Exhibit 10.2
Form of Severance Agreement
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and
entered into as of this ____ day of ________________, 200_ (the "Commencement
Date"), by and between RAINIER PACIFIC SAVINGS BANK (which, together with any
successor thereto which executes and delivers the assumption agreement provided
for in Section 5(a) hereof or which otherwise becomes bound by all of the terms
and provisions of this Agreement by operation of law, is hereinafter referred to
as the "Savings Bank"), and _______________________ (the "Employee").
WHEREAS, the Employee is currently serving as ___________________________;
and
WHEREAS, the board of directors of the Savings Bank (the "Board")
recognizes that the possibility of a change in control of the Savings Bank or of
its holding company, ___________ ________________ (the "Company"), may exist and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of key management
to the detriment of the Savings Bank, the Company and its stockholders; and
WHEREAS, the Board believes it is in the best interests of the Savings
Bank to enter into this Agreement with the Employee in order to assure
continuity of management of the Savings Bank and to reinforce and encourage the
continued attention and dedication of the Employee to the Employee's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Savings Bank, although no such change is now contemplated; and
WHEREAS, the Board 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. Certain Definitions.
(a) The term "Change in Control" means (1) an offeror other than the
Company purchases shares of stock of the Company or the Savings 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 Savings 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 ("FDIC") under 12 U.S.C.
Section 1817(j) (or any successor statute or regulation); (3) 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 Commencement Date, pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); (4) any person (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) that 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 Savings Bank
representing 25% or more of the combined voting power of the Company's or the
Savings Bank's outstanding securities; (5) individuals who are members of the
board of directors of the Company immediately following the Commencement Date or
who are
members of the Board immediately following the Commencement 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 subsequent to the
Commencement Date 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 stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; or (6) 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 Savings Bank or the
Company.
(b) The term "Commencement Date" means the date of this Agreement.
(c) 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 Savings Bank, including but not limited to the Company.
(d) The term "Date of Termination" means the date upon which the
Employee ceases to serve as an employee of the Savings Bank.
(e) The term "Involuntary Termination" means the termination of the
employment of Employee (i) by the Savings Bank, 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
Fife, Washington, or within a radius of 35 miles from the location of the
Savings Bank's administrative offices as of the Commencement Date, except for
reasonable travel on Company or Savings 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 Savings 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 Savings
Bank; (5) a material permanent increase in the required hours of work or the
workload of the Employee; or (6) any purported termination of the Employee's
employment, except for Termination for Cause (and, if applicable, the
requirements of Section 1(f) hereof), which purported termination shall not be
effective for purposes of this Agreement. The term "Involuntary Termination"
does not include Termination for Cause, retirement or suspension or temporary or
permanent prohibition from participation in the conduct of the Savings 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 because of the Employee's
personal dishonesty,
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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 Savings 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
beginning on the Commencement Date, subject to earlier termination as provided
herein. Beginning on the first anniversary of the Commencement 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 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. Severance Benefits.
(a) If after a Change in Control, the Savings Bank shall terminate
the Employee's employment other than Termination for Cause, or employment is
terminated in the event of Involuntary Termination by the Employee, within 12
months following a Change in Control, the Savings Bank shall (i) pay the
Employee his salary, including the pro rata portion of any incentive award,
through the Date of Termination; (ii) continue to pay, for the remaining term of
this Agreement, for the life, health and disability coverage that is in effect
with respect to the Employee and his/her eligible dependents; and (iii) pay to
the Employee in a lump sum in cash, within 25 days after the later of the date
of such Change in Control or the Date of Termination, an amount equal to 299% of
the Employee's "base amount" as determined under Section 280G of the Code.
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.
(b) The Employee shall not be required to mitigate the amount of any
payment or benefit provided for in this Agreement by seeking other employment or
otherwise, nor shall the
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amount of any payment or benefit provided for in this Agreement be reduced by
any compensation earned by the Employee as the result of employment by another
employer, by retirement benefits after the Date of Termination or otherwise.
This Agreement does not constitute a contract of employment or impose on the
Company or the Savings Bank any obligation to retain the Employee, to change the
status of the Employee's employment, or to change the Company's or the Bank's
policies regarding termination of employment
4. Attorneys' Fees. If the Employee is purportedly Terminated for Cause
and the Savings Bank denies payments and/or benefits under Section 3(a) of this
Agreement on the basis that the Employee experienced Termination for Cause, but
it is determined by a court of competent jurisdiction or by an arbitrator
pursuant to Section 12 that cause as contemplated by Section 1(f) of this
Agreement did not exist for termination of the Employee's employment, or if in
any event it is determined by any such court or arbitrator that the Savings Bank
has failed to make timely payment of any amounts or provision of any benefits
owed to the Employee under this Agreement, the Employee shall be entitled to
reimbursement for all reasonable costs, including attorneys' fees, incurred in
challenging such termination of employment or collecting such amounts or
benefits. Such reimbursement shall be in addition to all rights to which the
Employee is otherwise entitled under this Agreement.
5. No Assignments.
(a) This Agreement is personal to each of the parties hereto, and
neither party may assign or delegate any of its rights or obligations hereunder
without first obtaining the written consent of the other party; provided,
however, that the Savings Bank shall require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation, operation of law or
otherwise) to all or substantially all of the business and/or assets of the
Savings Bank, 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 Savings Bank would be required to
perform it if no such succession or assignment had taken place. Failure of the
Savings Bank 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 Savings Bank in
the same amount and on the same terms that Employee would be entitled to
hereunder if an event of Involuntary Termination occurred, in addition to any
payments and benefits to which the Employee is entitled under Section 3 hereof.
For purposes of implementing the provisions of this Section 5(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. In the event of the death of the Employee, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Employee's devisee, legatee, or other designee or, if there be no such designee,
to the Employee's estate.
6. Deferred Payments. If following a termination of the Employee, the
aggregate payments to be made by the Savings Bank under this Agreement and all
other plans or arrangements
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maintained by the Company or any of the Consolidated Subsidiaries would exceed
the limitation on deductible compensation contained in Section 162(m) of the
Code in any calendar year, any such amounts in excess of such limitation shall
be mandatorily deferred with interest thereon at 8.0% per annum to a calendar
year such that the amount to be paid to the Employee in such calendar year,
including deferred amounts, does not exceed such limitation.
7. Delivery of Notices. For the purposes of this Agreement, all notices
and other communications to any party hereto shall be in writing and shall be
deemed to have been duly given when delivered or sent by certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Employee: _________________________
At the address last appearing
on the personnel records of
the Employee
If to the Savings Bank: Rainier Pacific Savings Bank
0000 Xxxxxxx Xxxxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
Attention: Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
9. 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.
10. 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.
11. Governing Law. This Agreement shall be governed by the laws of the
State of Washington to the extent that federal law does not govern.
12. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by binding arbitration,
conducted before a panel of three arbitrators in a location selected by the
Employee within 100 miles of such Employee's job location with the Savings Bank,
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrators' award in any court having
jurisdiction.
* * * * *
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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: RAINIER PACIFIC SAVINGS BANK
________________________ ________________________________________
By: Xxxxxx X. Xxxxxx
Its: Chairman of the Board of Directors
EMPLOYEE
________________________________________
________________________________________
________________________________________
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