Exhibit 10.3
FORM OF
ANCHOR BANK
EMPLOYEE SEVERANCE COMPENSATION PLAN
PLAN PURPOSE
The
purpose of the Anchor Bank Employee Severance Compensation Plan
(the “Plan”) is to assure for Anchor Bank (the
“Bank”) the services of the Employees in the event of a
Change in Control of Anchor Bancorp (the “Holding
Company”) or the Bank. The benefits contemplated by the Plan
recognize the value to the Bank of the services and contributions
of the eligible Employees and the effect upon the Bank resulting
from uncertainties relating to continued employment, reduced
employee benefits, management changes and employee relations that
may arise if a Change in Control occurs or is threatened. The
Bank’s and the Holding Company’s Boards of Directors
believe that it is in the best interests of the Bank and the
Holding Company to provide eligible Employees with such benefits in
order to defray the costs and changes in employee status that could
follow a Change in Control. The Boards of Directors believe that
the Plan will also aid the Bank in attracting and retaining highly
qualified individuals who are essential to its success and that the
Plan’s assurance of fair treatment of the Bank’s
employees will reduce the distractions and other adverse effects on
Employees’ performance if a Change in Control occurs or is
threatened.
ARTICLE I
ESTABLISHMENT OF PLAN
1.1
Establishment of Plan
As
of the Effective Date, the Bank hereby establishes a severance
compensation plan to be known as the “Anchor Bank Employee
Severance Compensation Plan.” The purposes of the Plan are as
set forth above.
1.2
Applicability of Plan
The
benefits provided by this Plan shall be available to all Employees,
who, at or after the Effective Date, meet the eligibility
requirements of Article III. The Plan shall not apply to any
Employee whose employment was terminated prior to the Effective
Date.
1.3
Contractual Right to Benefits
This
Plan establishes and vests in each Participant a contractual right
to the benefits to which each Participant is entitled hereunder,
enforceable by the Participant against the Employer.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1
Definitions
Whenever
used in the Plan, the following terms shall have the meanings set
forth below.
(a) “Annual
Compensation” of a Participant means and includes all wages,
salary, bonus, and incentive compensation (other than stock based
compensation), paid (including accrued amounts) by the Employer as
consideration for the Participant’s services during the
twelve (12) complete months ending on the date as of which Annual
Compensation is to be determined, which are or would (but for an
election by the Participant to defer compensation) be includable in
the gross income of the Participant receiving the same for federal
income tax purposes.
(b) “Bank”
means Anchor Bank or any successor as provided for in Article VII
hereof.
(c) “Change
in Control” means (1) an offeror other than the Holding
Company purchases shares of stock of the Holding Company or the
Bank pursuant to a tender or exchange offer for such shares (2) an
event of a nature that results in the acquisition of control of the
Holding Company or the Bank within the meaning of the Bank Holding
Company Act of 1956, as amended, under 12 U.S.C. Section 1841 (or
any successor statute or regulation) or requires the filing of a
notice with the Federal Deposit Insurance Corporation
(“FDIC”) under 12 U.S.C. Section 1817(j) (or any
successor statute or regulation); (3) any person (as the term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934 (“Exchange Act”)) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) directly or
indirectly of securities of the Holding Company or the Bank
representing 25% or more of the combined voting power of the
Holding Company’s or the Bank’s outstanding securities;
(4) individuals who are members of the board of directors of the
Holding Company immediately following the Effective Date or who are
members of the board of directors of the Bank immediately following
the Effective Date (in each case, the “Incumbent
Board”) cease for any reason to constitute at least a
majority thereof, provided that any person becoming a
director subsequently whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Holding
Company’s or the Bank’s stockholders was approved by
the nominating committee serving under an Incumbent Board, shall be
considered a member of the Incumbent Board; or (5) consummation of
a plan of reorganization, merger, acquisition, consolidation, sale
of all or substantially all of the assets of the Holding Company or
a similar transaction in which the Holding Company is not the
resulting entity, provided that the term “Change in
Control” shall not include an acquisition of securities by an
employee benefit plan of the Bank or the Holding
Company.
(d) “Continuous
Employment” means the absence of any interruption or
termination of service as an Employee of the Bank or an affiliate.
Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the
Bank or in the case
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of transfers between payroll
locations of the Bank or between the Bank, its Parent, its
Subsidiary or its successor.
(e) “Effective
Date,” as to Employees of an Employer, means the date the
Plan is approved by the Board of Directors of the Bank, or such
other date as the Board shall designate in its resolution approving
the Plan.
(f) “Employee”
means an individual employed by the Employer on a full-time basis,
excluding any executive officer of the Employer who is covered by
an employment contract or a change in control severance agreement
with the Employer.
(g) “Employer”
means the Bank or a Subsidiary or a Parent which has adopted the
Plan pursuant to Article VI hereof.
(h) “Expiration
Date” means the date fifteen (15) years from the Effective
Date unless earlier terminated pursuant to Section 8.2 or extended
pursuant to Section 8.1.
(i) “Holding
Company” means Anchor Bancorp, the Parent of the
Bank.
(j) “Just
Cause,” with respect to termination of employment, means an
act or acts of personal dishonesty, incompetence, willful
misconduct, breach of 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. In determining
incompetence, acts or omissions shall be measured against standards
generally prevailing in the financial services industry.
(k) “Parent”
means any corporation which holds a majority of the voting power of
the outstanding shares of the Bank’s common stock.
(l) “Participant”
means an Employee who meets the eligibility requirements of Article
III.
(m) “Payment”
means the payment of severance compensation as provided in Article
IV hereof.
(n) “Plan”
means the Anchor Bank Employee Severance Compensation
Plan.
(o) “Subsidiary”
means any corporation in which the Bank, directly or indirectly,
holds a majority of the voting power of its outstanding shares of
capital stock.
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2.2
Applicable Law
To
the extent not preempted by the laws of the United States as now or
hereafter in effect, the laws of the State of Washington shall be
the controlling law in all matters relating to the Plan.
The
Plan neither requires nor establishes an ongoing administrative
system for its effect or operation. Payments under the Plan are
precipitated by a single event, a Change in Control, which event is
the sole focus of the Plan. Consequently, it is intended that the
Plan shall not be covered by or be subject to the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”).
2.3
Severability
If
a provision of this Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
ARTICLE III
ELIGIBILITY
3.1
Participation
Each
Employee who has completed at least one (1) year of Continuous
Employment as of the Effective Date shall become a Participant on
the Effective Date. Thereafter, each Employee shall become a
Participant on the day on which he or she completes one (1) year of
Continuous Employment. Notwithstanding the foregoing, persons who
have entered into and continue to be covered by an employment or
change in control severance agreement with the Employer shall not
be entitled to participate in the Plan.
3.2
Duration of Participation
