FIRST COMMUNITY FINANCIAL GROUP
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), signed December 28, 1998,
between FIRST COMMUNITY FINANCIAL GROUP and FIRST COMMUNITY BANK OF WASHINGTON
(collectively, the "Bank") and XXXXX X. XXXXXXX ("Executive") takes effect on
the Effective Date of this document ("Effective Date").
RECITALS
A. Executive is presently the Bank's Chief Financial Officer. The Bank
wishes to continue Executive's employment in that capacity under the
terms and conditions of this Agreement.
B. Under the terms of this Agreement, Executive wishes to continue his
employment with the Bank (or its successor, if any) on a full-time
basis for the period provided in this Agreement.
AGREEMENT
The parties agree as follows.
1. EMPLOYMENT. The Bank will continue Executive's employment during the
Term, and Executive accepts employment by the Bank on the terms and
conditions set forth in this Agreement. Executive's title will be
"Chief Financial Officer."
2. EFFECTIVE DATE AND TERM.
(a) EFFECTIVE DATE. This Agreement is effective as of
March 1, 1998.
(b) TERM. The term of this Agreement ("Term") is two years,
beginning on the Effective Date and will be automatically
extended one additional year on the anniversary of the
Effective Date.
3. DUTIES. Executive will faithfully and diligently perform the duties
assigned to Executive from time to time by the Bank's Chairman or
President, consistent with the duties that have been normal and
customary to Executive's position. Executive will use his best efforts
to perform his duties and will devote full time and attention to these
duties. Executive will report directly to the Bank's President. The
Bank's board of directors may, from time to time, modify Executive's
title or performance responsibilities to accommodate management
succession, as well as any other management objectives of the Bank.
4. SALARY. Initially, Executive will receive a salary of $90,000 per
year, to be paid in accordance with the Bank's regular payroll
schedule.
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5. INCENTIVE COMPENSATION. The Bank's board of directors, will
determine the amount of bonus, if any, to be paid by the Bank to
Executive for each year during the Term. In making this determination,
the Bank's board of directors will consider factors such as Executive's
performance of his duties and the safety, soundness, and profitability
of the Bank. Executive's bonus, if any, will reflect Executive's
contribution to the performance of the Bank during the year.
6. INCOME DEFERRAL AND BENEFITS. Subject to eligibility requirements and
in accordance with and subject to any policies adopted by the Bank.
Executive will be entitled to receive benefits (including stock options
and participation in the Executive Supplemental Income Plan) similar to
those offered to other executive officers of the Bank and its
subsidiaries with position and duties comparable to those of Executive.
7. BUSINESS EXPENSES. The Bank will reimburse Executive for ordinary and
necessary expenses (including, without limitation, travel,
entertainment, and similar expenses) incurred in performing and
promoting the Bank's business. Executive will present from time to time
itemized accounts of these expenses, subject to any limits of Bank
policy or the rules and regulations of the Internal Revenue Service.
8. CHANGE IN CONTROL
(a) DEFINITION OF "CHANGE IN CONTROL." "Change in Control" of
the Bank shall be deemed to have occurred if (i) any person,
firm, corporation or other business entity, at any time, by
merger, consolidation, purchase or otherwise, is or becomes
the "beneficial owner" directly or indirectly, of securities
of the Bank representing 50% or more of the combined voting
power of the Bank's then outstanding securities; or (ii) an
agreement is approved for the sale or disposition of all or
substantially all of the Bank's assets; or (iii) during any
period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of
Company cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of a
least two-thirds of the directors then still in office who
were directors at the beginning of the period.
(b) DEFINITION OF "CHANGE IN CONTROL PERIOD." "Change in
Control Period" shall be defined as any time during a period
beginning six months prior to the earlier of a public
announcement of a Change In Control if public announcement is
made, or the date on which the Board of Directors knows, or
should reasonably know of an impending Change in Control, and
ending twenty four (24) months subsequent to the consummation
of a Change in Control.
(c) STOCK OPTIONS. Upon a change in control rights to all
unexpired stock options granted to Executive will fully and
immediately vest. If terminated within the Change in Control
Period, but prior to the Change in Control, any options that
may have expired as a result of the termination will be
reinstated upon the consummation of the Change in Control such
that the option or the related right as defined in the option
plan may be exercised in accordance with the plan.
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(d) SALARY CONTINUATION PAYMENT. Upon Termination on
Change in Control Executive will receive cash payments for a
period of 24 months equal to the highest monthly base salary
he has received in any of the 24 months prior to termination.
9. TERMINATION.
(a) TERMINATION BY BANK FOR CAUSE. If, before the end of the
Term, the Bank terminates Executive's employment for Cause or
Executive terminates his employment without Good Reason, the
Bank will pay Executive the salary earned and expenses
reimbursable under this Agreement incurred through the date of
Executive's termination. At the election of the Bank,
Executive will be subject to the noncompetition and
nonsolicitation requirements as described in SECTION 13 and
will receive noncompetition compensation as described in
SECTION 13e.
(b) TERMINATION BY BANK OR EXECUTIVE. If before the end of the
Term, the Bank terminates Executive's employment without Cause
or Executive terminates his employment for Good Reason
(defined below), the Bank will pay Executive an amount equal
to one year's salary. Additionally, Executive will be subject
to the noncompetition and nonsolicitation requirements of
SECTION 13 for 12 months following termination and will
receive noncompetition compensation as described in SECTION
13e.
(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 require the Bank to expend any funds.
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) TERMINATION RELATED TO A CHANGE IN CONTROL. In the event
that any person extends any proposal or offer which is
intended to or may result in a Change in Control, Executive
shall, at the Company's request, assist the Company in
evaluating such proposal or offer. Further, as a condition to
receipt of the Salary Continuation Payment defined below,
Executive agrees not to resign his position with the Company
during any period from the receipt of a specific Change in
Control proposal up to the consummation or abandonment of the
transaction contemplated by such Proposal.
(1) TERMINATION BY BANK. If the Bank, or its
successor in interest by merger, or its transferee in
the event of a purchase in an assumption transaction,
for reasons other than Executive's death, disability,
or Cause terminates Executive's employment within the
Change in Control Period, the Bank will pay Executive
the Salary Continuation Payment.
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(2) TERMINATION BY EXECUTIVE. If Executive terminates
Executive's employment, with or without Good Reason,
within one year following a Change in Control, the
Bank will pay Executive the Salary Continuation
Payment.
(e) RETURN OF BANK PROPERTY. If and when Executive ceases, for
any reason, to be employed by the Bank, Executive must return
to the Bank all keys, pass cards, identification cards and any
other property of the Bank. At the same time, Executive also
must return to the Bank 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 the Bank. 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.
(f) EXECUTIVE SUPPLEMENTAL INCOME (ESI) PLAN. In
addition to the benefits described above, Executive may be
covered under an Executive Supplemental Income agreement. Upon
termination, Executive's rights with respect to ESI benefits
will be determined in accordance with the ESI agreement.
10. DEFINITION OF CAUSE "Cause" means any one or more of the following:
Willful misfeasance or gross negligence in the performance of
Executive's duties;
Conviction of a crime in connection with his duties;
Conduct demonstrably and significantly harmful to the Bank, as
reasonably determined by the Bank's board of directors on the
advice of legal counsel; or
Permanent disability, meaning a physical or mental impairment
which renders Executive incapable of substantially performing
the duties required under this Agreement, and which is
expected to continue rendering Executive so incapable for the
reasonably foreseeable future.
11. DEFINITION OF GOOD REASON. "Good Reason" means only any one or more
of the following:
Reduction, without Executive's consent, of Executive's salary
or elimination of any compensation or benefit plan benefitting
Executive unless applicable to all officers;
The assignment to Executive without his consent of any
authority or duties materially inconsistent with Executive's
position as of the date of this Agreement; or
A relocation or transfer of Executive's principal place of
employment that would require Executive to commute on a
regular basis more than 30 miles each way from his current
business office at the Bank on the date of this Agreement,
unless Executive consents to the relocation or transfer.
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12. 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 the Bank, unless (1) the Bank 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.
13. NONCOMPETITION.
(a) PARTICIPATION IN A COMPETING BUSINESS. During the Term and
for twelve (12) months after expiration of the Term (such
12-months being the "Post-Term Period") (regardless of whether
Executive's employment ends at the end of the Term or at some
other point after the end of the Term), 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 own an interest not exceeding 2% of
the total equity interest in any publicly held entity whose
equity securities are listed on a national securities exchange
(whether or not such entity is a Competing Business).
Executive's noncompetition obligations for the Post-Term
Period will not apply if termination occurs within the Change
in Control Period.
(b) NO SOLICITATION. During the Term and for the Post-Term
Period (regardless of whether Executive's employment ends at
the end of the Term or at some other point after the end of
the Term), Executive will not directly or indirectly solicit
or attempt to solicit (1) any employees located in Thurston,
Pierce, Xxxxx or Xxxxx Counties in Washington State (the
"Counties") of the Bank, to leave their employment or (2) any
customers located in the Counties of the Bank, to remove their
business from the Bank, 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.
Executive's nonsolicitation obligations for the Post-Term
Period will not apply if termination occurs within the Change
in Control Period.
(c) EMPLOYMENT OUTSIDE THE COUNTIES. Nothing in this Agreement
prevents Executive from accepting employment after the end of
the Term outside the Counties 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
Counties or (b) have any responsibilities for the Competing
Business' operations within the Counties.
(d) COMPETING BUSINESS. "Competing Business" means any
financial institution or trust company that competes with, or
will compete in the Counties with, the Bank. The term
"Competing Business" includes, without limitation, any
start-up or other financial institution or trust company
information.
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(e) NONCOMPETITION COMPENSATION. As compensation for the
agreements referred to in Section 13, commencing at the
beginning of the Post-Term Period, Executive will receive cash
payments from the Bank for a period of 12 successive months
equal to the highest monthly base salary paid in any of the 12
months prior to termination.
14. ENFORCEMENT.
(a) The Bank and Executive stipulate that, in light of all of
the facts and circumstances of the relationship between
Executive and the Bank, the agreements referred to in Sections
12 and 13 (including without limitation their scope, duration
and geographic extent) are fair and reasonably necessary for
the protection of the Bank'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 the Bank request the
court to reform these provisions to restrict Executive's use
of confidential information and Executive's ability to compete
with the Bank to the maximum extent, in time, scope of
activities, and geography, the court finds enforceable.
(b) Executive acknowledges that the Bank 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 12 or 13 or threatens or attempts to do
so. For this reason, under these circumstances, the Bank, 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
neither the Bank will be required to post a bond as a
condition for the granting of this relief.
15. ADEQUATE CONSIDERATION. Executive specifically acknowledges the
receipt of adequate consideration for the covenants contained in
Sections 12 and 13 and that the Bank 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.
16. 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
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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 Xxxxxxxx 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 12 or 13, the Bank will have the
right to initiate the court proceedings described in Section
14(b), in lieu of an arbitration proceeding under this Section
16. The Bank may initiate these proceedings wherever
appropriate within Washington State; but Executive will
consent to venue and jurisdiction in Xxxxxxxx County,
Washington.
17. 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) ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties concerning its subject
matter and supersedes all prior agreements. Accordingly,
Executive specifically waives the terms of and all of his
rights under all employment, change-in-control and salary
continuation agreements, whether written or oral, he has
previously entered into with the Bank or any of its
Subsidiaries or affiliates.
(c) BINDING EFFECT. This Agreement will bind and inure to the
benefit of the Bank's, and Executive's heirs, legal
representatives, successors and assigns.
(d) 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.
(e) 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.
(f) COUNSEL REVIEW. Executive acknowledges that he has had the
opportunity to consult with independent counsel with respect
to the negotiation, preparation, and execution of this
Agreement.
(g) 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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(h) AMENDMENT. This Agreement may not be modified or amended
except by a written instrument signed by both parties with the
prior written consent of the Bank.
(i) SEVERABILITY. The provisions of this Agreement are
severable. The invalidity of any provision will not affect the
validity of other provisions of this Agreement.
(j) GOVERNING LAW AND VENUE. 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. Except as otherwise provided in Section 16(c), the
parties must bring any legal proceeding arising out of this
Agreement in Xxxxxxxx County, Washington, and the parties will
submit to jurisdiction in that county.
(k) COUNTERPARTS. This Agreement may be executed in one or
more facsimile counterparts, each of which will be deemed an
original, but all of which taken together will constitute one
and the same document.
Signed: December 28, 1998:
-----------------
FIRST COMMUNITY FINANCIAL GROUP
/s/ Xxx X. Xxxxxxx
---------------------------------------
By: Xxx X. Xxxxxxx
Its: President and CEO
FIRST COMMUNITY BANK OF WASHINGTON
/s/ Xxx X. Xxxxxxx
---------------------------------------
By: Xxx Xxxxxxx
Its: Chairman, President and CEO
XXXXX X. XXXXXXX, individually
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
XXXXX X. XXXXXXX
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