EXHIBIT 10.26 COLUMBIA RIVER BANK EXECUTIVE SALARY CONTINUATION AGREEMENT

 

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                                                                   EXHIBIT 10.26

 

                               COLUMBIA RIVER BANK

                     EXECUTIVE SALARY CONTINUATION AGREEMENT

 

      THIS AGREEMENT is adopted effective October 1, 2003 by and between

COLUMBIA RIVER BANK, a state-chartered commercial bank with headquarters in The

Dalles, Oregon (the "Bank") and R. SHANE CORREA (the "Executive").

 

                                    RECITALS

 

      WHEREAS, the Executive is an employee of the Bank;

 

      WHEREAS, the Executive's experience and knowledge of the affairs of the

Bank and the banking industry are extensive and valuable;

 

      WHEREAS, the Bank desires to establish a compensation benefit program

consisting of salary continuation benefits for the Executive, to be paid from

the Bank's general assets.

 

      WHEREAS, it is deemed to be in the best interests of the Bank to provide

the Executive with such benefits, on the terms and conditions set forth herein,

in order to reasonably induce the Executive to remain in the Bank's employment;

and

 

      WHEREAS, the Executive and the Bank wish to specify in writing the terms

and conditions upon which this additional compensatory incentive will be

provided to the Executive;

 

      NOW, THEREFORE, in consideration of the services to be performed by the

Executive in the future, as well as the mutual promises and covenants contained

herein, the Executive and the Bank agree as follows:

 

                             SECTION 1 - Definitions

 

      Whenever used in this Agreement, the following words and phrases shall

have the meanings specified:

 

      "Accrual Balance" means the liability that should be accrued by the Bank,

under Generally Accepted Accounting Principles ("GAAP"), for the Bank's

obligation to the Executive under this Agreement, by applying Accounting

Principles Board Opinion Number 12 ("APB 12") as amended by Statement of

Financial Accounting Standards Number 106 ("FAS 106") and the Discount Rate. Any

one of a variety of amortization methods may be used to determine the Accrual

Balance. However, once chosen, the method must be consistently applied. The

Accrual Balance shall be reported by the Bank to the Executive on Schedule A.

 

      "Change of Control" means the transfer of shares of the Bank's voting

common stock, within twelve (12) months by the Executive's Termination of

Employment for reasons

 

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other than death, Disability or retirement, such that one entity or one person

acquires (or is deemed to acquire when applying Section 318 of the Code)

"control" of the Bank's common stock. As used herein, "control" shall mean the

acquisition of twenty-five percent (25%) or more of the voting securities of the

Bank or its holding company by any person, or persons acting as a group within

the meaning of Section 13(d) of the Securities Exchange Act of 1934, or to such

acquisition of a percentage between ten percent (10%) and twenty-five percent

(25%) if the Board or the Comptroller of the Currency, the FDIC, or the Federal

Reserve Bank have made a determination that such acquisition constitutes or will

constitute control of the Bank or its holding company. The term "person" refers

to an individual, corporation, bank, bank holding company, or other entity, but

excludes any Employee Stock Ownership Plan established for the benefit of

employees of the Bank, its holding company, or any of its affiliates.

 

      "Code" means the Internal Revenue Code of 1986, as amended.

 

      "Demotion" means (1) a material reduction in the Executive's duties

coupled with the Executive's loss of his or her existing executive officer

title; or (2) a material reduction in the Executive's base salary, incentive

compensation or benefits.

 

      "Disability" means the Executive's suffering a sickness, accident or

injury which has been determined by the carrier of any individual or group

disability insurance policy covering the Executive, or by the Social Security

Administration, to be a disability rendering the Executive totally and

permanently disabled. The Executive must submit proof to the Bank of the

carrier's or Social Security Administration's determination upon the request of

the Bank.

 

      "Discount Rate" means the rate used by the Bank for determining the

Accrual Balance. The initial Discount Rate is eight percent (8%). However, the

Bank, in its sole discretion, may adjust the Discount Rate to maintain the rate

within reasonable standards according to GAAP.

 

      "Early Termination" means Termination of Employment prior to Normal

Retirement Age for reasons other than death, Disability, Termination for Cause

or following a Change of Control.

 

      "Early Termination Date" means the month, day and year in which Early

Termination occurs.

 

      "Effective Date" means 10/01/03.

 

      "Holding Company" shall mean Columbia Bancorp, the parent corporation of

the Bank.

 

      "Normal Retirement Age" means the Executive's sixty-second (62nd)

birthday.

 

      "Normal Retirement Date" means the later of the Normal Retirement Age or

Termination of Employment.

 

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      "Plan Year" means a twelve-month period commencing on October 1 and ending

on September 30 of each calendar year.

 

      "Schedule A" means the benefit description form attached to this

Agreement, which is updated by the Bank on an annual basis. If there is a

conflict in any terms or provisions between the Schedule A and this Agreement,

the terms and provisions of this Agreement shall prevail.

 

      "Termination for Cause" shall have the meaning set forth in Section 5

herein.

 

      "Termination of Employment" means that the Executive ceases to be employed

by the Bank for any reason, voluntary or involuntary, other than by reason of a

leave of absence approved by the Bank.

 

                       SECTION 2 -Benefits During Lifetime

 

      2.1 Normal Retirement Benefit. Upon Termination of Employment on or after

the Normal Retirement Age for reasons other than death, the Bank shall pay to

the Executive the benefit described in this Section 2.1 in lieu of any other

benefit under this Agreement.

 

            (1) Amount of Benefit. The. annual benefit under this Section 2.1 is

      $72,000 (Seventy-Two Thousand Dollars). Commencing on the first

      anniversary of the first benefit payment following Termination of

      Employment, and continuing on each subsequent anniversary, the Bank shall

      increase this benefit by three percent (3%) from the previous anniversary

      date.

 

            (2) Payment of Benefit. The Bank shall pay the annual benefit to the

      Executive in twelve (12) equal monthly installments commencing with the

      first of the month following the Executive's Normal Retirement Date,

      paying the annual benefit to the Executive for a period of twenty (20)

      years.

 

      2.2 Early Termination Benefit. Upon Early Termination, the Bank shall pay

to the Executive the benefit described in this Section 2.2 in lieu of any other

benefit under this Agreement.

 

                  (1) Amount of Benefit. The benefit under this Section 2.2is

            the one hundred percent (100%) of the Accrual Balance at Termination

            of Employment.

 

                  (2) Payment of Benefit. The Bank shall pay the annual benefit

            to the Executive in twelve (12) equal monthly installments

            commencing with the first of the month following the Executive

            attaining Normal Retirement Age, paying the annual benefit to the

            Executive for a period of twenty (20) years.

 

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      2.3 Disability Benefit. Upon Termination of Employment due to Disability

prior to Normal Retirement Age, the Bank shall pay to the Executive the benefit

described in this Section 2.3 in lieu of any other benefit under this Agreement.

 

                  (1) Amount of Benefit. The benefit under this Section 2.3 is

            one hundred percent (100%) of the Accrual Balance at Termination of

            Employment.

 

                  (2) Payment of Benefit. The Bank shall pay the annual benefit

            to the Executive in twelve (12) equal monthly installments

            commencing with the first of the month following the Termination of

            Employment, paying the annual benefit to the Executive for a period

            of twenty (20) years.

 

      2.4 Change of Control Benefit. Upon a Change of Control, followed within

the time periods described below by the Executive's Demotion, or Termination of

Employment for reasons other than death, Disability or retirement, the Bank

shall pay to the Executive the benefit described in this Section 2.4 in lieu of

any other benefit under this Agreement.

 

                  (1) Amount of Benefit. The benefit under this Section 2.4 is

          the Change of Control Annual Benefit. The amount of this benefit is

          determined at the time of Termination of Employment or Demotion as

          follows:

 

                        (i) if the Termination of Employment or Demotion occurs

                  within twelve (12) months of the Change of Control, by (a)

                  vesting the Executive one hundred percent (100%) in the

                  Accrual Balance, and (b) adding to the Accrual Balance the

                  next scheduled three (3) plan year accrual account increases.

 

                        (ii) if the Termination of Employment or Demotion occurs

                  within twenty-four (24) months of the Change of Control, by

                  (a) vesting the Executive one hundred percent (100%) in the

                  Accrual Balance, and (b) adding to the Accrual Balance the

                  next scheduled two (2) plan year accrual account increases.

 

                        (iii) if the Termination of Employment or Demotion

                  occurs within thirty-six (36) months of the Change of Control,

                  by (a) vesting the Executive one hundred percent (100%) in the

                  Accrual Balance, and (b) adding to the Accrual Balance the

                  next scheduled one (1) plan year accrual account increase.

 

                  (2) Payment of Benefit. The Bank shall pay the annual benefit

          to the Executive in twelve (12) equal monthly installments commencing

          with the first of the month following the Executive attaining Normal

          Retirement Age, paying the annual benefit to the Executive for a

          period of twenty (20) years.

 

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      2.5 Early Retirement. Notwithstanding an Early Retirement as defined

herein, the benefits payable to the Executive shall not commence until the

Executive reaches Normal Retirement Age.

 

            (1) Definition. "Early Retirement" shall mean retirement by the

      Executive on the later of: (i) the date on which the Executive reaches the

      age of fifty-five (55), if on such date the Executive has been

      continuously employed by the Bank for at least ten (10) years; or (ii) the

      date on which the Executive has been continuously employed by the Bank for

      ten (10) years if the Executive is over the age of fifty-five (55) on such

      date. Commencing on the first anniversary of the first benefit payment

      following Normal Retirement Age, continuing on each subsequent

      anniversary, the Bank shall increase this benefit by three percent

      (3%)from the previous anniversary date

 

      2.6 Excess Parachute Payment. Notwithstanding any provision of this

Agreement to the contrary, the Bank shall not pay any benefit under this

Agreement to the extent the benefit would create an excise tax under the excess

parachute rules of Section 280G of the Code.

 

                           SECTION 3 - Death Benefits

 

      3.1 Death During Active Service. If the Executive dies while in the active

service of the Bank, the Bank shall pay to the Executive's beneficiary the

benefit described in this Section 3.1. This benefit shall be paid in lieu of the

benefits under Article 2.

 

            (1) Amount of Benefit. The annual benefit under this Section 3.1 is

      the Normal Retirement Benefit amount described in Section 2.1.1.

 

            (2) Payment of Benefit. The Bank shall pay the annual benefit to the

      Executive's beneficiary in twelve (12) equal monthly installments

      commencing with the first of the month following the Executive's death,

      paying the annual benefit to the Executive's beneficiary for a period of

      twenty (20) years.