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EXHIBIT 10.2  

 
  VOTING AGREEMENT    
  

Pacific
Northwest Bancorp

1111 Third Avenue

Seattle, WA 98101 

Gentlemen:

        In
order to induce you to enter into an Agreement and Plan of Merger (the "Merger Agreement") dated of even date herewith by and among Pacific Northwest Bancorp ("Pacific"), Pacific
Northwest Bank and Bank of the Northwest ("Northwest"), the undersigned, for himself, his heirs and legal representatives, hereby agrees, represents, warrants and covenants with and to Pacific as
follows: 

        1.    The
undersigned beneficially owns the shares of common stock of Northwest ("Northwest Common Stock") set forth beneath the undersigned's name below (which number excludes
shares as to which the undersigned has disclaimed beneficial ownership in Northwest's proxy statement for its 2002 annual meeting) and no other shares of Northwest Common Stock. Such shares are owned
free and clear of any lien, right or encumbrance whatsoever, except for any pledge of such shares to secure a loan to the undersigned, and no proxy has been granted with respect thereto and the
undersigned has full capacity, power and authority to vote such shares without the consent or approval of any other party in the absence of a default under any such loan secured by such shares. If any
of such shares are currently pledged to secure a loan to the undersigned, the undersigned (i) represents and warrants that such loan is not in default and no event or condition exists that with
notice, lapse of time or both would constitute such a default, and (ii) agrees to take all such action as may be necessary to prevent any such default, event or condition to exist in order to
prevent the lender from taking title to such shares and to continue to enable the undersigned to vote such shares as hereinafter set forth. 

        2.    The
undersigned hereby agrees to vote the undersigned's shares in favor of approval of the Merger Agreement unless the Merger Agreement has been terminated prior to the
Meeting (as defined in the Merger Agreement). 

        3.    The
undersigned covenants that, until the earlier of the consummation of the Merger or the termination of the Merger Agreement, the undersigned will not sell, permit a
lien or other encumbrance to exist with respect to (except as hereinabove provided), or grant any proxy in respect of (except as hereinabove provided and for proxies solicited by the Board of
Directors of Northwest in connection with the Meeting to vote on the approval of the Merger Agreement, the shares of Northwest Common Stock set forth below, unless all the other parties to any such
sale or other transaction enter into an agreement in form and substance satisfactory to Pacific embodying the benefits and rights contained herein. 

        4.    The
undersigned covenants that the undersigned will not, unless the Merger Agreement is terminated in accordance with the provisions thereof: (i) make any public
announcement with respect to the Merger (ii) submit or seek any other person or entity to submit a proposal for a tender offer, merger or similar transaction with Northwest; or
(iii) vote the shares owned or controlled by the undersigned in favor of, solicit proxies or seek another person or entity to solicit proxies on behalf of, a proposal, the purpose of which is
to oppose or nullify the Merger. 

	 	 	Very truly yours,
	

 	
 	

 «FirstName» «LastName»

NUMBER OF SHARES:                         Dated: July
    , 2002 

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EXHIBIT 10.3  

 
 

EMPLOYMENT AGREEMENT    
  

Daniel J. Durkin  

        This Employment Agreement ("Agreement") signed July 22, 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. 

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        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 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
$220,471.32 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 

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        (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 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 the salary earned and expenses reimbursable under this Agreement incurred through the date of Executive's termination. Executive will have no right to receive compensation
or other benefits for any period after termination under this Section 8(a). 

        (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 only the compensation and benefits earned and expenses reimbursable through the date this Agreement terminated. 

        (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. 

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        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. 

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 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. 

4

 

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,
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 11 and 12 (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 11 and 12 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 11 and 12 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 

5

 

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 11 or 12, Pacific
will have the right to initiate the court proceedings described in Section 12(b), in lieu of an arbitration proceeding under this Section 15 Pacific may initiate these proceedings
wherever appropriate within Washington State; but Executive will consent to venue and jurisdiction in King County, Washington. 

        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; provided, however, that this Agreement has no effect on the terms and conditions of Executive's Third Amended and Restated Employment Agreement, as
further amended, with Bank of the Northwest, the obligations of which will be satisfied prior to or on the Effective Date. 

        (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. 

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        (j)    Amendment.    This Agreement may be modified only through a written instrument signed by all parties and
consented to by Pacific. 

        (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
	

 	
 	

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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