EXHIBIT 10.19
EXECUTIVE SEVERANCE AGREEMENT
This Amended and Restated EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is
dated as of DECEMBER 17, 2003 (the "Effective Date"). The parties to this
Agreement ("Parties") are PANHANDLE STATE BANK ("PSB"), and XXXX XXXXX
("Executive"). This Agreement has been ratified by INTERMOUNTAIN COMMUNITY
BANCORP ("IMCB"), the parent company of PSB.
A. Executive is employed by PSB in a managerial capacity, presently holding
the position of SENIOR VICE PRESIDENT, CREDIT ADMINISTRATION, PANHANDLE
STATE BANK.
B. PSB wishes to ensure the continued availability of Executive's services in
the event of a change in the control of PSB, thereby allowing PSB to
maximize the benefits obtainable from any such change. To that end, PSB
desires to provide incentive for Executive's continued employment with
PSB.
NOW THEREFORE, PSB and Executive agree as follows:
AGREEMENT
1. EFFECTIVE DATE AND TERM. As of the Effective Date, this Agreement shall be
a binding obligation of the parties, not subject to revocation or
amendment except by mutual consent or in accordance with its terms. The
term of this Agreement ("Term") shall commence as of the Effective Date
and shall expire upon Executive's termination of employment with PSB.
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. COMMITMENT OF EXECUTIVE. 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 PSB's
request, assist PSB and/or IMCB 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 PSB 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.
3. SEVERANCE PAYMENT.
a) Payment Events. Subject to the requirements of Section 2 of
this Agreement, in the event of involuntary termination of
Executive's employment with PSB, 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, PSB 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 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.
c) Limitation on Payment. Notwithstanding anything in this
Agreement to the contrary, the Severance Payment shall not
exceed an amount equal to One Dollar ($1.00) less that the
amount which would cause the payment, together with any other
payments received from PSB and/or IMCB to be a "parachute
payment" as defined in Section 280G(b)(2)(A) of the Internal
Revenue Code of 1986, as amended.
4. DEFINITIONS
a) IMCB. "IMCB" means Intermountain Community Bancorp.
b) PSB. "PSB" means Panhandle State Bank. PSB is a wholly owned
subsidiary of IMCB.
c) 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.
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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 2 of this Agreement.
e) Disability. "Disability" means a physical or mental impairment
which renders Executive incapable of substantially performing
the essential functions of such Executive's position, and
which is expected to continue rendering Executive so incapable
for the reasonably foreseeable future, with or without
reasonable accommodation.
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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.
5. NOT AN EMPLOYMENT AGREEMENT. Nothing in this Agreement, express or
implied, is intended to confer upon Executive the right to employment with
PSB. Accordingly, except with respect to the Severance Payment, this
Agreement shall have no effect on the determination of any compensation
payable by PSB to Executive, or upon any of the other terms of Executive's
employment with PSB. The specific arrangements referred to herein are not
intended to exclude any other benefits which may be available to Executive
upon a termination of employment with PSB pursuant to employee benefit
plans of PSB or otherwise.
6. WITHHOLDING. All payments required to be made by PSB hereunder to
Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as PSB may reasonably
determine should be withheld pursuant to any applicable law or regulation.
7. ASSIGNABILITY. PSB may assign the Agreement and its rights hereunder in
whole, but not in part, to any corporation, bank or other entity with or
into which PSB may hereafter merge or consolidate or to which PSB may
transfer all or substantially all of its assets, if in any such case said
corporation, bank or other entity shall by operation of law or expressly
in writing assume all obligations of PSB hereunder as fully as if it had
been originally made a party hereto, but may not otherwise assign this
Agreement or its rights hereunder. Executive may not assign or transfer
this Agreement or any rights or obligations hereunder.
8. ENTIRE AGREEMENT. This agreement constitutes the entire understanding
between the parties concerning its subject matter and supersedes all prior
agreements, including that certain agreement between Executive and PSB
dated May 23, 2001. 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.
9. GENERAL PROVISIONS.
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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.
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.
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.
EXECUTED by each of the Parties effective as of the date first stated above.
PSB Executive
Panhandle State Bank Sr. Vice President
Credit Administration
By: /s/ Xxxx Xxxxxx /s/ Xxxx Xxxxx
--------------------------------- ------------------------
Chief Executive Officer Date Xxxx Xxxxx Date
AGREED TO AND RATIFIED by:
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IMCB
Intermountain Community Bancorp
By: /s/ Xxxx Xxxxxx
---------------------------
President & CEO Date
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FIRST AMENDMENT OF EXECUTIVE SEVERANCE AGREEMENT
This First Amendment of Executive Severance Agreement (the "Amendment") is
made and entered into as of March 24, 2004. The parties to this Amendment (the
"Parties") are PANHANDLE STATE BANK, an Idaho state-chartered bank ("PSB") and
XXXX XXXXX ("Executive"). This Amendment has been ratified by INTERMOUNTAIN
COMMUNITY BANCORP ("IMCB"), the parent company of PSB.
RECITALS
A. The Parties entered into an Executive Severance Agreement dated as of
December 17, 2003 (the "Agreement"), which Agreement governs certain terms of
Executive's employment in connection with a potential Change in Control of PSB
and/or IMCB.
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 3 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.
F-1
Dated as of March 24, 2004.
PSB EXECUTIVE
Panhandle State Bank, Xxxx Xxxxx
an Idaho State Chartered Bank Senior Vice President
Credit Administration
/s/ Xxxx Xxxxxx /s/ Xxxx Xxxxx
----------------------- ------------------
Xxxx Xxxxxx Xxxx Xxxxx
Chief Executive Officer
AGREED TO AND RATIFIED by:
IMCB
Intermountain Community Bancorp
/s/ Xxxx Xxxxxx
-----------------------------------
Xxxx Xxxxxx
President & Chief Executive Officer
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SECOND AMENDMENT OF EXECUTIVE SEVERANCE AGREEMENT
This SECOND AMENDMENT OF EXECUTIVE SEVERANCE AGREEMENT (this "Amendment")
is dated as of this 4th day of March, 2005 by and among Xxxx Xxxxx, Senior Vice
President and Chief Credit Officer (the "Executive") of Panhandle State Bank, an
Idaho bank (the "Bank") and wholly owned subsidiary of Intermountain Community
Bancorp, Inc., an Idaho corporation ("Intermountain").
WHEREAS, the Executive, Intermountain, and the Bank entered into an
Executive Severance Agreement dated as of December 17, 2003 (as amended by the
First Amendment of Executive Severance Agreement dated as of March 24, 2004, the
"Executive Severance Agreement"), which provides for payment of severance to the
Executive if he is terminated involuntarily but without cause within 24 months
after a change in control or within 12 months before a definitive agreement for
a change in control is entered into, or if the executive voluntarily terminates
his employment for good reason during those periods,
WHEREAS, the parties desire now to amend certain provisions of the
Executive Severance Agreement, consistent with the terms of section 9(e) of that
agreement, and
WHEREAS, the parties intend that the amendments of the Executive Severance
Agreement made by this Amendment shall become effective immediately, and that
the Executive Severance Agreement shall, as amended, remain in full force and
effect according to its terms.
NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.
1. DELETION OF THE ARBITRATION CLAUSE AND LEGAL FEE CLAUSE IN SECTIONS
9(b) AND 9(c); REPLACEMENT WITH A NEW LEGAL FEE REIMBURSEMENT CLAUSE. Paragraph
(b) of section 9 of the Executive Severance Agreement, captioned "Arbitration,"
and paragraph (c) of section 9, captioned "Attorney Fees," shall be deleted in
their entirety and replaced by a new paragraph (b), captioned "Payment of Legal
Fees." The deleted paragraphs (b) and (c) are as follows -
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.
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.
The deleted paragraphs (b) and (c) of section 9 shall be replaced by new
paragraph (b), as follows -
b) Payment of Legal Fees. PSB and IMCB are aware that after a Change in
Control management could cause or attempt to cause PSB and IMCB to
refuse to comply with the obligations under this Agreement, or could
institute or cause or attempt to cause PSB or IMCB to institute
litigation seeking to have this Agreement declared unenforceable, or
could take or attempt to take other action to deny Executive the
benefits intended under this Agreement. In these circumstances the
purpose of this Agreement would be frustrated. It is PSB's and
IMCB's intention that the Executive not be required to incur the
expenses associated with the enforcement of his rights under this
Agreement, whether by litigation or other legal action, because the
cost and expense thereof would substantially detract from the
benefits intended to be granted to the Executive hereunder. It is
PSB's and IMCB's intention that the Executive not be forced to
negotiate settlement of his rights under this Agreement under threat
of incurring expenses. Accordingly, if after a Change in Control
occurs it appears to the Executive that (a) either of PSB or IMCB
has failed to comply with any of its obligations under this
Agreement, or (b) either of PSB or IMCB or any other person has
taken any action to declare this Agreement void or unenforceable, or
instituted any litigation or other legal action designed to deny,
diminish, or to recover from the Executive the benefits intended to
be provided to the Executive hereunder, PSB and IMCB irrevocably
authorize the Executive from time to time to retain counsel of his
choice, at PSB's and IMCB's expense as provided in this paragraph
(b), to represent the Executive in connection with the initiation or
defense of any litigation or other legal action, whether by or
against PSB or IMCB or any director, officer, stockholder, or other
person affiliated with PSB or IMCB, in any jurisdiction.
Notwithstanding any existing or previous attorney-client
relationship between PSB or IMCB and any counsel chosen by the
Executive under this paragraph (b), PSB and IMCB irrevocably consent
to the Executive entering into an attorney-client relationship with
that counsel, and PSB and IMCB and the Executive agree that a
confidential relationship shall exist between the Executive and that
counsel. The fees and expenses of counsel selected from time to time
by the Executive as provided in this section shall be paid or
reimbursed to the Executive by PSB or IMCB on a regular, periodic
basis upon presentation by the Executive of a statement or
statements prepared by such counsel in accordance with such
counsel's customary practices, up to a maximum aggregate amount of
$250,000, whether suit be brought or not, and whether or not
incurred in trial, bankruptcy, or appellate proceedings. PSB's and
IMCB's obligation to pay the Executive's legal fees provided by this
paragraph (b) operates separately from and in addition to any legal
fee reimbursement obligation PSB or IMCB may have with the Executive
under any separate severance, employment, salary continuation, or
other agreement. Anything in this paragraph (b) to the contrary
notwithstanding however, PSB and IMCB shall not be required to pay
or reimburse the Executive's legal expenses if doing so would
violate section 18(k) of the Federal Deposit Insurance Act [12
U.S.C. 1828(k)] and Rule 359.3 of the Federal Deposit Insurance
Corporation [12 CFR 359.3].
Paragraphs (d) through (f) of section 9 of the Executive Severance
Agreement shall remain in full force and effect, except that they shall be
redesignated paragraphs (c) through (e).
2. COUNTERPARTS. 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.
IN WITNESS WHEREOF, this Second Amendment of Executive Severance Agreement
has been executed by Xxxx Xxxxx, Intermountain Community Bancorp, Inc., and
Panhandle State Bank as of the date first written above.
EXECUTIVE PANHANDLE STATE BANK
/s/ Xxxx Xxxxx By: /s/ Xxxx Xxxxxx
--------------------- --------------------
Xxxx Xxxxx Xxxx Xxxxxx
Its: Chief Executive Officer
INTERMOUNTAIN COMMUNITY BANCORP, INC.
By: /s/ Xxxx Xxxxxx
-----------------------
Xxxx Xxxxxx
Its: President and Chief Executive
Officer
