Contract
Exhibit 10.2
The
following executive officers have a change of control agreement with 1st
Security Bank of Washington (the “Bank”), the wholly-owned, operating subsidiary
of the Registrant, in the form attached:
Xxxxxx
Xxxxxx
Xxxx
Xxxx
THIS
AGREEMENT is entered into as of the _____ day of __________, 200__ (the
"Effective Date") by and between 1ST
SECURITY BANK OF WASHINGTON (the “Bank”), a Washington chartered savings
bank, and _______________________ (the “Executive”).
WITNESSETH:
WHEREAS,
Executive is the ____________________ of the Bank, and as such is a key officer
whose continued dedication, availability, advice and counsel to the Bank is
deemed important to the Board of Directors of the Bank;
WHEREAS,
the Bank wish to retain the services of Executive free from any distractions or
conflicts that could arise as a result of a change in control of the
Bank;
NOW,
THEREFORE, to assure the Bank of Executive’s continued dedication, the
availability of his advice and counsel to the Board of Directors of the Bank
free of any distractions resulting from a change of control, and for other good
and valuable consideration, the receipt and adequacy whereof each party hereby
acknowledges, the Bank and Executive hereby agree as follows:
1. TERM OF AGREEMENT:
This Agreement shall remain in effect until cancelled by either party hereto,
upon not less than 24 months prior written notice to the other party. The
execution of this Agreement shall automatically cancel and void any change in
control or severance agreements which otherwise might be in effect between
Executive and the Bank.
2. CHANGE OF CONTROL: If
there is a Change of Control of the Bank during the term of this Agreement,
Executive shall be entitled to a severance payment in the event the Executive
suffers an Involuntary Termination within six (6) months preceding or 12 months
after the Change in Control, unless such termination is for Cause. The amount of
such severance payment shall equal [_________(__)] months of
Executive’s then current salary and shall be paid in a lump sum within 45 days
of the date of Executive’s Involuntary Termination, subject to the restrictions
set forth in paragraph 12 of this Agreement.
3. LIMITATION OF
BENEFITS: It is the intention of the parties that no payment be made or
benefit provided to the Executive that would constitute an “excess parachute
payment” within the meaning of Section 280G of the Code and any regulations
thereunder, thereby resulting in a loss of an income tax deduction by the Bank
or the imposition of an excise tax on the Executive under Section 4999 of the
Code. If the independent accountants serving as auditors for the Bank
immediately prior to the date of a Change of Control determine that some or all
of the payments or benefits scheduled under this Agreement, when combined with
any other payments or benefits provided to the Executive on a Change of Control
by the Bank, and any affiliate of the Bank required to be aggregated with the
Bank under Section 280G of the Code, would constitute nondeductible excess
parachute payments by the Bank under Section 280G of the Code, then the payments
or benefits scheduled under this Agreement will be reduced to one dollar less
than the maximum amount which may be paid or provided without causing any such
payments or benefits scheduled under this Agreement or otherwise provided on a
Change of Control to be nondeductible. The determination made as to the
reduction of benefits or payments required hereunder by the independent
accountants shall be binding on the parties. The Executive shall have the right
to designate within a reasonable period which payments or benefits scheduled
under this Agreement
will be
reduced; provided, however, that if no direction is received from the Executive,
the Bank shall implement the reductions under this Agreement in its
discretion.
4. LITIGATION - OBLIGATIONS -
SUCCESSORS:
(a) If
litigation shall be brought or arbitration commenced to challenge, enforce or
interpret any provision of this Agreement, and such litigation or arbitration
does not end with judgment in favor of the Bank, the Bank hereby agrees to
indemnify the Executive for his reasonable attorney’s fees and disbursements
incurred in such litigation or arbitration.
(b) The
Bank’s obligation to pay the Executive the compensation and benefits and to make
the arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Bank may
have against him or anyone else. All amounts payable by the Bank hereunder shall
be paid without notice or demand. The Executive shall not be required
to mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise.
(c) The
Bank will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Bank, by agreement in form and substance satisfactory to
the Executive, to expressly assume and agree to perform this Agreement in its
entirety. Failure of the Bank to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to the compensation described in Section
2. As used in this Agreement, the “Bank” shall mean 1st
Security Bank of Washington and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
4(c) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
5. NOTICES: For the
purposes of this Agreement, notices and all other communications provided for in
the Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
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If
to the Executive:
If
to the Bank:
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or at
such other address as any party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
6. MODIFICATION - WAIVERS -
APPLICABLE LAW: No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing, signed by the Executive and on behalf of the Bank by such officer as
may be specifically designated by the Board of Directors of the Bank. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or in compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar
or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the state of Washington.
7. INVALIDITY -
ENFORCEABILITY: The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. Any
provision in this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating or affecting the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8. SUCCESSOR RIGHTS:
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to his executor or, if there is no such executor, to his
estate.
9. HEADINGS: Descriptive
headings contained in this Agreement are for convenience only and shall not
control or affect the meaning or construction of any provision in this
Agreement.
10. ARBITRATION: Any
dispute, controversy or claim arising under or in connection with this Agreement
shall be settled exclusively by arbitration in Seattle, Washington (or as close
thereto as feasible) in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. The Bank shall pay all
administrative fees associated with such arbitration. Judgment maybe entered on
the arbitrator's award in any court having jurisdiction. Subject to Section
4(a), unless otherwise provided in the rules of the American Arbitration
Association, the arbitrators shall, in their award, allocate between the parties
the costs of arbitration, which shall include reasonable attorneys' fees and
expenses of the parties, as well as the arbitrator's fees and expenses, in such
proportions as the arbitrators deem just.
11. CONFIDENTIALITY -
NONSOLICITATION:
(a) The
Executive acknowledges that the Bank may disclose certain confidential
information to the Executive during the term of this Agreement to enable him to
perform his duties hereunder. The Executive hereby covenants and
agrees that he will not, without the prior written consent of the Bank, during
the term of this Agreement or at any time thereafter, disclose or permit to be
disclosed to any third party by any method whatsoever any of the confidential
information of the Bank or its affiliates. For purposes of this
Agreement, “confidential information” shall include, but not be limited to, any
and all records, notes, memoranda, data, ideas, processes, methods, techniques,
systems, formulas, patents, models, devices, programs, computer software,
writings, research, personnel information, customer information, the Bank’s
financial information, plans, or any other information of whatever nature in the
possession or control of the Bank or its affiliates which has not been published
or disclosed to the general public, or which gives to the Bank or its affiliates
an opportunity to obtain an advantage over competitors who do not know of or use
it. The Executive further agrees that if his employment is terminated
for any reason, he will leave with the Bank and will not take originals or
copies of any records, papers, programs, computer software and
documents
and all matter of whatever nature which bears secret or confidential information
of the Bank or its affiliates.
(b) The
foregoing paragraph shall not be applicable if and to the extent the Executive
is required to testify in a judicial or regulatory proceeding pursuant to an
order of a judge or administrative law judge issued after the Executive and his
legal counsel urge that the aforementioned confidentiality be
preserved.
(c) The
foregoing covenants will not prohibit the Executive from disclosing confidential
or other information to other employees of the Bank or its affiliates or any
third parties to the extent that such disclosure is necessary to the performance
of his duties under this Agreement.
12. COMPLIANCE WITH SECTION 409A
OF THE CODE: Notwithstanding anything herein to the contrary, any
payments to be made in accordance with this Agreement shall not be made prior to
the date that is 185 calendar days from the date of termination of employment of
the Executive if it is determined by the Bank in good faith that such payments
are subject to the limitations set forth at Section 409A of the Code and
regulations promulgated thereunder, and payments made in advance of such date
would result in the requirement that Executive pay additional interest and taxes
in accordance with Section 409A(a)(1)(B)of the Code.
13. DEFINITIONS: The term
“Cause” shall mean the Executive’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 material breach of any provision of this
Agreement. No act or failure to act by the Executive shall be
considered willful unless the Executive 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 Bank or its affiliates.
The term
“Involuntary Termination” shall mean (i) termination of employment of the
Executive without Cause such that the Executive is no longer employed by the
Bank or any affiliate thereof; (ii) a reduction in the amount of the Executive’s
base salary compared to the amount of Executive’s base salary as of December 31
of the most recent calendar year; (iii) a material adverse change in the
Executive’s benefits, contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect on all senior
officers of the Bank; (iv) a requirement that the Executive perform services
principally at a location more than [50] miles from Mountlake
Terrace, Washington; or (v) a material demotion of the Executive, including, but
not limited to, a material diminution of the Executive’s title, duties or
responsibilities.
The term
“Change of Control” shall mean any of the following events occurring: (i) the
acquisition by any “person” or “group” (as defined in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 ("Exchange Act")), other than the Bank,
any parent holding company of the Bank (“Affiliate”) or their employee benefit
plans, directly or indirectly, as “beneficial owner” (as defined in Rule 13d-3,
under the Exchange Act) of securities of the Bank or any Affiliate representing
twenty percent (20%) or more of either the then outstanding shares or the
combined voting power of the then outstanding securities of the Bank or
Affiliate; (ii) either a majority of the directors of the Bank or any Affiliate
elected at the annual stockholders meeting shall have been nominated for
election other than by or at the direction of the “incumbent directors” of the
Bank or any Affiliate, or the “incumbent” directors” shall cease to constitute a
majority of the directors of the Bank or any Affiliate. The term
“incumbent director” shall mean any director who was a director of the Bank or
any Affiliate on the Effective Date and any individual who becomes a director of
the Bank or any Affiliate subsequent to the Effective Date and who is elected or
nominated by or at the
direction
of at least two-thirds of the then incumbent directors; (iii) the stockholders
of the Bank or any Affiliate approve (x) a merger, consolidation or other
business combination of the Bank or any Affiliate with any other “person” or
“group” (as defined in Sections 13(d) and 14(d) of the Exchange Act) or
affiliate thereof, other than a merger or consolidation that would result in the
outstanding common stock of the Bank or any Affiliate immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into common stock of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of the Bank or any
Affiliate or such surviving entity or a parent or affiliate thereof outstanding
immediately after such merger, consolidation or other business combination, or
(y) a plan of complete liquidation of the Bank or an agreement for the sale or
disposition by the Bank of all or substantially all of the Bank’s assets; or
(iv) any other event or circumstance which is not covered by the foregoing
subsections but which the Board of Directors of the Bank or any Affiliate
determines to affect control of the Bank or any Affiliate and with respect to
which the Board of Directors adopts a resolution that the event or circumstance
constitutes a Change of Control for purposes of the Agreement.
The
Change of Control Date is the date on which an event described in (i), (ii),
(iii) or (iv) occurs.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date referred to above.
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ATTEST:
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