Exhibit 10.1
Proposed Form of Employment Agreement for Executive Officers
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this ___ day of __________, 1999 by and between EverTrust Financial Group, Inc.
(the "Company"), and its wholly owned subsidiary, Everett Mutual Bank (the
"Bank"), and____________ (the "Employee").
WHEREAS, the Employee is currently serving as the _____________ of the
Company and of the Bank;
WHEREAS, the Employee has made and will continue to make a major
contribution to the success of the Company and the Bank in the position of
_________________;
WHEREAS, the board of directors of the Company and the board of directors
of the Bank (collectively, the "Board of Directors") recognize that the
possibility of a change in control of the Bank or the Company may exist and that
such possibility, and the uncertainty and questions which may arise among
management, may result in the departure or distraction of key management to the
detriment of the Company, the Bank and their respective stockholders;
WHEREAS, the Board of Directors believes that it is in the best interests
of the Company and the Bank for the Company and the Bank to enter into this
Agreement with the Employee in order to assure continuity of management of the
Company and its subsidiaries; and
WHEREAS, the Board of Directors has approved and authorized the execution
of this Agreement with the Employee;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means (1) an offeror other than the
Company purchases shares of stock of the Company or the Bank pursuant to a
tender or exchange offer for such shares (2) an event of a nature that
results in the acquisition of control of the Company or the Bank within the
meaning of the Bank Holding Company Act of 1956, as amended, under 12
U.S.C. Section 1841 (or any successor statute or regulation) or requires
the filing of a notice with the Federal Deposit Insurance Corporation under
12 U.S.C. Section 1817(j) (or any successor statute or regulation); (2) an
event that would be required to be reported in response to Item 1 of the
current report on Form 8-K, as in effect on the Effective Date, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx
Xxx"); (3) any person (as the term is used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) directly or indirectly of securities of the
Company or the Bank representing 25% or more of the combined voting power
of the Company's or the Bank's outstanding securities; (4) individuals who
are members of the board of directors of the Company immediately following
the Effective Date or who are members of the board of directors of the Bank
immediately
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following the Effective Date (in each case, the "Incumbent Board") cease
for any reason to constitute at least a majority thereof, provided that any
person becoming a director subsequently whose election was approved by a
vote of at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's or the Bank's
stockholders was approved by the nominating committee serving under an
Incumbent Board, shall be considered a member of the Incumbent Board; or
(5) consummation of a plan of reorganization, merger, consolidation, sale
of all or substantially all of the assets of the Company or a similar
transaction in which the Company is not the resulting entity, or a
transaction at the completion of which the former stockholders of the
acquired corporation become the holders of more than 40% of the outstanding
common stock of the Company and the Company is the resulting entity of such
transaction; provided that the term "Change in Control" shall not include
an acquisition of securities by an employee benefit plan of the Bank or the
Company.
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company (or its successors) that are part of the
affiliated group (as defined in Section 1504 of the Internal Revenue Code
of 1986, as amended (the "Code"), without regard to subsection (b) thereof)
that includes the Bank, including but not limited to the Company.
(c) The term "Date of Termination" means the date upon which the
Employee's employment with the Company or the Bank or both ceases, as
specified in a notice of termination pursuant to Section 8 of this
Agreement.
(d) The term "Effective Date" means the date of this Agreement.
(e) The term "Involuntary Termination" means the termination of the
employment of Employee (i) by either the Company or the Bank or both
without his express written consent; or (ii) by the Employee by reason of a
material diminution of or interference with his duties, responsibilities or
benefits, including (without limitation) any of the following actions
unless consented to in writing by the Employee: (1) a requirement that the
Employee be based at any place other than Everett Washington, or within a
radius of 35 miles from the location of the Company's administrative
offices as of the date of this Agreement, except for reasonable travel on
Company or Bank business; (2) a material demotion of the Employee; (3) a
material reduction in the number or seniority of personnel reporting to the
Employee or a material reduction in the frequency with which, or in the
nature of the matters with respect to which such personnel are to report to
the Employee, other than as part of a Bank- or Company-wide reduction in
staff; (4) a reduction in the Employee's salary or a material adverse
change in the Employee's perquisites, benefits, contingent benefits or
vacation, other than as part of an overall program applied uniformly and
with equitable effect to all members of the senior management of the Bank
or the Company; (5) a material permanent increase in the required hours of
work or the workload of the Employee; or (6) the failure of the board of
directors of the Company (or a board of directors of a successor of the
Company) to elect him as _______________________ of the Company (or a
successor of the Company) or any action by the board of directors of the
Company (or a board of directors of a successor of the Company) removing
him from such office, or the failure of the board of directors of the Bank
(or any successor of the Bank) to elect him as
_____________________________ of the Bank (or any successor of the Bank) or
any action by such board (or a board of a successor of the Bank) removing
him from such office. The term "Involuntary Termination" does not include
Termination for Cause, termination of employment due
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to death or permanent disability pursuant to Section 7(f) of this
Agreement, retirement or suspension or temporary or permanent prohibition
from participation in the conduct of the Bank's affairs under Section 8 of
the Federal Deposit Insurance Act.
(f) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Employee with either the Company or
the Bank, as the case may be, because of the Employee's personal
dishonesty, incompetence, willful misconduct, breach of a fiduciary duty
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or (except
as provided below) material breach of any provision of this Agreement. No
act or failure to act by the Employee shall be considered willful unless
the Employee acted or failed to act with an absence of good faith and
without a reasonable belief that his action or failure to act was in the
best interest of the Company or the Bank. The Employee shall not be deemed
to have been Terminated for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution, duly adopted by the
affirmative vote of not less than a majority of the entire membership of
the Board of Directors at a meeting of the Board duly called and held for
such purpose (after reasonable notice to the Employee and an opportunity
for the Employee, together with the Employee's counsel, to be heard before
the Board), stating that in the good faith opinion of the Board of
Directors the Employee has engaged in conduct described in the preceding
sentence and specifying the particulars thereof in detail.
2. Term. The term of this Agreement shall be a period of three years
commencing on the Effective Date, subject to earlier termination as provided
herein. Beginning on the first anniversary of the Effective Date, and on each
anniversary thereafter, the term of this Agreement shall be extended for a
period of one year in addition to the then-remaining term, provided that (i)
neither the Employee nor the Company has given notice to the other in writing at
least 90 days prior to such anniversary that the term of this Agreement shall
not be extended further; and (ii) prior to such anniversary, the Board of
Directors explicitly reviews and approves the extension. Reference herein to the
term of this Agreement shall refer to both such initial term and such extended
terms.
3. Employment. The Employee shall be employed as the ______________________
Officer of the Company and as the ______________________ of the Bank. As such,
the Employee shall render ___________________ services as are customarily
performed by persons situated in similar executive capacities, and shall have
such other powers and duties as the Board of Directors may prescribe from time
to time. The Employee shall also render services to any subsidiary or
subsidiaries of the Company or the Bank as requested by the Company or the Bank
from time to time consistent with his executive position. The Employee shall
devote his best efforts and reasonable time and attention to the business and
affairs of the Company and the Bank to the extent necessary to discharge his
responsibilities hereunder. The Employee may (i) serve on charitable boards or
committees and, in addition, on such corporate boards as are approved in a
resolution adopted by a majority of the Board of Directors, which approval shall
not be withheld unreasonably and (ii) manage personal investments, so long as
such activities do not interfere materially with performance of his
responsibilities hereunder.
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4. Cash Compensation.
(a) Salary. The Company and the Bank jointly agree to pay the Employee
during the term of this Agreement a base salary (the "Salary") the
annualized amount of which shall be not less than the annualized aggregate
amount of the Employee's base salary from the Company and any Consolidated
Subsidiaries in effect at the Effective Date; provided that any amounts of
salary actually paid to the Employee by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company and the Bank to the Employee.
The Salary shall be paid no less frequently than monthly and shall be
subject to customary tax withholding. The amount of the Employee's Salary
shall be increased (but shall not be decreased) from time to time in
accordance with the amounts of salary approved by the Board of Directors or
the board of directors of any of the Consolidated Subsidiaries after the
Effective Date. The amount of the Salary shall be reviewed by the Board of
Directors at least annually during the term of this Agreement.
(b) Bonuses. The Employee shall be entitled to participate in an
equitable manner with all other executive officers of the Company and the
Bank in such performance-based and discretionary bonuses, if any, as are
authorized and declared by the Board of Directors for executive officers.
(c) Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in
performing services under this Agreement in accordance with the policies
and procedures applicable to the executive officers of the Company and the
Bank, provided that the Employee accounts for such expenses as required
under such policies and procedures.
5. Benefits.
(a) Participation in Benefit Plans. The Employee shall be entitled to
participate, to the same extent as executive officers of the Company and
the Bank generally, in all plans of the Company and the Bank relating to
pension, retirement, thrift, profit-sharing, savings, group or other life
insurance, hospitalization, medical and dental coverage, travel and
accident insurance, education, cash bonuses, and other retirement or
employee benefits or combinations thereof. In addition, the Employee shall
be entitled to be considered for benefits under all of the stock and stock
option related plans in which the Company's or the Bank's executive
officers are eligible or become eligible to participate.
(b) Fringe Benefits. The Employee shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites
which are or may become generally available to the Company's or the Bank's
executive officers, including but not limited to supplemental retirement,
incentive compensation, supplemental medical or life insurance plans,
company cars, club dues, physical examinations, financial planning and tax
preparation services.
6. Vacations; Leave. The Employee shall be entitled (i) to annual paid
vacation in accordance with the policies established by the Board of Directors
for executive officers, and (ii) to voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.
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7. Termination of Employment.
(a) Involuntary Termination. The Board of Directors may terminate the
Employee's employment at any time. In the event of Involuntary Termination
other than after a Change in Control which occurs during the term of this
Agreement, the Company and the Bank jointly shall pay to the Employee for
one year following such termination the Salary at the rate in effect
immediately prior to the Date of Termination, payable in such manner and at
such times as the Salary would have been payable to the Employee under
Section 4(a) if the Employee had continued to be employed by the Company
and the Bank., and shall have no further obligation to the Employee under
this Agreement.
(b) Termination for Cause. In the event of Termination for Cause, the
Company and the Bank shall pay to the Employee the Salary and provide
benefits under this Agreement only through the Date of Termination, and
shall have no further obligation to the Employee under this Agreement.
(c) Voluntary Termination. The Employee's employment may be
voluntarily terminated by the Employee at any time upon 90 days' written
notice to the Company and the Bank or such shorter period as may be agreed
upon between the Employee and the Board of Directors. In the event of such
voluntary termination, the Company and the Bank shall be obligated jointly
to continue to pay to the Employee the Salary and provide benefits under
this Agreement only through the Date of Termination, at the time such
payments are due, and shall have no further obligation to the Employee
under this Agreement.
(d) Change in Control. In the event of Involuntary Termination after a
Change in Control which occurs at any time following the Effective Date
while the Employee is employed under this Agreement, the Company and the
Bank jointly shall (i) pay to the Employee in a lump sum in cash within 25
business days after the Date of Termination an amount equal to 299% of the
Employee's "base amount" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"); and (ii) provide to the Employee
during the remaining term of this Agreement substantially the same group
life insurance, hospitalization, medical, dental, prescription drug and
other health benefits, and long-term disability insurance (if any) for the
benefit of the Employee and his dependents and beneficiaries who would have
been eligible for such benefits if the Employee had not suffered
Involuntary Termination, on terms substantially as favorable to the
Employee, including amounts of coverage and deductibles and other costs to
him, as if he had not suffered Involuntary Termination.
(e) Death. In the event of the death of the Employee while employed
under this Agreement and prior to any termination of employment, the
Company and the Bank jointly shall pay to the Employee's estate, or such
person as the Employee may have previously designated in writing, the
Salary which was not previously paid to the Employee and which he would
have earned if he had continued to be employed under this Agreement through
the last day of the calendar month in which the Employee died, together
with the benefits provided hereunder through such date.
(f) Disability. If the Employee becomes entitled to benefits under the
terms of the then-current disability plan, if any, of the Company or the
Bank (the "Disability Plan") or becomes otherwise unable to fulfill his
duties under this Agreement, he shall be entitled to receive such group
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and other disability benefits, if any, as are then provided by the Company
or the Bank for executive employees. In the event of such disability, this
Agreement shall not be suspended, except that (i) the obligation to pay the
Salary to the Employee shall be reduced in accordance with the amount of
disability income benefits received by the Employee, if any, pursuant to
this paragraph such that, on an after-tax basis, the Employee shall realize
from the sum of disability income benefits and the Salary the same amount
as he would realize on an after-tax basis from the Salary if the obligation
to pay the Salary were not reduced pursuant to this Section 7(f); and (ii)
upon a resolution adopted by a majority of the disinterested members of the
Board of Directors, the Company and the Bank may discontinue payment of the
Salary beginning six months following a determination that the Employee has
become entitled to benefits under the Disability Plan or otherwise unable
to fulfill his duties under this Agreement.
(g) Temporary Suspension or Prohibition. If the Employee is suspended
and/or temporarily prohibited from participating in the conduct of the
Bank's affairs by a notice served under Section 8(e)(3) or (g)(1) of the
FDIA, 12 U.S.C. ss. 1818(e)(3) and (g)(1), the Bank's obligations under
this Agreement shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the
Bank may in its discretion (1) pay the Employee all or part of the
compensation withheld while its obligations under this Agreement were
suspended and (ii) reinstate in whole or in part any of its obligations
which were suspended.
(h) Permanent Suspension or Prohibition. If the Employee is removed
and/or permanently prohibited from participating in the conduct of the
Bank's affairs by an order issued under Section 8(e)(4) or (g)(1) of the
FDIA, 12 U.S.C. ss. 1818(e)(4) and (g)(1), all obligations of the Bank
under this Agreement shall terminate as of the effective date of the order,
but vested rights of the contracting parties shall not be affected.
(i) Default of the Bank. If the Bank is in default (as defined in
Section 3(x)(1) of the FDIA), all obligations under this Agreement shall
terminate as of the date of default, but this provision shall not affect
any vested rights of the contracting parties.
(j) Termination by Regulators. All obligations under this Agreement
shall be terminated, except to the extent determined that continuation of
this Agreement is necessary for the continued operation of the Bank: (1) at
the time the Federal Deposit Insurance Corporation enters into an agreement
to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the FDIA; or (2) by the FDIC, at the time it
approves a supervisory merger to resolve problems related to operation of
the Bank. Any rights of the parties that have already vested, however,
shall not be affected by any such action.
(k) Reductions of Benefits. Notwithstanding any other provision of
this Agreement, if payments and the value of benefits received or to be
received under this Agreement, together with any other amounts and the
value of benefits received or to be received by the Employee, would cause
any amount to be nondeductible by the Company or any of the Consolidated
Subsidiaries for federal income tax purposes pursuant to or by reason of
Section 280G of the Code, then payments and benefits under this Agreement
shall be reduced (not less than zero) to the extent necessary so as to
maximize amounts and the value of benefits to be received by the Employee
without causing any amount to become nondeductible pursuant to or by reason
of Section 280G of the Code. The
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Employee shall determine the allocation of such reduction among payments
and benefits to the Employee.
(l) Further Reductions. Any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. 1828(k) and any regulations promulgated
thereunder.
8. Notice of Termination. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Employee during the term of this
Agreement, the Company or the Bank, or both, shall deliver to the Employee a
written notice of termination, stating whether such termination constitutes
Termination for Cause or Involuntary Termination, setting forth in reasonable
detail the facts and circumstances that are the basis for the termination, and
specifying the date upon which employment shall terminate, which date shall be
at least 30 days after the date upon which the notice is delivered, except in
the case of Termination for Cause. In the event that the Employee determines in
good faith that he has experienced an Involuntary Termination of his employment,
he shall send a written notice to the Company and the Bank stating the
circumstances that constitute such Involuntary Termination and the date upon
which his employment shall have ceased due to such Involuntary Termination. In
the event that the Employee desires to effect a Voluntary Termination, he shall
deliver a written notice to the Company and the Bank, stating the date upon
which employment shall terminate, which date shall be at least 90 days after the
date upon which the notice is delivered, unless the parties agree to a date
sooner.
9. No Assignments.
(a) This Agreement is personal to each of the parties hereto, and no
party may assign or delegate any of its rights or obligations hereunder
without first obtaining the written consent of the other parties; provided,
however, that the Company and the Bank shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) by an assumption agreement in form and substance satisfactory to
the Employee, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company and/or the Bank
would be required to perform it if no such succession or assignment had
taken place. Failure to obtain such an assumption agreement prior to the
effectiveness of any such succession or assignment shall be a breach of
this Agreement and shall entitle the Employee to compensation and benefits
from the Company and the Bank in the same amount and on the same terms as
the compensation pursuant to Section 7(d) of this Agreement. For purposes
of implementing the provisions of this Section 9(a), the date on which any
such succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Employee hereunder shall
inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Company and Bank at
their home offices, to the attention of the Board of Directors with a copy to
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the Secretary of the Company and the Secretary of the Bank, or, if to the
Employee, to such home or other address as the Employee has most recently
provided in writing to the Company or the Bank.
11. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
12. Headings. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
13. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
14. Governing Law. This Agreement shall be governed by the laws of the
State of Washington.
15. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction.
16. Deferral of Non-Deductible Compensation. In the event that the
Employee's aggregate compensation (including compensatory benefits which are
deemed remuneration for purposes of Section 162(m) of the Code) from the Company
and the Consolidated Subsidiaries for any calendar year exceeds the maximum
amount of compensation deductible by the Company or any of the Consolidated
Subsidiaries in any calendar year under Section 162(m) of the Code (the "maximum
allowable amount"), then any such amount in excess of the maximum allowable
amount shall be mandatorily deferred with interest thereon at 8% per annum to a
calendar year such that the amount to be paid to the Employee in such calendar
year, including deferred amounts and interest thereon, does not exceed the
maximum allowable amount. Subject to the foregoing, deferred amounts including
interest thereon shall be payable at the earliest time permissible.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: EVERTRUST FINANCIAL GROUP, INC.
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Xxxx Xxxxxxxxxxx, Secretary By:
Its:
Attest: EVERETT MUTUAL BANK
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Xxxx Xxxxxxxxxxx, Secretary By:
Its:
Employee
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