EXHIBIT 10.(F) NON-QUALIFIED ANNUITY PERFORMANCE AGREEMENT WESTAMERICA BANCORPORATION

Exhibit 10 (f)

NON-QUALIFIED ANNUITY PERFORMANCE AGREEMENT
WESTAMERICA BANCORPORATION

This Agreement is entered into by and between DAVID PAYNE, hereinafter referred to as the “Employee,” and WESTAMERICA BANCORPORATION, a California corporation, hereinafter referred to as the “Corporation,” and is based on the following facts and representations:

NOW THEREFORE, the parties agree:

1.     Grant of Rights

     A.     Employee surrenders his rights and grants under Corporations’ 1985 Stock Option Plan (“85 Stock Plan”) and 1995 Stock Option Plan (“95 Stock Plan”) for the calendar years 1995, 1996 and 1997, limited to all rights to become vested in and thereby acquire up to 22,700 Restricted Performance Share (“RPS”) granted pursuant to the 85 Stock Plan and 95 Stock Plan for said years.

     B.     In consideration of such surrender and Employee’s services to the Corporation, Corporation grants and awards to Employee certain specific rights to receive annuity payments as deferred compensation (the “Grants”) subject to the following terms and conditions.

2.     Payments. The amounts to be paid for each Grant will be calculated as a percentage of the average of Employee’s highest three years’ total Compensation (salary and bonus), which average will be determined at the earlier of his retirement or age 55. The percentages and amounts will be determined by the Committee in January of 1998, 1999, and 2000 and will be based on the Corporation’s achievement of the Performance Goals established for the 85 Stock Plan and the 95 Stock Plan.

3.     Qualification.

     A.     “Performance Goals” for the Qualification Periods for each of the Three Grants (“Qualification Period”) have been established by the Board of Directors of the Corporation (“Board”) and are set forth on Exhibit A attached hereto and incorporated herein by this reference.

          (1) Qualification Period #1 from January 1, 1995 to December 31, 1997 with determination to be made in January 1998;

          (2) Qualification Period #2 from January 1, 1996 to December 31, 1998 with determination to be made in January 1999; and

          (3) Qualification Period #3 from January 1, 1997 to December 31, 1999 with determination to be made in January 2000.

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      B.     If, in the opinion of the Employee Benefits and Compensation Committee of the Board (the “Committee”), the Corporation has attained the specified set of Performance Goals applicable to a Grant, the scheduled amount of annuity payments to which the Grant relates shall become vestibule in the Employee over the applicable period of the Employee’s continued Relationship per the vesting provisions hereof.

     C.     If the Committee determines that any set of Performance Goals was not attained, and if no Trigger Event (as defined below) takes place, the Grant applicable to that set of Performance Goals shall terminate and shall be null and void regardless of Employee’s continued Relationship with Corporation and regardless of whether other Grants vest fully or partially in Employee.

     D.     Notwithstanding the foregoing, the Committee shall have the discretion to restate the Corporation’s financial results for purposes of such measurement in the event that the Committee determines that a significant accounting event or change has occurred. Determination by the Committee shall be final, binding, and conclusive and will be made within three months following the end of the applicable Qualification Period.

     4.     Payments. Provided Employee’s Grants become vested per the Vesting provisions of this Agreement, Employee shall receive annuity payments on the following terms and conditions:

          A.     As to each vested Grant, commencing with the first day of the month following Employee’s 55^th birthday, Employee, or Employee’s designated beneficiary, shall be entitled to receive twenty annual payments per the schedule on Exhibit B attached hereto and incorporated here in by this reference.

               (1)     If all three Grants are fully vested in all respects, the annuity payments will not be less than $511,950.

               (2)     If such amount is unclear for any reason, the good faith determination of the Committee shall be conclusive.

          B.     If early vesting occurs by reason of a Trigger Event, Corporation shall establish and fund a “Rabbi Trust” arrangement for the full remaining annuity payments due to Employee.

     5.     Contingent Additional Excise Tax Restoration Payment

          A.     If it is determined that any payment or distribution of any type to or for the benefit of the Employee made by the Company, by any of its affiliates, by any person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 180G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of this resolution, an employment agreement or otherwise, would be subject to the excise tax imposed by section 4999 of the Code (or any interest or penalties with respect to such excise tax) then a calculation shall be made to determine if the Employee shall be entitled to receive an additional payment (an “Excise Tax Restoration Payment”). The calculation will determine the amount, if any, by which (1) the excise tax due as a result of the Change in Control exceeds (2) the excise tax that would have been due if the Employee had not surrendered the 1995, 1996, and 1997 RPS grants. The excess amount determined per the preceding sentence, the incremental excise tax, shall be, together with any interest or penalties due thereon, collectively referred to as the “Excise Tax.”

          B.     All mathematical determinations and all determinations of whether any of the annuity or any other payments to Employee are “parachute payments” (within the meaning of section 280G of the Code) that are required to be made under this

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Agreement, including all determinations of whether an Excise Tax Restoration Payment is required, of the amount of such Excise Tax Restoration Payments, shall be made by the independent auditors retained by the Corporation most recently prior to the Change in Control (the “Auditors”), who shall provide their determination (the “Determination”), together with detailed supporting calculations regarding the amount of any Excise Tax Restoration Payment and any other relevant matters, both to the Corporation and to the Employee within seven business days of the Employee’s termination date, if applicable, or such earlier time as is required by the Corporation or by the Employee (if the Employee reasonably believes that any of the annuity payments may be subject to the Excise Tax). If the Auditors determine that no Excise Tax is payable by the Employee, it shall furnish the Employee with a written statement that such Auditors have concluded that no Excise Tax is payable as a result of the annuity (including the reasons therefore) and that the Employee has substantial authority not to report any Excise Tax on the Employee’s personal federal income tax return. Any determination by the Auditors shall be binding upon the Corporation and the Employee, absent manifest error.

          C.     If an Excise Tax Restoration Payment is determined to be payable, then the Corporation shall make an Excise Tax Restoration Payment to Employee in an amount that shall fund the payment by the Employee of any Excise Tax plus 1) the amount necessary to “gross up” the payment to cover all income taxes imposed on the Excise Tax Restoration Payment in that year at Employee’s applicable federal and state income tax rates, 2) any Excise Tax imposed on the Excise Tax Restoration Payment and 3) any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any amount of the Excise Tax. The payment shall be paid to the Employee within five business days after th