EXHIBIT 10.13
EXECUTIVE EMPLOYMENT AGREEMENT
This Amended and Restated EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement")
is dated as of DECEMBER 17, 2003. The effective date of this Agreement is
JANUARY 1, 2002 (the "Effective Date"). The parties to this Agreement
("Parties") are INTERMOUNTAIN COMMUNITY BANCORP f/k/a PANHANDLE BANCORP, an
Idaho corporation ("IMCB"), PANHANDLE STATE BANK, an Idaho state-chartered bank
("PSB") (IMCB and PSB individually and collectively being "Employer") and XXXX
XXXXXX ("Executive").
RECITALS
A. Executive is employed by Employer in an executive management
capacity, presently holding the position of President and CEO of IMCB and CEO of
PSB. The Parties wish to continue Executive's employment in that capacity under
the terms and conditions of this Agreement.
B. Executive previously entered into (i) an Executive Employment
Agreement with Employer dated as of January 1, 2002, and (ii) an Executive
Severance Agreement dated as of September 15, 1999, as amended, with Panhandle
Bancorp (the "Change in Control Agreement"), which provides for certain
severance payments to Executive in the event of a change in control of IMCB.
Executive also previously entered into a Tax Payment Bonus Plan dated as of
December 1, 2000 with IMCB (the "Tax Bonus Agreement").
AGREEMENT
1) TERM OF AGREEMENT. The term of this employment agreement is three (3)
years, commencing on the Effective Date (the "Term"). The agreement will
automatically renew every three years unless cancelled by the Board of
Directors within 60 days of the expiration of the term. Notwithstanding the
preceding, if a definitive agreement providing for a Change in Control
(defined below) is entered into (i) on or before the expiration of the Term
or (ii) within twelve (12) months after Executive's involuntary termination
other than for Cause, Disability, Retirement or death, then expiration of
such Term shall be extended through the Severance Protection Period
(defined below).
2) EMPLOYMENT. Employer will continue Executive's employment during the Term,
and Executive accepts employment by Employer on the terms and conditions
set forth in this Agreement. Executive's title will be "President and Chief
Executive Officer (CEO)" of IMCB and "CEO" of PSB.
3) DUTIES OF EXECUTIVE. Executive will report directly to the Chairman of the
Board of IMCB. Executive will be responsible for the following duties:
a) Development of and compliance with all bank policies.
b) Calls on the most important existing and potential corporate
customers.
c) Supervision of bank's strategic plan in all aspects.
d) Expansion into new markets and recruitment of employees.
e) Serving on PSB committees including: Executive Management, Senior
Management, Senior Credit, Compliance, Risk Management,
Technology, and Human Resources.
f) Serving as commercial loan officer to a few most important
business customers.
g) Representing PSB at civic and community activities.
h) Supervising the President of PSB and ICB in the implementation of
an effective branch operations system.
i) Supervising the COO in the implementation of effective
information systems, human resource management, financial plans
and budgets.
j) Supervising the Credit Administrator in the implementation of an
effective lending operation.
k) Supervising the Executive Assistant in the preparation of reports
and completion of various administrative tasks.
4) COMMITMENT OF EXECUTIVE. (a) Executive will faithfully and diligently
perform the duties set forth in Section 3 and such other duties as may be
assigned to Executive from time to time by IMCB's board of directors (the
"Board"). Executive will use his best efforts to perform his duties and
will devote full time and attention to these duties during working hours.
Executive may engage in non-IMCB business activities with prior Board
approval, which approval will not be unreasonably withheld.
(b) In the event that any person extends any proposal or offer which is
intended to or may result in a Change in Control, defined below (a "Change
in Control Proposal"), Executive shall, at Employer's request, assist
Employer in evaluating such proposal or offer. Further, as a condition to
receipt of the Severance Payment (defined below), Executive agrees not to
voluntarily resign (including resignation for Good Reason) Executive's
position with Employer during any period from the receipt of a specific
Change in Control Proposal up to the consummation or abandonment of the
transaction contemplated by such Proposal.
5) SALARY. Executive will receive an annual base salary of $180,000 to be paid
in accordance with PSB's regular payroll schedule. The Executive Committee
of the Board will review Executive's salary in connection with its
performance review on an annual basis.
6) OTHER COMPENSATION. Executive will participate in both the Long-Term
Incentive Plan and Executive Incentive Plan administered by the Human
Resource Committee.
a) Executive is eligible to participate in PSB's 401K retirement
plan with employer match of 50% of first 6% of salary contributed.
b) Executive may receive stock options annually, based on
performance evaluation at the discretion of the Board of Directors.
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c) Executive's Tax Bonus Agreement with IMCB shall not be affected
by this Agreement, and Executive shall continue to receive payments in
accordance with the terms of the Tax Bonus Agreement.
7) SALARY CONTINUATION PLAN. In consideration of this agreement, IMCB has
entered into a Salary Continuation Agreement with Executive, substantially
in the form approved by IMCB's board of directors on October 22, 2003 (the
"Salary Continuation Agreement").
8) VACATION AND BENEFITS. Executive is eligible for four (4) weeks of paid
vacation per year. Unused vacation time will not be carried over.
Additional benefits include life insurance of $50,000 for Executive and
$2,000 for Executive's spouse and $2,000 for each dependent, and
miscellaneous firm-wide benefits such as free checking account, safe
deposit box, no fee investments, etc. Executive shall also be entitled to
use of a company automobile with gas card.
9) TERMINATION AND SEVERANCE PROVISIONS. If, during the Term, either Employer
or Executive terminates Executive's employment with Employer for any
reason, and provided that such termination does not otherwise entitle
Executive to receive a Severance Payment (as defined below) under Section
10 of this Agreement, Executive will be entitled to receive a termination
payment equal to two (2) times Executive's annual base salary the
("Termination Payment"). The Termination Payment shall be paid in one lump
sum payment, payable upon the date that Executive's employment is
terminated. Notwithstanding the preceding, in the event that a definitive
agreement providing for a Change in Control (each as defined below) is
entered into within twelve (12) months after Executive's involuntary
termination other than for Cause, Disability, Retirement or death,
Executive shall be entitled to receive the difference between the Severance
Payment and the Termination Payment upon the effective date of the Change
in Control.
10) CHANGE IN CONTROL/SEVERANCE PAYMENT.
a) Payment Events. Subject to the requirements of Section 4(b) of
this Agreement, in the event of involuntary termination of
Executive's employment with Employer, other than for Cause,
Disability, Retirement, (each defined below) or death, or in the
event of voluntary termination for Good Reason (defined below),
(i) within the Severance Protection Period after a Change in
Control, or (ii) within twelve (12) months before a definitive
agreement providing for a Change in Control is entered into,
Employer will pay Executive a severance payment in the amount
determined pursuant to the next section ("Severance Payment"),
payable on the later of the date of termination or the effective
date of the Change in Control. The "Severance Protection Period"
shall be the period beginning on the effective date of the Change
of Control and continuing thereafter for twenty-four (24) months.
b) Amount of Payment. The Severance Payment shall be an amount equal
to the Payment Multiple (defined below) multiplied by one-twelfth
of Executive's
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compensation as reported on Executive's IRS Form W-2 for the most
recent calendar year less compensation payable to Executive that
was deferred or carried over from prior years. In the event the
Executive is not employed for a full calendar year prior to the
Change in Control, the Severance Payment shall be an amount equal
to the Payment Multiple multiplied by one-twelfth of Executive's
annual base salary. The "Payment Multiple" shall be twenty-four
(24). The Severance Payment shall be reduced by an amount equal
to any compensation which would be reported on Executive's IRS
Form W-2 for the period following the Change in Control;
provided, however, the Severance Payment shall not be reduced by
the amount of any bonus or other compensation received in the
period following the Change in Control that is based on
Executive's performance during the period prior to the Change in
Control.
11) EXCISE TAX UNDER INTERNAL REVENUE CODE SECTIONS 280G AND 4999.
a) Partial Reimbursement of Excise Tax. If a Change in Control
occurs the Executive may become entitled to acceleration of
benefits under this Agreement or under any other plan or
agreement of or with PSB or IMCB, including accelerated vesting
of stock options and acceleration of benefits under any other
benefit, compensation, or incentive plan or arrangement with PSB
or IMCB (collectively, the "Total Benefits"). If a Change in
Control occurs, IMCB and PSB shall cause the certified public
accounting firm retained by IMCB as of the date immediately
before the Change in Control (the "Accounting Firm") to calculate
the Total Benefits and any excise tax payable by the Executive
under sections 280G and 4999 based upon the Total Benefits. If
the Accounting Firm determines that an excise tax is payable, at
the same time PSB pays the Change in Control benefit under
Section 10 of this Agreement PSB shall also pay to the Executive
an amount in cash equal to the excise tax calculated by the
Accounting Firm (the "Excise Tax"). The Executive acknowledges
and agrees that this Section 11 provides for partial
reimbursement only of the final excise tax that may be payable by
him, and that additional unreimbursed excise taxes may be payable
by him after taking into account the reimbursement payment
provided under this Section 11. The partial reimbursement of the
excise tax under this Section 11 shall be made in addition to the
amount set forth in Section 10.
(b) Calculating the Excise Tax. For purposes of determining whether
any of the Total Benefits will be subject to the Excise Tax and
for purposes of determining the amount of the Excise Tax,
1) Determination of "Parachute Payments" Subject to the Excise
Tax: any other payments or benefits received or to be received by
the Executive in connection with a Change in Control or the
Executive's Termination of Employment (whether under the terms of
this Agreement or any other agreement, stock option plan or any
other benefit plan or arrangement with PSB or IMCB, any person
whose actions result in a Change in Control or any
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person affiliated with PSB, IMCB, or such person) shall be
treated as "parachute payments" within the meaning of section
280G(b)(2) of the Internal Revenue Code, and all "excess
parachute payments" within the meaning of section 280G(b)(1)
shall be treated as subject to the Excise Tax, unless in the
opinion of the Accounting Firm such other payments or benefits do
not constitute (in whole or in part) parachute payments, or such
excess parachute payments represent (in whole or in part)
reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4) of the Internal Revenue Code in
excess (as defined in section 280G(b)(3) of the Internal Revenue
Code), or are otherwise not subject to the Excise Tax,
2) Calculation of Benefits Subject to Excise Tax: the amount of
the Total Benefits that shall be treated as subject to the Excise
Tax shall be equal to the lesser of (a) the total amount of the
Total Benefits reduced by the amount of such Total Benefits that
in the opinion of the Accounting Firm are not parachute payments,
or (b) the amount of excess parachute payments within the meaning
of section 280G(b)(1) (after applying clause (i), above), and
3) Value of Noncash Benefits and Deferred Payments: the value of
any noncash benefits or any deferred payment or benefit shall be
determined by the Accounting Firm in accordance with the
principles of sections 280G(d)(3) and (4) of the Internal Revenue
Code.
(c) Assumed Marginal Income Tax Rate. For purposes of determining the
amount of the partial Excise Tax reimbursement payment to be made
under this Section 11, the Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the partial Excise
Tax reimbursement under this Section 11 is to be made and state
and local income taxes at the highest marginal rate of taxation
in the state and locality of the Executive's residence on the
date of Termination of Employment, net of the reduction in
federal income taxes that can be obtained from deduction of such
state and local taxes (calculated by assuming that any reduction
under section 68 of the Internal Revenue Code in the amount of
itemized deductions allowable to the Executive applies first to
reduce the amount of such state and local income taxes that would
otherwise be deductible by the Executive, and applicable federal
FICA and Medicare withholding taxes).
(d) Accounting Firm's Determinations Are Final and Binding. All
determinations made by the Accounting Firm under this Section 11
shall be final and binding on PSB, IMCB, and the Executive. All
determinations required to be made under this Section 11 -
including the assumptions used to calculate Total Benefits and
the Excise Tax - shall be made by the Accounting Firm, which
shall provide detailed supporting calculations both to PSB and
the Executive.
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12) DEFINITIONS
a) Cause. "Cause means any one or more of the following:
1) Willful misfeasance or gross negligence in the performance
of Executive's duties;
2) Conviction of a crime in connection with such duties; or
3) Conduct demonstrably and significantly harmful to the
financial condition of the PSB and/or IMCB.
c) Change in Control. "Change in Control" shall mean any of the
following:
1) Merger. IMCB merges into or consolidates with another
corporation, or merges another corporation into IMCB, and as
a result less than 50% of the combined voting power of the
resulting corporation immediately after the merger or
consolidation is held by persons who were the holders of
IMCB's voting securities immediately before the merger or
consolidation;
2) Acquisition of Significant Share Ownership. A report on
Schedule 13D or another form or schedule (other than
Schedule 13G) is filed or is required to be filed under
sections 13(d) or 14(d) of the Securities Exchange Act of
1934, if the schedule discloses that the filing person or
persons acting in concert has or have become the beneficial
owner of 25% or more of a class of IMCB's voting securities,
or if IMCB does not then have equity securities registered
under section 12 of the Securities Exchange Act of 1934 a
person or group acting in concert has or have become the
beneficial owner of 25% or more of a class of IMCB's voting
securities, but this paragraph (2) shall not apply to
beneficial ownership of voting shares of IMCB held in a
fiduciary capacity by an entity in which IMCB directly or
indirectly beneficially owns 50% or more of the outstanding
voting securities;
3) Change in Board Composition. During any period of two
consecutive years, individuals who constitute IMCB's board
of directors at the beginning of the two-year period cease
for any reason to constitute at least a majority thereof;
provided, however, that -- for purposes of this paragraph
(c) -- each director who is first elected by the board (or
first nominated by the board for election by stockholders)
by a vote of at least two-thirds (2/3) of the directors who
were directors at the beginning of the period shall be
deemed to have been a director at the beginning of the
two-year period; or
4) Sale of Assets. IMCB sells to a third party all or
substantially all of IMCB's assets. For this purpose, sale
of all or substantially all of IMCB's assets includes sale
of the shares or assets of the PSB alone.
d) Change in Control Proposal. "Change in Control Proposal" has the
meaning assigned in Section 4(b) of this Agreement.
e) Disability. "Disability" means a physical or mental impairment
which renders Executive incapable of substantially performing the
essential functions of
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such Executive's position, and which is expected to continue
rendering Executive so incapable for the reasonably foreseeable
future, with or without reasonable accommodation.
f) Retirement. "Retirement" shall mean voluntary termination by
Executive in accordance with PSB's retirement policies, including
early retirement, if applicable to their salaried employees.
g) Good Reason. "Good Reason" shall mean any of the following:
1) Substantial diminution of the Executive's duties compared to
the Executive's duties prior to the Change in Control;
2) Substantial diminution of the Executive's compensation
compared to the Executive's compensation prior to the Change
in Control;
3) Significant relocation, where Significant means a change of
more than 60 miles (one way) in the Executive's commute if
the Executive does not agree to move.
13) CONFIDENTIALITY. Executive will not, after signing this Agreement,
including during and after its Term, use for his own purposes or disclose
to any other person or entity any confidential information concerning
Employer or its business operations or customers, unless (1) Employer
consents to the use or disclosure of its confidential information, (2) the
use or disclosure is consistent with Executive's duties under this
Agreement, or (3) disclosure is required by law or court order.
Confidential information includes, but is not limited to, financial
information, customer lists, marketing strategies, and business plans.
14) RETURN OF EMPLOYER PROPERTY. If and when Executive ceases, for any reason,
to be employed by Employer, Executive must return to Employer all keys,
pass cards, identification cards and any other property of Employer. At the
same time, Executive also must return to Employer all originals and copies
(whether in hard copy, electronic or other form) of any documents, notes,
memoranda, designs, devices, diskettes, tapes, manuals, and specifications
which constitute proprietary information or material of Employer. The
obligations in this Section include the return of documents and other
materials which may be in Executive's desk at work, in Executive's car or
place of residence, or in any other location under Executive's control.
15) NON-SOLICITATION. Executive shall not solicit or cause to be solicited for
employment any employee of Employer for a period of two (2) years following
Executive's termination; nor solicit or cause to be solicited the business
and/or accounts of customers of Employer for a period of two years
following Executive's termination. Executive's obligations under this
Section 15 terminate immediately upon a Change in Control.
16) NON-COMPETITION. Except as otherwise expressly provided in this Agreement,
while Executive is employed by Employer and for two years following
termination of
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Executive's employment for any reason, , Executive will not become involved
with a Competing Business or serve, directly or indirectly, a Competing
Business in any manner, including, without limitation, as a shareholder,
member, partner, director, officer, manager, investor, organizer,
"founder," employee, consultant, or agent; provided, however, that
Executive may acquire and passively own an interest not exceeding 2% of the
total equity interest in a Competing Business. Executive's obligations
under this Section 16 terminate immediately upon a Change in Control. For
purposes of this Agreement, the term "Competing Business" means any
financial service institutions, including without limitation banks,
insurance companies, leasing companies, mortgage companies, and brokerage
firms that engage in business in the State of Idaho, or southeastern
Oregon, or eastern Washington.
17) ENFORCEMENT.
a) Employer and Executive stipulate that, in light of all of the facts and
circumstances of the relationship between Executive and Employer, the agreements
referred to in Sections 15 and 16 (including without limitation their scope,
duration and geographic extent) are fair and reasonably necessary for the
protection of Employer's goodwill and other protectable interests. If a court of
competent jurisdiction should decline to enforce any of those covenants and
agreements, Executive and Employer request the court to reform these provisions
to restrict Executive's ability to compete with Employer to the maximum extent,
in time, scope of activities, and geography, the court finds enforceable.
b) Executive acknowledges that Employer will suffer immediate and
irreparable harm that will not be compensable by damages alone, if Executive
repudiates or breaches any of the provisions of Sections 15 and 16 or threatens
or attempts to do so. For this reason, under these circumstances, Employer, 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 Employer will not be required to post a bond as a condition for the
granting of this relief.
18) ADEQUATE CONSIDERATION. Executive specifically acknowledges the receipt of
adequate consideration, including without limitation the Termination Payment,
identified in Section 9, if due and owing, for the covenants contained in
Sections 15 and 16 and that Employer is entitled to require him to comply with
those Sections regardless of the reason(s) for Executive's separation of
employment with Employer. Sections 15 and 16 will survive termination of this
Agreement, but will expire no later than two years from the date of the
termination of employment or the maturity of this agreement, whichever is later.
Executive represents that if his employment is terminated, whether voluntarily
or involuntarily, Executive has experience and capabilities sufficient to enable
Executive to obtain employment in areas which do not violate this Agreement and
that Employer's enforcement of a remedy by way of injunction will not prevent
Executive from earning a livelihood.
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19) ENTIRE AGREEMENT. This agreement constitutes the entire understanding
between the parties concerning its subject matter and supersedes all prior
agreements, including that certain employment agreement between Executive and
Employer effective January 1, 2002 and the Change in Control Agreement.
Accordingly, Executive specifically waives the terms of and all of Executive's
rights under any severance provisions of any employment and/or change-in-control
agreements, whether written or oral, previously entered into with PSB and/or
IMCB. Notwithstanding the preceding, the terms of this agreement are separate
from and do not supercede the terms of the Tax Bonus Agreement or the Salary
Continuation Agreement.
20) MISCELLANEOUS PROVISIONS.
a) Choice of Law. This Agreement is made with reference to and is
intended to be construed in accordance with the laws of the State of
Idaho.
b) Arbitration. Any dispute, controversy or claim arising out of or in
connection with, or relating to, this Agreement or any breach or
alleged breach hereof, shall, upon the request of any party involved,
be submitted to, and settled by, arbitration pursuant to the rules
then in effect of the American Arbitration Association (or under any
other form of arbitration mutually acceptable to the parties so
involved). Any award rendered shall be final and conclusive upon the
parties and a judgment thereon may be entered in the highest court of
the forum having jurisdiction. The arbitrator shall render a written
decision, naming the substantially prevailing party in the action, and
shall award such party all costs and expenses incurred, including
reasonable attorneys' fees. Notwithstanding the foregoing, if
Executive violates Sections 13 or 14, Employer will have the right to
initiate the court proceedings described in Section 15(b), in lieu of
an arbitration proceeding under this Section. Employer may initiate
these proceedings wherever appropriate within the State of Idaho; but
Executive will consent to venue and jurisdiction in Xxxxxx County,
Idaho.
c) Attorney Fees. In the event of any breach of or default under this
Agreement which results in either party incurring attorney or other
fees, costs or expenses (including in arbitration), the prevailing
party shall be entitled to recover from the non-prevailing party any
and all such fees, costs and expenses, including attorneys' fees.
d) Successors. This Agreement shall bind and inure to the benefit of the
Parties and each of their respective affiliates, legal
representatives, heirs, successors and assigns.
e) Amendment. This Agreement may be amended only in a writing signed by
the Parties.
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f) Headings. The headings of sections of this Agreement have been
included for convenience of reference only. They shall not be
construed to modify or otherwise affect in any respect any of the
provisions of the Agreement.
g) Counsel Review. Executive acknowledges that he has had the opportunity
to consult with independent counsel with respect to the negotiation,
preparation, and execution of this Agreement.
h) Severability. The provisions of this Agreement are severable. The
invalidity of any provision will not affect the validity of other
provisions of this Agreement.
EXECUTED by each of the Parties effective as of the date first stated above.
IMCB EXECUTIVE
Intermountain Community Bancorp, Xxxx Xxxxxx
an Idaho Corporation President & CEO, Intermountain
Community Bancorp
CEO, Panhandle State Bank
/s/ Xxxx X. Xxxxxx /s/ Xxxx Xxxxxx
------------------------------ -----------------------------------
Xxxx X. Xxxxxx Xxxx Xxxxxx
Chairman of the Board Date:
Date: ----------------
----------------
PSB
Panhandle State Bank,
an Idaho State Chartered Bank
/s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
Chairman of the Board
Date:
----------------
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FIRST AMENDMENT OF EXECUTIVE EMPLOYMENT AGREEMENT
This First Amendment of Executive Employment Agreement (the
"Amendment") is made and entered into as of March 24, 2004. The parties to this
Amendment (the "Parties") are INTERMOUNTAIN COMMUNITY BANCORP f/k/a PANHANDLE
BANCORP, an Idaho corporation ("IMCB"), PANHANDLE STATE BANK, an Idaho
state-chartered bank ("PSB") (IMCB and PSB individually and collectively being
"Employer") and XXXX XXXXXX ("Executive").
RECITALS
A. The Parties entered into an Executive Employment Agreement
dated as of December 17, 2003 and effective as of January 1, 2002 (the
"Agreement"), which Agreement governs the terms of Executive's employment with
Employer.
B. Among other things, the Agreement addresses the Severance
Payment to be received by Executive in the event of a Change in Control. The
Agreement sets forth a formula for determining the amount of the Severance
Payment. Since the Employment Agreement was executed, the Parties have
determined that the formula set forth in the Agreement does not accurately
reflect the Parties' intent.
C. In order to manifest the Parties' intent regarding the
Severance Payment, the Parties wish to amend the terms of the Agreement as set
forth in this Amendment. Unless otherwise defined in this Amendment, capitalized
terms used in this Amendment have the meanings assigned to them in the
Agreement.
TERMS OF AMENDMENT
In consideration of the foregoing, the Parties agree as follows:
1. Section 10 of the Agreement is amended by deleting subsection
(b) in its entirety and inserting the following in its place:
Amount of Payment. The Severance Payment shall be an amount
equal to two (2) times the average of the total base compensation and
short term bonus received by Executive for each of the two most recent
calendar years.
2. This Amendment may be executed in one or more counterparts,
each of will be deemed an original, but all of which taken together will
constitute one and the same document.
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Dated as of March 24, 2004.
IMCB EXECUTIVE
Intermountain Community Bancorp, Xxxx Xxxxxx
an Idaho Corporation President & CEO, Intermountain
Community Bancorp
CEO, Panhandle State Bank
/s/ Xxxx X. Xxxxxx /s/ Xxxx Xxxxxx
----------------------------- ---------------------------
Xxxx X. Xxxxxx Xxxx Xxxxxx
Chairman of the Board Date: March 24, 2004
Date: /s/ March 24, 2004
PSB
Panhandle State Bank,
an Idaho State Chartered Bank
/s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx
Chairman of the Board
Date: March 24, 2004
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