EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), between HARBOR BANCORP,
INC, a Washington business corporation (the "Company") and XXXX VAN DIJK
("Executive"), is dated as of June 9, 1999 and will be effective upon the
Effective Date of the Merger (the "Effective Date").
RECITALS
A. The Company is a Washington business corporation and the parent holding
company of The Bank of Grays Harbor, a Washington banking corporation
(the "Bank"). The Bank is engaged in the business of commercial banking
in Grays Harbor County, Washington.
B. The Company intends to merge with Pacific Financial Corporation, Long
Beach, Washington ("Pacific") with the Bank remaining as a wholly-owned
subsidiary of the resulting corporation (the "Merger") under the terms
of the Agreement and Plan of Merger dated as of June 9, 1999 (the
"Merger Agreement") between the Company and Pacific.
C. The Executive has considerable experience, expertise and training in
management related to banking and services offered by the Company and
the Bank. The Company desires and intends to employ the Executive
pursuant to the terms and conditions set forth in this Agreement.
D. Both the Company and the Executive have read and understand the terms
and provisions set forth in this Agreement, and have been afforded a
reasonable opportunity to review this Agreement with their respective
legal counsel.
AGREEMENT
The parties agree as follows:
1. EMPLOYMENT. The Company will employ the Executive for the Term, and the
Executive accepts employment with the Company on the terms and
conditions set forth in this Agreement. The Executive's title will be
"Senior Vice President and Chief Financial Officer."
2. EFFECTIVE DATE AND TERM.
(a) EFFECTIVE DATE. This Agreement is effective as of the
Effective Date.
(b) TERM. Subject to Section 5, the term of this Agreement
("Term") is three years, beginning on the Effective Date.
3. DUTIES. The Executive will serve as Senior Vice President and Chief
Financial Officer of the Company, the Bank and the Bank of the Pacific.
The Executive will faithfully and diligently perform the duties
assigned to the Executive from time to time by the
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Company's Chief Executive Officer and/or President, consistent with
the duties that have been normal and customary to the Executive's
position. The Executive will use his best efforts to perform his
duties and will devote all his working time and attention to these
duties. The Executive will perform such other duties as may be
appropriate to his office and as may be prescribed from time to time
by the Company's Chief Executive Officer and/or President. New
duties and responsibilities prescribed to the Executive will be
consistent with the Executive's position as the Company's Senior
Vice President and Chief Financial Officer, and may not include
immoral or unlawful acts.
4. COMPENSATION.
(a) SALARY. Initially, the Executive will receive a salary of
$88,000 per year, to be paid in accordance with the
Company's regular payroll schedule. The Executive's salary
will be subject to annual review and adjustment as set forth
in Section 4(f).
(b) INCENTIVE COMPENSATION. A disinterested majority of the
Company's Board of Directors or Executive Committee will
annually determine the amount of bonus, if any, to be paid
by the Company to the Executive for each year during the
Term. In making this determination, the Company's Board of
Directors will consider factors such as the Executive's
performance of his duties and the safety, soundness, and
profitability of the Company and the Bank. The Executive's
bonus, if any, will reflect the Executive's contribution to
the performance of the Company during the year. The
Executive will also be entitled to participate in stock
bonus or stock option plans generally available to senior
executives of the Company and the Bank.
(c) STANDARD EXECUTIVE BENEFITS. The Company will provide to
the Executive no less than the standard benefits provided
to senior Company and Bank executives in accordance with
the Company's benefit plans and policies, including but not
limited to health insurance, disability insurance and
coverage equal to the Executive's current salary at the
time of any disability, and four (4) weeks of paid vacation
per year accrued in accordance with the Company's benefits
plans and policies. The Executive will also be entitled to
participate in retirement plans, including 401(K) and
deferred compensation plans, and including any supplements
or additions to such plans, which are generally available
to senior executives of the Company and the Bank.
(d) EXPENSES. The Company will reimburse the Executive for all
reasonable expenses that the Executive may incur in the
performance of his duties, including but not limited to
expenses for travel, lodging, meals, entertainment, annual
banking conventions and monthly country club dues.
(e) ANNUAL REVIEW AND ADJUSTMENT. The Executive's compensation, as
set forth in this Section 4, will be subject to annual review
and adjustment by a disinterested majority of the Company's
Board of Directors or Executive Committee. In no
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case, however, will the Executive's salary, vacation, and
expense reimbursement be less than the amounts set forth in
this Section 4.
5. TERMINATION.
(a) NOTICE OF TERMINATION. The Company's Board of Directors and
the Executive may unilaterally terminate this Agreement for
any reason by providing the other party with 30 days' prior
written notice of the termination, delivered in person or by
certified U.S. mail to the Company's main office address or to
the Executive's last known address as reflected in the
Company's personnel records. Notice shall be effective upon
either personal delivery or three days following mailing by
certified U.S. mail.
(b) TERMINATION BY COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON. If, before the end of the Term, the Company terminates
this Agreement for Cause or the Executive terminates this
Agreement without Good Reason, the Company will pay the
Executive the salary earned and expenses reimbursable under
this Agreement incurred through the date of the Executive's
termination. The Executive will have no right to receive
compensation or other benefits for any period after
termination under this Section 5(b).
(c) OTHER TERMINATION. If, before the end of the Term, the
Company terminates this Agreement without Cause, or the
Executive terminates this Agreement for Good Reason, as
defined below, the Company will pay the Executive three (3)
times the base compensation received by the Executive
during the most recent calendar year ending on or prior to
the effective date of termination less statutory payroll
deductions and payable in accordance with the Company's
ordinary payroll policies and procedures, and as of such
date, all forfeiture provisions regarding restricted stock
awards and all vesting requirements regarding stock options
shall lapse or be considered completed. In no case will
compensation be less than that stated in Section 4(a).
(d) DEATH OR DISABILITY. This Agreement will terminate
immediately (1) upon the Executive's death or (2) if the
Executive is unable to perform his duties and obligations
under this Agreement for a period of 60 days as a result of
a physical or mental disability that substantially limits
one or more of his major life activities arising at any
time during the Term, unless the Executive could continue,
with reasonable accommodation, to perform his duties and
making such accommodations would not require the Company to
expend any funds. If termination occurs under this Section
5(d), the Executive or his estate will be entitled to
receive only the compensation and benefits earned and
expenses reimbursable through the date this Agreement is
terminated, and as of such date, all forfeiture provisions
regarding restricted stock awards and all vesting
requirements regarding stock options shall lapse or be
considered completed.
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(e) TERMINATION RELATED TO A CHANGE IN CONTROL.
(1) TERMINATION BY COMPANY. If the Company or the
Bank, or their successors in interest by merger,
or their transferees in the event of a purchase
and assumption transaction, and for reasons other
than the Executive's death, disability, or Cause,
(1) terminates this Agreement within two (2) years
following a Change in Control (as defined below)
or (2) terminates this Agreement before a Change
in Control and a Change in Control occurs within
nine months after the termination, the Company
will pay the Executive the payments as set forth
in Section 5(e)(3).
(2) TERMINATION BY THE EXECUTIVE. If a Change in Control
occurs, then the Executive may for any reason
terminate this Agreement within two year following
the Change in Control. The Executive must deliver
notice of his termination in accordance with the
notice provisions set forth in Section 5(a). The
Company will pay the Executive the payment described
in Section 5(e)(3) following the effectiveness of
notice delivered under this Section 5(e)(2).
(3) PAYMENTS. If Section 5(e)(1) or (2) is triggered
as described in those Sections, the Company will
pay the Executive three (3) times the base
compensation received by the Executive during the
most recent calendar year ending on or prior to
the effective date of termination less statutory
payroll deductions and payable in accordance with
the Company's ordinary payroll policies and
procedures, and as of such date, all forfeiture
provisions regarding restricted stock awards and
all vesting requirements regarding stock options
shall lapse or be considered completed. In no case
will compensation be less than stated in Section
4(a).
(f) LIMITATIONS ON PAYMENTS RELATED TO CHANGE IN CONTROL. The
following apply notwithstanding any other provision of this
Agreement:
(1) The payment described in Section 5(e)(3) will be
less than the amount that would cause it to be a
"parachute payment" within the meaning of Section
280G(b)(2)(A) of the Internal Revenue Code; and
(2) The Executive's right to receive the payment
described in Section 5(e)(3) terminates (i)
immediately, if before the Change in Control
transaction closes, the Executive terminates his
employment without Good Reason or the Company
terminates the Executive's employment for Cause, or
(ii) two years after a Change in Control occurs.
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(g) DEFINITION OF "CHANGE IN CONTROL." "Change in Control"
means a change "in the ownership or effective control" or
"in the ownership of a substantial portion of the assets"
of the Company or the Bank, within the meaning of Section
280G of the Internal Revenue Code. An initial public
offering by the Company or the Bank will not, however, be
deemed to be a change in Control under this Agreement.
(h) RETURN OF COMPANY PROPERTY. If and when the Executive ceases,
for any reason, to be employed by the Company, the Executive
must as soon as possible return to the Company, all property
of the Company and the Bank.
6. DEFINITION OF "CAUSE". Cause means any one or more of the following:
(a) The Executive's material breach of any provision of this
Agreement, and his failure to cure such breach within ten (10)
days after written notice from the Company to the Executive
specifying in reasonable detail the alleged breach;
(b) The Executive's gross negligence in the performance of his
duties, and his failure to cure such gross negligence within
ten (10) days after written notice from the Company to the
Executive specifying in reasonable detail the alleged
violation;
(c) The Executive's conviction of a felony; or
(d) The Executive's gross misconduct in the course and scope of
his employment with the Company.
7. DEFINITION OF "GOOD REASON". "Good Reason" means any one or more of
the following:
(a) The Company's material breach of any provision of this
Agreement, and its failure to cure such breach within ten (10)
days after written notice from the Executive to the Chairman
of the Company's Board of Directors specifying in reasonable
detail the alleged breach;
(b) The assignment to the Executive without his express written
consent of duties substantially inconsistent with and/or in
diminution of the positions, duties, responsibilities and
status contemplated by paragraph 3 of this Agreement; or
(c) A relocation or transfer of the Executive's principal place of
employment that would require the Executive to commute on a
regular basis more than 25 miles each way from his current
business office at the Company on the date of this Agreement
(excluding travel between the current main offices of the
Company and Pacific), unless the Executive consents to the
relocation or transfer.
8. CONFIDENTIALITY. The Executive, and any person acquiring confidential
information from the Executive, will not, after signing this Agreement.
including during and after its Term, disclose to any other person or
entity any confidential information concerning the Company, the Bank or
their business operations or customers, or use for his (their) own
purposes or permit or assist in the use of such confidential
information unless (1) the
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Company or the Bank consents to the use or disclosures of their
respective information, (2) the use or disclosure is consistent with
the Executive's duties under this Agreement, or (3) disclosure is
required by law or court order.
9. NONCOMPETITION.
(a) PARTICIPATION IN A COMPETING BUSINESS. During the Term and for
two (2) years after the Executive's employment with the
Company ends (regardless of whether the Executive's employment
ends at the end of the Term or at some other point after the
end of the Term), the 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 the Executive may
acquire and passively own an interest not exceeding five
percent (5 %) of the total equity interest in any company
(whether or not such company is a Competing Business).
(b) NO SOLICITATION. During the Term and for two (2) years after
the Executive's employment with the Company ends (regardless
of whether the Executive's employment ends at the end of the
Term or at some other point after the end of the Term), the
Executive will not solicit or attempt to solicit (1) any
employees of the Company, the Bank, or their subsidiaries or
affiliates to leave employment or (2) any customers of the
Company, or any of its subsidiaries or affiliates, to remove
their business from the Company, or any of its subsidiaries or
affiliates, 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.
(c) EMPLOYMENT OUTSIDE GRAYS HARBOR AND PACIFIC COUNTIES.
Following any termination of Executive's employment, nothing
in this Agreement prevents the Executive from accepting
employment outside Grays Harbor or Pacific Counties from a
Competing Business, as long as the Executive will not (1) act
as an employee or representative or agent of the Competing
Business within Grays Harbor or Pacific Counties or (2) have
any responsibilities for the Competing Business' operations
within Grays Harbor or Pacific Counties.
(d) COMPETING BUSINESS. "Competing Business" means any company
that competes with or will compete with the Company or the
Bank in Grays Harbor or Pacific Counties. The term "Competing
Business" includes, without limitation, any existing or newly
formed financial institution or trust company.
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10. ENFORCEMENT.
(a) The Company and the Executive stipulate that, in light of all
of the facts and circumstances of the relationship between the
Executive and the Company, the agreements referred to in
Sections 8 and 9 (including without limitation their scope,
duration and geographic extent) are fair and reasonably
necessary for the protection of the Company's and the Bank's
confidential information, goodwill and other protectable
interests. If a court of competent jurisdiction should decline
to enforce any of those covenants and agreements, the
Executive and the Company request the Court to reform these
provisions to restrict the Executive's use of confidential
information and the Executive's ability to compete with the
Company and the Bank to the maximum extent, in time, scope of
activities, and geography, the court finds enforceable.
(b) The Executive acknowledges that the Company will suffer
immediate and irreparable harm that will not be compensable by
damages alone, if the Executive repudiates or breaches any of
the provisions of Sections 8 and 9 or threatens or attempts to
do so. For this reason, under these circumstances, the
Company, 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 Company will not be required to post a bond as
a condition of the granting of this relief.
11. ADEQUATE CONSIDERATION. The Executive specifically acknowledges the
receipt of adequate consideration for the covenants contained in
Sections 8 and 9 and that the Company is entitled to require him to
comply with these Sections. These Sections will survive termination of
this Agreement. The Executive represents that if his employment is
terminated, whether voluntarily or involuntarily, the Executive has
experience and capabilities sufficient to enable the Executive to
obtain employment in areas which do not violate this Agreement and that
the Company's enforcement of a remedy by way of injunction will not
prevent the Executive from earning a livelihood.
12. ARBITRATION.
(a) ARBITRATION. The parties may 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) upon either
party's written request delivered within sixty (60) days of
the date of the dispute, controversy or claim arises. A single
arbitrator agreed upon 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
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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 Grays Harbor 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 the
Executive violates Section 8 or 9, the Company will have the
fight to initiate the court proceedings described in Section
10(b), in lieu of an arbitration proceeding under this Section
12.
13. MISCELLANEOUS PROVISIONS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties concerning its subject
matter and supersedes all prior agreements. Accordingly, the
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
previously entered into with the Company, the Bank or any of
their subsidiaries or affiliates.
(b) BINDING EFFECT. This Agreement will bind and inure to the
benefit of the Company's and the 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 of 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) COUNSEL REVIEW. The Executive acknowledges that he has had the
opportunity to consult with independent counsel with respect
to the negotiations, preparation, and execution of this
Agreement.
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(f) ASSIGNMENT. The services to be rendered by the Executive
under this Agreement are unique and personal. Accordingly,
the Executive may not assign any of his rights or duties
under this Agreement.
(g) AMENDMENT. This Agreement may be modified only through a
written instrument signed by both parties.
(h) SEVERABILITY. The provisions of this Agreement are severable.
The invalidity of any provision will not affect the validity
of other provisions of this Agreement.
(i) GOVERNING LAW AND VENUE. This Agreement will be governed 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 12(c), the parties
must bring any legal proceeding arising out of this Agreement
in Grays Harbor County, Washington, and the parties will
submit to jurisdiction in that county.
(j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but
all of which taken together will constitute one and the same
document.
Signed as of June 9, 1999:
HARBOR BANCORP, INC. XXXX VAN DIJK, individually
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxx Van Dijk
------------------------------------ ------------------------------------
By: Xxxx Van Dijk, Senior Vice President
Its: and Chief Financial Officer
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