1
EXHIBIT 10.3
FIRST SECURITY BANK OF MISSOULA
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), signed August 9, 1996, between
FIRST SECURITY BANK OF MISSOULA ("Bank") and XXXXXX XXXXXX ("Xxxxxx") and
ratified by GLACIER BANCORP, INC., takes effect on the effective date of the
Merger ("Effective Date").
RECITALS
A. Glacier Bancorp, Inc. ("Glacier") has entered into a Plan and Agreement
of Merger ("Merger Agreement") with Missoula Bancshares, Inc.
("Bancshares") under which Bancshares will merge with and into Glacier
("Merger"). Bancshares presently owns approximately 99% of the
outstanding shares of common stock of the Bank. Immediately following
the Merger, the Bank will be a subsidiary of Glacier.
B. Before the Merger, Fraser has served as the Bank's Senior Vice-
President.
C. Glacier and the Bank desire Fraser to continue his employment at the
Bank under the terms and conditions of this Agreement.
X. Xxxxxx desires to continue his employment at the Bank under the terms
and conditions of this Agreement.
AGREEMENT
In consideration of the promises set forth in this Agreement, the
parties agree as follows.
1. EMPLOYMENT. The Bank agrees to employ Fraser and Fraser accepts
employment by the Bank on the terms and conditions set forth in this Agreement.
Fraser's title will be Senior Vice-President, Loans.
2. EFFECTIVE DATE AND TERM.
(a) Effective Date. This Agreement is effective as of the Effective
Date.
(b) Term. The term of this Agreement ("Term") is three years,
beginning on the Effective Date.
(c) Abandonment or Termination of the Merger. This Agreement is void
if the Merger Agreement is terminated in accordance with its
terms.
3. DUTIES. The Bank will employ Fraser as its Senior Vice-President,
Loans. Fraser will faithfully and diligently perform his assigned duties, which
are as follows:
-1-
2
(a) Performance of Loan Department. Fraser will be responsible for
the Bank's loan functions, including development of loan
policies, and all aspects of the performance of the Bank's
commercial loan department, including without limitation,
directing that daily operational and managerial matters are
performed in a manner consistent with Glacier's and the Bank's
policies.
(b) Development and Preservation of Business. Fraser will be
responsible for the development and preservation of banking
relationships and other business development efforts (including
appropriate civic and community activities) in Missoula County,
Montana.
(c) Report to Chief Executive Officer and Board. Fraser will report
directly to the Bank's Chief Executive Officer. Fraser will also
report to the Bank's board of directors upon their request.
(d) Modification of Duties. The Bank's board of directors may, from
time to time, modify Fraser's title or add, delete, or modify
Fraser's performance responsibilities to accommodate management
succession, as well as any other management objectives of the
Bank or of Glacier. Fraser will assume any additional positions,
duties, and responsibilities as may reasonably be requested of
him with or without additional compensation, as appropriate and
consistent with Sections 3(a) and 3(b) of this Agreement.
4. EXTENT OF SERVICES. Fraser will devote all of his working time,
attention and skill to the duties and responsibilities set forth in Section 3.
To the extent that such activities do not interfere with his duties under
Section 3, Fraser may participate in other businesses as a passive investor, but
(a) Fraser may not actively participate in the operation or management of those
businesses, and (b) Fraser may not, without the Bank's prior written consent,
make or maintain any investment in a business with which the Bank and/or Glacier
has an existing competitive or commercial relationship.
5. SALARY. Initially, Fraser will receive a salary of $73,716 per year, to
be paid monthly in accordance with the Bank's regular payroll schedule. Subject
to the Bank's annual review of Fraser's compensation, in connection with the
advice and recommendations of the Chief Executive Officer of Glacier, Fraser's
annual salary will be increased to $77,400 on January 1, 1998 and to $81,264 on
January 1, 1999.
6. INCENTIVE COMPENSATION. Each year during the Term, the Bank's board of
directors, subject to ratification by Glacier's board of directors, will
determine the amount of bonus to be paid by the Bank to Fraser for that year. In
making this determination, the Bank's board of directors will consider factors
such as Fraser's
-2-
3
performance of his duties and the safety, soundness and profitability of the
Bank. Fraser's bonus will reflect Fraser's contribution to the performance of
the Bank during the year, also taking into account the nature and extent of
incentive bonuses paid to comparable senior officers at Glacier. This bonus will
be paid to Fraser no later than January 31 of the year following the year in
which the bonus is earned by Fraser.
7. INCOME DEFERRAL. Fraser will be eligible to participate in any program
available to the Bank's and Glacier's senior management for income deferral, for
the purpose of deferring receipt of any or all of the compensation he may become
entitled to under this Agreement.
8. VACATION AND BENEFITS.
(a) Vacation and Holidays. Fraser will receive the greater of (1)
four weeks of paid vacation each year or (2) the vacation
benefits set forth in Glacier's schedule for senior employees
with Fraser's years of service with the Bank, in addition to all
holidays observed by the Bank. Each year, Fraser may carry over
only up to two weeks of unused vacation. Any unused vacation time
in excess of two weeks will not accumulate or carry over from one
calendar year to the next.
(b) Benefits. Fraser will be entitled to participate in any group
life insurance, disability, health and accident insurance plans,
profit sharing and pension plans and in other employee fringe
benefit programs the Bank or Glacier may have in effect from time
to time for its similarly situated employees, in accordance with
and subject to any policies adopted by the Bank's or Glacier's
board of directors with respect to the plans or programs,
including without limitation, any incentive or employee stock
option plan, deferred compensation plan, 401(k) plan, and
Supplemental Executive Retirement Plan (SERP). Neither the Bank
nor Glacier through this Agreement obligates itself to make any
particular benefits available to its employees.
(c) Business Expenses. The Bank will reimburse Fraser for ordinary
and necessary expenses (including, without limitation, travel,
entertainment, and similar expenses) incurred in performing and
promoting the Bank's business. Fraser will present from time to
time itemized accounts of these expenses, subject to any limits
of Bank policy or the rules and regulations of the Internal
Revenue Service. The Bank will continue to provide Fraser with
University of Montana Grizzly Athletic Association membership
dues and tickets at the Golden Grizzly level, as in effect on the
date this Agreement was signed. The Bank will also pay Fraser's
membership and dues at a country club approved by Glacier (which
approval will not be unreasonably withheld) in Xxxxxx Lake.
-3-
4
9. TERMINATION OF EMPLOYMENT.
(a) Termination By Bank for Cause. If the Bank terminates Fraser's
employment for Cause (defined below) before this Agreement
terminates the Bank will pay Fraser the salary earned and
expenses reimbursable under this Agreement incurred through the
date of his termination. Fraser will have no right to receive
compensation or other benefits for any period after termination
under this Section 9.(a).
(b) Other Termination By Bank. If the Bank terminates Fraser's
employment without Cause before this Agreement terminates, or
Fraser terminates his employment for Good Reason (defined below),
the Bank will pay Fraser for the remainder of the Term the
compensation and other benefits he would have been entitled to if
his employment had not terminated.
(c) Death or Disability. This Agreement terminates (1) if Fraser dies
or (2) if Fraser is unable to perform his duties and obligations
under this Agreement for a period of 90 days as a result of a
physical or mental disability arising at any time during the term
of this Agreement, unless with reasonable accommodation Fraser
could continue to perform his duties under this Agreement and
making these accommodations would not require the Bank to expend
any funds. If termination occurs under this Section 9.(c), Fraser
or his estate will be entitled to receive all compensation and
benefits earned and expenses reimbursable through the date
Fraser's employment terminated.
(d) Termination Related to a Change in Control.
(1) Termination by Bank. If the Bank, or its successor in
interest by merger, or its transferee in the event of a
purchase in an assumption transaction, (for reasons other
than Fraser's death, disability, or Cause) (1) terminates
Fraser's employment within one year following a Change in
Control (as defined below) or (2) terminates Fraser's
employment before the Change in Control but on or after the
date that any party either announces or is required by law
to announce any prospective Change in Control transaction
and a Change in Control occurs within six months after the
termination, the Bank will provide Fraser with the payment
and benefits described in Section 9.(d)(3).
(2) Termination by Fraser. If Fraser terminates Fraser's
employment, with or without Good Reason, within one year
following a Change in Control, the Bank will provide Fraser
with the payment and benefits described in Section 9.(d)(3).
-4-
5
(3) Payments. If Section 9.(d)(1) or (2) is triggered as
described in those Sections, the Bank will: (i) pay Fraser a
single payment in an amount equal to Fraser's annual salary
(determined as of the day before the date Fraser's
employment was terminated) and (ii) maintain and provide for
one-year following Fraser's termination, at no cost to
Fraser, the benefits described in Section 8.(b) to which
Fraser is entitled (determined as of the day before the date
of such termination); but if Fraser's participation in any
such benefit is thereafter barred or not feasible, or
discontinued or materially reduced, the Bank will arrange to
provide Fraser with either benefits substantially similar to
those benefits or a cash payment of substantially similar
value in lieu of the benefits.
(e) Limitations on Payments Related to Change in Control. The
following apply notwithstanding any other provision of this
Agreement:
(1) the total of the payments and benefits described in Section
9.(d)(3) will be less than the amount that would cause it to
be a "parachute payment" within the meaning of Section
280G(b)(2)(A) of the Internal Revenue Code;
(2) the payments and benefits described in Section 9.(d)(3) will
be reduced by any compensation (in the form of cash or other
benefits) received by Fraser from the Bank or its successor
after the Change in Control; and
(3) Fraser's right to receive the payments and benefits
described in Section 9.(d)(3) terminates (i) immediately, if
before the Change in Control transaction closes, Fraser
terminates his employment without Good Reason or the Bank
terminates Fraser's employment for Cause, or (ii) one year
after a Change in Control occurs.
(f) Return of Bank Property. If and when Fraser ceases, for any
reason, to be employed by the Bank, Fraser must return to the
Bank all keys, pass cards, identification cards and any other
property of the Bank or Glacier. At the same time, Fraser also
must return to the Bank all originals and copies (whether in hard
copy, electronic or other form) of any documents, drawings,
notes, memoranda, designs, devices, diskettes, tapes, manuals,
and specifications which constitute proprietary information or
material of the Bank or Glacier. The obligations in this
paragraph include the return of documents and other materials
which may be in his desk at work, in his car, in
-5-
6
place of residence, or in any other location under his control.
(g) Cause. "Cause" means any one or more of the following:
(i) Willful misfeasance or gross negligence in the
performance of Fraser's duties;
(ii) Conviction of a crime in connection with his duties;
(iii) Conduct demonstrably and significantly harmful to
the Bank as reasonably determined on the advice of legal
counsel by the Bank's board of directors; or
(iv) Permanent disability, meaning a physical or mental
impairment which renders Fraser incapable of substantially
performing the duties required under this Agreement, and
which is expected to continue rendering Fraser so
incapable for the reasonably foreseeable future.
(h) Good Reason. "Good Reason" means only any one or more of the
following:
(i) Reduction of Fraser's salary or reduction or
elimination of any compensation or benefit plan
benefitting Fraser, unless the reduction or elimination is
generally applicable to substantially all Bank employees
(or employees of a successor or controlling entity of the
Bank) formerly benefitted;
(ii) The assignment to Fraser without his consent of any
authority or duties materially inconsistent with Fraser's
position as of the date of this Agreement; or
(iii) A relocation or transfer of Fraser's principal place
of employment that would require Fraser to commute on a
regular basis more than 10 miles each way from Missoula.
(i) Change in Control. "Change in Control" means a change "in the
ownership or effective control" or "in the ownership of a
substantial portion of the assets" of the Bank, within the
meaning of section 280G of the Internal Revenue Code.
10. CONFIDENTIALITY. Fraser will not, after the date this Agreement was
signed, including during and after its Term, use for his own purposes or
disclose to any other person or entity any confidential business information
concerning the Bank or Glacier or their business operations, unless (1) the Bank
or Glacier consents to the use or disclosure of their respective confidential
-6-
7
information; (2) the use or disclosure is consistent with Fraser's duties under
this Agreement or (3) disclosure is required by law or court order. For purposes
of this Agreement, confidential business information includes, without
limitation, trade secrets (as defined under the Montana Uniform Trade Secrets
Act, Montana Code Section 30-14- 402), various confidential information
concerning all aspects of current and future operations, nonpublic information
on investment management practices, marketing plans, pricing structure and
technology of either the Bank or Glacier. Fraser will also treat the terms of
this Agreement as confidential business information.
11. NONCOMPETITION. During the Term and the terms of any extensions or
renewals of this Agreement and for a period equal to the lesser of (a) two years
after Fraser's employment with the Bank and Glacier has terminated or (b) three
years from Closing of the Merger, Fraser will not, directly or indirectly, as a
shareholder, director, officer, employee, partner, agent, consultant, lessor,
creditor or otherwise:
(a) provide management, supervisory or other similar services to any
person or entity engaged in any business in Missoula County,
Montana which is competitive with the business of the Bank or
Glacier as conducted during the term of this Agreement or as
conducted as of the date of termination of employment;
(b) persuade or entice, or attempt to persuade or entice, any
employee of the Bank or Glacier to terminate his/her employment
with the Bank or Glacier; or
(c) persuade or entice or attempt to persuade or entice, any person
or entity to terminate, cancel, rescind or revoke its business or
contractual relationships with the Bank or Glacier.
12. ENFORCEMENT.
(a) The Bank and Fraser stipulate that, in light of all of the facts
and circumstances of the relationship between Fraser and the
Bank, the agreements referred to in Sections 10 and 11 (including
without limitation their scope, duration and geographic extent)
are fair and reasonably necessary for the protection of the
Bank's and Glacier's confidential information, goodwill and other
protectable interests. If a court of competent jurisdiction
should decline to enforce any of those covenants and agreements,
Fraser and the Bank request the court to reform these provisions
to restrict Fraser's use of confidential information and Fraser's
ability to compete with the Bank and Glacier to the maximum
extent, in time, scope of activities, and geography, the court
finds enforceable.
(b) Fraser acknowledges the Bank and Glacier will suffer immediate
and irreparable harm that will not be
-7-
8
compensable by damages alone if Fraser repudiates or breaches any
of the provisions of Sections 10 or 11 or threatens or attempts
to do so. For this reason, under these circumstances, the Bank,
in addition to and without limitation of any other rights,
remedies or damages available to it at law or in equity, will be
entitled to obtain temporary, preliminary and permanent
injunctions in order to prevent or restrain the breach, and the
Bank will not be required to post a bond as a condition for the
granting of this relief.
13. COVENANTS. Fraser specifically acknowledges the receipt of adequate
consideration for the covenants contained in Sections 10 and 11 and that the
Bank is entitled to require him to comply with these Sections. These Sections
will survive termination of this Agreement. Fraser represents that if his
employment is terminated, whether voluntarily or involuntarily, Fraser has
experience and capabilities sufficient to enable Fraser to obtain employment in
areas which do not violate this Agreement and that the Bank's enforcement of a
remedy by way of injunction will not prevent Fraser from earning a livelihood.
14. ARBITRATION.
(a) Arbitration. At either party's request, the parties must submit
any dispute, controversy or claim arising out of or in connection
with, or relating to, this Agreement or any breach or alleged
breach of this Agreement, to arbitration under the American
Arbitration Association's rules then in effect (or under any
other form of arbitration mutually acceptable to the parties). A
single arbitrator agreed on by the parties will conduct the
arbitration. If the parties cannot agree on a single arbitrator,
each party must select one arbitrator and those two arbitrators
will select a third arbitrator. This third arbitrator will hear
the dispute. The arbitrator's decision is final (except as
otherwise specifically provided by law) and binds the parties,
and either party may request any court having jurisdiction to
enter a judgment and to enforce the arbitrator's decision. The
arbitrator will provide the parties with a written decision
naming the substantially prevailing party in the action. This
prevailing party is entitled to reimbursement from the other
party for its costs and expenses, including reasonable attorneys'
fees.
(b) Governing Law. All proceedings will be held at a place designated
by the arbitrator in Flathead County, Montana. The arbitrator, in
rendering a decision as to any state law claims, will apply
Montana law.
(c) Exception to Arbitration. Notwithstanding the above, if Fraser
violates Section 10 or 11, the Bank will have the right to
initiate the court proceedings described in
-8-
9
Section 12, in lieu of an arbitration proceeding under this
Section 14.
15. MISCELLANEOUS PROVISIONS.
(a) Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties concerning its
subject matter and supersedes all prior agreements,
correspondence, representations, or understandings between the
parties relating to its subject matter.
(b) Binding Effect. This Agreement will bind and inure to the benefit
of the Bank's, Glacier's, and Fraser's heirs, legal
representatives, successors and assigns.
(c) Litigation Expenses. If either party successfully seeks to
enforce any provision of this Agreement or to collect any amount
claimed to be due under it, this party will be entitled to
reimbursement from the other party for any and all of its
out-of-pocket expenses and costs including, without limitation,
reasonable attorneys' fees and costs incurred in connection with
the enforcement or collection.
(d) Waiver. Any waiver by a party of its rights under this Agreement
must be written and signed by the party waiving its rights. A
party's waiver of the other party's breach of any provision of
this Agreement will not operate as a waiver of any other breach
by the breaching party.
(e) Assignment. The services to be rendered by Fraser under this
Agreement are unique and personal. Accordingly, Fraser may not
assign any of his rights or duties under this Agreement.
(f) Amendment. This Agreement may be modified only through a written
instrument signed by both parties.
(g) Severability. The provisions of this Agreement are severable. The
invalidity of any provision will not affect the validity of other
provisions of this Agreement.
(h) Governing Law and Venue. This Agreement will be governed by and
construed in accordance with Montana law, except to the extent
that certain matters may be governed by federal law. The parties
must bring any legal proceeding arising out of this Agreement in
Flathead County, Montana.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all
of which taken together will constitute one and the same
document.
-9-
10
Signed August 9, 1996:
THE FIRST SECURITY BANK OF MISSOULA:
By: /s/ Xxxxxxx X. Xxxxxxx
Its: President and CEO
XXXXXX XXXXXX:
/s/ Xxxxxx Xxxxxx
Ratified August 9, 1996
GLACIER BANCORP, INC.
By: /s/ Xxxx X. XxxXxxxxx
Its: President and CEO
-10-
