EXHIBIT 10.1
 
PACIFIC CONTINENTAL BANK
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (“Agreement”), signed as of May 23, 2002 (the
“Effective Date”), is entered into between PACIFIC CONTINENTAL BANK (“Bank”),
PACIFIC CONTINENTAL CORPORATION (“Corporation”) and DANIEL J. HEMPY
(“Executive”).
 
RECITALS
 
A.    Bank desires to employ Executive under the terms and conditions of this
Agreement.
 
B.    Executive desires to be employed by the Bank under the terms and
conditions of this Agreement.
 
AGREEMENT
 
In consideration of the promises set forth in this Agreement, the parties agree
as follows.
 
1.  Employment.    The Bank agrees to employ Executive, and Executive accepts
employment by the Bank, on the terms and conditions set forth in this Agreement.
Executive’s title will be Executive Vice President, Director of Corporate
Banking of the Corporation and of the Bank.
 
2.  Term.    The term of this Agreement (“Term”) is three years, provided that
Executive’s employment may be terminated by either party at any time, with or
without cause, upon not less than 30 days prior written notice to the other
party, subject to the provisions of Section 9. Notwithstanding any termination
or expiration of this Agreement, so long as Executive is employed by the
Corporation or any of its subsidiaries, the provisions of Section 10 shall
survive until such time as the Corporation’s Board of Directors specifically
terminates Section 10.
 
3.  Duties.    The Bank will employ Executive as its Executive Vice President,
Director of Corporate Banking. Executive will faithfully and diligently perform
the duties assigned to him from time to time by the Bank’s and the Corporation’s
President. These duties will include, without limitation, the following:
 
a.  Development and Preservation of Business.    Executive will be responsible
for the development and preservation of banking relationships and other business
development efforts (including appropriate civic and community activities) in
the Bank’s market area.
 
b.  Report to President.    Executive will report directly to the Bank’s and the
Corporation’s President.

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4.  Extent of Services.    Executive will devote all of his working time,
attention and skill to the duties and responsibilities set forth in Section 3.
To the extent that such activities do not interfere in any material respect with
his duties under Section 3, Executive may participate in other businesses as a
passive investor, but (a) Executive may not actively participate in the
operation or management of those businesses, and (b) Executive may not make or
maintain any investment in a business with which the Bank and/or Corporation has
an existing competitive or commercial relationship (except for investments of no
greater than three percent (3%) of the total outstanding shares in any
publicly-traded company), in either without the Bank’s or the Corporation’s
prior written consent (which shall not be unreasonably withheld).
 
5.  Salary.    Executive will initially receive an annual base salary of
$155,000, to be paid in accordance with the Bank’s regular payroll schedule.
Subsequent salary increases are subject to the Bank’s annual review of
Executive’s compensation and performance.
 
6.  Bonuses.    Each year during the Term, the Bank’s board of directors will
determine the amount of bonus to be paid by the Bank to Executive for that year.
This bonus will be paid to Executive no later than January 31 of the year
following the year in which the bonus is earned by Executive. After 2002, such
bonus shall be determined in accordance with the Bank’s 401(k)/bonus formula, as
such formula is in effect as of the date of this Agreement and as it may be
modified with Executive’s prior approval. Notwithstanding the foregoing bonus
formula, unless Executive voluntarily terminates his employment with the Bank or
his employment is terminated by the Bank for Cause, Executive shall receive a
guaranteed minimum bonus of $55,000, which shall be payable in January of 2003.
 
7.  Income Deferral.    Executive will be eligible to participate in any program
available to the Bank’s and Corporation’s senior management for income deferral,
for the purpose of deferring receipt of any or all of the compensation he may
become entitled to under this Agreement.
 
8.  Vacation and Benefits.
 
a.  Vacation and Holidays.    Initially, Executive will receive four (4) weeks
of paid vacation each year, which shall be adjusted in accordance with Bank
policy. Each year, Executive may carry over up to one (1) week of unused
vacation to the following year. Any unused vacation time in excess of one (1)
week will not accumulate or carry over from one calendar year to the next.
 
b.  Benefits.    Executive will be entitled to participate in any group life
insurance, disability, health and accident insurance plans, profit sharing and
pension plans and in other employee fringe benefit programs the Bank or
Corporation may have in effect from time to time for its similarly situated
employees, in accordance with and subject to any policies adopted by the Bank’s
or Corporation’s board of directors with respect to the plans or programs.
Neither the Bank nor Corporation through this Agreement obligates itself to make
any particular benefits available

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to its employees. As of the date of this Agreement, the Bank or Corporation
shall make available and pay the premiums for Executive’s and his family’s
medical, life and disability insurance, provided that Executive acknowledges
that the cost for family dental insurance coverage is $75, which is payable by
Executive.
 
c.  Perquisites.    While Executive is employed during the Term, Executive will
also receive the following:
 
(1)  the use of a Bank automobile;
 
(2)  payment for country club dues;
 
(3)  payment for parking expenses at Executive’s office; and
 
(4)  a cellular phone and laptop computer.
 
d.  Stock Options.    While employed, Executive shall be granted incentive stock
options, subject to applicable incentive stock option limitations in which case
such options shall be non-qualified stock options, to purchase shares of the
Corporation’s stock as follows:
 
(1)  Simultaneous with the effectiveness of this Agreement, Executive shall
receive, by separate written agreement, an option to purchase 20,000 shares of
Corporation common stock. The exercise price shall be the fair market value of
the Corporation’s common stock as of the date of grant. The options shall have a
ten-year term and shall vest in equal portions over three years from the date of
grant, with one-third of the total options vesting on each of the first, second
and third anniversaries of the date of grant.
 
(2)  Executive shall receive, by separate written agreement, an option to
purchase 20,000 shares of the Corporation’s common stock (the “Portland-Based
Option”). The exercise price shall be the fair market value of the Corporation’s
common stock as of the date of grant. If, prior to June 30, 2004, the Bank’s
loans in the Portland, Oregon market exceed $250 million and the Bank’s deposits
in the Portland, Oregon market exceed $150 million, then at such time as the
foregoing loan and deposit amounts are exceeded, the Portland-Based Option will
become vested and exercisable. The Portland-Based Option will only be vested and
exercisable if the condition in the preceding sentence is satisfied. The
Portland-Based Option shall have a term of ten years.
 
(3)  In each of 2003 and 2004, Executive shall receive, by separate written
agreement, an incentive stock option to purchase shares of Corporation common
stock with a market value of $100,000 as of the date of grant. The exercise
price shall be the fair market value of the Corporation’s common stock as of the
date of grant. The options shall have a five-year

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term and shall vest in equal portions over four years from the date of grant,
with one-quarter of the total options vesting on each of the first, second,
third and fourth anniversaries of the date of grant.
 
(4)  The number of shares of Corporation stock subject to the foregoing options
shall be adjusted proportionately from the date of this Agreement for any stock
splits, stock dividends or other similar changes to the Corporation’s
outstanding common stock.
 
e.  Business Expenses.    The Bank will promptly pay or reimburse Executive for
reasonable expenses which are consistent with past practice at the Bank
(including, without limitation, travel, entertainment, and similar expenses) and
which are incurred in performing and promoting the Bank’s business. Executive
will present on a monthly basis itemized accounts of these expenses, subject to
any limits of Bank policy or the rules and regulations of the Internal Revenue
Service.
 
9.  Termination of Employment.
 
a.  Termination By Bank for Cause.    If, during the Term, the Bank terminates
Executive’s employment for Cause (defined below), the Bank will pay Executive
the salary earned, unpaid vacation and other amounts payable under applicable
law that have accrued through the date of termination, and expenses reimbursable
under this Agreement incurred through the date of his termination. Executive
will have no right to receive compensation or other benefits for any period
after termination under this Section 9.
 
b.  Other Termination By Bank.    If, during the Term, the Bank terminates
Executive’s employment without Cause, or Executive terminates his employment for
Good Reason (defined below), the Bank will pay Executive the compensation
(including the bonus described in Section 6, unpaid vacation and other amounts
payable under applicable law that have accrued through the date of termination)
and other benefits he would have been entitled to if his employment had not
terminated (the “Termination Payment”), for a period of twelve (12) months. The
Bank will also pay Executive for expenses reimbursable under this Agreement
incurred though the date of termination. In the event of a termination related
to a Change in Control pursuant to Section 10, the provisions of Section 10
shall supersede this section.
 
c.  Death or Disability.    This Agreement terminates (1) if Executive dies or
(2) if Executive is unable to perform his duties and obligations under this
Agreement for a period of 90 days as a result of a physical or mental disability
(such inability being, a “Disability”), unless with reasonable accommodation
Executive could continue to perform his duties under this Agreement and making
these accommodations would not pose an undue hardship on the Bank. If
termination occurs under this Section 9(c), Executive or his estate will be
entitled to receive

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all compensation and benefits earned (including, without limitation, the bonus
described in Section 6, pro rated for the actual time worked by Executive during
the applicable period and calculated and paid in the ordinary course consistent
with bonus payments to other Bank executives, accrued and unpaid vacation, and
any other amounts payable under applicable law) and expenses reimbursable
through the date Executive’s employment terminated. In addition, the portion of
stock options that would have vested had Executive’s employment continued for an
additional twelve (12) months after Executive’s death or Disability will vest.
 
d.  Return of Bank Property.    If and when Executive ceases, for any reason, to
be employed by the Bank or the Corporation, Executive must return to the Bank
all keys, pass cards, identification cards and any other property of the Bank or
Corporation. At the same time, Executive also must return to the Bank all
originals and copies (whether in hard copy, electronic or other form) of any
documents, drawings, notes, memoranda, designs, devices, diskettes, tapes,
manuals, and specifications which constitute proprietary information or material
of the Bank or Corporation. The obligations in this paragraph include the return
of documents and other materials which may be in his desk at work, in his car,
in place of residence, or in any other location under his control.
 
e.  Cause.    “Cause” means any one or more of the following:
 
(1)  Willful misfeasance or gross negligence in the performance of Executive’s
duties which adversely affects the Bank in more than an insignificant manner;
 
(2)  Conviction of a crime constituting a felony, theft or dishonesty; or
 
(3)  Willful conduct demonstrably and significantly harmful to the Bank, as
determined by the Bank’s board of directors in its reasonable judgment.
 
Notwithstanding the foregoing, termination for “Cause” shall not be deemed to
have occurred unless and until there shall have been delivered to Executive a
copy of a resolution duly adopted by the Board of Directors of the Corporation
at a meeting called and held after ten days notice to Executive and an
opportunity for Executive, together with counsel, to be heard before the Board
of Directors, stating that in the reasonable good faith opinion of the Board of
Directors, Executive was guilty of conduct constituting “Cause” hereunder and
specifying the particulars thereof in detail.
 
f.  Good Reason.    “Good Reason” means only any one or more of the following:
 
(1)  Reduction of Executive’s salary or reduction or elimination of any
significant compensation or benefit plan benefiting Executive, in each case as
may from time to time be in effect, unless the reduction or elimination

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is generally applicable to substantially all Bank employees (or employees of a
successor or controlling entity of the Bank) formerly benefited;
 
(2)  The assignment to Executive without his consent of any authority or duties
materially inconsistent with Executive’s position as from time to time in
effect;
 
(3)  Any change without Executive’s consent of the individual to whom Executive
reports;
 
(4)  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; or
 
(5)  Any material breach by the Bank of any of its obligations to Executive,
provided that breach is not cured within 30 days after Bank’s receipt of written
notice of such breach from Executive.
 
g.  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 Bank, within the meaning of section 280G of the Internal Revenue
Code.
 
10.  Payment Related to a Change in Control.
 
a.  Payment Triggers    Upon the occurrence of any of the following, each of
which is a “Triggering Event,” Executive will be entitled to receive the payment
and benefits described in Section 10(b):
 
(1)  A Change in Control of the Bank and/or the Corporation is consummated while
Executive is employed by the Bank, and Executive is not offered a Comparable
Position (as defined below) with the acquiring company;
 
(2)  Within one year after accepting a Comparable Position with the acquiring
company, Executive’s employment ceases for any reason other than termination for
Cause; or
 
(3)  The Bank terminates Executive’s employment without Cause or Executive
resigns for Good Reason, and within one year thereafter the Bank and/or the
Corporation 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 Bank and/or the Corporation.
 
(4)  A “Comparable Position” means the position of Executive Vice President,
Director of Corporate Banking (or other position that Executive may from time to
time hold with the Bank with his consent) of the acquiring company, on financial
terms in the aggregate no less favorable than this Agreement.

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b.  Payment Amount.    If a Triggering Event occurs, the Bank will pay
Executive, upon the closing of the Change in Control or termination of
Executive’s employment, whichever is applicable, a single payment in an amount
equal to two (2) times the highest compensation (as reportable on Executive’s
IRS W-2 form) received by Executive from the Bank and/or the Corporation during
any of the most recent three (3) calendar years ending before, or simultaneously
with, the date on which the Change in Control occurs or the termination of
Executive’s employment, as applicable, less the amount of any Termination
Payments that may have been paid to Executive pursuant to Section 9(b). If
Executive’s employment is terminated pursuant to Section 10(a), the Bank will
also maintain and provide for one year following Executive’s termination or the
closing of the Change in Control, whichever is later, at no cost to Executive,
the benefits described in Section 8(b) to which Executive is entitled
(determined as of the day before the date of such termination); but if
Executive’s participation in any such benefit is thereafter barred or not
feasible, or discontinued or materially reduced, the Bank will arrange to
provide Executive with either benefits substantially similar to those benefits
or a cash payment of substantially similar value in lieu of the benefits. In
addition, any unvested options granted to Executive shall immediately vest.
 
c.  Limitations on Payments Related to Change in Control.    The following apply
notwithstanding any other provision of this Agreement:
 
(1)  If the total of the payments and benefits described in Section 10(b) 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 (a “Parachute
Payment Amount”), then such payment(s) shall be reduced so that the total amount
thereof is $1 less than the Parachute Payment Amount; and
 
(2)  Executive’s right to receive the payments and benefits described in Section
10(b) terminates immediately if before the Change in Control transaction closes,
Executive terminates his employment without Good Reason or the Bank terminates
Executive’s employment for Cause.
 
d.  Survival.    The provisions of this Section 10 will survive any termination
or expiration of this Agreement until such time as the Corporation’s Board of
Directors specifically terminates this Section 10.
 
11.  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 (other than Executive’s attorneys, accountants,
financial advisors and spouse) or entity any confidential business information
concerning the Bank or Corporation or their business operations, unless (1) the
Bank or Corporation consents to the use or disclosure of their respective
confidential information; (2) the use or disclosure is consistent with
Executive’s duties under this Agreement or (3) disclosure is required by law or
court

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order. For purposes of this Agreement, confidential business information
includes, without limitation, trade secrets, various confidential information
concerning all aspects of current and future operations, nonpublic information
on investment management practices, marketing plans, pricing structure and
technology of either the Bank or Corporation. Executive and the Bank will also
treat the terms of this Agreement as confidential business information. The
obligations of this confidentiality shall not apply to information that (1)
enters the public domain without a breach of this Agreement by Executive, (2) is
disclosed by the Bank, the Corporation or any of their affiliates to third
parties without restrictions on disclosure, (3) is known to Executive prior to
receipt thereof from the Bank, (4) is lawfully obtained by Executive from any
third party not subject to a confidentiality agreement with the Bank, (5) is
required to be disclosed to or by a court or other governmental authority or by
applicable law, or (6) is necessary to establish rights under this Agreement or
any other agreement contemplated hereby.
 
12.  Nonsolicitation.    Provided that neither the Bank nor the Corporation is
in breach of its obligations to Executive, for one (1) year after Executive’s
employment under this Agreement terminates, Executive will not, directly or
indirectly, persuade or entice, or attempt to persuade or entice, (i) any
employee of the Bank or Corporation to terminate his/her employment with the
Bank or Corporation, or (ii) any customer of the Bank or Corporation to
terminate his/her relationship with the Bank or Corporation or to otherwise
direct any portion of his/her business away from the Bank or Corporation.
 
13.  Noncompete.    Provided that neither the Bank nor the Corporation is in
breach of its obligations to Executive, during the Term and the terms of any
extensions or renewals of this Agreement and for a period of one (1) year after
Executive’s employment with the Bank and/or the Corporation has terminated,
Executive will not, without the prior consent of the Bank (which consent shall
be given or withheld in good faith), directly or indirectly, as a shareholder,
director, officer, employee, partner, agent, consultant, lessor, creditor or
otherwise (except for investments of no greater than three percent (3%) of the
total outstanding shares in any publicly-traded company): provide management,
supervisory or other similar services to any person or entity engaged in any
business in Lane, Multnomah and Washington Counties, Oregon (or any other
counties in which the Bank or the Corporation may have a presence) which is
competitive with the business of the Bank or the Corporation as conducted during
the term of this Agreement or as conducted as of the date of termination of
employment, including any preliminary steps associated with the formation of a
new bank.
 
14.  Enforcement.
 
a.  The Bank and Executive stipulate that, in light of all of the facts and
circumstances of the relationship between Executive and the Bank, the agreements
referred to in Sections 11, 12 and 13 are fair and reasonably necessary for the
protection of the Bank’s and Corporation’s confidential information, 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
request the court to reform these provisions to restrict Executive’s use of
confidential

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information and Executive’s ability to solicit employees to the maximum extent,
in time and scope, the court finds enforceable.
 
b.  Executive acknowledges the Bank and Corporation 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 11, 12 or 13 or
threatens or attempts to do so. For this reason, under these circumstances, the
Bank, in addition to and without limitation of any other rights, remedies or
damages available to it 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 will not be required to post a bond as a condition for
the granting of this relief.
 
15.  Covenants.    Executive specifically acknowledges the receipt of adequate
consideration for the covenants contained in Sections 11, 12 and 13 and that the
Bank is entitled to require him to comply with these Sections. These Sections
will survive termination of this Agreement.
 
16.  Arbitration.
 
a.  Arbitration.    At either party’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 either 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 party for its costs
and expenses, including reasonable attorneys’ fees.
 
b.  Governing Law.    All proceedings will be held at a place designated by the
arbitrator in Lane County, Oregon.
 
c.  Exception to Arbitration.    Notwithstanding the above, if Executive
violates Section 11, 12 or 13, the Bank and/or Corporation will have the right
to initiate the court proceedings described in Section 14(b), in lieu of an
arbitration proceeding under this Section 16.
 
17.  Miscellaneous Provisions.
 
a.  Entire Agreement.    This Agreement constitutes the entire understanding and
agreement between the parties concerning its subject matter and supersedes all

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prior agreements, correspondence, representations, or understandings between the
parties relating to its subject matter.
 
b.  Binding Effect.    This Agreement will bind and inure to the benefit of the
Bank’s, Corporation’s and Executive’s heirs, legal representatives, successors
and assigns.
 
c.  Litigation Expenses.    If either party successfully seeks to enforce any
provision of this Agreement or to collect any amount claimed to be due under it,
this party will be entitled to reimbursement from the other party for any and
all of its out-of-pocket expenses and costs including, without limitation,
reasonable attorneys’ fees and costs incurred in connection with the enforcement
or collection.
 
d.  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.
 
e.  Assignment.    The services to be rendered by Executive under this Agreement
are unique and personal. Accordingly, Executive may not assign any of his rights
or duties under this Agreement.
 
f.  Amendment.    This Agreement may be modified only through a written
instrument signed by both parties.
 
g.  Severability.    The provisions of this Agreement are severable. The
invalidity of any provision will not affect the validity of other provisions of
this Agreement.
 
h.  Governing Law and Venue.    This Agreement will be governed by and construed
in accordance with Oregon law, except to the extent that certain matters may be
governed by federal law. The parties must bring any legal proceeding arising out
of this Agreement in Lane County, Oregon.
 
i.  Counterparts; Facsimile.    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. Delivery of an executed
signature page to this Agreement shall be as effective as delivery of a manually
signed counterpart.
 
[signatures appear on following page]

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Signed as of: May 23, 2002:
 
EXECUTIVE:
By:
 
/s/    DANIEL J. HEMPY        

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Daniel J. Hempy

 
PACIFIC CONTINENTAL BANK:
By:
 
/s/    J. BRUCE RIDDLE        

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J. Bruce Riddle
Its:  President & CEO

 
PACIFIC CONTINENTAL CORPORATION
By:
 
/s/    J. BRUCE RIDDLE        

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J. Bruce Riddle
Its:  President & CEO

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