NATIONAL BANK OF TUKWILA
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), signed June 11, 1999, between
NATIONAL BANK OF TUKWILA (the "Bank") and XXXXXXX X. XXXXXXXXXXXX ("Executive")
takes effect on the effective date of the Merger ("Effective Date").
RECITALS
A. NBT Northwest Bancorp, which is the parent company of the Bank, intends
to merge into InterWest Bancorp, Inc. ("InterWest"), and the Bank will
thereby become the wholly owned subsidiary of InterWest (the "Merger")
under the terms of the Agreement and Plan of Merger dated as of June
11, 1999 ("Plan") between the parties and Pacific Northwest Bank, the
wholly owned subsidiary of InterWest.
B. Executive is presently the Bank's President and Chief Executive Officer
("CEO"). The Bank wishes to continue Executive's employment in that
capacity under the terms and conditions of this Agreement.
C. Under the terms of this Agreement, Executive wishes to continue his
employment with the Bank (or its successor, if any) for the period
provided in this Agreement.
AGREEMENT
The parties agree as follows.
1. EMPLOYMENT. The Bank will continue Executive's employment during the
Term (as defined below), and Executive accepts employment by the Bank,
on the terms and conditions set forth in this Agreement.
Executive's title will be "President and Chief Executive Officer."
2. EFFECTIVE DATE AND TERM.
(a) TERM. The initial term of this Agreement commences on the
Effective Date and terminates one year from the Effective Date
("Initial Term"); PROVIDED, however, Executive may renew his
employment under this Agreement for two additional one-year
terms (each, a "Renewal Term") by providing InterWest with
written notice of his intent to renew at least sixty (60) days
prior to the date this Agreement would otherwise terminate
(the Initial Term and any exercised Renewal Term being, the
"Term").
(b) FAILURE TO RENEW TERM. If Executive fails to provide the
written notice described above but his employment is
nonetheless continued after expiration of the then applicable
Term, then (i) Executive shall be deemed an at-will employee
of the Bank, (ii) Executive shall cease to have any right to
continued employment under this Agreement, and (iii) upon
termination of his employment, Executive shall only be
entitled to receive (X) the salary earned and expenses
reimbursable through the date of such termination plus (Y)
only if such termination is without Cause or Executive resigns
for Good Reason, the Severance Payment. In addition, upon any
termination of Executive's employment under this Section 2(b),
Executive will be subject to the noncompetition and
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nonsolicitation requirements of Section 12 for a two-year
period following such termination.
(c) ABANDONMENT OF THE MERGER. If the Plan terminates before
Closing, this Agreement will not become effective and will be
void.
3. DUTIES. Executive will faithfully and diligently perform the duties
assigned to Executive from time to time by the Bank's board of
directors, by InterWest's board of directors, or by the President and
CEO of InterWest. In the event that InterWest elects to merge the Bank
into Pacific Northwest Bank or some other affiliate of InterWest, then
the title and duties of Executive with respect to the entity surviving
such merger shall be determined by the President and CEO of InterWest
or his designee. Executive will use his best efforts to perform his
duties and will devote his time and attention to these duties, which
will include, without limitation, the following:
(a) BANK PERFORMANCE. Executive will be responsible for all
aspects of the Bank's performance, including, without
limitation, directing that daily operational and managerial
matters are performed in a manner consistent with InterWest's
and the Bank's policies. These duties will also include
formulating and implementing the Bank's expansion strategies
and performing all other tasks in connection with the Bank's
management and affairs that are normal and customary to
Executive's position.
(b) INTEGRATION WITH INTERWEST. Executive will participate in the
integration of the Bank's commercial banking activities with
InterWest's existing operations.
(c) 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 areas.
(d) REPORT TO BOARD. Executive will report directly to the Bank's
board of directors and to the President and CEO of InterWest
or his designee. The Bank's or InterWest's board of directors
may, from time to time, modify Executive's title or add to,
delete from, or modify Executive's performance
responsibilities to accommodate management succession, as well
as any other management objectives of the Bank or of
InterWest. Executive will assume any additional positions,
duties, and responsibilities as may reasonably be requested of
him with or without additional compensation, as appropriate
and consistent with Sections 3(a), 3(b), and 3(c) of this
Agreement.
4. SALARY. Executive will receive a salary of $95,000 per year (the "Base
Salary"), which shall be paid in accordance with the Bank's customary
payment practices.
5. INCENTIVE COMPENSATION. The Bank's board of directors, subject to
ratification by InterWest's board of directors, will determine the
amount of bonus, if any, to be paid by the Bank to Executive for each
year during the Term. In making this determination, the Bank's board of
directors will consider factors such as Executive's performance of his
duties and the safety, soundness, and profitability of the Bank.
Executive's bonus, if any, will reflect Executive's contribution to the
performance of the Bank during the year.
6. INCOME DEFERRAL AND BENEFITS. Subject to eligibility requirements and
in accordance with and subject to any policies adopted by the Bank's or
InterWest's board of directors with respect to any
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benefit plans or programs (including stock option plans), Executive
will be entitled to receive benefits similar to those offered to
other executive officers of InterWest's subsidiaries with position
and duties comparable to those of Executive. The foregoing
notwithstanding, Executive will continue to receive at minimum
perquisites commensurate to those he currently receives, including
without limitation, four (4) weeks of apid vacation per year and use
of a Bank automobile.
7. BUSINESS EXPENSES. The Bank will reimburse Executive for ordinary and
necessary expenses (including, without limitation, travel,
entertainment, and similar expenses) incurred in performing and
promoting the Bank's business. Executive will present from time to time
itemized accounts of these expenses, subject to any limits of Bank
policy or the rules and regulations of the Internal Revenue Service.
8. TERMINATION.
(a) TERMINATION BY BANK FOR CAUSE. If, before the end of any
Term, the Bank terminates Executive's employment for Cause
or Executive terminates his employment without Good Reason,
the Bank will pay Executive the Base Salary earned and
expenses reimbursable under this Agreement for such Term
that are incurred through the date of Executive's
termination. Executive will have no right to receive
compensation or other benefits for any period after
termination under this Section 8(a), and Executive will be
subject to the noncompetition and nonsolicitation
requirements of SECTION 12 through the remainder of the
Term and for the two-year period following such Term.
(b) OTHER TERMINATION BY BANK. If, before the end of any Term, the
Bank terminates Executive's employment without Cause or
Executive terminates his employment for Good Reason (defined
below), the Bank will (1) pay Executive for the remainder of
such Term the Base Salary for that Term he would have been
entitled to under this Agreement if his employment had not
terminated, and (2) make a payment to Executive in an amount
equal to his Base Salary then in effect (the "Severance
Payment"), which Severance Payment will be made in equal
payments over one year. If Executive is terminated pursuant to
this Section 8(b), Executive will be subject to the
noncompetition and nonsolicitation requirements of SECTION 12
through the remainder of the Term only.
(c) DEATH OR DISABILITY. This Agreement terminates (1) if
Executive dies or (2) 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 arising
during any Term, unless with reasonable accommodation
Executive could continue to perform his duties under this
Agreement and making these accommodations would not pose an
undue burden on the Bank. If termination occurs under this
Section 8(c), Executive or his estate will be entitled to
receive only the compensation and benefits earned and expenses
reimbursable through the date this Agreement terminated.
(d) COMPLETION OF TERM. Upon termination of Executive's employment
by reason of completion of the Term, the Bank will pay
Executive the Severance Payment in equal payments over the
course of one year.
(e) RETURN OF BANK PROPERTY. If and when Executive ceases, for any
reason, to be employed by the Bank, Executive must return to
the Bank all keys, pass cards, identification cards and any
other property of the Bank or InterWest. At the same time,
Executive also must
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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
InterWest. The obligations in this paragraph include the
return of documents and other materials which may be in
Executive's desk at work, in Executive's car or place of
residence, or in any other location under Executive's
control.
9. DEFINITION OF "CAUSE". "Cause" means any one or more of the following:
(a) Willful misfeasance or gross negligence in the performance of
Executive's duties;
(b) Conviction of a crime in connection with his duties; or
(c) Conduct demonstrably and significantly harmful to the Bank, as
reasonably determined by the Bank's board of directors on the
advice of legal counsel.
10. DEFINITION OF "GOOD REASON". "Good Reason" means only any one or more
of the following:
(a) Reduction, without Executive's consent, of Executive's salary
or elimination of any compensation or benefit plan benefiting
Executive, unless the reduction or elimination is applicable
to all similarly situated Bank employees (or employees of a
successor or controlling entity of the Bank) formerly
benefited;
(b) A relocation or transfer of Executive's principal place of
employment that would require Executive to commute on a
regular basis more than thirty miles each way from his current
business office at the Bank on the date of this Agreement,
unless Executive consents to such commute. Notwithstanding the
foregoing, it is the parties' understanding and intent that
Executive will, on occasion, be required to travel to Seattle,
Washington, for Bank-related business; or
(c) The written consent of the Bank and InterWest to such resignation.
11. CONFIDENTIALITY. Executive will not, after signing this Agreement,
including during and after its Term, use for his own purposes or
disclose to any other person or entity any confidential information
concerning the Bank, InterWest, their subsidiaries or their business
operations or customers, unless (1) the Bank or InterWest 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 order.
12. NONCOMPETITION.
(a) PARTICIPATION IN A COMPETING BUSINESS. During any Term and for
two years after expiration of such Term (such two years being
the "Post-Term Period") (regardless of whether Executive
remains employed with the Bank through such Term), Executive
will not become involved with a Competing Business or serve,
directly or indirectly, a Competing Business in any manner,
including, without limitation, as a shareholder, member,
partner, director, officer, manager, investor, organizer,
"founder," employee, consultant or agent; PROVIDED, HOWEVER,
that Executive may acquire and own an interest not exceeding
2% of the total equity interest in any publicly held entity
whose equity securities are listed on a national securities
exchange (whether or not such entity is a
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Competing Business). Executive's noncompetition obligations
for the Post-Term Period will not apply if (1) Executive's
employment during any Term is terminated without Cause, or
(2) Executive terminates his employment during any Term for
Good Reason.
(b) NO SOLICITATION. During any Term and the Post-Term Period
(regardless of whether Executive remains employed with the
Bank through the Term), Executive will not directly or
indirectly solicit or attempt to solicit (1) any employees of
the Bank, InterWest, or any of InterWest's Subsidiaries, to
leave their employment or (2) any customers of the Bank,
InterWest, or any of InterWest's Subsidiaries to remove their
business from the Bank, InterWest, or any of InterWest's
Subsidiaries, or to participate in any manner in a Competing
Business. Solicitation prohibited under this Section includes
solicitation by any means, including, without limitation,
meetings, letters or other mailings, electronic communications
of any kind, and internet communications. Executive's
nonsolicitation obligations for the Post-Term Period will not
apply if (1) Executive's employment during any Term is
terminated without Cause, or (2) Executive terminates his
employment during any Term for Good Reason.
(c) EMPLOYMENT OUTSIDE THE COUNTY. Nothing in this Agreement
prevents Executive from accepting employment after the end of
the Term outside a thirty mile radius of Tukwila, Washington
(the "Restricted Zone"), from a Competing Business, as long as
Executive will not (a) act as an employee or other
representative or agent of the Competing Business within the
Restricted Zone or (b) have any responsibilities for the
Competing Business' operations within the Restricted Zone.
(d) COMPETING BUSINESS. "Competing Business" means any financial
institution or trust company that competes with, or will
compete with, InterWest, the Bank, or any of InterWest's
Subsidiaries. The term "Competing Business" includes, without
limitation, any start-up or other financial institution or
trust company in formation.
13. 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 and 12
(including without limitation their scope, duration and
geographic extent) are fair and reasonably necessary for the
protection of the Bank's and InterWest'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 information and Executive's
ability to compete with the Bank and InterWest to the maximum
extent, in time, scope of activities, and geography, the court
finds enforceable.
(b) Executive acknowledges that the Bank and InterWest 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 or 12 or threatens or attempts to do
so. For this reason, under these circumstances, the Bank and
InterWest, 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 neither the Bank nor InterWest will be required to
post a bond as a condition for the granting of this relief.
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14. ADEQUATE CONSIDERATION. Executive specifically acknowledges the receipt
of adequate consideration for the covenants contained in Sections 11
and 12 and that the Bank is entitled to require him to comply with
these Sections. These Sections will survive termination of this
Agreement. Executive represents that if his employment is terminated,
whether voluntarily or involuntarily, Executive has experience and
capabilities sufficient to enable Executive to obtain employment in
areas which do not violate this Agreement and that the Bank's
enforcement of a remedy by way of injunction will not prevent Executive
from earning a livelihood.
15. 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 King County, Washington. The
arbitrator, in rendering a decision as to any state law
claims, will apply Washington law.
(c) EXCEPTION TO ARBITRATION. Notwithstanding the above, if
Executive violates Section 11 or 12, the Bank will have the
right to initiate the court proceedings described in Section
13(b), in lieu of an arbitration proceeding under this Section
15. The Bank may initiate these proceedings wherever
appropriate within Washington State; but Executive will
consent to venue and jurisdiction in King County, Washington.
16. MISCELLANEOUS PROVISIONS.
(a) DEFINED TERMS. Capitalized terms used as defined terms, but
not defined in this Agreement, will have the meanings assigned
to those terms in the Plan.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties concerning its subject
matter and supersedes all prior agreements. Accordingly,
Executive specifically waives the terms of and all of his
rights under all employment, change-in-control and salary
continuation agreements, whether written or oral, he has
entered into with the Bank or any of its Subsidiaries or
affiliates.
(c) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement,
express or implied, is intended to confer upon Executive the
right to continued employment with the Bank after the Term.
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(d) BINDING EFFECT. This Agreement will bind and inure to the
benefit of the Bank's, InterWest's, and Executive's heirs,
legal representatives, successors and assigns.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) AMENDMENT. This Agreement may not be modified or amended
except by a written instrument signed by both parties with the
prior written consent of InterWest.
(j) SEVERABILITY. The provisions of this Agreement are severable.
The invalidity of any provision will not affect the validity
of other provisions of this Agreement.
(k) GOVERNING LAW AND VENUE. This Agreement will be governed by
and construed in accordance with Washington law, except to the
extent that certain matters may be governed by federal law.
Except as otherwise provided in Section 15(c), the parties
must bring any legal proceeding arising out of this Agreement
in King County, Washington, and the parties will submit to
jurisdiction in that county.
(l) COUNTERPARTS. This Agreement may be executed in one or more
facsimile counterparts, each of which will be deemed an
original, but all of which taken together will constitute one
and the same document.
Signed: June 11, 1999:
NATIONAL BANK OF TUKWILA XXXXXXX X. XXXXXXXXXXXX, individually
/s/ /s/
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By: Xxxxxxx X. Xxxxxxxxxxxx
Its:
