EXHIBIT 10.3
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 Xxxxxxx
X. Xxxx (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 a Senior Vice President
of Security and has agreed to serve as a Senior Vice President and a Commercial
Lending Officer 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, dated
February 1, 1996 (the "Prior Employment Agreement"), shall terminate without any
obligation 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 a Senior
Vice President and a Commercial Lending Officer of the Bank 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:
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1. Definitions.
(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 as a Senior Vice President and a Commercial Lending Officer of the Bank,
including (without limitation) any of the following actions unless consented to
in writing by the Employee: (1) the assignment to the Employee of duties
substantially inconsistent with and in diminution of the duties of a Senior Vice
President and a Commercial Lending Officer of the Bank; and (2) a material
adverse change in the Employee's salary or benefits, other than as part of an
overall program applied uniformly and with equitable effect to a substantial
number of similarly situated personnel of the Bank. 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 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 two 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 (1) the Bank has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further; and (2) prior to such anniversary,
the Board of Directors of the Bank 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. 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 a Senior Vice President and
a Commercial Lending Officer of the Bank at the Billings, Montana office of the
Bank. As such, the Employee shall perform all duties commonly discharged by a
Senior Vice President and a Commercial Lending Officer of the Bank, pursuant to
guidelines and directions issued by superior officers or the Board of Directors
from time to time, and such other duties of a similar nature as may be assigned
to him by superior officers or the Board of Directors from time to time,
provided that such other duties shall be reasonably related to the duties of a
Senior Vice President and a Commercial Lending Officer of the Bank.
4. Compensation.
(a) Salary. The Bank agrees to pay the Employee during the
term of this Agreement a salary of $71,500 per year, subject to customary
withholding, and payable in such installments as the Bank customarily utilizes
in paying its employees generally. In the discretion of the Bank's 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 similarly situated personnel in
discretionary bonuses as authorized and declared by the Board of Directors. 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 applicable policies and
procedures 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, he
shall be entitled, for business purposes only, to non-exclusive use of a car
owned by the Bank.
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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 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 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 period of the remaining term of
this Agreement, pay to the Employee his salary at the annual 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.
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 24 months following the Date of Termination,
pay to the Employee his salary at the annual 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.
(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) or (2) of Section 1(d) of this Agreement or otherwise
materially breached this Agreement, the Employee shall have the right to provide
to the Bank 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 is 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
the Bank shall pay to the Employee his salary at the annual 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.
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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 a Senior Vice President and a Commercial Lending Officer
of the Bank, the Employee shall be entitled to receive group and other
disability income benefits of the type, if any, then provided by the Bank for
similarly situated personnel.
(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
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his or her designee, at the time the Director or his or her designee approves a
supervisory 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 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. 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.
9. 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 16 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.
10. 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.
11. 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
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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
United States to the extent applicable and otherwise by the laws of the State of
Montana.
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.
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/ Xxxxx Xxxxxxx /s/ Xxxx X. Xxxxxx
------------------ -------------------
Secretary Xxxx X. Xxxxxx, President and
Chief Executive Officer
Employee
/s/ Xxxxxxx X. Xxxx
--------------------
Xxxxxxx X. Xxxx
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