Exhibit 10.1
FORM OF EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of this ___th day of ___ 20___, by and between Anchor Bank (the “Bank”), and _______________ (the “Employee”).
WHEREAS, the Employee is currently serving as ___________________________________________________;
WHEREAS, it is anticipated that the Employee will continue to make a major contribution to the success of the Bank;
WHEREAS, the board of directors of the Bank (the “Board of Directors”) recognizes the possibility of a change in control of the Company or the Bank may occur 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 shareholders;
WHEREAS, the Board of Directors believes that it is in the best interests of the Bank to enter into this Agreement with the Employee in order to assure high quality management of the Bank;
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
.
“Change in Control” means (1) an offeror other than the Company (as defined below) purchases shares of stock of the Company or the 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 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) and applicable regulations 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) any person (as the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (“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 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 Company board of directors immediately following the Effective Date or who are members of the Board of Directors 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 shareholders 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, acquisition, 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,
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.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means a committee of the Board of Directors which has been delegated authority to act on such matters by the Board of Directors.
“Company” means Anchor Bancorp.
“Consolidated Subsidiaries” means any subsidiary or subsidiaries of the Company (or its successors) that are part of the affiliated group (as defined in Code Section 1504 without regard to subsection (b) thereof), specifically including the Bank.
“Date of Termination” means the date upon which the Employee experiences a Separation from Service from the Bank, as specified in a notice of termination pursuant to Section 8 of this Agreement or the date a succession becomes effective under Section 10.
“Effective Date” means the date of this Agreement.
“Involuntary Termination” means the Employee’s Separation from Service (i) by the Bank without the Employee’s express written consent; or (ii) by the Employee for "good reason": "Good reason" means 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 within 60 miles of Aberdeen, Washington, 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, other than as part of a Company-wide or Bank-wide reduction in staff; (4) a ten percent (10%) or more reduction in the Employee's then Salary, other than as part of an overall program applied uniformly and with equitable effect to all members of the senior management of the Bank; (5) a material permanent increase in the required hours of work or the workload of the Employee; (6) the failure of the Board of Directors to elect the Employee as ____________________________ of the Bank (or a successor of the Bank) or any action by the Board of Directors (or its successors) removing the Employee from such office. The term “Involuntary Termination” does not include Termination for Cause, Separation from Service due to death or permanent disability pursuant to Section 7(f) of this Agreement, retirement or 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 (“FDIA”).
“Restriction Period” shall mean the one-year period commencing on the date of the Employee’s Date of Termination.
“Restrictive Covenants” shall mean the covenants and restrictions described in Section 9.
“Section 409A” shall mean Section 409A of the Code and the regulations and guidance of general applicability issued thereunder.
“Separation from Service” shall have the same meaning as in Section 409A. Notwithstanding the foregoing, for purposes of determining whether the Employee is entitled to a payment under Section 7(a) or Section 7(d) of this Agreement, the term “Separation from Service” shall require the complete cessation of services to the Bank, the Company and all Consolidated Subsidiaries.
“Termination for Cause” and “Terminated For Cause” mean Employee’s Separation from Service with either the Bank because of the Employee's personal dishonesty, 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, acting or failing to act in a manner that adversely affects the Bank or the Company, including but not limited to increasing adverse regulatory or reputational risk, 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 the Employee’s action or failure to act was in the best interest of 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 of Directors duly called and held for such purpose, stating that in the good faith opinion of the Board of Directors the Employee has engaged in conduct described herein 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 Bank 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 or the Committee 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 ____________________________ of the Bank. As such, the Employee shall render all services and possess the powers 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 Bank as requested by the Board of Directors from time to time consistent with the Employee’s executive position. The Employee shall devote the Employee’s best efforts and reasonable time and attention to the business and affairs of the Bank to the extent necessary to discharge the Employee’s responsibilities hereunder. The Employee may (i) serve on charitable or civic 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 or the Committee, which approval shall not be unreasonably withheld, and (ii) manage personal investments, so long as such activities do not interfere materially with performance of the Employee’s responsibilities hereunder or give rise to violations of applicable securities laws. If the Employee ceases to be an officer of the Company, the Employee shall immediately resign as a Director of the Company. If the Employee ceases to be an officer of the Bank, then the Employee shall immediately resign as a Director of the Bank.
4.
Cash Compensation; Bonuses; Expenses
.
(a)
Salary
. The Bank agrees to pay the Employee during the term of this Agreement a base salary (the “Salary”) in the annualized amount of $260,000. The Employee’s Salary shall be paid in accordance with the Bank's routine payroll practices and shall be subject to customary tax and other applicable withholdings. The Employee's Salary shall be reviewed from time to time, at least annually, and adjusted as necessary to reflect amounts approved by the Board of Directors or the Committee.
(b)
Incentives/Bonuses
. The Employee shall be eligible for incentive opportunities as a percentage of the Employee’s Salary and as authorized and declared by the Board of Directors or the Committee for executive officers. Incentive payments provided for under this Agreement shall be paid no later than 2½ months after the end of the year in which the Employee obtains a legally binding right to such payments (or such other time that still qualifies the payment as a “short-term deferral” under Section 409A). The Employee also shall be entitled to participate in an equitable manner with all other executive officers of the Bank in such performance-based and discretionary bonuses, if any, as are authorized and declared by the Board of Directors or the Committee for executive officers.
(c)
Expenses
. Subject to Section 19, 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 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 Bank generally, in all plans of 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.
(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 Bank's executive officers, including but not limited to supplemental retirement, deferred compensation program, supplemental medical or life insurance plans, company cars, club dues, physical examinations, financial planning and tax preparation services.
6.
Vacations; Sick Leave
. The Employee shall be entitled (i) to annual paid vacation in accordance with the policies established by the Board of Directors or the Committee 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 or the Committee may determine in its discretion. Upon the Employee's Separation from Service, the Employee shall be paid for all accrued unused vacation in accordance with the Bank's existing policies at the time.
Payments of accrued vacation pay or unused sick leave shall be paid within 15 days of the Employee’s Date of Termination or at such other time as provided for in the Bank's policies, consistent with Section 409A.
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 Bank shall: (i) pay the Employee his Salary through the Date of Termination; (ii) continue to pay to the Employee his Salary, at the rate in effect immediately prior to the Date of Termination, for the period beginning on the Employee's Date of Termination and ending on the 18-month anniversary thereof (the “18-Month Period”); and (iii) provide to the Employee during the 18-Month Period (as defined in Section 7(a)(ii)) 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 the Employee’s 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 (i.e., the Employee’s share of premiums, deductibles and co-pays, all as in effect on the Date of Termination), as if the Employee had not suffered Involuntary Termination provided, however, if such coverage is not available with respect to the Employee or his eligible dependents, then a lump sum cash payment shall be paid to the Employee, within 25 days after the Employee's Date of Termination, equal to the present value of the monthly cost of such coverages that cannot be provided (determined as of the date it is determined that such coverage(s) cannot be provided), with the present value being determined using a discount rate equal to the short-term Applicable Federal Rate as determined under Section 1274(d) of the Code. To the extent payments under
this Paragraph 7(a) are subject to Section 409A, Section 19 shall apply. No payment shall be made under this Paragraph 7(a) unless the Employee executes a release substantially in the form attached as Exhibit A hereto no later than the earlier of the time provided for in the release or 60 days after the Employee's Separation from Service.
(b)
Termination for Cause
. In the event of Termination for Cause, 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 at least 90 days' written notice to 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 Bank shall be obligated 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 the Employee experiences an Involuntary Termination during the period commencing on the 6-month anniversary preceding the effective time of a Change in Control, and ending on the first anniversary of the effective time of a Change in Control, the Bank shall: (i) pay the Employee his Salary through the Date of Termination; (ii) pay to the Employee in a lump sum in cash within 25 business days after the Date of Termination an amount equal to 2.99 times the Employee's “base amount” as determined under Section 280G of the Code (determined at the effective time of the Change in Control); (iii) provide to the Employee during the remainder of the Term 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 the Employee’s 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 (i.e., the Employee’s share of premiums, deductibles and co-pays, all as in effect on the Date of Termination), as if the Employee had not suffered Involuntary Termination provided, however, if such coverage is not available with respect to the Employee or his eligible dependents, then a lump sum cash payment shall be paid to the Employee, within 25 days after the Employee's Date of Termination, equal to the present value of the monthly cost of such coverages that cannot be provided (determined as of the date it is determined that such coverage(s) cannot be provided), with the present value being determined using a discount rate equal to the short-term Applicable Federal Rate as determined under Section 1274(d) of the Code. To the extent payments under this Paragraph 7(d) are subject to Section 409A, Section 19 shall apply. No payment shall be made under this Paragraph 7(d) unless the Employees timely executes a release substantially in the form attached as Exhibit A hereto no later than the earlier of the time provided for in the release or 60 days after the Employee's Separation from Service.
(e)
Death
. In the event of the death of the Employee while employed under this Agreement and prior to any termination of employment, the Bank 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 the Employee would have earned if the Employee 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 Bank (the “Disability Plan”) or becomes otherwise unable to fulfill the Employee’s duties under this Agreement, the Employee shall be entitled to receive such group
and other disability benefits as provided for in the Disability Plan, if any, as are then provided by 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 the Employee 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 or the Committee, 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 the Employee’s 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. Section 1818(e)(3) and (g)(1), or pursuant to Section 32.16.090 of the Revised Code of Washington (“R.C.W.”), 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 (i) 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. Section 1818(e)(4) and (g)(1), or pursuant to R.C.W. 32.16.090, 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.
(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: (i) at the time the FDIC 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 (ii) by the FDIC or the Federal Reserve, at the time either agency approves a supervisory merger to resolve problems related to operation of the Bank or the Company, respectively. 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 for federal income tax purposes pursuant to or by reason of Code Section 280G, 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 Code Section 280G. To the extent permitted by Section 409A, the Employee shall determine the allocation of such reduction among payments and benefits to the Employee.
(l)
Further Reductions
. Any payments made to the Employee pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.
(m)
Clawback
. All amounts payable to the Employee under this Agreement shall be subject to such clawback (recovery) as may be required to be made pursuant to law, rule, regulation or stock exchange listing requirement or any policy of the Company or the Bank adopted pursuant to any such law, rule, regulation or stock exchange listing requirement.
(n)
No Duplication of Payments
. The Employee shall be entitled to payments under only one of the paragraphs of this Section 7. Without limiting the scope of the preceding sentence, no payments shall be made under both Section 7(a) and 7(d). If payments are made under Section 7(a), and payments become due under Section 7(d), then any payments made in accordance with Section 7(a) shall be applied against the amounts due under Section 7(d).
8.
Notice of Termination
. In the event that the Bank desires to terminate the employment of the Employee during the term of this Agreement, the Bank 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. In the event that the Employee determines in good faith that the Employee has experienced an Involuntary Termination of the Employee’s employment, the Employee the Employee shall send a written notice to the Bank stating the circumstances that constitute such Involuntary Termination and the date upon which the Employee’s employment shall have ceased due to such Involuntary Termination. In the event that the Employee desires to effect a Voluntary Termination, the Employee shall deliver a written notice to 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.
Restrictive Covenants
.
(a)
Loyalty
. The Employee shall devote the Employee’s full time and best efforts to the performance of the Employee’s employment under this Agreement. During the term of this Agreement, the Employee shall not, at any time or place, either directly or indirectly, engage in any business or activity in competition with the business affairs or interests of the Company or the Bank or be a director, officer or executive of or consultant to any bank, savings bank, savings and loan association, credit union or similar financial institution or holding company of any such entity. “Directly or indirectly engaging in any business or activity in competition with the business affairs or interests of the Company or the Bank” shall include (but not be limited to) engaging in business as owner, partner, agent or employee of any person, firm or corporation engaged in such business individually or as beneficiary by interest in any partnership, corporation or other business entity or in being interested directly or indirectly in any such business conducted by any person, firm or corporation. The preceding sentence shall not apply with respect to the mere ownership by the Employee of less than one percent of a publicly traded entity.
(b)
Noncompetition
. During the Restriction Period, the Employee shall not be a director, officer or employee of or consultant to any bank, savings bank, savings and loan association, credit union or similar financial institution or holding company of any such entity in any county in which the Bank or any other affiliate of the Bank operates a full service branch office or lending center on the date of termination of this Agreement.
(c)
Exception
. Nothing in Paragraphs 9(a) and 9(b) shall limit the right of the Employee to invest in the capital stock or other securities of any business dissimilar from that of Company or the Bank, or solely as a passive investor in any business.
(d)
Nonsolicitation
of Customers
. During the Restriction Period, the Employee shall not solicit any Customers for services or products then provided by the Company, the Bank or the Consolidated Subsidiaries. For purpose of this Section, “Customers” are defined as (1) all customers serviced by the Company, the Bank, or any of the Consolidated Subsidiaries as of the Employee’s Date of Termination, (2) all potential customers whom the Company, the Bank or any of the Consolidated Subsidiaries actively solicited at any time during the 12-month period ending on the Employee’s Date of Termination, and (3) all successors, owners, directors, partners and management personnel of the Customers described in (1) or (2).
(e)
Nonraiding of Employees
. The Employee recognizes that the workforce of the Company and the Bank is a vital part of their businesses; therefore, during the Restriction Period, the
Employee shall not directly or indirectly recruit or solicit any Employee (as defined below) to leave his employment with the Company, the Bank or any of the Consolidated Subsidiaries. Without limiting the foregoing, this includes that the Employee shall not (1) disclose to any third party the names, backgrounds, or qualifications of any of the Employees or otherwise identify them as potential candidates for employment, or (2) personally or through any other person approach, recruit, interview or otherwise solicit Employees to work for any other employer. For purposes of this Section, “Employees” means all employees working for the Company, the Bank or any of the Consolidated Subsidiaries at the time of the Employee’s Date of Termination.
(f)
Nondisclosure
. In the course of employment, the Employee may have access to confidential information and trade secrets relating to the business of the Bank or the Company. Except as required in the course of employment by the Bank, the Employee shall not, without the prior written consent of the Board of Directors, directly or indirectly before or after termination of this agreement, disclose to anyone any confidential information relating to the Bank, the Company or any financial information, trade secrets or “know-how” that is germane to the Bank's or the Company's business and operations. The Employee recognizes and acknowledges that any financial information concerning any of the customers of the Bank, the Company or any affiliated entity, as may exist from time to time, is strictly confidential and is a valuable, special and unique asset of their businesses. The Employee shall not, either before or after termination of this Agreement, disclose to anyone said financial information, or any part thereof, for any reason or purposes whatsoever.
(g)
Non-Defamation
. The Employee shall not, during the course of the Employee's employment with the Company or the Bank, nor at any time thereafter, directly or indirectly, in public or private, in any manner or in any medium whatsoever, deprecate, impugn or otherwise make any comments, writings, remarks or other expressions that would, or could be construed to, defame the Company, the Bank or either of their reputations. Nor shall the Employee assist any other person, firm or company in so doing.
(h)
Sanctions; Remedial Actions
.
(1)
Cessation of Remaining Payments and Compensation; Right to Recover Previous Payments
. In the event any of the Restrictive Covenants are violated, any remaining payments or compensation, of any nature, due to the Employee under this Agreement shall immediately cease, and the Bank shall have the right to recover, at any time and in its sole discretion, all payments and other compensation (of whatever nature) paid to the Employee (or the equivalent value thereof, in the case of insurance or other non-monetary payments) after such violation occurred.
(2)
Injunctive Relief
. The Employee acknowledges that it is impossible to measure in money the damages that will accrue to the Bank if the Employee fails to observe and comply with the Restrictive Covenants; therefore, the Restrictive Covenants may be enforced by an action at law for damages and by an injunction or other equitable remedies to prohibit the restricted activity. The Employee hereby waives the claim or defense that an adequate remedy at law is available to the Bank. Nothing set forth herein shall prohibit the Bank from pursuing all remedies available to them.
(i)
Reasonableness
. The parties agree that this Agreement in its entirety, and in particular the Restrictive Covenants, are reasonable both as to time and scope. The parties additionally agree (1) that the Restrictive Covenants are necessary for the protection of the Company and the Bank's business and goodwill; (2) that the Restrictive Covenants are not any greater than are reasonably necessary to secure the Company and the Bank's business and goodwill; and (3) that the degree of injury to the public due to the loss of the service and skill of the Employee or the restrictions placed upon the Employee’s opportunity to make a living with the Employee’s skills upon enforcement of said restraints, does not and will not warrant non-enforcement of said restraints. The parties agree that if the scope of the Restrictive Covenants is adjudged too broad to be capable of enforcement, then the parties authorize said court or arbitrator to narrow the Restrictive Covenants so as to make them capable of enforcement, given all relevant circumstances, and to enforce the same.
(j)
Survival
. This Section 9 shall survive the termination of this Agreement.
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 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 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 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 Bank at its home office, to the attention of the Board of Directors with a copy to 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 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 Washington.
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 Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding the foregoing, the Bank may resort to the Superior Court of Grays Harbor County, Washington for injunctive and such other relief as may be available in the event that the Employee engages in conduct, after termination of the Agreement that amounts to a violation of section 9 hereof or violation of the Washington Trade Secrets Act or amounts to unlawful interference with the business expectancies of the Bank.
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 Code Section 162(m)) from Company and the Consolidated Subsidiaries for any calendar year exceeds the maximum amount of compensation deductible by the Bank, the Company and the Consolidated Subsidiaries in any calendar year under Code Section 162(m) (the “maximum allowable amount”), then any such amount in excess of the maximum allowable amount shall be mandatorily deferred with interest thereon at three percent 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, and in no event later than required by Section 409A.
18.
Knowing and Voluntary Agreement.
Employee represents and agrees that the Employee has read this Agreement, understands its terms, and that the Employee has the right to consult counsel of choice and has either done so or knowingly waives the right to do so. Employee also represents that the Employee has had ample time to read and understand the Agreement before executing it and that the Employee enters into this Agreement without duress or coercion from any source.
19.
Compliance with Section 409A
.
(a) The Bank and the Employee agree that, notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and operated so that the payment of the benefits set forth herein either shall either be exempt from the requirements of Section 409A or shall comply with the requirements of such provision. The Employee hereby acknowledges that they have been advised to seek and has sought the advice of a tax advisor with respect to the tax consequences to the Employee of all payments pursuant to this Agreement, including any adverse tax consequences or penalty taxes under Section 409A and applicable State tax law. The Employee hereby agrees to bear the entire risk of any such adverse federal and State tax consequences and penalty taxes in the event any payment pursuant to this Agreement is deemed to be subject to Section 409A, that no representations have been made to the Employee relating to the tax treatment of any payment pursuant to this Agreement under Section 409A and the corresponding provisions of any applicable State income tax laws, and that in no event shall the Bank, the Company nor any affiliate thereof be liable to the Employee for or with respect to any taxes, penalties or interest which may be imposed upon the Employee pursuant to Section 409A.
(b) If, on the date of the Employee's Separation from Service, the Employee is a “specified employee,” as defined in Section 409A, and if any payments or benefits under this Agreement payable
upon the Employee's Separation from Service will result in additional tax or interest to the Employee because of Section 409A, then despite any provision of this Agreement to the contrary the Employee will not be entitled to the payments or benefits until the earlier of (1) the date that is six months and one day after Employee's Separation from Service for reasons other than the Employee's death, and (2) the date of the Employee's death. After the end of the period during which payments or benefits are delayed under this provision, the entire amount of the delayed payments and benefits shall be paid to the Employee in a single lump sum, without interest.
(c) If an amount payable hereunder that is subject to Section 409A is conditioned upon the Employee's signing a release, and the period of time during which the Employee may sign the release spans two taxable years of the Employee, then the portion of such amount that may be paid during either of such years (depending on when the release is signed) shall be paid in the second year.
(d) With respect to reimbursements and in-kind benefits made to the Employee hereunder, if any, which are not otherwise excludible from the Employee's gross income, to the extent required to comply with the provisions of Section 409A, no reimbursement of such expenses incurred by the Employee during any taxable year of the Employee shall be made after the last day of the following taxable year, the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a taxable year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and the right to reimbursement of such expenses or such in-kind benefits shall not be subject to liquidation or exchange for another benefit.
[CONTINUED ON FOLLOWING PAGE]
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.
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Attest:
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ANCHOR BANK
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_____________________________________
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_________________________________
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By: __________________________________
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_______________, Secretary
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Its: __________________________________
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EMPLOYEE
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_____________________________________
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EXHIBIT A
General Release
This General Release, dated as of ____________, 201_, is delivered by _______________ (the “Employee”) to and for the benefit of the Released Parties (as defined below). The Employee acknowledges that this General Release is being executed in accordance with Section 7(a) or 7(d) of the Employment Agreement dated _________, 20___ (the “Agreement”).
1.
General Release.
a. The Employee, for himself and for the Employee’s heirs, dependents, assigns, agents, executors, administrators, trustees and legal representatives (collectively, the “Releasors”) hereby forever releases, waives and discharges the Released Parties (as defined below) from each and every claim, demand, cause of action, fee, liability or right of any sort (based upon legal or equitable theory, whether contractual, common-law, statutory, federal, state, local or otherwise), known or unknown, which Releasors ever had, now have, or hereafter may have against the Released Parties by reason of any actual or alleged act, omission, transaction, practice, policy, procedure, conduct, occurrence, or other matter, at any time up to and including the Effective Date (as defined below), including without limitation, those in connection with, or in any way related to or arising out of, the Employee’s employment or termination of employment or any other agreement, understanding, relationship, arrangement, act, omission or occurrence, with the Released Parties.
b. Without limiting the generality of the previous paragraph, this General Release is intended to and shall release the Released Parties from any and all claims, whether known or unknown, which Releasors ever had, now have, or may hereafter have against the Released Parties including, but not limited to: (1) any claim of discrimination or retaliation under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, as amended (excluding claims for accrued, vested benefits under any employee benefit or pension plan of the Released Parties subject to the terms and conditions of such plan and applicable law), the Family and Medical Leave Act, the Reconstruction Era Civil Rights Act, and the Rehabilitation Act of 1973; (2) any other claim (whether based on federal, state or local law or ordinance, statutory or decisional) relating to or arising out of the Employee’s employment, the terms and conditions of such employment, the termination of such employment and/or any of the events relating directly or indirectly to or surrounding the termination of such employment, including, but not limited to, breach of contract (express or implied), tort, wrongful discharge, detrimental reliance, defamation, emotional distress or compensatory or punitive damages; (3) any claim relating to or arising from a violation of Section 409A of the Internal Revenue Code of 1986, as amended; and (4) any claim for attorney’s fees, costs, disbursements and the like.
c. The foregoing release does not in any way affect: (1) the Employee’s rights of indemnification to which the Employee was entitled immediately prior to the Resignation Date (as an employee or director of any of the Released Parties); (2) any rights the Employee may have as a shareholder of the Employer; (3) the Employee’s vested rights under any tax-qualified retirement plan or stock compensation plan maintained by a Released Party; (4) any right the Employee may have to obtain contribution in the event of an entry of judgment against the Employee as a result of any act or failure to act for which the Employee and any of the Released Parties are jointly responsible; and (5) the right of the Employee to take whatever steps may be necessary to enforce the terms of the Agreement.
d. For purposes of this General Release, the “Released Parties”
means Anchor Bancorp, Anchor Bank all current and former parents, subsidiaries, related companies, partnerships, joint ventures and employee benefit programs (and the trustees, administrators, fiduciaries and insurers of such programs), and, with respect to each of them, their predecessors and successors, and, with respect to each such entity, all of its past, present, and future employees, officers, directors, members, shareholders, owners, representatives, assigns, attorneys, agents, insurers, and any other person acting by, through, under or in concert with any of the persons or entities listed in this paragraph, and their successors (whether acting as agents for such entities or in their individual capacities).
2.
No Existing Suit
.
The Employee represents and warrants that, as of the Effective Date (as defined below), the Employee has not filed or commenced any suit, claim, charge, complaint, action, arbitration, or legal proceeding of any kind against of the Released Parties.
3.
Knowing and Voluntary Waiver
.
By signing this General Release, the Employee expressly acknowledges and agrees that: (a) the Employee has carefully read it and fully understands what it means; (b) the Employee has discussed this General Release with an attorney of the Employee’s choosing before signing it; (c) the Employee has been given at least 21 calendar days to consider this General Release; (d) the Employee has agreed to this General Release knowingly and voluntarily and was not subjected to any undue influence or duress; (e) the consideration provided him under Agreement is sufficient to support the releases provided by him under this General Release; (f) the Employee may revoke the Employee’s execution of this General Release within seven days after the Employee signs it by sending written notice of revocation as set forth below; and (g) on the eighth day after the Employee executes this General Release (the “Effective Date”), this General Release becomes effective and enforceable, provided that the Employee does not revoke it during the revocation period. Any revocation of the Employee’s execution of this General Release must be submitted, in writing, to Anchor Bank, at its main office, to the attention of the Chairman of the Board, stating “I hereby revoke my execution of the General Release.” The revocation must be personally delivered to the Chairman of the Board of Anchor Bank or mailed to the Chairman of the Board of Anchor Bank and postmarked within seven days of the Employee’s execution of this General Release. If the last day of the revocation period is a Saturday, Sunday or legal holiday, then the revocation period will be extended to the following day which is not a Saturday, Sunday or legal holiday. The Employee agrees that if the Employee does not execute this General Release or, in the event of revocation, the Employee will not be entitled to receive any of the payments or benefits under Section 7(a) or 7(d) of the Agreement. The Employee must execute this General Release on or before the date that is 21 days after the effective date of the Employee’s termination of employment.
This General Release is final and binding and may not be changed or modified, except as provided in a signed and dated agreement in writing between the Employee and Anchor Bank.
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EMPLOYEE
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Date: __________________
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______________________
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Exhibit 10.2
FORM OF CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the “Agreement”) is made and entered into as of this ___th day of ___, 20___, by and between Anchor Bank (the “Bank”) and __________________ (the “Employee”).
WHEREAS, the Employee is currently serving as __________________ of the Bank;
WHEREAS, the board of directors of the Bank (the “Board of Directors”) recognizes the possibility of a change in control of the Company (as herein defined) or the Bank may occur 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 shareholders;
WHEREAS, the Board of Directors believes it is in the best interests of the Bank to enter into this Agreement with the Employee in order to assure continuity of management of the 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 Bank, although no such change is now contemplated; 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
.
“Change in Control” means (1) an offeror other than the Company (as defined below) purchases shares of stock of the Company or the 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 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) and applicable regulations 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) any person (as the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (“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 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 Company's board of directors immediately following the Commencement Date or who are members of the Board of Directors 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 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 shareholders 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, acquisition, 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,
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.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means a committee of the Board of Directors which has been delegated authority to act on such matters by the Board of Directors.
“Company” means Anchor Bancorp.
“Commencement Date” means _________, 20___.
“Consolidated Subsidiaries” means any subsidiary or subsidiaries of the Company (or its successors) that are part of the affiliated group (as defined in Code Section 1504) without regard to subsection (b) thereof), specifically including the Bank.
“Date of Termination” means the date upon which the Employee experiences a Separation from Service, or the date a succession becomes effective under Section 5(a).
“Involuntary Termination” means the Employee’s Separation from Service (i) by the Bank without the Employee’s express written consent; or (ii) by the Employee for "good reason": "Good reason" means 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 within 60 miles of Aberdeen, Washington, 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, other than as part of a Company-wide or Bank-wide reduction in staff; (4) a ten percent (10%) or more reduction in the Employee's then base salary, other than as part of an overall program applied uniformly and with equitable effect to all members of the senior management of the Bank; (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 to elect the Employee as __________________ of the Bank (or a successor of the Bank) or any action by the Board of Directors (or its successors) removing the Employee from such office. The term “Involuntary Termination” does not include Termination for Cause, Separation from Service due to death or disability, retirement, voluntary termination except as provided herein or 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 (“FDIA”).
“Restriction Period” shall mean the one-year period commencing on the date of the Employee’s Date of Termination.
“Restrictive Covenants” shall mean the covenants and restrictions described in Section 4.
“Section 409A” shall mean Section 409A of the Code and the regulations and guidance of general applicability issued thereunder.
“Separation from Service” shall have the same meaning as in Section 409A, provided that for purposes of determining whether the Employee is entitled to benefits hereunder, there must be a complete cessation of services to the Bank, the Company and all Consolidated Subsidiaries.
“Termination for Cause” and “Terminated For Cause” mean Employee’s Separation from Service with either the Company or the Bank or both, because of the Employee's personal dishonesty, 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, acting or failing to act in a manner that adversely affects the Bank or the Company, including but not limited to increasing adverse regulatory or reputational risk, 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 the Employee’s action or failure to act was in the best interest of 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 of Directors duly called and held for such purpose, stating that in the good faith opinion of the Board of Directors the Employee has engaged in conduct described herein and specifying the particulars thereof in detail.
2.
Term
. The term of this Agreement shall be a period of three years commencing 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:
(i) neither the Employee nor the Bank 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 or the Committee 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)
In General
. In the event the Employee experiences an Involuntary Termination during the period commencing on the 6-month anniversary preceding the effective time of a Change in Control, and ending on the first anniversary of the effective time of such Change in Control, the Bank shall: (i) pay the Employee his Bank salary through the Date of Termination; (ii) pay to the Employee in a lump sum in cash within 25 business days after the Date of Termination an amount equal to one times the Employee's annual Bank salary determined as of the Date of Termination; and (iii) provide to the Employee over the one-year period commencing on the Employee’s Date of Termination (the “One-Year Period”) 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 the Employee’s 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 (i.e., the Employee’s share of premiums, deductibles and co-pays, all as in effect on the Date of Termination), as if the Employee had not suffered Involuntary Termination provided, however, if such coverage is not available with respect to the Employee or his eligible dependents, then a lump sum cash payment shall be paid to the Employee, within 25 days after the Employee's Date of Termination, equal to the present value of the monthly cost of such coverages that cannot be provided (determined as of the date it is determined that such coverage(s) cannot be provided), with the present value being determined using a discount rate equal to the short-term Applicable Federal Rate as determined under Section 1274(d) of the Code. To the extent payments under this Paragraph 3(a) are subject to Section 409A, Section 13 shall apply. No payment shall be made under this Paragraph 3(a) unless the Employees timely executes a release substantially in the form attached as Exhibit A hereto by the time provided for in the release or 60 days after the Employee's Separation from Service, whichever is earlier.
(b)
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 for federal income tax purposes pursuant to or by reason of Code Section 280G, 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 Code Section 280G. To the extent
permitted by Section 409A, the Employee shall determine the allocation of such reduction among payments and benefits to the Employee.
(c)
No Duty to Mitigate; Not a Contract of Employment
. 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 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 (except as otherwise provided herein). This Agreement does not constitute a contract of employment or impose on the Company or the 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.
(d)
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. Section 1818(e)(3) and (g)(1), or pursuant to Section 32.16.090 of the Revised Code of Washington (“R.C.W.”), 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 (i) 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.
(e)
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. Section 1818(e)(4) and (g)(1), or pursuant to R.C.W. 32.16.090, 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.
(f)
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.
(g)
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: (i) at the time the FDIC 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 (ii) by the FDIC or the Federal Reserve, at the time either agency approves a supervisory merger to resolve problems related to operation of the Bank or the Company, respectively. Any rights of the parties that have already vested, however, shall not be affected by any such action.
(h)
Further Reductions
. Any payments made to the Employee pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.
(i)
Clawback
. All amounts payable to the Employee under this Agreement shall be subject to such clawback (recovery) as may be required to be made pursuant to law, rule, regulation or stock exchange listing requirement or any policy of the Company or the Bank adopted pursuant to any such law, rule, regulation or stock exchange listing requirement.
4.
Restrictive Covenants
. As a condition to receiving the severance benefits provided hereunder, the following requirements must be satisfied:
(a)
Loyalty
. The Employee shall devote the Employee’s full time and best efforts to the performance of the Employee’s employment under this Agreement. During the term of this Agreement, the Employee shall not, at any time or place, either directly or indirectly, engage in any business or activity in competition with the business affairs or interests of the Company or the Bank or be a director, officer or executive of or consultant to any bank, savings bank, savings and loan association, credit union or similar financial institution or holding company of any such entity. "Directly or indirectly engaging in any business or activity in competition with the business affairs or interests of the Company or the Bank" shall include (but not be limited to) engaging in business as owner, partner, agent or employee of any person, firm or corporation engaged in such business individually or as beneficiary by interest in any partnership, corporation or other business entity or in being interested directly or indirectly in any such business conducted by any person, firm or corporation. The preceding sentence shall not apply with respect to the mere ownership by the Employee of less than one percent of a publicly traded entity.
(b)
Noncompetition
. During the Restriction Period, the Employee shall not be a director, officer or employee of or consultant to any bank, savings bank, savings and loan association, credit union or similar financial institution or holding company of any such entity in any county in which the Bank or any other affiliate of the Bank operates a full service branch office or lending center on the date of termination of this Agreement.
(c)
Exception
. Nothing in Paragraphs 4(a) and 4(b) shall limit the right of the Employee to invest in the capital stock or other securities of any business dissimilar from that of Company or the Bank, or solely as a passive investor in any business.
(d)
Nonsolicitation
of Customers
. During the Restriction Period, the Employee shall not solicit any Customers for services or products then provided by the Company, the Bank or the Consolidated Subsidiaries. For purpose of this Section, “Customers” are defined as (1) all customers serviced by the Company, the Bank, or any of the Consolidated Subsidiaries as of the Employee’s Date of Termination, (2) all potential customers whom the Company, the Bank or any of the Consolidated Subsidiaries actively solicited at any time during the 12-month period ending on the Employee’s Date of Termination, and (3) all successors, owners, directors, partners and management personnel of the Customers described in (1) or (2).
(e)
Nonraiding of Employees
. The Employee recognizes that the workforce of the Company and the Bank is a vital part of their businesses; therefore, during the Restriction Period, the
Employee shall not directly or indirectly recruit or solicit any Employee (as defined below) to leave his employment with the Company, the Bank or any of the Consolidated Subsidiaries. Without limiting the foregoing, this includes that the Employee shall not (1) disclose to any third party the names, backgrounds, or qualifications of any of the Employees or otherwise identify them as potential candidates for employment, or (2) personally or through any other person approach, recruit, interview or otherwise solicit Employees to work for any other employer. For purposes of this Section, “Employees” means all employees working for the Company, the Bank or any of the Consolidated Subsidiaries at the time of the Employee’s Date of Termination.
(f)
Nondisclosure
. In the course of employment, the Employee may have access to confidential information and trade secrets relating to the business of the Bank or the Company. Except as required in the course of employment by the Bank, the Employee shall not, without the prior written consent of the Board of Directors, directly or indirectly before or after termination of this agreement, disclose to anyone any confidential information relating to the Bank, the Company or any financial information, trade secrets or “know-how” that is germane to the Bank's or the Company's business and
operations. The Employee recognizes and acknowledges that any financial information concerning any of the customers of the Bank, the Company or any affiliated entity, as may exist from time to time, is strictly confidential and is a valuable, special and unique asset of their businesses. The Employee shall not, either before or after termination of this Agreement, disclose to anyone said financial information, or any part thereof, for any reason or purposes whatsoever.
(g)
Non-Defamation
. The Employee shall not, during the course of the Employee's employment with the Company or the Bank, nor at any time thereafter, directly or indirectly, in public or private, in any manner or in any medium whatsoever, deprecate, impugn or otherwise make any comments, writings, remarks or other expressions that would, or could be construed to, defame the Company, the Bank or either of their reputations. Nor shall the Employee assist any other person, firm or company in so doing.
(h)
Sanctions; Remedial Actions
.
(1)
Cessation of Remaining Payments and Compensation; Right to Recover Previous Payments
. In the event any of the Restrictive Covenants are violated, any remaining payments or compensation, of any nature, due to the Employee under Section 3 shall immediately cease, and the Company or the Bank shall have the right to recover, at any time and in its sole discretion, all payments and other compensation (of whatever nature) paid to the Employee (or the equivalent value thereof, in the case of insurance or other non-monetary payments) after such violation occurred.
(2)
Injunctive Relief
. The Employee acknowledges that it is impossible to measure in money the damages that will accrue to the Company and the Bank if the Employee fails to observe and comply with the Restrictive Covenants; therefore, the Restrictive Covenants may be enforced by an action at law for damages and by an injunction or other equitable remedies to prohibit the restricted activity. The Employee hereby waives the claim or defense that an adequate remedy at law is available to the Company and the Bank. Nothing set forth herein shall prohibit the Company and the Bank from pursuing all remedies available to them.
(i)
Reasonableness
. The parties agree that this Agreement in its entirety, and in particular the Restrictive Covenants, are reasonable both as to time and scope. The parties additionally agree (1) that the Restrictive Covenants are necessary for the protection of the Company and the Bank's business and goodwill; (2) that the Restrictive Covenants are not any greater than are reasonably necessary to secure the Company and the Bank's business and goodwill; and (3) that the degree of injury to the public due to the loss of the service and skill of the Employee or the restrictions placed upon the Employee’s opportunity to make a living with the Employee’s skills upon enforcement of said restraints, does not and will not warrant non-enforcement of said restraints. The parties agree that if the scope of the Restrictive Covenants is adjudged too broad to be capable of enforcement, then the parties authorize said court or arbitrator to narrow the Restrictive Covenants so as to make them capable of enforcement, given all relevant circumstances, and to enforce the same.
(j)
Survival
. This Section 4 shall survive the termination of this Agreement.
5.
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 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 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 Bank in the same amount and on the same terms as the compensation pursuant to Section 3 of this Agreement. 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.
6.
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 Bank at its home office, to the attention of the Board of Directors with a copy to 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 Bank.
7.
Amendments
. No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties, except as herein otherwise provided.
8.
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.
9.
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.
10.
Governing Law
. This Agreement shall be governed by the laws of the State of Washington.
11.
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 Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding the foregoing, the Bank may resort to the Superior Court of Grays Harbor County, Washington for injunctive and such other relief as may be available in the event that the Employee engages in conduct, after termination of the Agreement that amounts to a violation of section 4 hereof or violation of the Washington Trade Secrets Act or amounts to unlawful interference with the business expectancies of the Company or the Bank.
12.
Knowing and Voluntary Agreement.
Employee represents and agrees that the Employee has read this Agreement, understands its terms, and that the Employee has the right to consult counsel of choice and has either done so or knowingly waives the right to do so. Employee also represents that the Employee has had ample time to read and understand the Agreement before executing it and that the Employee enters into this Agreement without duress or coercion from any source.
13.
Compliance with Section 409A
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(a) The Bank and the Employee agree that, notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and operated so that the payment of the benefits set forth herein either shall either be exempt from the requirements of Section 409A or shall comply with the requirements of such provision. The Employee hereby acknowledges that they have been advised to seek and has sought the advice of a
tax advisor with respect to the tax consequences to the Employee of all payments pursuant to this Agreement, including any adverse tax consequences or penalty taxes under Section 409A and applicable State tax law. The Employee hereby agrees to bear the entire risk of any such adverse federal and State tax consequences and penalty taxes in the event any payment pursuant to this Agreement is deemed to be subject to Section 409A, that no representations have been made to the Employee relating to the tax treatment of any payment pursuant to this Agreement under Section 409A and the corresponding provisions of any applicable State income tax laws, and that in no event shall the Bank, the Company nor any affiliate thereof be liable to the Employee for or with respect to any taxes, penalties or interest which may be imposed upon the Employee pursuant to Section 409A.
(b) If, on the date of the Employee's Separation from Service, the Employee is a “specified employee,” as defined in Section 409A, and if any payments or benefits under this Agreement payable upon the Employee's Separation from Service will result in additional tax or interest to the Employee because of Section 409A, then despite any provision of this Agreement to the contrary the Employee will not be entitled to the payments or benefits until the earlier of (1) the date that is six months and one day after Employee's Separation from Service for reasons other than the Employee's death, and (2) the date of the Employee's death. After the end of the period during which payments or benefits are delayed under this provision, the entire amount of the delayed payments and benefits shall be paid to the Employee in a single lump sum, without interest.
(c) If an amount payable hereunder that is subject to Section 409A is conditioned upon the Employee's signing a release, and the period of time during which the Employee may sign the release spans two taxable years of the Employee, then the portion of such amount that may be paid during either of such years (depending on when the release is signed) shall be paid in the second year.
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.
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Attest:
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ANCHOR BANK
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_____________________________________
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_________________________________
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By: __________________________________
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__________________, Secretary
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Its: __________________________________
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EMPLOYEE
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_____________________________________
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EXHIBIT A
General Release
This General Release, dated as of ____________, 201_, is delivered by _______________ (the “Employee”) to and for the benefit of the Released Parties (as defined below). The Employee acknowledges that this General Release is being executed in accordance with the Change in Control Severance Agreement dated _________, 20___ (the “Agreement”).
1.
General Release.
a. The Employee, for himself and for the Employee’s heirs, dependents, assigns, agents, executors, administrators, trustees and legal representatives (collectively, the “Releasors”) hereby forever releases, waives and discharges the Released Parties (as defined below) from each and every claim, demand, cause of action, fee, liability or right of any sort (based upon legal or equitable theory, whether contractual, common-law, statutory, federal, state, local or otherwise), known or unknown, which Releasors ever had, now have, or hereafter may have against the Released Parties by reason of any actual or alleged act, omission, transaction, practice, policy, procedure, conduct, occurrence, or other matter, at any time up to and including the Effective Date (as defined below), including without limitation, those in connection with, or in any way related to or arising out of, the Employee’s employment or termination of employment or any other agreement, understanding, relationship, arrangement, act, omission or occurrence, with the Released Parties.
b. Without limiting the generality of the previous paragraph, this General Release is intended to and shall release the Released Parties from any and all claims, whether known or unknown, which Releasors ever had, now have, or may hereafter have against the Released Parties including, but not limited to: (1) any claim of discrimination or retaliation under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, as amended (excluding claims for accrued, vested benefits under any employee benefit or pension plan of the Released Parties subject to the terms and conditions of such plan and applicable law), the Family and Medical Leave Act, the Reconstruction Era Civil Rights Act, and the Rehabilitation Act of 1973; (2) any other claim (whether based on federal, state or local law or ordinance, statutory or decisional) relating to or arising out of the Employee’s employment, the terms and conditions of such employment, the termination of such employment and/or any of the events relating directly or indirectly to or surrounding the termination of such employment, including, but not limited to, breach of contract (express or implied), tort, wrongful discharge, detrimental reliance, defamation, emotional distress or compensatory or punitive damages; (3) any claim relating to or arising from a violation of Section 409A of the Internal Revenue Code of 1986, as amended; and (4) any claim for attorney’s fees, costs, disbursements and the like.
c. The foregoing release does not in any way affect: (1) the Employee’s rights of indemnification to which the Employee was entitled immediately prior to the Resignation Date (as an employee or director of any of the Released Parties); (2) any rights the Employee may have as a shareholder of the Employer; (3) the Employee’s vested rights under any tax-qualified retirement plan, nonqualified deferred compensation plan or stock compensation plan maintained by a Released Party; (4) any right the Employee may have to obtain contribution in the event of an entry of judgment against the Employee as a result of any act or failure to act for which the Employee and any of the Released Parties are jointly responsible; and (5) the right of the Employee to take whatever steps may be necessary to enforce the terms of the Agreement.
d. For purposes of this General Release, the “Released Parties”
means Anchor Bancorp, Anchor Bank, all current and former parents, subsidiaries, related companies, partnerships, joint ventures and employee benefit programs (and the trustees, administrators, fiduciaries and insurers of such programs), and, with respect to each of them, their predecessors and successors, and, with respect to each such entity, all of its past, present, and future employees, officers, directors, members, shareholders, owners, representatives, assigns, attorneys, agents, insurers, and any other person acting by, through, under or in concert with any of the persons or entities listed in this paragraph, and their successors (whether acting as agents for such entities or in their individual capacities).
2.
No Existing Suit
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The Employee represents and warrants that, as of the Effective Date (as defined below), the Employee has not filed or commenced any suit, claim, charge, complaint, action, arbitration, or legal proceeding of any kind against of the Released Parties.
3.
Knowing and Voluntary Waiver
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By signing this General Release, the Employee expressly acknowledges and agrees that: (a) the Employee has carefully read it and fully understands what it means; (b) the Employee has discussed this General Release with an attorney of the Employee’s choosing before signing it; (c) the Employee has been given at least 21 calendar days to consider this General Release; (d) the Employee has agreed to this General Release knowingly and voluntarily and was not subjected to any undue influence or duress; (e) the consideration provided him under Agreement is sufficient to support the releases provided by him under this General Release; (f) the Employee may revoke the Employee’s execution of this General Release within seven days after the Employee signs it by sending written notice of revocation as set forth below; and (g) on the eighth day after the Employee executes this General Release (the “Effective Date”), this General Release becomes effective and enforceable, provided that the Employee does not revoke it during the revocation period. Any revocation of the Employee’s execution of this General Release must be submitted, in writing, to Anchor Bank, at its main office, to the attention of the Chairman of the Board, stating “I hereby revoke my execution of the General Release.” The revocation must be personally delivered to the Chairman of the Board of Anchor Bank or mailed to the Chairman of the Board of Anchor Bank and postmarked within seven days of the Employee’s execution of this General Release. If the last day of the revocation period is a Saturday, Sunday or legal holiday, then the revocation period will be extended to the following day which is not a Saturday, Sunday or legal holiday. The Employee agrees that if the Employee does not execute this General Release or, in the event of revocation, the Employee will not be entitled to receive any of the payments or benefits under Section 3 of the Agreement. The Employee must execute this General Release on or before the date that is 21 days after the effective date of the Employee’s termination of employment.
This General Release is final and binding and may not be changed or modified, except as provided in a signed and dated agreement in writing between the Employee and Anchor Bank.
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EMPLOYEE
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Date: __________________
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______________________
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