EXECUTIVE EMPLOYMENT AND
COMPENSATION AGREEMENT
Date: Effective as of July 10, 1998
Parties: South Umpqua Bank, a bank chartered under the laws of the State of
Oregon, its subsidiaries and affiliates (the "Company")
and
Xxx Xxxxx (the "Executive")
Agreement: The Company and the Executive agree as follows:
1. Effective Date Of Agreement
This Agreement is effective as of July 10, 1998.
2. Term Of Employment
The term of this Agreement shall commence as of July 10, 1998 and shall
continue until the close of the Company's business on July 10, 2000
("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
the principal Chief Executive Officer and President of the Company and
shall report to the Board of Directors. At all 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
July 10, 1998.
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The Executive shall also serve as a director of the Company, if elected.
Fees paid to the Executive for service as a director shall be in addition
to those amounts paid pursuant to this Agreement.
The office of the Executive shall be located at the principal offices of
the Company in Roseburg, Oregon. The Executive shall not be required to
relocate his office without his prior written consent.
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 $172,500 ("Base Salary"), payable at
the rate of not less than $14,375 per month, for the remainder of
the calendar year 1998, 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; 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.
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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 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 Without
"Cause"
In the event the Company terminates the Executive's employment
during the Term of Employment for any reason other than "cause" (as
defined in Section 9), then Executive shall be entitled to receive
and the Company shall be obligated to pay:
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1. All compensation, benefits, and other fringe benefits accrued
to the Effective Date;
2. An amount equal to nine months' Base Salary as defined in
Section 5.a; and
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 termined 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
maimum 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
10.1 - 4
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 July 10, 1994 between the Company and the Executive).
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 July 10, 1994 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.
10.1 - 5
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 Chief Executive Officer and President 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).
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 July
10, 2000.
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 President and
Chief Executive Officer of the Company;
(b) a significant diminution in the nature or scope of the authorities,
powers, functions, or duties related to the position of President
and Chief Executive Officer of the Company (including status,
10.1 - 6
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 15 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
(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).
10.1 - 7
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.
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: Xxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxx 00000
Any such notice delivered in personal shall be deemed to have been
received on the date of delivery.
10.1 - 8
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.
(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.
10.1 - 9
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 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/ Xxxxx X. Xxxx
-----------------------------------------
Title: Chairman
/s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Xxxxxxx X. Xxxxx
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