Document:

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                                                                  EXHIBIT 10.17

                             BOX HILL SYSTEMS CORP.

August 2, 1999

161 Avenue of the Americas
New York, NY 10013

RE:      EMPLOYMENT TERMS

Dear Dr. Benjamin Monderer:

Box Hill Systems Corp., a New York corporation, (the "Company") is pleased to
offer you employment on the following terms.

You will serve as Executive Vice President, Applications
Engineering/Professional Services and a member of the Board of Directors of
the Company, and will be responsible for such duties as are normally
associated with such positions. You will not be paid any additional
compensation for your services as a Director of the Company. During your
service with the Company, you will devote substantially all of your business
time to the Company. You will report to the Chief Executive Officer(s) and
will be subject to the direction and policies from time to time reasonably
established by the Chief Executive Officer(s).

You will work out of our principal offices located in New York. You will be
expected to travel as reasonably required by your duties. The Company will
reimburse you for your reasonable travel, entertainment, business and other
expenses incurred in the course of your employment in accordance with Company
policy.

You shall receive an initial base salary of $300,000 per year, payable in
regular periodic payments in accordance with Company policy, less required
payroll deductions and withholdings. The Compensation Committee of the Board
("Compensation Committee") shall determine any changes to your base salary.
You will be entitled to not less than 4 weeks of paid vacation per year, in
addition to all Company holidays.

Upon meeting all applicable eligibility requirements, the Company will
provide you with a competitive comprehensive benefits package including
health and dental insurance. The Company will also pay for health and dental
insurance for your spouse and children under the age of 21. You will be
eligible to participate in the Company's 401(k) plan and the Company's equity
incentive plans. In addition to the foregoing, you will receive all benefits
the Company may provide from time to time to other senior executive level
employees.

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August 2, 1999
Page 2

You shall be eligible to receive a performance bonus. The award of any
performance bonus shall be at the discretion of the Compensation Committee.
Attached as Exhibit C are the bonus levels and criteria for the remainder of
fiscal year 1999, and the year 2000.

After December 31, 2000, your base salary and annual bonus levels will be
subject to changes as determined by the Committee.

Your employment with the Company will be at-will in that you may terminate
your employment with the Company at any time and for any reason whatsoever.
Likewise, the Company, by a written resolution duly adopted by a majority of
the Board, may terminate your employment at any time and for any reason
whatsoever. This at-will arrangement may not be changed except by a writing
signed by you and a duly authorized officer of the Company.

Upon termination of your employment with the Company, you will be paid your
then current accrued base salary to and including the date of termination,
any accrued vacation pay and other benefits through the date of termination
and all compensation previously deferred by you, if any (together with
accrued interest and earnings thereon).

In addition, if the Company terminates your employment without Cause (defined
below) or you resign for Good Reason (defined below), then so long as (i) you
(or your representative) shall have furnished to the Company an executed
release and waiver of claims in the form attached hereto as Exhibit A (the
"Release") and (ii) the Effective Date provided for in the Release shall have
occurred, the Company shall pay to you, in a single lump sum payment, an
aggregate amount equal to one hundred percent (100%) of your then current
annual base salary, with such payment to be made concurrently with the
Effective Date provided for in such executed Release (subject to required
payroll deductions and withholdings.

If your employment with the Company is terminated for Cause or you resign,
other than for Good Reason, you shall not be entitled to receive any
compensation following such termination other than salary and vacation
accrued on or prior to the termination date and any reimbursement expenses
due to you for which you shall not have been previously reimbursed.

For purposes of this letter agreement the following definitions shall apply:

         (1) "Cause" shall be limited to the occurrence of any of the
following events, as set forth in a written resolution duly adopted by a
majority of the Board: (i) your personally continuing to engage in conduct
which causes material harm to the Company after having been given thirty (30)
days written notice of such determination by the Board (ii) your

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August 2, 1999
Page 3

indictment for violation of any Law constituting a felony (including the
Foreign Corrupt Practices Act of 1977) or the foreign equivalent thereof,
(iii) your continuing failure to perform the lawful directives of the Board
(consistent with the terms of this letter) or your duties and
responsibilities hereunder, in each case in all material respects and after
having been given thirty (30) days written notice of such determination by
the Board which written notice shall specifically identify the directive
alleged not to have been followed or the provision of this letter which it is
alleged you have continually failed to substantially perform, the bases for
the Board's determination thereof and the specific corrective action that the
Board proposes that you take; and (iv) your incurable breach of any material
element of the Company's Confidential Information and Inventions Agreement.
In no event shall your death or disability constitute Cause or the basis for
any termination therefor;

         (2) "Good Reason" shall mean (i) a reduction in your base salary,
(ii) the relocation of your full-time office to a location other than sixty
miles of New York City, (iii) a violation or breach by the Company, in any
material respect, of any of its obligations under this letter so long as you
have given the Company thirty (30) days notice of such breach, and the
Company has not cured the breach during that thirty (30) day period,

         (3) "Disability" shall mean your failure or inability, for reasons
of health, to perform your usual and customary duties on behalf of the
Company in the usual and customary manner for a total of more than 90
consecutive business days (excluding Saturdays, Sundays and Holidays (days
during which the Company is closed due to a recognized a holiday)).

In the event of any termination of your employment with the Company other
than for death or Disability, the Company shall have the right to retain you
as a consultant for a period of one (1) year from the date of such
termination (the "Consulting Period"). During the Consulting Period, the
Company shall be entitled to require you to be available to render consulting
services for up to twelve (12) days of consulting during such one (1) year
period, it being understood that the scheduling of such consulting services
shall not interfere with your work schedule for your principal employer. The
Company shall schedule such consulting for days, or portions thereof, and
places reasonably satisfactory to you, and unless you otherwise agree, all
consulting services shall be rendered in New York. In exchange for your
availability during the Consulting Period (whether or not the Company
actually schedules consulting activities), the Company shall pay you, in four
(4) equal payments (the "Consulting Payments"), an aggregate amount equal to
twenty five percent (25%) of your annual base salary in effect as of the date
of your termination, with the first such payment to be made within five (5)
business days following commencement of the Consulting Period and the next
three (3) payments to be made on the first day of each successive calendar
quarter following the date of termination. The Company shall

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August 2, 1999
Page 4

also reimburse you for your reasonable expenses incurred in carrying out your
consulting duties hereunder.

During the time that you are employed by the Company pursuant hereto, and
during the Consulting Period, but (without limitation of your rights and
remedies under this letter agreement) only for so long as the Company
continues to employ you in accordance with the terms hereof or make
Consulting Payments in accordance with the immediately preceding paragraph,
as the case may be, you will not, without the Company's prior written
consent, directly or indirectly, (i) own, manage, operate, control or
participate in any material way in the ownership, management, operation or
control of, whether as an officer, employee, partner or otherwise, any
business which directly competes with the business of the Company or (ii)
solicit or induce any employee of the Company to leave the employ of the
Company (it being understood that placing "help-wanted" or similar ads in
newspapers or other media of general circulation or distribution shall not
constitute such a solicitation or inducement); provided that nothing in this
letter agreement shall restrict you from at any time (A) engaging in any
business where your primary focus is not computer storage, whether as an
owner, manager, operator, officer, employee, partner, control person or
otherwise or (B) beneficially owning less than two percent (2%) of the
outstanding equity interests in any publicly traded company.

The Company will indemnify you for all damages and costs that may be incurred
by you in connection with claims arising out of or relating to your acts or
omissions within the authorized scope of your employment. The Company shall
provide such indemnification, and shall advance your expenses incurred in
connection with any such claims as reasonably requested by you and as duly
approved by the Board from time to time, to the fullest extent permissible
under applicable law.

As a Company employee, you will be expected to abide by Company rules and
regulations. As a condition of employment, you will be required to sign and
comply with a Confidential Information and Inventions Agreement, a copy of
which is attached hereto as Exhibit B, which, among other things, prohibits
unauthorized use or disclosure of Company proprietary information.

The employment terms in this letter supersede any other agreements or
promises made to you by anyone, whether oral or written, and comprise the
final, complete and exclusive agreement between you and the Company. As
required by law, this offer is subject to satisfactory proof of your right to
work in the United States.

Please sign and date this letter, and return it to me as soon as possible if
you wish to accept employment at the Company under the terms described above.

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August 2, 1999
Page 5

We look forward to your favorable reply and to a productive and enjoyable
work relationship.

Sincerely,

BOX HILL SYSTEMS CORP.

By:   /s/ Philip Black
     ------------------------

Name: /s/ Philip Black
     ------------------------

Title:   CEO
     ------------------------

ACCEPTED BY:

/s/ Benjamin Monderer
------------------------
Dr. Benjamin Monderer

August 2, 1999
------------------------
         Date

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                                    EXHIBIT A

                          RELEASE AND WAIVER OF CLAIMS

         In consideration of the payments and other benefits set forth in my
employment offer letter, to which this form is attached, I hereby furnish Box
Hill Systems Corp., (the "Company") with the following release and waiver.

         I hereby release, and forever discharge the Company, its officers,
directors, agents, employees, stockholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys' fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising at any
time prior to and including my employment termination date with respect to
any claims relating to my employment and the termination of my employment,
including but not limited to, claims pursuant to any federal, state or local
law relating to employment, including, but not limited to, discrimination
claims, claims under the California Fair Employment and Housing Act, and the
Federal Age Discrimination in Employment Act of 1967, as amended ("ADEA"),
the Federal Americans with Disabilities Act ("AD") or claims for wrongful
termination, breach of the covenant of good faith, contract claims, tort
claims, and wage or benefit claims, including but not limited to, claims for
salary, bonuses, commissions, stock, stock options, vacation pay, fringe
benefits, severance pay or any form of compensation.

         I also acknowledge that I have read and understand Section 1542 of
the California Civil Code which reads as follows: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor." I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against
the Company.

         I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this waiver and release is knowing and
voluntary, and that the consideration given for this waiver and release is in
addition to anything of value to which I was already entitled as an employee of
the Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the waiver and release granted
herein does not relate to claims which may arise after this release and waiver
is executed; (b) I have the right to consult with an attorney prior to executing
this release and waiver (although I may choose voluntarily not to do so); and
(c) if on the date of execution of this release and waiver I am age 40 or older,
then (I) I have twenty-one (21) days from the date I receive this release and
waiver, in which to consider this release and waiver (although I may choose
voluntarily to execute this release and waiver earlier); and (II) I have seven
(7) days following the execution of this release and waiver to revoke my consent
to this release and waiver. This release and waiver shall be effective as of the
date of execution hereof; provided that if on the date of execution of this
release and waiver I am age 40 or older, then this release and waiver shall not
be effective until the foregoing seven (7) day revocation period has expired.
The date as of which this release and waiver is effective as aforesaid shall be
deemed the "Effective Date" hereof.

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Date: __________________                             By:______________________

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                                    EXHIBIT B

                CONFIDENTIAL INFORMATION AND INVENTIONS AGREEMENT

For purposes of this Agreement, "Box Hill" shall include Box Hill Systems
Corp., Artecon, Falcon, Storage Dimensions and any past, present or future
subsidiaries of those companies.

In consideration for my employment by Box Hill:

1.   I will not disclose to anyone outside of Box Hill, or use in other than Box
     Hill's business for the benefit of Box Hill any Box Hill Confidential
     Information or material relating to the business of Box Hill either during
     or after my employment at Box Hill, except with Box Hill's written
     permission. I also understand that information and materials received in
     confidence from third parties by Box Hill and its subsidiaries is included
     within the meaning of this paragraph.

2.   I will not disclose to Box Hill, or induce Box Hill to use, any
     confidential information or material belonging to others.

3.   I will comply, and do all things necessary for Box Hill to comply, with
     United States Government regulations and with provisions of contracts
     between the agencies of the United States Government of their contractors
     and Box Hill, which relate either to patent rights or to the safeguarding
     of information pertaining to the defense of the United States.

4.   I hereby assign to Box Hill my entire right, title and interest in any
     invention or idea, patentable or not, hereafter made or conceived solely or
     jointly by me:

     a.  while working at Box Hill in an executive, managerial, planning,
         technical, research or engineering capacity (including development,
         manufacturing, systems, applied science, sales or customer
         engineering); and

     b.  that relates in any manner to the actual or anticipated business of Box
         Hill or to Box Hill's actual or anticipated research and development,
         or is suggested by or results from any task assigned to me or work
         performed by me or on behalf of Box Hill; except any invention or idea
         which I cannot assign to Box Hill because of prior invention agreement
         with ____________________________ which is effective until
         __________________________. (give name and date or write "none")

5.   I agree that in connection with any invention or idea covered by paragraph
     4:

     a.  I will disclose it promptly to the Box Hill Management; and

     b.  I will, at Box Hill's request, promptly execute a specific assignment
         of title to Box Hill, and do anything else reasonably necessary to
         enable Box Hill to secure patent therefor in the United States and in
         foreign countries.

6.   I represent that I have indicated on the back of this form any inventions
     or ideas, not covered in paragraph 4, in which I have any right, title or
     interest, and which were previously

                                      1.

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     conceived either wholly or in part by me, but neither published nor
     filed in the United States Patent Office, and identified all of these.

7.   I agree to comply with Box Hill's Database Policy. The policy states that
     all information in databases, whether centrally located (e.g. Minx or
     Informix) or locally (e.g. Act!) are the property of Box Hill Systems and
     are considered confidential. This information includes but is not limited
     to customer contacts, customer lists, pricing, inventory, vendors, billing,
     shipping and customer service data. I will not transfer, reproduce or
     duplicate this confidential information outside of the Box Hill. This
     includes, but is not limited to, transmitting database information by
     email, transferring the information verbally or by hardcopy, or any other
     means. Additionally, I will not intentionally destroy any information in
     central or local databases.

8.   I understand and acknowledge that any breach of my obligations under this
     agreement will result in irreparable harm to Box Hill and hereby consent to
     the entry of injunctive relief to prevent or restrain any further violation
     of or harm to Box Hill's rights.

9.   I acknowledge receipt of a copy of this agreement, and agree that with
     respect to the subject matter hereof, it is my entire agreement with Box
     Hill, superceding any previous oral or written communications,
     representations, understanding or agreements with Box Hill or any official
     or representative thereof.

Signed:                    ____________________________________________________

Employee's Full Name:      ____________________________________________________

Witness:       ________________________________________________________________
              (Employee's Manager or other appropriate Box Hill representative)

Date:          ________________________________________________________________

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                                    EXHIBIT C

QUARTERLY PERFORMANCE BONUS

Each quarter, you shall be eligible for a performance bonus of up to 50% of your
base salary for such quarter (Quarterly Bonus). The Quarterly Bonus shall be
based on the following formula, and on the Company's Business Plan, as approved
by the Board of Directors, for such quarter:

FORMULA

1. REVENUE-BASED BONUS: Half of the Quarterly Bonus shall be based on revenue.
If the Company meets the Business Plan revenue goals for any given quarter, you
shall be entitled to half of the Quarterly Bonus (25% of the your base salary
for such quarter) for performance during that quarter. If the Company fails to
meet the Business Plan revenue goals for a given quarter, then the revenue-based
bonus shall be paid as follows:

         if the Company attains less than 75% of the Business Plan revenue
         goals, you shall not receive any revenue-based bonus for that quarter.
         For attaining levels of revenue between 75% and 100% of plan, you shall
         receive 2% of the total Quarterly Bonus for every 1% of revenue above
         75%.

2. INCOME-BASED BONUS: Half of the Quarterly Bonus is to be based on net income.
If the Company meets the Business Plan net income goals for any given quarter,
then you shall be entitled to half of the Quarterly Bonus (25% of the your
salary for such quarter) for performance during that quarter. If the Company
fails to meet the Business Plan net income goals for a given quarter, then the
net income-based bonus shall be paid as follows:

         0.5% of the Quarterly Bonus, payable for each 1% achieved of the net
         income line of the Business Plan, up to a maximum of 100%.

BUSINESS PLAN DETERMINATIONS

Third Quarter, 1999: You shall be granted full bonus (50% of base salary).

Fourth Quarter, 1999: You shall be granted a bonus pursuant to the formula set
forth above, based on the Business Plan for the Fourth Quarter, to be approved
by the Board during the Fourth Quarter.

Fiscal Year 2000: You shall be granted bonus pursuant to the formula set forth
above, based on the Business Plan for the Year 2000, to be approved by Board
during the First Quarter of 2000.<PAGE>

                                  EXHIBIT 10(H)

                      FIRST COMMUNITY FINANCIAL GROUP, INC.

EMPLOYEE STOCK OPTION PLAN

Purpose of the Plan. The purpose of this Employee Stock Option Plan ("Plan") is
to provide additional incentives to key employees of FIRST COMMUNITY FINANCIAL
GROUP, INC., a Washington corporation ("First Community") and any of its
existing or future Subsidiaries, thereby helping to attract and retain the best
available personnel for positions of responsibility with said corporations and
otherwise promoting the success of the business activities of First Community.
First Community intends that Options issued pursuant to this Plan shall
constitute either Incentive Stock Options within the meaning of Section 422 of
the Code or Nonqualified Stock Options

DEFINITIONS. AS USED IN THIS PLAN, THE FOLLOWING DEFINITIONS APPLY:

     "First Community" has the meaning set forth in paragraph 1 of this Plan.

     "Board" means the Board of Directors of First Community.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Common Stock" means First Community's common stock, currently with a par
     value of $2.50 per share.

     "Committee" has the meaning set forth in subparagraph 4(a) of this Plan.

     "Continuous Status as Employee" means the absence of any interruption or
     termination of service as an Employee. Continuous Status as an Employee
     shall not be considered interrupted in the case of sick leave, military
     leave or any other approved leave of absence.

     "Date of Grant" of an Option means the date on which the Committee makes
     the determination granting such Option, or such later date as the Committee
     may designate. The Date of Grant shall be specified in the Option
     agreement.

     "Employee" means any person employed by First Community, or a Subsidiary of
     First Community which is currently in existence or is hereafter organized
     or is acquired by First Community.

     "Exercise Price" has the meaning set forth in subparagraph 4(b)(2) of this
     Plan.

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     "Option" means a stock option granted under this Plan. Options shall
     include both Incentive Stock Options as defined under Section 422 of the
     Code and Nonqualified Stock Options, which refer to all stock options other
     than Incentive Stock Options.

     "Optionee" means an Employee who receives an Option.

     "Plan" has the meaning set forth in paragraph 1 of this Plan.

     "Parent" means any corporation owning at least eighty percent (80%) of the
     total voting power of the issued and outstanding stock of First Community,
     and eighty percent (80%) of the total value of the issued and outstanding
     stock of First Community.

     "Shareholder-Employee" means an Employee who owns stock representing more
     than ten percent (10%) of the total combined voting power of all classes of
     stock of First Community or of any Subsidiary or parent company. For this
     purpose, the attribution of stock ownership rules provided in Section
     424(d) of the Code shall apply.

     "Subsidiary" means any corporation of which not less than fifty percent
     (50%) of the voting shares are held by First Community or a Subsidiary,
     whether or not such corporation now exists or is hereafter organized or
     acquired by First Community or a Subsidiary.

STOCK SUBJECT TO OPTIONS

NUMBER OF SHARES RESERVED. The maximum number of shares which may be optioned
and sold under this Plan is 40,000 shares of the Common Stock of First Community
(subject to adjustment as provided in subparagraph 6(j) of this Plan). During
the term of this Plan, First Community will at all times reserve and keep
available a sufficient number of shares of its Common Stock to satisfy the
requirements of this Plan.

EXPIRED OPTIONS. If any outstanding Option expires or becomes unexercisable for
any reason without having been exercised in full, the shares of Common Stock
allocable to the unexercised portion of such Option will again become available
for other Options.

ADMINISTRATION OF THE PLAN

THE COMMITTEE. The Board will administer this Plan directly, acting as a
Committee of the whole, or if the Board elects, by a separate Committee
appointed by the Board for that purpose and consisting of at least three Board
members. All references in the Plan to the "Committee" refers to this separate
Committee, if any is established, or if none is then in existence, refers to the
Board as a whole. Once appointed, any Committee will continue to serve until
otherwise directed by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members, remove members (with or
without cause), appoint new members in

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substitution, and fill vacancies however caused. The Committee will select one
of its members as chairman, and will hold meetings at such times and places as
the chairman or a majority of the Committee may determine. At all times, the
Board will have the power to remove all members of the Committee and thereafter
to directly administer this Plan as a Committee of the whole.

Members of the Committee who are eligible for Options or who have been granted
Options will be counted for all purposes in determining the existence of a
quorum at any meeting of the Committee and will be eligible to vote on all
matters before the Committee respecting the granting of Options or
administration of this Plan.

At least annually, the Committee must present a written report to the Board
indicating the persons to whom Options have been granted since the date of the
last such report, and in each case the Date of Grant, the number of shares
optioned, and the per-share Exercise Price.

POWERS OF THE COMMITTEE. All actions of the Committee must be either (i) by a
majority vote of the members of the full Committee at a meeting of the
Committee, or (ii) by unanimous written consent of all members of the full
Committee without a meeting. All decisions, determinations and interpretations
of the Committee will be final and binding on all persons, including all
Optionees and any other holders or persons interested in any Options, unless
otherwise expressly determined by a vote of the majority of the entire Board. No
member of the Committee or of the Board will be liable for any action or
determination made in good faith with respect to the Plan or any Option. Subject
to all provisions and limitations of the Plan, the Committee will have the
authority and discretion:

     to determine the persons to whom Options are to be granted, the Dates of
     Grant, and the number of shares to be represented by each Option;

     to determine the price at which shares of Common Stock are to be issued
     under an Option, subject to subparagraph 6(b) of this Plan ("Exercise
     Price");

     to determine all other terms and conditions of each Option granted under
     this Plan (including specification of the dates upon which Options become
     exercisable, and whether conditioned on performance standards, periods of
     service or otherwise), which terms and conditions can vary between Options;

     to modify or amend the terms of any Option previously granted, or to grant
     substitute Options, subject to subparagraphs 6(l) and 6(m) of this Plan;

     to authorize any person or persons to execute and deliver Option agreements
     or to take any other actions deemed by the Committee to be necessary or
     appropriate to effect the grant of Options by the Committee;

     to interpret this Plan and to make all other determinations and take all
     other actions which the Committee deems necessary or appropriate to
     administer this Plan in accordance with its terms and conditions.

                                        3

<PAGE>

Eligibility. Options may be granted only to Employees. Granting of Options under
this Plan will be entirely discretionary with the Committee. Adoption of this
Plan will not confer on any Employee any right to receive any Option or Options
under this Plan unless and until said Options are granted by the Committee in
its sole discretion. Neither the adoption of this Plan nor the granting of any
Options under this Plan will confer upon any Employee or Optionee any right with
respect to continuation of employment, nor will the same interfere in any way
with his or her right or with the right of the shareholders of First Community
or any Subsidiary to terminate his or her employment at any time.

Terms and Conditions of Options. All Options granted under this Plan must be
authorized by the Committee, and must be documented in written Option agreements
in such form as the Committee will approve from time to time, which agreements
must comply with and be subject to all of the following terms and conditions:

NUMBER OF SHARES; ANNUAL LIMITATION. Each Option agreement must state whether
the Option is intended to be an Incentive Stock Option or a Nonqualified Stock
Option and the number of shares subject to Option. Any number of Options may be
granted to an Employee at any time; except that, in the case of Incentive Stock
Options, the aggregate fair market value (determined as of each Date of Grant)
of all shares of Common Stock with respect to which Incentive Stock Options
become exercisable for the first time by such Employee during any one calendar
year (under all incentive stock option plans of the Company and all of its
Subsidiaries taken together) shall not exceed $100,000. Any portion of an Option
in excess of the $100,000 limitation shall be treated as a Nonqualified Stock
Option

EXERCISE PRICE AND CONSIDERATION. The Exercise Price shall be the price
determined by the Committee, subject to subparagraphs (1) and (2) below.

     In the case of Incentive Stock Options, the Exercise Price shall in no
     event be less than the fair market value of the Common Stock on the Date of
     Grant. In the case of an Incentive Stock Option granted to a Employee who,
     immediately before the grant of such Incentive Stock Option, is a
     Shareholder-Employee, the Exercise Price shall be at least 110% of the fair
     market value of the Common Stock on the Date of Grant.

     In all cases, the Exercise Price shall be no less than the greater of (i)
     the fair market value of the Common Stock or (ii) the net book value of the
     Common Stock at the time of grant, as is determined by the Committee.

     In all cases, the Exercise Price shall be payable either in (i) United
     States dollars upon exercise of the Option, (ii) Common Stock of First
     Community, or (iii) if approved by the Board, other consideration including
     without limitation services, debt instruments or other property.

                                        4

<PAGE>

TERM OF OPTION. No Option shall in any event be exercisable after the expiration
of ten (10) years from the Date of Grant. Further, no Incentive Stock Option
granted to a Employee who, immediately before such Incentive Stock Option is
granted, is a Shareholder-Employee shall be exercisable after the expiration of
five (5) years from the Date of Grant. Subject to the foregoing and other
applicable provisions of the Plan including but not limited to subparagraphs
6(g), 6(h) and 6(i), the term of each Option will be determined by the Committee
in its discretion.

NON-TRANSFERABILITY OF OPTIONS. No Option may be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee.

MANNER OF EXERCISE. An Option will be deemed to be exercised when written notice
of exercise has been given to First Community in accordance with the terms of
the Option by the person entitled to exercise the Option, together with full
payment for the shares of Common Stock subject to said notice.

RIGHTS AS SHAREHOLDER. An Optionee shall have none of the rights of a
shareholder with respect to any shares covered by his or her Option unless and
until the Optionee has exercised such Option and submitted full payment for the
shares.

DEATH OF OPTIONEE. An Option shall be exercisable at any time prior to
termination under subparagraphs (1) or (2), below, by the Optionee's estate or
by such person or persons who have acquired the right to exercise the Option by
bequest or by inheritance or by reason of the death of the Optionee. In the
event of the death of an Holder,

     an Incentive Stock Option shall terminate no later than the earliest of (i)
     one year after the date of death of the Optionee if the Optionee had been
     in Continuous Status as an Employee since the Date of Grant of the Option,
     or (ii) the date specified under subparagraph 6(i) of this Plan if the
     Optionee's status as an Employee was terminated prior to his or her death,
     or (iii) the expiration date otherwise provided in the applicable Option
     agreement; and

     a Nonqualified Stock Option shall terminate no later than the earlier of
     (i) one year after the date of death of the Optionee, or (ii) the
     expiration date otherwise provided in the Option agreement, except that if
     the expiration date of a Nonqualified Stock Option should occur during the
     180-day period immediately following the Optionee's death, such Option
     shall terminate at the end of such 180-day period.

DISABILITY OF OPTIONEE. If an Optionee's status as an Employee is terminated at
any time during the Option period by reason of a disability (within the meaning
of Section 22(e)(3) of the Code) and if said Optionee had been in Continuous
Status as an Employee at all times between the date of grant of the Option and
the termination of his or her status as an Employee, his or her Option shall
terminate no later than the earlier of (i) one year after the date of
termination of his or her status as an Employee, or (ii) the expiration date
otherwise provided in his or her Option agreement.

                                        5

<PAGE>

TERMINATION OF STATUS AS AN EMPLOYEE.

If an Optionee's status as an Employee is terminated at any time after the grant
of an Option to such Employee for any reason other than death or disability (as
described in subparagraphs 6(g) and 6(h) above) and not for cause, as provided
in subparagraph (2) below, then such Option shall terminate no later than the
earlier of (i) the same day of the third month after the date of termination of
his or her status as an Employee, or (ii) the expiration date otherwise provided
in his or her Option agreement.

If an Optionee's status as an Employee is terminated for cause at any time after
the grant of an Option to such Employee, then such Option shall terminate at the
end of the day on the date of termination of his or her status as an Employee.
For this purpose, "cause" includes fraud or willful misconduct or any other
conduct which the Board reasonably believes will cause or has caused First
Community substantial injury as a result of gross negligence or dishonesty.

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required action by
the shareholders of First Community, the number of shares of Common Stock
covered by each outstanding Option, the number of shares of Common Stock
available for grant of additional Options, and the per-share Exercise Price in
each outstanding Option, will be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from any stock
split or other subdivision or consolidation of shares, the payment of any stock
dividend (but only on the Common Stock) or any other increase or decrease in the
number of such shares of Common Stock effected without receipt of consideration
by First Community; PROVIDED, however, that conversion of any convertible
securities of First Community will not be deemed to have been "effected without
receipt of consideration." Such adjustment will be made by the Committee, whose
determination in that respect will be final, binding and conclusive.

     Except as otherwise expressly provided in this subparagraph 6(j), no
     Optionee will have any rights by reason of any stock split or the payment
     of any stock dividend or any other increase or decrease in the number of
     shares of Common Stock, and no issuance by First Community of shares of
     stock of any class, or securities convertible into shares of stock of any
     class, will affect the number of shares or Exercise Price subject to any
     Options, and no adjustments in Options will be made by reason thereof. The
     grant of an Option under this Plan will not affect in any way the right or
     power of First Community to make adjustments, reclassifications,
     reorganizations or changes of its capital or business structure.

CONDITIONS UPON ISSUANCE OF SHARES. Shares of Common Stock will not be issued
with respect to an Option granted under this Plan unless the exercise of such
Option and the issuance and delivery of such shares pursuant thereto will comply
with all applicable provisions of law, including applicable federal and state
securities laws. As a condition to the exercise of an Option, First Community
may require the person exercising such Option to represent and warrant at the
time of exercise that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or distribute such Common
Stock if, in the opinion of counsel for First Community, such a representation
is required by any of the aforementioned relevant provisions of law.

                                        6
<PAGE>

CORPORATE SALE TRANSACTIONS. In the event of the merger or reorganization of
First Community with or into any other corporation, the sale of substantially
all of the assets of First Community, or a dissolution or liquidation of First
Community (collectively, "Sale Transaction"), (1) all outstanding Options that
are not then fully exercisable will become exercisable upon the date of closing
of any sale transaction or such earlier date as the Committee may fix; and (2)
the Committee may, in the exercise of its sole discretion, terminate all
outstanding Options as of a date fixed by the Committee. In such event, however,
the Committee must notify each Optionee of such action in writing not less than
sixty (60) days prior to the termination date fixed by the Committee, and each
Optionee must have the right to exercise his or her Option prior to said
termination date.

SUBSTITUTE STOCK OPTIONS. In connection with an internal reorganization of First
Community, the Committee is authorized, in its discretion, to substitute for any
unexercised Option, a new option for shares of the resulting entity's stock.

TAX COMPLIANCE. First Community, in its sole discretion, may take actions
reasonably believed by it to be required to comply with any local, state, or
federal tax laws relating to the reporting or withholding of taxes attributable
to the grant or exercise of any Option or the disposition of any shares of
Common Stock issued upon exercise of an Option, including, but not limited to
(i) withholding from any Optionee exercising an Option a number of shares of
Common Stock having a fair market value equal to the amount required to be
withheld by First Community under applicable tax laws, and (ii) withholding from
any form of compensation or other amount due an Optionee, or holder, of shares
of Common Stock issued upon exercise of an Option any amount required to be
withheld by First Community under applicable tax laws. Withholding or reporting
will be considered required for purposes of this subparagraph if the Committee,
in its sole discretion, so determines.

HOLDING PERIOD FOR INCENTIVE STOCK OPTIONS. With regard to shares of Common
Stock issued pursuant to an Incentive Stock Option granted under the Plan, if
the Optionee (or such other person who may exercise the Option pursuant to
subparagraph 6(g) of this Plan) makes a disposition of such shares within two
years from the Date of Grant of such Option, or within one year from the date of
issuance of such shares to the Optionee upon the exercise of such Option, then
the Optionee must request and obtain approval from the Company in writing of
such disposition and must cooperate with the Company in any tax compliance
relating to such disposition.

OTHER PROVISIONS. Option agreements executed under this Plan may contain such
other provisions as the Committee will deem advisable.

     Term of the Plan. This Plan will become effective and Options may be
     granted upon the Plan's approval by the Board, subject to shareholder
     approval. Unless sooner terminated as provided in subparagraph 7(a) of this
     Plan, this Plan will terminate on the tenth (10th) anniversary of its
     effective date. Options may be granted at any time after the effective date
     and prior to the date of termination of this Plan.

                                        7

<PAGE>

AMENDMENT OR EARLY TERMINATION OF THE PLAN. The Board may terminate this Plan at
any time. The Board may amend this Plan at any time and from time to time in
such respects as the Board may deem advisable, except that, without approval of
the shareholders, no revision or amendment will increase the number of shares of
Common Stock subject to this Plan other than in connection with an adjustment
under subparagraph 6(j) of this Plan.

EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination of this Plan
will affect Options granted prior to such amendment or termination, and all such
Options will remain in full force and effect notwithstanding such amendment or
termination.

     Shareholder Approval. Adoption of this Plan will be subject to ratification
     by affirmative vote of shareholders owning at least a majority of the
     outstanding Common Stock of First Community at a duly convened meeting. If
     such shareholder approval is not obtained within twelve (12) months after
     the date of the Board's adoption of this Plan, then this Plan shall
     terminate subject to subparagraph 7(b) of the Plan except that any
     Incentive Stock Options previously granted under the Plan shall become
     Nonqualified Stock Options, and no further Options shall be granted under
     the Plan.

                                        8
<PAGE>

              FIRST COMMUNITY FINANCIAL GROUP, INC.

            EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT

This Employee Incentive Stock Option Agreement (Agreement) is entered into by
and between FIRST COMMUNITY FINANCIAL GROUP, INC., a Washington corporation
(First Community) and the Employee, named below.

1.   Pursuant to First Communitys Employee Stock Option Plan (the Plan) and
     subject to the terms of this Agreement, First Community hereby grants the
     following irrevocable incentive stock option (Option):

     Employee: ______________________________________________________________

     Option Shares: _____________________ Exercise Price: ___________________

     Date of Grant: _____________________ Date of Termination: ______________

     Vesting Schedule: This Option will become exercisable as to ____________
     Shares on each of the first ____ anniversary dates from the Date of Grant.

2.   Pursuant to this Option, the Employee has the option to purchase the
     stated number of Option Shares of the common stock of First Community at
     the Exercise Price, payable on the date of exercise.  This Option is
     granted as of the Date of Grant, and shall terminate on the Date of
     Termination unless sooner terminated by reason of death, disability or
     other termination of status as an employee as provided in the Plan.

3.   This Option shall become exercisable according to the Vesting Schedule.
     Option Shares as to which this Option becomes exercisable are called
     Vested Shares.  This Option shall be exercisable as to Vested Shares in
     whole or in part at any time between the Date of Grant and the Date of
     Termination of this Option.  Notwithstanding the foregoing, if the
     Optionees status as an employee with First Community terminates, then
     this Option will cease to vest and will not become exercisable as to any
     additional shares, as of the date on which the Optionees employment
     terminates.  In such case, this Option will be limited to the Vested
     Shares as of such date of the termination of employment.

4.   This Option must be exercised by actual delivery to First Community of a
     written notice of exercise signed by Employee specifying the number of
     shares with respect to which this Option is being exercised and the
     per-share Exercise Price, accompanied by payment of the full amount of
     the Exercise Price for the number of shares being purchased, together
     with the applicable Federal income tax withholding amount, if any.

5.   All terms and conditions of the Plan are hereby incorporated by this
     reference as a part of this Agreement, including but not limited to the
     Terms and Conditions of Options provided in the Plan.  The First
     Community reserves the right, without the consent of Employee, to amend
     the Plan and/or

<PAGE>

     this Agreement at any time prior to the exercise of the Option granted
     hereunder to cause this Option to qualify as an incentive stock option
     within the scope and meaning of Section422 of the Internal Revenue Code
     (Code), or any successor provision of the Code.

EMPLOYEE:                               FIRST COMMUNITY FINANCIAL GROUP, INC.,
                                        a Washington corporation

                                        By:
---------------------------------          -------------------------------

Print Name:                             Title:
           ----------------------             ----------------------------

I hereby acknowledge that I have received a copy of the Plan, incorporated by
reference above.

---------------------------------
Employee

<PAGE>

                     FIRST COMMUNITY FINANCIAL GROUP, INC.

                 EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT

This Employee Nonqualified Stock Option Agreement (Agreement) is entered into
by and between FIRST COMMUNITY FINANCIAL GROUP, INC., a Washington corporation
(First Community) and the Employee, named below.

1.   Pursuant to First Communitys Employee Stock Option Plan (the Plan) and
subject to the terms of this Agreement, First Community hereby grants the
following irrevocable nonqualified stock option (Option):

     Employee: ______________________________________________________________

     Option Shares: _____________________ Exercise Price: ___________________

     Date of Grant: _____________________ Date of Termination: ______________

     Vesting Schedule: This Option will become exercisable as to ____________
     Shares on each of the first ____ anniversary dates from the Date of Grant.

2.   Pursuant to this Option, the Employee has the option to purchase the
     stated number of Option Shares of the common stock of First Community at
     the Exercise Price, payable on the date of exercise.  This Option is
     granted as of the Date of Grant, and shall terminate on the Date of
     Termination unless sooner terminated by reason of death, disability or
     other termination of status as an employee as provided in the Plan.

3.   This Option shall become exercisable according to the Vesting Schedule.
     Option Shares as to which this Option becomes exercisable are called
     Vested Shares.  This Option shall be exercisable as to Vested Shares in
     whole or in part at any time between the Date of Grant and the Date of
     Termination of this Option.  Notwithstanding the foregoing, if the
     Optionees status as an employee with First Community terminates, then
     this Option will cease to vest and will not become exercisable as to any
     additional shares, as of the date on which the Optionees employment
     terminates.  In such case, this Option will be limited to the Vested
     Shares as of such date of the termination of employment.

4.   This Option must be exercised by actual delivery to First Community of a
     written notice of exercise signed by Employee specifying the number of
     shares with respect to which this Option is being exercised and the
     per-share Exercise Price, accompanied by payment of the full amount of
     the Exercise Price for the number of shares being purchased, together
     with the applicable Federal income tax withholding amount, if any.

5.   All terms and conditions of the Plan are hereby incorporated by this
     reference as a part of this Agreement, including but not limited to the
     Terms and Conditions of Options provided in the Plan.

EMPLOYEE:                               FIRST COMMUNITY FINANCIAL GROUP, INC.,
                                        a Washington corporation

                                        By:
---------------------------------          -------------------------------

Print Name:                             Title:
           ----------------------             ----------------------------

I hereby acknowledge that I have received a copy of the Plan, incorporated by
reference above.

---------------------------------
Employee

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