Exhibit 10.1
RELEASE OF ALL CLAIMS AND HOLD HARMLESS AGREEMENT
For the consideration of Fifty Thousand and no/100 Dollars
($50,000.00)
and the promises and covenants set forth herein, Terry L. Cochran
("Cochran")
agrees to release all of his claims against Columbia Bancorp, an
Oregon
corporation ("Columbia") and others as set forth in detail in this
Release of
All Claims and Hold Harmless Agreement ("Agreement"). The Agreement
has an
effective date of December 4, 2006, except to the extent
specifically set forth
in Section 3 below.
RECITALS
--------
A. Cochran is
the former President and Chief Executive Officer
("CEO") of Columbia and is also the former President and CEO of
Columbia River Bank. In 2001, Cochran voluntarily resigned as
Chief Executive Officer of Columbia. As of the effective date
of
the Agreement, Cochran continues to serve on Columbia's Board
of
Directors.
B. Columbia
is an Oregon corporation and is the holding company of
Columbia River Bank. Columbia is based in The Dalles, Oregon.
C. Cochran,
in his capacity as CEO of Columbia, received from time
to time "incentive stock options," some of which he exercised
before resigning, some of which he did not exercise before
resigning. For tax purposes, the exercise of incentive stock
options is treated differently if a person exercises the
options
while an employee or within ninety (90) days of leaving
employment as opposed to exercising the stock options more than
ninety (90) days after leaving employment.
D. As of the
effective date of the Agreement, Cochran continues to
hold certain unexercised stock options, incentive stock grants
and/or other equity based compensation benefits. Cochran is not
entitled to any additional stock options except as granted by
the compensation committee of Columbia's board of directors in
compliance with applicable securities laws and with the Nasdaq
Marketplace Rules.
E. Cochran
now contends that Columbia represented to him at
retirement, and continued to represent to him within the twelve
months preceding the date of this Agreement, that he could
extend and maintain the tax treatment of certain incentive
stock
options (as that term is defined for purposes of Section 422(a)
of the Internal Revenue Code of 1986, as amended, and the
treasury regulations thereunder). Cochran further contends that
he relied upon such representations and that, based upon such
reliance, he failed to exercise such incentive stock options
within 90 days of his retirement. Cochran contends that
Columbia
derived or will derive substantial financial benefit, that
Columbia is liable to him for the additional tax burden he has
incurred as a result of relying upon such alleged
representations, and that Columbia is responsible for any
future
additional tax burden he is likely to incur in connection with
his previous exercise of incentive stock options and with any
potential exercise of currently unexercised incentive stock
options.
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F. Columbia
denies (i) that, directly or indirectly through one or
more employees, officers, directors or agents, it made the
representations to Cochran set forth in Recital E, or any other
representations in connection with the terms of his
relationship
to Columbia other than as expressly set forth in a binding
agreement between Cochran and Columbia, (ii) that it owed
Cochran a duty to advise him in connection with the tax
consequences of exercising the incentive stock options, (iii)
that Cochran had a reasonable basis for relying at any time
upon
any such alleged representations or advice, (iv) that Cochran
was harmed by any such reliance, (v) that any such claims, even
if otherwise supportable, are not fully and completely barred
by
the applicable statutes of limitation, and (vi) that it is
liable to Cochran for any additional tax burden he has
incurred,
or will incur, as the result of executing his stock options.
G. In light
of the foregoing the parties have agreed as set forth
below, whereby Columbia has agreed to pay Cochran Fifty
Thousand
and no/100 Dollars ($50,000.00) on the terms and subject to the
conditions set forth herein, in exchange for a full and final
discharge of all claims Cochran might raise in respect of
claims
that might have arisen or might hereafter arise by Cochran
against Columbia based upon acts or omissions occurring on or
prior to the date of this Agreement. Without limiting the
generality of the foregoing, the parties expressly intend to
release all past, present and future claims based on an
allegation that Columbia owes compensation to Cochran for
additional tax liability he has incurred or may incur as a
result of exercising his stock options, including options held
by Cochran as of the date hereof, options previously exercised,
and options, if any, that may be granted in the future.
NOW, THEREFORE, in consideration of the terms, conditions, promises
and
covenants set forth below, Cochran agrees as follows:
TERMS OF RELEASE
----------------
1.
Consideration. Pending the satisfaction of the conditions set
forth in Section 3 below, the consideration payable to Cochran
shall be an
amount, in cash, equal to Fifty Thousand and no/100 Dollars
($50,000.00),
payable in two equal annual installments. The first such
installment shall be
paid on January 5, 2007 and the second installment shall be paid on
January 5,
2008. Each payment shall be made by deposit in the United States
Mail of a check
in the full amount of such installment, made payable to "Terry L.
Cochran."
Cochran is responsible for identifying and paying any taxes that
may be due on
this amount, and hereby agrees to defend, indemnify and hold
harmless Columbia
from and against any and all liabilities incurred by Columbia in
connection with
Cochran's failure to make such payments, including without
limitation any
investigation, inquiry, response or other communication with any
taxing
authority in connection therewith, and specifically including the
fees of any
and all accountants, attorneys and consultants engaged by Columbia
or any other
person as a result of any such event.
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2. Complete
Release. In consideration of the promises as set forth
herein, Cochran, and for his heirs, agents, representatives,
successors,
assigns, partners, and attorneys, hereby releases, acquits and
forever
discharges Columbia and its current and former employees,
agents,
representatives, successors, assigns, partners, parents,
subsidiaries,
divisions, affiliates, owners, stockholders, officers, directors,
accountants,
tax advisors, tax preparers and attorneys, from any and all
actions, causes of
action, obligations, costs, expenses, damages, losses, claims,
liabilities,
suits, debts, and demands (including attorneys' fees and costs
actually
incurred), of whatever character in law or in equity known or
unknown, suspected
or unsuspected, in any way connected to Columbia (included, but not
limited to,
Cochran's employment by Columbia, claims of discrimination arising
out of the
employment, Cochran's deferred compensation agreement, and the
exercise of stock
options) up until the day Cochran signs this Agreement. Without
limiting the
generality of the foregoing, Cochran specifically releases Columbia
(including
the parties indemnified above) from any and all future claims
related to
Cochran's future exercise of the stock options described above, and
any other
options hereafter granted to Cochran, including in each instance
claims related
to Cochran's tax liability as a result of exercising any stock
options. This
release shall not be construed to inhibit the exercise, in
accordance with the
express written terms and conditions thereof, of any stock options
currently
outstanding or hereafter granted; provided, however, that in
connection with any
such exercise, and any future acquisition or disposition of stock
options or
other securities, neither Cochran nor any of his heirs,
beneficiaries,
successors or assigns, shall be entitled to rely, and no such
person shall rely,
upon Columbia or its directors, officers, agents or affiliates for
advice as to
the investment, tax or
