EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT IS SUBJECT TO ARBITRATION
PURSUANT TO THE UNIFORM ARBITRATION ACT
CONTAINED IN CHAPTER 5, TITLE 27 OF THE MONTANA CODE ANNOTATED
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 24th day of September, 1996, by and between Western Federal Savings Bank of
Montana, Missoula, Montana (hereinafter referred to as the "Bank"), and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ (the "Employee").
WHEREAS, the Bank's parent holding company, WesterFed Financial
Corporation ("WesterFed" or the "Holding Company"), has entered into an
agreement dated September 24, 1996, with Security Bancorp, the parent holding
company of Security Bank, FSB ("Security"), under which Security Bancorp shall
be merged into WesterFed (the "Merger"), and such agreement calls for the
Employee and the Bank to enter into an employment agreement in the form of this
agreement; and
WHEREAS, the Employee is currently serving as President and Chief
Executive Officer of Security and of Security Bancorp and has agreed to serve as
an Executive Vice President of the Bank effective at the effective time of the
Merger; and
WHEREAS, the Employee has agreed that upon the effectiveness of the
Merger, that certain Employment Agreement between himself and Security and
Security Bancorp, dated June 19, 1995 (the "Prior Employment Agreement"), shall
terminate without any obligation thereunder to him on the part of any employer
or successor thereto and that this Agreement shall entirely supersede and
replace the Prior Employment Agreement; and
WHEREAS, the Board of Directors of the Bank (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 induce the Employee to serve the Bank as an
Executive Vice President following the Merger and to assure continuity of
management after the Merger; and
WHEREAS, although it is contemplated that Security shall merge into the
Bank in connection with the Merger, the Employee has agreed that if Security
does not merge into the Bank, the Bank may assign and transfer to Security all
of the Bank's rights and obligations under this Agreement; and
WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee to take effect as stated in
Section 2 hereof;
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.
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(a) The term "Change in Control" means (1) an acquisition by
any acquiror, directly or indirectly, through one or more subsidiaries or
transactions, or acting in concert with one or more persons or companies, of
more than 25% of the outstanding voting securities of the Holding Company, or
(2) a reorganization, merger, consolidation, sale of all or substantially all of
the assets of the Bank or the Holding Company or a similar transaction in which
the Bank or the Holding Company is not the resulting entity. The term "Change in
Control" shall not include an acquisition of securities by an employee benefit
plan of the Bank or the Holding Company.
(b) The term "Commencement Date" means the date upon which the
Merger is effective.
(c) The term "Date of Termination" means the earlier of (1)
the date upon which the Bank gives notice to the Employee of the termination of
the Employee's employment with the Bank or (2) the date upon which the Employee
ceases to serve as an employee of the Bank.
(d) The term "Involuntarily Termination" means termination of
the employment of Employee without the Employee's express written consent, and
shall include a material diminution of or interference with the Employee's
duties, responsibilities and benefits as an Executive Vice President of the Bank
with respect to commercial lending, including (without limitation) any of the
following actions unless consented to in writing by the Employee: (1) a change
in the principal workplace of the Employee which would reasonably require him to
commute more than 30 miles each way from his principal residence as of the date
of this Agreement; (2) the assignment to the Employee of duties substantially
inconsistent with and in diminution of the position, duties, responsibilities
and status contemplated by Section 3 of this Agreement; and (3) a material
adverse change in the Employee's salary, perquisites, benefits, contingent
benefits or vacation, other than as part of an overall program applied uniformly
and with equitable effect to all members of the senior management of the Bank or
the Holding Company. The term "Involuntary Termination" does not include
Termination for Cause or termination of employment due to retirement, death,
disability 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").
(e) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee because of the
Employee's personal dishonesty, incompetence, willful misconduct, breach of a
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. 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 called and held for such purpose (after reasonable notice to the
Employee stating why the Board of Directors would consider Termination for Cause
and an opportunity for the Employee, together with the Employee's counsel, to be
heard before the Board), stating that in the good faith opinion of the Board the
Employee has engaged in conduct described in the preceding sentence and
specifying the particulars thereof in detail.
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2. Term; Termination of Prior Employment Agreement. The term of this
Agreement shall be a period of three years commencing on the Commencement Date,
subject to earlier termination as provided herein. Upon the effectiveness of the
Merger, the Prior Employment Agreement shall terminate with no obligation
thereunder to the Employee on the part of any employer or successor thereto, and
this Agreement shall entirely supersede and replace such Prior Employment
Agreement.
3. Employment. The Employee is employed as an Executive Vice President
of the Bank. As such, the Employee shall render administrative and management
services as are customarily performed by persons situated in similar executive
capacities with respect to commercial lending by the Bank, and shall have such
other powers and duties of such an officer of the Bank as the Board of Directors
may prescribe from time to time.
4. Compensation.
(a) Salary. The Bank agrees to pay the Employee during the
term of this Agreement a salary of $160,200 per year, subject to customary
withholding, and payable in such installments as the Bank customarily utilizes
in paying its executive employees. In the discretion of the Board of Directors,
such salary may be increased from time to time.
(b) Discretionary Bonuses. The Employee shall be entitled to
participate in an equitable manner with all other executive officers of the Bank
in discretionary bonuses as authorized and declared by the Board of Directors to
its executive employees. No other compensation provided for in this Agreement
shall be deemed a substitute for the Employee's right to participate in such
bonuses when and as declared by the Board of Directors.
(c) Expenses. 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.
(d) Company Car. So long as the Employee is employed
hereunder, the Bank shall provide him with the use of a car owned by the Bank,
provided that, in accordance with the policies of the Bank as in effect from
time to time, the Employee shall (i) keep records of personal and business use
of the automobile, and (ii) reimburse the Employer for expenses connected with
the personal use of the automobile by the Employee or his spouse.
5. Participation in Retirement and Employee Benefit Plans. The Employee
shall be entitled to participate in all plans relating to pension, thrift,
profit-sharing, group life insurance, medical and dental coverage, education,
and other retirement or employee benefits or combinations thereof, in which
continuing employees of Security are entitled to participate after the Merger.
6. Vacations; Leave. The Employee shall be entitled to (i) annual paid
vacation in accordance with the policies established by the Bank's Board of
Directors, provided that such vacation shall not be less than four weeks per
year, and (ii) to voluntary leave of absence, with
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or without pay, from time to time at such times and upon such conditions as the
Board of Directors may determine in its discretion.
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, such termination of employment by action of the Board of
Directors shall not prejudice the Employee's right to compensation or other
benefits under this Agreement. In the event of Involuntary Termination of the
employment of the Employee by the Bank other than in connection with or within
12 months after a Change in Control, the Bank shall, through the third
anniversary of the Commencement Date, (i) continue to pay to the Employee his
salary at the rate in effect immediately prior to the Date of Termination, which
salary shall be payable in such manner and at such times as such salary would
have been payable to the Employee under Section 4(a) if the Employee had
continued to be employed by the Bank, and (ii) provide to the Employee health
benefits as maintained by the Bank for the benefit of its executive officers
from time to time during the remaining term of this Agreement or, at the
election of the Board of Directors, substantially the same health benefits as
the Bank maintained for the Employee.
In the event of Involuntary Termination of the employment of
the Employee by the Bank in connection with or within 12 months after a Change
in Control, the Bank shall, during the longer of the period remaining until the
third anniversary of the Commencement Date or the period of 18 months following
the Date of Termination, (i) continue to pay to the Employee his salary at the
rate in effect immediately prior to the Date of Termination, which salary shall
be payable in such manner and at such times as such salary would have been
payable to the Employee under Section 4(a) if the Employee had continued to be
employed by the Bank, and (ii) provide to the Employee health benefits as
maintained by the Bank for the benefit of its executive officers from time to
time during such period or, at the election of the Board of Directors,
substantially the same health benefits as the Bank maintained for the Employee.
(b) Termination for "Good Reason." In the event that the
Employee reasonably believes that the Bank has taken any of the actions
specified in clauses (1), (2) or (3) of Section 1(d) of this Agreement or
otherwise materially breached this Agreement, the Employee shall have the right
to provide to the Board of Directors a written notice asserting the right to
terminate his employment for good reason and specifying (i) the facts and
circumstances supporting the Employee's belief that the Bank has taken any such
action or materially breached this Agreement and the date upon which such
termination of employment for good reason shall become effective, which date
shall be at least 30 days after the date of such notice, and (ii) a period of
not less than ten business days during which the Bank shall have the opportunity
to rescind such actions or cure such breach. In the event that the Bank does not
rescind such actions or cure such breach with such period, the Employee shall
have the right to terminate his employment and to receive from the Bank through
the third anniversary of the Commencement Date the same salary and health
benefits as he would have received in the event of Involuntary Termination as
described in subsection 7(a) of this Agreement.
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(c) Termination for Cause. In the event of Termination for
Cause, the Bank shall pay the Employee the Employee's salary through the Date of
Termination, and the Bank shall have no further obligation to the Employee under
this Agreement.
(d) Voluntary Termination. The Employee's employment may be
voluntarily terminated by the Employee at any time upon 90 days' written notice
to the Bank or such shorter period as may be agreed upon between the Employee
and the Board of Directors of the Bank. In the event of such voluntary
termination, the Bank shall be obligated to continue to pay to the Employee the
Employee's salary and benefits only through the Date of Termination, at the time
such payments are due, and the Bank shall have no further obligation to the
Employee under this Agreement.
(e) Death; Disability. In the event of the death of the
Employee while employed under this Agreement and prior to any termination of
employment, the Employee's estate, or such person as the Employee may have
previously designated in writing, shall be entitled to receive from the Bank the
salary of the Employee through the last day of the calendar month in which the
Employee died. If the Employee becomes disabled as defined in the Bank's then
current disability plan, if any, or if the Employee is otherwise unable due to
disability to serve as an Executive Vice President, the Employee shall be
entitled to receive group and other disability income benefits of the type, if
any, then provided by the Bank for executive officers.
(f) 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. ss. 1818(e)(3) and (g)(1), 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.
(g) 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. ss. 1818(e)(4) and (g)(1), 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.
(h) 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.
(i) 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: (1) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation 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 (2) by the Director or his or her designee, at the time the Director or
his or her designee approves a supervisory
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merger to resolve problems related to operation of the Bank or when the Bank is
determined by the Director to be in an unsafe or unsound condition. Any rights
of the parties that have already vested, however, shall not be affected by any
such action.
(j) Limitations on Payments. 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. 1828(k) and any regulations promulgated
thereunder. Notwithstanding any other provision of this Agreement, if the value
of payments and benefits under this Agreement, together with any other amounts
and the value of benefits received or to be received by the Employee would cause
any amount to be nondeductible by the Bank or the Holding Company for federal
income tax purposes pursuant to Section 280G of the Internal Revenue Code of
1986, as amended, then payments 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 the Employee without causing any amount to become nondeductible by
the Bank or the Holding Company pursuant to or by reason of such Section 280G.
8. Confidential Information; Loyalty; Non-competition
(a) During the term of the Employee's employment hereunder and
thereafter, the Employee shall not, except as may be required to perform his
duties hereunder or as required by law, disclose to others or use, whether
directly or indirectly, any Confidential Information. "Confidential Information"
means information about the Bank and the Bank's clients and customers which is
not available to the general public and was or shall be learned by the Employee
in the course of his employment by the Bank, including without limitation any
data, formulae, information, proprietary knowledge, trade secrets, and credit
reports and analyses owned, developed and used in the course of the business of
the Bank, including client and customer lists and information related thereto;
and all papers, resumes, records and other documents (and all copies thereof)
containing such Confidential Information. The Employee acknowledges that such
Confidential Information is specialized, unique in nature and of great value to
the Bank. The Employee agrees that upon the expiration of the Employee's term of
employment hereunder or in the event the Employee's employment hereunder is
terminated prior thereto for any reason whatsoever, the Employee will promptly
deliver to the Bank all documents (and all copies thereof) containing any
Confidential Information.
(b) The Employee shall devote his full time to the performance
of his employment under this Agreement; provided, however, that the Employee may
serve, without compensation, with charitable, community and industry
organizations and continue to serve, with compensation, as a director of any
business corporation of which he is currently a director to the extent such
directorships do not inhibit the performance of his duties thereunder or
conflict with the business of the Bank. During the term of the Employee's
employment hereunder, the Employee shall not engage in any business or activity
contrary to the business affairs or interests of the Bank.
(c) Upon the expiration of the term of the Employee's
employment hereunder or in the event the Employee's employment hereunder
terminates prior thereto for any reason whatsoever, the Employee shall not, for
a period of three years after the occurrence of such event, for himself, or as
the agent of, on behalf of, or in conjunction with, any person or entity,
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solicit or attempt to solicit, whether directly or indirectly: (i) any employee
of the Bank to terminate such employee's employment relationship with the Bank;
or (ii) any savings and loan, banking or similar business from any person or
entity that is or was a client, employee, or customer of the Bank and had dealt
with the Employee or any other employee of the Bank under the supervision of the
Employee.
(d) In the event Employee voluntarily terminates his
employment hereunder pursuant to Section 7(d) of this Agreement, or in the event
the Employee's employment hereunder is Terminated for Cause, the Employee shall
not, for a period of one (1) year from the Date of Termination, directly or
indirectly, own, manage, operate or control, or participate in the ownership,
management, operation or control of, or be employed by or connected in any
manner with, any financial institution having an office located within twenty
(20) miles of any office of the Bank as of the Date of Termination.
(e) The provisions of subsections (b) and (d) of this Section
8 shall not prevent the Employee from purchasing, solely for investment, not
more than five percent (5%) of any financial institution's stock or other
securities which are traded on any national or regional securities exchange or
are actively traded in the over-the-counter market and registered under Section
12(g) of the Securities Exchange Act of 1934.
(f) The provisions of this Section 8 shall survive the
termination of the Employee's employment hereunder whether by expiration of the
term thereof or otherwise.
9. No Mitigation. The Employee shall not be required to mitigate the
amount of any salary or other 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.
10. Stock and Stock Option Awards.
(a) On the Commencement Date, WesterFed shall grant to the
Employee under the WesterFed Financial Corporation 1993 Stock Option and
Incentive Plan (the "Plan") options to purchase 12,000 shares of Common Stock
(as defined in the Plan) at an Exercise Price (as defined in the Plan) equal to
the Market Value (as defined in the Plan) of a share of the Common Stock on the
date on which the Merger becomes effective. Such award shall vest based upon
Continuous Service (as defined in the Plan) at the rate of 20 percent per year
over the five years following the date of the grant, but vesting shall
accelerate in the event of a change in control or merger, consolidation or
combination of WesterFed into another corporation in the same manner as awards
made under the Plan prior to the Merger to executive officers of WesterFed
accelerate in such events.
(b) Furthermore, if prior to the Merger, the shareholders of
WesterFed are asked to approve an increase in the number of shares of Common
Stock which may be awarded under the Plan, or approve a plan similar to the Plan
under which stock options are to be awarded to executive officers of WesterFed,
and such shareholders vote to approve such an increase or plan, WesterFed shall
on the Commencement Date award to the Employee options to purchase an
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additional 30,000 shares of the Common Stock at an Exercise Price equal to the
Market Value of the Common Stock on the date of the grant, which award shall
vest based upon Continuous Service at the rate of 20 percent per year over the
five years following the date of the grant, but vesting shall accelerate in the
event of a change in control, or merger, consolidation or combination of
WesterFed into another corporation in same manner as awards made under the Plan
prior to the Merger to executive officers of WesterFed accelerate in such
events; provided that if the shareholders of WesterFed are asked to approve such
an increase or plan and vote not to approve it, then the Employee's rights under
this Section 10(b) shall expire.
(c) On the Commencement Date, WesterFed shall make the same
award to the Employee under the WesterFed Financial Corporation Recognition and
Retention Plan as he would have received if on that date he had been elected and
qualified for the first time as a non-employee director of WesterFed.
11. Attorneys Fees. In the event the Bank exercises its right of
Termination for Cause, but it is determined by a court of competent jurisdiction
or by an arbitrator pursuant to Section 18 that cause did not exist for such
termination, or if in any event it is determined by any such court or arbitrator
that the Bank has failed to make timely payment of any amounts owed to the
Employee under this Agreement, the Employee shall be entitled to reimbursement
for all reasonable costs, including attorneys' fees, incurred in challenging
such termination or collecting such amounts. Such reimbursement shall be in
addition to all rights to which the Employee is otherwise entitled under this
Agreement.
12. Assignments.
(a) In the event that Security does not merge into the Bank,
the Bank shall have the right to assign and transfer all of its rights and
obligations under this Agreement to Security. If the Bank elects to exercise
this right, it shall so notify the Employee in writing.
(b) This Agreement is a personal services contract and the
Employee may not assign or delegate any of his rights or obligations hereunder.
(c) 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.
13. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when 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.
14. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
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15. 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.
16. 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.
17. Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
Montana.
18. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: Western Federal Savings Bank
of Montana
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Executive Officer
Employee
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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