EXHIBIT 10.3
EXECUTIVE SEVERANCE AGREEMENT
This Agreement is made and entered into by and between PUYALLUP VALLEY
BANK, a Washington banking corporation, (hereinafter called "Bank") and Xxxxxx
X. Xxxxxxx, (hereinafter called the ("Executive").
WHEREAS, Executive was recently employed by the Bank in a key managerial
capacity, presently holding the position(s) of Senior Vice President and Chief
Financial Officer of the Bank; and,
WHEREAS, the Bank wishes to ensure that the Executive will be available to
assist the Board of Directors of the Bank in evaluating and responding to, and
if deemed appropriate by the Board, completing any actual or threatened change
in control of the Bank; and,
WHEREAS, the Bank wishes to provide additional comfort to both itself and
the Executive as to continuity of management in the event of any actual or
threatened change in control of the Bank;
NOW, THEREFORE, the Bank and the Executive agree to the following
provisions:
1. CHANGE IN CONTROL For purposes of this Agreement, the term
"Change in Control" shall mean a change "in the ownership or
effective control" or "in the ownership of a substantial
portion of the assets" of the Bank, with the quoted phrases of
this sentence having the same meaning as when used in Section
280G (b) (2) (A) of the Internal Revenue Code. "Change in
Control" shall include any change within a twelve-month period
in the composition of the Board of Directors of the Bank
whereby the individuals serving as directors at the beginning
of such period cease to constitute at least a majority of the
board at any time during such period.
2. COMMITMENT OF EXECUTIVE In the event that any person extends
any proposal or offer which could result in a Change in
Control, the Executive will help evaluate such proposal or
offer and present his evaluation to the Board of Directors of
the Bank. Further, the Executive specifically agrees that he
will not resign his position(s) with the Bank during any
period from the receipt of a specific change in control
proposal up to the closing or termination of the transaction
contemplated by the proposal.
3. SEVERANCE PAYMENT EVENTS In the event of --
(i) the voluntary or involuntary termination, excluding
termination due to death, disability or commission of a crime,
of the Executive's employment with the Bank within three (3)
years after a Change in Control; or
(ii) the involuntary termination, excluding termination due to
death, disability, or commission of a crime, by the Bank of
the Executive's employment with the Bank on or after the date
that any party announces (or should announce) any prospective
Change in Control transaction, if a Change in Control does
occur within twelve (12) months of such termination,
then the Bank shall pay to Executive a severance payment, in
the amount determined pursuant to the next paragraph, payable
on the later of the date of termination or the date of the
Change in Control.
4. AMOUNT OF THE SEVERANCE PAYMENT The severance payment shall
be an amount equal to the highest compensation (as
reportable on the Executive's IRS W-2 form) received by the
Executive from the Bank during any one of the most recent
three (3) calendar years ending before, or simultaneously
with, the date on which the Change in Control occurs;
provided, however, that the severance payment shall be less
than the amount which would cause the payment to be a
"parachute payment" as defined in Section 280G (b) (2) (A)
of the Internal Revenue Code; and provided, further, that
such severance payment shall be reduced by any compensation
(as reportable on the Executive's IRS W-2 form) received
from the Bank or its successor in interest after the Change
in Control.
5. REVOCABILITY This Agreement may be terminated unilaterally by
the Bank, but (i) only as of a prospective effective date
which follows by at least 12 months the date that written
notice is given to Executive that the Bank, by a vote of at
least a majority of its directors, has determined to terminate
the Agreement, and (ii) only if no Change in Control occurs
prior to such effective date. If not earlier terminated, this
Agreement will terminate three (3) years after any Change in
Control occurs.
IN WITNESS WHEREOF, the parties have executed this Agreement this _____ day
of ____________________, 1997.
PUYALLUP VALLEY BANK: EXECUTIVE
By:________________________ _________________________
Xxxxx X. Xxxxx Xxxxxx X. Xxxxxxx
President/CEO
