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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
(1997)
This Employment Agreement (the "Agreement") is between WASHINGTON
MUTUAL, INC., a Washington corporation ("Washington Mutual") and ____
____________ ("Employee").
Employee has many years of experience in the financial services
business, and has been employed as an officer of Washington Mutual and/or an
affiliate since ________________. Because of Employee's importance to
Washington Mutual and the value to be derived from Employee's continued
employment, it is the desire of Washington Mutual and Employee to set forth
certain terms and conditions relating to Employee's employment as an inducement
for Employee continuing his or her employment for so long as Washington Mutual
desires to employ Employee.
Therefore, the parties agree as follows:
1. Employment. Washington Mutual agrees to, and does hereby,
employ Employee, and Employee agrees to, and does hereby, accept such
employment. Notwithstanding the foregoing, any other provision in this
Agreement or any prior written or oral agreement or understanding between
Washington Mutual and Employee, Employee's employment hereunder shall be at
will and may be terminated at any time by Washington Mutual without any
liability whatsoever to Washington Mutual except for the payment of such
amounts and the providing of such benefits as are expressly set forth in
Sections 6 and 12.
2. Duties. Employee shall perform such duties as the Chairman,
the President or the Board of Directors of Washington Mutual (the "Board") may
from time to time direct. (As used herein "Board" shall include the board of
directors or other successor body performing their function in the event of a
merger, consolidation, etc., as described in paragraph 12 below.) Employee
shall initially have the title of _______ _____________ with duties principally
in the area of _______________________, but this may be changed from time to
time as the Chairman, the President or the Board may determine.
3. Compensation. During Employee's employment under this
Agreement, Employee shall receive base salary compensation in the amount
determined by the Directors' Compensation and Stock Option Committee (the
"Compensation Committee"), payable semi-monthly or in such manner as is
consistent with Washington Mutual's policy relating to salaried employees. In
addition, Employee is entitled to participate in Washington Mutual's Bonus and
Incentive Plan for Executive and Senior Management as adopted by the
Compensation Committee, under which Employee may receive, subject to the terms
of the Plan, a bonus based on Washington Mutual's achievement of specified
financial goals. Employee may also be awarded stock options and/or restricted
stock, as determined by the Compensation Committee. Employee's compensation
shall be reviewed by the Compensation Committee annually and, in the sole
discretion of the Compensation Committee, such compensation may be adjusted
either upward or downward.
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4. Other Benefits. Subject to the respective eligibility
requirements and other terms and provisions of the applicable benefit or
insurance plans (including relevant waiting periods), Employee shall be
enrolled as a participant in all employee benefit plans (including retirement
and insurance plans) available to other officers of Washington Mutual, as the
same may from time to time be adopted or amended. Employee shall also be
entitled to receive such other perquisites as the Chairman, the President or
the Board may from time to time deem appropriate.
5. Performance of Duties. Employee agrees that during his or her
employment with Washington Mutual: (a) Employee will faithfully perform the
duties of such office or offices as he or she may occupy, which duties shall be
such as may be assigned to him or her by the Chairman, the President or the
Board; (b) Employee will devote to the performance of his or her duties all
such time and attention as the Chairman, the President or the Board shall
reasonably require, taking, however, from time to time such reasonable
vacations as are consistent with his or her duties and Washington Mutual
policy; and (c) Employee will not, without the express consent of the Chairman
or the Board, become actively associated with or engaged in any business or
activity during the term of this Agreement other than that of Washington Mutual
(excepting of course customary family and personal activities which may include
management of personal investments so long as it does not entail active
involvement in a business enterprise) and Employee will do nothing inconsistent
with his or her duties to Washington Mutual.
6. Termination.
(a) Washington Mutual may terminate Employee at any time
in its sole discretion. Except as expressly provided in (b) and (c) below,
upon termination Washington Mutual shall have no liability to pay any further
compensation or any other benefit or sum whatsoever to Employee.
(b) Upon termination, Employee's rights under Washington
Mutual's employee pension plans and employee welfare benefit plans (including
medical coverage and insurance plans) shall be determined under the terms of
the plans themselves.
(c) In the event that (i) Employee is terminated for any
reason upon or within three years after a Change in Control (as defined in
Section 12 below) or (ii) Employee resigns for "good cause" (as defined in
Section 12 below) upon or within three years after a Change in Control, then
(but in no other circumstances) Employee shall be entitled to receive, within
five business days after the effective date of such termination or resignation,
from Washington Mutual or its successor, an amount equal to three times
Employee's annual Washington Mutual compensation. In addition, upon such an
event:
(i) all stock options held by Employee shall become
immediately exercisable notwithstanding any provisions in the grant of such
options regarding vesting, and
(ii) the lapse of the restrictions on Employee's
restricted stock shall automatically be accelerated; provided that the
provision in this subsection (ii) shall be effective
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only if (1) the shareholders vote to authorize the Compensation Committee to
accelerate the vesting of restricted stock without regard to the vesting
schedules contained in the Washington Mutual, Inc. Restricted Stock Plan
(whether to submit this issue to a vote of the shareholders is in Washington
Mutual's discretion), and (2) the Compensation Committee then approves the
acceleration; and provided further that the Compensation Committee may exclude
any particular grant(s) of restricted stock from the acceleration provided for
in this subsection (ii), either at the time it approves the acceleration or in
connection with making any particular grant of restricted stock.
(d) For purposes of Section 6(c), Employee's "annual
compensation" shall include all items of compensation other than the value of
stock options and/or restricted stock granted to Employee. Employee's "annual
compensation" shall include the greater of (i) the total of Employee's salary
and target bonus for the calendar year in which the termination occurs (if
established before the termination) or (ii) Employee's salary and actual bonus
for the prior calendar year (annualized if Employee was not employed by
Washington Mutual for the entire previous calendar year). Employee's "annual
compensation" shall also include the amount of the contributions made or
anticipated to have been made on Employee's behalf to Washington Mutual's
benefit plans for the calendar year in which the termination occurs, including
without limitation contributions to pension plans and cafeteria plan.
(e) Notwithstanding the foregoing, if any payment
described in Section 6(c), together with any other payments or transfers of
property, would constitute a "parachute payment" under Section 280G of the
Internal Revenue Code of 1986, as amended, or any successor statute then in
effect, the aggregate payments by Washington Mutual or its successor pursuant
to Section 6(c) shall be reduced to an amount that, when combined with any
other payments or transfers of property taken into account under Section 280G,
is one dollar less than the smallest sum that would be considered to be a
"parachute payment." The foregoing notwithstanding, the reduction provided for
in this paragraph shall be made only if it increases the amount received by
Employee net of federal income, FICA and golden parachute excise taxes.
7. Continuation of Medical Insurance. If Employee's employment
by Washington Mutual terminates for any reason (including early retirement)
other than gross misconduct, Employee shall be entitled to continue to
participate in Washington Mutual's self-funded group medical plan, at
Employee's expense, to the extent provided in the plan and under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
8. Death or Disability. If Employee should die or become
disabled at any time during his or her employment hereunder this Agreement
shall terminate and neither Employee nor anyone claiming by, through or under
him or her shall be entitled to any further compensation or other sum under
this Agreement (other than payments made by insurers under policies of life and
disability insurance and any sums which may become available under any employee
benefit plan).
9. Determination of Disability. If there should be any dispute
between the parties as to Employee's physical or mental disability at any time,
such question shall be settled by the
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opinion of an impartial reputable physician agreed upon for the purpose by the
parties or their representatives or, failing agreement within ten days of a
written request therefor by either party to the other, then one designated by
the then President of the Washington State Medical Association. The
certificate of any such physician as to the matter in dispute shall be final
and binding on the parties.
10. Confidentiality. Employee agrees that information not
generally known to the public to which Employee has been or will be exposed as
a result of Employee's employment by Washington Mutual is confidential
information that belongs to Washington Mutual. This includes information
developed by Employee, alone or with others, or entrusted to Washington Mutual
by its customers or others. Washington Mutual's confidential information
includes, without limitation, information relating to Washington Mutual's trade
secrets, know-how, procedures, purchasing, accounting, marketing, sales,
customers, clients, employees, business strategies and acquisition strategies.
Employee will hold Washington Mutual's confidential information in strict
confidence and will not disclose or use it except as authorized by Washington
Mutual and for Washington Mutual's benefit.
11. Possession of Materials. Employee agrees that upon conclusion
of employment or request by Washington Mutual, Employee shall turn over to
Washington Mutual all documents, files, office supplies and any other material
or work product in Employee's possession or control that were created pursuant
to or derived from Employee's services for Washington Mutual.
12. Change in Control. For purposes of this Agreement, "Change in
Control" shall mean:
(a) The acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the date of this Agreement), other than
Washington Mutual, a Subsidiary or any employee benefit plan of Washington
Mutual or its Subsidiaries, of shares representing more than 25% of (i) the
common stock of Washington Mutual, (ii) the aggregate voting power of
Washington Mutual's voting securities or (iii) the total market value of
Washington Mutual's voting securities;
(b) During any period of 25 consecutive calendar months,
a majority of the Board of Directors of Washington Mutual (the "Board") ceasing
to be composed of individuals (i) who were members of the Board on the first
day of such period, (ii) whose election or nomination to the Board was approved
by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of the Board or (iii) whose election
or nomination to the Board was approved by individuals referred to in clauses
(i) and (ii) above constituting at the time of such election or nomination at
least a majority of the Board;
(c) The good-faith determination by the Board that any
Person or group (other than a Subsidiary or any employee benefit plan of
Washington Mutual or its Subsidiaries) has acquired direct or indirect
possession of the power to direct or cause to direct the management
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or policies of Washington Mutual, whether through the ability to exercise
voting power, by contract or otherwise;
(d) The merger, consolidation, share exchange or similar
transaction between Washington Mutual and another Person (other than a
Subsidiary) other than a merger in which Washington Mutual is the surviving
corporation; or
(e) The sale or transfer (in one transaction or a series
of related transactions) of all or substantially all of Washington Mutual's
assets to another Person (other than a Subsidiary) whether assisted or
unassisted, voluntary or involuntary.
For purposes of the above definition of Change in Control:
(f) "Person" shall mean any individual, corporation,
company, voluntary association, partnership, limited liability company, joint
venture, trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof); and
(g) "Subsidiary" shall mean a corporation that is wholly
owned by Washington Mutual, either directly or through one or more corporations
which are wholly owned by Washington Mutual.
In the event of a Change in Control, this Agreement shall bind, and
run to the benefit of, the successor to Washington Mutual resulting from the
Change in Control.
If, upon or within three years after a Change in Control (i) Employee
shall be terminated for any reason or (ii) Employee shall resign for "good
cause," Employee shall be entitled to the separation payments described in
Section 6(c) above, subject to Section 6(e) above.
For purposes of this Agreement, "good cause" for Employee to resign
shall mean:
(h) The assignment of duties to Employee which (i) are
materially different from Employee's duties immediately prior to the Change in
Control, or (ii) result in Employee having significantly less authority and/or
responsibility than he or she had prior to the Change in Control, without his
or her express written consent;
(i) The removal of Employee from the position held
immediately prior to the Change in Control, except where such removal is for
cause (as defined below) or by reason of Employee's disability;
(j) A reduction of Employee's base salary as in effect on
the date of the Change in Control or as the same may be increased from time to
time thereafter;
(k) A reduction in the overall level of Employee's total
compensation below the average total compensation paid by Washington Mutual to
Employee for the 24 months immediately preceding the Change in Control; or
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(l) Any change in Employee's duties which would require
him or her to relocate out of the Seattle area, without Employee's express
written consent.
For purposes of Section 12(i) of this Agreement, a removal of Employee
from his or her position will be considered to be for "cause" if, but only if,
the removal is because (i) Employee engages in abusive use of alcohol or other
drugs on a continuing or recurring basis, (ii) Employee is convicted of any
felony or of a misdemeanor involving moral turpitude (including forgery, fraud,
theft or embezzlement), or is convicted or enters into a pretrial diversion or
similar program in connection with the prosecution for an offense involving
dishonesty, breach of trust or money laundering, or (iii) Employee has engaged
in dishonesty, fraud, destruction or theft of property of Washington Mutual or
an affiliate, physical attack to a fellow employee, willful malfeasance or
gross negligence in the performance of his or her duties, or misconduct
materially injurious to Washington Mutual or an affiliate.
13. Title. Although it is the intention of the parties that
during the term of this Agreement Employee shall be an executive employee of
Washington Mutual with the title and duties described in Section 2 above, it is
specifically understood that the employment and the nature and situs of
services to be rendered shall be subject to the authority of the Chairman, the
President or the Board to change the same from time to time and at any time and
to provide for the operation of Washington Mutual as specified by applicable
banking laws and regulations.
14. Arbitration. Any dispute arising out of or relating to this
Agreement or Employee's employment shall be submitted to binding arbitration
(instead of being decided in court by a judge or jury) as follows:
(a) Each party shall select one neutral arbitrator and
the two arbitrators shall together select a third neutral arbitrator. If
either party fails to promptly select an arbitrator, or if the two
party-selected arbitrators do not promptly select the third arbitrator, the
missing arbitrator(s) shall be selected by the Presiding Judge of the King
County Superior Court. Each of the arbitrators shall be either a present or
former senior executive or board member of a banking, financial or insurance
company doing business in the State of Washington or a member of the Washington
Bar with at least ten years experience in banking, financial or corporate law.
(b) The arbitration shall proceed in Seattle under
Washington law. To the extent not inconsistent with this Agreement, the
arbitrators shall follow the American Arbitration Association ("AAA")
Employment Dispute Resolution Rules effective on November 1, 1993, provided
that the arbitration shall not be filed with or administered by the AAA or any
other arbitration administrator. The arbitration shall be commenced by serving
a written demand for arbitration on the other party, either personally or by
both regular first class mail and certified mail, return receipt requested.
(c) All pre-hearing matters shall be decided by the third
arbitrator. Discovery shall be permitted only upon order of the third
arbitrator after a showing of good cause (it being the intent of the parties to
limit discovery to that which is reasonably necessary for preparation and
presentation of this case).
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(d) In making the decision and award, the arbitrators
shall apply applicable substantive law. On issues of state law, the
substantive law (not including choice of law rules) of the state of Washington
shall control. The arbitrators may award injunctive relief or any other remedy
that would have been available in court. If a court, applying applicable
substantive law, would be authorized to award punitive or exemplary damages,
the arbitrators shall have the same power, but the arbitrators otherwise shall
not award punitive or exemplary damages. All statutes of limitations that
would apply in court shall apply in the arbitration. Questions about whether a
dispute must be arbitrated shall be determined by the arbitrators. The
arbitrators may require the losing party to pay some or all of the costs of the
arbitration and the prevailing party's reasonable attorneys' fees.
(e) Because of the interstate nature of Washington
Mutual's business, this arbitration agreement is governed by the Federal
Arbitration Act, 9 U.S.C. Section 1 et seq. (the "FAA"). The provisions of
the FAA (and to the extent not preempted by the FAA, the provisions of
Washington's arbitration statute, Chapter 7.04 RCW) are incorporated into this
Agreement to the extent not inconsistent with the other terms of this
Agreement.
(f) The decision of the arbitrators shall be binding upon
the parties and shall not be subject to judicial review, absent fraud or
collusion involving the arbitrators, and judgment may be entered upon the award
in the King County Superior Court if the same is not paid within thirty (30)
days after the written decision of the arbitrators has been delivered to the
parties.
(g) The disputes that must be submitted to arbitration
under this Agreement include, but are not limited to, pay disputes, wrongful
termination disputes and discrimination, harassment or civil rights disputes,
and include disputes with (i) Washington Mutual's direct and indirect
subsidiaries and (ii) the employees and agents of Washington Mutual and of its
direct and indirect subsidiaries so long as the employee or agent with whom the
Employee has the dispute is also bound by or consents to this agreement to
arbitrate.
(h) Either party may request a court to issue such
temporary or interim relief (including temporary restraining orders and
preliminary injunctions) as may be appropriate, either before or after
arbitration is commenced. The temporary or interim relief shall remain in
effect pending the outcome of arbitration. No such request shall be a waiver
of the right to submit any dispute to arbitration.
15. Miscellaneous.
(a) This Agreement is the entire agreement between the
parties and may not be modified or abrogated orally or by course of dealing,
but only by another instrument in writing duly executed by the parties. This
Agreement replaces and supersedes all prior agreements between the parties on
these subjects, including without limitation that certain Employment Agreement
dated as of January 1, 1994 between Employee, Washington Mutual Savings Bank
and Washington Mutual, Inc.
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(b) This Agreement has been drafted in contemplation of
and shall be construed in accordance with and governed by Washington law.
Jurisdiction and venue of any action in connection with this Agreement shall be
had exclusively in the Superior Court for King County, Washington or the U.S.
District Court in Seattle.
(c) In the event of any litigation arising out of this
Agreement the losing party agrees to pay the prevailing party's reasonable
attorneys' fees and costs including those incurred on appeal.
(d) Employee acknowledges that this Agreement has been
drafted by counsel for Washington Mutual, and that Employee has not relied upon
such counsel with respect to this Agreement.
(e) If a court of competent jurisdiction or governmental
authority declares any term or provision hereof invalid, unenforceable or
unacceptable, the remaining terms and provisions hereof shall be unimpaired and
the invalid, unenforceable or unacceptable term or provision shall be replaced
by a term or provision that is valid, enforceable and acceptable and that comes
closest to expressing the intention of the invalid, unenforceable or
unacceptable term or provision.
(f) Employee may not assign, pledge or encumber his
interest in this Agreement or any part thereof without the prior written
consent of Washington Mutual.
DATED for reference purposes the 1st day of January 1997 but effective
as of January 1, 1995.
WASHINGTON MUTUAL: WASHINGTON MUTUAL, INC.
By____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its Chairman
EMPLOYEE: ______________________________________
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