SETTLEMENT AGREEMENT
Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx, individually as "Xx. Xxxxxxx"
and "Xxx. Xxxxxxx", respectively, and collectively as "the Xxxxxxx", and
First Community Bank and First Community Financial Group, collectively as
"the Bank", intending to settle and resolve all possible disputes related in
any way to Xx. Xxxxxxx' employment by the Bank or Prairie Security Bank,
memberships on the Bank Boards or Prairie Security Bank's Board of Directors,
and/or any other relationships with the Bank and/or Prairie Security Bank and
the ending of those relationships, and/or related in any way to Xx. Xxxxxxx'
Bank stock options and stock, agree as follows:
1. All parties acknowledge that they enter into this Agreement
knowingly and voluntarily with advice of counsel. As contemplated by the
federal Age Discrimination in Employment Act ("ADEA"), Xx. Xxxxxxx
specifically acknowledges that he has had sufficient time to consider
carefully the terms of this Agreement and to consult with an attorney of his
choice, which he is hereby advised to do before signing this Agreement.
2. Xx. Xxxxxxx' thirty days of paid administrative leave ended July
18, 1997, which date is deemed to be the effective date of his resignations
from Bank employment and Bank Board memberships. Xx. Xxxxxxx hereby confirms
his resignations from said employment and Board positions and agrees to
complete any necessary forms to reflect his resignations. Xx. Xxxxxxx agrees
not to seek rehire as an employee of the Bank or to seek a position on either
Bank Board. Xx. Xxxxxxx acknowledges that his salary has been paid through
the last day of his administrative leave.
3. So long as the Xxxxxxx are not in breach of this Agreement, the
Bank agrees to do the following:
a. Within two business days after receipt by Bank counsel Xxxxx X.
Xxxxxxxxx of properly executed duplicate originals of this Agreement,
including the attached Non-Revocation Statement, deliver to the Xxxxxxx'
counsel, Xxxxxxx X. Xxxxxx, a check for $130,000 for general compensatory
damages, payable to Xxxxx Xxxxxx Xxxxxx, P.S. in Trust for Xxxxxxx X.
Xxxxxxx, and a check for $30,000 for attorneys' fees, payable to Xxxxx
Xxxxxx Xxxxxx, X.X.
x. For the period beginning August 1, 1997 and ending December 31,
2001, pay Xx. Xxxxxxx as general compensatory damages and in consideration
for the noncompete provisions in paragraph 15 below one hundred six (106)
payments of $3,490.57 each, payable semi-monthly. Although not wages, the
parties agree that for the Bank's convenience, such payments will be made
on the Bank's regular semi-monthly paydays during said period, except that
any payment due prior to the
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execution by the Xxxxxxx of this Agreement will be made to Xx. Xxxxxxx
within two business days following the receipt by Xx. Xxxxxxxxx of
properly executed duplicate originals of this Agreement. Payments
pursuant to this paragraph will be made by mailing checks to Xx. Xxxxxxx
at his residence.
c. For the period beginning August 1, 1997 and ending December 31,
2001, pay $160 per month to Xx. Xxxxxxx to defray the cost of any medical
insurance coverage Xx. Xxxxxxx may elect to continue under COBRA or may
otherwise purchase. Payments pursuant to this paragraph will be made by
mailing checks each month on the first of the Bank's two regular
semi-monthly paydays to Xx. Xxxxxxx at his residence, except that any
payment due prior to the execution by the Xxxxxxx of this Agreement will
be made to Xx. Xxxxxxx within two business days following the receipt by
Xx. Xxxxxxxxx of properly executed duplicate originals of this Agreement.
The Bank will also provide one fully executed original of this Settlement
Agreement to Xx. Xxxxxx as soon as reasonably practical.
4. The Bank agrees to buy, and the Xxxxxxx agree to sell, the Xxxxxxx'
present 3,949 shares of Bank stock, together with any additional shares
distributed as stock dividends on said shares, for a cash price of $80,000 no
earlier than February 10, 1998 and no later than July 1, 1998.
5. The Bank hereby extends the deadline to July 1, 1999 for the
exercise by Xx. Xxxxxxx of his presently vested stock options for 15,657
shares. In all other respects, the terms of said options, including without
limitations, those provisions regarding adjustments based on changes in
capitalization, remain the same. The parties acknowledge that the current
exercise price for such options is $8.18 per share.
6. The parties agree that any stock options of Xx. Xxxxxxx which were
not vested as of July 18, 1997, including those for 40,000 shares granted
pursuant to Xx. Xxxxxxx' Employment Agreement with the Bank dated September
11, 1996 and those for 7,829 shares granted pursuant to an agreement between
Xx. Xxxxxxx and Prairie Security Bank are canceled upon execution by all
parties of this Agreement. The Xxxxxxx acknowledge that there are no other
unvested options.
7. The Bank agrees to pay the full mediation fee for the mediation
conducted by Xxxxxxxxx Xxxxxx.
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8. Xx. Xxxxxxx agrees to purchase the Bank automobile he presently
uses for $23,600, which amount shall be offset against the payment to be made
by the Bank pursuant to paragraph 3a above.
9. With the exception of the laptop computer and the pager currently
in his possession, Xx. Xxxxxxx agrees to return all Bank keys, credit cards,
cellular telephones and other property of the Bank which he may have, or have
control of, by delivering same no later than the time of his execution of
this Agreement to Xx. Xxxxxx, who will make such items immediately available
to the Bank. Xx. Xxxxxxx agrees to purchase the pager for $50, which amount
shall be offset against the payment to be made under paragraph 3a above.
Further, the Bank may offset against the payment to be made by it pursuant to
paragraph 3a above, monies Xx. Xxxxxxx owes to the Bank to settle his expense
accounts. Xx. Xxxxxxx will promptly pay any of his expenses reflected on
credit card statements received after the date of this Agreement. In
addition, Xx. Xxxxxxx is responsible for all personal charges on his credit
card, pager and cellular telephones, regardless of when incurred. All such
charges and all other sums, if any, which Xx. Xxxxxxx owes the Bank, may be
offset against sums owed him by the Bank pursuant to this Agreement. The
Bank will provide documentation of any such charges and offsets to Xx.
Xxxxxxx.
10. The Bank has delivered Xx. Xxxxxxx' mail and the personal
possessions from his Bank office to Xx. Xxxxxx. The Bank agrees to forward
any personal mail that it receives in the future for Xx. Xxxxxxx to his
residence.
11. Xx. Xxxxxxx agrees to cooperate with the Bank and its attorneys in
the Bank's defense of any and all litigation and disputes which are based on
events that occurred during the term of his employment by the Bank or Prairie
Security Bank, as the case may be, including but not limited to the presently
pending lawsuit by Plaintiff Xxxxx Xxxxxxxx. Xx. Xxxxxxx acknowledges that
he will not be paid a fee by the Bank for his time spent in complying with
this paragraph, other than statutorily provided witness fees and expenses.
12. The parties agree that the First Community Bank of Washington
Employment Agreement for Xx. Xxxxxxx dated September 11, 1996 is terminated
and the terms of this Agreement are intended to supersede the terms of said
Employment Agreement. With respect to rights under his Executive
Supplemental Income Agreement, the parties agree that Xx. Xxxxxxx, at
retirement, is entitled to the Actuarially Determined Amount of his
Retirement Benefit accrued through June 18, 1997, which the parties agree is
$15, 104.10. Said Retirement Benefit of $15,104.10 is to be paid as a lump
sum upon Xx. Xxxxxxx' request but no later than within a reasonable period
after he attains age 65. Further, the parties agree that the Death Benefit
provided by Xx. Xxxxxxx' Executive Supplemental Income Agreement is $33,908
in the first year following his death, $25,431
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for each of the next four years and $16,954 for each of the next ten years
after that, but that Xx. Xxxxxxx is entitled to such Death Benefit only if he
dies prior to receiving said Retirement Benefit. The Bank acknowledges that
nothing in this Agreement is intended to be a waiver of Xx. Xxxxxxx' rights
in his 401(k) plan or KSOP.
13. Xx. Xxxxxxx acknowledges that in the course of his employment with
First Community Bank and Prairie Security Bank and his service as a member of
the Bank Boards of Directors and of the Prairie Security Bank Board of
Directors, he has obtained knowledge of confidential information and other
secrets concerning the Bank and Prairie Security Bank and their business and
affairs which are valuable to the Bank and which it does not want disclosed.
Xx. Xxxxxxx promises to maintain all such information on a confidential basis
and not to disclose it to any third party, without the Bank's express written
consent. This promise of Xx. Xxxxxxx is intended to and will apply in the
broadest sense possible to information regarding the Bank's business
activities and customers and is not intended to be limited solely to matters
which might meet the legal definition of "trade secrets" under Washington
law. Confidential information shall not include any information which is
otherwise in the public domain or which was lawfully received by Xx. Xxxxxxx
from a source other than the Bank, which source was not under any obligation
of confidentiality to the Bank.
14. Through the period ending December 31, 2001, Xx. Xxxxxxx shall not
induce or attempt to induce any Bank employee to leave the employ of the Bank
or in any way interfere with the relationship between the Bank and any
employee of the Bank. Further, through the period of payments to be made
pursuant to paragraphs 3b and 3c above, Xx. Xxxxxxx agrees not to induce or
attempt to induce any customer, shareholder, trade association, supplier,
licensee, or other person or business to change its relationship with the
Bank.
15. The parties agree to the following noncompete provisions:
a. Until the end of the period of payments to be made pursuant to
paragraphs 3b and 3c above, Xx. Xxxxxxx shall not in Thurston, Pierce,
Xxxxx, Xxxxx or Grays Harbor Counties (the "Noncompetition Area"):
a) engage in efforts to organize or invest in a new financial institution
(for purposes of this Agreement, "financial institution" is defined to be a
bank, mortgage company, or other entity in the business of making
commercial, consumer or real estate loans or loan equivalents) or b) work
as an executive or senior level officer, manager, loan officer, loan
representative or consultant or seek business for a financial institution.
b. If Xx. Xxxxxxx has violated these noncompete provisions, the Bank
will advise him in writing and Xx. Xxxxxxx will have ten calendar days
following the date of such notice to cure such violation. The Bank may not
exercise any
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remedies hereunder unless and until such ten day period has expired
without cure of such violation.
c. Xx. Xxxxxxx agrees to submit annually by April 15 of each year
copies of all W-2 and 1099 forms reporting income paid to him during the
previous tax year and copies of the first two pages of his completed 1040
form for said year to his counsel, who will then verify that all W-2 and
1099 forms have been included. Said counsel will then forward copies of
all of said W-2 and 1099 forms (amounts paid may be redacted) to Xxxxxx &
Xxxx at its Seattle office, together with said counsel's certification that
the income shown on the W-2 and 1099 forms is consistent with the 1040.
The Bank acknowledges that Xxxxxx & Xxxx will not advise the Bank of any
information in such forms, unless the firm in good faith perceives a breach
of this Agreement. The obligations in this paragraph apply only to tax
years in which Xx. Xxxxxxx is subject to these noncompete provisions, for
either the entire year or part of it.
d. After July 15, 1999, Xx. Xxxxxxx may engage in activity
prohibited by these noncompete provisions, but all Bank payment obligations
pursuant to paragraphs 3b and 3c above will cease as of the date of his
first engaging in such activity. Xx. Xxxxxxx agrees to give the Bank
reasonable advance notice of his intent to engage in such activity.
e. Xx. Xxxxxxx' activities in various national trade associations
(including their for-profit subsidiaries which may serve financial
institutions in the Noncompetition Area, but excluding those for-profit
subsidiaries which may provide services in competition with the Bank) or
his service as an expert witness (other than in litigation against or
involving the Bank) or consultant to law firms on specific litigation
(other than on litigation against or involving the Bank) shall not
constitute violations of these noncompete provisions.
f. The parties agree that if a trial judge with jurisdiction over a
dispute related to this Agreement should determine that the noncompete
provisions set forth in this Agreement are unreasonably broad, the parties
authorize said trial judge to narrow same so as to make them reasonable,
given all relevant circumstances, and to enforce same.
16. Xx. Xxxxxxx acknowledges that his breach of paragraphs 13, 14 or 15
above would cause irreparable injury and damage which cannot be reasonably or
adequately compensated by damages. Therefore, in addition to any other
remedies available to the Bank, Xx. Xxxxxxx agrees that the Bank will have
the right to seek to enjoin any acts contrary to the terms of those
paragraphs and that injunctive relief would be an appropriate remedy.
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17. The Bank's obligations hereunder are in full settlement of any and
all claims in connection with Xx. Xxxxxxx' employment by First Community Bank
and Prairie Security Bank, memberships on the Bank Boards and Prairie
Security Bank's Board of Directors, and/or any other relationships with the
Bank and/or Prairie Security Bank and the ending of those relationships and
in connection with the Xxxxxxx' Bank stock and Xx. Xxxxxxx' stock options
which were not vested as of July 18, 1997, including but not limited to any
claims which could be made under any stock option agreement, any implied or
express contract, the ADEA, or any other federal, state or local law
(statutory or common). The Xxxxxxx accept the Bank's undertakings in this
Agreement as full settlement of any and all such claims against the Bank
and/or its shareholders, directors (in their capacity as directors), and
employees, known or unknown, including but not limited to any claim for
attorneys' fees. The Xxxxxxx realize this constitutes a full and final
settlement of any and all such claims, and, except only for the obligations
undertaken in this Agreement, this settlement releases the Bank (and its
shareholders, directors (in their capacity as directors) and employees, and
anyone else against whom the Xxxxxxx could assert a claim related to said
relationships and their ending, and the spouses and marital communities of
all such individuals), from any further liability to the Xxxxxxx (or to
anyone whom either has the power to bind in this settlement) in connection
with such claims. This settlement is not an admission that the Bank or any
other person or organization violated any law or failed to fulfill any duty
to the Xxxxxxx.
18. The Xxxxxxx' obligations hereunder are in full settlement of any
and all claims in connection with Xx. Xxxxxxx' employment with First
Community Bank and Prairie Security Bank and memberships on the Bank's Boards
and Prairie Security Bank's Board of Directors, and/or any other
relationships with the Bank and/or Prairie Security Bank and the ending of
those relationships, including but not limited to any claims which could be
made under any implied or express contract or any other federal, state or
local law (statutory or common), but excluding any claims arising from acts
and omissions which were intentional and contrary to statutory or common law
or which resulted in an improper personal benefit to Xx. Xxxxxxx. The Bank
accepts the Xxxxxxx' undertakings in this Agreement as full settlement of any
and all such claims against the Xxxxxxx, known or unknown, including but not
limited to any claim for attorneys fees. The Bank realizes this constitutes a
full and final settlement of any and all such claims, and, except only for
the obligations undertaken in this Agreement, this settlement releases the
Xxxxxxx (and anyone else against whom the Bank could assert a claim related
to said relationships and their ending, and the spouses and marital
communities of all such individuals), from any further liability to the Bank
(or to anyone the Bank has the power to bind in this settlement) in
connection with such claims. This settlement is not an admission that the
Xxxxxxx violated any law or failed to fulfill any duty to the Bank.
19. The parties acknowledge that the mutual releases set forth in the
above two paragraphs are not intended to abridge or alter any indemnification
rights Xx. Xxxxxxx may have for his service as a member of the Bank's Boards
or the Board of Prairie Security
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Bank as provided in the Articles of Incorporation and Bylaws of the Bank as of
the date of this Agreement or as they may hereafter be amended.
20. In the absence of a valid court order requiring disclosure or as
otherwise required to comply with the law, the Xxxxxxx agree to keep
confidential the negotiations regarding the terms of this Agreement and the
terms themselves, except only as to the Xxxxxxx' attorneys and financial
advisors, who shall be instructed by the Xxxxxxx to keep same confidential as
well. In the absence of a valid court order requiring disclosure or as
otherwise required to comply with the law, the Bank agrees to keep
confidential the negotiations regarding the terms of this Agreement and the
terms themselves, except only a) as to present and future employees who have
a need to know and present and future Bank Board members, attorneys and
accountants, all of whom shall be instructed by the Bank to keep same
confidential as well, and b) in those instances where the Bank in its good
faith business judgment is required to make disclosures.
21. The parties agree that their comments to persons or entities not
covered by the exceptions to the confidentiality provisions in paragraph 20
above will be limited to the substance of the material contained in the
attached Joint Statement. In other words, for example, if Xx. Xxxxxxx is
asked to comment on his separation from the Bank by anyone other than his
attorneys or financial advisors, his comments will be limited to the
substance of the material contained in said Joint Statement.
22. The parties shall refrain from making any disparaging remarks or
statements about each other.
23. In the event of a dispute regarding the terms of this Agreement and
compliance with it, the parties agree to submit any such disputes to
mediation by a mutually acceptable mediator and then, if such dispute is not
resolved fully by mediation, to binding arbitration, the latter to be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The parties agree that the substantially prevailing
party in any such dispute shall be entitled to recover its/their costs and
reasonable attorneys' fees from the other party(ies).
24. The release provisions of this Agreement will remain in full force
and effect, except only to the extent revoked by Xx. Xxxxxxx pursuant to
paragraph 26 below, even if a provision of this Agreement is breached.
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25. The invalidity or unenforceability of all or part of any provision
of this Agreement will in no way affect the validity or enforceability of any
other provision of this Agreement.
26. Xx. Xxxxxxx understands that he may revoke his release of claims
under the ADEA during the seven days following his signing of this Agreement.
He further understands that the release of any ADEA claims will not become
effective or enforceable and the Bank will not be obligated to make the
payments specified in paragraph 3a above until the seven day revocation
period has expired and he has properly executed the attached Non-Revocation
Statement.
27. This Agreement shall be binding upon the parties hereto, the
Xxxxxxx' heirs, and the Bank's successors and assigns. Without limiting the
foregoing, the Bank acknowledges and agrees that all payments due Xx. Xxxxxxx
hereunder shall continue to be paid in accordance with this Agreement
notwithstanding his death.
28. Any demand, request or notice which either party hereto desires or
may be required to make or deliver to the other shall be in writing and shall
be deemed given when delivered by facsimile, personally delivered, delivered
by private courier service (such as Federal Express), or three days after
being deposited in the United States Mail in registered or certified form,
return receipt requested, addressed as follows:
To Xxxxxxx: Xxxxxxx X. Xxxxxxx
000 Xxxx Xxx, Xxxx 0X-000
Xxxxxxx XX 00000
With a copy to: Xxxxx Xxxxxx Xxxxxx, P.S.
000 00xx Xxx XX
X.X. Xxx 000
Xxxxxxx XX 00000
Attn: Xxxxx X. Xxxxxxxx
To the Bank: First Community Bank
000 Xxxxxxx Xxxxxx XX
X.X. Xxx 0000
Xxxxx XX 00000-0000
Attn: Xxx X. Xxxxxxx, Xx.
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With a copy to: Xxxxxx & Xxxx PC
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx XX 00000
Attn: Xxxxx X. Xxxxxxxxx
or to such other single address and person as either party may communicate to
the other by like written notice.
EXECUTED as of the dates indicated below.
FIRST COMMUNITY BANK
Date:____________________ By_________________________________
Its________________________________
FIRST COMMUNITY FINANCIAL GROUP
Date:____________________ By_________________________________
Its________________________________
Date:____________________ ___________________________________
XXXXXXX X. XXXXXXX
Date:____________________ ____________________________________
XXXXXXX X. XXXXXXX
0
XXX-XXXXXXXXXX XXXXXXXXX
I declare that I have not revoked my release of claims under
the Age Discrimination in Employment Act during the seven days following my
execution of my Settlement Agreement with First Community Bank and First
Community Financial Group and that such release is now effective and
enforceable.
Date:____________________
_______________________
XXXXXXX X. XXXXXXX
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