EXHIBIT 10.3
BANK OF THE SAN JUANS
EMPLOYMENT AGREEMENT
XXXXXX X. XXXXX, XX.
THIS EMPLOYMENT AGREEMENT (this "Agreement"), signed as of August 19, 2008,
between BANK OF THE SAN JUANS BANCORPORATION ("SJ Bancorp"), BANK OF THE SAN
JUANS (the "Bank") and Xxxxxx X. Xxxxx, Xx. ("Executive") and ratified by
GLACIER BANCORP, INC. ("GBCI"), takes effect on the effective date of the
pending Merger (the "Effective Date") referenced below.
RECITALS
A. SJ Bancorp has entered into a Plan and Agreement Merger (the "Merger
Agreement") with GBCI, pursuant to which SJ Bancorp will merge with and
into GBCI, and the Bank will become a wholly owned subsidiary of GBCI (the
"Merger").
B. Executive presently serves as President and Chief Executive Officer of SJ
Bancorp and the Bank and will continue to do so until the Effective Date.
C. GBCI and the Bank desire Executive to be employed by the Bank from and
after the Effective Date, under the terms and conditions of this Agreement,
and Executive desires to be employed by the Bank from and after the
Effective Date, under the terms and conditions of this Agreement.
D. This Agreement supercedes any and all other employment, change in control
or similar agreements that may currently be in effect for Executive,
including the Change in Control Severance Agreement, dated August 21, 2007
(the "Change in Control Agreement").
AGREEMENT
In consideration of the promises set forth in this Agreement, the parties
agree as follows.
1. EMPLOYMENT; TITLE. The Bank agrees to employ Executive, and Executive
accepts employment by the Bank on the terms and conditions set forth in
this Agreement. Executive's title will be President and Chief Executive
Officer of the Bank.
2. EFFECTIVE DATE AND TERM.
a. Term. The term of this Agreement ("Term") commences on the Effective
Date and expires on December 31, 2011.
b. Abandonment or Termination of the Merger. This Agreement is void if
the Merger Agreement is terminated for any reason.
3. DUTIES. The Bank will employ Executive as its President and Chief Executive
Officer. Executive will faithfully and diligently perform the duties
assigned to him, which duties will be consistent with his title and
position. Executive will report directly to GBCI's President and Chief
Executive Officer. The Bank's or GBCI's board of directors may, from time
to time, modify Executive's performance responsibilities to accommodate
management objectives of the Bank or of GBCI. Executive 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 his title and position.
4. EXTENT OF SERVICES. Executive will devote all of his working time,
attention and skill to the duties and responsibilities referenced in
Section 3. To the extent that such activities do not interfere with his
duties under Section 3, Executive may participate in other businesses as a
passive investor, but (a) Executive may not actively participate in the
operation or management of those businesses, and (b) Executive may not,
without the Bank's prior written consent, make or maintain any investment
in a business with which the Bank and/or GBCI has an existing competitive
or commercial relationship.
5. SALARY. Executive will receive an annualized salary of $183,750, which is
the amount of Executive's annual salary as of the date of this Agreement.
Executive's salary will be paid in accordance with the Bank's regular
payroll schedule. Subsequent salary increases are subject to the Bank's
annual review of Executive's compensation and performance. Executive will
not receive additional compensation for his service on the Bank's board of
directors.
6. GBCI BANK PRESIDENT PLANS. In light of the Bank continuing Executive's
annual salary at its pre-Effective Date amount, Executive will not
participate in GBCI's Bank President Short-Term Incentive Plan or its Bank
President Long-Term Incentive Plan.
7. VACATION AND BENEFITS.
a. Vacation and Holidays. Executive will receive four weeks of paid
vacation each year. Executive's ability to carry over or accumulate
vacation will be governed by the Bank's and/or GBCI's applicable
policies.
b. Benefits. Except as provided in Section 6, Executive will be entitled
to participate in any group life insurance, disability, health and
accident insurance plans, profit sharing plan and in other employee
fringe benefit programs the Bank or GBCI 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 GBCI's board of
directors with respect to the plans or programs, including without
limitation, any incentive or employee stock option plan, deferred
compensation plan and 401(k) plan. Neither the Bank nor GBCI through
this Agreement obligates itself to make any particular benefits
available to its employees.
c. Business Expenses. The Bank will reimburse Executive for ordinary and
necessary expenses which are consistent with past practice at the Bank
(including, without limitation, travel, entertainment, and similar
expenses) and which are
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incurred in performing and promoting the Bank's business. Executive
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.
d. Automobile Lease. The Bank will continue to provide Executive with
exclusive use of a Bank automobile, and Executive will maintain
appropriate records with respect to such use for tax purposes.
e. Life Insurance Policy. The Bank will continue to pay premiums for the
key man split life insurance policy covering Executive's life as of
the date hereof.
8. TERMINATION OF EMPLOYMENT.
a. Termination By Bank for Cause. If the Bank terminates Executive's
employment for Cause (defined below) or Executive terminates his
employment without Good Reason (defined below) before this Agreement
terminates, the Bank will pay Executive the salary earned and expenses
reimbursable under this Agreement incurred through the date of his
termination. Executive will have no right to receive compensation or
other benefits for any period after termination under this Section
8(a).
b. Other Termination By Bank. If the Bank terminates Executive's
employment without Cause before this Agreement terminates, or
Executive terminates his employment for Good Reason, the Bank will pay
Executive a lump sum payment equal to one times Executive's annual
base salary at the time of termination (the "Termination Payment");
provided, however, that if within six months following such
termination of employment a Change in Control (defined below) of the
Bank is announced or required by law to be announced, then upon
consummation of such Change in Control, Executive shall receive the
Change in Control Payment (defined below) less the amount of any
Termination Payment already received.
c. Death or Disability. This Agreement terminates (1) if Executive dies
or (2) if Executive is unable to perform his duties and obligations
under this Agreement for a period of 90 consecutive days as a result
of a physical or mental disability arising at any time during the term
of this Agreement, unless with reasonable accommodation Executive
could continue to perform his duties under this Agreement and making
these accommodations would not pose an undue hardship on the Bank. If
termination occurs under this Section 8(c), Executive or his estate
will be entitled to receive all compensation and benefits earned and
expenses reimbursable through the date Executive's employment
terminated.
d. Change in Control. If, during the Term of this Agreement, GBCI or the
Bank enters into an agreement for a Change in Control (defined below)
of the Bank, or any party announces or is required by law to announce
any such prospective Change in Control, and (i) 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
Executive's death, disability, or Cause) terminates Executive's
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employment, or (ii) Executive terminates his employment with the Bank
for Good Reason following consummation of such Change in Control, then
the Bank will pay Executive the Change in Control Payment (defined
below).
(1) The term "Change in Control" means a change "in the ownership or
effective control" or "in the ownership of a substantial portion
of the assets" of GBCI or the Bank, within the meaning of Treas.
Reg. Section 1.409A-3(i)(5).
(2) The term "Change in Control Payment" means the dollar amount
equal to three times the sum of (a) Executive's salary for the
calendar year prior to the Change in Control, plus (b) the annual
bonus paid to Executive for the calendar year prior to the Change
in Control, subject to adjustment as provided in paragraph (3)
below.
(3) Notwithstanding anything in this Agreement to the contrary, if
the total of the Change in Control Payment, together with any
other payments or benefits received by Executive from the Bank or
GBCI, will be an amount that would cause them to be a "parachute
payment" within the meaning of Section 280G(b)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Parachute Payment
Amount"), then the Change in Control Payment shall be reduced so
that the total amount thereof is $1 less than the Parachute
Payment Amount.
(4) Executive's right to receive the Change in Control Payment
terminates (a) immediately, if before the Change in Control
transaction closes, Executive terminates his employment without
Good Reason, or the Bank terminates Executive's employment for
Cause, or (b) upon expiration of this Agreement.
e. Return of Bank Property. If and when Executive ceases, for any reason,
to be employed by the Bank, Executive must return to the Bank all
keys, pass cards, identification cards and any other property of the
Bank or GBCI. At the same time, Executive 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 GBCI. The
obligations in this paragraph include the return of documents and
other materials that may be in his desk at work, in his car, in place
of residence, or in any other location under his control.
f. 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 his duties; or
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(3) Conduct demonstrably and significantly harmful to the Bank, as
reasonably determined on the advice of legal counsel by the
Bank's board of directors, which conduct has not been remedied
within a reasonable period of time after Executive's receipt of
written notice from the Bank setting forth in reasonable detail
the conduct alleged to constitute "Cause" for termination
hereunder.
g. Good Reason. "Good Reason" means only any one or more of the
following:
(1) Reduction of Executive's salary or reduction or elimination of
any compensation or benefit plan benefiting Executive, 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 benefited;
(2) The assignment to Executive without his consent of any authority
or duties, or a reduction in Executive's authority or duties, in
either case materially inconsistent with Executive's position as
of the date of this Agreement;
(3) A relocation or transfer of Executive's principal place of
employment that would require Executive to commute on a regular
basis more than thirty (30) miles each way from the Bank's
present main office location.
h. Resignation from Board. If Executive's employment terminates for any
reason, then Executive shall immediately tender his resignation from
the board of directors of the Bank and any committees thereof.
i. Payment of Obligations. In the event of any dispute concerning
Executive's termination or whether Executive otherwise is entitled to
any payment under this Agreement then unless and until there is a
final resolution of the dispute (pursuant to Section 13) in favor of
the Bank, the Bank shall pay all amounts and provide all benefits to
Executive that the Bank would be required to pay; provided, however,
that the Bank shall not be required to pay any disputed amounts
pursuant to this Section except upon receipt of an undertaking or
security by or on behalf of the Executive (in such form and amount
satisfactory to the Bank in its reasonable discretion) to repay all
such amounts to which Executive may be ultimately adjudged not to be
entitled.
j. COBRA Coverage. Upon termination of his employment with the Bank,
Executive will be entitled to benefits under the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"). Executive shall be
responsible for making payments for such COBRA benefits.
9. CONFIDENTIALITY. Executive 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 SJ Bancorp, the Bank or GBCI
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or their business operations, unless (1) the Bank or GBCI consents to the
use or disclosure of their respective confidential information; (2) the use
or disclosure is consistent with Executive's duties under this Agreement;
(3) disclosure is required by law or court order; or (4) the information is
made or otherwise becomes public. For purposes of this Agreement,
confidential business information includes, without limitation, 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
GBCI. Executive will also treat the terms of this Agreement as confidential
business information.
10. RESTRICTIVE COVENANTS.
a. Competitive Activities. During the period of his employment and for
one year after Executive's employment with the Bank has ended,
Executive will not, directly or indirectly, as a founder, shareholder,
director, officer, employee, partner, agent, consultant, lessor,
creditor or otherwise, provide management, supervisory or other
similar services to any person or entity engaged in any business
within La Plata County, Colorado or Xxxxxxxxx County, Colorado, that
is competitive with the business of the Bank or GBCI as conducted
during the term of this Agreement or as conducted as of the date of
termination of employment, including any preliminary steps associated
with the formation of a new financial institution; provided, however,
that this Section 10(a) shall not apply, and Executive shall not be
subject to the provisions of this Section 10(a), if Executive's
employment with the Bank ends upon or following expiration of this
Agreement.
b. Non-Interference. During the period of his employment and for one year
after Executive's employment with the Bank has ended, Executive will
not, directly or indirectly, persuade or entice, or attempt to
persuade or entice, (i) any employee of the Bank or GBCI to terminate
his/her employment with the Bank or GBCI, or (ii) any person or entity
to terminate, cancel, rescind or revoke its business or contractual
relationships with the Bank or GBCI.
11. ENFORCEMENT.
a. The Bank and Executive stipulate that, in light of all of the facts
and circumstances of the relationship between Executive and the Bank,
the agreements referred to in Sections 9 and 10 (including without
limitation their scope, duration and geographic extent) are fair and
reasonably necessary for the protection of the Bank's and GBCI's
confidential information, goodwill and other protectable interests. If
a court of competent jurisdiction should decline to enforce any of
those covenants and agreements, Executive and the Bank request the
court to reform these provisions to restrict Executive's use of
confidential information and Executive's ability to compete with the
Bank and GBCI to the maximum extent, in time, scope of activities, and
geography, the court finds enforceable.
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b. Executive acknowledges the Bank and GBCI 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 9
or 10 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.
12. COVENANTS. Executive specifically acknowledges the receipt of adequate
consideration for the covenants contained in Sections 9 and 10 and that the
Bank is entitled to require him to comply with these Sections. These
Sections will survive termination of this Agreement. 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 the
Bank's enforcement of a remedy by way of injunction will not prevent
Executive from earning a livelihood.
13. 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 the City and County of Denver, Colorado. The
arbitrator, in rendering a decision as to any state law claims, will
apply Colorado law.
c. Exception to Arbitration. Notwithstanding the above, if Executive
violates Section 9 or 10, the Bank will have the right to initiate the
court proceedings described in Section 11(b), in lieu of an
arbitration proceeding under this Section 13.
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14. 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.
This Agreement supersedes and replaces in its entirety the Change in
Control Agreement.
b. Binding Effect. This Agreement will bind and inure to the benefit of
the Bank's, GBCI's and Executive'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 Executive under this
Agreement are unique and personal. Accordingly, Executive 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 Colorado law, except to the extent that
certain regulatory matters may be governed by federal law. The parties
must bring any legal proceeding arising out of this Agreement in the
City and County of Denver, Colorado.
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.
j. Counsel Review. Executive acknowledges that he has consulted with
independent counsel with respect to the negotiation, preparation, and
execution of this Agreement.
k. IRC Section 409A. The provisions of this Agreement are intended to
comply
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with Section 409A of the U.S. Internal Code of 1986, as amended, U.S.
Treasury regulations issued thereunder, and related U.S. Internal
Revenue Service guidance ("409A Rules"). Such provisions will be
interpreted and applied in a manner consistent with the 409A Rules so
that payments and benefits provided to Executive hereunder will not,
to the greatest extent possible, be subject to taxation under such
Section 409A. Notwithstanding any contrary provisions hereof, this
Agreement may be amended if and to the extent GBCI and/or the Bank
determines that such amendment is necessary to comply with the 409A
Rules.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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This Employment Agreement is executed as of August 19, 2008.
BANK OF THE SAN JUANS BANCORPORATION:
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Its: Chairman
BANK OF THE SAN JUANS:
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Its: Chairman
EXECUTIVE:
/s/ Xxxxxx X. Xxxxx, Xx.
----------------------------------------
Xxxxxx X. Xxxxx, Xx.
Ratified as of August 19, 2008:
GLACIER BANCORP, INC.
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx
Its: President & Chief Executive Officer
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