EXECUTIVE EMPLOYMENT AND
COMPENSATION AGREEMENT
Date: Effective as of March 31, 1999
Parties: South Umpqua Bank, a bank chartered under the laws of the State of
Oregon, its subsidiaries and affiliates (the "Company")
and
Xxxxxx X. Xxxxxxxx (the "Executive")
Agreement: The Company and the Executive agree as follows:
1. Effective Date Of Agreement
This Agreement is effective as of March 31, 1999.
2. Term Of Employment
The term of this Agreement shall commence as of March 31, 1999 and shall
continue until the close of the Company's business on November 2, 2001 ("Term
of Employment").
3. Obligation Of The Parties To Negotiate In Good Faith
Upon the expiration of the Term of Employment, the parties agree to
negotiate with one another in good faith regarding another Executive
Employment and Compensation Agreement. Upon the expiration of the Term of
Employment, the Executive shall be deemed to be an "employee at will."
4. Employment Position, Duties, And Responsibilities
The Company agrees to continue the Executive in its employ, and the
Executive agrees to remain in the employ of the Company for the Term of
Employment in the position and with the duties and responsibilities of a
Senior Vice President and Chief Financial Officer of the Company and shall
report to the President and Chief Executive Officer of the Company. At all
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times during the Term of Employment the Executive shall hold a title and
position of responsibility commensurate with the Executive's title and
position on March 31, 1999.
5. Compensation
During the Term of Employment, the Executive shall be paid by the Company
as follows:
a. Annual Base Salary
A minimum annual base salary of $104,500("Base Salary"), payable at
the rate of not less than $8,708.34 per month, for the remainder of the
calendar year 1999, and for the remainder of the Term of Employment,
together with such increases as may be awarded by the Company from time
to time in accordance with the Company's regular practices of salary
increases for executives; plus
b. Annual Executive Performance Bonus
An annual executive performance bonus under the Company's Executive
Bonus Compensation Plan or such equivalent successor plan as may be
adopted by the Company from time to time ("Performance Bonus").
c. Retirement Plans
The Executive shall be a full and vested participant in all of the
Company's retirement, and deferred compensation plans, if any
("Retirement Plans") to the extent permitted by such plans; plus
d. Fringe Benefits
The Executive shall be entitled to a monthly car allowance of $500,
payment or reimbursement of: club dues and initiation fees for Roseburg
Golf and Country Club and the Multnomah Athletic Club; other club dues or
dues for civic organizations which in the opinion of the Board of
Directors are beneficial to the Company; and Executive's reasonable
expenses incurred by the Executive in the conduct of his duties.
6. Employee Benefit Plans
In addition to the payments and other benefits provided for in this
Agreement, the Executive shall be entitled to participate in the Company's
Incentive Stock Option Plan, Non-Qualified Stock Option Plan, and the
Executive Profit Sharing and Thrift Plan, if any, to the extent permitted by
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such plans. If no such plans are in effect as of the date of this Agreement,
then the Executive shall become a participant as soon as such plan or plans
become operative.
Nothing in this Agreement shall preclude the Company from amending or
terminating any employee benefit plan or practice.
During the Term of Employment, the Executive's benefits set forth in this
Agreement shall not be less than those benefits available to the Executive as
of the date of this Agreement. The nature, level, and extent of such benefits
to which Executive is entitled may be reduced only with the Executive's
written consent.
7. Termination Of Executive's Employment During the Term Of Employment
a. Termination Of The Executive's Employment By The Company For
"Cause"
In the event the Executive's employment is terminated by the Company
during the Term of Employment for "cause" (as defined in Section 9), the
Executive shall be entitled to receive payment only for those sums,
benefits, and other fringe benefits which have accrued to and are due and
owing the Executive as of the effective date of the termination of his
employment ("Effective Date"). Executive shall not be entitled to any
other sums for the remainder of the Term of Employment.
b. Termination Of The Executive's Employment By The Company Within
One Year After Hiring A New Chief Executive Officer or
President
In the event that the Company hires a new Chief Executive Officer or
President and the Executive's employment is terminated by the Company
within one (1) year following the date of employment of the new Chief
Executive Officer or President, then the Executive shall be entitled to
receive and the Company shall be obligated to pay the Executive:
1. All compensation, benefits, and other fringe benefits
accrued to the Effective Date;
2. A minimum amount equal to nine (9) months' Base Salary as
defined in Section 5.(a);and
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3. An amount equal to the projected Performance Bonus as
defined in Section 5.b. for the year in which the Effective Date
occurred, pro-rated based upon the number of months during such year
in which the Executive was employed. For example, if Executive's
employment was terminated after six months of a bonus year, and the
projected bonus for the Executive for that year was $20,000, then
the Executive would be entitled to receive the sum of $10,000 as the
projected pro-rated bonus for that year.
4. Health insurance benefits available to the Executive on the
Effective Date shall continue in full force and effect for the
maximum time allowed by law following the Effective Date.
c. Payment of Sums Due Executive
All sums due the Executive pursuant to this Section 7 shall be
paid by the Company to the Executive in full, in cash, or the
equivalent of cash, within five days from the Effective Date.
8. Termination Of Employment In Connection With A Change In Control Of
Company
The provisions of this Section 8 shall govern all severance or
termination payments to the Executive in the event that the Company is subject
to a "change in control" (as defined in Section 10).
a. Termination of Employment Of The Executive By The Company Or
The Company's Successor In Interest, In Anticipation Of, In
Connection With, Or After A Change In Control
In the event that the Company, its successor in interest by
merger, its transferee, or the new owner of a controlling interest
in the Company's stock, terminates the Executive's employment or
causes the termination of the Executive's employment during the Term
of Employment in anticipation of, in connection with, or after a
change in control has occurred, then the Company, its successor in
interest by merger, its transferee, or the new owner of its stock,
as the case may be, shall pay the Executive an amount equal to two
times the average of the total annual compensation, as defined in
Section 5.a. and b., including the Base Salary plus the Performance
Bonus, paid to the Executive during the last two full calendar years
of employment (including employment pursuant to a prior agreement
dated November 3, 1997 between the Company and the Executive).
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b. Termination Of Employment By Executive After A Change In
Control And Occurrence Of A "Triggering Event"
In the event that the Executive terminates his employment
during the Term of Employment after a change in control and a
"triggering event" (as defined in Section 10) has occurred, then the
Company, its successor in interest by merger, its transferee, or the
new owner of a controlling interest in the Company's stock, as the
case may be, shall pay the Executive the following amount: an amount
equal to two times the average of the total annual compensation, as
defined in Section 5.a. and b., including the Base Salary plus the
Performance Bonus, paid to the Executive during the last two full
calendar years of employment (including employment pursuant to a
prior agreement dated November 3, 1997 between the Company and the
Executive).
c. Payments to Executive
Executive shall be paid those amounts specified in this Section
8 in full, in cash or the equivalent of cash, five days after the
Effective Date.
d. Excess Parachute Payment
If the lump sum payment under this Section 8 of this Agreement,
either alone or together with other payments to which the Executive
is entitled to receive from the Company, would constitute an "excess
parachute payment" as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), such lump sum
severance payment shall be reduced to the largest amount that will
result in no portion of the lump sum payment under this Section 8 of
this Agreement being subject to the excise tax imposed by Section
4999 of the Code. The determination of any reduction in the lump sum
severance payment under this Section 8 of this Agreement, pursuant
to the foregoing provisions, shall be made by mutual agreement of
the Company and the Executive.
9. Definition Of "Cause"
"Cause" is defined as personal dishonesty, willful misconduct, breach of
fiduciary involving personal profit, failure to perform his stated duties as
Senior Vice President and Chief Financial Officer of the Company, or failure
of the Executive to devote his full time and undivided attention during normal
business hours to the business and affairs of the Company, (except for
reasonable vacations, illness or disability and time devoted by the Executive
to serving as a director or member of any committee or organization engaging
in charitable and community activities).
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10. Definition Of "Change In Control" and "Triggering Event"
A "change in control" is defined as any transaction, act, series of
transactions or series of acts that either:
(a) would constitute a change in control for purposes of The Bank
Act (ORS Chapters 706 through 716), the Bank Holding Company Act of 1956,
as amended, The Bank Merger Act, as amended, The Change In Bank Control
Act, as amended, or The Securities Exchange Act Of 1934, as amended,
(collectively referred to herein as the "Acts"), assuming the Company is
subject to the foregoing Acts regardless of whether the Company is
actually subject to the provisions of any such Acts;
(b) would result in any person, entity or group of persons as those
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934 (but excluding an Employee Stock Ownership Plan) becoming a
beneficial owner, directly or indirectly of the securities of the Company
representing 20% or more of the combined voting power of the Company's
then outstanding shares; or
(c) would result in individuals who were directors of the Company as
of the date of this Agreement ceasing to constitute at least a majority
of the Board of Directors of the Company at any time prior to November 3,
2001.
A "triggering event" is defined as any one of the following events which
take place after a change in control has occurred:
(a) failure to elect or reelect the Executive to the same or higher
office or removal of the Executive from the office of Senior Vice
President and Chief Financial Officer;
(b) a significant diminution in the nature or scope of the
authorities, powers, functions, or duties related to the position of
Senior Vice President and Chief Financial Officer of the Company
(including status, offices, and reporting requirements), or a reduction
in the compensation to which Executive is entitled as set forth in
Section 5 which is not remedied within 30 days after receipt by the
Company of written notice from the Executive;
(c) the Company requiring the Executive to be based at any office or
location more than 100 miles from 000 Xxxxxxxxx Xxxx Xx., Xxxxxxxx,
Xxxxxx, or the Company requiring the Executive to travel on Company
business to a substantially greater extent than required immediately
prior to the date of this Agreement; or
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(d) breach by the Company of any provision of this Agreement not
covered within the foregoing clauses (a), (b), and (c) of this section,
which is not remedied within 30 days after receipt by the Company of
written notice from the Executive;
For the purposes of this Section 10 and this Agreement, "Company"
shall include the Company's successor in interest by merger, its
transferee of all or substantially all of the Company's assets and/or
liabilities, or the new owner of a controlling interest of the Company's
stock.
(e) The liquidation, dissolution, consolidation or merger of the
Company or one or more of the Company's subsidiaries or affiliates, or
the transfer of all or a significant portion of the assets and/or
liabilities of the Company, or one of its subsidiaries or affiliates,
unless a successor or successors (by merger, consolidation or otherwise)
to which all or a significant portion of the Company's assets and
liabilities or the assets and liabilities of any of its subsidiaries have
been transferred, shall have assumed and discharged all duties and
obligations of the Company to the Executive under this Agreement.
An election by the Executive to terminate his employment after the
occurrence of a change in control and the occurrence of a triggering event as
defined herein, shall entitle the Executive to payment of those sums specified
in Section 8.b.
11. Unexercised Stock Options
In the event that the Executive shall hold as of the Effective Date any
outstanding and unexercised (whether or not exercisable at the time) stock
options or options previously granted by the Company, the disposition of such
options shall be made in accordance with the Company's Incentive Stock Option
Plan (if any).
12. Right To Seek Arbitration
Either party shall have the right, in addition to all other rights and
remedies provided by law at their election, either to seek arbitration in
Oregon, under the rules of the American Arbitration Association or to
institute a judicial proceeding, in either case within 90 days after having
received notice of termination of his employment.
13. Obligation To Mitigate Damages
In the event of the Executive's termination of employment, the Executive
shall not be required to mitigate damages by seeking other employment.
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14. Confidential Information
Executive agrees not to disclose at any time any confidential information
obtained by him while in the employ of the Company. The executive also agrees
that upon leaving the Company, he will not take with him any document of the
Company's which is of a confidential or proprietary nature.
15. Withholding
All payments required to be made by the Company to the Executive pursuant
to this Agreement shall be subject to applicable federal and state withholding
requirements.
16. Notices
All notices, requests, demands, and other communications provided for by
this Agreement will be in writing and shall be sufficiently given if and when
mailed in the continental United States by registered or certified mail, or
personally delivered to the party entitled thereto at the address stated below
or to such changed addresses as the addressee may have given by similar
notice:
To the Company: South Umpqua Bank
000 Xxxxxxxxx Xxxx Xx.
Xxxxxxxx, Xxxxxx 00000
To the Executive: Xxxxxx X. Xxxxxxxx
0000 X.X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Any such notice delivered in person shall be deemed to have been received
on the date of delivery.
17. General Provisions
(a) There shall be no right of set-off or counter-claim against any
payments to the Executive, his surviving spouse, beneficiaries, or
estate. All sums to which the Executive is entitled pursuant to this
Agreement shall, upon his death, be paid to his surviving spouse, heirs,
or to his estate, if there is no surviving spouse.
(b) The Company and the Executive recognize that each party will
have no adequate remedy at law for breach of this Agreement; and that in
the event of any such breach, the Company and the Executive agree and
consent that the other shall be entitled to apply for and obtain a Decree
of Specific Performance.
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(c) No right or interest to or in any payment shall be assignable by
the Executive, provided, however, that this provision shall not preclude
the Executive from designating one or more beneficiaries to receive any
amount or amounts that may be payable to him after his death and shall
not preclude the legal representative of his estate from assigning any
right hereunder to the person or persons entitled thereto under his Will
or in the case of intestacy to the person or persons entitled thereto
under the laws of intestate succession of the State of Oregon.
18. Successors To The Company
This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including without limitation any
corporation or corporations acquiring directly or indirectly all or
substantially all of the assets and/or liabilities, or a controlling interest
in the stock of the Company, whether by merger, consolidation, sale or
otherwise (and such successor shall thereafter be deemed "the Company" for the
purposes of this Agreement), but shall not otherwise be assignable by the
Company.
19. Amendment Or Modification
This Agreement may not be amended or modified without the written consent
of the parties to this Agreement. A waiver by either party to this Agreement
of any breach by the other party shall not be deemed to be a waiver of any
subsequent or continuing breach.
20. Severability
In the event that any portion of this Agreement is declared
unenforceable, the remaining portions of this Agreement shall be unaffected
and shall remain in full force and effect.
21. Legal Expenses
If the Company fails to comply with any of its obligations under this
Agreement, or in the event that the Company or any other person takes any
action or declares this Agreement unenforceable or institutes any litigation
or other legal action designed to deny, diminish or to recover from the
Executive the benefits intended to be provided to the Executive hereunder, and
provided further that the Executive has complied with all of his obligations
under this Agreement, the Company hereby authorizes the Executive to retain
counsel of his choice at the sole expense of the Company to represent the
Executive in connection with the initiation or defense of any litigation or
other legal action whether by or against the Company, or any director,
officer, shareholder, or other person affiliated with the Company in any
10.3 - 9
jurisdiction. The reasonable fees and expenses of counsel selected by the
Executive as provided herein shall be paid or reimbursed to the Executive by
the Company on a regular periodic basis upon presentation by Executive of a
statement or statements prepared by such counsel in accordance with such
counsel's customary practices up to a maximum aggregate amount of $60,000 for
legal fees and expenses which shall be paid regardless of whether the
Executive prevails in any legal action.
22. Continuation Of Benefits
During any period of time that the validity or enforceability of this
Agreement is being challenged by any party, the Company shall continue to
cover the Executive and his beneficiaries under the Company's cafeteria plan,
hospital plan, health care plan, dental plan, life or other insurance or death
benefit plan, or other present or future similar group or employee benefit
plan or program for which key executives of the Company are eligible to the
same extent as if the Executive had continued to be an employee of the
Company.
DATED as of ________________
SOUTH UMPQUA BANK
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx, Director, President and
Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxxx
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