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EXHIBIT 10.4
CHANGE IN CONTROL AGREEMENT
EFFECTIVE DATE: JANUARY 1, 2004
This CHANGE IN CONTROL AGREEMENT
("Agreement") is made by WEST COAST BANCORP
("Bancorp") and WEST COAST BANK ("Bank")
(collectively "Company") and XANDRA
McKEOWN ("Executive").
RECITALS
A. The Executive is
employed by the Company as its Executive Vice President,
Commercial Banking
Group Manager.
B. The Board recognizes
that a possible or threatened Change in Control may
result in
key management personnel being concerned about their continued
employment
status or responsibilities. In addition, they may be approached
by other
companies offering competing employment opportunities.
Consequently, they will be distracted from their duties and may
even leave
the
Company during a time when their undivided attention and commitment
to
the best interests of
the Company and Bancorp's shareholders would be
vitally
important.
C. The Company considers
it essential to its best interests and those of
Bancorp's
shareholders to provide for the continued employment of key
management personnel in the event
of a Change in Control.
D. Therefore, in order
to--
(1)
Encourage the
Executive to assist the Company during a Change in
Control and be available during the transition afterwards;
(2)
Give assurance
regarding the Executive's continued employment status
and responsibilities in the event of a Change in Control; and
(3)
Provide the
Executive with Change in Control benefits competitive
with the Company's peers
--the
parties agree on the following:
TERMS AND CONDITIONS
1. DEFINITIONS. Words and
phrases appearing in this Agreement with initial
capitalization are defined terms that have the meanings stated
below.
Words appearing in the
following definitions which are themselves defined
terms are
also indicated by initial capitalization.
(a)
"BENEFICIAL
OWNERSHIP" means direct or indirect ownership within the
meaning of Rule 13(d)(3) under the Exchange Act.
(b)
"BOARD" means
Bancorp's Board of Directors.
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(c)
"CAUSE" means
either:
(1) Any of the
circumstances that qualify as grounds for
termination for cause
under the Executive's employment
agreement as in effect at the time; or
(2) If no
employment agreement is in effect at that time or if the
employment agreement in effect at that time does not specify
grounds for termination for cause, any of the following
circumstances shall qualify as "Cause" under this Agreement:
(A)
Embezzlement, dishonesty or other fraudulent acts
involving the Company or the Company's business
operations;
(B) Material
breach of any confidentiality agreement or
policy;
(C) Conviction
(whether entered upon a verdict or a plea,
including a plea of no contest) on any felony charge or
on a misdemeanor reflecting upon the Executive's
honesty;
(D) An act or
omission that materially injures the Company's
reputation, business affairs or financial condition, if
that injury could have been reasonably avoided by the
Executive; or
(E) Willful misfeasance or gross
negligence in the
performance of the Executive's duties provided, however,
that the Executive is first given:
(i) Written
notice by the Company specifying in detail
the performance issues; and
(ii) A reasonable
opportunity to cure the issues
specified in the notice.
(d)
"CHANGE IN
CONTROL" means:
(1)
Except as
provided in subparagraph (B) below, an acquisition
or series of acquisitions as described in subparagraph (A)
below.
(A) The
acquisition by a Person of the Beneficial Ownership
of more than 30% of either:
(i) Bancorp's
then outstanding shares of common stock;
or
(ii) The combined
voting power of Bancorp's then
outstanding voting securities entitled to vote
generally in the election of directors.
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(B) This
paragraph (1) does not apply to any acquisition:
(i) Directly
from the Company;
(ii) By the Company;
or
(iii) Which is part of a transaction that satisfies the
exception in paragraph (3)(A), (B) and (C) below;
(2) The
incumbent directors cease for any reason to be a majority
of the Board. The "incumbent directors" are directors who are
either:
(A) Directors on
the Effective Date; or
(B) Elected, or
nominated for election, to the Board by a
majority vote of the members of the Board or the
Nominating Committee of the Board who were directors on
the Effective Date. However this subparagraph (B) does
not include any director whose election came as a result
of an actual or threatened election contest regarding
the election or removal of directors or other actual or
threatened solicitation of proxies by or on behalf of a
Person other than the Board;
(3) Consummation
of a merger, reorganization or consolidation of
Bancorp or the sale or other disposition of substantially all
of it assets, except where:
(A) Persons who,
immediately before the consummation, had,
respectively, a Controlling Interest in and Voting
Control of Bancorp have, respectively, a Controlling
Interest in, and Voting Control of the resulting entity;
(B) No Person
(other than the entity resulting from the
transaction or an employee benefit plan maintained by
that entity) has the Beneficial Ownership of more than
30% of either:
(i) The
resulting entity's then outstanding shares of
common stock or other comparable equity security;
or
(ii) The combined
voting power of the resulting
entity's then outstanding voting securities
entitled to vote generally in the election of
directors,
except to the extent that Person held that Beneficial
Ownership
before the consummation; and
(C) A majority
of the members of the board of directors of
the resulting entity were members of the Board at either
the time:
(i)
The transaction
was approved by the Board; or
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(ii) The initial
agreement for the transaction was
signed; or
(4) Approval by
Bancorp's shareholders of its complete liquidation
or dissolution.
(e)
"CHANGE IN
CONTROL PROPOSAL" means any proposal or offer that is
intended to or has the potential to result in a Change in
Control.
(f)
"CODE" means the
Internal Revenue Code of 1986.
(g)
"COMMITTEE"
means the Compensation and Personnel Committee of the
Board.
(h)
"CONTROLLING
INTEREST" means Beneficial Ownership of more than 50%
of the outstanding shares common stock of a corporation or the
comparable equity securities of a noncorporate business entity.
(i)
"DISABILITY"
means that either the carrier of any Company-provided
individual or group long-term disability insurance policy
covering
the Executive or the Social Security Administration has
determined
that the Executive is disabled. Upon the request of the
Committee,
the Executive will submit proof of the carrier's or the Social
Security Administration's determination.
(j)
"EFFECTIVE DATE"
means January 1, 2004.
(k)
"ERISA" means
the Employee Retirement Security Act of 1974.
(l)
"EXCHANGE ACT"
means the Securities Exchange Act of 1934.
(m)
"GOOD REASON"
means any one of the following:
(1) Any
reduction in the Executive's salary or reduction or
elimination of any compensation or benefit plan benefiting the
Executive, which reduction or elimination does not generally
apply to substantially all similarly situated employees of the
Company or such employees of any successor entity or of any
entity in control of Bancorp or the Bank;
(2) A relocation
or transfer of the Executive's place of
employment to an office or location that is more than 35 miles
from the Executive's then current place of employment; or
(3) A material
diminution in the Executive's responsibilities,
title or duties.
(n)
"PERSON" means
any individual, entity or group within the meaning of
Sections 13(d) and 14(d) of the Exchange Act, other than a
trustee
or
fiduciary holding securities under an employee benefit plan of
the Company.
(o)
"TERMINATION
EVENT" means any of the following events:
(1) The
Executive terminates employment for Good Reason within 24
months
after a Change in Control;
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(2) The Company
terminates the Executive's employment other than
for Cause, Disability or death within 24 months after a Change
in Control;
(3) The Company
terminates the Executive's employment before a
Change in Control if:
(A) The
termination is not for Cause, Disability or death;
and
(B) The
termination occurs either on or after:
(i) The
announcement by Bancorp, or any other Person,
that a Change in Control is contemplated or
intended; or
(ii) The date a
contemplated or intended Change in
Control should have been announced under
applicable securities or other laws; or
(4) The date the
Executive's continued employment begins under
Section 3(b).
(p)
"VOTING CONTROL"
means holding more than 50% of the combined voting
power of an entity's then outstanding securities entitled to vote
in
the election of its directors or other governing body.
2. INITIAL TERM;
RENEWALS; EXTENSION.
(a)
The initial term
of this Agreement begins on the Effective Date and
ends on December 31, 2004.
(b)
Following this
initial term, this Agreement will automatically renew
on January 1 of each year for subsequent one-year terms, unless
not
later than the September 30 preceding the upcoming renewal
date,
either the Company or the Executive gives the other written
notice
terminating this Agreement as of the upcoming December 31.
(c)
If a definitive
agreement providing for a Change in Control is
signed on or before the expiration date of the initial term or
any
renewal
term, the term of this Agreement then in effect will
automatically be extended to 24 months after the effective date
(as
stated in the definitive agreement) of the Change in Control.
During
this extended period, the Board may not terminate this
Agreement
without the Executive's written consent.
3. EXECUTIVE'S
OBLIGATIONS.
(a)
The Executive
agrees that, upon notification that the Company has
received a Change in Control Proposal, the Executive shall:
(1) At the
Company's request, assist the Company in evaluating
that proposal; and
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(2) Not resign
the Executive's position with the Company until the
transaction contemplated by that proposal is either
consummated or abandoned.
(b)
If, within 24
months following a Change in Control, the Company
wants the Executive to continue employment in a position or
under
circumstances that would qualify as Good Reason for the
Executive
terminating employment:
(1) The
Executive shall nevertheless agree to that continued
employment, provided that:
(A) The term of
this continued employment shall not exceed
90 days or such shorter or longer term as agreed by the
Company and the Executive;
(B) The
continued employment will be at an executive level
position that is reasonably comparable to the
Executive's then current position;
(C) The
continued employment shall be at either:
(i) The
Executive's then current place of employment;
or
(ii) Such other
location as agreed by the Company and
the Executive; and
(D) As
compensation for this continued employment, the
Executive shall receive:
(i) The same
base pay and bonus arrangement as in
effect on the day before the continued employment
agreement became effective (or their hourly
equivalent); and
(ii) Either:
(I) Continuation
of the Executive's employee
benefits, fringe benefits and perquisites at
their then current level; or
(II) If that
continuation is not reasonably
feasible, the Executive shall receive
additional cash compensation equal to the
amount the Company would have paid as the
employer contribution for the items that
cannot be continued.
(2) The date
this continued employment begins shall be treated as
a Termination Event, so that benefits will be payable under
this Agreement, in accordance with its terms and conditions,
even though the Executive's employment with the Company has
not terminated.
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4. SEVERANCE BENEFITS.
Upon a Termination Event, the Executive will receive
severance
benefits as follows:
(a)
COMPONENTS. The
severance benefits will consist of:
(1) The cash
compensation payment under subsection (b) below;
(2) The equity
acceleration under subsection (c) below;
(3) The health
plan continuation benefits under subsection (d)
below;
(4) The 401(k)
equivalency payment under subsection (e) below; and
(5) The
outplacement/tax planning benefits under subsection (f)
below.
(b)
CASH
COMPENSATION PAYMENT.
(1) This payment
will equal two times the Executive's cash
compensation. The Executive's "cash compensation" is the sum
of:
(A) The
Executive's adjusted salary as determined under
paragraph (2) below; and
(B) The
Executive's average bonus as determined under
paragraph (3) below.
(2) The
Executive's "adjusted salary" is the Executive's
annualized regular monthly salary in effect on the date of the
Termination Event as reportable on IRS Form W-2, adjusted by
including and
excluding the following items:
(A) Include any
salary deferral contributions made under any
employee benefit plan maintained by the Company,
including Bancorp's Executives' Deferred Compensation
Plan;
(B) Exclude:
(i) Bonus
payments;
(ii) Bonus amounts
deferred including any made under
any employee benefit plan maintained by the
Company, including Bancorp's Executives' Deferred
Compensation Plan;
(iii) Reimbursements or other expense allowances, fringe
benefits (cash and noncash), moving expenses,
severance or disability pay and welfare benefits;
(iv) Employer
contributions to a deferred compensation
plan to the extent the contributions are not
included in the Executive's gross income for the
calendar year in which
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contributed, and any distributions from a deferred
compensation plan, regardless of whether those
amounts are includible in the Executive's gross
income when distributed;
(v) Amounts
realized from the exercise of
non-qualified stock options or when restricted
stock (or property) becomes freely transferable or
no longer subject to a substantial risk of
forfeiture;
(vi) Amounts realized
from the sale, exchange or other
disposition of stock acquired under a qualified
stock option;
(vii) The value of a non-qualified stock option included
in income in the year in which granted;
(viii) Amounts includible in income upon making a Code
Section 83(b) election;
(ix) Taxable benefits,
such as premiums for excess
group term life insurance;
(x) Imputed
income from any life insurance on the
Executive's life that is owned by or funded in
whole or in part by the Company; and
(xi) Other similar
recurring or non-recurring payments.
(3) The
Executive's "average bonus" is the average of:
(A) The actual
bonus paid or payable for the bonus
computation year that ended before the bonus computation
year in which the Termination Event occurs; and
(B) The
annualized amount of the bonus the Executive earned,
determined as of the end of the month in which the
Termination Event occurs, for the bonus computation year
in which the
