Joint City, City Attorney Settlement and Release

GENERAL SETTLEMENT AND RELEASE AGREEMENT This General Settlement
and Release Agreement (the
“Agreement”) is by and between the City of Morgan Hill for
itself and for all of its elected officials, officers, directors,
supervisors and council members in its and their official and
personal capacities, and each of them, (“the CITY”), on the one
hand, and Helene Leichter, for herself an
d her agents, representatives, heirs and assigns (“LEICHTER”),
on the other hand.
GENERAL SETTLEMENT AND RELEASE AGREEMENT

This General Settlement and Release Agreement (the “Agreement”) is by and between the City of Morgan Hill for itself and for all of its elected officials, officers, directors, supervisors and council members in its and their official and personal capacities, and each of them, (“the CITY”), on the one hand, and Helene Leichter, for herself and her agents, representatives, heirs and assigns (“LEICHTER”), on the other hand.

RECITALS

A. The purpose of this Agreement is to settle and compromise, fully and completely, the claims of sexual harassment and retaliation (the “CLAIMS”) asserted by LEICHTER against the CITY without admission of liability, or of any act, claim or defense. This Agreement excludes any claims LEICHTER has against Hedy Chang (“CHANG”) arising from conduct committed by CHANG while acting in her personal capacity and/or outside the course of her employment, if any, with the CITY, and/or elected position with the City Council of Morgan Hill.

B. The CITY and LEICHTER acknowledge that they are entering into this Agreement after consulting with counsel. This settlement shall not be construed as an admission of liability by any party for any purpose. NOW THEREFORE, in consideration of the covenants and promises contained in this Agreement and other good and valuable consideration, and to avoid protracted litigation, it is hereby agreed among the parties as follows:

AGREEMENT

1. Denial of Liability. LEICHTER acknowledges that the CITY has denied and continues to deny any liability to her for the CLAIMS.

2. Denial of Wrongdoing. LEICHTER acknowledges that the CITY has denied and continues to deny that it engaged in any unlawful or wrongful conduct against her and that this Agreement shall not in any way be construed as an admission by the CITY of any unlawful or wrongful acts whatsoever against LEICHTER. The CITY expressly denies any violation of any policy or procedure, or of any state or federal law or regulation.

3. Wrongful Acts or Liability for Acts of Others. The CITY also specifically denies any liability to or wrongful acts against LEICHTER, or any other person, on the part of itself, or any other of its elected officials, officers, directors, employees or agents, with the express exception of CHANG while acting in her personal capacity and outside the course of her position with the City Council. The CITY is silent and makes no representation whatsoever as to whether CHANG is liable to LEICHTER or whether CHANG committed any wrongful acts against LEICHTER.

4. Agreement Not an Admission. This Agreement shall not be admissible in any proceeding as evidence of or any admission by the CITY of any violation of any law or regulation or wrongful act. This Agreement may, however, be introduced in any proceeding to enforce this Agreement.

5. Warranties.

(a) LEICHTER specifically represents that she has no pending complaints or charges against the CITY or CHANG with any state or federal court, or any local, state or federal agency, division or department, based on any events occurring prior to the date of execution of this Agreement.

(b) LEICHTER further represents that she will not in the future file or instigate the filing of any lawsuit in any state or federal court or any proceeding before any local, state or federal agency, department or division, claiming that the CITY has violated common law or statute, including the California Fair Employment & Housing Act or Title VII of the Civil Rights Act of 1964, in connection with the CLAIMS. LEICHTER may file a civil action against CHANG for conduct of CHANG while acting in her personal capacity and outside the course of her position with the City Council.

1. Settlement Proceeds.

(a) Cash Consideration. (i) In full and complete consideration for LEICHTER’S promises and undertaking set forth in this Agreement, within 10 days of receipt by counsel for the CITY of a fully executed original of this Agreement, the CITY shall pay Settlement proceeds in the total amount of Forty -Thousand and No/100 Dollars ($40,000.00) (the “Settlement Proceeds”). The Settlement Proceeds shall be paid in two checks, one in the amount of Twenty-Five Thousand and No/100 Dollars ($25,000.00) made payable to “Helene Leichter,” and one in the amount of Fifteen -Thousand and No/100 Dollars ($15,000.00) made payable to “Carroll, Burdick & McDonough LLP.” The check to LEICHTER shall be in compensation for emotional distress and physical injury. The CITY shall make no state or federal withholding deductions and shall issue an IRS Form 1099 Misc. in connection with this payment.

(ii) LEICHTER acknowledges that she is solely responsible for all tax reporting obligations, if any, with respect to the designation of all or part of the Settlement Proceeds as damages attributable to “emotional distress” or “physical injury.” LEICHTER further agrees to indemnify and hold the CITY harmless from any and all losses, costs, expenses, interest, payments or penalties, if any, incurred by the CITY as a result of the CITY not making state and federal withholding deductions from the Settlement Proceeds set forth in Paragraph 6(a)(i), above, or as a result of the CITY not reporting such Settlement Proceeds as wages to any taxing authority, in the event said Settlement Proceeds later should be deemed to be taxable to LEICHTER. The CITY agrees to notify LEICHTER within a reasonable period of time if any taxing authority makes a claim for any taxes, penalties, interest or payments arising out of the payment of Settlement Proceeds described in Paragraph 6(a)(i), above, so that she will have an opportunity to defend against any such claim. b. Non-Cash Consideration. (i) Vacation or PTO. The CITY shall credit LEICHTER’S accrued vacation or PTO bank with an additional one time grant of seven (7) weeks’ or two hundred and eighty (280) hours of paid vacation or PTO to be used pursuit to regular policy and procedure but which shall not be forfeited for any reason and which shall not count toward any cap on accrual of vacation or PTO if any such cap exists under current policy or procedure. Should any cap be instituted during LEICHTER’S employment with the CITY, LEICHTER’S cap shall be at the stated maximum allowed for similarly situated employees plus seven (7) weeks or two hundred and eighty (280) hours.

(ii) Work from Home. Commencing on the date of execution of this Agreement and continuing through the end of 2004, LEICHTER shall be permitted to work two days per week from home. LEICHTER agrees to exercise this right in good faith and acknowledges that, from time to time,circumstances may warrant a change in her work schedule or routine that does not permit her to work from home. Council members agree that should any issues related to working from home arise in the future, they will discuss such matters directly with LEICHTER in a good faith attempt to resolve any such issues.

(iii) Public Statement The CITY and LEICHTER have agreed upon the attached press release. No other public statement shall be issued or made by the CITY or its employees, officials or representatives, OR LEICHTER, concerning the CLAIMS, except by mutual agreement of the CITY, subcommittee consisting of Councilmembers Carr and Tate, and LEICHTER. The CITY and LEICHTER must mutually agree as to whether and when such a statement is to be issued.

(iv) Working Relationship. Within 14 days from the date hereof, the CITY shall engage Dr. William Mathis to facilitate discussion of any issues raised by the CITY and/or LEICHTER in regards to the employment relationship.

1. Release of Known and Unknown Claims (a) It is understood and agreed by the parties to this Agreement that in consideration of the mutual promises and covenants contained in this Agreement, and after consultation with counsel, LEICHTER irrevocably and unconditionally releases and forever discharges the CITY (excluding CHANG for acts committed in her personal capacity and/or while acting outside the course of her employment and/or position as a member of the City Council) from any and all claims that she was sexually harassed and/or retaliated against while employed by the CITY up to and including the date of this Agreement. LEICHTER acknowledges that this release of claims specifically includes common law and/or statutory claims for sexual harassment and retaliation, including claims brought under the California Fair Employment & Housing Act and federal Title VII of the Civil Rights Act of 1964, based upon events occurring prior to the date that this Agreement is executed by LEICTHER.

(b) LEICHTER represents and warrants that she has not assigned or subrogated any of her rights, claims or causes of action, including any claims referenced in this Agreement, or authorized any other person or entity to assert such claims on her behalf, and she agrees to indemnify and hold harmless the CITY against any assignment of said rights, claims and/or causes of action.

1. Waiver of California Civil Code Section 1542. (a) LEICHTER does hereby expressly waive and relinquish all rights and benefits afforded by California Civil Code section 1542 in relation to the CLAIMS and does so understanding and acknowledging the significance and consequences of such specific waiver of California Civil Code section 1542. (b) LEICHTER acknowledges and understands that she is being represented in this matter by counsel, and acknowledges that she is familiar with the provisions of California Civil Code section 1542. California Civil Code section 1542 provides 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.

Thus, notwithstanding the provisions of section 1542, LEICTHER expressly acknowledges and agrees that this Agreement is also intended to include in its effect, without limitation, any claim of sexual harassment or retaliation that could be brought based upon facts of which she is currently unaware but which occurred prior to the effective date of this Agreement, and that this Agreement contemplates the extinguishment of those claims.

(c) LEICHTER acknowledges and agrees that she may later discover facts different from, or in addition to, those she now knows or believes to be true in entering into this Agreement. LEICHTER agrees to assume the risk of the possible discovery of additional or different facts, including facts which may have been concealed or hidden, and agrees that this Agreement shall remain effective regardless of such additional or different facts. LEICHTER further acknowledges and agrees that the CITY had no duty to disclose any fact to her prior to the execution of this Agreement.

1. Advice of Counsel. LEICHTER acknowledges that she has consulted with an attorney respecting this Agreement. To the extent that LEICHTER has signed the Agreement without obtaining the advice of counsel, LEICHTER acknowledges that she has not been subject to any undue or improper influence interfering with the exercise of her free will in deciding whether to execute this Agreement and LEICHTER acknowledges that she has signed this Agreement voluntarily with a full understanding of the Agreement and its effect upon her legal rights.

2. Arbitration. Any and all disputes, controversies or claims arising under or in any way relating to the interpretation, application or enforcement of this Agreement, including without limitation any claim by LEICHTER that LEICHTER was fraudulently induced to enter into this Agreement, shall be settled by final and binding arbitration under the auspices and rules of the American Arbitration Association. Any such arbitration must be filed in Morgan Hill, California, and the then prevailing laws of the State of California shall control, except where federal law governs. The parties agree that the arbitrator shall award reasonable costs and attorney’s fees to the prevailing party.

The award of the arbitrator is to be final and binding, and enforceable in any court of competent jurisdiction and shall be based upon a written opinion.

1. Governing Law. This Agreement shall be governed by the laws of the State of California, applicable to contracts executed in and to be performed entirely within that state.

2. Entire Agreement. This is the entire agreement between LEICHTER and the CITY and the Agreement supersedes any previous negotiations, agreements and understandings. LEICHTER acknowledges that she has not relied on any oral or written representations by the CITY (or its counsel) to induce him to sign this Agreement, other than the terms of this Agreement. No modifications of this Agreement can be made except in writing signed by LEICHTER and the CITY.

3. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under existing or future laws effective during the term of this Agreement, such provisions shall be fully severable, the Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

4. Ambiguities. Attorneys for both parties have participated in the negotiation of this Agreement and, thus, it is understood and agreed that the general rule that ambiguities are to be construed against the drafter shall not apply to this Agreement. In the event that any language of this Agreement is found to be ambiguous, each party shall have an opportunity to present evidence as to the actual intent of the parties with respect to any such ambiguous language.

5. Waiver. No waiver by any party of any breach of any term or provision of this Agreement shall be a waiver of any preceding, concurrent or succeeding breach of this Agreement or of any other term or provision of this Agreement. No waiver shall be binding on the part of, or on behalf of, any other party entering into this Agreement.

6. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, all of which together shall constitute one and the same instrument.

THE SIGNATORIES HAVE CAREFULLY READ THIS ENTIRE AGREEMENT. ITS CONTENTS HAVE BEEN FULLY EXPLAINED TO THEM BY THEIR ATTORNEYS. THE SIGNATORIES FULLY UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS AGREEMENT. THE ONLY PROMISES MADE TO ANY SIGNATORY ABOUT THIS AGREEMENT, AND TO SIGN THIS AGREEMENT, ARE CONTAINED IN THIS AGREEMENT. THE SIGNATORIES ARE SIGNING THIS AGREEMENT VOLUNTARILY. PLEASE READ CAREFULLY. THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS. IN WITNESS WHEREOF, the parties have executed this General Settlement and Release Agreement on the dates set forth below.

DATE: _________________________ ______________________________

HELENE LEICHTER

THE CITY OF MORGAN HILL

DATE: _________________________ ______________________________