Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

Daniel J. Durkin

 

This Employment Agreement (“Agreement”) signed October 28, 2002, between PACIFIC
NORTHWEST BANCORP (“Pacific”), PACIFIC NORTHWEST BANK and DANIEL J. DURKIN
(“Executive”) takes effect on the Effective Date of the Merger of Bank of the
Northwest into Pacific Northwest Bank (“Effective Date”).

 

RECITALS

 

A.            Pacific and Pacific Northwest Bank have entered into a Plan and
Agreement of Merger (“Plan”) with Bank of the Northwest, pursuant to which Bank
of the Northwest will merge into Pacific Northwest Bank (“Merger”).

 

B.            Executive is presently the Chairman and Chief Executive Officer of
Bank of the Northwest.  Pacific and Pacific Northwest Bank wish to retain
Executive’s services in the capacity set forth herein following the Merger, and
Executive wishes to accept employment with Pacific and Pacific Northwest Bank in
such capacity following the Merger.

 

AGREEMENT

 

The parties agree as follows:

 

1.)           EMPLOYMENT.  PACIFIC AND PACIFIC NORTHWEST BANK AGREE TO EMPLOY
EXECUTIVE, AND EXECUTIVE AGREES TO ACCEPT EMPLOYMENT WITH PACIFIC AND PACIFIC
NORTHWEST BANK.  DURING THE TERM OF HIS EMPLOYMENT UNDER THIS AGREEMENT,
EXECUTIVE WILL HAVE THE TITLE OF VICE CHAIRMAN OF THE BOARD OF PACIFIC NORTHWEST
BANCORP AND PACIFIC NORTHWEST BANK (HEREAFTER REFERRED TO JOINTLY AS “PACIFIC”
UNLESS PACIFIC NORTHWEST BANK IS SPECIFICALLY MENTIONED) AND CHAIRMAN OF THE
OREGON ADVISORY BOARD OF PACIFIC NORTHWEST BANK.

 

2.)           EFFECTIVE DATE, TERM AND OFFICE.

A)     EFFECTIVE DATE.  THIS AGREEMENT IS EFFECTIVE AS OF THE EFFECTIVE DATE.

B)     TERM.  THE TERM OF THIS AGREEMENT (“TERM”) IS THREE YEARS, BEGINNING ON
THE EFFECTIVE DATE.

C)     ABANDONMENT OF THE MERGER.  IF THE PLAN TERMINATES BEFORE THE EFFECTIVE
DATE, THIS AGREEMENT WILL NOT BECOME EFFECTIVE AND WILL BE VOID.

 

D)     OFFICE.  DURING THE TERM, EXECUTIVE SHALL RETAIN THE OFFICE OCCUPIED, AND
HAVE ACCESS TO THE STAFF SUPPORT AVAILABLE TO HIM IMMEDIATELY PRECEDING THE
EFFECTIVE DATE, AND THE DUTIES TO BE PROVIDED BY EXECUTIVE AS SET FORTH BELOW
SHALL BE PERFORMED (OTHER THAN ATTENDING BOARD, COMMITTEE AND OTHER MEETINGS AT
PACIFIC’S PRINCIPAL OFFICE IN SEATTLE) AT THE LOCATION WHERE EXECUTIVE WAS
EMPLOYED IMMEDIATELY PRIOR TO THE EFFECTIVE DATE, OR AT ANY OTHER OFFICE OF
PACIFIC IN THE PORTLAND, OREGON METROPOLITAN AREA, WHICH BECOMES THE PRINCIPAL
OFFICE OF PACIFIC IN OREGON.

 

3.)           DUTIES.  EXECUTIVE WILL PERFORM THE DUTIES ASSIGNED TO EXECUTIVE
FROM TIME TO TIME BY THE BOARD OF DIRECTORS AND THE CHIEF EXECUTIVE OFFICER OF
PACIFIC AND PACIFIC NORTHWEST BANK.  THESE DUTIES WILL INCLUDE, WITHOUT
LIMITATION, THE FOLLOWING:

 

A)     EXECUTIVE WILL SERVE AS VICE CHAIRMAN AND A MEMBER OF THE BOARD OF
DIRECTORS OF PACIFIC AND PACIFIC NORTHWEST BANK AND CHAIRMAN OF THE OREGON
ADVISORY BOARD OF PACIFIC NORTHWEST BANK.

 

B)     EXECUTIVE WILL ADVISE AND CONSULT WITH THE CHIEF EXECUTIVE OFFICER OF
PACIFIC AND WILL ASSIST WITH THE DEVELOPMENT, EXPANSION AND PRESERVATION OF
COMMUNITY AND

 

 

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CUSTOMER RELATIONSHIPS IN THE OREGON MARKET AND SERVE ON APPROPRIATE CIVIC AND
CHARITABLE BOARDS AND/OR COMMITTEES.

 

C)     EXECUTIVE WILL MAINTAIN RELATIONSHIPS WITH OTHER OREGON BANKERS, ATTEND
ASSOCIATION MEETINGS AS APPROPRIATE, AND ADVISE AND CONSULT WITH THE CHIEF
EXECUTIVE OFFICER OF PACIFIC REGARDING POSSIBLE BUSINESS COMBINATION
OPPORTUNITIES WITHIN THE OREGON MARKET.

 

DURING THE TERM, EXECUTIVE AGREES TO DEVOTE SUCH TIME AS NECESSARY TO DISCHARGE
THE DUTIES ASSIGNED TO HIM AND TO USE HIS BEST EFFORTS TO PERFORM SUCH DUTIES
FAITHFULLY AND EFFICIENTLY.

 

4.)           COMPENSATION.  EXECUTIVE WILL RECEIVE A SALARY FROM PACIFIC
NORTHWEST BANK OF $221,208 PER YEAR, TO BE PAID IN ACCORDANCE WITH PACIFIC
NORTHWEST BANK’S REGULAR PAYROLL SCHEDULE (“COMPENSATION”).  EXECUTIVE WILL
RECEIVE NO ADDITIONAL COMPENSATION FOR SERVING AS A MEMBER OF THE BOARD OF
DIRECTORS OF PACIFIC AND PACIFIC NORTHWEST BANK AND THE OREGON ADVISORY BOARD OF
PACIFIC NORTHWEST BANK.

 

 

5.)           CHANGE OF CONTROL.  IN THE EVENT OF A CHANGE OF CONTROL (DEFINED
BELOW) DURING THE TERM, EXECUTIVE SHALL HAVE THE OPTION, AT HIS SOLE DISCRETION,
TO TERMINATE THIS AGREEMENT AND RECEIVE ON THE DATE OF TERMINATION A LUMP SUM
PAYMENT IN AN AMOUNT EQUAL TO THE COMPENSATION HE WOULD HAVE RECEIVED FOR THE
BALANCE OF THE TERM, IN WHICH CASE PACIFIC WILL CONTINUE EXECUTIVE’S COVERAGE
UNDER ALL EMPLOYEE WELFARE AND HEALTH BENEFIT PLANS AS IN EFFECT ON THE
TERMINATION DATE (OR PROVIDE EXECUTIVE WITH EQUIVALENT BENEFITS) THROUGH THE
EXPIRATION OF THE TERM..

 

For the purpose of this Agreement, a Change of Control shall be deemed to have
occurred as of the first day any one or more of the following conditions is
satisfied:

 

A)     ANY INDIVIDUAL, CORPORATION, PARTNERSHIP, TRUST, ASSOCIATION, POOL,
SYNDICATE OR ANY OTHER ENTITY OR ANY GROUP OF PERSONS ACTING IN CONCERT BECOMES
THE BENEFICIAL OWNER, AS THAT CONCEPT IS DEFINED IN RULE 13D-3 PROMULGATED BY
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF
1934, OF SECURITIES OF PACIFIC POSSESSING FIFTY PERCENT (50%) OR MORE OF THE
VOTING POWER FOR THE ELECTION OF DIRECTORS OF PACIFIC;

 

B)     THERE SHALL BE CONSUMMATED ANY CONSOLIDATION, MERGER, OR OTHER BUSINESS
COMBINATION INVOLVING PACIFIC OR THE SECURITIES OF PACIFIC IN WHICH HOLDERS OF
VOTING SECURITIES OF PACIFIC IMMEDIATELY PRIOR TO SUCH CONSUMMATION OWN, AS A
GROUP, IMMEDIATELY AFTER SUCH CONSUMMATION, VOTING SECURITIES OF PACIFIC (OR, IF
PACIFIC DOES NOT SURVIVE SUCH TRANSACTION, VOTING SECURITIES OF THE CORPORATION
SURVIVING SUCH TRANSACTION) HAVING LESS THAN SIXTY PERCENT (60%) OF THE TOTAL
VOTING POWER IN AN ELECTION OF DIRECTORS OF PACIFIC (OR SUCH OTHER SURVIVING
CORPORATION);

 

C)     DURING ANY PERIOD OF TWO (2) CONSECUTIVE YEARS, INDIVIDUALS WHO AT THE
BEGINNING OF SUCH PERIOD CONSTITUTE THE DIRECTORS OF PACIFIC CEASE FOR ANY
REASON TO CONSTITUTE AT LEAST A MAJORITY THEREOF UNLESS THE ELECTION, OR THE
NOMINATION FOR ELECTION BY PACIFIC’S SHAREHOLDERS, OF EACH NEW DIRECTOR OF
PACIFIC WAS APPROVED BY A VOTE OF AT LEAST TWO-THIRDS (2/3) OF THE DIRECTORS OF
PACIFIC THEN STILL IN OFFICE WHO WERE DIRECTORS OF PACIFIC AT THE BEGINNING OF
ANY SUCH PERIOD; OR

 

D)     THERE SHALL BE CONSUMMATED ANY SALE, LEASE, EXCHANGE OR OTHER TRANSFER
(IN ONE TRANSACTION OR A SERIES OF RELATED TRANSACTIONS) OF ALL, OR
SUBSTANTIALLY ALL, OF THE ASSETS OF PACIFIC (ON A CONSOLIDATED BASIS) TO A PARTY
WHICH IS NOT CONTROLLED BY OR UNDER COMMON CONTROL WITH PACIFIC.

 

6.)           BENEFIT PLANS.  DURING THE TERM OF HIS EMPLOYMENT, EXECUTIVE SHALL
BE ENTITLED TO PARTICIPATE IN ANY AND ALL EMPLOYEE WELFARE AND HEALTH BENEFIT
PLANS AND OTHER EMPLOYEE BENEFIT PLANS, INCLUDING BUT NOT LIMITED TO QUALIFIED
PENSION PLANS ESTABLISHED BY PACIFIC FROM TIME TO TIME FOR THE BENEFIT OF ALL
EMPLOYEES OF PACIFIC.  EXECUTIVE SHALL BE REQUIRED TO COMPLY WITH THE CONDITIONS
ATTENDANT TO COVERAGE BY SUCH PLANS AND SHALL COMPLY WITH AND BE ENTITLED TO
BENEFITS ONLY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF SUCH PLANS AS THEY
MAY BE AMENDED FROM TIME TO

 

 

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TIME.  NOTHING HEREIN CONTAINED SHALL BE CONSTRUED AS REQUIRING PACIFIC TO
ESTABLISH OR CONTINUE ANY PARTICULAR BENEFIT PLAN IN DISCHARGE OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.

 

7.)           BUSINESS EXPENSES.  PACIFIC WILL REIMBURSE EXECUTIVE FOR ORDINARY
AND NECESSARY EXPENSES (E.G. TRAVEL, ENTERTAINMENT, CLUB DUES AND SIMILAR
EXPENSES) INCURRED IN PERFORMING AND PROMOTING PACIFIC’S BUSINESS.  THE LEVEL OF
REIMBURSEMENT WILL BE COMPARABLE TO THE REIMBURSEMENT EXECUTIVE CURRENTLY
RECEIVES AT BANK OF THE NORTHWEST.  EXECUTIVE WILL PRESENT FROM TIME TO TIME
ITEMIZED ACCOUNTS OF THESE EXPENSES, SUBJECT TO ANY RULES AND REGULATIONS OF THE
INTERNAL REVENUE SERVICE.

 

8.)           TERMINATION.

 

A)     TERMINATION BY PACIFIC FOR CAUSE.  IF, BEFORE THE END OF THE TERM,
PACIFIC TERMINATES EXECUTIVE’S EMPLOYMENT FOR CAUSE OR EXECUTIVE TERMINATES HIS
EMPLOYMENT WITHOUT GOOD REASON (DEFINED BELOW), PACIFIC WILL PAY EXECUTIVE A
LUMP SUM EQUAL TO $5,934 TIMES THE NUMBER OF MONTHS REMAINING IN THE TERM. 
PARTIAL MONTHS SHALL BE PRORATED.

 

B)     OTHER TERMINATION BY PACIFIC.  IF, BEFORE THE END OF THE TERM, PACIFIC
TERMINATES EXECUTIVE’S EMPLOYMENT WITHOUT CAUSE OR EXECUTIVE TERMINATES HIS
EMPLOYMENT FOR GOOD REASON (DEFINED BELOW), PACIFIC WILL PAY EXECUTIVE A LUMP
SUM PAYMENT IN AN AMOUNT EQUAL TO THE COMPENSATION HE WOULD HAVE RECEIVED FOR
THE BALANCE OF THE TERM IF HIS EMPLOYMENT HAD NOT TERMINATED, AND PACIFIC WILL
CONTINUE EXECUTIVE’S COVERAGE UNDER ALL EMPLOYEE WELFARE AND HEALTH BENEFIT
PLANS AS IN EFFECT ON THE TERMINATION DATE (OR PROVIDE EXECUTIVE WITH EQUIVALENT
BENEFITS) THROUGH THE EXPIRATION OF THE TERM.

 

C)     DEATH OR DISABILITY.  THIS AGREEMENT TERMINATES (1) IF EXECUTIVE DIES OR
(2) IF EXECUTIVE IS UNABLE TO PERFORM HIS DUTIES AND OBLIGATIONS UNDER THIS
AGREEMENT FOR A PERIOD OF 90 DAYS AS A RESULT OF A PHYSICAL OR MENTAL DISABILITY
ARISING AT ANY TIME DURING THE TERM OF THIS AGREEMENT, UNLESS WITH REASONABLE
ACCOMMODATION EXECUTIVE COULD CONTINUE TO PERFORM HIS DUTIES UNDER THIS
AGREEMENT AND MAKING THESE ACCOMMODATIONS WOULD NOT POSE UNDUE HARDSHIP TO
PACIFIC.  IF TERMINATION OCCURS UNDER THIS SECTION 8(C), EXECUTIVE OR HIS ESTATE
WILL BE ENTITLED TO RECEIVE A LUMP SUM EQUAL TO $5,934 TIMES THE NUMBER OF
MONTHS REMAINING IN THE TERM.  PARTIAL MONTHS SHALL BE PRO-RATED.

 

D)     RETURN OF BANK PROPERTY.  IF AND WHEN EXECUTIVE CEASES, FOR ANY REASON,
TO BE EMPLOYED BY PACIFIC, EXECUTIVE MUST RETURN TO PACIFIC ALL KEYS, PASS
CARDS, IDENTIFICATION CARDS AND ANY OTHER PROPERTY OF PACIFIC. AT THE SAME TIME,
EXECUTIVE ALSO MUST RETURN TO PACIFIC 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 PACIFIC.  THE OBLIGATIONS IN THIS
PARAGRAPH INCLUDE THE RETURN OF DOCUMENTS AND OTHER MATERIALS WHICH MAY BE IN
EXECUTIVE’S DESK AT WORK, IN EXECUTIVE’S CAR OR PLACE OF RESIDENCE, OR IN ANY
OTHER LOCATION UNDER EXECUTIVE’S CONTROL.

 

9.)           DEFINITION OF “CAUSE”. “CAUSE” MEANS ANY ONE OR MORE OF THE
FOLLOWING, AS REASONABLY DETERMINED BY PACIFIC:

A)     WILLFUL MISFEASANCE OR GROSS NEGLIGENCE IN THE PERFORMANCE OF EXECUTIVE’S
DUTIES FOR PACIFIC THAT CONTINUES FOR MORE THAN 30 DAYS AFTER WRITTEN NOTICE TO
EXECUTIVE SPECIFYING CONDUCT OR OMISSION THAT CONSTITUTES THE MISFEASANCE OR
GROSS NEGLIGENCE.

B)     CONVICTION OF A CRIME IN CONNECTION WITH HIS DUTIES FOR PACIFIC.

C)     CONDUCT DEMONSTRABLY AND SIGNIFICANTLY HARMFUL TO PACIFIC, AS REASONABLY
DETERMINED BY THE BOARD OF DIRECTORS OF PACIFIC ON THE ADVICE OF LEGAL COUNSEL
THAT CONTINUES FOR MORE THAN 30 DAYS AFTER WRITTEN NOTICE TO EXECUTIVE
SPECIFYING THE HARMFUL CONDUCT.

D)     CONVICTION OF A FELONY.

E)     BREACH OF THE COVENANTS SET FORTH IN SECTIONS B) AND I) OF THIS
AGREEMENT.

 

Notwithstanding the foregoing, Executive will not be deemed to have been
terminated for Cause unless and until there has been delivered to Executive a
copy of a resolution duly adopted by the affirmative vote of not less than

 

 

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three-quarters of the entire membership of the Board of Directors of Pacific at
a meeting of the Board of Directors called and held for that purpose (after
reasonable notice to Executive and an  opportunity for Executive, together with
his counsel, to be heard before the Board of Directors), finding that in the
good faith opinion of the Board of Directors, Executive was guilty of conduct
constituting Cause as defined above and specifying the particulars for such
finding in detail.

 

10.)     DEFINITION OF “GOOD REASON”.  “GOOD REASON” MEANS ONLY ANY ONE OR MORE
OF THE FOLLOWING:

A)     REDUCTION, WITHOUT EXECUTIVE’S CONSENT, OF EXECUTIVE’S COMPENSATION.

B)     REDUCTION OR ELIMINATION OF ANY BENEFIT PLAN BENEFITING EXECUTIVE, UNLESS
THE REDUCTION OR ELIMINATION IS GENERALLY APPLICABLE TO SUBSTANTIALLY ALL
SIMILARLY SITUATED PACIFIC EMPLOYEES FORMERLY BENEFITED.

C)     THE ASSIGNMENT TO EXECUTIVE WITHOUT HIS CONSENT OF ANY DUTIES MATERIALLY
INCONSISTENT WITH THOSE SET FORTH IN THIS AGREEMENT.

D)     THE REQUIREMENT BY PACIFIC THAT EXECUTIVE’S EMPLOYMENT BE BASED AT ANY
OFFICE OR LOCATION OTHER THAN THAT SET FORTH IN SECTION 2(D) HEREOF.

 

11.)     CONFIDENTIALITY.  EXECUTIVE WILL NOT, AFTER SIGNING THIS AGREEMENT,
INCLUDING DURING AND AFTER ITS TERM, USE FOR HIS OWN PURPOSES OR DISCLOSE TO ANY
OTHER PERSON OR ENTITY ANY CONFIDENTIAL INFORMATION CONCERNING PACIFIC OR THEIR
BUSINESS OPERATIONS OR CUSTOMERS, UNLESS (1) PACIFIC CONSENTS TO THE USE OR
DISCLOSURE OF THEIR RESPECTIVE CONFIDENTIAL INFORMATION, (2) THE USE OR
DISCLOSURE IS CONSISTENT WITH EXECUTIVE’S DUTIES UNDER THIS AGREEMENT, OR (3)
DISCLOSURE IS REQUIRED BY LAW OR COURT ORDER.

 

12.)     NONCOMPETITION.

A)     PARTICIPATION IN A COMPETING BUSINESS.  DURING THE PERIOD EXECUTIVE IS
EMPLOYED BY PACIFIC AND FOR TWELVE (12) MONTHS AFTER EXECUTIVE’S EMPLOYMENT WITH
PACIFIC TERMINATES, EXECUTIVE WILL NOT BECOME INVOLVED WITH A COMPETING BUSINESS
OR SERVE, DIRECTLY OR INDIRECTLY, A COMPETING BUSINESS IN ANY MANNER, INCLUDING,
WITHOUT LIMITATION, AS A SHAREHOLDER, MEMBER, PARTNER, DIRECTOR, OFFICER,
MANAGER, INVESTOR, ORGANIZER, “FOUNDER,” EMPLOYEE, CONSULTANT, OR AGENT;
PROVIDED, HOWEVER, THAT EXECUTIVE MAY ACQUIRE AND PASSIVELY OWN AN INTEREST NOT
EXCEEDING 2% OF THE TOTAL EQUITY INTEREST IN ANY COMPETING BUSINESS.

B)     NO SOLICITATION. DURING THE PERIOD EXECUTIVE IS EMPLOYED WITH PACIFIC AND
FOR TWELVE (12) MONTHS AFTER EXECUTIVE’S EMPLOYMENT WITH PACIFIC TERMINATES,
EXECUTIVE WILL NOT DIRECTLY OR INDIRECTLY SOLICIT OR ATTEMPT TO SOLICIT (1) ANY
EMPLOYEES OF PACIFIC, OR ANY OF PACIFIC’S SUBSIDIARIES, TO LEAVE THEIR
EMPLOYMENT OR (2) ANY CUSTOMERS OF PACIFIC, OR ANY OF PACIFIC’S SUBSIDIARIES, TO
REMOVE THEIR BUSINESS FROM PACIFIC OR TO PARTICIPATE IN ANY MANNER IN A
COMPETING BUSINESS.  SOLICITATION PROHIBITED UNDER THIS SECTION INCLUDES
SOLICITATION BY ANY MEANS, INCLUDING, WITHOUT LIMITATION, MEETINGS, LETTERS OR
OTHER MAILINGS, ELECTRONIC COMMUNICATIONS OF ANY KIND, AND INTERNET
COMMUNICATIONS.

C)     EMPLOYMENT OUTSIDE THE RESTRICTED AREA.  NOTHING IN THIS AGREEMENT
PREVENTS EXECUTIVE FROM ACCEPTING EMPLOYMENT AFTER THE END OF THE TERM OUTSIDE
THE RESTRICTED AREA (DEFINED BELOW) FROM A COMPETING BUSINESS, AS LONG AS
EXECUTIVE WILL NOT (A) ACT AS AN EMPLOYEE OR OTHER REPRESENTATIVE OR AGENT OF
THE COMPETING BUSINESS WITHIN THE RESTRICTED AREA OR (B) HAVE ANY
RESPONSIBILITIES FOR THE COMPETING BUSINESS’ OPERATIONS WITHIN THE RESTRICTED
AREA.

D)              COMPETING BUSINESS.  “COMPETING BUSINESS” MEANS ANY FINANCIAL
INSTITUTION (“FINANCIAL INSTITUTION” MEANS A STATE OR NATIONAL BANK, A STATE OR
FEDERAL SAVINGS AND LOAN ASSOCIATION, A MUTUAL SAVINGS BANK, OR A STATE OR
FEDERAL CREDIT UNION), TRUST COMPANY OR MORTGAGE COMPANY (INCLUDING WITHOUT
LIMITATION,

 

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ANY START-UP OR OTHER FINANCIAL INSTITUTION, TRUST COMPANY OR MORTGAGE COMPANY)
THAT COMPETES WITH PACIFIC IN THE STATES OF WASHINGTON AND/OR OREGON (THE
“RESTRICTED AREA”).

 

13.)     ENFORCEMENT.

A)     PACIFIC AND EXECUTIVE STIPULATE THAT, IN LIGHT OF ALL OF THE FACTS AND
CIRCUMSTANCES OF THE RELATIONSHIP BETWEEN EXECUTIVE AND PACIFIC, THE AGREEMENTS
REFERRED TO IN SECTIONS H) AND I) (INCLUDING WITHOUT LIMITATION THEIR SCOPE,
DURATION AND GEOGRAPHIC EXTENT) ARE FAIR AND REASONABLY NECESSARY FOR THE
PROTECTION OF PACIFIC’S CONFIDENTIAL INFORMATION, GOODWILL AND OTHER PROTECTABLE
INTERESTS.  IF A COURT OF COMPETENT JURISDICTION SHOULD DECLINE TO ENFORCE ANY
OF THOSE COVENANTS AND AGREEMENTS, EXECUTIVE AND PACIFIC REQUEST THE COURT TO
REFORM THESE PROVISIONS TO RESTRICT EXECUTIVE’S USE OF CONFIDENTIAL INFORMATION
AND EXECUTIVE’S ABILITY TO COMPETE WITH PACIFIC TO THE MAXIMUM EXTENT, IN TIME,
SCOPE OF ACTIVITIES AND GEOGRAPHY, THE COURT FINDS ENFORCEABLE.

 

B)     EXECUTIVE ACKNOWLEDGES THAT PACIFIC WILL SUFFER IMMEDIATE AND IRREPARABLE
HARM THAT WILL NOT BE COMPENSABLE BY DAMAGES ALONE, IF EXECUTIVE REPUDIATES OR
BREACHES ANY OF THE PROVISIONS OF SECTIONS H) AND I) OR THREATENS OR ATTEMPTS TO
DO SO. FOR THIS REASON, UNDER THESE CIRCUMSTANCES, PACIFIC, IN ADDITION TO AND
WITHOUT LIMITATION OF ANY OTHER RIGHTS, REMEDIES OR DAMAGES AVAILABLE TO IT AT
LAW OR IN EQUITY, WILL BE ENTITLED TO OBTAIN TEMPORARY, PRELIMINARY AND
PERMANENT INJUNCTIONS IN ORDER TO PREVENT OR RESTRAIN THE BREACH, AND PACIFIC
WILL NOT BE REQUIRED TO POST A BOND AS A CONDITION FOR THE GRANTING OF THIS
RELIEF.

 

14.)     ADEQUATE CONSIDERATION.  EXECUTIVE SPECIFICALLY ACKNOWLEDGES THE
RECEIPT OF ADEQUATE CONSIDERATION FOR THE COVENANTS CONTAINED IN SECTIONS H) AND
I) AND THAT PACIFIC IS ENTITLED TO REQUIRE HIM TO COMPLY WITH THESE SECTIONS. 
THESE SECTIONS WILL SURVIVE TERMINATION OF THIS AGREEMENT.  EXECUTIVE REPRESENTS
THAT IF HIS EMPLOYMENT IS TERMINATED, WHETHER VOLUNTARILY OR INVOLUNTARILY,
EXECUTIVE HAS EXPERIENCE AND CAPABILITIES SUFFICIENT TO ENABLE EXECUTIVE TO
OBTAIN EMPLOYMENT IN AREAS WHICH DO NOT VIOLATE THIS AGREEMENT AND THAT THE
BANK’S ENFORCEMENT OF A REMEDY BY WAY OF INJUNCTION WILL NOT PREVENT EXECUTIVE
FROM EARNING A LIVELIHOOD.

 

15.)     ARBITRATION.

A)     ARBITRATION.  AT EITHER PARTY’S REQUEST, THE PARTIES MUST SUBMIT ANY
DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR IN CONNECTION WITH, OR RELATING
TO, THIS AGREEMENT OR ANY BREACH OR ALLEGED BREACH OF THIS AGREEMENT, TO
ARBITRATION UNDER THE AMERICAN ARBITRATION ASSOCIATION’S RULES THEN IN EFFECT
(OR UNDER ANY OTHER FORM OF ARBITRATION MUTUALLY ACCEPTABLE TO THE PARTIES).  A
SINGLE ARBITRATOR AGREED ON BY THE PARTIES WILL CONDUCT THE ARBITRATION.  IF THE
PARTIES CANNOT AGREE ON A SINGLE ARBITRATOR, EACH PARTY MUST SELECT ONE
ARBITRATOR AND THOSE TWO ARBITRATORS WILL SELECT A THIRD ARBITRATOR.  THIS THIRD
ARBITRATOR WILL HEAR THE DISPUTE.  THE ARBITRATOR’S DECISION IS FINAL (EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED BY LAW) AND BINDS THE PARTIES, AND EITHER PARTY
MAY REQUEST ANY COURT HAVING JURISDICTION TO ENTER A JUDGMENT AND TO ENFORCE THE
ARBITRATOR’S DECISION.  THE ARBITRATOR WILL PROVIDE THE PARTIES WITH A WRITTEN
DECISION NAMING THE SUBSTANTIALLY PREVAILING PARTY IN THE ACTION.  THIS
PREVAILING PARTY IS ENTITLED TO REIMBURSEMENT FROM THE OTHER PARTY FOR ITS COSTS
AND EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES.

 

B)     GOVERNING LAW.  ALL PROCEEDINGS WILL BE HELD AT A PLACE DESIGNATED BY THE
ARBITRATOR IN KING COUNTY, WASHINGTON.  THE ARBITRATOR, IN RENDERING A DECISION
AS TO ANY STATE LAW CLAIMS, WILL APPLY WASHINGTON LAW.

 

C)     EXCEPTION TO ARBITRATION.  NOTWITHSTANDING THE ABOVE, IF EXECUTIVE
VIOLATES SECTION H) OR I), PACIFIC WILL HAVE THE RIGHT TO INITIATE THE COURT
PROCEEDINGS DESCRIBED IN SECTION B), IN LIEU OF AN ARBITRATION PROCEEDING UNDER
THIS SECTION C) PACIFIC MAY INITIATE THESE PROCEEDINGS WHEREVER APPROPRIATE
WITHIN WASHINGTON STATE; BUT EXECUTIVE WILL CONSENT TO VENUE AND JURISDICTION IN
KING COUNTY, WASHINGTON.

 

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16.)     MISCELLANEOUS PROVISIONS.

 

A)             DEFINED TERMS.  CAPITALIZED TERMS USED AS DEFINED TERMS, BUT NOT
DEFINED IN THIS AGREEMENT, WILL HAVE THE MEANINGS ASSIGNED TO THOSE TERMS IN THE
PLAN.

 

B)            REGULATION O. EXECUTIVE WILL NOT BE AN “EXECUTIVE OFFICER” FOR
PURPOSES OF FEDERAL RESERVE BOARD REGULATION O.

 

C)             AUTOMOBILE.  EXECUTIVE SHALL RECEIVE AN AUTOMOBILE ALLOWANCE OF
$750 PER MONTH.

 

D)            ENTIRE AGREEMENT.  THIS AGREEMENT CONSTITUTES THE ENTIRE
UNDERSTANDING BETWEEN THE PARTIES CONCERNING ITS SUBJECT MATTER AND SUPERSEDES
ALL PRIOR AGREEMENTS

 

E)             REVIEWED WITH INDEPENDENT COUNSEL/CONSTRUCTION OF AGREEMENT. 
EACH PARTY HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT WITH LEGAL COUNSEL OF
THEIR CHOOSING, AND THIS AGREEMENT IS THE OUTCOME OF THAT REVIEW PROCESS. THIS
AGREEMENT HAS BEEN ENTERED INTO AFTER NEGOTIATION AND REVIEW OF ITS TERMS AND
CONDITIONS BY PARTIES UNDER NO COMPULSION TO EXECUTE AND DELIVER A
DISADVANTAGEOUS AGREEMENT.  THIS AGREEMENT INCORPORATES PROVISIONS, COMMENTS AND
SUGGESTIONS PROPOSED BY BOTH PARTIES.  NO AMBIGUITY OR OMISSION IN THIS
AGREEMENT SHALL BE CONSTRUED OR RESOLVED AGAINST ANY PARTY ON THE GROUND THAT
THIS AGREEMENT OR ANY OF ITS PROVISIONS WAS DRAFTED OR PROPOSED BY THAT PARTY.

 

F)             BINDING EFFECT.  THIS AGREEMENT WILL BIND AND INURE TO THE
BENEFIT OF PACIFIC’S AND EXECUTIVE’S HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS.

 

G)            LITIGATION EXPENSES.  IF EITHER PARTY SUCCESSFULLY SEEKS TO
ENFORCE ANY PROVISION OF THIS AGREEMENT OR TO COLLECT ANY AMOUNT CLAIMED TO BE
DUE UNDER IT, THIS PARTY WILL BE ENTITLED TO REIMBURSEMENT FROM THE OTHER PARTY
FOR ANY AND ALL OF ITS OUT-OF-POCKET EXPENSES AND COSTS INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS’ FEES AND COSTS INCURRED IN CONNECTION WITH THE
ENFORCEMENT OR COLLECTION.

 

H)            WAIVER.  ANY WAIVER BY A PARTY OF ITS RIGHTS UNDER THIS AGREEMENT
MUST BE WRITTEN AND SIGNED BY THE PARTY WAIVING ITS RIGHTS.  A PARTY’S WAIVER OF
THE OTHER PARTY’S BREACH OF ANY PROVISION OF THIS AGREEMENT WILL NOT OPERATE AS
A WAIVER OF ANY OTHER BREACH BY THE BREACHING PARTY.

 

I)              ASSIGNMENT.  THE SERVICES TO BE RENDERED BY EXECUTIVE UNDER THIS
AGREEMENT ARE UNIQUE AND PERSONAL.  ACCORDINGLY, EXECUTIVE MAY NOT ASSIGN ANY OF
HIS RIGHTS OR DUTIES UNDER THIS AGREEMENT.

 

J)              AMENDMENT.  THIS AGREEMENT MAY BE MODIFIED ONLY THROUGH A
WRITTEN INSTRUMENT SIGNED BY ALL PARTIES.

 

K)             SEVERABILITY.  THE PROVISIONS OF THIS AGREEMENT ARE SEVERABLE. 
THE INVALIDITY OF ANY PROVISION WILL NOT AFFECT THE VALIDITY OF OTHER PROVISIONS
OF THIS AGREEMENT.

 

L)              GOVERNING LAW.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH WASHINGTON LAW, EXCEPT TO THE EXTENT THAT CERTAIN MATTERS MAY
BE GOVERNED BY FEDERAL LAW.

 

 

PACIFIC NORTHWEST BANCORP

 

 

 

 

 

By:

/s/ Patrick M. Fahey

 

 

Patrick M. Fahey, President and CEO

 

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PACIFIC NORTHWEST BANK

 

 

 

 

 

By:

/s/ Patrick M. Fahey

 

 

Patrick M. Fahey, President and CEO

 

 

 

 

 

/s/ Daniel J. Durkin

 

DANIEL J. DURKIN

 

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