PACIFIC CONTINENTAL CORPORATION/PACIFIC CONTINENTAL BANK
 
CHANGE IN CONTROL
 
SEVERANCE/SALARY CONTINUATION AGREEMENT
 

 
THIS SEVERANCE/SALARY CONTINUATION AGREEMENT (this “Agreement”) is entered into
by and between PACIFIC CONTINENTAL CORPORATION, an Oregon corporation (the
“Company”), its wholly owned subsidiary PACIFIC CONTINENTAL BANK, an Oregon
state-chartered bank (the “Bank”), and Mitchell Hagstrom the Executive Vice
President Bank (“Executive”), effective as of April 15, 2005.
 
The Company, Bank and Executive agree as follows:
 

1.  
Definitions.

 

1.1  
Cause. “Cause” means any one or more of the following:

 

a.  
Removal or discharge of Executive pursuant to order of any federal banking
authority;

 

b.  
Executive perpetrates fraud, dishonesty, or other act of misconduct in the
rendering of services to the Company or the Bank or to customers of the Company
or the Bank, or if Executive engages in conduct which, in the opinion of the
Board of Directors, materially interferes with the performance of Executive’s
duties or harms the reputation of the Company or the Bank by reason of the
adverse reaction of the community to such conduct;

 

c.  
Executive conceals from, or knowingly fails to disclose to, any federal banking
regulatory authority or the Board of Directors any material matters affecting
the viability of the Company or the Bank; or

 

d.  
Executive fails (or refuses) to faithfully or diligently perform any of the
usual and customary duties of his employment and either fails to remedy the
lapse or formulate a plan for its correction with the Company or the Bank (if
such failure is not susceptible to immediate correction) within thirty (30) days
after notice to Executive.

 

1.2  
Change in Control. “Change in Control” means a change "in the ownership or
effective control" or "in the ownership of a substantial portion of the assets"
of the Company or the Bank, within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended; provided however, that an internal
reorganization of the Company or the Bank shall not constitute a Change in
Control.

 

1.3  
Change in Control Payment. “Change in Control Payment” has the meaning assigned
in Section 3 of this Agreement.

 

1.4  
Compensation. “Compensation” means Executive’s highest base compensation,
together with bonuses earned pursuant to the Company and/or Bank’s then-existing
bonus plan(s), for each of the three most recent calendar years, including the
current calendar year. For purposes of the current calendar year determination,
Executive’s base compensation will be annualized and it will be assumed that
Executive will earn the maximum bonus amount payable pursuant to the Company
and/or Bank’s then-existing bonus plan(s).

 

1.5  
Disability. “Disability” means a physical or mental impairment that renders
Executive incapable of substantially performing the usual and customary duties
of his employment for a period of 90 consecutive days, unless with reasonable
accommodation Executive could continue to perform such duties, and making these
accommodations would not pose an undue hardship on the Company or the Bank.

 

1.6  
Good Reason. “Good Reason” means only any one or more of the following:

 

a.  
Reduction of Executive’s Post Change in Control Salary or elimination of any
significant compensation or benefit plan benefiting Executive, unless the
reduction or elimination is generally applicable to substantially all similarly
situated employees (or similarly situated employees of a successor or
controlling entity of the Company or the Bank) formerly benefited;

 

b.  
The Post Change in Control assignment to Executive without his consent of any
authority or duties materially inconsistent with Executive’s position as of the
date of the Change of Control; or

 

c.  
A relocation or transfer of Executive’s principal place of employment that would
require Executive to commute on a regular basis more than 50 miles each way from
his present place of employment.

 

1.7  
Parachute Payment Amount. “Parachute Payment Amount” has the meaning assigned in
Section 5 of this Agreement.

 

1.8  
Post Change in Control Salary. For purposes of Section 4 of this Agreement,
“Post Change in Control Salary” means, for the Salary Continuation Period, the
base compensation and bonus(es) that Executive would have been entitled to if
his/her employment had not been terminated. For purposes of determining the
bonus(es) that Executive would have been entitled to, it will be assumed that
Executive would have earned the maximum bonus amount payable pursuant to the
Company and/or Bank’s bonus plan(s) in existence at the time of the Change in
Control.

 

1.9  
Salary Continuation Payment. “Salary Continuation Payment” has the meaning
assigned in Section 4 of this Agreement.

 

1.10  
Salary Continuation Period. “Salary Continuation Period” has the meaning
assigned in Section 4 of this Agreement.

 

1.11  
Termination Event After Change in Control. A “Termination Event After Change in
Control” shall be deemed to occur upon, and only upon, any one or more of the
following:

 

a.  
Termination of Executive’s employment by Executive for Good Reason within the
Salary Continuation Period;

 

b.  
Termination of Executive’s employment by the Bank and/or the Company other than
for Cause or Disability, or death within the Salary Continuation Period; or

 

c.  
Termination of Executive’s employment or of this Agreement by the Bank and/or
the Company other than for Cause, Disability or death prior to a Change in
Control if such termination occurs within twelve (12) months before the
execution of a definitive agreement providing for a Change in Control.

 

1.12  
Trade Secret. “Trade Secret” has the meaning assigned in ORS 646.461 (4), as in
effect as of the date of this Agreement.

 

2.  
Commitment of Executive. In the event that any person extends any proposal or
offer that is intended to or may result in a Change in Control, Executive shall,
at the Company’s or the Bank’s request, assist the Company and/or the Bank in
evaluating such proposal or offer. Further, subject to the additional terms and
conditions of this Agreement, in order to receive the Salary Continuation
Payment, Executive cannot resign from the Company or the Bank during any period
from the receipt of a specific Change in Control proposal up to the consummation
or abandonment of the transaction contemplated by such proposal.

 

3.  
Severance Payment Obligations.

 

3.1  
Closing of Change In Control. If, consistent with Section 2, Executive remains
employed with the Company and the Bank through the closing of a Change in
Control, then concurrent with such closing, Executive shall receive a single
cash payment in an amount equal to one-half (1/2) times Executive’s Compensation
(the “Change in Control Payment”).

 

3.2  
Termination Prior to Change In Control. If (i) the Company or the Bank
terminates Executive’s employment without Cause, Executive resigns for Good
Reason before a Change in Control, or the Company or the Bank unilaterally
terminates this Agreement, and (ii) within twelve (12) months thereafter, the
Company or the Bank enters into an agreement for a Change in Control or any
party announces or is required by law to announce a prospective Change in
Control of the Company or the Bank, then upon the closing of such Change in
Control, Executive shall receive the Change in Control Payment. 

 

4.  
Salary Continuation Payment. 

 

4.1  
Payment Events. Except as otherwise provided in this Section, in the case of a
Termination Event After a Change in Control, Executive shall receive a salary
continuation payment (the “Salary Continuation Payment”), payable in a lump sum
on the later of the date of termination or the date of the Change in Control.

 

4.2  
Amount of Payment.  The Salary Continuation Payment shall be an amount equal to
the Executive’s Post Change in Control Salary, for the balance of the Salary
Continuation Period. The “Salary Continuation Period” shall be the period
beginning on the Change of Control and continuing thereafter for eighteen (18)
months.

 

4.3  
Adjustment of Salary Continuation Payment. Notwithstanding the foregoing, if
Executive’s Good Reason for terminating his or her employment is a reduction of
Post Change in Control Salary, then the Salary Continuation Payment shall be
calculated based on Executive’s Post Change in Control Salary in effect prior to
such reduction.

 

5.  
Parachute Payment Limitation. Notwithstanding anything in this Agreement to the
contrary, if the total of the Change in Control Payment and the Salary
Continuation Payment, together with any other payments or benefits received from
the Company or the Bank, will be an amount that would cause them to be a
"parachute payment" within the meaning of Section 280G(b)(2)(A) of the Internal
Revenue Code of 1986, as amended (the “Parachute Payment Amount”), then the sum
of the Change in Control Payment and the Salary Continuation Payment shall be
reduced so that the total amount thereof is $1 less than the Parachute Payment
Amount. 

 

6.  
Nonsolicitation. Iif the Executive receives a Salary Continuation Payment, then
during the Salary Continuation Period, Executive will not, directly or
indirectly, persuade or entice, or attempt to persuade or entice, (i) any
employee of the Bank or the Company to terminate his/her employment with the
Bank or the Company, or (ii) any person or entity to terminate, cancel, rescind
or revoke its business or contractual relationships with the Bank or the
Company.

 
Not withstanding the preceding, if the Executive receives a Change in Control
Payment, but not a Salary Continuation Payment, the nonsolicitation provisions
shall apply for a period beginning on the Change of Control date and shall
extend for a period of six (6) months.
 

7.  
Confidentiality Executive will not, after the date this Agreement is signed,
including during and after its term, use for his own purposes or disclose to any
other person or entity any Trade Secret of the Bank or the Company.

 

8.  
Enforcement. 

 

8.1  
Executive, the Bank and the Company stipulate that, in light of all of the facts
and circumstances of the relationship between Executive and the Bank/Company,
the agreements referred to in Section 6 (including without limitation their
scope) are fair and reasonably necessary for the protection of the
Bank’s/Company’s goodwill and other protectable interests. If a court of
competent jurisdiction should decline to enforce any of those covenants and
agreements, Executive and the Bank/Company request the court to reform these
provisions to the maximum extent that the court finds enforceable.

 

8.2  
Executive acknowledges that the Bank/Company will suffer immediate and
irreparable harm that will not be compensable by damages alone, if Executive
repudiates or breaches any of the provisions of Sections 6 or 7 or threatens or
attempts to do so. For this reason, under these circumstances, the Bank/Company,
in addition to and without limitation of any other rights, remedies or damages
available to them at law or in equity, will be entitled to obtain temporary,
preliminary, and permanent injunctions in order to prevent or restrain the
breach, and the Bank/Company will not be required to post a bond as a condition
for the granting of this relief.

 

9.  
Arbitration. Except for as set forth in Section 8 of this Agreement, at either
the Company’s, the Bank’s or Executive’s request, the parties must submit any
dispute, controversy or claim arising out of or in connection with, or relating
to, this Agreement or any breach or alleged breach of this Agreement, to
arbitration under the American Arbitration Association's rules then in effect
(or under any other form of arbitration mutually acceptable to the parties). A
single arbitrator agreed on by the parties will conduct the arbitration. If the
parties cannot agree on a single arbitrator, each party must select one
arbitrator and those two arbitrators will select a third arbitrator. This third
arbitrator will hear the dispute. The arbitrator's decision is final (except as
otherwise specifically provided by law) and binds the parties, and any party may
request any court having jurisdiction to enter a judgment and to enforce the
arbitrator's decision. The arbitrator will provide the parties with a written
decision naming the substantially prevailing party in the action. This
prevailing party is entitled to reimbursement from the other parties for its
costs and expenses, including reasonable attorneys' fees. All proceedings will
be held at a place designated by the arbitrator in Lane County, Oregon. The
arbitrator, in rendering a decision as to any state law claims, will apply
Oregon law.

 

10.  
Withholding. All payments required to be made by the Company or the Bank
hereunder to Executive shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company or the Bank may
reasonably determine should be withheld pursuant to any applicable law or
regulation.

 

11.  
Other Compensation and Terms of Employment. This Agreement is not an employment
agreement. Accordingly, except with respect to the Change in Control Payment and
the Salary Continuation Payment, this Agreement shall have no effect on the
determination of any compensation payable by the Company or the Bank to
Executive, or upon any of the other terms of Executive's employment with the
Company or the Bank. The specific arrangements referred to herein are not
intended to exclude any other benefits which may be available to Executive upon
a termination of employment with the Company or the Bank pursuant to employee
benefit plans of the Company or the Bank or otherwise.

 

12.  
Miscellaneous Provisions.

 

12.1  
Entire Agreement. This Agreement constitutes the entire understanding and
agreement between the parties concerning its subject matter and supersedes all
prior agreements, correspondence, representations, or understandings between the
parties relating to its subject matter including that certain Executive
Severance Agreement dated as of January 22, 1998.

 

12.2  
Binding Effect. This Agreement will be binding and enforceable against, and will
inure to the benefit of, the heirs, legal representatives, successors and
assigns of the Company, the Bank, and Executive.

 

12.3  
Waiver. Any waiver by a party of its rights under this Agreement must be written
and signed by the party waiving its rights. A party's waiver of the other
party's breach of any provision of this Agreement will not operate as a waiver
of any other breach by the breaching party.

 

12.4  
Amendment. This Agreement may be modified only through a written instrument
signed by both parties.

 

12.5  
Severability. The provisions of this Agreement are severable. The invalidity of
any provision will not affect the validity of other provisions of this
Agreement.

 

12.6  
Counsel Review. Executive acknowledges that he has had the opportunity to
consult with independent counsel with respect to the negotiation, preparation,
and execution of this Agreement.

 

12.7  
Governing Law and Venue. This Agreement will be governed by and construed in
accordance with Oregon law, except to the extent that federal law may govern
certain matters. The parties must bring any legal proceeding arising out of this
Agreement in Lane County, Oregon.

 

12.8  
Counterparts. This Agreement may be executed in one or more counterparts, each
of which will be deemed an original, but all of which taken together will
constitute one and the same document.

 

12.9  
Assignability. The Company and/or the Bank may assign this Agreement and its
rights hereunder in whole, but not in part, to any corporation, bank or other
entity with or into which the Company and/or the Bank may hereafter merge or
consolidate or to which the Company and/or the Bank may transfer all or
substantially all of its assets, if in any such case said corporation, bank or
other entity shall by operation of law or expressly in writing assume all
obligations of the Company and/or the Bank hereunder as fully as if it had been
originally made a party hereto, but may not otherwise assign this Agreement or
its rights hereunder. Executive may not assign or transfer this Agreement or any
rights or obligations hereunder.

 

12.10  
Revocability. Subject to the provisions of Sections 1.11, 3.2 and 4.1 of this
Agreement, this Agreement may be terminated unilaterally by a majority vote of
the board of directors of the Company and/or the Bank.

 
This Severance/Salary Continuation Agreement is effective as of the date first
set forth above.
 

 
PACIFIC CONTINENTAL CORPORATION

By  /s/ Hal Brown    

Its  President and CEO   

PACIFIC CONTINENTAL BANK

By  /s/ Hal Brown    

Its  President and CEO   

EXECUTIVE:

/s/ Mitchell Hagstrom   
Mitchell Hagstrom