Document:

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                                                                    EXHIBIT 10.4

                         INTERMOUNTAIN COMMUNITY BANCORP
                       RESTRICTED STOCK PURCHASE AGREEMENT

         THIS RESTRICTED STOCK PURCHASE AGREEMENT ("Agreement") is entered into
by and between Intermountain Community Bancorp ("Bancorp") and the Grantee,
named below, on ___________________, __________.

         Grantee:_______________________________________________________________

         Shares:  ________________________ Purchase Price:______________________

         Date of Grant:_________________

This Agreement is subject to the terms and conditions of Bancorp's Second
Amended and Restated Employee Stock Option and Restricted Stock Plan (the
"Plan"). Such terms and conditions are incorporated herein by this reference. In
the event of a conflict between the terms and conditions of this Agreement and
the terms and conditions of the Plan, the terms and condition of the Plan shall
govern.

1.       PURCHASE OF SHARES

         a.       General. In connection with a Restricted Stock Award (as
                  defined in the Plan) that Bancorp has granted to the Grantee,
                  Bancorp offers to sell to the Grantee, for the per share
                  purchase price set forth above (the "Purchase Price"), the
                  number of shares of Bancorp's Common Stock identified above
                  (the " Shares").

         b.       Conditions to Sale of Shares. As a condition precedent to
                  Bancorp's obligation to sell shares under paragraph 1.a, the
                  Grantee shall deliver to Bancorp, within thirty (30) days
                  following the Date of Grant, (i) an original of this Agreement
                  duly executed by the Grantee, and (ii) the aggregate Purchase
                  Price, in cash or cash equivalent; and in the event the
                  Grantee fails to do so, then the rights and obligations of
                  Bancorp and the Grantee hereunder shall terminate without the
                  need for further action by any party, and Bancorp and the
                  Grantee shall have no further rights or obligations with
                  respect to the Restricted Stock Award described in paragraph
                  1.a.

         c.       Issuance of Shares and Delivery of Certificates. Concurrently
                  with the payment by the Grantee of the aggregate Purchase
                  Price, as described in paragraph 1.b, Bancorp shall issue the
                  Shares to the Grantee. All certificates representing the
                  Shares so issued shall be held by the Secretary of Bancorp, as
                  provided in paragraph 3, in escrow.

         d.       Rights Upon Issuance of Shares. Until such time as Bancorp
                  exercises its Repurchase Right (defined below) under this
                  Agreement, and subject to any restrictions contained in the
                  Plan or this Agreement, the Grantee (or his successor

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                  in interest) shall have the rights of a stockholder (including
                  voting, dividend and liquidation rights) with respect to the
                  Shares, including Unvested Shares (defined below).

         e.       Vesting Schedule. The Shares shall vest as provided in the
                  vesting schedule set forth below. In no event shall any
                  portion of the Shares vest after the Grantee first ceases to
                  maintain Continuous Status as an Employee (as defined in the
                  Plan). That portion of the Shares that is not vested at the
                  time that the Grantee first ceases to maintain Continuous
                  Status as an Employee (the "Unvested Shares") shall be subject
                  to the Repurchase Right (defined below) of Bancorp, as
                  described in paragraph 2.

<TABLE>
<CAPTION>
Number of Complete Years of Continuous Status as an               Percent of the Original
          Employee From the Date of Grant                       Number of Shares that Vest *
<S>                                                             <C>
                             1                                             25%
                             2                                             25%
                             3                                             25%
                             4                                             25%
</TABLE>

* The number of Shares that vest each year, resulting from multiplying the
original number of Shares by the percentage shown, shall be rounded up to the
nearest whole number, but the total number of Shares that vest over the entire
vesting period shall not exceed, in the aggregate, the total number of Shares
identified in this Agreement above.

2.       REPURCHASE RIGHT

         a.       General. Notwithstanding any provisions contained in this
                  Agreement to the contrary, Bancorp shall have the right, but
                  not the obligation, to repurchase all or any portion of the
                  Unvested Shares (the "Repurchase Right") at the Purchase Price
                  originally paid by the Grantee for such Unvested Shares. Such
                  Repurchase Right shall be exercisable at any time during the
                  ninety (90) day period that immediately follows the date on
                  which Grantee, for any reason, first ceases to maintain
                  Continuous Status as an Employee.

         b.       Exercise of Repurchase Right. If Bancorp elects to exercise
                  the Repurchase Right for all or any portion of the Unvested
                  Shares, it shall do so by delivering a written notice of
                  exercise to the Grantee prior to the expiration of the ninety
                  (90) day period described in paragraph 2.a. Such notice shall
                  specify the number of Unvested Shares that Bancorp will
                  repurchase and the date on which the repurchase is to be
                  effected, which date shall be not more than thirty (30) days
                  after the date of the notice. To the extent that one or more
                  certificates

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                  representing Unvested Shares may have been previously
                  delivered out of escrow to the Grantee, the Grantee shall,
                  prior to the close of business on the date specified for the
                  repurchase, deliver to the Secretary of Bancorp the
                  certificates representing the Unvested Shares to be
                  repurchased, each certificate to be properly endorsed for
                  transfer. Bancorp shall, concurrently with the receipt of such
                  stock certificates (either from escrow or from the Grantee as
                  herein provided), pay to the Grantee, in cash or cash
                  equivalents, an amount equal to the Purchase Price originally
                  paid by the Grantee for the Unvested Shares that Bancorp
                  elects to repurchase. If Bancorp does not elect to exercise
                  the Purchase Right for all or any portion of the Unvested
                  Shares, in the manner and within the time period described
                  above, then Bancorp shall cease to have any further Repurchase
                  Right with respect to the Unvested Shares that it does not
                  elect to repurchase (provided, however, that such Shares shall
                  continue to be subject to the right of first refusal described
                  in paragraph 6).

         c.       Additional Shares or Substitute Securities. In the event of a
                  stock dividend, stock split, recapitalization or other change
                  affecting Bancorp's outstanding Common Stock as a class
                  (effected, in each case, without receipt by Bancorp of
                  consideration), then any new, substituted or additional
                  securities or other property (including money paid, other than
                  as a regular cash distribution) that is by reason of such
                  transaction distributed with respect to the Shares shall be
                  immediately subject to the Repurchase Right, but only to the
                  extent that such Shares are at the time Unvested Shares.
                  Appropriate adjustments to reflect the distribution of such
                  securities or property shall be made to the number of Shares
                  at the time subject to the Repurchase Right hereunder, and to
                  the price per share to be paid upon the exercise of the
                  Repurchase Right, in order to reflect the effect of any such
                  transaction upon Bancorp's capital structure; provided,
                  however, that the aggregate Purchase Price shall remain the
                  same.

3.       ESCROW

         a.       Deposit. The Grantee hereby authorizes Bancorp to hold in
                  escrow, in accordance with this paragraph 3, all certificates
                  representing Unvested Shares. In the event any such
                  certificates shall come into the possession of the Grantee,
                  the Grantee shall immediately deliver the same to the
                  Secretary of Bancorp for such purposes. The Grantee further
                  agrees to deliver, at the time any Unvested Shares are issued
                  to him, a duly executed Assignment Separate From Certificate,
                  in the form attached hereto as Exhibit A, to accompany any
                  certificates representing Unvested Shares. The certificates
                  representing Unvested Shares shall remain in escrow until such
                  time or times as they are released or surrendered in
                  accordance with paragraph 3.b.

         b.       Release/Surrender. As to Shares in which the Grantee acquires
                  a vested interest (as described in paragraph 1.e), the
                  certificates representing such Shares shall be released from
                  escrow and delivered to the Grantee as soon as practicable
                  after the Grantee acquires such vested interest. As to Shares
                  that are Unvested Shares at

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                  the time that the Grantee first ceases to maintain Continuous
                  Status as an Employee, (i) if Bancorp elects to exercise the
                  Repurchase Right with respect to all or any portion of such
                  Unvested Shares, as provided in paragraph 2, certificates
                  representing the Unvested Shares that Bancorp elects to
                  repurchase shall be delivered to Bancorp, concurrently with
                  the payment to the Grantee, in cash or cash equivalent, of an
                  amount equal to the aggregate Purchase Price for such Unvested
                  Shares, and the Grantee shall cease to have any further rights
                  or claims with respect to such Unvested Shares, and (ii) if
                  Bancorp does not elect to exercise the Purchase Right, as
                  provided in paragraph 2, or elects to exercise the Repurchase
                  Right with respect to less than all of the Unvested Shares,
                  certificates for Unvested Shares that Bancorp does not elect
                  to repurchase shall be delivered to the Grantee, and Bancorp
                  shall cease to have any further Repurchase Right with respect
                  to such Unvested Shares (provided, however, that such Shares
                  shall continue to be subject to the right of first refusal
                  described in paragraph 6).

         c.       Prohibition on Transfer. The Grantee shall not sell, transfer,
                  pledge, hypothecate or otherwise dispose of Unvested Shares,
                  and any such sale, transfer or pledge in violation of this
                  Agreement shall be void. Bancorp shall not be required (i) to
                  transfer on its books any Shares that shall have been sold or
                  transferred in violation of this Agreement, or (ii) to accord
                  any rights (including, without limitation, the right to vote,
                  to receive dividends, or to receive the proceeds of
                  liquidation) to any transferee to whom such Shares shall have
                  been so transferred.

4.       LEGENDS. In order to reflect restrictions on disposition of the
         Unvested Shares, each certificate representing Shares shall be endorsed
         with a legend substantially as follows, in addition to any other
         legends that Bancorp deems to be necessary or advisable:

                  THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
                  SUBJECT TO THE RESTRICTIONS AND RIGHT OF FIRST REFUSAL SET
                  FORTH IN A RESTRICTED STOCK PURCHASE AGREEMENT, DATED
                  _______________, A COPY OF WHICH IS ON FILE AT THE OFFICE OF
                  bancorp AND THE PROVISIONS OF WHICH ARE INCORPORATED HEREIN BY
                  REFERENCE.

5.       SECTION 83(b) ELECTION. The Grantee understands and acknowledges that:

            (i)   Under Section 83 of the Internal Revenue Code of 1986, as
                  amended (the "Code"), the excess of the fair market value of
                  the Shares at the time that any restrictions on the Shares
                  lapse over the Purchase Price for the Shares is taxed, as
                  ordinary income, in the taxable year in which such
                  restrictions lapse. In this context, "restriction" means the
                  right of Bancorp to buy back the Shares pursuant to the
                  Repurchase Right.

            (ii)  If Section 83 of the Code is applicable, the Grantee may file
                  a special election ("Section 83(b) Election") so that the
                  excess of the fair market value of the Shares at the time the
                  Shares are transferred to him/her (rather than the time that
                  any

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                  restrictions on the Shares lapse) over the Purchase Price for
                  the Shares is taxed, as ordinary income, in the taxable year
                  in which the Shares are transferred to him/her (rather than
                  the taxable year in which any restrictions lapse). Even if the
                  fair market value of the Shares equals the amount paid for the
                  Shares, the election must be made to avoid adverse tax
                  consequences in the future.

            (iii) The Participation will not be entitled to a deduction for any
                  ordinary income previously recognized as a result of making a
                  Section 83(b) Election, if the Unvested Shares are
                  subsequently forfeited to Bancorp.

            (iv)  If the value of the Unvested Shares declines after a Section
                  83(b) Election, such election may cause the Grantee to
                  recognize more compensation income than he/she would have
                  otherwise recognized.

            (v)   There may be tax reporting, payroll tax and withholding tax
                  requirements relating to the acquisition, and/or the
                  subsequent vesting, of Shares.

            (vi)  THE FORM FOR MAKING A SECTION 83(b) ELECTION IS ATTACHED
                  HERETO AS EXHIBIT B. IF THE GRANTEE CHOOSES TO MAKE SUCH AN
                  ELECTION, THIS FORM MUST BE FILED NO LATER THAN THIRTY (30)
                  DAYS AFTER THE SHARES ARE TRANSFERRED TO HIM. FAILURE TO MAKE
                  A TIMELY SECTION 83(b) ELECTION MAY RESULT IN THE RECOGNITION
                  OF ORDINARY INCOME BY THE GRANTEE AS THE REPURCHASE RIGHT
                  LAPSES. IT IS THE GRANTEE'S SOLE RESPONSIBILITY, AND NOT
                  BANCORP'S, TO MAKE A TIMELY SECTION 83(b) ELECTION.

            (vii) THE GRANTEE IS ADVISED TO SEEK INDEPENDENT ADVICE REGARDING
                  THE APPLICABLE PROVISIONS OF ANY TAX LAWS RELATING TO HIS
                  ACQUISITION OF ANY SHARES.

6.       RIGHT OF FIRST REFUSAL. All Shares acquired by the Grantee pursuant to
         this Agreement shall be subject to the right of first refusal of
         Bancorp described in this paragraph 6.

         a.       In the event the Grantee proposes to sell, assign or otherwise
                  transfer such Shares, after the Shares are no longer Unvested
                  Shares, to any person(s) in a bona fide sale, the Grantee
                  shall submit in writing to Bancorp a notice ("Notice of
                  Proposed Sale") that identifies the number of Shares that the
                  Grantee proposes to sell, the person(s) who proposes to buy
                  such Shares, the sales price for such Shares and all other
                  material terms and conditions of the proposed sale. For a
                  period of thirty (30) days from the date it first receives the
                  Notice of Proposed Sale ("Option Period"), Bancorp shall have
                  the right, but not the obligation, to purchase all, but not
                  less than all, of the Shares that the Grantee proposes to sell
                  at the sales price identified in the Notice of Proposed Sale.

         b.       If Bancorp wishes to exercise the right of first refusal
                  identified in paragraph 6.a to purchase the Shares that the
                  Grantee proposes to sell, it shall give to the

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                  Grantee a written notice of exercise to that effect within the
                  Option Period; and the purchase and sale of such Shares shall
                  close within ten (10) days after the time Bancorp gives such
                  written notice. At such closing Bancorp shall pay the sales
                  price, in full, in cash or cash equivalent.

         c.       If Bancorp does not give the notice of exercise described in
                  paragraph 6.b within the Option Period, or if it waives its
                  right of first refusal identified in paragraph 6.a, then the
                  Grantee may sell the Shares identified in the Notice of
                  Proposed Sale to the person, at the sales price and subject to
                  all other terms and conditions identified in such notice;
                  provided, however, that if such sale by the Grantee does not
                  close within thirty (30) days following the expiration of
                  Bancorp's right of first refusal, then the Shares identified
                  in the Notice of Proposes Sale shall again be subject to all
                  the provisions of this paragraph 6.

         d.       Prior to the time that Shares are first sold to any person at
                  fair market value in a bona fide sale, such Shares shall
                  continue to be subject to the restrictions set forth in this
                  paragraph 6, as if the person who proposes to sell those
                  shares were the Grantee.

         e.       All sales, assignments or other transfers of Shares in
                  violation of the right of first refusal of Bancorp described
                  in this paragraph 6 shall be void.

7.       SECURITIES LAW COMPLIANCE. Notwithstanding any contrary provisions of
         this Agreement, the Shares may not be sold, assigned or transferred,
         unless they are registered under applicable Federal and state
         securities laws and regulations or, if the Shares are not then so
         registered, an exemption from such registration is available.

8.       MISCELLANEOUS

         a.       Successors in Interest. This Agreement and all of its terms,
                  conditions and covenants are intended to be fully effective
                  and binding, to the extent permitted by law, on the heirs,
                  executors, administrators, successors and permitted assigns of
                  the parties hereto.

         b.       Spousal Consent. If the Grantee is married, the Grantee shall
                  obtain the signature of the Grantee's spouse as set forth on
                  the Consent of Spouse below. The Grantee's failure to obtain
                  such consent shall constitute a representation by the Grantee,
                  on which Bancorp shall rely, that the Grantee is unmarried and
                  that the Grantee has sole authority with respect to the
                  Grantee's actions regarding the Shares.

         c.       No Right to Employment. Nothing in this Agreement shall affect
                  in any manner whatsoever the right or power of Bancorp to
                  terminate the Grantee's employment with Bancorp, or the
                  Grantee's ability to quit Bancorp's employment, with or
                  without cause, at any time.

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         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.

GRANTEE:                                 INTERMOUNTAIN COMMUNITY BANCORP,
                                         an Idaho corporation

____________________________________     By:____________________________________

Print Name: ________________________     Title:_________________________________

Address: ___________________________

         ___________________________

         ___________________________

Social Security No._________________

Grantee hereby acknowledges that he have received a copy of the Plan.

__________________________________________

Print Name:_______________________________

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                             SPOUSAL ACKNOWLEDGEMENT

         The undersigned spouse of Grantee has read and hereby approves the
foregoing Agreement. In partial consideration of Bancorp granting to Grantee the
right to acquire the Purchased Shares in accordance with the terms of this
Agreement, the undersigned hereby agrees to be irrevocably bound by all the
terms of such Agreement, including, without limitation, the right of the Bancorp
to purchase any Purchased Shares of Grantee pursuant to this Agreement.

_______________________________________________________

Print Name:_______________________________

                                     Address: __________________________________

                                              __________________________________

                                              __________________________________

                                     Social Security No.________________________

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                                    EXHIBIT A

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto, ________________________________, ________________________ (_______)
shares of the Common Stock of Intermountain Community Bancorp, an Idaho
corporation, standing in the undersigned's name on the books of said corporation
represented by Certificate No. ____ herewith, and does hereby irrevocably
constitute and appoint ____________ as attorney-in-fact, to transfer the said
stock on the books of the said corporation with full power of substitution in
the premises.

Dated: _____________________, _____

                                       _________________________________________

                                       Print Name:______________________________

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                                    EXHIBIT B

                           SECTION 83(b) TAX ELECTION

         The undersigned hereby elects pursuant to Internal Revenue Code Section
83(b) with respect to the property described in paragraph 2 below and supplies
the following information in accordance with the regulations promulgated
thereunder:

1. The name, address and taxpayer identification number of the undersigned are:

         ________________________________
         ________________________________
         ________________________________

         Taxpayer I.D. No._______________

2. Description of property with respect to which the election is being made:

         _____________ shares of Common Stock, no par value, in Intermountain
         Community Bancorp (the "Bancorp"). Such shares were already owned by
         taxpayer at the time the restrictions described in paragraph 4 were
         imposed.

3. Date on which property is transferred and taxable year for which the election
is made:

         The transfer of the property described in paragraph 2 occurred on
         ____________, when the restrictions described in paragraph 4 were
         imposed.

         The taxable year for which this election is made is calendar year
         ___________.

4. The nature of the restriction(s) to which the property is subject is:

         The subject shares are subject to a Restricted Stock Purchase Agreement
         between the shareholder and Bancorp dated ________________, _________
         (the "Purchase Agreement") pursuant to which the shares are subject to
         a right of purchase by Bancorp in the event that the shareholder's
         service to Bancorp is voluntarily terminated or terminated for cause,
         as defined in the Repurchase Agreement. If the right of repurchase is
         exercised, the purchase price is the price originally paid for the
         share by taxpayer. The right of repurchase lapses as to ____________ of
         the original number of shares acquired by taxpayer as the shareholder
         completes each year of continuous service with Bancorp.

         The property is non-transferable in the taxpayer's hands, by virtue of
language to that effect stamped on the stock certificate.

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5. Fair market value:

         On the date the restrictions described in paragraph 4 were imposed, the
         shares described in paragraph 2 had a fair market value of
         ________________________.

6. Amount paid for property:

         Taxpayer paid fair market value for the property described in paragraph
2.

7. Furnishing statement to employer:

         A copy of this statement has been furnished to Bancorp, as required by
Reg. Section 1.83(b)-2(d).

Dated:  _____________________.

                                      __________________________________________

                                      Print Name:_______________________________

THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE CENTER WITH WHICH
TAXPAYER FILES HIS OR HER FEDERAL INCOME TAX RETURNS. THE ELECTION MUST BE FILE
WITHIN THIRTY (30) DAYS AFTER THE TRANSFER OF SHARES TO HIM. THIS FILING SHOULD
BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED. PURCHASER
MUST RETAIN TWO (2) COPIES OF THE COMPLETED FORM FOR FILING WITH HIS OR HER
FEDERAL AND STATE TAX RETURNS FOR THE CURRENT TAXABLE YEAR AND AN ADDITIONAL
COPY FOR HIS OR HER RECORDS.

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                                                                    EXHIBIT 10.5

                         INTERMOUNTAIN COMMUNITY BANCORP

                           DIRECTOR STOCK OPTION PLAN

1.       PURPOSE OF THE PLAN. The purpose of this Director Stock Option Plan
         ("Plan") is to provide additional incentives to Directors of Panhandle
         Bancorp, an Idaho corporation ("Bancorp"), thereby helping to attract
         and retain the best available personnel for positions as directors of
         Bancorp and otherwise promoting the success of the business activities
         of Bancorp. Bancorp intends that Options issued under this Plan will
         constitute nonqualified stock options.

2.       DEFINITIONS. As used in this Plan, the following definitions apply:

         a.       "Bancorp" has the meaning set forth in paragraph 1 of this
                  Plan.

         b.       "Board" means the Board of Directors of Bancorp.

         c.       "Common Stock" means Bancorp's common stock, currently with a
                  par value of $2.50 per share.

         d.       "Committee" has the meaning set forth in subparagraph 4(a) of
                  this Plan.

         e.       "Continuous Status as a Director" means the absence of any
                  interruption or termination of service as a Director.

         f.       "Date of Grant" means of an Option means the date on which the
                  Committee makes the determination granting such Option, or
                  such later date as the Committee may designate. The Date of
                  Grant shall be specified in the Option agreement.

         g.       "Director" means any person serving as a member of the Board
                  of Bancorp.

         h.       "Exercise Price" has the meaning set forth in subparagraph
                  4(b)(2) of this Plan.

         i.       "Option" means a stock option granted under this Plan, which
                  constitutes a nonqualified stock option.

         j.       "Optionee" means a Director who receives an Option.

         k.       "Plan" has the meaning set forth in paragraph 1 of this Plan.

         l.       "Parent" means any corporation owning at least eighty percent
                  (80%) of the total voting power of the issued and outstanding
                  stock of Bancorp, and eighty percent (80%) of the total value
                  of the issued and outstanding stock of Bancorp.

         m.       "Subsidiary" means any bank or other corporation of which not
                  less than fifth percent (50%) of the voting shares are held by
                  Bancorp or a Subsidiary, whether

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                  or not such corporation now exists or is hereafter organized
                  or acquired by Bancorp or a Subsidiary.

3.       STOCK SUBJECT TO OPTIONS.

         a.       Number of Shares Reserved. The maximum number of shares which
                  may be optioned and sold under this Plan is 50,000 shares of
                  the Common Stock of Bancorp (subject to adjustment as provided
                  in subparagraph 6(j) of this Plan). During the term of this
                  Plan, Bancorp will at all times reserve and keep available a
                  sufficient number of shares of its Common Stock to satisfy the
                  requirements of this Plan.

         b.       Expired Options. If any outstanding Option expires or becomes
                  unexercisable for any reason without having been exercised in
                  full, the shares of Common Stock allocable to the unexercised
                  portion of such Option will again become available for other
                  Options.

4.       ADMINISTRATION OF THE PLAN.

         a.       The Committee. The Board will administer this Plan directly,
                  acting as a Committee of the whole, or if the Board elects, by
                  a separate Committee appointed by the Board for that purpose
                  and consisting of at least three Board members. All references
                  in the Plan to the "Committee" refers to this separate
                  Committee, if any is established, or if none is then in
                  existence, refers to the Board as a whole. Once appointed, any
                  Committee will continue to serve until otherwise directed by
                  the Board. From time to time, the Board may increase the size
                  of the Committee and appoint additional members, remove
                  members (with or without cause), appoint new members in
                  substitution, and fill vacancies however caused. The Committee
                  will select one of its members as chairman, and will hold
                  meetings at such times and places as the chairman or a
                  majority of the Committee may determine. At all times, the
                  Board will have the power to remove all members of the
                  Committee and thereafter to directly administer this Plan as a
                  Committee of the whole.

                  (1)      Members of the Committee who are eligible for Options
                           or who have been granted Options will be counted for
                           all purposes in determining the existence of a quorum
                           at any meeting of the Committee and will be eligible
                           to vote on all matters before the Committee
                           respecting the granting of Options or administration
                           of this Plan.

                  (2)      At least annually, the Committee must present a
                           written report to the Board indicating the Directors
                           to whom Options have been granted since the date of
                           the last such report, and in each case the Date of
                           Grant, the number of shares optioned, and the
                           per-share Exercise Price.

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         b.       Powers of the Committee. All actions of the Committee must be
                  either (i) by a majority vote of the members of the full
                  Committee at a meeting of the Committee, or (ii) by unanimous
                  written consent of all members of the full Committee without a
                  meeting. All decisions, determinations and interpretations of
                  the Committee will be final and binding on all persons,
                  including all Optionees and any other holders or persons
                  interested in any Options, unless otherwise expressly
                  determined by a vote of the majority of the entire Board. No
                  member of the Committee or of the Board will be liable for any
                  action or determination made in good faith with respect to the
                  Plan or any Option. Subject to all provisions and limitations
                  of the Plan, the Committee will have the authority and
                  discretion:

                  (1)      to determine the Directors to whom Options are to be
                           granted, the Dates of Grant, and the number of shares
                           to be represented by each Option;

                  (2)      to determine the price at which shares of Common
                           Stock are to be issued under an Option, subject to
                           subparagraph 6(b) of this Plan ("Exercise Price");

                  (3)      to determine all other terms and conditions of each
                           Option granted under this Plan (including
                           specification of the dates upon which Options become
                           exercisable, and whether conditioned on performance
                           standards, periods of service or otherwise), which
                           terms and conditions can vary between Options;

                  (4)      to modify or amend the terms of any Option previously
                           granted, or to grant substitute Options, subject to
                           subparagraphs 6(l) and 6(m) of this Plan;

                  (5)      to authorize any person or persons to execute and
                           deliver Option agreements or to take any other
                           actions deemed by the Committee to be necessary or
                           appropriate to effect the grant of Options by the
                           Committee;

                  (6)      to interpret this Plan and to make all other
                           determinations and take all other actions which the
                           Committee deems necessary or appropriate to
                           administer this Plan in accordance with its terms and
                           conditions.

5.       ELIGIBILITY. Options may be granted only to Directors. Granting of
         Options under this Plan will be entirely discretionary with the
         Committee. Adoption of this Plan will not confer on any Director any
         right to receive any Option or Options under this Plan unless and until
         said Options are granted by the Committee, in its sole discretion.
         Neither the adoption of this Plan nor the granting of any Options under
         this Plan will confer upon any Director or Optionee any right with
         respect to continuation of status as a Director, nor will the same
         interfere in any way with his or her right or with the right of the
         shareholders of Bancorp or any Subsidiary to terminate his or her
         status as a Director at any time.

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6.       TERMS AND CONDITIONS OF OPTIONS. All Options granted under this Plan
         must be authorized by the Committee, and must be documented in written
         Option agreements in such form as the Committee will approve from time
         to time, which agreements must comply with and be subject to all of the
         following terms and conditions:

         a.       Number of Shares. Each Option agreement must state the number
                  of shares subject to Option. Any number of Options may be
                  granted to a single eligible Director at any time and from
                  time to time.

         b.       Exercise Price and Consideration. Each option agreement must
                  state the Exercise Price for the shares of Common Stock to be
                  issued under the Option, which price must be not less than the
                  greater of (1) the fair market value of the Common Stock or
                  (2) the net book value of the Common Stock at the time of
                  grant, as is determined by the Committee. The Exercise Price
                  is payable either (i) in United States dollars upon exercise
                  of the Options, or (ii) if approved by the Board or Committee,
                  other consideration including without limitation Common Stock
                  of Bancorp, services, or other property.

         c.       Term of Option. Subject to other applicable provisions of this
                  Plan including but not limited to subparagraphs 6(g), 6(h) and
                  6(i), the term of each Option will be determined by the
                  Committee in its discretion.

         d.       Non-transferability of Options. No Option may be sold,
                  pledged, assigned, hypothecated, transferred, or disposed of
                  in any manner other than by will or by the laws of descent or
                  distribution and may be exercised, during the lifetime of the
                  Optionee, only by the Optionee.

         e.       Manner of Exercise. An Option will be deemed to be exercised
                  when written notice of exercise has been given to Bancorp in
                  accordance with the terms of the Option by the person entitled
                  to exercise the Option, together with full payment for the
                  shares of Common Stock subject to said notice.

         f.       Rights as Shareholder. An Optionee shall have none of the
                  rights of a shareholder with respect to any shares covered by
                  his or her Option unless and until the Optionee has exercised
                  such Option and submitted full payment for the shares.

         g.       Death of Optionee. In the event of the death of an Optionee
                  who at the time of his or her death was a Director and who had
                  been in Continuous Status as a Director since the Date of
                  Grant of the Option, the Option will terminate on the earlier
                  of (i) one year after the date of death of the Optionee, or
                  (ii) the expiration date otherwise provided in the Option
                  agreement, except that if the expiration date should occur
                  during the 180-day period immediately following the Optionee's
                  death, such Option will terminate at the end of such 180-day
                  period. The Option will be exercisable at any time prior to
                  such termination by the Optionee's estate, or by such person
                  or persons who have acquired the right to exercise the Option
                  by bequest or by inheritance or by reason of the death of the
                  Optionee.

                                       4
<PAGE>

         h.       Disability of Optionee. If an Optionee's status as a Director
                  is terminated at any time during the Option period by reason
                  of a disability (within the meaning of Section 22(e)(3) of the
                  Internal Revenue Code) and if said Optionee had been in
                  Continuous Status as a Director at all times between the Date
                  of Grant of the Option and the termination of his or her
                  status as a Director, his or her Option will terminate on the
                  earlier of (i) one year after the date of termination of his
                  or her status as a Director, or (ii) the expiration date
                  otherwise provided in his or her Option agreement.

         i.       Termination of Status as a Director.

                  (1)      If an Optionee's status as a Director is terminated
                           at any time after the grant of an Option to such
                           Director for any reason other than death or
                           disability, as provided in subparagraphs 6(g) and
                           6(h) of this Plan, and excepting if the Director is
                           removed for cause, as provided in subparagraph (2)
                           below, such Option will terminate on the earlier of
                           (i) the same day of the sixth month after the date of
                           termination of his or her status as a Director, or
                           (ii) the expiration date otherwise provided in his or
                           her Option agreement.

                  (2)      If an Optionee is removed as a Director for cause at
                           any time after the grant of an Option to such
                           Director, then such Option will terminate on the date
                           of termination of his or her status as a Director.
                           For this purpose, cause will be deemed to exist only
                           if the Board has reasonable grounds to believe that
                           Bancorp has suffered or will suffer substantial
                           injury as a result of the gross negligence or
                           dishonesty of the Director who is removed.

         j.       Adjustments Upon Changes in Capitalization. Subject to any
                  required action by the shareholders of Bancorp, the number of
                  shares of Common Stock covered by each outstanding Option, the
                  number of shares of Common Stock available for grant of
                  additional Options, and the per-share Exercise Price in each
                  outstanding Option, will be proportionately adjusted for any
                  increase or decrease in the number of issued shares of Common
                  Stock resulting from any stock split or other subdivision or
                  consolidation of shares, the payment of any stock dividend
                  (but only on the Common Stock) or any other increase or
                  decrease in the number of such shares of Common Stock effected
                  without receipt of consideration by Bancorp; provided,
                  however, that conversion of any convertible securities of
                  Bancorp will not be deemed to have been "effected without
                  receipt of consideration." Such adjustment will be made by the
                  Committee, whose determination in that respect will be final,
                  binding and conclusive.

                  (1)      Except as otherwise expressly provided in this
                           subparagraph 6(j), no Optionee will have any rights
                           by reason of any stock split or the payment of any
                           stock dividend or any other increase or decrease in
                           the number of shares of Common Stock, and no issuance
                           by Bancorp of shares of stock

                                       5
<PAGE>

                           of any class, or securities convertible into shares
                           of stock of any class, will affect the number of
                           shares or Exercise Price subject to any Options, and
                           no adjustments in Options will be made by reason
                           thereof. The grant of an Option under this Plan will
                           not affect in any way the right or power of Bancorp
                           to make adjustments, reclassifications,
                           reorganizations or changes of its capital or business
                           structure.

         k.       Conditions Upon Issuance of Shares. Shares of Common Stock
                  will not be issued with respect to an Option granted under
                  this Plan unless the exercise of such Option and the issuance
                  and delivery of such shares pursuant thereto will comply with
                  all applicable provisions of law, including applicable federal
                  and state securities laws. As a condition to the exercise of
                  an Option, Bancorp may require the person exercising such
                  Option to represent and warrant at the time of exercise that
                  the shares of Common Stock are being purchased only for
                  investment and without any present intention to sell or
                  distribute such Common Stock if, in the opinion of counsel for
                  Bancorp, such a representation is required by any of the
                  aforementioned relevant provisions of law.

         l.       Corporate Sale Transactions. In the event of the merger or
                  reorganization of Bancorp with or into any other corporation,
                  the sale of substantially all of the assets of Bancorp, or a
                  dissolution or liquidation of Bancorp (collectively, "Sale
                  Transaction"), (1) all outstanding Options that are not then
                  fully exercisable will become exercisable upon the date of
                  closing of any sale transaction or such earlier date as the
                  Committee may fix; and (2) the Committee may, in the exercise
                  of its sole discretion, terminate all outstanding Options as
                  of a date fixed by the Committee. In such event, however, the
                  Committee must notify each Optionee of such action in writing
                  not less than sixty (60) days prior to the termination date
                  fixed by the Committee, and each Optionee must have the right
                  to exercise his or her Option prior to said termination date.

         m.       Substitute Stock Options. In connection with an internal
                  reorganization of Bancorp, the Committee is authorized, in its
                  discretion, to substitute for any unexercised Option, a new
                  option for shares of the resulting entity's stock.

         n.       Tax Compliance. Bancorp, in its sole discretion, may take
                  actions reasonably believed by it to be required to comply
                  with any local, state, or federal tax laws relating to the
                  reporting or withholding of taxes attributable to the grant or
                  exercise of any Option or the disposition of any shares of
                  Common Stock issued upon exercise of an Option, including, but
                  not limited to (i) withholding from any Optionee exercising an
                  Option a number of shares of Common Stock having a fair market
                  value equal to the amount required to be withheld by Bancorp
                  under applicable tax laws, and (ii) withholding from any form
                  of compensation or other amount due an Optionee, or holder, of
                  shares of Common Stock issued upon exercise of an Option any
                  amount required to be withheld by Bank under applicable tax
                  laws. Withholding or reporting will be considered required for

                                       6
<PAGE>

                  purposes of this subparagraph if the Committee, in its sole
                  discretion, so determines.

         o.       Other Provisions. Option agreements executed under this Plan
                  may contain such other provisions as the Committee will deem
                  advisable.

7.       TERM OF THE PLAN. This Plan will become effective and Options may be
         granted upon the Plan's approval by the Board, subject to shareholder
         approval. Unless sooner terminated as provided in subparagraph 7(a) of
         this Plan, this Plan will terminate on the tenth (10th) anniversary of
         its effective date. Options may be granted at any time after the
         effective date and prior to the date of termination of this Plan.

         a.       Amendment or Early Termination of the Plan. The Board may
                  terminate this Plan at any time. The Board may amend this Plan
                  at any time and from time to time in such respects as the
                  Board may deem advisable, except that, without approval of the
                  shareholders, no revision or amendment will increase the
                  number of shares of Common Stock subject to this Plan other
                  than in connection with an adjustment under subparagraph 6(j)
                  of this Plan.

         b.       Effect of Amendment or Termination. No amendment or
                  termination of this Plan will affect Options granted prior to
                  such amendment or termination, and all such Options will
                  remain in full force and effect notwithstanding such amendment
                  or termination.

8.       SHAREHOLDER APPROVAL. Adoption of this Plan will be subject to
         ratification by affirmative vote of shareholders owning at least a
         majority of the outstanding Common Stock of Bancorp at a duly convened
         meeting.

                                    * * * * *

                                       7
<PAGE>

                             CERTIFICATE OF ADOPTION

         I certify that the foregoing Director Stock Option Plan was approved by
the Board of Directors of Panhandle Bancorp on January 14, 1999.

                                          /s/ Terry L. Merwin
                                          -----------------------------
                                          Terry L. Merwin, Secretary

         I further certify that the foregoing Director Stock Option Plan was
approved by the shareholders of Panhandle Bancorp on August 18, 1999.

                                          /s/ Terry L. Merwin
                                          ---------------------------------
                                          Terry L. Merwin, Secretary

                                       8

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