall be liable for any
act, omission, or determination taken or made in good faith with respect to the
Plan or any Awards made hereunder; and the members of the Committee shall be
entitled to indemnification and reimbursement by the Corporation and the Bank in
respect of any claim, loss, damage, or expenses (including counsel fees) arising
therefrom to the full extent permitted by law or regulation, and under any
directors' and officers' liability or similar insurance coverage that may be in
effect from time to time.
24.
Expenses of the
Plan.
The expenses of administering the Plan will be
proportionately borne by the Corporation and the Bank, based on the then-value
of the Long-Term Incentive Benefits of the Participants who are Executives of
the Corporation and Executives of the Bank, respectively.
25.
Governing
Law.
The Plan will be construed in accordance with and
governed by the laws of the State of Washington, except to the extent that such
laws are preempted by Federal law.
26.
Terms
. Whenever
any words are used herein in the masculine, they shall be construed as though
they were in the feminine in all cases where they would so apply; and whenever
any words are used herein in the singular or in the plural, they
shall be construed as though they were used in the plural or the singular, as
the case may be, in all cases where they would so apply.
27.
Headings
. Paragraph
headings are for convenient reference only and shall not control or affect the
meaning or construction of any of its provisions.
28.
Validity
. In
case any provision of this Plan shall be illegal or invalid for any reason, said
illegality or invalidity shall not affect the remaining parts hereof, but this
Plan shall be construed and enforced as if such illegal and invalid provision
has never been inserted herein.
29.
Rescissions
. Any
modification to the terms of this Plan that would inadvertently result in an
additional tax liability on the part of the Executive, shall have no effect to
the extent the change in the terms of the Plan is rescinded by the earlier of a
date before the right is exercised (if the
change
grants a discretionary right) and the last day of the calendar year during which
such change occurred.
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30.
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Compliance with
Section 409A
. This Agreement shall at all times be
administered and the provisions of this Agreement shall be interpreted
consistent with the requirements of Section
409A.
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The
Corporation and the Bank have signed the Plan as of _________, __, 2008,
but effective for all purposes as of ________________,
2008.
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By: __________________________
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Title: _________________________
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By: __________________________
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Title: _________________________
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Exhibit
10.2
Banner Corporation Long-Term
Incentive Plan
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Form of
Repricing Agreement
BANNER
CORPORATION
LONG-TERM
INCENTIVE PLAN
REPRICING
AGREEMENT
«Fullname»
«Street»
«City»,
«State» «Zip»
Dear
«Nickname»;
You are
currently a participant (the “Participant”) in the Banner Corporation Long-Term
Incentive Plan (the “Plan”)
commonly referred to as the Phantom
Stock Plan.
Banner Corporation
(“Banner”) and the Participant desire to reduce the hypothetical Grant Date
value (as defined in the Plan) of the Participant’s Phantom Stock Account for
purposes of determining the value of the Participant’s Long-Term Incentive
Benefit.
The
Original Grant Date was ___ and the hypothetical value of the Participant’s
Phantom Stock Account on the original grant date was ___.
This
amount was based on ___ shares of Phantom Stock with a value on the original
Grant Date of $__/share.
The
Phantom Stock has a repriced value of $__/share. The value of the
shares was determined on May 5, 2008, which gives a new hypothetical value of
___.
Banner
and the Participant agree to abide by the terms of the Plan taking into account
this repriced hypothetical value including, but not limited to, the deemed
election provisions of Section 6 of the Plan regarding
benefits.
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BANNER
CORPORATION
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Date:_____________________________
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By:_____________________________
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PARTICIPANT
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Date:_____________________________
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Signature: ________________________
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Exhibit
10.3
Supplemental
Executive Retirement Agreement with Paul E. Folz
SUPPLEMENTAL
EXECUTIVE RETIREMENTAGREEMENT
THIS SUPPLEMENTAL EXECUTIVE
RETIREMENT
AGREEMENT
(the "Agreement"),
is made and entered into as of the 1st day of January, 2008, by and between
BANNER BANK
(the
"Bank"), a Washington-chartered commercial bank, and Paul E. Folz,
(the “Executive"), a senior management employee of the Bank.
RECITALS
The
Executive is a senior management employee of the Bank, and as such has rendered
and is expected to continue to render valuable services to the Bank. The Board
of Directors of the Bank desires for the Bank to provide the Executive with
supplemental retirement benefits in recognition of such services.
NOW, THEREFORE
, the Bank and
the Executive hereby mutually agree as follows:
Section 1.
Definitions.
When used herein, the words and
phrases below shall have the meanings set forth, unless a different meaning is
clearly required by the context. Masculine pronouns include feminine pronouns
wherever used and vice versa.
“Affiliates”
means any and
all entities that are considered affiliated with an Employer within the meaning
of Sections 414(b) and (c) of the Code.
"Board"
means the Board of
Directors of the Bank.
"Change in Control"
means an
event deemed to occur if and when (a) an offeror other than the Company
purchases shares of the stock of the Company pursuant to a tender or exchange
offer for such shares, (b) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act), other than an employee benefit plan
maintained by the Company or any affiliate of the Company, is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities, (c) the membership of the board of
directors of the Company changes as the result of a contested election, such
that individuals who were directors at the beginning of any twenty-four (24)
month period (whether commencing before or after the date of adoption of this
Plan) do not constitute a majority of the Board at the end of such period or (d)
there occurs a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets or a plan of partial or complete
liquidation in which the Company is not the resulting entity.
"Code"
means the Internal
Revenue Code of 1986, as amended.
"Company"
means Banner
Corporation, Inc., a Washington corporation.
"
Disability
"
means any physical or
mental injury or disease of a permanent nature which renders the Executive
incapable of meeting the requirements of the employment or service performed by
the Executive immediately prior to the commencement of such disability. The
determination of whether a Participant is disabled shall be made by the Board of
Directors in its sole and absolute discretion.
"Final Average Compensation"
means the average of the annual compensation of the Executive for the three (3)
full calendar years within the final eight (8) full calendar years of his
employment which will produce the highest average. For this purpose, the annual
compensation of the Executive shall mean his total cash remuneration from the
Bank, the Company or any affiliate of the Company (including, but not limited
to, base salary, bonuses and other incentive compensation), plus the sum of: (i)
any salary reduction amounts which the Executive elects to have contributed with
respect to him to a qualified cash or deferred arrangement under Section 401(k)
of the Code, to a cafeteria plan under Section 125 of the Code, or to any
similar plan or arrangement and (ii) any amounts deferred by Executive under any
deferred compensation plan or contract to which he is a party. Amounts described
in (i) and (ii) shall be deemed received at the time the Executive would have
received them but for the programs described in (i) and (ii).
"Retirement Date"
means the
effective date of Executive's Termination of Employment (other than upon a
Termination for Cause) as an employee of the Bank, the Company or an Affiliate
of the Company at or after attaining age 62 and upon the completion of at least
six (6) Years of Service.
"Other Retirement Benefits"
means the monthly benefits available to the Executive under any (i) retirement
plan in which the Executive is a participant, which is qualified under Section
401(a) of the Code and which is maintained by the Bank, the Company or any
affiliate of the Company and (ii) non-tax-qualified supplemental retirement
plan, agreement or similar arrangement (other than this Agreement) which is
maintained by the Bank, the Company or any affiliate of the Company for the
benefit of the Executive or to which the Executive is a party. For purposes of
determining the monthly Supplemental Benefit payable to the Executive under this
Agreement, the monthly benefits available to the Executive as Other Retirement
Benefits shall be (i) limited solely to those benefits which are attributable to
contributions or accruals made by the Bank, the Company or any affiliate of the
Company on behalf of the Executive and shall not include any benefits which are
attributable to the Executive's own contributions, (ii) determined as if such
benefits were payable to the Executive in the form of a twenty year annuity
using a 7.5% earnings rate, and (iii) based on the value of the Executive's
Other Retirement Benefits on the Executive's Retirement Date (without regard to
whether the Executive is actually receiving such Other Retirement Benefits on
such date).
“Section 409A”
means Section
409A of the Internal Revenue Code of 1986, as amended, and any regulations or
other guidance of general applicability issued thereunder.
“Specified Employee”
means a
key employee (as defined in Code Section 416(i) without regard to paragraph 5
thereof) of the Bank or an Affiliate if any stock of the Bank or an Affiliate is
publicly traded on an established securities market or otherwise, as determined
under Section 409A, based on the twelve (12) month period ending each December
31 (the “identification period”). If the Executive is determined to
be a Specified Employee for an identification period, the Executive shall be
treated as a Specified Employee for purposes of this Plan during the twelve (12)
month period that begins on the first day of the fourth month following the
close of the identification period.
"Spouse's Supplemental
Benefit"
means a benefit payable under Section 5 to the Executive's
surviving spouse.
"
Supplemental Benefit"
means
the monthly benefit payable to the Executive under this Agreement.
"
Termination for Cause
"
means Termination of
Employment because of the Executive's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or material
breach of any provision of any employment agreement between the Executive and
the Bank, the Company or any affiliate of the Company.
“Termination
of Employment”
means the severing of
employment by the Executive with the Bank and its Affiliates (as defined in
Section 409A), voluntarily or involuntarily, for any reason other than an
authorized leave of absence.
Whether a Termination of Employment has
occurred shall be determined in accordance with Section 409A (taking into
account all special rules and presumptions provided for in the regulations under
Section 409A), based on both the facts and circumstances surrounding the
termination of the Executive’s employment and whether the Executive and the Bank
reasonably anticipate that no further substantial services will be performed by
the Executive for the Bank after a certain date (whether as an employee or
independent contractor).
"
Year of
Service"
means each twelve
(12) month period of Executive's employment with the Bank, the Company or any
Affiliate of the Company, beginning on Executive's hire date and determined
without regard to hours of service during such period.
Section
2.
Termination of
Employment on a Retirement Date.
(a) Upon
the Executive's Termination of Employment on a Retirement Date, the Executive
shall receive a benefit equal to the sum of the (i) monthly amount payable from
his Other Retirement Benefits and (ii) monthly Supplemental Benefit payable
under this Agreement. The monthly amount of the Supplemental Benefit shall equal
one-twelfth (1/12) of the product of four percent (4%) of the Executive's Final
Average Compensation and the Executive's Years of Service subsequent to January
1, 2007. Notwithstanding anything in this Agreement to the contrary, the sum of
the amounts set forth in clauses (i) and (ii) of this Section 2(a) (as
determined in accordance with this Agreement as of the Executive's Retirement
Date) shall not exceed the product of three percent (3%) times the Executive’s
total Years of Service and the Executive's Final Average Compensation, and the
Executive's monthly Supplemental Benefit shall be reduced to the extent
necessary to comply with this limitation; provided, however, that nothing in
this Agreement shall be construed or interpreted to require a reduction in the
Executive's Other Retirement Benefits if the amount of such Other Retirement
Benefits, determined without regard to any Supplemental Benefit payable under
this Agreement, exceeds the product of three percent (3%) times the Executive’s
total Years of Service and the Executive's Final Average
Compensation.
(b) Subject
to Section 2(c), Section 6 and Section 7, payment of the Supplemental Benefit
shall commence on the first day of the month next following the Executive's
Retirement Date and continue monthly for the Executive's life, or, if
applicable, as provided for in Section 5.
(c) If
the Executive is a Specified Employee, then payments under this Section 2 shall
be delayed until the first day of the month following the six-month anniversary
of the Executive’s Termination of Employment. Payments that are
delayed to comply with the preceding sentence shall be paid in a lump sum with
the first payment that is not limited by the preceding sentence.
Section
3.
Termination of
Employment Prior to a Retirement Date.
(a) Except
as provided in this Section 3(a), in the event of the Executive’s Termination of
Employment prior to a Retirement Date, other than by reason of his death,
Disability or on or after the effective date of a Change in Control, no
Supplemental Benefit shall be payable to the Executive. In the event
of the Executive's Termination of Employment prior to a Retirement Date other
than by reason of his death, Disability or on or after the effective date of a
Change in Control, if the Executive has been credited with at least six (6)Years
of Service as of the date of his Termination of Employment, then the Executive
shall receive a Supplemental Benefit determined in accordance with and payable
under Section 2, except in no event will the payments be made prior to the
executive attaining 62 years of age and, if applicable, the payment shall be
subject to the delayed distribution requirements of Section 2(c).
(b)
In the
event of the Executive's Termination of Employment prior to a Retirement Date by
reason of his Disability, the Executive (or, if applicable, his surviving
spouse), shall receive a Supplemental Benefit in an amount determined in
accordance with and payable under Section 2 as if the Executive's Retirement
Date had occurred on the date immediately preceding his Termination of
Employment (without regard to whether the Executive satisfied the otherwise
applicable minimum age and service requirements as of such date).
(c)
In the
event of the Executive's Termination of Employment prior to a Retirement Date by
reason of his death, the Executive's surviving spouse shall receive a Spouse's
Supplemental Benefit in an amount determined under Section 5.
Section 4.
Termination of Employment On or After
the Effective Date of a Change in Control.
In the event
of the Executive's involuntary Termination of Employment on or after the
effective date of a Change in Control, the date of the Executive’s Termination
of Employment shall be treated as the Executive's Retirement Date (without
regard to whether the Executive satisfied the otherwise applicable minimum age
and service requirements in the definition of “Retirement Date” as of such
date). The Executive shall be entitled to receive a Supplemental
Benefit as determined either in accordance with Section 2(a) if at the time of
his Termination of Employment the Executive had attained his Retirement Date
(without regard to the preceding sentence), or in accordance with Section 3(a)
if at the time of his Termination Date he had not attained his Retirement Date
but had satisfied the requirements for a benefit under Section
3(a). The Executive’s benefit under this Section 4 shall be paid as
provided in Section 2(b) or 2(c) as applicable. In no event, however,
will the payment be made prior to the Executive attaining 62 years of
age.
Section
5.
Spouse's Supplemental
Benefit.
(a)
In the event
of the Executive's death following his Retirement Date, if the Executive is
married on the date of his death, his surviving spouse shall be entitled to a
Spouse's
Supplemental Benefit, payable for life, equal to fifty percent (50%) of the
monthly amount of the Supplemental Benefit payable to the Executive prior to his
death.
(b)
In the
event of the Executive's death while actively employed by the Bank, the Company
or an affiliate of the Company, if the Executive is married on his date of
death, his surviving spouse shall receive a Spouse's Supplemental Benefit equal
to fifty percent (50%) of the amount the Executive would have received as a
Supplemental Benefit if his Retirement Date had occurred on the date immediately
preceding his death (without regard to whether the Executive satisfied the
otherwise applicable minimum age and service requirements on such
date).
(c)
The
monthly amount of the Spouse's Supplemental Benefit shall be payable on the
first day of each calendar month following the death of the Executive and
preceding the death of such spouse.
(d)
Notwithstanding
any provision of this Agreement to the contrary, in the event that both the
Executive and his spouse (if any) die after a Retirement Date but before the
date on which the Executive would have attained age 85, their designated
beneficiary (or the estate of the last to die if no beneficiary has been
designated) shall receive a lump sum death benefit (the "Death Benefit"). The
Death Benefit shall be equal to the product of (i) fifty percent (50%) of the
annual amount of the Supplemental Benefit payable to the Executive, and (ii) the
difference between 85 and the age that the Executive attained (or would have
attained) as of the later of the date on which he died or the date on which his
spouse died.
(e) Notwithstanding
any provision of this Agreement to the contrary, if the Executive (or a trust
created by the Executive) is a party to a split dollar life insurance agreement
with the Bank which is in effect on his date of death, the benefits payable to
the Executive's designated beneficiaries) under such agreement shall reduce
dollar-for-dollar the amount otherwise payable to the Executive's surviving
spouse (or, for purposes of Section 5(d), the Executive's beneficiary or estate)
under Section 5 of this Agreement (but only to the extent that such life
insurance benefits exceed $250,000). For purposes of determining the applicable
reduction, the benefits payable under this Agreement shall be calculated as an
actuarially equivalent lump sum amount determined by reference to reasonable
actuarial factors consistent with the requirements of Section 417(e) of the
Code.
Section 6.
Termination for
Cause.
Notwithstanding any provision of this Agreement
to the contrary, no Supplemental Benefit or Spouse's Supplemental Benefit shall
be payable hereunder in the event of the Executive's Termination for
Cause.
Section
7.
Miscellaneous.
(a) The
Supplemental Benefit shall terminate and cease to be paid to the Executive (and
rights to the Spouse's Supplemental Benefit shall terminate) if he shall
disclose material confidential information or trade secrets concerning the Bank
or any of it subsidiaries without the Bank's consent, or shall engage in any
activity that is materially damaging to the Bank including, but not limited to,
engaging in competitive employment during the three-year period beginning on his
Retirement Date or during the two-year period beginning on the date of the
Executive’s involuntary Termination of Employment on or after the effective date
of a Change of Control.
The
Executive shall be deemed to engage in competitive employment if he shall render
services as an owner, employee, officer, director, consultant or otherwise, for
any bank, savings and loan association, credit union or similar thrift or,
savings bank or financial institution headquartered within the states of
Washington, Oregon or Idaho. Further, the Executive shall be deemed
to engage in competitive employment if he participates in any way in the hiring
or otherwise engaging, or assisting any other entity in hiring or otherwise
engaging, on a temporary, part-time or permanent basis, for service in any
location in which the Bank or any affiliate of the Company operates a
full-service branch office, any individual who was employed by the Bank or any
affiliate of the Company as of his Retirement Date, unless such individual has
been separated from service to the Bank or affiliate for a minimum of one year
or has been involuntarily terminated by the Bank or affiliate.
(b)
Nothing
in this Agreement shall be construed as giving the Executive the right to be
retained in the employ of the Bank or any subsidiary of the Bank at all or for
any specified period in any particular position, or any right to any payment
whatsoever except to the extent provided for by this Agreement.
(c)
Notwithstanding
any other provisions hereof if any person entitled to receive payments hereunder
(the "recipient") shall be physically or mentally or legally incapable of
receiving or acknowledging receipt of such payment, the Bank, upon the receipt
of satisfactory evidence that another person or institution is maintaining the
recipient and that no guardian or committee has been appointed for the
recipient, may cause such payment to be made to such person or institution so
maintaining the recipient.
(d)
Nothing
in this Agreement and no action taken pursuant to the provisions of this
Agreement shall create or shall be construed as creating a trust of any kind, or
a fiduciary relationship between the Bank and the Executive or any other person.
Any amounts which are or may be set aside hereunder shall continue for all
purposes to be a part of the general funds of the Bank, and no person other than
the Bank, shall, by virtue of the provisions of this Agreement, have any
interest in such funds. To the extent that any person acquires a right to
receive payments from the Bank hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Bank.
(e)
The
benefits payable under this Agreement may not be assigned by the Executive or
any other person nor anticipated in any way.
(f)
This
Agreement may not be amended, altered or modified, except by a written
instrument signed by the parties hereto, or their respective successors or
assigns.
(g)
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Washington, to the extent not preempted by applicable federal
law.
(h)
All
notices hereunder shall be in writing and deemed properly given if delivered by
hand and receipted or if mailed by registered mail, return receipt requested.
Notices to the Bank shall be directed to the Secretary of the Bank. Notices to
the Executive shall be directed to
his last
known address. Notice may not be provided by e-mail.
(i)
This
Agreement shall be binding upon the Executive, the Bank and their successors and
assigns.
Section
8.
Administration.
(a) This
Agreement shall be administered by the Board of Directors. The Board of
Directors shall interpret this Agreement, establish regulations to further the
purposes of this Agreement and take any other action necessary to the proper
operation of this Agreement. Prior to paying any benefit under this Agreement,
the Board of Directors may require the Executive or his spouse to provide such
information or material as the Bank, in its sole discretion, shall deem
necessary for it to make any determination it may be required to make under this
Agreement. The Board of Directors shall have authority to cease payments under
this paragraph (a), and the determination of the Board of Directors shall be
final and conclusive. Upon the request of the Executive, the Board of Directors
may grant an advance opinion as to whether a proposed activity would violate the
provisions of this paragraph (a).
(b) If
for any reason a benefit payable under this Agreement is not paid when due, the
Executive or his spouse may file a written claim with the Board of Directors. If
the claim is denied or no response is received within forty-five (45) days after
the date on which the claim was filed with the Board of Directors (in which case
the claim will be deemed to have been denied), the Executive or his spouse may
appeal the denial to the Board of Directors within sixty (60) days of receipt of
written notification of the denial or the end of the forty-five day period,
whichever occurs first. In pursuing an appeal, the Executive or his spouse may
request that the Board of Directors review the denial, may review pertinent
documents, and may submit issues and documents in writing to the Board of
Directors. A decision on appeal will be made within thirty (30) days after the
appeal is made, unless special circumstances require the Board of Directors to
extend the period for another thirty (30) days.
(c)
The Board
of Directors may appoint one or more persons to act as administrator and
delegate its administrative responsibilities to such administrator.
(d)
It is
acknowledged by the Bank that the procedures set forth in Section 8(b) are not
the exclusive remedy available to the Executive or his beneficiaries in the
event of a dispute over the interpretation of this Agreement.
IN WITNESS WHEREOF
, this
Agreement has been executed in behalf of the Bank; by its duly authorized
officers and by the Executive as of the day and year first above
stated.
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BANNER
BANK
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By:
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____________________________
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____________________________
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Executive
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