SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 24,2000
COWLITZ BANCORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 0-23881 91-152984
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
927 Commerce Avenue, Longview, Washington 98632
(Address of principal executive office)
(360) 423-9800
(Registrant's telephone number including area code)
Item 5. Other Events
On March 24, 2000, Cowlitz Bancorporation and Cowlitz Bank entered into a
Severance Agreement and Release with Charles Jarrett. Mr. Jarrett had been
President and Chief Operating Officer of Cowlitz Bancorporation and President
and Chief Executive Officer of Cowlitz Bank. Mr. Jarrett resigned those
positions effective March 22, 2000. In addition, he resigned as a director of
Cowlitz Bank effective March 22, 2000, and as a director of Cowlitz
Bancorporation effective April 30, 2000. Under the Severance Agreement, Mr.
Jarrett will receive 24 monthly payments of $21,228.52 each beginning in April,
2000, and ending in March, 2002. Mr. Jarrett will also receive paid medical
coverage through March, 2002, and certain retirement benefits to which he was
entitled under Cowlitz Bancorporation plans. All unvested stock options
previously granted to Mr. Jarrett were fully vested, and Mr. Jarrett has until
September 18, 2000, to exercise such options. Mr. Jarrett has options to acquire
up to 217,500 shares of Cowlitz Bancorporation common stock at prices ranging
from $4.94 to $7.94 per share. Prior to exercising any options or selling any
shares, Mr. Jarrett must give notice to Cowlitz Bancorporation which has the
right to pay for such options or to purchase such shares.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
10.1 Severance Agreement and Release between Cowlitz Bancorporation and
Charles W. Jarrett.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COWLITZ BANCORPORATION
By: /s/ Benjaminia Namatinia
Benjamin Namatinia
Chairman and Chief Executive Officer
SEVERANCE AGREEMENT AND RELEASE
This Agreement is entered into by and between Cowlitz Bank, a Washington
chartered bank (the "Bank"), Cowlitz Bancorporation, a Washington corporation
("Bancorporation") (with the Bank and Bancorporation jointly referred to herein
as the "Company"),and Charles W. Jarrett ("employee"), to be effective as
provided herein.
WHEREAS, employee has been employed as President and Chief Operating Officer of
Bancorporation and President and Chief Executive Officer of the Bank and is
party to a certain employment agreement with the Company dated as of January 1,
1998; and
WHEREAS, employee serves on the board of directors of the Bank and
Bancorporation; and
WHEREAS, employee desires to resign his employment with the Bank and
Bancorporation and his positions as a director of the Bank and of
Bancorporation; and
WHEREAS, during the course of employment and as a director of the Company
employee had access to valuable trade secrets and confidential information of
the Company, the use or disclosure of which in competition with the Company or
otherwise would be detrimental to the business of the Company; and
WHEREAS, the Company and Employee desire to terminate the employment
relationship on amicable grounds and the employee desires to obtain the
severance benefits provided for herein, some or all of which employee may not
otherwise be entitled to receive; therefore, the parties agree as follows:
1. Termination of Employment. Employee's resignation shall be deemed effective
and his employment with the Company shall terminate effective March 22, 2000
(the "termination date"), and all entitlement to further salary and benefits
will cease as of that date except as expressly provided herein.
2. Severance Benefits. In consideration of the representations, promises and
covenants of employee herein, each of which are acknowledged by employee to be a
material inducement to the Company to enter into this Agreement and provide the
consideration specified herein, employee shall be provided the following
severance benefits:
A. Severance Pay. Employee shall be paid at his current monthly base salary of
nineteen thousand eight hundred and fifty six dollars and twenty-five cents
($19,856.25) (the "base salary") through March 31, 2000. Said payment shall be
made on the Company's normal payroll schedule on the first regular pay date
after the effective date of this Agreement. Employee shall be paid a monthly
amount for twenty-four months commencing April, 2000 and continuing through
March, 2002, with such payments to be made on the last business day of each such
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Severance Agreement - 2
month. The amount of each such monthly payment shall be $21,228.52. Payments
specified herein are subject to lawfully required payroll withholdings and
employee shall annually be issued a W-2 reflecting such payments and
withholdings.
B. Vacation and Holiday Pay. Employee shall be paid for four weeks of vacation
and one floating holiday. The parties agree that the amount to be paid for all
such vacation and the floating holiday is equal to the monthly base pay for one
month. Said payment shall be made on the Company's normal payroll schedule on
the first regular pay date after the effective date of this Agreement, and is
subject to lawfully required payroll withholdings.
C. Medical Insurance Premiums. The Company shall bear the cost of maintaining
employee on its group medical insurance plan through March, 2002, including the
cost of any dependents of employee for whom the Company paid the cost of
insuring as of the termination date. Nothing herein shall preclude the Company
from changing carriers or altering coverage so long as employee is provided the
same coverage as generally available to other employees of the Company. In the
event employee cannot be covered under the applicable plan following the 18
months after the termination date during which employee is eligible for COBRA
coverage, then for each remaining month through March, 2002 the Company shall
pay employee an amount equal to the monthly premium cost of insuring employee
and any covered dependents under the Company's plan in effect at that time. The
Company's obligation to provide insurance coverage or pay the cost of premiums
hereunder shall terminate if employee obtains alternative coverage from a
subsequent employer.
D. Retirement Benefits. Employee has been a participant in certain retirement
and/or deferred compensation plans of the Company. As to all such plans Employee
shall be provided, to the extent applicable, retirement benefits, service
credit, and/or contributions to be made on his behalf by the Company under such
plans for the year 1999 and pro rata for the year 2000 through March 31, 2000,
the amount of which contributions shall be $25,000 for the year 1999 and $12,250
for pro rata portion of the year 2000. Such amounts shall be paid by March 31,
2000.
E. Automobile Lease. The Company currently leases an automobile for employee's
use. The Company agrees to allow employee to have such lease transferred to
employee. Employee shall have until April 22, 2000 to arrange transfer of the
lease, and shall return the automobile to the Company if the lease is not
transferred by said date. Employee shall be responsible for any costs associated
with transferring the lease and the transfer documents must release the Company
from any further liability or responsibility for the automobile and lease
payments after the transfer date.
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Severance Agreement - 3
F. Stock Options: Employee shall be deemed fully vested in and eligible to
exercise all presently unvested stock options previously granted to employee.
The number and exercise price of all vested options currently held by employee
and all unvested options that vest pursuant to this Section 2.F are set forth on
Exhibit A hereto. Employee shall be eligible to exercise such options for a
period of one hundred and eighty days following the termination date, and any
options not exercised within such period shall lapse and be of no further
effect. In the event employee elects to exercise any options as permitted
hereunder, employee shall provide written notice of such election to the
Company, which notice shall identify the stock option grant that is being
exercised, specify the number of shares sought to be acquired and the applicable
exercise price, and be accompanied by a cashier's check for the total exercise
price for the shares to be acquired. If the options are being exercised to sell
the shares to a third party pursuant to a bona fide written offer, verifiable
evidence of such offer shall also be provided with the notice. Upon receipt of
such notice the Company shall then have the right to either issue stock pursuant
to employee's notice of election, or to cancel the option as to the number of
shares of stock specified in employee's notice of election. The Company may
exercise its right to cancel by providing employee written notice of
cancellation within two business days after receiving employee's notice of
election, in which event the Company shall return to employee the amount
tendered to exercise the options and pay employee an amount equal to (1) the
difference between (a) the greater of the closing price of the Company's stock
on the date the notice of exercise is received or the price per share offered
employee in a bona fide written offer from a third party, and (b) the per share
exercise price of the option; multiplied by (2) the number of shares specified
in employee's notice of election. Payment to employee for cancellation of an
option(s) shall be made within two business days following the Company's notice
of election to cancel. Any option(s) cancelled by the Company shall have no
further force or effect. Except to the extent expressly provided herein, the
Company's Stock Option Plan and any agreements by which Employee was granted
stock options shall be controlling with respect to stock options and the
exercise thereof. In connection with the exercise of any option, the Company
will not require any investment letter or representation from employee, except
to the extent that, in the opinion of Company's counsel, the absence of such a
letter or representation would result in a violation of applicable federal or
state securities laws or regulations. The Company agrees that it will authorize
sale of stock obtained by employee exercising options within six months of the
grant date unless, in the opinion of the Company's counsel, sale within such six
month period would violate applicable federal or state securities laws or
regulations.
3. Stock Purchase Rights. Employee presently holds shares of the common stock of
the Company and has the option to purchase additional shares of stock as
specified in Section 2. With respect to all such shares of stock currently held
by employee and any shares of stock acquired through the exercise of stock
options specified on Exhibit A or otherwise acquired by Employee, employee
agrees that he shall not sell, assign, transfer or otherwise convey any such
shares except pursuant to this Section 3. Before employee sells, assigns,
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Severance Agreement - 4
transfers or conveys shares of stock (jointly, a "stock sale") he shall first
give written notice to the Company of his intent, specifying the number of
shares subject to the intended stock sale, and, if other than a sale on the open
market, verifiable evidence of the bona fide offer to purchase from a third
party. The Company shall have the right to purchase such shares at the greater
of the closing price of the Company's stock on the date the notice of exercise
is received or the price per share offered employee in the bona fide written
offer. The Company shall provide employee written notice of its intent to
exercise its purchase right within two business days after receiving employee's
notice, and closing of the transaction shall occur within three business days
thereafter. If the Company fails to provide employee notice of its intent to
purchase employee's shares within the time specified then employee may engage in
a stock sale with respect to the number of shares specified in employee's
notice. The Company's right to purchase shares of stock hereunder shall expire
five years from the termination date.
4. Board Memberships. Employee hereby resigns from the board of directors of the
Bank effective March 22, 2000, and from the board of directors of Bancorporation
effective April 30, 2000. Employee shall receive directors' compensation at the
rate presently in effect through the end of the respective months in which his
resignation are effective.
5. Consulting Relationship. At employee's election, employee may serve as a
consultant to the Company for the period through which he receives severance pay
hereunder. Employee's election to serve as a consultant shall not obligate
employee to undertake any specific projects or tasks for the Company, and shall
not entitle employee to any further or additional consideration from the
Company. Employee shall not represent himself as an agent of the Company and
shall not have the authority to bind or obligate the Company in any respect.
6. Release of Claims. Employee expressly waives and releases any and all claims,
causes of action, and damages employee has or may have against the Company, its
officers, agents, employees, and directors, unasserted or unasserted, known or
unknown, arising from or in any way relating to employee's employment,
employment agreement, or the termination of such employment and agreement,
including without limitation common law claims for breach of contract and/or
torts, and claims under any law, statute, ordinance or regulation of the United
States and any state, county, municipality or other governmental entity,
specifically including Title VII of the Civil Rights Act of 1964 as amended, the
Fair Labor Standards Act, the Equal Pay Act, the Family and Medical Leave Act,
the Americans with Disabilities Act, the Washington Law Against Discrimination,
any and all other laws regarding civil rights, and any other legal limitation on
the employment relationship. Employee agrees that employee is entitled to no
further compensation or consideration from the Company after the termination
date except as expressly provided in this Agreement. Such release does not cover
any claims under the federal Age Discrimination in Employment Act as amended.
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Severance Agreement - 5
7. Intellectual Properties.
A. Employee agrees all ownership, copyright, patent, trade secrecy, and other
rights in all works, programs, fixes, routines, inventions, ideas, designs,
manuals, improvements, discoveries, processes, customer lists or other
properties, and any improvements thereon (the "Intellectual Properties") made or
conceived by employee during the term and in the course of employee's engagement
by the Company were works made for hire, and are the rights and property solely
of the Company, whether developed independently by employee or jointly with
others, and whether or not developed or conceived during regular working hours
or at the Company's facilities, and whether or not the Company uses, registers,
or markets the same, and employee represents employee has disclosed and
delivered over to the Company any Intellectual Properties of which employee is
aware, and as to any of which employee later becomes aware employee shall
disclose and deliver over to the Company the same in writing or in such form and
manner as the Company may reasonably request.
B. To the extent that ownership of such Intellectual Properties has not
automatically vested in the Company, employee hereby irrevocably sells, assigns,
transfers and conveys to the Company employee's entire right, title and interest
in and to the Intellectual Properties made or conceived by employee during the
term and in the course of employee's engagement by the Company. Employee will
assist the Company as requested, at the Company's expense but without additional
compensation to employee, to further evidence and perfect, and to enforce, the
Company's rights in and ownership of the Intellectual Properties covered hereby,
including without limitation, the execution of additional instruments of
conveyance and assisting the Company with applications for patents or copyright
or other registrations. If employee fails or refuses to execute any such
instruments, employee hereby appoints the Company as employee's attorney-in-fact
to act on employee's behalf and to execute such instruments. This appointment
shall be irrevocable and deemed to be a power coupled with an interest.
C. In accordance with Section 49.44.140 of the Revised Code of Washington, this
Agreement (other than Subsection 7 D.) does not apply to, and employee has no
obligation to assign or offer to assign to the Company, any invention for which
no Company trade secrets and no equipment, supplies, or facilities of the
Company were used and which was developed entirely on employee's own time,
unless: (i) the invention relates directly to the business of the Company, (ii)
the invention relates to actual or demonstrably anticipated research or
development work of the Company, or (iii) the invention results from any work
performed by employee for the Company.
D. If and to the extent that employee made use, in the course of employee's
engagement with the Company, of any items or Intellectual Properties previously
developed by employee or developed by employee outside of the scope of this
Agreement, employee hereby grants the Company a nonexclusive, royalty-free,
perpetual, irrevocable, worldwide license (with right to sublicense) to make,
use, sell, copy, distribute, modify, and otherwise to practice and exploit any
and all such items and Intellectual Properties.
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Severance Agreement - 6
8. Trade Secrets and Confidential Information. The employment agreement between
the parties dated January 1, 1998, specifies in section 15 certain obligations
of employee with respect to Confidential Information (as defined therein).
Employee agrees that he shall continue to be subject at all times to all such
obligations with respect to Confidential Information, and such obligations are
hereby incorporated herein. Employee represents and warrants that he has
returned to the Company all documents and other materials which contain or
pertain to the Confidential Information.
9. Non-competition. The employment agreement between the parties dated January
1, 1998, specifies in section 16 and 17, respectively, the duty of the employee
not to compete and remedies available in the event of breach of employee's duty
not to compete or to maintain confidential information. The parties intend such
provisions to remain in effect pursuant to their terms, incorporate said
provisions herein, and employee reaffirms his obligations thereunder.
Notwithstanding the foregoing, employee shall be permitted to provide consulting
services on a defined project basis for specific time periods for entities that
"compete" with the Company (as defined in said Employment Agreement), if
employee first obtains written approval from the Company to undertake such
consulting activity. The Company's approval will not be unreasonably withheld;
provided, withholding approval shall not be deemed unreasonable if the nature of
the consulting services or the party to which the services would be provided
indicate to the Company that the reasonably contemplated potential competitive
harm would be more than de minimis. The parties agree that the geographic
restriction set forth in section 16 of the employment agreement shall be limited
to those areas that are within 40 miles of any geographic area in which the
Bancorporation or the Bank or its affiliates conduct business as of the
termination date.
10. Nondisparagement. Employee agrees to refrain from making any type of
negative or disparaging comments about, or in any way casting in an unfavorable
light, the business operations or conduct of the Company and its past or present
directors, officers, employees, representatives, and agents. The Company agrees
to refrain from making any type of negative or disparaging comments about, or in
any way casting in an unfavorable light, the capabilities, performance or
conduct of the employee. The parties agree the Company shall issue a press
release in the form attached hereto as Exhibit B.
11. Binding Effect. Employee's rights and release of claims hereunder inure to
and will bind employee's heirs, successors, and assigns, and will benefit the
Company and its successors and assigns. The obligations of the Bank and
Bancorporation hereunder shall be binding on their respective successors and
assigns. No waiver of or forbearance to enforce any right or provision hereof
shall be binding unless in writing and signed by the party to be bound, and no
such waiver or forbearance in any instance shall apply to any other instance or
to any other right or provision.
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Severance Agreement - 7
12. Governing Law; Venue. This Agreement will be governed by the laws of the
State of Washington without regard to its conflicts of laws rules to the
contrary. The parties hereby consent to the exclusive jurisdiction and venue of
the state and federal courts sitting in Washington for all matters and actions
arising under or relating to this Agreement, employee's employment, and the
termination thereof. The prevailing party in any such action shall be entitled
to reasonable attorneys' fees, costs and expenses incurred in connection with
such litigation. No term hereof shall be construed to limit or supersede any
other right or remedy of the Company under applicable law with respect to the
protection of trade secrets or otherwise.
13. Severability. If any provision of this Agreement is held to be invalid or
unenforceable to any extent in any context, it shall nevertheless be enforced to
the fullest extent allowed by law in that and other contexts, and the validity
and force of the remainder of this Agreement shall not be affected.
14. Final Agreement. This Agreement represents the final agreement of the
parties as to all matters addressed herein and supersedes all previous
agreements, negotiations, and discussions by the parties regarding the subject
matters addressed herein.
15. Arbitration.
A. Any controversy or claim between or among the Company and employee, including
but not limited to those arising out of or relating to this Agreement, shall be
determined by arbitration in accordance with the Commercial Arbitration Rules
with Expedited Procedures, as in effect on the date hereof except as modified by
this paragraph, of the American Arbitration Association. Matters of discovery
shall be governed by the Federal Rules of Civil Procedure and all statutes of
limitation that would otherwise be applicable shall apply to any arbitration
proceeding under this paragraph. Judgment upon the award rendered may be entered
in any court having jurisdiction. Each party shall share equally in payment of
the costs and fees of the any arbitration under this paragraph. Neither the
decision rendered in any arbitration nor any information produced by any party
in connection with any arbitration proceedings described herein shall be
disclosed to any other person, except (i) to the officers, agents, counsel and
advisors of any party or arbitrator and (ii) as may be compelled by a court of
competent jurisdiction or as otherwise required by law.
B. In addition to its rights set forth in Subsection 15 A, the Company may
obtain provisional or interim remedies from a court of competent jurisdiction,
including without limitation a temporary restraining order or injunction, with
respect to claims by the Company relating to sections 8, 9 and 10 of this
Agreement. Any issues of law or fact which arise in connection with the exercise
by the Company of its rights and remedies as contemplated by this Subsection 15
B may be determined, at the Company's election, by arbitration in accordance
with Subsection 15 A above. By exercising any rights and remedies under this
Subsection 15 B, neither party shall waive the provisions of Subsection 15 A
above.
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Severance Agreement - 8
16. Effective Date. This Agreement shall be effective on the date executed by
employee and delivered to the Company. The Company agrees to provide to Employee
no later than April 24, 2000, a certified copy of resolutions or consents
adopted by the board of directors of the Bank and Bancorporation confirming and
ratifying this Agreement.
Cowlitz Bank:
By: _____________________________
Its: _______________________
Dated: _______________________
Cowlitz Bancorporation:
By: _____________________________
Its: _______________________
Dated: _______________________
Employee:
_________________________________
Charles W. Jarrett
Dated: _____________
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EXHIBIT A
Options Granted to Charles Jarrett
Number of Shares Per Share
Date of Grant Covered by Option Exercise Price
9/30/97 192,500 $5.71
12/31/98 10,000 $7.94
12/31/99 15,000 $4.94
