EXHIBIT 10.1
PROPOSED FORM OF SEVERANCE AGREEMENT FOR EXECUTIVE OFFICERS
SEVERANCE AGREEMENT FOR EXECUTIVE OFFICERS
THIS SEVERANCE AGREEMENT (the "Agreement") is made and entered into as
of this ___ day of __________, 1999 by and between Alaska Pacific Bancshares,
Inc. (the "Company"), and its wholly owned subsidiary, Alaska Pacific 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
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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 event of a
nature that results in the acquisition of control of the Company or the Bank
within the meaning of the Savings and Loan Holding Company Act under 12 U.S.C.
Section 1467a and 12 C.F.R. Part 574 (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 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
consolidated group of the Company (or its successors) for federal income tax
reporting.
(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 Juneau, Alaska, 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 to death or permanent disability pursuant
to Section 7(f) of this Agreement, retirement or
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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
___________________ of the Company and as the ______________________ of the
Bank. As such, the Employee shall have supervision and control over the daily
operations of the Company and the Bank, shall render administrative and
management 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.
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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.
7. Termination of Employment.
(a) Involuntary Termination. The Board of Directors may
terminate the Employee's employment at any time, but, except in the case of
Termination for Cause, termination of employment shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. 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
(i) pay to the Employee during the remaining term of this Agreement 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 (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.
(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
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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 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.
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(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) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, 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 Director or his or her
designee, at the time the Director or his or her designee approves a supervisory
merger to resolve problems related to operation of the Bank or when the Bank is
determined by the Director to be in an unsafe or unsound condition. 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 Employee shall determine the allocation of such reduction among
payments and benefits to the Employee.
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. Attorneys' Fees. The Company and the Bank jointly shall pay all
legal fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Employee as a result of (i) the Employee's contesting
or disputing any termination of employment, or (ii) the Employee's seeking to
obtain or enforce any right or benefit provided by this Agreement or by any
other plan or arrangement maintained by the Company or the Bank (or a successor)
or the Consolidated Subsidiaries under which the Employee is or may be entitled
to receive benefits; provided that the Company's and the Bank's obligation to
pay such fees and expenses is subject to the Employee's prevailing with respect
to the matters in dispute in any action initiated by the Employee or the
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Employee's having been determined to have acted reasonably and in good faith
with respect to any action initiated by the Company or the Bank.
10. 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 10(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.
11. 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
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.
12. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
13. 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.
14. 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.
15. Governing Law. This Agreement shall be governed by the laws of the
State of Alaska.
16. 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
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Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
17. 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.
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: Alaska Pacific Bancshares, Inc.
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, Secretary By:
Its:
Attest: Alaska Pacific Bank
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, Secretary By:
Its:
Employee
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