AMENDMENT TO EMPLOYMENT AGREEMENT
In consideration for the mutual covenants herein contained, the parties
hereby amend the Employment Agreement dated as of July 29, 1997 between
Centennial Bank, an Oregon banking corporation (the "Employer") and Xxxxxxxx
(Xxx) X. Xxxxxxxxx (the "Executive") (herein the "Agreement").
RECITALS
Employer and its parent, Centennial Bancorp, have entered into an
Agreement and Plan of Reorganization (the "Merger") with Umpqua Holdings
Corporation and Umpqua Bank providing for the Merger of Employer into Umpqua
Bank.
AGREEMENT
The parties agree to amend the Agreement as follows:
1. Section 2.2 of the Agreement shall be amended to read in its
entirety as follows:
"Section 2.2 Term.
The term of the Executive's employment under this
Agreement shall continue to the later of (i) December 31, 2002
or (ii) the earlier of the termination or the consummation of
the Merger." If the term extends beyond December 31, 2002, the
Executive shall be entitled to a monthly salary equal to his
base salary earned in December, 2002 and which shall include
no bonus or incentive compensation.
2. Section 3.3.1 of the Agreement shall be amended to read in its
entirety as follows:
"3.3.1 In the event of a Change of Control of the
Employer or Centennial Bancorp, Executive shall be entitled to
receive on a deferred basis as set forth in this Section 3.3.1
an amount equal to 2.99 x "Executive's Base Amount," less the
value of the acceleration of unvested stock options provided
in Section 3.5, such value to be determined in accordance with
IRC 280G. "Executive's Base Amount" of compensation will be
determined according to IRC 280G and is currently estimated to
approximate $276,046. Immediately following the Change of
Control, such amount will be placed by Employer in a "Rabbi
Trust" to secure the payments required in this Section 3.3.1.
The terms of the Rabbi Trust will be consistent with the model
provisions contained in IRC Rev. Proc. 92-64, 1992-2 CB 422.
The Rabbi Trust will provide for an independent third-party
trustee, shall be irrevocable and shall be invested in such
securities and other investments as selected by the trustee.
All costs of forming and administering the trust will be paid
from the contributions to,
principal of, or interest earned by the trust. Payments from
the trust will commence in January of 2007 and will be made to
the Executive as follows: one tenth of the trust balance as of
the preceding December 31 will be paid in January of the first
year, one-ninth of the trust balance as of the preceding
December 31 will be paid in January of the second year,
one-eighth of the trust balance as of the preceding December
31 will be paid in January of the third year, etc., until the
entire amount of the Trust is paid in January 2016. In the
event of the death of Executive, all subsequent payments shall
be made to the party designated in a written notice by
Executive to Employer and in the event such party is deceased
or is an entity and is no longer in existence or Executive has
failed to provide Employer with written notice, then such
payments shall be made to the Executive's estate or as
thereafter directed by written notice of the estate to
Employer. At the time of a Change of Control, Employer agrees
to sell to Executive and Executive agrees to purchase the
Employer owned automobile currently used by Executive at the
vehicle's Xxxxx Blue Book wholesale value."
3. Add three new sections to the Agreement to read in their
entirety as follows:
3.3.3 In the event Executive becomes entitled to a payment or
benefit pursuant to the terms of this Agreement or of any
other plan, arrangement or agreement (collectively, the
"Payments") of the Employer or its successor (or any
affiliate) (collectively, the "Employer"), and the Employer's
Auditor determines that the Payments result in "excess
parachute payments" under section 280G of the Code, then
Executive shall receive, instead of the Payments, aggregate
payments equal to the Reduced Amount, if such Reduced Amount
would result in net after-tax payments to Executive that are
greater than the net after-tax payments he would have received
without regard to this section. For purposes of this
subsection 3.3.3, the "Reduced Amount" shall be the amount,
expressed as a present value, that maximizes the aggregate
present value of the payments without causing any payment to
be nondeductible by the Employer under section 280G of the
Code and "Employer's Auditor" shall mean the independent
auditors retained most recently prior to the transaction
implicating Section 280G of the Code by the Employer, or, if
the Employer is not the surviving entity following the Change
in Control, by the Employer's successor (or any affiliate).
3.3.4 If the amount of the aggregate payments to Executive
must be reduced under section 3.3.3, then Executive shall
direct in which order the payments are to be reduced, but no
change in the timing of any payment shall be made without the
consent of the Employer. As a result of uncertainty in the
application of sections 280G and 4999 of the Code at the time
of an initial determination by the Employer's Auditor, it is
possible that a payment will have been made by the Employer
that should
not have been made (an "Overpayment") or that an additional
payment that will not have been made by the Employer could
have been made (an "Underpayment"). In the event that the
Employer's Auditor, based upon the assertion of a deficiency
by the Internal Revenue Service against the Employer or
Executive that the Employer's Auditor believes has a high
probability of success, determines that an Overpayment has
been made, such Overpayment shall be treated for all purposes
as a bilateral error subject to adjustment which Executive
shall repay to the Employer, together with interest at the
applicable federal rate specified in section 7872(f)(2) of the
Code. In the event that the Employer's Auditor determines that
an Underpayment has occurred, such Underpayment shall promptly
be paid or transferred by the Employer to, or for the benefit
of, Executive, together with interest at the applicable
federal rate specified in section 7872(f)(2) of the Code.
3.3.5 Notwithstanding the provisions of Sections 3.3.3 or
3.3.4, no amount shall be reduced or shall be payable by
Executive to the Employer if and to the extent that such
payment would not reduce the amount that is nondeductible
under section 280G of the Code or is subject to an excise tax
under section 4999 of the Code or, without the consent of
Executive, were to exceed $10,000.
4. Executive acknowledges that he has relied upon his own legal counsel
with respect to all matters addressed in this amendment. Upon payment by
Employer to the trustee of the amounts provided by section 3.3.1 of the
Agreement, Executive will look only to the trustee and the funds in the Rabbi
Trust with respect to the Change of Control payment and any earnings thereon,
and hereby releases Employer for any acts, errors or omissions of the trustee;
except to the extent any claim of a creditor of Employer has been satisfied out
of the assets of the Rabbi Trust.
5. Except as revised in this amendment, all other terms of the
Agreement remain in full force and effect.
Dated September 23, 2002
Centennial Bank
By: /s/ Xxxx Xxxxxxxx /s/ Xxx X. Xxxxxxxxx
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Xxxx Xxxxxxxx, Xxxxxxxx (Xxx) X. Xxxxxxxxx
Chairman, Centennial Bancorp Executive
By: /s/ Xxx Xxxxxxxx
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Xxx Xxxxxxxx,
Chairman, Centennial Bank
Employer
