Exhibit
10.1
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered
into as of this ___ day of __________, 2008, by and between 1
st Security Bank of
Washington, Mountlake Terrace, Washington (hereinafter referred to
as the “Bank”) and ____________ (the
“Employee”).
WHEREAS,
the Employee serves as _______________ of 1 st Security Bancorp, Inc. (the
“Company”) and the Bank; and
WHEREAS,
the board of directors of the Bank (the “Board of
Directors”) believes it is in the best interests of the
Company and the Bank to enter into this Agreement with the Employee
in order to assure continuity of management of the Company and the
Bank; and
WHEREAS,
the Board of Directors has approved and authorized the execution of
this Agreement with the Employee;
NOW,
THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, it is
AGREED as follows:
(a) The term “Change in Control” means any
of the following events occurring: (i) the acquisition by any
“person” or “group” (as defined in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934
(“Exchange Act”)), other than the Company, any
subsidiary of the Company or their employee benefit plans, directly
or indirectly, as “beneficial owner” (as defined in
Rule 13d-3, under the Exchange Act) of securities of the Company
representing twenty percent (20%) or more of either the then
outstanding shares or the combined voting power of the then
outstanding securities of the Company; (ii) either a majority of
the directors of the Company elected at the Company’s annual
stockholders meeting shall have been nominated for election other
than by or at the direction of the “incumbent
directors” of the Company, or the “incumbent
directors” shall cease to constitute a majority of the
directors of the Company. The term “incumbent
director” shall mean any director who was a director of the
Company on the Effective Date and any individual who becomes a
director of the Company subsequent to the Effective Date and who is
elected or nominated by or at the direction of at least two-thirds
of the then incumbent directors; (iii) the shareholders of the
Company approve (x) a merger, consolidation or other business
combination of the Company with any other “person” or
“group” (as defined in Sections 13(d) and 14(d) of the
Exchange Act) or affiliate thereof, other than a merger or
consolidation that would result in the outstanding common stock of
the Company immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into common
stock of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of the
Company or such surviving entity or a parent or affiliate thereof
outstanding immediately after such merger, consolidation or other
business combination, or (y) a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets; or (iv)
any other event or circumstance which is not covered by the
foregoing subsections but which the Board of Directors determines
to affect control of the Company and with respect to which the
Board of Directors
adopts a resolution that the event or circumstance constitutes a
Change of Control for purposes of the Agreement. The
Change of Control Date is the date on which an event described in
(i), (ii), (iii) or (iv) occurs.
(b) The term “Consolidated
Subsidiaries” means any subsidiary or subsidiaries of the
Company (or its successors) that are part of the consolidated group
of the Company (or its successors) for federal income tax
reporting.
(c) The term “Date of Termination” means the
date upon which the Employee's employment with the Company or the
Bank or both ceases, as specified in a notice of termination
pursuant to Section 8 of this Agreement.
(d)
The term “Effective Date” means ____________ __,
2008.
(e) The term “Involuntary Termination” means
the termination of the employment of Employee (i) by either the
Company or the Bank or both without his express written consent; or
(ii) by the Employee by reason of a material diminution of or
interference with his duties, responsibilities or benefits,
including (without limitation) any of the following actions unless
consented to in writing by the Employee: (1) a
requirement that the Employee be based at any place other than
Mountlake Terrace, or within 20 miles thereof, except for
reasonable travel on Company or Bank business; (2) a material
demotion of the Employee; (3) a material reduction in the number or
seniority of personnel reporting to the Employee or a material
reduction in the frequency with which, or in the nature of the
matters with respect to which such personnel are to report to the
Employee, other than as part of a Bank- or Company-wide reduction
in staff; (4) a reduction in the Employee’s salary or a
material adverse change in the Employee’s perquisites,
benefits, contingent benefits or vacation, other than prior to a
Change in Control as part of an overall program applied uniformly
and with equitable effect to all members of the senior management
of the Bank or the Company; (5) a material permanent increase in
the required hours of work or the workload of the Employee; or (6)
the failure of the board of directors of the Company (or a board of
directors of a successor of the Company) to elect him as
_________________ of the Company (or a successor of the Company) or
any action by the board of directors of the Company (or a board of
directors of a successor of the Company) removing him from any of
such offices, or the failure of the Board of Directors of the Bank
(or any successor of the Bank) to elect him as
_____________________ of the Bank (or any successor of the Bank) or
any action by such board o(or board of a successor of the Bank)
removing him from any of such offices. The term
“Involuntary Termination” does not include Termination
for Cause or termination of employment due to death or permanent
disability pursuant to Section 7(g) of this Agreement, or
suspension or temporary or permanent prohibition from participation
in the conduct of the affairs of a depository institution under
Section 8 of the Federal Deposit Insurance Act, or Section
32.16.090 of the Revised Code of Washington
(“R.C.W.”).
(f)
The terms “Termination for Cause” and “Terminated
for Cause” mean termination of the employment of the Employee
with either the Company or the Bank, as the case may be, because of
the Employee’s 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 (excluding violations which do not have a
material adverse affect on the Company or the Bank) or final
cease-and-desist order, or (except as
provided below) material
breach of any provision of this Agreement. No act or
failure to act by the Employee shall be considered willful unless
the Employee acted or failed to act with an absence of good faith
and without a reasonable belief that his action or failure to act
was in the best interest of the Bank. The Employee shall
not be deemed to have been Terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board of Directors at a
meeting of the Board duly 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 of Directors the Employee has engaged in conduct described in
the preceding sentence and specifying the particulars thereof in
detail. The opportunity of the Employee to be heard
before the Board shall not affect the right of the Employee to
arbitration as set forth in paragraph 18.
(g) The
term “Code” means the Internal Revenue Code of 1986, as
amended, or any successor code thereto.
(h) The
term “Section 409A” means Section 409A of the Code and
the regulations and guidance of general applicability issued
thereunder.
2. Term . The term of this Agreement
shall be a period of three years commencing on the Effective Date,
subject to earlier termination as provided herein. On
each anniversary of this Agreement the term shall be extended for a
period of one year in addition to the then-remaining term,
provided that 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 provided
further that the Employee has not received an unsatisfactory
performance review by either the Board of Directors or the board of
directors of the Company.
3. Employment . The Employee is
employed as the ________________ of the Company and
as the ___________________ of the Bank. As such, the
Employee shall render administrative and management services as are
customarily performed by persons situated in similar executive
capacities, and shall have such other powers and duties as the
Board of Directors or the board of directors of the Company may
prescribe from time to time. The Employee shall also
render services to any subsidiary or subsidiaries of the Company or
the Bank as requested by the Company or the Bank from time to time
consistent with his executive position. The Employee
shall devote his best efforts and reasonable time and attention to
the business and affairs of the Company and the Bank to the extent
necessary to discharge his responsibilities
hereunder. The Employee may (i) serve on corporate or
charitable boards or committees, and (ii) manage personal
investments, so long as such activities do not interfere materially
with performance of his responsibilities hereunder.
(a) Salary . The Bank agrees to pay
the Employee during the term of this Agreement a base salary (the
“Bank Salary”) the annualized amount of which shall be
not less than the annualized aggregate amount of the
Employee’s base salary from the Bank and any Consolidated
Subsidiaries in effect at the Effective Date; provided that
any amounts of salary actually paid to the Employee by any
Consolidated Subsidiaries shall reduce the amount to be paid by the
Bank to the Employee. The Bank Salary shall be paid no
less frequently than
monthly and shall be subject
to customary tax withholding. The amount of the
Employee’s Bank Salary shall be increased (but shall not be
decreased other than prior to a Change in Control as part of an
overall program applied uniformly and with equitable effect to all
members of senior management of the Company or the Bank) from time
to time in accordance with the amounts of salary approved by the
Board of Directors or the board of directors of any of the
Consolidated Subsidiaries after the Effective Date.
(b) Bonuses . The Employee shall be
entitled to participate in an equitable manner with all other
executive officers of the Company and the Bank in such
performance-based and discretionary bonuses, if any, as are
authorized and declared by the board of directors for executive
officers of the Company and by the Board of Directors of the Bank
for executive officers of the Bank. Any discretionary
bonus shall be paid not later than 2 2 months after the
year in which the Employee obtains a legally binding right to the
bonus. If the discretionary bonus cannot be paid by that
date, then it shall be paid on the next following April 15, or such
other date during the year as permitted under Section 409A.
(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 Company and the Bank, provided
that the Employee accounts for such expenses as required under
such policies and procedures.
(a) Participation in Benefit Plans
. The Employee shall be entitled to participate, to the
same extent as executive officers of the Company and the Bank
generally, in all plans of the Company and the Bank relating to
pension, retirement, thrift, profit-sharing, savings, group or
other life insurance, hospitalization, medical and dental coverage,
travel and accident insurance, education, cash bonuses, and other
retirement or employee benefits or combinations
thereof. In addition, the Employee shall be entitled to
be considered for benefits under all of the stock and stock option
related plans in which the Company's or the Bank's executive
officers are eligible or become eligible to participate.
(b)
Fringe Benefits . The Employee shall be eligible
to participate in, and receive benefits under, any other fringe
benefit plans or perquisites which are or may become generally
available to the Company’s or the Bank’s executive
officers.
6. Vacations; Leave . The Employee
shall be entitled to annual paid vacation in accordance with the
policies established by the Board of Directors and the board of
directors of the Company for executive officers, in no event less
than _____ weeks per year, and to voluntary leaves of absence, with
or without pay, from time to time at such times and upon such
conditions as the Board of Directors may determine in its
discretion.
7. Termination of Employment .
(a) Involuntary Termination . If the
Employee experiences an Involuntary Termination, such termination
of employment shall be subject to the Bank’s obligations
under this Section 7. In the event of the Involuntary
Termination of the Employee, the Bank shall,
during the remaining term of
this Agreement (i) pay to the Employee monthly one-twelfth of the
Bank Salary at the annual rate in effect immediately prior to the
Date of Termination and one-twelfth of the average annual amount of
cash bonus and cash incentive compensation of the Employee, based
on the average amounts of such compensation earned by the Employee
from the Bank and any Consolidated Subsidiaries for the two full
fiscal years preceding the Date of Termination; and (ii) maintain
substantially the same group life or key man life insurance,
hospitalization, medical, dental, prescription drug and other
health benefits, and long-term disability insurance (if any) for
the benefit of the Employee and his dependents and beneficiaries
who would have been eligible for such benefits if the Employee had
not
