SEVERANCE AGREEMENT AND GENERAL RELEASE
Exhibit 10.1
SEVERANCE AGREEMENT AND GENERAL RELEASE
THIS SEVERANCE AGREEMENT AND GENERAL RELEASE (“Agreement”) is entered into between Xxxxxx Xxxx
(subsequently referred to as “Xx. Xxxx”) and Washington Banking Company, Inc., Whidbey Island Bank
and all of its subsidiaries or affiliates (collectively, “WBC” or “Employer”). Both parties to this
Agreement wish to clearly set forth the terms and conditions of Xx. Xxxx’x separation from
employment with WBC and resolve all issues related to the employment agreement between Xx. Xxxx and
WBC dated May 6, 2005 (“Employment Agreement”).
In exchange for enhanced severance and other benefits described in this Agreement, Xx.
Xxxx and WBC agree as follows:
1. Resignation. Xx. Xxxx hereby resigns from employment (including all officer
positions) with and the Boards of Directors of WBC and Whidbey Island Bank effective September 30,
2008. (“Retirement Date”). Between the date of this agreement and the Retirement Date, Xx. Xxxx
shall be expected to perform his normal duties as directed by Xxxx Xxxxxxxxx, Chairman of the Board
of Directors, and any task necessary to transition his responsibilities to others, and WBC shall
provide Xx. Xxxx his regular Base Salary (as defined in the Employment Agreement) and benefits.
2. Vacation. As of the Retirement Date, WBC shall pay to Xx. Xxxx an amount equal to
his accrued but unused vacation. This payment, less normal payroll and withholding taxes, shall be
made with the next regularly scheduled payroll after the Retirement Date.
3. Enhanced Severance Payment. Consistent with the Employment Agreement, WBC shall pay
Xx. Xxxx two years of his Base Compensation, less applicable payroll and withholding taxes, as
severance pay. For the purposes of this Agreement, the Base Compensation used to calculate the
severance pay shall be (a) the highest Base Salary paid to Xx. Xxxx over the three years
immediately preceding the Retirement Date plus (b) two times his last-paid annual bonus or the
average annual bonus (cash plus the value of any stock issued in lieu of cash bonuses) paid to Xx.
Xxxx over the previous three years, whichever is greater. This severance pay will be paid as
follows: (a) one-half of the total amount paid in a lump sum on or before the next regularly
scheduled payroll date after the Effective Date of this Agreement; and (b) the remaining one-half
paid in equal installments in conjunction with WBC’s regularly scheduled payroll through September
30, 2009. In the event of Xx. Xxxx’x death prior to payment of the entire severance obligation, any
remaining unpaid severance pay due under this paragraph will be accelerated and paid in a lump sum
to his estate.
4. Stock Options. On the Retirement Date, WBC shall accelerate the vesting of Xx.
Xxxx’x unvested stock options and restricted stock. Other than this accelerated vesting, the terms
of all of Xx. Xxxx’x stock options shall be governed by any applicable plan or grant.
5. Medical Insurance/COBRA. After September 30, 2008, Xx. Xxxx shall have the right to
purchase group medical, dental and vision insurance continuation coverage pursuant to his rights
under the COBRA statute and regulations. Provided that Xx. Xxxx elects continuation
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coverage under COBRA, WBC shall pay Xx. Xxxx’x insurance premiums for the group medical, dental and
vision insurance continuation coverage for up to eighteen (18) months beginning October 1, 2008,
and ending March 31, 2010, provided, however, if Xx. Xxxx becomes eligible for another employer’s
health insurance plan or otherwise becomes ineligible to continue his health insurance under COBRA,
such health insurance premium payments shall cease. Xx. Xxxx shall notify WBC immediately upon
eligibility for another such health plan.
6. Other Benefits. After the Retirement Date, Xx. Xxxx’x participation and conversion
rights in any other benefits programs shall be governed by the terms of the applicable plan and any
legal requirements.
7. Automobile. Upon the Retirement Date, WBC agrees to transfer title to Xx. Xxxx to
the automobile (2005 Chevrolet Tahoe) that Xx. Xxxx has been using for WBC-related business.
8. Confidentiality. Xx. Xxxx acknowledges that under the provisions of previously
executed agreements, and under applicable laws including the Washington Trade Secrets Act, he is
obligated to maintain confidential all trade secret, proprietary, confidential and other
information not publicly known of or about WBC or any of its customers, employees or business
partners. Xx. Xxxx affirms his agreement to maintain the confidentiality of all such information,
including his obligations under Section 8 of his Employment Agreement. In addition, Xx. Xxxx agrees
to maintain the confidentiality of the terms of this Agreement, except that he may share the terms
with his wife, attorney or tax advisor. Similarly, WBC agrees to maintain the confidentiality of
this Agreement, except that WBC may share the terms with its senior management (such as its
President), Board members, attorneys, accountants, regulatory authorities and as may be required by
law.
9. References. All inquiries about Xx. Xxxx including any requests for reference
information shall be directed to WBC’s Vice President of Human Resources, who shall confirm Xx.
Xxxx’x title, dates of employment and that he departed WBC as a voluntary retirement.
10. Return of Property. As of the Retirement Date, Xx. Xxxx will return to WBC all
company-owned property in his possession, if any, specifically including all keys and card key
badges to company buildings or property, all company-owned equipment, and all company documents and
papers, including but not limited to trade secrets or confidential company information.
11. Non-Solicitation of Employees and Customers. Xx. Xxxx reaffirms his
nonsolicitation obligations stated in Section 9 of his Employment Agreement, except that the
parties agree that the period of the non-solicitation restriction shall be reduced from two years
to one year from the Retirement Date.
12. Non-Competition Agreement. Xx. Xxxx reaffirms his non-competition obligations
under Section 7 of the Employment Agreement, except that the parties agree that the period of the
non-competition restriction shall be reduced from two years to one year from the Retirement Date.
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13. Release. In exchange for the enhanced severance and other benefits described
above, Xx. Xxxx, on behalf of himself and his marital community, irrevocably and unconditionally
waives, releases, and forever discharges, WBC and all of its parent, affiliated or subsidiary
organizations, any employer-sponsored employee benefit plans and each of their respective
directors, officers, agents, trustees, employees, employee-spouses, successors and assigns
(collectively “the Releases”), from any and all claims or damages (including attorney’s fees and
costs actually incurred), whether known or unknown, which have arisen through the date of this
Agreement related in any way to his employment by WBC or his separation. This release includes but
is not limited to, claims under federal, state or local laws prohibiting discrimination in
employment, including the Age Discrimination in Employment Act, and the Employee Retirement Income
and Security Act of 1974, as well as any tort or contract claims or any other claims arising from
any alleged legal restrictions of the right of WBC to compensate, manage or terminate its
employees. This release shall not prohibit Xx. Xxxx from filing a charge with the Equal Employment
Opportunity Commission but shall be a waiver of any damages or monetary recovery therefrom. This
release does not affect or include claims Xx. Xxxx may have in a capacity other than as an
employee, such as rights as a shareholder or customer of WBC.
14. Voluntary Agreement. Xx. Xxxx understands and acknowledges the significance and
consequences of this Agreement. Xx. Xxxx acknowledges that it is voluntary and he has not signed
it as a result of any coercion. Xx. Xxxx acknowledges that he was given at least twenty-one (21)
days after receipt of this document during which to consider this Agreement and that he has been
encouraged to consult with an attorney prior to signing it, and that he signs it only after
careful consideration and analysis. In the event that Xx. Xxxx signs this Agreement before
expiration of this consideration period, the remaining time shall be waived.
15. Revocation Period. Xx. Xxxx understands and acknowledges that he has seven (7)
days after signing this Agreement to revoke it. This Agreement will not be effective until the
eighth day after it is signed or the Retirement Date, whichever occurs later (“Effective Date”).
16. No Admission of Liability. This Agreement shall not be considered as evidence
of any violation of any statute or law, or any wrongdoing or liability on the part of Xx. Xxxx or
WBC or its agents or employees.
17. Non-Disparagement. Xx. Xxxx reaffirms his obligations not to disparage WBC or its
past or present officers, directors, agents, employees, products or services in any form or forum
to any person or entity as stated in Section 10 of his Employment Agreement. WBC, through its
President and Board of Directors, shall not disparage Xx. Xxxx. Both WBC and Xx. Xxxx shall
characterize Xx. Xxxx’x departure as a voluntary retirement.
18. Entire Agreement. The Agreement contains the entire understanding between Xx. Xxxx
and WBC regarding the subject matter of this Agreement. It supersedes the Employment Agreement and
all other agreements that relate to the termination of Xx. Xxxx’x employment (or the benefits
available as a result thereof) between the parties except that Sections 7, 8, 9, and 10 of the
Employment Agreement shall remain in effect except as expressly modified herein. This Agreement may
not be modified except in writing signed by Xx. Xxxx and by WBC.
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19. Miscellaneous. This Agreement is entered into without reliance on any promise
or representation, written or oral, other than those expressly contained herein. It supersedes any
other such promises or representations unless specifically identified in this Agreement. This
Agreement shall bind the heirs, personal representatives, successors and assigns of both Xx. Xxxx
and WBC. If any provision of this Agreement is determined to be invalid or unenforceable, in whole
or in part, this determination will not affect any other provision of this Agreement and the
provision in question shall be modified by the court so as to be rendered enforceable. This
Agreement shall be deemed to have been entered into and shall be construed and enforced in
accordance with the laws of the State of Washington and an action for breach of this Agreement may
only be filed in federal or state courts residing in King County, Washington.
XX. XXXX ACKNOWLEDGES AND UNDERSTANDS THAT THE ABOVE AGREEMENT
INCLUDES A RELEASE OF ALL CLAIMS, KNOWN AND UNKNOWN, TO THE EXTENT
SPECIFIED IN SECTION 13 ABOVE AND EXECUTES THIS AGREEMENT WITH FULL
KNOWLEDGE OF ITS CONTENTS AND OPPORTUNITY FOR CONSULTATION WITH
LEGAL COUNSEL.
| Dated: 9/23/08 | Employee: | /s/ Xxxxxx Xxxx | ||
| Xxxxxx Xxxx | ||||
| Dated: 9/23/08 | Washington Banking Company, Inc. |
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| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Its Chairman of Board of Directors | ||||
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