AMENDMENT NO. 1 TO THE SETTLEMENT AGREEMENT AND MUTUAL RELEASES
AMENDMENT NO. 1
This AMENDMENT NO. 1 TO THE SETTLEMENT AGREEMENT AND MUTUAL RELEASES (the "Amendment") is made and entered into, as of the date on which it is fully executed, as indicated by the signatures below, by and among the Xxxxxxxx Group (as defined in the Settlement Agreement and Mutual Releases (the "Agreement")), Xxxxxxx X. Xxxxxxxxx, an individual, First Financial Northwest, Inc., a Washington corporation (the "Company"), Xxxxxxx X. Xxxxx, an individual, Xxxx X. Xxxxxxx and Associates, a sole proprietorship registered in New Jersey, and Xxxxxx Xxxxxxx, an individual (collectively, "the parties" and each a "party").
RECITALS
WHEREAS, the parties entered into the Agreement as of December 20, 2012;
WHEREAS, the Agreement requires, inter alia, that Xx. Xxxxxxxxx be appointed to the Boards of Directors of the Company, First Savings Bank Northwest (the "Bank"), and First Financial Diversified Corporation ("Diversified");
WHEREAS, the parties desire to modify the Agreement to provide for the appointment of Xxxxx X. Xxxxxxx to the Boards of Directors of the Company, the Bank, and Diversified in lieu of the appointment of Xx. Xxxxxxxxx to those boards, and otherwise to modify the Agreement to accommodate the substitution of Xx. Xxxxxxx for Xx. Xxxxxxxxx; and
WHEREAS, Xx. Xxxxxxx is a Senior Principal and co-founder of Obsidian Finance Group, LLC, with offices at 0 Xxxxxxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxx, Xxxxxx 00000;
NOW, THEREFORE, in consideration of the mutual promises, representations, covenants and agreements of the parties contained herein, and for other good and valuable consideration, the receipt and legal sufficiency of which the parties hereby acknowledge, the parties hereto, intending to be legally bound, agree as follows:
TERMS
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1.
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Substitution of Xx. Xxxxxxx for Xx. Xxxxxxxxx
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(a) In the heading to Section 1.1, the reference to "Xx. Xxxxxxxxx" is changed to "Xx. Xxxxxxx."
(b) Restyle Sections 1.1(b), 1.1(c) and 1.1(d), respectively, as Sections 1.1(c), 1.1(d) and 1.1(e), respectively, and insert the following new Section 1.1(b) following Section 1.1(a):
| (b) | The Board, having voted on December 19, 2012, to increase the size of the Board by one (1) director to a total of nine (9) directors and to appoint Xx. Xxxxxxxxx to fill that new position; and the parties having agreed that Xx. Xxxxxxx shall be substituted for Xx. Xxxxxxxxx as a |
| member of the Board; the Board no later than January 16, 2013, shall withdraw the appointment of Xx. Xxxxxxxxx as a director of the Company and appoint Xx. Xxxxxxx to serve as a director of the Company until the later of the date of the Annual Meeting of Shareholders of the Company in 2013 (the "2013 Annual Meeting") or the date on which his successor should be elected and qualified, the effectiveness of such appointment and Board vote in favor of Xx. Xxxxxxx'x appointment to be subject only to: (i) if necessary, Xx. Xxxxxxx receiving all approvals by the Washington Department of Financial Institutions, the Federal Deposit Insurance Corporation and the Federal Reserve Bank of San Francisco, or their successors, necessary for him to serve as a director of the Company and of the Bank, and (ii) Xx. Xxxxxxxxx and the Xxxxxxxx Group fully complying with their obligations under this Agreement. |
(c) At lines 1-2 of former Section 1.1(b) of the Agreement, now restyled as Section 1.1(c), the phrase "No later than fifteen business days after the execution of this Agreement by all parties" is deleted and replaced with "No later than January 28, 2013."
(d) At the last two lines of former Section 1.1(b) of the Agreement, now restyled as Section 1.1(c), the phrase "and withdrawing any previous objections to Xx. Xxxxxxxxx'x appointment to such boards" is deleted.
(e) In former Sections 1.1(b) and 1.1(c) of the Agreement, now restyled respectively as Sections 1.1(c) and 1.1(d), all remaining references to "Xx. Xxxxxxxxx" are changed to "Xx. Xxxxxxx."
(f) Section 1.1(d) of the Agreement, now restyled as Section 1.1(e), is deleted and replaced with the following:
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The Company, Xx. Xxxxxxx and all members of the Xxxxxxxx Group (including Xxxxxx Xxxxxxxx in his individual capacity) shall enter into a Non-Disclosure Agreement, substantially in the form attached as Exhibit A hereto, which shall remain in force through Xx. Xxxxxxx'x tenure on the Board.
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(Exhibit A to this Amendment is unchanged from Exhibit A to the Agreement, except for the substitution of Xx. Xxxxxxx'x name for Xx. Xxxxxxxxx'x name.)
(g) In the heading to Section 1.2 and in Sections 1.2(a) and 1.2(b) of the Agreement, all references to "Xx. Xxxxxxxxx" are changed to "Xx. Xxxxxxx."
(h) At lines 5-6 of Section 1.2(b) of the Agreement, the parenthetical phrase "(or ceases to represent the Xxxxxxxx Group as an attorney)" is deleted.
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(i) In Section 1.3 of the Agreement, the reference to "Xx. Xxxxxxxxx" is changed to "Xx. Xxxxxxx."
(j) In Section 1.4 of the Agreement, the first two references to "Xx. Xxxxxxxxx" (found in the second line of the first paragraph of Section 1.4) are changed to "Xx. Xxxxxxx."
(k) In Section 5.1 of the Agreement, the reference to "Xx. Xxxxxxxxx" is changed to "Xx. Xxxxxxx."
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2.
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Effective Date
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In Section 5.1 of the Agreement, both references to "February 15, 2013" are changed to "March 1, 2013."
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3.
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Joint Motion for Extension of Stay
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No later than three court days following the execution of this Amendment by all parties, counsel for the parties shall cause to be filed in the Litigation a joint motion to extend the stay of the Litigation, and all proceedings or deadlines therein, until the Effective Date, as modified by this Amendment, has or has not occurred.
The parties agree that the Joint Press Release attached to this Amendment as Exhibit B will be issued upon execution of this Amendment; and that the Company will file with the U.S. Securities and Exchange Commission ("SEC") a Form 8-K announcing the Amendment, to which copies of this Amendment and the Joint Press Release will be attached as exhibits.
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5.
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Miscellaneous
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(a) This Amendment and the Agreement shall be read together, as one document, and together constitute the entire agreement among the parties regarding its subject matter and supersede any prior oral or written agreements among them (other than the Agreement as revised by this Amendment) regarding the subject matter contained herein.
(b) Except as specifically provided herein, all terms and conditions of the Agreement shall remain in full force and effect, without waiver or modification. In the event of any inconsistencies, the terms of this Amendment shall govern.
(c) All capitalized terms used in this Amendment and not otherwise defined herein have the same meanings as when used in the Agreement.
(d) To facilitate execution, this Amendment may be executed in any number of counterparts (including by facsimile and email/pdf transmission), each of which shall be deemed to be an original, but all of which together shall constitute one and the same Amendment binding on all the parties, notwithstanding that not all parties are signatories to the same counterpart.
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(e) This Amendment shall be governed and construed in accordance with the laws of the State of Washington, without regard to the conflict of law principles thereof. Should any dispute arise between or among the parties regarding the interpretation or performance of this Amendment, the parties agree that such dispute shall be resolved in the Superior Court for the State of Washington in King County.
IN WITNESS WHEREOF, the parties have duly executed this Amendment No. 1 as of the last date shown below.
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XXXXXX XXXXXXX
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| /s/Xxxxxx Xxxxxxx | |
| Date: January 16, 2013 | |
| FIRST FINANCIAL NORTHWEST, INC. | |
| By: /s/Xxxxxx Xxxxxxx | |
| [Print Name]Xxxxxx Xxxxxxx | |
| Title: President and CEO | |
| Date: January 16, 2013 | |
| XXXXXXX X. XXXXX | |
| /s/Xxxxxxx X. Xxxxx | |
| Date: 1/16/13 | |
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XXXX X. XXXXXXX AND ASSOCIATES
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| By: /s/Xxxx X. Xxxxxxx | |
| [Print Name] Xxxx X. Xxxxxxx | |
| Title: Chairman | |
| Date: January 16, 2013 |
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THE XXXXXXXX GROUP
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Xxxxxx Xxxxxxxx;
Xxxxxxxx Value Partners II, L.P.;
Xxxxxxxx Value Partners V, L.P.;
Xxxxxxxx Value Partners VI, L.P.;
Xxxxxxxx Value Partners VII, L.P.;
Xxxxxxxx Partners, L.P.;
Xxxxxxxx Associates, L.P.;
Xxxxxxxx Associates Insurance Fund of the
S.A.L.I. Multi-Series Fund, L.P.;
Xxxxxxxx Value LLC; and
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Xxxxxxxx Advisers LLC
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By: /s/Xxxxxx Xxxxxxxx
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| [Print Name] Xxxxxx Xxxxxxxx | |
| Title: Manager | |
| Date: 1/16/13 | |
| XXXXXXX XXXXXXXXX | |
| /s/Xxxxxxx Xxxxxxxxx | |
| Date: 1/16/13 |
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Exhibit A
NON-DISCLOSURE AGREEMENT
THIS NON-DISCLOSURE AGREEMENT (this "Agreement"), is made and entered into as of the date on which it is fully executed, as indicated by signatures below, by and among First Financial Northwest, Inc. (the "Company"), the Xxxxxxxx Group (composed of Xxxxxxxx Associates, L.P., Xxxxxxxx Partners, L.P., Xxxxxxxx Value Partners II, L.P., Xxxxxxxx Value Partners V, L.P., Xxxxxxxx Value Partners VI, L.P., Xxxxxxxx Value Partners VII, L.P., Xxxxxxxx Value LLC, Xxxxxxxx Associates Insurance Fund of The S.A.L.I. Multi-Series Fund L.P., Xxxxxxxx Advisers LLC, and Xxxxxx Xxxxxxxx, an individual, and their employees and representatives), and Xxxxx X. Xxxxxxx, a director nominee of the Xxxxxxxx Group ("Xxxxxxx").
WHEREAS, the Company has agreed to place Xxxxxxx on its board of directors, subject to approval by interested state and federal regulatory agencies;
WHEREAS, the Company, the Xxxxxxxx Group and Xxxxxxx have agreed that it is in their mutual interests to enter into this Agreement as hereinafter described.
NOW THEREFORE, for good and valuable consideration, the parties hereto mutually agree as follows:
1. In connection with Xxxxxxx serving on the Company's board, Xxxxxxx and other Company employees, directors, and agents may divulge nonpublic information concerning the Company and its subsidiaries to the Xxxxxxxx Group and such information may be shared among the Xxxxxxxx Group's employees and agents who have a need to know such information. The Xxxxxxxx Group expressly agrees to maintain all nonpublic information concerning the Company and its subsidiaries in confidence. The Xxxxxxxx Group expressly acknowledges that federal and state securities laws may prohibit a person from purchasing or selling securities of a company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such other person is likely to purchase or sell such securities, while the first-mentioned person is in possession of material nonpublic information about such company. The Xxxxxxxx Group agrees to comply with the Company's xxxxxxx xxxxxxx and disclosure policies, as in effect from time to time, to the same extent as if it were a director of the Company. To the extent the nonpublic information concerning the Company and its subsidiaries received by the Xxxxxxxx Group is material, this Agreement is intended to satisfy the confidentiality agreement exclusion of Regulation FD of the Securities and Exchange Commission (the "SEC") set forth in Section 243.100(b)(2)(ii) of Regulation FD.
2. Each of the Xxxxxxxx Group and Xxxxxxx represents and warrants to the Company that this Agreement has been duly and validly authorized (in the case of the entity members of the Xxxxxxxx Group), executed and delivered by them, and is a valid and binding agreement enforceable against them in accordance with its terms.
3. Xxxxxxx hereby further represents and warrants to the Company that: (a) he satisfies all of the qualifications to be a director of the Company as set forth in Article III,
Section 4 of the Company's bylaws and any additional applicable qualifications under the laws of the State of Washington or under the regulations of any bank regulatory authority, and that he is not in any way precluded from serving as a director by order or other action of any court, regulatory or other governmental authority; and (b) no event has occurred with respect to Xxxxxxx that would require disclosure in a document filed by the Company with the SEC pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, under Item 401(f) of SEC Regulation S-K.
4. The Xxxxxxxx Group acknowledges that with regard to its obligations to maintain the confidentiality of nonpublic information of the Company and its subsidiaries, monetary damages may not be a sufficient remedy for any breach or threatened breach of this Agreement and that, in addition to all other remedies, the Company may be entitled to seek specific performance and injunctive or other equitable relief as a remedy for such breach, and in conjunction therewith the Company shall not be required to post any bond.
5. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties in connection therewith not referred to herein.
6. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Washington, without regard to choice of law principles that may otherwise compel the application of the laws of any other jurisdiction. Each of the parties hereby irrevocably consents to the exclusive jurisdiction of the state and federal courts sitting in the State of Washington to resolve any dispute arising from this Agreement and waives any defense of inconvenient or improper forum.
7. The terms and provisions of this Agreement shall be deemed severable and, in the event any term or provision hereof or portion thereof is deemed or held to be invalid, illegal or unenforceable, such provision shall be conformed to prevailing law rather than voided, if possible, in order to achieve the intent of the parties, and, in any event, the remaining terms and provisions of this Agreement shall nevertheless continue and be deemed to be in full force and effect and binding upon the parties.
8. All representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.
9. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by all of the parties hereto.
10. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by duly authorized officers of the undersigned as of the day and year first above written.
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THE XXXXXXXX GROUP
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| /s/Xxxxxx Xxxxxxxx | /s/Xxxxxx Xxxxxxx | |||
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By:
Date
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Xxxxxx Xxxxxxxx
1/16 , 2013
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By:
Date
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Xxxxxx Xxxxxxx, President, Chief
Executive Officer and Chairman
of the Board
January 16 , 2013
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XXXXX X. XXXXXXX
/s/Xxxxx X. Xxxxxxx
Date: January 14th , 2013
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Exhibit B
JOINT PRESS RELEASE
**For Immediate Release**
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For more information, contact:
Xxxxxx Xxxxxxx, President and Chief Executive Officer,
(000) 000-0000
For The Xxxxxxxx Group:
Xx. Xxxxx Xxxxxx, (000) 000-0000
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FIRST FINANCIAL NORTHWEST, INC. AND THE XXXXXXXX GROUP ANNOUNCE AMENDMENT TO LITIGATION SETTLEMENT
Renton, Washington – January 17, 2013 – First Financial Northwest, Inc. (the "Company") (NASDAQ GS: FFNW) and the Xxxxxxxx Group announced that they have amended the agreement that was entered into to settle the litigation in which the Xxxxxxxx Group challenged the counting of votes in a contested director election at the Company's 2012 Annual Meeting of Shareholders.
The original settlement agreement provided, among other things, that Xxxxxxx X. Xxxxxxxxx would be seated on the Company's Board of Directors after receiving any required regulatory approvals. The Company and the Xxxxxxxx Group have now agreed that the Company will instead appoint Xxxxx X. Xxxxxxx to its Board, subject to any required regulatory approvals, and will then nominate Xx. Xxxxxxx at the 2013 Annual Meeting of Shareholders for a full three-year term. Xx. Xxxxxxx is a Senior Principal of Obsidian Finance Group, LLC, whose offices are located in Lake Oswego, Oregon. All other significant terms of the settlement remain the same.
First Financial Northwest, Inc. is the parent company of First Savings Bank Northwest, a Washington chartered stock savings bank headquartered in Renton, Washington, serving the Puget Sound Region through its full-service banking office. The Company is a part of the ABA NASDAQ Community Bank Index. For additional information about the Company, please visit xxx.xxxxx.xxx and click on the "Investor Relations" section.
The Xxxxxxxx Group is a New York-based money management firm which currently owns approximately 9.41% of the Company's outstanding shares of common stock.
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