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Exhibit 10.3(b)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into effective this 1st
day of January, 1997, by and between Columbia Banking System, Inc., a Washington
corporation ("CBSI" or the "Employer"), and XXXXXX X. XXXX ( the "Executive").
RECITALS
1. Pursuant to the terms and conditions of an Amended Employment
Agreement effective December 30, 1993 (the "Original Agreement"), Executive has
served as the Chief Executive Officer of CBSI. The term of the original
Agreement expires on December 31, 1997.
2. Executive and the Board of Directors of CBSI and Columbia
State Bank ("Columbia Bank") have both indicated their desire to extend the term
of Executive's service from December 31, 1997 to December 31, 2001, 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 continue until December 31, 2001,
unless extended or sooner terminated as provided in this Agreement.
3. Duties.
(a) Executive will be the Chief Executive Officer of CBSI and such
other subsidiaries or affiliates as the Board of Directors of CBSI (the "Board")
shall determine. In such capacities, Executive will render the executive
management and perform the tasks in connection with the affairs of CBSI and its
subsidiaries which are normal and customary to the position of Chief Executive
Officer. Unless otherwise agreed by Executive and the Board, he shall preside at
all meetings of the Board and the Executive Committee. Executive will be the
person to whom the Vice Chairman, President, and all other officers of the
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Employer and, as appropriate, subsidiaries or affiliates of Employer, shall
report.
(b) Executive will perform such other duties as may be appropriate
to his office and as may be prescribed from time to time by the Board or that
are provided in the Bylaws. Executive may delegate such duties as he sees fit to
the Vice Chairman, the President, or other officers of the Employer.
(c) Executive will devote his best efforts and all necessary time,
attention, and effort to the business and affairs of the Employer and its
affiliated companies, as such business and affairs now exist or hereafter may be
changed or supplemented, in order to properly discharge his responsibilities
under this Agreement.
4. Salary, Bonus, and Other Compensation.
4.1 Base Salary.
(a) During the term of this Agreement, Employer will pay Executive
an annual base salary of not less than $160,000 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, 2001, then
Employer will pay Executive such greater or lesser amount of the agreed
compensation as provided in Section 5.
4.2 Bonus. During the term of this Agreement, Executive
will be eligible to participate in the bonus pool, if any, established by the
Board for the CBSI's senior executives, either under an executive incentive plan
or otherwise.
4.3 Benefits.
(a) In addition to the base salary and bonus payable or
potentially payable to Executive pursuant to this Section 4, Executive will be
entitled to the following benefits, unless otherwise altered by the Board based
upon policies adopted for senior executives of CBSI or its subsidiaries
generally:
(1) Participation in health insurance, disability
insurance, and other health and welfare benefit programs generally available
to senior executives;
(2) Participation in retirement plans, including
defined contribution and 401(k) Plans and any supplements or
additions to those plans;
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(3) A contractual supplemental retirement benefit
("SERP") for which an accrual will be made each year in the amount of 10% of
total cash compensation and which shall accrue interest thereafter at the rate
paid on 2-year Treasury Bills at January 1 of each year until paid, plus 2%
compounded annually;
(4) Participation in stock or stock option plans
generally available to senior executives of the Employer;
(5) Other employment benefits, as may be approved
from time to time by Employer;
(6) Life insurance in an amount of $345,000 by paying
annual premiums of $11,845 on Pacific Mutual Life Insurance
Policy No. 1A2269509-0 which is currently owned by Executive;
(7) Memberships in clubs as deemed appropriate and
reimbursement for Executive's reasonable expenses incurred in promoting the
business of Employer. Executive shall present from time to time itemized
accounts of any such expenses, within limits of Employer policy and the rules
and regulations of the Internal Revenue Service.
5. Termination of Agreement.
5.1 Early Termination.
(a) This Agreement may be terminated at any time by
either the Board or Executive and shall terminate upon Executive's death or
disability. Any termination by the Board other than termination for cause (as
defined below) shall not prejudice the 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, 2001, he
will be entitled to such payments as he would have the right to receive upon
termination for cause under subsection 5.1(b), provided that SERP contributions
shall not be forfeited.
(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 SERP contributions will be considered
fully vested and all forfeiture provisions regarding restricted stock awards or
vesting requirements concerning options shall lapse or be considered completed,
as applicable. 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 compensation or other benefits
for
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any period after termination for cause and shall forfeit SERP contributions for
the year of termination and the prior two years.
(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 the Company (which
would include 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 Employee incapable of performing
the duties required under this Agreement. The Board, acting in good faith, shall
make the final determination of whether Employee is suffering under any
disability as herein defined and, for purposes of making such determination, may
require Employee to submit himself to a physical examination by a physician
mutually agreed upon by Employee and the Board at Employer's expense.
(d) In the event of termination of this Agreement by
reason of Executive's death or disability, all SERP contributions made prior to
that date will be considered fully vested and all forfeiture provisions
regarding restricted stock awards or vesting requirements concerning options
shall lapse or be considered completed, as applicable.
5.2 Obligations. Except as otherwise provided in Section
7 or in a particular option grant, Executive's rights to vested but unexercised
stock options will continue for a period of one year after early termination,
except only in the case of 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. Employee 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 termination, 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 the Employer that competes within the
states of Oregon or Washington with Employer or any of its affiliates, with
respect to activities of the type performed by such companies within such
service areas immediately prior to Executive's termination. 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 or CBSI without good
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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 CBSI. The provisions
restricting competition by Executive may be waived by action of the Board.
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.
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 covenant set forth above is unreasonably
broad, the parties authorize said court or any other administrative body to
narrow same so as to make it reasonable, given all relevant circumstances, and
to enforce same. 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 below, 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 the transaction which 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 of all benefits
provided for in this Agreement until three years following termination or
December 31, 2001, whichever is longer; (ii) vesting of all stock options and
lapse of all restrictions with respect to restricted stock awards shall occur;
(iii) funding of Executive's SERP through the term of the contract. 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 by directors whose elections have not been
supported by the Board; or
(c) Dissolution, or sale of fifty percent or more in
value of the assets, of either CBSI or its subsidiaries.
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. 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 with CBSI, 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
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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: Xxxxxx X. Xxxx
--------- 00 Xxxxxxx Xxxx Xxxxxx X.X.
Xxxxxx, XX 00000
This amended Agreement is dated as of September 25, 1996.
COLUMBIA BANKING SYSTEM, INC.
By:/s/ Xxxxxxx X. XxXxxx /s/ Xxxxxx X. Xxxx
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Xxxxxxx X. XxXxxx Xxxxxx X. Xxxx
Chairman of Compensation Executive
Committee
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