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.
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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 Date: /s/ March 24, 2004
Date: March 24, 2004
AGREED TO AND RATIFIED by:
IMCB
Intermountain Community Bancorp
/s/ Xxxx Xxxxxx
---------------------------
Xxxx Xxxxxx
President & Chief Executive Officer
Date: March 24, 2004
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