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Exhibit 10.4(b)
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 W.W. PHILIP (the "Executive").
Except for the provisions of Section 4.3, this Agreement shall become effective
as of January 1, 1997.
RECITALS
1. Pursuant to the terms and conditions of an Amended Employment
Agreement effective December 30, 1993 and as amended effective December 29, 1995
(the "Original Agreement"), Executive is serving as the President and Chief
Operating Officer of CBSI and the President and Chief Executive Officer of
Columbia Bank. The term of the original Agreement expires on December 31, 1996.
2. Executive and the Board of Directors of CBSI and Columbia Bank
have both indicated their desire to extend the term of Executive's service from
December 31, 1996 to December 31, 1998, and to enter into this Agreement on the
terms and conditions as set forth below.
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 January 1, 1997, the
expiration date of the Original Agreement, and will continue until December 31,
1998, unless extended or sooner terminated as provided in this Agreement;
provided that the Restricted Stock Award described in Section 4.3 shall be
granted effective August 28, 1996.
3. Duties.
(a) Executive will be President and Chief Executive Officer of Columbia
Bank and President and Chief Operating Officer of CBSI. In such capacities, and
subject to the authority of the Board of Directors of Columbia Bank and CBSI, as
appropriate, Executive will render the executive management and perform the
tasks in connection with the affairs of Columbia Bank and CBSI
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that are normal and customary to the positions that he will hold. Executive will
work closely with and report to the Chief Executive Officer of CBSI.
(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 Board, or that
are provided in the Bylaws, of Columbia Bank or CBSI. He will be the person to
whom all other officers of Columbia Bank and CBSI report.
(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 base salary of not less than $175,000 per year beginning
January 1, 1997.
(b) CBSI 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 December 31,
1998, 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 Restricted Stock Award.
(a) Grant of Restricted Stock Award. In order to reward
Executive for his outstanding prior service and to incent Executive to continue
as a director following 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 Twenty Thousand (20,000) shares of the no par value
common stock of CBSI (the "Shares"). The date of grant is August 28, 1996.
(b) Consideration for Issuance of Shares. In
consideration for the issuance of the Shares, the Executive agrees to remain as
an active executive officer and/or Board member of CBSI and Columbia Bank from
August 28, 1996 through the period the Shares are subject to the escrow, as
provided herein. Should the Executive fail, without the express approval of the
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Board of Directors or the Personnel and Compensation Committee of the Board of
Directors (the "Committee"), to remain in such capacity, the 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 Shares
shall be deposited in escrow immediately upon issuance by CBSI. Columbia Bank
shall act as Escrow Agent and, as such, shall hold the 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
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 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 Shares shall be subject to escrow
until August 28, 2001 unless sooner terminated in accordance with the terms of
this Employment Agreement.
(f) Dividends and Voting Rights. During the period while
the Shares are held in escrow, all dividends payable with respect the such
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
Shares, all in the same manner and to the full extent as though such Shares were
held by the Executive free of the escrow.
(g) Release of Stock From Escrow. Shares held in escrow
pursuant to this Agreement shall be released from such escrow by the delivery of
the stock certificate(s) evidencing such Shares to the Executive (or, in the
case of death or disability of the Executive, to the Executive's estate or legal
guardian) at:
(i) August 28, 2001;
(ii) The death or disability (as defined below)
of the Executive;
(iii) The determination by the Board of Directors
or the Committee to authorize the release of such 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.
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(h) Termination of Service/Forfeiture of 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 Shares are held in escrow (and the Shares are not
then released pursuant to the provisions of Section 4.3(g)
above), such 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 Shares to Executive.
Upon the expiration of such thirty (30) day period without action
by the Board or Committee to release such Shares to the
Executive, the 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, including participation in Employer health
insurance plans.
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 December
31, 1998 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 and all reimbursable
expenses hereunder incurred through such termination date and, in addition,
liquidated damages in an amount equal to the greater of two years' salary or
salary for the then-remaining term of the Agreement (without regard to the term)
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 and expenses reimbursable hereunder incurred through
such termination date. Executive shall have no right to receive
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compensation or other benefits for any period after termination for cause.
(c) For purposes of this Agreement, the term "cause"
shall mean willful misfeasance or gross negligence in the performance of his
duties, 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 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 pursuant to Section 4.3(b)
of this Agreement, 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
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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 for a period of two years following termination;
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 Definition. For purposes of this Agreement, the
term "change of control" shall mean the occurrence of one or more of the
following events:
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(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 Section 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. Deferred Compensation Arrangement. Executive will be entitled
to defer the entire salary and bonus, if any, provided in Sections 4.1 and 4.2
of this Agreement, for the years 1997 and 1998, which amounts shall accrue
interest at the rate paid on 2- year Treasury bills at January 1 of each year,
until paid, plus 2% compounded annually, all in accordance with a nonqualified
deferred compensation agreement to be entered into between the parties.
9. Miscellaneous.
9.1 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.
9.2 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.
9.3 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.
9.4 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
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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.
9.5 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: 000 Xxxxx Xxxxx Xxxx X.X.
--------- Xxxxxx, XX 00000
This Agreement is dated as of September 25, 1996.
COLUMBIA STATE BANK
By:___________________________
X.X. Xxxx
Chairman of the Board
COLUMBIA BANKING SYSTEM, INC.
By: /s/ X.X. Xxxx /s/ W.W. Philip
__________________________ _____________________________
X.X. Xxxx W.W. Philip
Chairman and Executive
Chief Executive Officer
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