EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is made and entered into as of
this 17th day of August, 2005, by and between PACIFIC CONTINENTAL BANK, an
Oregon banking corporation (the "BANK") and XXXXXXX XXXXXXXX ("EXECUTIVE"). This
Agreement will be effective as of the Effective Date determined pursuant to the
Plan and Agreement of Merger dated as of the date hereof among Pacific
Continental Corporation (the "COMPANY"), the Bank, NWB Financial Corporation and
Northwest Business Bank (the "MERGER AGREEMENT"). If the Merger Agreement is
terminated for any reason, this Agreement will be null and void and of no
effect.
RECITALS
A. Executive is employed by Northwest Business Bank in a senior executive
management capacity, presently holding the position of Senior Vice President and
Manager of Commercial Lending.
B. The Bank desires to employ Executive, and Executive wishes to accept such
employment, from and after the Effective Date pursuant to the terms set forth in
this Agreement.
AGREEMENT
1) DEFINITIONS.
a) Cause. "CAUSE" means any one or more of the following:
i. Removal or discharge of Executive pursuant to order of any
federal banking authority;
ii. Executive perpetrates fraud, material dishonesty, or other
act of material misconduct in the rendering of services to
the Company or the Bank or to customers of the Company or
the Bank, or if Executive engages in conduct which, in the
opinion of the Board of Directors, materially interferes
with the performance of Executive's duties or xxxxx the
reputation of the Company or the Bank by reason of the
adverse reaction of the community to such conduct;
iii. Executive conceals from, or knowingly fails to disclose to,
any federal banking regulatory authority or the Board of
Directors any material matters affecting the viability of
the Company or the Bank; or
iv. Executive fails (or refuses) to faithfully or diligently
perform any of the usual and customary duties of his
employment and either fails to remedy the lapse or formulate
a plan for its correction with the Company or the Bank (if
such failure is not susceptible to immediate correction)
within
thirty (30) days after notice to Executive explaining in detail the
allegations and recommended correction.
Notwithstanding the foregoing, Executive shall not be terminated without:
(a) Ten days written notice setting forth Company's intention to
terminate for Cause;
(b) An opportunity for Executive to rebut termination for Cause
within five business days after receiving notice; and
(c) A final finding, in good faith, by the Board of Directors that
Cause existed.
b) Change in Control Agreement. "CHANGE IN CONTROL AGREEMENT" means the
Change in Control/Salary Continuation Agreement dated as of the date
hereof among the Company, the Bank and Executive.
c) Compensation. "COMPENSATION" means Executive's current base
compensation, together with the maximum potential bonus amount
payable as set forth in Section 7 of this Agreement.
d) Good Reason. "GOOD REASON" means only any one or more of the
following:
i. Reduction of Executive's base salary or elimination of any
significant compensation or benefit plan benefiting
Executive, unless the reduction or elimination is generally
applicable to substantially all similarly situated employees
(or similarly situated employees of a successor or
controlling entity of the Company or the Bank) formerly
benefited;
ii. The assignment to Executive without his consent of any
authority or duties materially inconsistent with Executive's
position as of the date of the Effective Date of this
Agreement; or
iii. A relocation or transfer of Executive's principal place of
employment that would require Executive to commute on a
regular basis more than 30 miles each way from his present
place of employment.
e) Trade Secret. "TRADE SECRET" means information, including a drawing,
cost data, customer list, formula, pattern, compilation, program,
device, method, technique or process that:
i. Derives independent economic value, actual or potential,
from not being generally known to the public or to other
persons who can obtain economic value from its disclosure
or use; and
ii. Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
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f) Other Terms. Other defined terms shall have the meaning specifically
assigned to them elsewhere in this Agreement.
2) TERM OF AGREEMENT. The term of this employment agreement is one (1) year,
commencing on the Effective Date (the "TERM").
3) EMPLOYMENT. The Bank will continue Executive's employment during the Term,
and Executive accepts employment by the Bank on the terms and conditions set
forth in this Agreement. Executive's title will be Senior Vice President,
Relationship Banking Manager.
4) REPORTING AND DUTIES OF EXECUTIVE. Executive will report directly to the
Bank's Director of Seattle Operations and will serve on the Bank's Planning
Committee. Executive will be responsible for business development in the
greater Seattle area and, in such capacity, will promote the Bank's products
and services to both loan and deposit prospects primarily in community-based
businesses, professional service groups and not-for-profit businesses.
Executive's responsibilities will including managing the Bank's Relationship
Banking Officers and Relationship Banking Assistants and such other duties
that are consistent with his title and position.
5) COMMITMENT OF EXECUTIVE. Executive will use his best efforts to perform his
duties and will devote full time and attention to these duties during working
hours. Executive may engage in non-bank business activities with prior
approval of the Bank's Board of Directors, which approval will not be
unreasonably withheld.
6) SALARY. Executive will initially receive an annual base salary of $113,850,
to be paid in accordance with the Bank's regular payroll schedule. The Bank's
Compensation Committee will first review and adjust Executive's salary on
August 16, 2006, and thereafter, in connection with its performance review on
an annual basis, with the next regularly scheduled salary adjustment to be
effective March 1, 2007. Extraordinary service may be recognized with
unscheduled salary adjustments, but such adjustments are only made upon the
recommendation of the Bank's CEO and at the discretion and with the approval
of the Bank's Compensation Committee.
7) BONUS. Bonuses are determined annually by the Bank's Board of Directors, in
accordance with the bonus plan currently in effect. Executive's maximum bonus
potential will be 25% of current salary.
8) STOCK OPTIONS. On the Effective Date, Executive will receive an option to
acquire 10,000 shares of Company common stock. Subsequent option grants will
be discretionary and will be determined by the Bank's board of directors
based on title and criteria applicable to all other the Bank employees. All
options will have a five (5) year expiration period, and will vest in four
equal installments (25% per year), with the first vesting occurring on the
date of grant. The terms of the options shall be governed by the Company's
current Stock Option Plan.
9) VACATION AND BENEFITS. Executive is eligible for five weeks of paid vacation
per year. Generally, all paid vacation must be taken in the year accrued.
Additional benefits
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include health, life, disability and 401(k) retirement benefits as provided
under the Bank's current plans (however, it is expected the Bank will
continue the Bank's 401(k) plan through 2005), subject to annual revision.
Medical and dental plans currently provide that the Bank pays 100% of the
premiums for Executive and 50% of the premiums for Executive's dependents.
The Bank will continue to pay current dues for the athletic club membership
currently held by Executive, and the Bank will provide a monthly parking
stipend covering 100% of Executive's parking. Consistent with Company
policies, Company will reimburse Executive for business mileage and business
cell phone.
10) TERMINATION AND SEVERANCE PROVISIONS.
a) Termination By Bank for Cause. If the Bank terminates Executive's
employment for Cause before this Agreement terminates, the Bank will pay
Executive the salary earned and expenses reimbursable under this Agreement
incurred through the date of his termination. Executive will have no right
to receive compensation or other benefits for any period after termination
under this Section 10(a).
b) Other Termination By Bank. If the Bank terminates Executive's employment
without Cause before this Agreement terminates, or Executive terminates
his employment for Good Reason, then the Bank will pay Executive a lump
sum payment equal to the greater of (i) one-half (0.5 times) Executive's
Compensation, or (ii) the Compensation to which Executive would have
otherwise been entitled for the remainder of the Term.
c) Death or Disability. This Agreement terminates (1) if Executive dies or
(2) if Executive is unable to perform his duties and obligations under
this Agreement for a period of 90 consecutive days as a result of a
physical or mental disability arising at any time during the term of this
Agreement, unless with reasonable accommodation Executive could continue
to perform his duties under this Agreement and making these accommodations
would not pose an undue hardship on the Bank. Disability shall be
determined by the definition and procedure set forth in the Company
disability insurance plan. If termination occurs under this Section 10(c),
Executive or his estate will be entitled to receive all compensation and
benefits earned and expenses reimbursable through the date Executive's
employment terminated.
d) 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 the
Company. At the same time, Executive also must return to the Bank all
materials relating to Trade Secrets of the Bank or the Company, whether in
hard copy, electronic or other form. The obligations in this paragraph
include the return of documents and other materials that may be in his
desk at work, in his car, in place of residence, or in any other location
under his control.
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e) Limitation on Payment. Notwithstanding anything in this Agreement to the
contrary, if the total of the payments to be received under this
Agreement, together with any other payments or benefits received from the
Company or the Bank (including under the Change in Control Agreement),
will be an amount that would cause them to be a "parachute payment" within
the meaning of Section 280G(b)(2)(A) of the Internal Revenue Code of 1986,
as amended (the "PARACHUTE PAYMENT AMOUNT"), then the sum of the payments
to Executive shall be reduced so that the total amount thereof is $1 less
than the Parachute Payment Amount.
11) NONCOMPETITION. Except as otherwise expressly provided in this Agreement,
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 passively own an interest
not exceeding 2% of the total equity interest in a Competing Business. For
purposes of this Agreement, the term "COMPETING BUSINESS" means any
financial service institutions, including without limitation banks,
insurance companies, leasing companies, mortgage companies, and brokerage
firms that engage in business within King County, Washington and such other
markets in which the Bank or the Company may have offices at the time of
separation. The provisions of this Section 11 will apply while Executive is
employed by the Bank and for a period equal to the greater of (a) six (6)
months after the date of separation or (b) if Executive receives a payment
pursuant to Section 10(b)(ii) of this Agreement, then for the remainder of
the Term. Notwithstanding the foregoing, if Executive is entitled to a
payment under Section 10(b)(ii), Executive may forego such payment and be
released from this noncompetition restriction.
12) NONSOLICITATION. During the term of the noncompetition provision set forth
in Section 11, Executive will not, directly or indirectly, persuade or
entice, or attempt to persuade or entice (i) any employee of the Bank or the
Company to terminate his/her employment with the Bank or the Company, or
(ii) any person or entity to terminate, cancel, rescind or revoke its
business or contractual relationships with the Bank or the Company.
13) CONFIDENTIALITY. Executive will not, after the date this Agreement is
signed, including during and after its term, use for his own purposes or
disclose to any other person or entity any Trade Secret of the Bank or the
Company.
14) ENFORCEMENT.
a) Executive and the Bank stipulate that, in light of all of the facts and
circumstances of the relationship between Executive and the Bank, the
agreements referred to in Sections 11, 12 and 13 (including without
limitation their scope) are fair and reasonably necessary for the
protection of the Bank's 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 the maximum extent that the court finds
enforceable.
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Executive acknowledges that the Bank will suffer immediate and irreparable
harm that will not be compensable by damages alone, if Executive
repudiates or breaches any of the provisions of Sections 11, 12 or 13 or
threatens or attempts to do so. For this reason, under these
circumstances, the Bank, in addition to and without limitation of any
other rights, remedies or damages available to them at law or in equity,
will be entitled to obtain temporary, preliminary, and permanent
injunctions in order to prevent or restrain the breach, and the Bank will
not be required to post a bond as a condition for the granting of this
relief.
15) ARBITRATION. Except for as set forth in Section 14 of this Agreement, at
either the Bank's or Executive'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. 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.
16) WITHHOLDING. All payments required to be made by the Bank hereunder to
Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
17) MISCELLANEOUS PROVISIONS.
a) Entire Agreement. This Agreement constitutes the entire understanding and
agreement between the parties concerning its subject matter and supersedes
all prior agreements, correspondence, representations, or understandings
between the parties relating to its subject matter. Notwithstanding the
preceding sentence, the terms of this Agreement are separate from and do
not supercede the terms of the Change in Control Agreement (except as set
forth in Section 10(e) of this Agreement).
b) Binding Effect. This Agreement will be binding and enforceable against,
and will inure to the benefit of, the heirs, legal representatives,
successors and assigns of the Bank and Executive.
c) 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
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breach of any provision of this Agreement will not operate as a waiver of
any other breach by the breaching party.
d) Amendment. This Agreement may be modified only through a written
instrument signed by both parties.
e) Severability. The provisions of this Agreement are severable. The
invalidity of any provision will not affect the validity of other
provisions of this Agreement.
f) 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.
g) Governing Law and Venue. This Agreement will be governed by and construed
in accordance with Washington law, except to the extent that federal law
may govern certain matters. The parties must bring any legal proceeding
arising out of this Agreement in King County, Washington.
h) 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.
i) Assignability. The Bank may assign this Agreement and its rights hereunder
in whole, but not in part, to any corporation, bank or other entity with
or into which the Bank may hereafter merge or consolidate or to which the
Bank may transfer all or substantially all of its assets, if in any such
case said corporation, bank or other entity shall by operation of law or
expressly in writing assume all obligations of the Bank hereunder as fully
as if it had been originally made a party hereto, but may not otherwise
assign this Agreement or its rights hereunder. Executive may not assign or
transfer this Agreement or any rights or obligations hereunder.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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This Employment Agreement is effective as of the date first set forth above.
PACIFIC CONTINENTAL BANK
By /s/ Xxx Xxxxx
-----------------------------
Its CEO
----------------------------
EXECUTIVE:
/s/ Xxxxxxx Xxxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxx
Agreed to and ratified as of the date first set forth above.
PACIFIC CONTINENTAL CORPORATION
By /s/ Xxx Xxxxx
-----------------------------
Its CEO
-----------------------------
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