CHANGE IN CONTROL SEVERANCE PAYMENT AGREEMENT
Exhibit
10.2
CHANGE
IN CONTROL
This
Agreement, made and entered into as of the 22nd
day of
August, 2005, by and between Vail Banks, Inc. and WestStar Bank (collectively
referred to as the “Company”), and Xxxxx Xxxx (hereinafter called the
“Executive”),
W
I T N E
S S E T H:
WHEREAS,
the Executive has been hired by the Company and will render valuable services
to
the Company; and
WHEREAS,
the Company desires to retain the Executive during a possible Change in Control
of the Company (as defined in Section 3) and believes that the execution
of this
Agreement will further its aim in retaining the Executive during an actual
or
attempted Change in Control and will tend to assure fair treatment of executives
in the event of a Change in Control;
NOW,
THEREFORE, for and in consideration of the premises and of the Executive’s
continuation in his present employment with Company, the parties hereto agree
as
follows:
1.
Duties
and Status of Executive.
The
Executive shall perform such duties and responsibilities for the Company
as
shall be assigned to him by Xxxxxxx X. Xxxxxxxx, Senior Executive Vice President
and Chief Administrative Officer. The Executive shall devote his working
time
and attention to the discharge of his duties with the Company. In addition
to
the compensation and other benefits provided to the Executive by the Company,
the Executive shall have the additional benefits provided by this
Agreement.
2.
Term.
(a)
Initial
Term.
The
term of this Agreement shall initially be a fixed period of one year that
expires on the first anniversary of the date of this Agreement and may be
extended as provided in subsection (b) below.
(b)
Extension.
The
term of this Agreement shall be extended automatically on the first anniversary
and on each subsequent anniversary of the date of this Agreement (each such
anniversary being referred to as an “Extension Date”) for an additional one year
period; provided that
(i)
the
then
current term of this Agreement will not be extended on any Extension Date
if,
(A)
not
later
than 90 days before such Extension Date the Company gives the Executive written
notice that it does not wish to extend the term, or
(B)
before
such Extension Date the Bank terminates the employment of the Executive for
Cause (as defined in Section 4(c)), and
(ii)
whether
or not the Bank has given notice to the Executive pursuant to clause (i)
(A)
above that it does not wish to extend the term of this Agreement, if a Change
in
Control occurs during the initial term of this Agreement, or any extension
thereof, the term of this Agreement shall not expire sooner than the first
anniversary of the date of such Change in Control.
3.
Change
in Control.
For the
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred in the event of:
(a)
an
acquisition
by any Person of Beneficial Ownership of the Shares of the Company then
outstanding (the "Company’s Common Stock Outstanding")
or the
voting securities of the Company then outstanding entitled to vote generally
in
the election of directors (the "Company’s Voting Securities Outstanding"), if
such acquisition of Beneficial Ownership results in the Person beneficially
owning (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
twenty-five percent (25%) or more of the Company’s Common Stock Outstanding or
twenty-five percent (25%) or more of the combined voting power of the Company’s
Voting Securities Outstanding; provided, that immediately prior to such
acquisition such Person was not a direct or indirect Beneficial Owner of
twenty-five percent (25%) or more of the Company’s Common Stock Outstanding or
twenty-five percent (25%) or more of the combined voting power of Company’s
Voting Securities Outstanding, as the case may be; or
(b)
the
consummation of a
reorganization, merger, consolidation, complete liquidation or dissolution
of
the Company, the sale or disposition of all or substantially all of the assets
of the Company or similar corporate transaction (in each case referred to
in
this Section 3 as a "Corporate Transaction") or, if consummation of such
Corporate Transaction is subject to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly or
implicitly); or
(c)
a
change
in the composition of the Board such that the individuals who, as of the
date of
this Agreement, constitute the Board (such Board shall be hereinafter referred
to as the "Incumbent Board") cease for any reason to constitute at least
a
majority of the Board; provided, however, for purposes of this Section 3
that
any individual who becomes a member of the Board subsequent to the date of
this
Agreement whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of those individuals
who are members of
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the
Board
and who were also members of the Incumbent Board (or deemed to be such pursuant
to this proviso) shall be considered as though such individual were a member
of
the Incumbent Board; but, provided, further, that any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act, including any successor to such Rule),
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board, shall not be so considered as a
member
of the Incumbent Board.
(d)
Notwithstanding
the provisions set forth in subsections (a) and (b), the following shall
not
constitute a Change in Control for purposes of this Agreement: (1) any
acquisition of Shares by, or consummation of a Corporate Transaction with,
any
Subsidiary or any employee benefit plan (or related trust) sponsored or
maintained by the Company or an affiliate; or (2) any acquisition of Shares,
or
consummation of a Corporate Transaction, following which more than fifty
percent
(50%) of, respectively, the shares then outstanding of common stock of the
corporation resulting from such acquisition or Corporate Transaction and
the
combined voting power of the voting securities then outstanding of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the
individuals and entities who were Beneficial Owners, respectively, of the
Company’s Common Stock Outstanding and Company’s Voting Securities Outstanding
immediately prior to such acquisition or Corporate Transaction in substantially
the same proportions as their ownership, immediately prior to such acquisition
or Corporate Transaction, of the Company’s Common Stock Outstanding and
Company’s Voting Securities Outstanding, as the case may be.
4.
Change
in Control Payments And Severance Payments.
(a)
If
a
Change in Control of the Company occurs and within 12 months of the date
of such
Change in Control the Executive’s employment is terminated:
(i)
by
the
Company, other than for Cause, death or Disability; or
(ii)
by
the
Executive for Good Reason,
then
the
Executive shall be entitled to receive (subject to withholding of all applicable
taxes) the severance payments described in (b) below after his termination
of
employment. If the Executive’s employment is terminated by the Company for Cause
or as a result of death or Disability, or by the Executive without Good Reason,
the Executive shall not be entitled to any payments under this
Agreement.
(b)
If
the
Executive becomes eligible for benefits under Section 4(a) above, the Bank
shall
pay or provide to the Executive a lump sum payment within thirty (30)
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days
of
such termination (subject to withholding of all applicable taxes) (A) an
amount
equal to his base annual salary (for purposes of this Agreement, “base annual
salary” shall mean Executive’s base salary at the highest rate in effect during
the six months prior to his termination), plus (B) 100% of the incentive
payment
Executive would have received for the year during which the Change in Control
occurs under the Company’s annual incentive plan, assuming the target level of
performance had been met for such year;
(c)
For
the
purposes of this Section 4, “Cause” means:
(i)
the
conviction of the Executive of, or a plea of guilty or nolo contendere by
the
Executive to, any felony involving conduct on the part of the Executive that
renders his unfit for the performance of his duties to the Company, or its
subsidiaries and affiliates, or
(ii)
any
willful misconduct on the part of the Executive in the performance of his
duties
that is materially harmful to the Company or its subsidiaries or affiliates,
monetarily or otherwise.
For
the
purpose of this subsection (c), no act, or failure to act, on the Executive’s
part shall be considered “willful” unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission
was
in the best interest of the Company and its subsidiaries and affiliates.
(d)
For
the
purpose of this Section 4, “Disability” shall be deemed to exist if, as a result
of the Executive’s incapacity due to physical or mental illness, he shall have
been absent from his duties with the Company on a full-time basis for 150
consecutive calendar days and within 30 days after he has received notice
of
termination pursuant to Section 5 he has not returned to the performance
of his
duties on a full-time basis.
(e)
For
the
purposes of this Section 4, “Good Reason” shall be deemed to exist under any of
the following circumstances, but only to the extent that they occur within
the
twelve month period immediately after a Change in Control:
(i)
An
adverse diminution in Executive’s job functions, duties or responsibilities, or
a similar adverse change in Executive’s reporting relationships.
(ii)
A
reduction by the Company in the Executive’s base salary as in effect on the date
hereof or as the same may be increased from time to time, or failure to give
his
annual salary increases consistent with performance review ratings as compared
with other employees of the same or similar rank.
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(iii)
A
failure
by the Company to continue giving the Executive bonuses comparable to the
amount
of bonuses given to him prior to the Change in Control.
(iv)
The
Company’s requiring that the Executive be based anywhere other than the Eagle
County, Colorado area, except for required travel on Company business to
an
extent substantially consistent with his then present business travel
obligations, or in the event that the Executive consents to any such
relocations, the failure by the Company to pay (or reimburse him for) all
reasonable moving expenses incurred by him.
(v)
The
failure by the Company to continue in full force and effect any benefit,
retirement, savings or compensation plan or any employee life, accident,
disability, medical, dental, vision or other employee welfare benefit plan
in
which the Executive is participating at the time of a Change in Control of
the
Company, the taking of any action by the Company which would adversely affect
his participation in or materially reduce his benefits under any of such
plans
or deprive him of any material fringe benefit or perquisite enjoyed by him
at
the time of the Change in Control, or the failure by the Company to provide
him
with the number of paid personal days to which he is then entitled in accordance
with the normal personal day policy in effect on the date hereof.
(vi)
Any
breach by the Company of its obligations under this Agreement or any purported
termination by the Company of his employment which is not effected pursuant
to a
notice of termination satisfying the requirements of Section 5 (and if
applicable Section 4(c)); and for purposes of this Agreement, no such purported
termination shall be effective.
(f)
The
Company agrees that if the Executive’s employment is terminated and he is
entitled to benefits under Section 4(a) and/or Section 4(b), he shall not
be
required to mitigate damages by seeking other employment, nor shall any amount
he earns after his termination of employment reduce the amount payable by
the
Company under this Agreement (except as provided in paragraph (B) above relating
to benefit changes upon subsequent employment).
5.
Notice
of Termination.
Any
termination by the Company or by the Executive of the Executive’s employment
with the Company shall be communicated by a written notice of termination
to the
other party, and shall specify the provision of this Agreement relied upon
and
shall set forth in reasonable detail the circumstances claimed to provide
a
basis for termination. The date of termination shall be the date on which
the
notice of termination is delivered if by the Executive or 30 days after the
date
of the notice of termination if given by the Company.
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6.
Litigation
Expenses; Indemnification and Insurance.
(a)
If the Company involuntarily terminates Executive other than for Cause, death
or
Disability or Executive terminates his employment for Good Reason, then,
in the
event Executive incurs legal fees and other expenses in seeking to obtain
or to
enforce any rights or benefits provided by this Agreement and is successful
to a
significant extent in obtaining or enforcing any such rights or benefits
through
settlement, mediation, arbitration or otherwise, the Company shall promptly
pay
Executive’s reasonable legal fees and expenses and related costs incurred in
enforcing this Agreement including, without limitation, attorneys fees and
expenses, experts fees and expenses, and investigative fees. Except to the
extent provided in the preceding sentence, each party shall pay its own legal
fees and other expenses associated with any dispute under this
Agreement.
(b)
Unless
the Executive is terminated for Cause, at all times after a Change of Control,
the Company shall continue to provide for Executive the indemnification
provisions contained in the Company’s by-laws and shall continue to maintain for
the benefit of the Executive such policies of liability insurance, providing
protection to him as an officer, director, agent or employee of the Company
and
its subsidiaries, as may from time to time be purchased by the Company for
officers and directors generally as authorized by or in furtherance of the
indemnification provisions contained in the Company’s by-laws. Unless the
Executive is terminated for Cause, neither the insurance nor the Executive’s
right to indemnification thereunder may be canceled by the Company without
his
permission for a period of five years following the date of termination under
this Agreement; provided, however, that the Company may obtain a substitute
insurance policy as long as the rights of indemnity to the Executive are
at
least equivalent to the most favorable rights provided under the policies
in
effect immediately prior to the date of a Change of Control.
7.
Assignment;
Successors in Interest.
(a)
General.
Except
with the prior written consent of the Executive, no assignment by operation
of
law or otherwise by the Company of any of its rights and obligations under
this
Agreement may be made other than to an entity which is a successor to all
or a
substantial portion of the business of the Company (but then only if such
entity
assumes by operation of law or by specific assumption executed by the transferee
and delivered to the Executive all obligations and liabilities of the Company
under this Agreement); no transfer by operation of law or otherwise by the
Company of all or a substantial part of its business or assets shall be made
unless the obligations and liabilities of the Company under this Agreement
are
assumed in connection with such transfer either by operation of law or by
specific assumption executed by the transferee. In such event, the Company
shall
remain liable for the performance of all of its obligations under this Agreement
(which liability shall be a primary obligation
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for
full
and prompt performance rather than a secondary guarantee of collectibility
of
damages). Except for any transfer or assignment of rights under this Agreement,
in whole or in part, upon the death of the Executive to his heirs, devisees,
legatees or beneficiaries or except with the prior written consent of the
Company, no assignment or transfer by operation of law or otherwise may be
made
by the Executive of any of his rights under this Agreement.
(b)
Binding
Nature.
This
Agreement shall be binding upon the parties to this Agreement and their
respective legal representatives, heirs, devisees, legatees, beneficiaries
and
successors and assigns; shall inure to the benefit of the parties to this
Agreement and their respective permitted legal representatives, heirs, devisees,
legatees, beneficiaries and other permitted successors and assigns (and to
or
for the benefit of no other person or entity, whether an employee or otherwise,
whatsoever); and any reference to a party to this Agreement shall also be
a
reference to a permitted successor or assign.
8.
Miscellaneous.
(a)
The failure of any party to this Agreement at any time or times to require
performance of any provision of this Agreement shall in no manner affect
the
right to enforce the same. No waiver by any party to this Agreement of any
provision (or of a breach of any provision) of this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
either as a further or continuing waiver of any such provision or breach
or as a
waiver of any other provision (or of a breach of any other provision) of
this
Agreement.
(b)
Wherever
possible each provision of this Agreement shall be interpreted in such manner
as
to be effective and valid but if any one or more of the provisions of this
Agreement shall be invalid, illegal or unenforceable in any respect for any
reason, the validity, legality or enforceability of any such provisions in
every
other respect and of the remaining provisions of this Agreement shall not
be
impaired.
(c)
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of Colorado (without giving effect to any choice of law
provisions).
(d)
This
Agreement may only be amended by a written instrument signed by the parties
hereto which makes specific reference to the Agreement.
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IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its
duly authorized officer and the Executive has executed this Agreement as
of the
date and year first written above.
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Vail
Banks, Inc.
By:
/s/ Xxxx X.
Xxxx
Xxxx
X. Xxxx
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Its:
President and Chief Executive Officer
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EXECUTIVE
/s/
Xxxxx
Xxxx
Xxxxx
Xxxx
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