1
Exhibit 10.4
CONFIDENTIAL
------------
SALARY CONTINUATION AGREEMENT
THIS SALARY CONTINUATION AGREEMENT ("Agreement") is dated as of
December 1, 1996 (the "Effective Date"). The parties to the Agreement
("Parties"') are WEST COAST BANCORP, an Oregon corporation ("Bancorp"), its
wholly-owned subsidiary COMMERCIAL BANK, an Oregon state banking corporation
("Bank") (collectively, "Company"), and XXXXX X. XXXXXX ("Executive").
A. Company currently receives the exclusive services of certain employees
including Executive, and both Company and Executive desire to continue
Executive's services in the event of a change in the control of
Bancorp, thereby allowing Company to maximize the benefits obtainable
from any such change.
B. To encourage Executive's continued services, Company desires to
provide a salary continuation benefit to Executive.
In consideration of the mutual promises, covenants, agreements and
undertakings contained in this Agreement, the parties agree as follows:
1. EFFECTIVE DATE AND TERM. As of the Effective Date, this Agreement
shall be a binding obligation of the parties, not subject to
revocation or amendment except by mutual consent or in accordance with
its terms. The term of this Agreement ("Term") shall commence as of
the Effective Date and shall end one (1) year thereafter, provided
however, that this Agreement shall be automatically renewed for
successive one year periods, unless the Board of Directors of either
the Bank or Bancorp do not approve such renewal and provide written
notice to Executive of such event, or Executive gives written notice
to Company not less than thirty (30) days prior to any such
anniversary date of Executive's election not to extend the term beyond
its then scheduled expiration date. Notwithstanding the preceding, if
a definitive agreement providing for a Change in Control (as defined
below) is entered into on or before the expiration of the Term, the
term of this Agreement shall be extended to twelve (12) months after
the consummation of such Change in Control.
2. COMMITMENT OF EXECUTIVE. In the event that any person extends any
proposal or offer which is intended to or may result in a Change in
Control, as defined below (a "Change in Control Proposal"), Executive
shall, at Company's request, assist Company in evaluating such
proposal or offer. Further, as a condition to receipt of the Salary
Continuation Payment defined below, Executive agrees not to resign
Executive's position with Company during any period from the receipt
of a specific Change in Control Proposal up to the consummation or
abandonment of the transaction contemplated by such Proposal.
3. SALARY CONTINUATION PAYMENT.
(a) Amount of Payment--Termination Event After Change in Control.
Except as otherwise provided in this Section, in the case of a
Termination Event After a
71
2
Change in Control, as defined in Section 4, Executive shall
receive a salary continuation payment (the "Salary
Continuation Payment") equal to the sum of the Regular Salary
Continuation Payment and the Bonus Continuation Payment. The
Regular Salary Continuation Payment shall equal Executive's
regular monthly salary in effect as of the date of termination
of employment (as reportable on Executive's IRS Form W-2, but
including the amount of any voluntary deferrals of salary, and
excluding any expense allowances or reimbursements, any
bonuses, any gain from exercise of stock options, or any other
similar non-recurring payments) which would be payable to
Executive but for the termination from the date of termination
of Executive's employment to the date twelve (12) months after
the Change in Control. The Bonus Continuation Payment shall
equal (i) the most recent annual bonus paid to Executive,
multiplied by (ii) (x) the number of days during which
Executive was employed but as to which no annual bonus has
been paid plus the number of days from the date of termination
of employment to the date twelve (12) months after the Change
in Control divided by (y) 365.
(b) Limitation on Payment. Notwithstanding anything in this
Agreement to the contrary, the Salary Continuation Payment
shall not exceed an amount equal to One Dollar ($1.00) less
than the amount which would cause the payment, together with
any other payments received from Company, to be a "parachute
payment" as defined in Section 280G(b)(2)(A) of the Internal
Revenue Code.
4. TERMINATION EVENT AFTER CHANGE IN CONTROL. A Termination Event After
a Change in Control shall be deemed to occur upon, and only upon, one
or more of the following:
(a) Termination of Executive's employment by Executive for Good
Reason (as defined herein) within twelve (12) months after a
Change In Control;
(b) Termination of Executive's employment by Company other than
for Cause, Disability, or Retirement (each of which is defined
below) within twelve (12) months after a Change In Control; or
(c) Termination of Executive's employment by Company other than
for Cause, Disability, or Retirement prior to a Change In
Control if such termination occurs either (i) on or after
announcement, by Company or any other party, of a contemplated
Change In Control or an intended Change In Control, or (ii) on
or after the date a contemplated or intended Change In Control
should have been announced in conformity with applicable
securities or other laws, but only if in either case a Change
In Control occurs within twelve (12) months after such
termination of Executive's employment.
5. DEFINITIONS.
(a) Cause. "Cause" shall mean only any one or more of the
following:
(i) Willful misfeasance or gross negligence in the
performance of Executive's duties; or
(ii) Conviction of a crime in connection with such duties.
72
3
(b) Disability. "Disability" shall mean a physical or mental
impairment which renders Executive incapable of substantially
performing the duties required under this Agreement, and which
is expected to continue rendering Executive so incapable for
the reasonably foreseeable future.
(c) Retirement. "Retirement" shall mean voluntary termination by
Executive in accordance with Company's retirement policies,
including early retirement, if applicable to their salaried
employees.
(d) Good Reason. "Good Reason" shall mean only any one or more of
the following:
(i) Any reduction of Executive's salary or any reduction
or elimination of any compensation or benefit plan
benefiting Executive, which reduction or elimination
is not of general application to substantially all
employees of Company or such employees of any
successor entity or of any entity in control of
Company;
(ii) A relocation or transfer of Executive's place of
employment which would reasonably require Executive
to commute more than twenty (20) miles each way from
Executive's principal residence; or
(iii) A material diminution in the responsibilities or
duties of Executive.
(e) Change In Control. "Change in Control" shall mean either of
the following:
(i) A Person or Entity (as defined below) acquiring or
otherwise becoming the owner (as a result of a
purchase, merger, stock exchange, or otherwise) of
more than fifty percent (50%) of the outstanding
common stock of Company, or
(i) The merger of Company into any corporation, or the
merger of any corporation into Company, where more
than fifty percent (50%) of the stock of such
corporation or Company, as the case may be, (the
"Surviving Corporation") is owned by other than the
owners of the common stock of Company prior to such
merger.
(a) Person or Entity. "Person or Entity" shall include any one or
more persons and/or entities acting in concert with respect to
their interests in the Surviving Corporation.
1. OTHER COMPENSATION AND TERMS OF EMPLOYMENT. This Agreement is not an
employment agreement. Accordingly, except with respect to the Salary
Continuation Payment, this Agreement shall have no effect on the
determination of any compensation payable by Company to Executive, or
upon any of the other terms of Executive's employment with Company.
The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to Executive upon a
termination of employment with Company pursuant to employee benefit
plants of Company or otherwise.
73
4
2. WITHHOLDING. All payments required to be made by Company hereunder to
Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as Company may reasonably
determine should be withheld pursuant to any applicable law or
regulation.
3. ASSIGNABILITY. Company may assign this Agreement and its rights
hereunder in whole, but not in part, to any corporation, bank or other
entity with or into which Company may hereafter merge or consolidate
or to which Company may transfer all or substantially all of its
assets, if in any such case said corporation, bank or other entity
shall by operation of law or expressly in writing assume all
obligations of Company hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or
its rights hereunder. Executive may not assign or transfer this
Agreement or any rights or obligations hereunder.
4. GENERAL PROVISIONS.
(a) Choice of Law. This Agreement is made with reference to and
is intended to be construed in accordance with the laws of the
State of Oregon.
(b) Arbitration. Any dispute, controversy or claim arising out of
or in connection with, or relating to, this Agreement or any
breach or alleged breach hereof, shall, upon the request of
any party involved, be submitted to, and settled by,
arbitration pursuant to the rules then in effect of the
American Arbitration Association (or under any other form of
arbitration mutually acceptable to the parties so involved).
Any award rendered shall be final and conclusive upon the
parties and a judgment thereon may be entered in the highest
court of the forum having jurisdiction. The arbitrator shall
render a written decision, naming the substantially prevailing
party in the action, and shall award such party all costs and
expenses incurred, including reasonable attorneys' fees.
(c) Attorney Fees. In the event of any breach of or default under
this Agreement which results in either party incurring
attorney or other fees, costs or expenses (including in
arbitration), the prevailing party shall be entitled to
recover from the non-prevailing party any and all such fees,
costs and expenses, including attorney fees.
(d) Successors. This Agreement shall be binding upon and inure to
the benefit of the Parties and each of their respective
affiliates, legal representatives, successors and assigns.
(e) Construction. This Agreement contains the entire agreement
among the Parties with respect to its subject matter, and may
be amended or modified only in a writing executed by all of
the Parties. Its language is and will be deemed to be the
language chosen by the Parties jointly to express their mutual
intent. No rule of construction based on which party drafted
the Agreement or certain of its provisions will be applied
against any party. This Agreement may be amended only in a
writing signed by the parties.
74
5
(f) Captions. The captions of the respective sections of this
Agreement have been included for convenience of reference
only. They shall not be construed to modify or otherwise
affect in any respect any of the provisions of the Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts by the parties hereto. All counterparts shall be
construed together and shall constitute one Agreement.
EXECUTED by each of the parties effective as of the date first stated
above.
BANK:
COMMERCIAL BANK
By:______________________________________
Its:_______________________________
BANCORP:
WEST COAST BANCORP,
an Oregon corporation
By:______________________________________
Its:_______________________________
EXECUTIVE:
_________________________________________
XXXXX X. XXXXXX
75
