Exhibit 10 *(d)
Exhibit 10 *(d)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by and
between Columbia State Bank, a Washington banking corporation ("Columbia Bank")
together with Columbia Banking System, Inc., a Washington corporation ("CBSI")
(collectively, the "Employer"), and J. XXXXX XXXXXXXXX (the "Executive"). This
Agreement shall become effective as of July 1, 1998.
RECITALS
Executive has served as outside legal counsel to Employer and has substantial
knowledge of Employer's affairs and of the business of financial institutions in
general. Employer has incurred substantial growth and is looking to continue
expansion of its operations, with the assistance of Executive. Executive is
willing to so assist the Employer and to discontinue his outside legal practice,
in return for consideration provided herein.
In consideration of the mutual promises made in this Agreement, the parties
agree as follows:
AGREEMENT
1. Employment.
Employer employs Executive and Executive accepts employment with Employer on the
terms and conditions set forth in this Agreement.
2. Term.
The term of this Agreement will commence as of July 1, 1998 and will continue
until June 30, 2003, unless extended or sooner terminated as provided in this
Agreement.
3. Duties.
(a) Executive will be Vice-Chairman of Columbia Bank and CBSI. In such
capacities, and subject to the authority of the Chairman and the Board of
Directors of Columbia Bank and CBSI, as appropriate, Executive will be
responsible for strategic planning, merger and acquisition activity, legal
and regulatory compliance and will in addition render the executive
management and perform the tasks in connection with the affairs of Columbia
Bank and CBSI that are normal and customary to the positions that he will
hold.
(b) Executive will perform such other duties as may be appropriate to his
position and as may be prescribed from time to time by the Chairman or the
Board, or that are provided in the Bylaws, of Columbia Bank or CBSI. He
will also report to the Chairman.
(c) Executive will devote his best efforts and all necessary time, attention,
and effort to the business and affairs of Employer and its affiliates, as
such business and affairs now exist or hereafter may be changed or
supplemented, in order to properly discharge his responsibilities under
this Agreement. He may delegate such of his duties as he sees fit to the
other officers of CBSI or its subsidiaries.
4. Salary, Bonus, and Other Compensation.
4.1 Salary.
(a) During the term of this Agreement, Employer will pay Executive an annual
(calendar year) base salary of not less than $175,000 per year (payable at
the rate of $14,583.33 per month) beginning July 1, 1998.
(b) Columbia Bank will guarantee payment of any portion of Executive's
compensation that may be allocated to a subsidiary of CBSI.
(c) If this Agreement terminates prior to June 30, 2003, then Employer will pay
Executive such greater or lesser amount of the agreed compensation as
provided in Section 5.
4.2 Bonus. Executive will be eligible to participate in the bonus pools, if
any, that the Board of Columbia Bank or CBSI may establish for senior
executives, either under an executive incentive plan or otherwise.
4.3 1998 Restricted Stock Award.
(a) Grant of Restricted Stock Award. In order to further incent Executive in
his employment as a senior executive officer, CBSI hereby grants and issues
to and in the name of the Executive as a Restricted Stock Award a total of
ten thousand (10,000) shares of the no par value common stock of CBSI (the
"1998 Shares"). The date of grant is April 22, 1998.
(b) Consideration for Issuance of 1998 Shares. In consideration for the
issuance of the 1998 Shares, the Executive agrees to become Vice Chairman
effective July 1, 1998 and to remain as an active executive officer and/or
Board member of CBSI and Columbia Bank from July 1, 1998, through the
period the 1998 Shares are subject to the escrow, as provided herein.
Should the Executive fail, without the express approval of the Committee,
to remain in such capacity, the 1998 Shares will be redelivered by the
Escrow Agent to CBSI and will be canceled. CBSI will have no other remedy
for such a breach.
(c) Escrow. The certificate(s) evidencing the 1998 Shares shall be deposited
in escrow immediately upon issuance by CBSI. Columbia Bank shall act as
Escrow Agent and, as such, shall hold the 1998 Shares subject to delivery
to the Executive or redelivery to CBSI in its corporate capacity, all in
accordance with the terms of this Agreement. The Executive hereby grants
an irrevocable power of attorney to the Escrow Agent to transfer and
deliver the 1998 Shares and the stock certificate(s) evidencing the same in
accordance with the terms and provisions of this Agreement and the
directions of the Board of Directors or the Committee.
(d) Escrow Stock Not Transferable. No transfer, pledge or other disposition of
the 1998 Shares may be made by the Executive so long as they are held under
and remain subject to the escrow.
(e) Term of Escrow. The 1998 Shares shall be subject to escrow until April 22,
2003 unless sooner terminated in accordance with the terms of this
Employment Agreement.
(f) Dividends and Voting Rights. During the period while the 1998 Shares are
held in escrow, all dividends payable with respect the such 1998 Shares
shall be paid by the Escrow Agent directly to the Executive and the
Executive shall be entitled to exercise all voting rights with respect to
such 1998 Shares, all in the same manner and to the full extent as though
such 1998 Shares were held by the Executive free of the escrow.
(g) Release of Stock From Escrow. 1998 Shares held in escrow pursuant to this
Agreement shall be released from such escrow by the delivery of the stock
certificate(s) evidencing such 1998 Shares to the Executive (or, in the
case of death or disability of the Executive, to the Executive's estate or
legal guardian) at the earlier of:
(i) April 22, 2003;
(ii) The mandatory retirement of Executive from service as a director, as
provided in Section 2.3 of CBSI's Bylaws and Section 2.1 of Columbia
Bank's Bylaws;
(iii) The death or disability (as defined below) of the Executive;
(iv) The determination by the Board of Directors or the Committee to authorize
the release of such 1998 Shares to the Executive upon the occurrence of
any event that the Board or Committee determines to warrant such release;
or
(iv) The occurrence of a change in control, as defined in Section 7.2 of this
Agreement.
(h) Termination of Service/Forfeiture of 1998 Shares. In the event of the
termination of service as an active executive officer and/or Board member
of CBSI or Columbia Bank during the period that the 1998 Shares are held in
escrow (and the 1998 Shares are not then released pursuant to the
provisions of Section 4.3(g) above), such 1998 Shares shall be forfeited to
CBSI and all rights of the Executive with respect thereto terminated,
unless, in the case of termination by act of Employer, the Board of
Directors or the Committee, within thirty (30) days following such
termination, authorizes the release of such 1998 Shares to Executive. Upon
the expiration of such thirty (30) day period without action by the Board
or Committee to release such 1998 Shares to the Executive, the 1998 Shares
shall be deemed forfeited and the stock certificate(s) evidencing the same
shall be redelivered to CBSI, whereupon they shall be canceled and retired.
(i) Reliance by Escrow Agent. The Escrow Agent shall have no liability for
action in reliance upon any instructions delivered to it and believed in good
faith by it to be from the Board or the Committee.
4.4 Benefits. In addition to the base salary and bonus payable or
potentially payable to Executive pursuant to this Section 4, Executive will be
entitled to receive benefits similar to those offered to other senior executives
of Employer.
5. Termination of Agreement.
5.1 Early Termination.
(a) This Agreement may be terminated at any time by the Board of Employer or by
Executive, and it shall terminate upon Executive's death or disability. Any
termination by the Board of Employer other than termination for cause (as
defined below) shall not prejudice Executive's right to compensation or
other benefits under this Agreement. Except as provided in Section 7, if
Executive voluntarily terminates his employment before June 30, 2003 he
will be entitled to such payments as he would have the right to receive
upon termination for cause under subsection 5.1 (b).
(b) Except as provided in Section 7, if Employer terminates this Agreement
without cause, Employer shall pay Executive upon the effective date of such
termination all salary earned, benefits accrued and all reimbursable
expenses hereunder incurred through such termination date and, in addition,
liquidated damages in an amount equal to the greater of (i) two years'
salary, or (ii) salary for the then-remaining term of the Agreement payable
hereunder; in such event, all forfeiture provisions regarding the
Restricted Stock Award shall lapse. If Employer terminates this Agreement
for cause, Employer shall pay Executive upon the effective date of such
termination only such salary earned, benefits accrued and expenses
reimbursable hereunder incurred through such termination date. Executive
shall have no right to receive compensation or other benefits for any
period after termination for cause.
(c) For purposes of this Agreement, the term "cause" shall mean (i) willful
misfeasance or gross negligence in the performance of his duties; (ii)
conduct demonstrably and significantly harmful to Employer (including
willful violation of any final cease and desist order applicable to
Employer or a financial institution subsidiary); or (iii) conviction of a
felony. For purposes of this Agreement, "disability" shall mean a
medically reimbursable physical or mental impairment that may be expected
to result in death, or to be of long, continued duration, and that renders
Executive incapable of performing the duties required under this Agreement.
The Board or the Committee, acting in good faith, shall make the final
determination of whether Executive is suffering under any disability as
herein defined and, for purposes of making such determination, may require
Executive to submit himself to a physical examination by a physician
mutually agreed upon by Executive and the Board or the Committee at
Employer's expense.
(d) In the event of termination of this Agreement by reason of Executive's
death or disability, all forfeiture provisions regarding the Restricted
Stock Award shall lapse.
5.2 Obligations. Except as otherwise provided in Section 7 or in a
particular option grant, Executive's rights, if any, to vested but unexercised
stock options will continue for a period of one year after early termination,
other than termination for cause. In the case of termination for cause,
Executive's unvested stock options, if any, shall terminate immediately.
6. Restrictive Covenant.
6.1 Noncompetition.
(a) Executive agrees that except as otherwise set forth in this Agreement, he
will not, during the term of this Agreement and for a period of two years
after the later of (i) expiration of the term of this Agreement, or (ii)
completion of service as an active executive officer and/or Board member of
CBSI or
Columbia Bank, directly or indirectly, become interested in, as
principal shareholder, director, or officer, any financial institution
(other than an institution controlled by, controlling, or under common
control with Employer and its affiliates) that competes within the State of
Washington with Employer or any of its affiliates, with respect to
activities of the type performed by such companies within such service area
immediately prior to Executive's termination.
(b) The restrictions concerning competition after termination as contained in
this Section 6.1 shall apply only in the event that Executive voluntarily
terminates his employment with Employer without good reason. For purposes
of this Agreement, termination for "good reason" shall mean termination by
Executive as a result of any material breach of this Agreement by Employer,
or any diminution of duties of Executive by the Board of either Columbia
Bank or CBSI. The provisions restricting competition by Executive may be
waived by the Employer.
6.2 Noninterference. During the noncompetition period described in Section
6.1, Executive shall not solicit or attempt to solicit any other employee of
Employer or its affiliates to leave the employ of those companies, or in any way
interfere with the relationship between Employer and any other employee of
Employer or its affiliates.
6.3 Interpretation. If a court or any other administrative body with
jurisdiction over a dispute related to this Agreement should determine that the
restrictive covenants set forth above is unreasonably broad, the parties
authorize such court or administrative body to narrow the covenants so as to
make it reasonable, given all relevant circumstances, and to enforce such
revised covenants. The covenants in this paragraph shall survive termination of
this Agreement.
7. Change of Control.
7.1 Benefits. The parties recognize that a "change of control" of Employer
(as defined in Section 7.2) could be detrimental to Executive's continued
employment. Accordingly, in order to give further assurances to the Executive
to enter into this Agreement, if:
(a) There is a change of control of CBSI; and either
(b) Within 730 days of such change in control, Executive terminates his
employment with Employer; or
(c) At any time from and after sixty days prior to the public announcement by
Employer of a transaction that will result in the change of control,
Employer (or its successor) terminates Executive's employment without
cause, then Executive, as of the date of termination of his employment,
subject to the remaining provisions of this Section 7.1, shall be paid or
provided with: (i) continued payment of his base salary and all benefits
provided for in this Agreement until two years following termination or
June 30, 2003, whichever is longer; and (ii) vesting of all stock options
and lapse of all restrictions with respect to the Restricted Stock Award
shall occur. The provisions of this Section 7.1 shall survive expiration
of the term of the Agreement.
7.2 Definitions. For purposes of this Agreement, the term "change of
control" shall mean the occurrence of one or more of the following events:
(a) One person or entity acquiring or otherwise becoming the owner of twenty-
five percent or more of CBSI's outstanding common stock;
(b) Replacement of a majority of the incumbent directors of CBSI or Columbia
Bank by directors whose elections have not been supported by a majority of
the Board of either company, as appropriate; or
(c) Dissolution, or sale of fifty percent or more in value of the assets, of
either CBSI or Columbia Bank.
7.3 Reimbursement. In the event the provisions of this Section 7.3 result in
imposition of a tax on Executive under the provisions of Internal Revenue Code
(S) 4999, Employer agrees to reimburse Executive for the same, exclusive of any
tax imposed by reason of receipt of reimbursement under this Section 7.3.
8. Miscellaneous.
8.1 This Agreement contains the entire agreement between the parties with
respect to Executive's employment with Employer and his covenant not to compete
with Employer and its affiliates, and is subject to modification or amendment
only upon amendment in writing signed by both parties.
8.2 This Agreement shall bind and inure to the benefit of the heirs, legal
representatives, successors, and assigns of the parties, except that Employer's
rights and obligations may not be assigned. The provisions of Section 6.1 of
this Agreement are intended to confer upon CBSI and its subsidiaries and
affiliates the benefits of Executive's covenant not to compete.
8.3 If any provision of this Agreement is invalid or otherwise unenforceable,
all other provisions shall remain unaffected and shall be enforceable to the
fullest extent permitted by law.
8.4 This Agreement is made with reference to and is intended to be construed
in accordance with the laws of the State of Washington. Venue for any action
arising out of or concerning this Agreement shall lie in Xxxxxx County,
Washington. In the event of a dispute under this Agreement not involving
injunctive relief, the dispute shall be arbitrated pursuant to the Superior
Court Mandatory Arbitration Rules ("MAR") adopted by the Washington State
Supreme Court, irrespective of the amount in controversy. This Agreement shall
be deemed as stipulation to that effect pursuant to MAR 1.2 and 8.1. The
arbitrator, in his or her discretion, may award attorney's fees to the
prevailing party or parties.
8.5 Any notice required to be given under this Agreement to either party
shall be given by personal service or by depositing a copy thereof in the United
States registered or certified mail, postage prepaid, addressed to the following
address, or such other address as addressee shall designate in writing:
Employer: 0000 Xxxxxxxx
Xxxxxx, XX 00000
Executive: 00 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
This Agreement is dated as of May 27, 1998.
COLUMBIA STATE BANK
By: /s/ W.W. Philip
---------------
W.W. Philip
Its: Chairman, President and
Chief Executive Officer
COLUMBIA BANKING SYSTEM, INC.
By: /s/ W.W. Philip
---------------
W.W. Philip
Its: Chairman, President and Chief Executive Officer
/s/ J. Xxxxx Xxxxxxxxx
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J. Xxxxx Xxxxxxxxx
