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EMPLOYMENT AGREEMENT
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PARTIES: CENTENNIAL BANCORP ("Company")
XXXXXXX X. XXXXXXXX ("Executive")
EFFECTIVE DATE: OCTOBER 1, 1995
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RECITALS:
A. Company is an Oregon corporation.
B. Executive is an executive officer of Company and has contributed
substantially to the successful development and expansion of the
business of Company.
C. Company desires to assure the continued employment of Executive
and to assist him in providing for his financial security.
D. The parties entered into an Employment Agreement dated October 1,
1991 respecting Executive's employment by Company for a term
ending September 30, 1996, and have agreed to extend the term of
such employment to end on December 31, 2001 as provided in and
subject to the conditions stated in this Agreement.
AGREEMENT:
1. POSITIONS, DUTIES AND TERM
1.1 Company shall employ Executive as President and Chief Executive
Officer of Company, and Executive shall serve Company in such
capacity, during the Employment Period.
1.2 The Employment Period under this Agreement shall commence effective at
October 1, 1995, and shall end on December 31, 2001, unless it is
earlier terminated in accordance with other provisions of this
Agreement.
1.3 Executive shall perform such duties as may be assigned to him from
time to time by the board of directors of Company. Such assignments
shall not unduly diminish the relative importance and responsibility
of Executive's position, and the title of his position
shall not be changed without his consent, except
pursuant to this Agreement.
1.4 Without limiting the generality of the other provisions of this
Section, Executive shall:
1.4.1 Be responsible to Company's board of directors for the
operation of Company and its subsidiaries (currently
Centennial Bank and Centennial Mortgage Co.);
1.4.2 Serve as the vice chairman and chief executive officer of
Centennial Bank (the "Bank") until a new chief executive
officer of the Bank is employed by the Bank;
1.4.3 Identify and select for approval by the board of directors of
the Bank a new chief executive officer for the Bank no later
than December 31, 1997;
1.4.4 Implement a new regional organizational structure for the Bank
prior to the hiring of the new chief executive officer of the
Bank;
1.4.5 Serve, if requested by Company's board of directors, as
chairman of the Bank's board of directors after the new chief
executive officer of the Bank has been hired; and
1.4.6 Serve as a member of Company's board of directors, and, if
requested by Company's board of directors, also serve on the
Bank's board of directors, Centennial Mortgage Co.'s board of
directors, the Bank's asset/liability committee, and on the
board of directors of any significant subsidiary Company may
form or acquire during the Employment Period.
2. EXTENT OF SERVICES
2.1 Except as permitted by Section or 2.4 or as approved by Company's
board of directors, which approval it may withhold in its reasonable
discretion, Executive shall devote his full time and attention
exclusively to the performance of the work and duties assigned to
him for and on behalf of Company and shall not, during the
Employment Period, either directly or indirectly, engage in, or
enter into any business or perform any services for any other
person, firm, association, or corporation.
2.2 Executive shall perform his duties with fidelity and to the best of
his ability during the Employment Period, and shall at all times
during the Employment Period and thereafter respect the confidential
nature of the information received by him in the course of
performing his duties.
2.3 Nothing contained in this Section shall prohibit Executive from
serving on the board of directors of any other corporation that does
not compete with Company or any of its subsidiaries (subject to the
approval of Company's board of directors, which will not be
unreasonably withheld), or from owning or controlling stock or other
equity securities of any other company, whether or not the
securities are publicly traded (including a company that operates a
business that is competitive with Company or its subsidiaries, if
such securities are publicly traded and Executive does not
beneficially own more than 5% of the outstanding securities);
provided, however, that Executive shall not own or control more than
25% of the stock or other equity securities of any company without
first obtaining the approval of Company's board of directors, which
will not be unreasonably withheld.
2.4 For periods after September 30, 1997 or the date on which a new
chief executive officer of the Bank is hired, whichever occurs
later, Executive shall be deemed to have fulfilled his obligation to
render full time service to Company if he devotes time to Company
and its subsidiaries in the performance of his duties under this
Agreement that is equivalent to three-fourths of a full-time work
schedule. The reduced work schedule shall be applied both on an
annual basis and, subject to vacations and other permitted leaves
taken by Executive, on a monthly basis. During any period of reduced
work schedule under this section, Executive may take sick leave,
vacations and other permitted leaves of absence in accordance with
Company's policies applicable to other executive officers.
2.5 In addition to all other permitted leaves of absence under the
employee benefit plans and policies of Company, Executive shall have
the elective right to take a single leave of absence for a period
not exceeding 180 days, during which time Executive shall not be
required to perform any services for Company. During this leave of
absence, which shall not commence until after the new chief
executive officer of the Bank is hired, Executive shall be entitled
to receive all compensation and benefits provided in other sections
of this Agreement. It is contemplated that this leave of
absence shall be completed by December 31, 1998. However, the timing of
this leave shall be subject to the approval of Company's board of
directors.
3. COMPENSATION AND BENEFIT PLANS
During the Employment Period, the Executive shall be compensated as
follows:
3.1 BASE SALARY. Executive shall receive an annual salary ("Base
Salary"), payable in semimonthly installments on the first and 15th
days of each month. The Base Salary shall be:
3.1.1 $225,000 for the year beginning October 1, 1995 and ending
September 30, 1996.
3.1.2 $250,000 for the year beginning October 1, 1996 and ending
September 30, 1997.
3.1.3 Amounts approved by Company's board of directors for periods
after September 30, 1997, but not less than $250,000 for each
12-month period.
3.2 CASH BONUS. In addition to the Base Salary specified above, if
Company and/or Executive reach the objectives for each calendar year
that are determined by Company's board of directors prior to the
beginning of such year, Executive shall be paid an annual cash bonus
for that year (the "Cash Bonus"). Any Cash Bonus earned shall be
paid on the following schedule: 20% on the fifteenth day of each
April, July, and October and 40% on the fifteenth day of January,
with the first payment being due on April 15, 1996. The Cash Bonus
payable hereunder shall be:
3.2.1 $100,000 for the year beginning January 1, 1996 and ending
December 31, 1996.
3.2.2 $100,000 for the year beginning January 1, 1997 and ending
December 31, 1997.
3.2.3 Amounts approved by Company's board of directors for periods
after December 31, 1997, but not less than $25,000 per
calendar quarter.
3.3 STOCK OPTIONS AND INCENTIVE COMPENSATION
3.3.1 On November 22, 1995, Company granted to Executive an option
(the "Stock Option") to purchase 60,000 shares of Company's
common
stock under the 1995 Stock Incentive Plan, which was approved
by Company's board of directors on November 22, 1995. The
grant of the Stock Option was conditioned upon the approval of
the 1995 Stock Incentive Plan by Company's shareholders and to
the execution of this Agreement. The Stock Option is governed
by a separate stock option agreement.
4. TERMINATION FOR DISABILITY
4.1 For purposes of this Agreement, the term "disability" shall mean
Executive's inability because of sickness or injury to perform the
material duties of his occupation, as determined by a physician
acceptable to Company.
4.2 If, during the Employment Period, because of disability Executive
becomes unable to perform his duties for six months in the aggregate
in any 12-month period, or for any consecutive three months in
circumstances where Executive's medical prognosis is that he will be
unable to resume performance of his duties within an additional
three months, then Company may thereafter terminate the Employment
Period upon 30 days' written notice to Executive. At Company's
request and expense, Executive shall submit to annual physical
examinations by a physician mutually approved by Company and
Executive, and Executive will execute such written consents for
release of information as will permit the physician's report on each
examination to be delivered to Company's board of directors.
4.3 Beginning with the date of any termination of the Employment Period
because of Executive's disability, Company shall provide:
4.3.1 Disability income benefits comparable to the benefits payable
under the insurance policies currently held by Company, issued
by Standard Insurance Company. Company shall at its expense
continue to maintain in effect those policies or a
substantially comparable policy or policies throughout the
Employment Period.
4.3.2 Employee Group Benefits (as defined in Section 6.1) to
Executive for so long as Executive meets the eligibility
requirements for participation in the insurance, plans and
programs maintained or provided by Company for its employees
or executive officers generally. Company shall be obligated to
use
its best efforts to maintain Employee's
eligibility to participate in such insurance,
plans and programs.
4.3.3 Post-Retirement Medical Coverage to Executive as provided in
Section .
4.4 Upon any termination of the Employment Period because of Executive's
disability, Company's only other obligations to Executive shall be the
payment of: (a) Base Salary, Cash Bonus, and benefits accrued to the date
of termination; and (b) Deferred Compensation (as defined in Section 9).
5. DEATH OF EXECUTIVE
In the event of Executive's death before any other termination of the
Employment Period, the Employment Period shall terminate effective at the
date of his death. Upon termination of the Employment Period because of
Executive's death, Company's only obligations to Executive shall be the
payment of: (a) Base Salary, Cash Bonus, and benefits accrued to the date
of termination; and (b) Deferred Compensation.
6. EMPLOYEE GROUP BENEFITS
6.1 This Agreement shall not operate to reduce or otherwise adversely
affect Executive's continuing or future participation in, or his
vested rights or accrued benefits under any plan, program or policy
of Company or any of its subsidiaries providing Employee Group
benefits. The term "Employee Group Benefits" shall mean medical,
dental, vision, group life, accidental death, and similar insurance,
plans and programs maintained or provided by Company for its
employees or executive officers generally, but shall not include any
group disability insurance plans or programs so long as Company
provides disability coverage for Executive in accordance with
Section 4.3.1.
6.2 Following termination of the Employment Period (other than any
termination by Company for cause or any termination by Executive
without good reason), Company shall at its expense provide Executive
with coverage ("Post-Retirement Medical Coverage") for payment or
reimbursement of medical expenses incurred by him, on the following
terms and conditions:
6.2.1 The Post-Retirement Medical Coverage shall be provided by
Company either pursuant to an indemnity or capitation contract
with a medical insurance company or health
maintenance organization, or by self-
insurance and direct reimbursement by Company
from its general funds.
6.2.2 The Post-Retirement Medical Coverage shall include such
coverages, deductibles, and co-payment benefits and
obligations as are then being provided by Company for its
executive employees generally, but shall not require Executive
to pay insurance premiums.
6.2.3 The Post-Retirement Medical Coverage shall terminate as to
Executive at the end of the month following the earliest of
the following dates: (a) the date Executive becomes eligible
for Medicare; or (b) the date at which Executive attains age
65.
6.3 This Agreement shall not operate or reduce or otherwise adversely
affect Executive's continuing or future participation in, or his
vested rights or accrued benefits under, the Bank's Employee Savings
and Profit Sharing Plan or any similar successor plan.
7. TERMINATION OTHER THAN UPON DEATH OR DISABILITY
7.1 BY COMPANY. Company may relieve Executive of his duties and
terminate the Employment Period at any time in its sole discretion
upon written notice to Executive, in which event Executive shall
have no further authority to act on behalf of Company or any of its
affiliates.
7.1.1 TERMINATION FOR CAUSE. If Company terminates the Employment
Period for "cause" (as defined in Section 7.1.3), Company's
only obligations to Executive shall be the payment of: (a)
Base Salary, Cash Bonus, and benefits accrued to the date of
termination; and (b) Deferred Compensation.
7.1.2 TERMINATION WITHOUT CAUSE. If Company terminates the
Employment Period without cause, Company's only obligations to
Executive shall be the payment of: (a) Base Salary, Cash
Bonus, and benefits accrued to the date of termination; (b)
Deferred Compensation; (c) Post-Retirement Medical Coverage as
provided in Section 6.2; and (d) Base Salary, Cash Bonus, and
Employee Group benefits until December 31, 2001; provided,
however, Company's obligation to provide Employee Group
Benefits to Executive
shall exist only so long as Executive meets the eligibility
requirements for participation in the insurance, plans and
programs maintained or provided by Company for its employees
or executive officers generally. Company shall be obligated to
use its best efforts to maintain Executive's eligibility to
participate in such insurance, plans and programs.
7.1.3 DEFINITION OF CAUSE. As used in this Agreement, "cause" shall
mean any one of the following:
7.1.3.1 Dishonesty, gross negligence, or deliberate misconduct
by Executive in performance of his duties to Company or
its subsidiaries or Executive's conviction of or entry
of a plea of guilty or nolo contendere to a felony or
other crime that has or may have a material adverse
effect on Executive's ability to carry out his duties
under this Agreement or upon the reputation of Company
or its subsidiaries.
7.1.3.2 Willful and material breach of this Agreement by
Executive (other than acts covered by Section 7.1.3.1),
which breach continues uncorrected for 30 days following
written notice thereof by Company to Executive.
7.1.3.3 Executive's removal from office because of the
requirement or recommendation of a regulatory agency
having jurisdiction over Company or its subsidiary.
7.1.3.4 Uncorrected failure of Executive to perform his duties
in a manner consistent with past performance or
consistent with standards respecting either Company's or
Executive's performance established by Company's board
of directors in discussion with Executive during the
course of regular review of Executive's performance. Any
such failure of performance shall be
deemed uncorrected if it continues
substantially unrectified for a
period of 90 days or more.
7.2 BY EXECUTIVE. Executive may terminate the Employment Period at any
time in his sole discretion upon written notice to Company.
7.2.1 TERMINATION FOR GOOD REASON. If Executive terminates the Employment
Period for "good reason" (as defined in Section 7.2.3), Company's
only obligations to Executive shall be the payment of: (a) Base
Salary, Cash Bonus, and benefits accrued to the date of termination;
(b) Deferred Compensation; (c) Post-Retirement Medical Coverage as
provided in Section 6.2; and (d) Base Salary, Cash Bonus, and
Employment Group Benefits until December 31, 2001; provided,
however, Company's obligation to provide Employee Group Benefits to
Executive shall exist only so long as Executive meets the
eligibility requirements for participation in the insurance, plans
and programs maintained or provided by Company for its employees or
executive officers generally. Company shall be obligated to use its
best efforts to maintain Executive's eligibility to participate in
such insurance, plans and programs.
7.2.2 TERMINATION WITHOUT GOOD REASON. If Executive terminates the
Employment Period without good reason, Company's only obligations to
Executive shall be the payment of: (a) Base Salary, Cash Bonus, and
benefits accrued to the date of termination; and (b) Deferred
Compensation.
7.2.3 DEFINITION OF GOOD REASON. As used in this Agreement, "good reason"
shall mean (a) the assignment to Executive of any significant duties
inconsistent with his status as the Chief Executive Officer of
Company or any material and adverse change in his responsibilities
or authority hereunder; (b) the relocation of the Executive without
his consent to any place other than Eugene, Oregon or, on a
temporary basis comparable to the arrangement currently in
existence, to Portland, Oregon; or (c) any other willful and
material breach of this Agreement by Company which continues
uncorrected for
30 days following written notice thereof by
Executive to Company.
8. OTHER EMPLOYMENT AFTER TERMINATION
Without the consent of Company's board of directors, which it may withhold
in its reasonable discretion, during the three-year period following
termination of the Employment Period, Executive shall not, either directly
or indirectly, engage in, or enter into any business or perform any
services for any other person, firm, association or corporation that is
engaged in any direct, substantial competition with Company or any of its
subsidiaries; provided, however, that this restriction shall not apply
following any termination by Company without cause, any termination by
Executive with good reason, or any termination by Executive following the
acquisition by any person (including any corporation, partnership, joint
venture, trust, association, or individual) of more than 50% of Company's
then outstanding stock (whether by exchange of stock or securities,
purchase, redemption or any combination thereof) or the acquisition by any
person of all or substantially all of Company's operating assets. Except
as limited by the foregoing sentence, Executive's becoming self-employed
or accepting other employment following termination of the Employment
Period shall not operate to reduce or impair any amount payable, any
benefit, any service credit for benefits, or any other right, privilege or
interest of Executive under this Agreement.
9. DEFERRED COMPENSATION
In addition to all other payments to be made in accordance with this
Agreement, Company shall pay to Executive, or to Executive's personal
representative in the event of Executive's death prior to satisfaction of
Company's obligations hereunder, the deferred compensation specified in
this Section 9 ("Deferred Compensation").
9.1 AMOUNT OF DEFERRED COMPENSATION. The total amount of Deferred
Compensation shall be equal to eight and four tenths (8.4) times
Executive's Base Salary as specified in Section 3.1.2.
9.2 VESTED PERCENTAGE. The Deferred Compensation shall be 100% vested
upon execution of this Agreement, unless the Employment Period is
terminated by Company for cause or is terminated by Executive
without good reason, in either of which cases the Deferred
Compensation shall be vested 95% until October 1, 1996, on which
date the Deferred Compensation shall become 100% vested. Except for
this vesting schedule, the Deferred Compensation shall not be
subject to reduction
for any reason (including but not limited to early
termination of the Employment Period).
9.3 INSTALLMENT PAYMENTS. The Deferred Compensation shall be payable by
Company in 288 equal semimonthly payments, without interest, payable
on the fifteenth day and the last day of each calendar month after
commencement of payments.
9.4 COMMENCEMENT OF PAYMENTS. The first semimonthly payment of Deferred
Compensation shall be paid on the fifteenth day of the month next
following the month in which occurs the earliest of the following
dates:
9.4.1 December 31, 2001.
9.4.2 The date of Executive's death.
9.4.3 The date of termination of the Employment Period, unless
Executive's employment shall have terminated by reason of his
disability.
9.4.4 The date of the last payment to be made under the disability
income insurance policy referenced in Section 4.3.1, if
Executive's employment shall have terminated by reason of his
disability.
9.5 NO PREPAYMENT. Deferred Compensation shall not be prepaid or accelerated
by Company without the written approval of Executive or his personal
representative.
10. AUTOMOBILE
Company agrees to provide for Executive's use an automobile during the
Employment Period on terms substantially comparable to Company's current
arrangements with Executive.
11. PAYROLL WITHHOLDINGS
All payments of Base Salary, Cash Bonus, Deferred Compensation, and other
compensation payable by Company pursuant to this Agreement shall be
subject to the customary withholding of income taxes and shall be subject
to other withholdings required with respect to compensation paid by a
corporation to an employee.
12. EXECUTIVE'S COVENANT AND INDEMNITY
Executive covenants and agrees that all information supplied by him
incident to Company's or his application for any life, disability income
or other insurance to fund (directly or indirectly) Company's obligations
hereunder will be true,
accurate and complete. Executive agrees to indemnify and hold Company
harmless from any loss or reduction of life, disability income or other
insurance benefits or proceeds resulting from breach of this covenant.
Company shall have the right to set off any such loss or reduction in
insurance benefits or proceeds against amounts Company would otherwise be
obligated to pay to Executive in accordance with this Agreement.
13. ARBITRATION
Any controversy, claim, dispute or difference arising out of the
interpretation, construction or performance of this Agreement shall be
settled by arbitration in the state of Oregon under the rules and auspices
of the American Arbitration Association, and judgment upon the award
entered in such arbitration may be entered in any court having
jurisdiction thereof.
14. JURISDICTION
This Agreement has been made in and shall be governed by the laws of the
state of Oregon.
15. SUCCESSORS AND ASSIGNS
All rights and duties of Company under this Agreement shall be binding on
and inure to the benefit of its successors, assigns or any company which
purchases or otherwise acquires all or substantially all of its operating
assets or outstanding shares by any method. This Agreement shall not be
assignable by Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by Executive's estate or personal representative. References
in this Agreement to Executive's personal representative or estate shall
also mean and include Executive's heirs and devisees.
16. LEGAL COUNSEL AND EXPENSES
The parties acknowledge and agree that: (a) the law firm of Xxxxxxx
Xxxxxxxxxx Xxxxxx Xxxxxx Xxxxx & Xxxxx ("GSLPSS") has acted as legal
counsel to Company, Bank, and Executive, respectively, on various matters
in the past; (b) that GSLPSS represents Executive only, and not Company or
Bank, in connection with this Agreement; (c) neither Company nor Bank has
sought or relied on any advice from GSLPSS in connection with this
Agreement; (d) prior to executing this Agreement, Company and Bank have
obtained and relied upon review by, and advice from their general legal
counsel, Tonkon, Xxxx, Xxxxx, Marmaduke & Booth, concerning Company's and
Bank's rights and obligations under this Agreement. Company shall
reimburse Executive the amount of legal fees
incurred by Executive in having this Agreement prepared by
GSLPSS.
17. ATTORNEY FEES
If any action, suit or arbitration is instituted to enforce or interpret
this Agreement, the prevailing party shall be entitled to recover from the
other party, in addition to all other rights and remedies, the prevailing
party's reasonable attorney fees in the arbitration or at trial and on
appeal.
18. INTEGRATION
Effective at October 1, 1995, this Agreement entirely superseded the
Employment Agreement dated October 1, 1991, and the 1991 Employment
Agreement shall be deemed terminated, and no further payments shall be
made under that Agreement, except for the January 15, 1996 payment with
respect to Executive's cash bonus for 1995. This Agreement contains the
entire agreement of the parties relating to the subject matter hereof, and
may not be amended except by an instrument in writing signed by the
parties.
19. NOTICES
All notices required or permitted under this Agreement shall be in writing
and may be personally served or mailed by registered or certified U.S.
mail, postage prepaid and addressed as follows, or sent to such other
address as a party shall specify by notice to the other party:
If to Company: Centennial Bancorp
000 Xxx Xxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Secretary
If to Executive: Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxx 00000
20. SEVERABILITY
If any provision of this Agreement shall be found, in any action, suit,
arbitration or other proceeding, to be invalid or ineffective, the
validity and effect of the remaining provisions shall not be affected.
21. PERFORMANCE BY COMPANY OR BANK
All compensation and benefits to be provided to Executive pursuant to this
Agreement shall be provided either by Company or by Bank, or partly by
each.
22. EXECUTION
The parties have executed this Agreement on the dates specified below,
with this Agreement to be effective at the date appearing in the caption
of this Agreement.
COMPANY: EXECUTIVE:
CENTENNIAL BANCORP
By /s/Xxxxx X. Xxxxxx /s/Xxxxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx
Director and Secretary
Date: November 22, 1995 Date: November 22, 1995
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