EXHIBIT 10.1
VENTURE FINANCIAL GROUP, INC.
EMPLOYMENT AGREEMENT
FOR
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
This EMPLOYMENT AGREEMENT ("Agreement") by and among VENTURE FINANCIAL
GROUP, INC., a Washington corporation (the "Company), VENTURE BANK, a Washington
banking corporation ("the Bank") (hereinafter the Company and the Bank are
collectively referred to as the "Employer") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("the
Executive"), is dated April 21, 2005.
RECITALS
A. WHEREAS, pursuant to an Agreement and Plan of Reorganization dated
April 21, 2005, Washington Commercial Bancorp and ▇▇▇▇▇▇▇ National Bank, with
whom the Executive is currently employed, will merge into the Company and the
Bank, respectively (the "Merger").
B. WHEREAS, the Employer desires as of and conditioned upon the closing of
the Merger (the "Effective Date") to employ the Executive as the President and
Chief Executive Officer of the Bank and as President of the Company, and the
Executive wishes to accept such employment under the terms and conditions set
forth in this agreement.
NOW, THEREFORE, in consideration of the covenants and undertakings herein
contained and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
AGREEMENT
1. Employment. As of the Effective Date, this Agreement shall replace
Executive's existing employment agreement with Washington Commercial Bancorp and
▇▇▇▇▇▇▇ National Bank (the "WCB Agreement"), and the Employer will employ the
Executive for the Term (as defined below), and the Executive accepts employment
with the Employer on the terms and conditions set forth in this agreement.
Executive agrees that he will not be entitled to any benefits under Section 5 of
the WCB Agreement as a result of the Merger except those benefits listed on
Exhibit A.
2. Term. The term of the Agreement begins on the Effective Date and
continues through September 30, 2008. Unless either party informs the other
party that they do not wish to extend the Agreement by the October 1 of the year
preceding the end of the Term, this Agreement will automatically renew for an
additional one year term. "Term" as used herein includes the initial term and
any extensions thereto.
3. Duties. The Executive will serve as President and Chief Executive
Officer of the Bank and as President of the Company, and will faithfully and
diligently perform the duties that are normal and customary to the positions, as
well as those duties assigned from time to time by the board of directors of the
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Bank or the Company (the "Boards of Directors"). The Executive will be
responsible for all aspects of the Bank's performance including, without
limitation, ensuring that daily operational and managerial matters are performed
in a manner consistent with the Employer's policies. Executive shall devote his
entire business time, attention, and energies to the business of Employer. The
foregoing, however, shall not preclude Executive from engaging in appropriate
civic, charitable, or religious activities or from serving on the boards of
directors of other entities, as long as such activities and services do not
interfere or conflict with his responsibilities to Employer and such activities
and services are approved by Employer's Chairman or Compensation Committee of
the Board of Directors, which approval shall not be unreasonably withheld.
Subject to the limitations of Section 11, the foregoing shall not preclude
Executive from devoting a reasonable amount of time to private investments. The
Executive agrees to act in accordance with the laws of the State of Washington
and the federal government and pursuant to the general guidelines and directions
as established from time to time by the Boards of Directors.
4. Service as Director. The Executive will serve as a member of the Bank's
Board of Directors. In addition, the Company's Board of Directors will (a)
appoint Executive to serve as a director of the Company until the next annual
meeting of shareholders (the "Annual Meeting"); and (b) nominate and recommend,
subject to eligibility and the Employer's directors' fiduciary duties, that the
Company's shareholders elect Executive at the Annual Meeting to serve in the
class of directors with a term to expire in 2008. The Executive will not be
entitled to receive additional compensation for service as a director of the
Boards of Directors. Executive shall be deemed to have resigned from both the
Boards of Directors immediately after termination of his employment, regardless
of whether the Executive submits a formal, written resignation as director.
5. Compensation.
(a) Salary. During the term of this Agreement, the Executive will
receive a base salary of not less than $200,000 per year. The Executive's salary
will be reviewed for possible increase annually, on or about March 1st, starting
March 1, 2007, by the Company's Chairman and Compensation Committee, taking into
account the Executive's performance, the Bank's performance, cost of living and
industry standards.
(b) Incentive Compensation. In addition to the base salary, the
Executive will participate in the Venture Bank Annual Incentive Plan (and any
successor plans) and will be eligible to receive an annual bonus at a level
pursuant to a formula determined by the Employer from time to time based on
factors including, but not limited to, the quality of the Executive's
performance of his assigned duties and the pre-tax profits of the Bank. For each
of the first four years following the Effective Date, the Executive will receive
a bonus of at least $6,500. For 2005, the parties intend that Executive's bonus
will be based on performance criteria, including but not limited to the
following: successful completion of the Merger; financial performance of
Washington Commercial Bancorp for the period prior to the Merger, excluding
nonrecurring income statement items for items related to the Merger; and
successful integration following the Merger. In any event, Executive's target
bonus for 2005 will not be less than the bonus that he received for 2004 from
▇▇▇▇▇▇▇ National Bank.
(c) Stock Options/Restricted Stock Grants.
(i) The Company may grant stock options to the Executive, from
time to time, at the discretion of the Company's Board of Directors. All
unexpired options and stock awards will vest in the event of a Change of Control
(defined in Section 10(d) below).
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(ii) On the Effective Date, the Executive will receive a
restricted stock grant of 5,000 shares under the Company's 2004 Stock Incentive
Plan. Of these shares, 25% will vest on October 1, of 2006, 2007, 2008 and 2009,
respectively. In the event that the Employer terminates the Executive's
employment other than for Cause (as defined in Section 8 below), all remaining
unvested shares will automatically become vested.
(d) Other Benefits. During the term of this Agreement, the Executive
shall be entitled to receive all employee benefits the Employer generally
provides to its senior executives including the following benefits: medical,
dental, vision, life insurance, KSOP, voluntary life insurance, long-term
disability insurance, and other benefits as outlined in the Employer's Policy
Manual and as provided to regular full-time employees of the Employer.
(e) Automobile. The Executive will be furnished an automobile
allowance of at least seven hundred and fifty dollars ($750) per month, which
shall be reviewed annually by the Compensation Committee.
(f) Salary Continuation Plan. Reasonably promptly after the
Effective Date, the Company's Board of Directors will offer the Executive a
Salary Continuation Plan, which will provide retirement benefits to the
Executive.
(g) Relocation Expenses. Executive shall be entitled to
reimbursement in full of all reasonable expenses up to a maximum of $50,000
incurred in relocating to within 20 miles of DuPont, Washington from his present
residence, including but not limited to the following: household moving
expenses, temporary living expenses, customary brokerage fees or closing costs
incurred by Executive in selling Executive's primary residence and purchasing a
new residence in or around DuPont, Washington.
6. Reimbursable Expenses. The Executive is authorized to receive
reimbursement for reasonable expenses incurred in performing his duties and in
promoting the business of the Employer, including, without limitation, travel,
entertainment, and similar expense, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures established from
time to time by the Employer.
7. Vacation. The Executive shall be entitled to paid vacation according to
the Bank's Personnel Policy, but no less than twenty-five (25) working days of
paid vacation each year of his employment, at least 10 of which shall be taken
consecutively.
8. Definition of "Cause". Cause for termination of employment means any
one or more of the following:
(a) Willful misfeasance, gross negligence, or conduct involving
dishonesty in the performance of the Executive's duties, as reasonably
determined by a two-thirds vote of either of the Boards of Directors;
(b) Conviction of any felony or of a crime in connection with
Executive's duties;
(c) Conduct demonstrably and significantly harmful to the Employer,
as reasonably determined by a two-thirds vote of either of the Boards of
Directors, including but not limited to intentional violation of law or of any
significant policy or procedure of the Employee;
(d) Refusal or failure to act in accordance with a directive
(provided such directive is
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lawful and commercially reasonable) of either the Employer's Boards of Directors
or Employer's Chairman, as reasonably determined by a two-thirds vote of either
of the Board of Directors; or
(e) Removal of the Executive from office or permanent prohibition of
the Executive from participating in the conduct of the Employer's affairs by an
order issued by a bank regulatory authority.
9. Definition of "Good Reason". Good Reason for the Executive's
resignation means any one or more of the following occurs without the
Executive's consent:
(a) Reduction of Executive's salary or elimination of any
compensation or benefit plan benefiting the Executive unless applicable to all
officers;
(b) Material reduction of the Executive's authority or duties or
assignment to Executive of any authority or duties materially inconsistent with
Executive's position; or
(c) A relocation or transfer of Executive's principal place of
employment that would require Executive to commute on a regular basis more than
30 miles each way from the main business office of the Bank as of the date of
this Agreement (or the new administrative office in Dupont).
10. Termination. Executive's employment may be terminated during the Term
as described in this Section:
(a) For Cause or Without Good Reason. If the Executive's employment
is terminated by the Employer for Cause or by the Executive without Good Reason,
the Employer will pay the Executive the salary earned and expenses reimbursable
under this Agreement incurred through the date of the Executive's termination.
The Executive will have no right to receive compensation or other benefits under
this Agreement after termination under this section.
(b) Without Cause or For Good Reason. If the Executive's employment
is terminated by the Employer without Cause, or by the Executive for Good
Reason, the Bank will pay the Executive an amount equal to the base salary paid
to the Executive by the Employer during the twelve (12) months preceding the
month of termination, less statutory payroll deductions (the "Severance
Benefit"). The Severance Benefit will be paid in installments over 12 months,
starting the month following termination, in accordance with the Employer's
standard payroll procedures. The Executive's receipt and retention of the
Severance Benefit is conditioned on the Executive's compliance with the
Restrictive Covenants (defined in Section 11 below) and the Executive's
execution of a release of all claims and potential claims against the Employer.
(c) Death or Disability. This agreement terminates if the Executive
dies or if the Executive is unable to perform his duties and obligations under
this Agreement for a period of 90 consecutive days as a result of a physical or
mental disability arising at any time during the term of the Agreement, unless
with reasonable accommodation Executive could continue to perform his duties and
making these accommodations would not cause an undue hardship to the Bank. If
termination occurs under this Section 10(c), Executive or his estate will be
entitled to receive only the compensation and benefits earned and expenses
reimbursable through the date this Agreement terminated.
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(d) Termination Related to Change in Control. A "Change in Control"
occurs if: (i) the Company merges or consolidates with another corporation and
as a result less than 50% of the combined voting power of the resulting
corporation immediately after the merger or consolidation is held by persons who
were the holders of the Company's voting securities immediately before the
merger or consolidation, or (ii) any person, entity, or group of person or
entities acquires a majority of the Company's or the Bank's outstanding stock or
substantially all of the assets of the Employer. The Executive will be entitled
to a Change in Control Benefit (defined below), in lieu of any other severance
benefit provide herein, if there is a Change of Control and (1) within one year
following the effective date of such Change of Control, Employer terminates the
Executive's employment without Cause or the Executive terminates his employment
for Good Reason or (2) at any time during the period starting 180 days prior to
the public announcement of the transaction that will result in a Change of
Control and ending at the Change in Control, Employer terminates Executive's
employment without Cause; or (3) the Executive terminates his employment for any
reason or no reason after the six month anniversary of the Change in Control but
before the one year anniversary of the Change in Control. The Change in Control
Benefit equals two times the amount of the Executive's base salary at
termination or at the Change in Control, whichever is greater. The Change in
Control Benefit will be paid in monthly installments over 12 months in
accordance with the Employer's standard payroll procedures, starting the month
immediately following the later of the month in which termination of employment
or the Change in Control occurs. The Executive's receipt and retention of the
Change in Control Benefit is conditioned on the Executive's compliance with the
Restrictive Covenants and the Executive's execution of a release of all claims
and potential claims against the Employer.
(e) Retention Bonus. If the Executive is employed by the Employer
(or its successor) as of the one year anniversary of the Change in Control, the
Employer (or its successor) will pay the Executive a retention bonus equal to
one times the Executive's base salary as of that date (the "Retention Bonus").
The Retention Bonus will be paid in lump sum during the month following the one
year anniversary of the Change in Control.
(f) "Excess Parachute Payment" Restrictions. If the benefits under
Section 10(d) or 10(e), either alone or together with other payments to which
the Executive is entitled to receive from the Employer, would constitute an
"excess parachute payment" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), these benefits shall be reduced to the
largest amount that will result in no portion of the benefits being subject to
the excise tax imposed by Section 4999 of the Code. The determination of any
reduction in the benefits pursuant to the foregoing provisions, shall be made by
mutual agreement of the Employer and the Executive or if no agreement is
possible, by the Executive's accountants.
(g) Limitation on Severance or Change in Control Benefit.
Notwithstanding any other provision in this Agreement, the Employer shall make
no payment of any benefit provided for herein to the extent that such payment
would be prohibited by the provisions of Part 359 of the regulations of the
Federal Deposit Insurance Corporation (the "FDIC") as the same may be amended
from time to time, and if such payment is so prohibited, the Employer shall use
its best efforts to secure the consent of the FDIC or other applicable banking
agencies to make such payments in the highest amount permissible, up to the
amount provided for in this Agreement.
(h) Return of Bank Property. If and when Executive ceases for any
reason to be employed by the Employer, Executive must return to the Employer all
keys, pass cards, identification
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cards and any other property of the Employer. At the same time, Executive also
must return to the Employer all originals and copies (whether in hard copy,
electronic or other form) of any documents, drawings, notes, memoranda, designs,
devices, diskettes, tapes, manuals, and specifications which constitute
proprietary information or material of the Employer. The obligations in this
paragraph include the return of documents and other materials which may be in
Executive's desk at work, Executive's car or place of residence, or in any other
location under Executive's control.
11. Restrictive Covenants.
(a) Confidential Information. The Executive acknowledges that in the
course of his employment, he will have or obtain knowledge of confidential
information and other secrets concerning the Employer and its business, plans
and strategies, its actual and prospective customers, and other matters which
are valuable to the Employer and which the Employer does not want disclosed. The
Executive will not, after signing this Agreement, during and after the Term,
disclose to any other person or entity any confidential information concerning
the Employer, its business operations or customers, or use for his own purposes
or permit or assist others in the use of such confidential information, unless
(i) either of the Boards of Directors consents to the use or disclosure of the
information, (ii) the use or disclosure is consistent with the Executive's
duties under this Agreement, or (iii) disclosure is required by law or court
order.
(b) Noncompetition. Upon termination of the Executive's employment
for any reason, the Executive shall not, for a period of twelve (12) months
after the date of termination (the "Noncompete Period"), be employed or act in
any capacity, either directly or indirectly, or by or for himself or for any
partnership, corporation, trust, or company or otherwise "participate" (as
defined below) in any business conducting any of the types of business conducted
by Employer at the time of termination of employment in any market area
delineated in the Employer's CRA (Community Reinvestment Act of 1977) Plan at
the time of termination. For purposes of this Agreement, the term "participate"
includes, without limitation, any direct or indirect interest in any such
business, whether as an officer, director, consultant, employee, partner, sole
proprietor, stockholder, owner, or otherwise, other than by ownership of less
than three percent (3%) of the stock of any financial institution providing
services in the areas delineated in the Employer's CRA plan. The term
"participate" shall also include participation, planning, or consulting for any
startup financial organization.
(c) Nonsolicitation. For a period of twenty-four (24) months
following his termination (whether voluntary or not) Executive will not (a)
induce or attempt to induce any other employee of the Employer to leave the
employ of the Employer, or in any way interfere with the relationship between
the Employer and any other employee of the Employer or (b) induce or attempt to
induce any customer, supplier, licensee, or other business relations of the
Employer to cease doing business with the Employer.
(d) Injunctive Relief. The Executive acknowledges that it is
impossible to measure in money the damages that will accrue to the Employer if
the Executive fails to observe the covenants in this Section 11 (the
"Restrictive Covenants"); therefore, the Restrictive Covenants may be enforced
by an action at law for damages and by an injunction to prohibit the restricted
activity. Executive hereby waives the claim or defense that an adequate remedy
at law is available to the Employer. Nothing set forth herein shall prohibit the
Employer from pursuing all remedies available to it.
(e) Reasonableness. The parties agree that this Agreement in its
entirety, and in particular the Restrictive Covenants, are reasonable both as to
time and as to area. The parties additionally agree (i) that the Restrictive
Covenants are necessary for the protection of the Employer's business and
goodwill; (ii) that the Restrictive Covenants are not any greater than are
reasonably necessary to secure the Employer's business and goodwill; and (iii)
that the degree of injury to the public due to the loss of the
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service and skill of the Executive or the restrictions placed upon Executive's
opportunity to make a living with his skills upon enforcement of said
restraints, does not and will not warrant non-enforcement of said restraints.
The parties agree that if any portion of the Restrictive Covenants set is
adjudged unreasonably broad, then the parties authorize said court or arbitrator
to narrow same so as to make it reasonable, given all relevant circumstances,
and to enforce the same.
(f) Survival. This Section 11 shall survive the termination of this
Agreement.
12. Creative Work. The Executive agrees that all creative work and work
product, including but not limited to all technology, business management tools,
processes, software, patents, trademarks, and copyrights developed by the
Executive during his employment with the Employer, regardless of when or where
such work or work product was produced, constitutes work made for hire, all
rights of which are owned by the Employer. Executive hereby assigns to the
Company and the Bank all rights, title, and interest, whether by way of
copyrights, trade secret, trademark, patent, or otherwise, in all such work or
work product, regardless of whether the same is subject to protection by patent,
trademark, or copyright laws.
13. Arbitration. Any dispute arising under this agreement shall be settled
by final, binding, private arbitration in ▇▇▇▇▇▇▇▇ County, Washington, unless
the arbitrator is unwilling to travel to ▇▇▇▇▇▇▇▇ County, in which case the
arbitration will be held in Seattle, Washington. This includes disputes about
the meaning of the agreement and performance under the agreement. The
arbitration will be conducted by Judicial Dispute Resolution LLC with the
arbitrator appointed and the arbitration conducted in accordance with Judicial
Dispute Resolution rules and procedures. The arbitrator will have full authority
to determine all issues, including arbitrability. The arbitrator's award may be
reduced to final judgment in ▇▇▇▇▇▇▇▇ County Superior Court. Each party shall
bear its own costs in connection with the arbitration and shall share equally
the fees and expenses of the arbitrator, except that the arbitrator shall award
the prevailing party fees and costs. Notwithstanding the foregoing, an aggrieved
party may seek a temporary restraining order or preliminary injunction in
▇▇▇▇▇▇▇▇ County Superior court to preserve the status quo during the arbitration
proceeding, provided however, that the party seeking relief agrees that ultimate
resolution of the dispute will still be determined through arbitration and not
through court process. The filing of the court action for injunctive relief
shall not hinder or delay the arbitration process.
14. Expenses/Attorneys' Fees. The prevailing party shall be awarded all
costs and expenses of the proceeding, including but not limited to, attorneys'
fees, filing and service fees, witness fees and arbitrator's fees. If
arbitration is commenced, the arbitrator will have full authority and complete
discretion to determine the "prevailing party" and the amount of costs and
expenses to be awarded.
15. Notices. Any notice to be delivered under this Agreement shall be
given in writing and delivered, personally or by certified mail, postage
prepaid, addressed to the Company or to the Executive at their last known
addresses.
16. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Washington.
17. Waiver/Amendment. This Agreement may not be amended, released,
discharged, abandoned, changed, or modified in any manner, except by an
instrument in writing signed by each of the parties hereto. The failure of any
party hereto to enforce at any time any of the provisions of this Agreement
shall in no way be construed to be a waiver of any such provision, nor in any
way to affect the validity of this Agreement or any part thereof or the right of
any party thereafter to enforce each and every such provision. No waiver or any
breach of this Agreement shall be held to be a waiver of any other or subsequent
breach.
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18. Severability. If any provision of this Agreement shall be held by a
court or arbitrator to be invalid or unenforceable, the remaining provisions
shall continue to be fully effective.
19. Entire Agreement. This Agreement represents the entire employment
agreement between the parties. This Agreement supersedes any other prior oral or
written employment agreement between the parties on the subject matter hereof.
This Agreement does not supersede either the Salary Continuation Plan or any
other incentive compensation agreement (including stock option agreements)
entered into separately by the parties to this Agreement.
20. Binding Effect. It is agreed that all covenants, terms, and conditions
of this Agreement shall extend, apply to, and firmly bind the heirs, executors,
administrators, assigns, and successors in interest of the respective parties
hereto as fully as the respective parties themselves are bound and, as
applicable, shall survive the Executive's death, disability or termination.
21. ADVICE OF COUNSEL. THE EXECUTIVE ACKNOWLEDGES THAT, IN EXECUTING THIS
AGREEMENT, THE EXECUTIVE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF
INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND
PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY
PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.
IN WITNESS WHEREOF, the parties have signed this Agreement effective on
the day and year first above written.
EXECUTIVE:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
VENTURE FINANCIAL GROUP, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Chairman, President & CEO
VENTURE BANK
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Chairman
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EXHIBIT A
1. $125,000.00 paid immediately prior to the Effective Time.
2. 5,000 shares of Restricted Stock of Venture Financial Group, Inc.