Employment Agreement between First Northwest and Matthew P. Deines dated December 7, 2021
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of December 7, 2021 ("Effective Date"), by and among First Northwest Bancorp (the "Company"), the Company’s wholly owned subsidiary First Fed Bank (the "Bank," and together with the Company referred to as "Employer"), and Matt Deines (hereinafter referred to as "Executive"). This Agreement supersedes and replaces any and all previous employment agreements between the parties, including, without limitation, the Employment Agreement between Executive and Employer dated August 1, 2019 (the “Prior Agreement”).
WHEREAS, Employer desires to employ Executive in the capacity hereinafter stated and Executive desires to continue in the employ of Employer in such capacity, for the period and on the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the promises and of the mutual covenants and conditions herein contained, the parties hereto, intending to be legally bound, do hereby agree as follows:
1. EMPLOYMENT DUTIES AND AUTHORITY
The Company and the Bank shall each employ Executive as its President and Chief Executive Officer, and Executive shall accept such employment. If elected, Executive shall also serve as a member of the Board of Directors of the Company and a member of the Board of Directors of the Bank for no additional compensation. Executive agrees to perform the duties that are customarily performed by the President and Chief Executive Officer of a bank holding company and a state-chartered banking institution and accepts all other duties described herein or as prescribed by the Employer's Boards of Directors (the "Board") and agrees to discharge the same faithfully and to the best of his ability and the highest and best standards of the banking industry, in accordance with the policies of the Employer's Articles of Incorporation, Bylaws, policies and procedures. Executive shall devote his full business time and attention to the business and affairs of Employer for which he is employed and shall perform the duties thereof to the best of his ability. Except as permitted by the prior written consent of the Employer's Board, Executive shall not directly or indirectly render any services of a business, commercial or professional nature to any other person, firm or corporation, whether for compensation or otherwise, which are in conflict with Employer’s interests. Executive shall have such responsibility and duties and such authority to transact business on behalf of Employer as are customarily incident to the office of President and Chief Executive Officer of a bank holding company and a state-chartered banking institution.
Employer hereby employs Executive and Executive hereby accepts employment with Employer for the period of three years (the "Term") commencing the Effective Date, with such Term being subject to prior termination as herein provided; provided, that, on such third anniversary of the Effective Date, at its option, Employer may extend the Term for a period of one year, upon the same terms and conditions, by written notice to Executive not less than 30 days prior to the end of the Term.
Where used herein, "Term" shall refer to the entire period of employment of Executive by Employer, whether for the period provided above, or whether terminated earlier as hereinafter provided, or extended as provided above.
3. EXECUTIVE COMPENSATION
(a) Base Salary. Employer agrees to pay Executive a base salary of FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000.00) per year beginning on the Effective Date. Employer's Board or the Compensation Committee of the Board (the “Compensation Committee”) shall in its sole and absolute discretion determine any increases in Executive's base salary annually following an annual performance evaluation. Executive's salary shall be paid in accordance with Employer’s standard payroll practices. Employer shall deduct therefrom all taxes which may be required to be deducted or withheld under any provision of the law (including, but not limited to, social security payments and income tax withholding) now in effect or which may become effective anytime during the term of this Agreement.
(b) Annual Bonus. Executive will be eligible for an incentive bonus as a percentage of Executive's base salary and as authorized and declared by the Board or the Compensation Committee for executive officers (“Annual Bonus”). Payments of Annual Bonus provided for under this Agreement must be paid no later than seventy-five (75) days after the end of the year in which the Executive obtains a legally binding right to those payments, or such other time that still qualifies the payment as a "short-term deferral" under Section 409A of the Internal Revenue Code (the "Code"). Executive will also be entitled to participate in an equitable manner with all other executive officers of Employer in any performance-based and discretionary bonuses that are authorized and declared by the Board or Compensation Committee for executive officers.
(c) Equity Awards. The Executive will be eligible to receive equity incentive awards under the Employer's equity incentive plan, as it may be amended from time to time, or any successor plan. Except as otherwise provided herein, each such award shall be subject to the terms of the Employer's equity incentive program under which it is granted.
(d) Vacation and Sick Leave. Executive is entitled to (A) annual paid vacation in accordance with the policies established by the Board or the Compensation Committee for executive officers, and (B) voluntary leaves of absence, with or without pay, from time to time at the times and upon the conditions as the Board and the Compensation Committee may determine in their discretion. Executive will be paid for all accrued unused vacation upon termination of employment. In addition, Executive is entitled to seven (7) days of annual sick leave. Unused sick leave may be accumulated until retirement or separation (without limitation). After completing five (5) full years of service, Executive will be paid for one-half of the unused sick leave, not to exceed two hundred forty (240) hours, upon termination of employment. Executive will not receive any additional compensation from Employer for unused sick leave, except to the extent authorized by the Board or the Compensation Committee in writing. Payments of accrued vacation pay or unused sick leave will be made as soon as reasonably and administratively practicable and as required by applicable law following Executive's termination of employment.
(e) Employee Benefits. Executive shall be entitled to participate in any and all other employee benefits and plans that may be developed and adopted by Employer and in which Executive is eligible to participate under the terms of such plans, subject to the Employer's right to amend or terminate such plans.
(f) Fringe Benefits and Perquisites. Employer agrees to reimburse Executive for all ordinary and customary expenses for business-related entertainment, meals, travel, cellular phone, and incidental business expense in accordance with Employer's policies. Reasonable costs incurred for professional education, publications, seminars, meetings and special social entertainment shall also be reimbursed in accordance with Employer's policies.
Employer agrees to provide Executive with health and life insurance benefits that are now or may hereinafter be in effect for all other full-time employees subject to the eligibility requirements of the plans, subject to Employer's right to amend or terminate such benefits. Employer may also obtain a "key-man" life insurance policy on the life of Executive which shall be a general asset of the Employer and to which Executive and the Executive's beneficiary will have no preferred or secured claim.
Employer shall have the right to terminate this Agreement for any of the reasons specified in (a) and (b) below, such reasons constituting "Cause," by serving written notice upon Executive. Employer shall have the right to terminate this Agreement for any of the reasons specified in (c) and (d) below by serving written notice upon Executive, his conservator, or his estate, as the case may be. Executive shall have the right to terminate this Agreement for any of the reasons specified in (e) below by serving written notice upon Employer:
(a) Embezzlement, willful misconduct, gross negligence, dishonesty, or other fraudulent acts involving Employer or Employer's business operations or in the performance of Executive's duties under this Agreement, including but not limited to Executive's refusal to comply with legal directives of the Board. A material breach of Executive's fiduciary duties to Employer if such breach has not been remedied, or is not being remedied, to Employer's reasonable satisfaction within 30 days after written notice, including a detailed description of such breach, has been delivered to Executive. Executive’s material breach of Section 9 or any confidentiality policy of Employer;
(b) An act or omission that materially injures Employer’s reputation, business affairs, or financial condition, if such injury could have been reasonably avoided by Executive, including but not limited to Executive’s conviction of or a plea of no contest or nolo contendere to a felony or crime involving dishonesty or moral turpitude;
(c) Physical or mental disability rendering Executive incapable of performing the essential functions of his position, with or without reasonable accommodation; provided, however, that Executive shall, if medically necessary, be entitled to a leave of absence for a consecutive period of 180 days, during which time Executive shall continue to receive his base salary and other benefits, once his accrued sick leave has first been exhausted. If applicable state and federal law require an additional leave of absence beyond the 180 days, Employer shall provide such leave, but Executive shall not be entitled to receive his base salary or any other benefits during such time, except for benefits provided under any long-term disability policy of the Employer as may be in effect from time to time;
(d) A determination by Employer's Board, in its sole and absolute discretion and documented in a Board resolution, to terminate the employment of Executive without Cause for any reason or for no reason.
(e) "Good Reason," which shall mean the occurrence of any of the following, in each case, during the Term without the Executive's written consent:
(i) a material reduction in the Executive's base salary;
(ii) a relocation of the Executive's principal place of employment by more than 35 miles;
(iii) a material adverse change in the Executive's authority, duties, or responsibilities (other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law);
provided, however, that Good Reason shall only be deemed to have occurred if: (A) within 90 days after the initial existence of the circumstances constituting Good Reason, Executive provides the Employer with a written notice describing such circumstances, (B) the Employer fails to cure the circumstances within 30 days after the Employer receives Executive's notice, and (C) Executive terminates his employment with the Employer and all affiliates of the Employer within 90 days of the date of Executive's initial notice.
In the event this Agreement is terminated for any of the reasons specified above, Executive shall be deemed to have resigned from positions that the Executive holds as an officer or member of the Board (or a committee thereof) of the Employer or any of its affiliates immediately.
6. SEVERANCE BENEFITS
In the event this Agreement is terminated by Employer for Cause, as specified in paragraphs (a) or (b) of Section 5 above, by Executive for any reason other than as specified in paragraph (e) of Section 5, or by reason of Executive’s death, Executive shall not be entitled to any severance pay. In the event this Agreement is terminated for any reason specified in paragraphs (d) or (e) of Section 5 above, Executive shall be entitled to severance pay in an amount equal to two times the sum of (A) Executive’s current annual base salary and (B) the average of the Annual Bonus paid to Executive for services during the preceding three calendar years (or the Executive's period of employment, if less than three years), calculated as of the date of the Executive's termination, to be paid in one lump sum.
In the case of termination in (d) or (e) of Section 5 above, the Employer will also make a lump-sum payment to Executive within 60 days of Executive's termination of employment in an amount equal to the amount necessary to pay Executive's COBRA premiums for continuation of group health insurance coverage for 12 months based on such premiums in effect on the date of Executive's termination; provided, that Executive shall not be obligated to use such lump-sum payment exclusively for payment of COBRA premiums.
The benefits referenced above are collectively referred to herein as "Severance." Executive acknowledges and agrees that any Severance provided upon termination is in lieu of all damages, payments and liabilities on account of the early termination of this Agreement and is the sole and exclusive remedy for Executive and shall only be paid, within 60 days after his termination of employment with Employer, subject to Executive's execution and delivery to Employer, within 45 days after termination, of a complete release of all claims Executive may have against the Employer, its officers, directors, agents, employees, predecessors, successors, parents, subsidiaries, and affiliates. If the 60-day period referred to above begins in one calendar year and ends in the following calendar year, then the payment shall be made in the latter calendar year.
If upon termination of employment Executive chooses to arbitrate any claims pursuant to Section 15, Executive shall be deemed to have waived Executive's right, if any, to Severance.
Termination of the Executive's employment shall not be deemed to be for Cause, as specified in paragraphs (a) or (b) of Section 5 above, unless and until the Board delivers to the Executive a written notice finding that the Executive has engaged in the conduct described in any of paragraphs (a) or (b) Section 5 above. Executive shall give 90 days' prior notice, in writing, to Employer in the event Executive resigns or voluntarily terminates employment.
7. CHANGE IN CONTROL BENEFITS
In the event there is (i) a Change in Control, as defined below, or (ii) any party announces or is required by law to announce a prospective Change in Control, and the Executive's employment hereunder is terminated by the Executive for Good Reason as specified in paragraph (e) of Section 5 or by the Employer without Cause as specified in paragraph (d) of Section 5 within 18 months following the later of (A) the announcement or the date of required announcement of the prospective Change in Control or (B) the Change in Control, the Executive shall be entitled to be paid, in a single lump sum, severance (“CIC Severance”) equal to the sum of (1) Executive’s current annual base salary multiplied by 2.99, (2) the average of the Annual Bonus paid to Executive for services during the preceding three calendar years (or the Executive's period of employment, if less than three years), (3) a prorated Annual Bonus for the current year, and (4) an amount equal to the amount necessary to pay Executive's COBRA premiums for continuation of group health insurance coverage for 12 months based on such premiums in effect on the date of Executive's termination. Executive acknowledges and agrees that the CIC Severance is in lieu of all damages, payments and liabilities on account of the early termination of this Agreement (including, without limitation, Severance under Section 6 of this Agreement) and is the sole and exclusive remedy for Executive, and shall only be paid, within 60 days after his separation from service with Employer, subject to Executive's execution and delivery to Employer, within 45 days of termination, of a complete release of all claims Executive may have against the Employer, its officers, directors, agents, employees, predecessors, successors, parents, subsidiaries, and affiliates. If the 60-day period referred to above begins in one calendar year and ends in the following calendar year, then the payment shall be made in the latter calendar year. If upon termination of employment Executive chooses to arbitrate any claims pursuant to Section 15, Executive shall be deemed to have waived Executive's right, if any, to CIC Severance under this Section 7. Executive shall give 90 days' prior notice, in writing, to Employer in the event Executive resigns or voluntarily terminates employment.
"Change in Control" means a change in the ownership or effective control or in the ownership of a substantial portion of the assets of the Bank or Company, within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"); provided, however that (i) an internal reorganization of Employer or (ii) the placement of the Bank into receivership or conservatorship by the Federal Deposit Insurance Corporation ("FDIC") shall not constitute a "Change in Control."
Notwithstanding the above, payments under a change in control related to this agreement shall be paid within any limits and subject to any approvals that may be imposed by the FDIC for "parachute payments" under applicable provisions of 12 C.F.R. 359.
(a) Excess Parachute Payment. If any of the payments or benefits received or to be received by the Executive (including, without limitation, any payment or benefits received in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement or otherwise) (all such payments collectively referred to herein as the "280G Payments") constitute "parachute payments" within the meaning of Section 280G of the Code and would, but for this Section 7(a), be subject to the excise tax imposed under Section 4999 of the Code (the "Excise Tax"), then such 280G Payments shall be reduced in a manner determined by the Employer (by the minimum possible amounts) that is consistent with the requirements of Section 409A until no amount payable to the Executive will be subject to the Excise Tax. If two economically equivalent amounts are subject to reduction but are payable at different times, the amounts shall be reduced (but not below zero) on a pro rata basis.
8. RESTRICTIVE COVENANTS.
(a) Noncompetition. Executive agrees that, during Executive's employment with Employer, and for a period of one year thereafter (the "Noncompetition Period"), Executive will not directly or indirectly become interested in, as a founder, organizer, principal shareholder, director, officer, or employee of or consultant to any bank, savings bank, savings and loan association, credit union, or similar financial institution or holding company of such an entity, now existing or organized hereafter, that competes or may compete with Employer, including any successor, within any county in which Employer operates a full-service branch office or lending center. Executive will not be deemed a "principal shareholder" unless (i) Executive's investment in such institution exceeds three percent (3%) of the institution's outstanding voting securities or (ii) Executive is active in the organization, management, or affairs of the institution. The provisions restricting competition by Executive may be waived by written action of the Board.
(b) Noninterference. During the Noncompetition Period, Executive shall not directly or indirectly (i) solicit or attempt to solicit any employee of Employer to leave the employ of Employer, or in any way interfere with the relationship between Employer or any other employee of Employer, (ii) solicit or attempt to solicit any customers or potential customers whom Employer actively solicited at any time during the 12 month period before Executive's date of termination (the "Customers"), including but not limited to all successors, owners, directors, partners, and management personnel of such Customers, to cease doing business with Employer or to otherwise divert the Customers' business from Employer, or (iii) solicit or attempt to solicit any supplier, licensee, or other business associate of Employer to cease doing business with Employer.
(c) Interpretation. The parties agree that the terms of Section 8(a) and Section 8(b) (collectively, the "Restrictive Covenants") are reasonable as to both time and scope. The parties additionally agree (i) that the Restrictive Covenants are necessary for the protection of the Employer’s business and goodwill; (ii) that the Restrictive Covenants are not any greater than are reasonably necessary to secure Employer’s business and goodwill; and (iii) that the degree of injury to the public from the loss of the service and skill of Executive or the restrictions placed on Executive's opportunity to make a living with Executive's skills upon enforcement of the Restrictive Covenants does not and will not warrant non-enforcement of them. If an arbitrator, court, or any other administrative body with jurisdiction over a dispute related to this Agreement determines that the Restrictive Covenants are unreasonably broad, the parties hereby authorize and direct the arbitrator, court, or administrative body to narrow them so as to make them reasonable, given all relevant circumstances, and to enforce them. This Section 8 will survive the termination of Executive's employment.
(d) Acknowledgement. The parties acknowledge that the terms of Sections 8(a) through Section (c) are a restatement of the Restrictive Covenants contained in the Prior Agreement and that the provisions of this Agreement, including Executive’s increase in rate of pay and enhanced severance benefits, are additional consideration for the Restrictive Covenants and restatement thereof.
9. CONFIDENTIAL INFORMATION AND NONDISCLOSURE
(a) Confidential Information. Employer has and will develop and own certain Confidential Information, which has a great value in its business. Employer also has and will have access to Confidential Information of its Customers.
"Customers" shall mean any persons or entities for whom Employer performs services or from whom Employer obtains information. Confidential Information includes information disclosed to Executive during the course of his employment and information developed or learned by Executive during the course of his employment.
Confidential Information is broadly defined and includes all information which has or could have commercial value or other utility in Employer's business or the businesses of Employer's Customers. Confidential Information also includes all information which could be detrimental to the interests of Employer or its Customers if it were disclosed.
By example and without limitation, Confidential Information includes all information concerning loan information, Customer data, including but not limited to Customer and supplier identities, Customer characteristics or agreements and Customer lists, applicant data, employment categories, job classifications, employment histories, job analyses and validations, preferences, credit history, agreements, and any personally identifiable information related to Customers; any information provided to Executive by a Customer, including but not limited to electronic information, documents, software, and trade secrets; historical sales information; advertising and marketing materials and strategies; financial information related to Employer, Customers, Customer's employees or any other party; labor relations strategies; research and development strategies and results, including new materials research; pending projects and proposals; production processes; scientific or technological data, formulae and prototypes; employee data; pricing and product information; computer data information; inventory levels and products; supplier information and data; testing techniques; processes; formulas; trade secrets; inventions; discoveries; improvements; specifications; data, know-how, and formats; marketing plans; pending projects and proposals; business plans; computer processes; computer programs and codes; technological data; strategies; forecasts; budgets; and projections.
(b) Protection of Confidential Information. Executive agrees that at all times during and after his employment by Employer, Executive will keep confidential and not disclose to any third party or make any use of the Confidential Information of Employer or its Customers, except for the benefit of Employer or its Customers and in the course of his employment. In the event Executive is required by law to disclose such information described in this paragraph, Executive will provide Employer and its legal counsel with immediate notice of such request so that Employer may consider seeking a protective order. For purposes of this Agreement, the disclosure of any Confidential Information, at any time except as required by law, shall be considered to be "unfair competition." Executive also agrees not to remove or permit the removal of Confidential Information from Employer's place of business without the express written authorization of an officer (other than himself) of Employer or its authorized representative. Executive acknowledges that he is aware that the unauthorized disclosure of Confidential Information of Employer or its Customers may be highly prejudicial to their interests, an invasion of privacy, and an improper disclosure of trade secrets and financial information in violation of state and federal law.
(c) Return of Property. In the event Executive's employment with Employer is terminated (voluntarily or otherwise), Executive agrees to inform Employer of all Employer property, documents and other data relating to his employment which is in his possession and control and to deliver promptly all such property, documents and data to Employer.
(d) Sanctions for Unauthorized Taking of Trade Secrets. Executive understands that taking of Employer's trade secrets is a crime and could also result in civil liability under the Washington Trade Secrets Act and that willful misappropriation may result in an award against Executive of double the amount of the Employer's damages and Employer's attorney fees for collecting such damages.
(e) Notice of Immunity. Notwithstanding any other provision of this Agreement:
(i) The Executive will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed under seal in a lawsuit or other proceeding.
(ii) If the Executive files a lawsuit for retaliation by the Employer for reporting a suspected violation of law, the Executive may disclose the Employer's trade secrets to the Executive's attorney and use the trade secret information in the court proceeding if the Executive: (A) files any document containing trade secrets under seal; and (B) does not disclose trade secrets except pursuant to court order.
(f) Injunctive Relief. Executive acknowledges that breach of this section may cause Employer irreparable harm for which money is inadequate compensation. Executive therefore agrees that Employer will be entitled to injunctive relief consistent with Section 15 below, without the necessity of posting a bond, to enforce this section and this Agreement, in addition to damages and other available remedies, and Executive consents to such injunctive relief in accordance with Section 15 below.
10. DISCOVERIES AND INVENTIONS; WORK MADE FOR HIRE
Executive agrees that upon conception and/or development of any discovery, invention, improvement, software, writing or other material or design that: (i) relates to the business of Employer, or (ii) relates to Employer’s actual or demonstrably anticipated research or development, or (iii) results from any work performed by Executive for Employer, Executive will assign to Employer the entire right, title and interest in and to any such discovery, invention, improvement, software, writing or other material or design. Executive has no obligation to assign any discovery, invention, improvement, software, writing or other material or design that Executive conceives and/or develops entirely on Executive’s own time without using Employer’s equipment, supplies, facilities, or trade secret information unless the discovery, invention, improvement, software, writing or other material or design: (A) relates to the business of Employer, or (B) relates to Employer’s actual or demonstrably anticipated research or development, or (C) results from any work performed by Executive for Employer. Executive agrees that any discovery, invention, improvement, software, writing or other material or design that relates to the business of Employer or relates to Employer’s actual or demonstrably anticipated research or development which is conceived or suggested by Executive, either solely or jointly with others, within one year following termination of the Executive’s employment with Employer shall be presumed to have been so made, conceived or suggested in the course of such employment with the use of Employer’s equipment, supplies, facilities, and/or trade secrets.
In order to determine the rights of Executive and Employer in any discovery, invention, improvement, software, writing or other material, and to insure the protection of the same, Executive agrees that during Executive’s employment, and for one year after termination of Executive’s employment with Employer, Executive will disclose immediately and fully to Employer any discovery, invention, improvement, software, writing or other material or design conceived, made or developed by Executive solely or jointly with others. Employer agrees to keep any such disclosures confidential. Executive also agrees to record descriptions of all work in the manner directed by Employer and agrees that all such records and copies, samples and experimental materials will be the exclusive property of Employer. Executive agrees that at the request of and without charge to Employer, but at Employer’s expense, Executive will execute a written assignment of the discovery, invention, improvement, software, writing or other material or design to Employer and will assign to Employer any application for letters patent or for trademark registration made thereon, and to any common-law or statutory copyright therein; and that Executive will do whatever may be necessary or desirable to enable Employer to secure any patent, trademark, copyright, or other property right therein in the United States and in any foreign country, and any division, renewal, continuation, or continuation in part thereof, or for any reissue of any patent issued thereon. In the event Employer is unable, after reasonable effort, and in any event after 10 business days, to secure Executive’s signature on a written assignment to Employer of any application for letters patent or to any common-law or statutory copyright or other property right therein, whether because of the Executive’s physical or mental incapacity or for any other reason whatsoever, the Executive irrevocably designates and appoints the Corporate Secretary of Employer as Executive’s attorney-in-fact to act on Executive’s behalf to execute and file any such application and to do all other lawfully permitted acts to further the prosecution and issuance of such letters patent, copyright or trademark.
Executive acknowledges that, to the extent permitted by law, all work papers, reports, documentation, drawings, photographs, negatives, tapes and masters therefor, prototypes and other materials (hereinafter, “items”) (including, without limitation, any and all such items generated and maintained on any form of electronic media) generated by Executive during Executive’s employment with Employer shall be considered a “work made for hire” and that ownership of any and all copyrights in any and all such items shall belong to Employer. The item will recognize Employer as the copyright owner, will contain all proper copyright notices, e.g., “(creation date) First Northwest Bancorp, All Rights Reserved,” and will be in condition to be registered or otherwise placed in compliance with registration or other statutory requirements throughout the world.
To the maximum extent permitted under applicable law and the Company's and the Bank's bylaws (as may be amended from time to time), Employer shall indemnify and hold harmless Executive in the event that the Executive is made a party or threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (a "Proceeding"), other than any Proceeding initiated by the Executive or the Employer related to any contest or dispute between the Executive and the Employer or any of its affiliates with respect to this Agreement or the Executive's employment hereunder, by reason of the fact that the Executive is or was a director or officer of the Company or the Bank, or any affiliate of the Company or the Bank, from and against any liabilities, costs, claims, expenses, judgments, fines, or settlements, including all costs and expenses incurred in defense of any Proceeding (including attorney fees). Costs and expenses incurred by the Executive in defense of such Proceeding (including attorneys' fees and expenses) shall be paid by the Employer in advance of the final disposition of such litigation upon receipt by the Employer of: (i) a written request for payment; (ii) appropriate documentation evidencing the incurrence, amount, and nature of the costs and expenses for which payment is being sought; and (iii) an undertaking adequate under applicable law made by or on behalf of the Executive to repay the amounts so paid if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company or the Bank under this Agreement.
Employer or any successor to the Employer shall purchase and maintain, at its own expense, directors' and officers' liability insurance providing coverage to the Executive on terms that are no less favorable than the coverage provided to other directors and similarly situated executives of the Employer.
12. CLAWBACK PROVISIONS
The Executive agrees that any compensation provided by the Employer to Executive is subject to recoupment or clawback under any applicable clawback or recoupment policy that is generally applicable to the Company's executives, as may be in effect from time to time, or as required by law.
Any notice, request, demand, or other communication required or permitted hereunder shall be deemed to be properly given when personally served in writing, when deposited in the U.S. mail, postage prepaid, or when communicated to a public telegraph company for transmittal, addressed as follows:
First Northwest Bancorp/First Fed Bank
Attention: Board of Directors
First Fed Bank
105 W Eighth Street
Port Angeles, WA 98362
3539 NW 67th St.
Seattle, WA 98177
Any party hereto may change its or his address for purposes of this section by giving notice in accordance herewith.
14. BENEFIT OF AGREEMENT
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective executors, administrators, successors and assigns.
15. GOVERNING LAW; ARBITRATION.
This Agreement is made with reference to and is intended to be construed in accordance with the laws of the State of Washington. Any dispute or controversy arising under or in connection with this Agreement must be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding the foregoing, the Employer may resort to the Superior Court of Clallam County, Washington, for injunctive and other relief as available if Executive engages in conduct during or after termination of this Agreement that amounts to a violation of Section 8 or Section 9, a violation of the Washington Trade Secrets Act, or interference with the business expectancies of Employer.
16. CAPTIONS AND PARAGRAPH HEADINGS
Captions and paragraph headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it.
17. INVALID PROVISIONS
Should any provision of this Agreement for any reason be declared invalid, void, or unenforceable by a court of competent jurisdiction, the validity and binding effect of any remaining portions shall not be affected, and the remaining portions of this Agreement shall remain in full force and effect as if this Agreement had been executed with said provision eliminated.
No waiver of any obligation of any party hereto under this Agreement shall be effective unless in a writing specifying such waiver and executed by the other party. No waiver of any right or remedy of any party hereto under this Agreement shall be effective unless in a writing specifying such waiver and executed by such party. A waiver by any party hereto of any of its rights or remedies under this Agreement on any occasion shall not be a bar to the exercise of the same right or remedy on any subsequent occasion or of any other right or remedy at any time.
19. ENTIRE AGREEMENT
This Agreement contains the entire Agreement of the parties and, in consideration for the Employer to enter into this Agreement, supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Executive by Employer, except to the extent that it is contemplated that Executive and Employer may enter into one or more agreements relating to equity-based compensation. Each party to this Agreement acknowledges that no representations, promises, or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which is not embodied herein, and that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding. This Agreement may not be modified or amended by oral agreement, but only by an agreement in writing signed by the Employer and Executive.
20. IRC SECTION 409A COMPLIANCE
The severance payments and other benefits under this Agreement are intended to be exempt from the requirements of Section 409A of the Code by reason of all payments under this Agreement being "short-term deferrals" within the meaning of Treasury Regulation Section 1.409A-1(b)(4). All provisions of this Agreement shall be interpreted in a manner consistent with preserving this exemption. If Executive is a "specified employee" as defined in Section 409A of the Code, and U.S. Treasury regulations promulgated thereunder ("Section 409A Rules"), then any amounts subject to the Section 409A rules that are otherwise required to be paid to him upon his separation from service (as defined in the Section 409A Rules) shall not be paid until the date that is six months after the date of his separation from service or, if earlier, the date of his death. To the extent that this Agreement provides for the reimbursement of specified expenses incurred, such reimbursement will be made in accordance with the provisions of the Agreement (or other applicable plan or policy), but in no event later than the last day of the taxable year following the taxable year in which the expense was incurred. The amount of expenses eligible for reimbursement or in-kind benefits provided by Employer in any taxable year will not affect the amount of expenses or in-kind benefits to be reimbursed or provided in any other year. The term "termination," when used in reference to termination of employment, shall mean "separation from service," as defined in the Section 409A Rules.
21. ATTORNEY FEES AND COSTS
In the event of litigation, arbitration or any other action or proceeding between the parties to interpret or enforce this Agreement or any part thereof or otherwise arising out of or relating to this Agreement, the prevailing party shall be entitled to recover its costs related to any such action or proceeding and its reasonable fees of attorneys, accountants and expert witnesses incurred by such party in connection with any such action or proceeding. The prevailing party shall be deemed to be the party which obtains substantially the relief sought by final resolution, compromise or settlement, or as may otherwise be determined by order of a court of competent jurisdiction in the event of litigation, an award or decision of one or more arbitrators in the event of arbitration, or a decision of a comparable official in the event of any other action or proceeding.
EXECUTIVE AND EMPLOYER AGREE THAT BY ENTERING INTO THIS AGREEMENT, EXECUTIVE AND EMPLOYER KNOWINGLY AND VOLUNTARILY WAIVE THEIR RIGHTS TO A TRIAL BY A JUDGE OR JURY. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT AND HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HIS CHOICE BEFORE SIGNING THIS AGREEMENT.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
FIRST NORTHWEST BANCORP
By: /s/ Stephen E. Oliver
FIRST FED BANK
By: /s/ Stephen E. Oliver
/s/ Matt Deines