CHANGE IN CONTROL
SEVERANCE PAYMENT AGREEMENT
This Agreement, made and entered into as of the 5th day of July, 2000,
by and between VAIL BANKS, INC., a Colorado corporation (the "Company"), and
Xxxxx X. Xxxxxxxxx (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 its subsidiaries; and
WHEREAS, the Company wishes to induce the Executive to remain in
employment during a possible Change in Control of the Company (as defined in
Section 3 below) 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 employment with the Company, the parties hereto agree as follows:
1. DUTIES AND STATUS OF EXECUTIVE.
------------------------------
The Executive shall perform such duties and responsibilities as shall
be assigned to him by the Chief Executive Officer or the Board of Directors of
the Company. The Executive shall devote his working time and attention to the
discharge of his duties with the Company and its subsidiaries. In addition to
the compensation and other benefits provided 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 two years that expires on the second 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
so that the Agreement then expires on the second anniversary of the
applicable Extension Date; 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 Company
terminates the employment of the Executive for Cause
(as defined in Section 4(c), and
(ii) whether or not the Company 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 Common Stock
Outstanding") or the voting securities of the Company then outstanding
entitled to vote generally in the election of directors (the "Company
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 Common Stock Outstanding or twenty-five
percent (25%) or more of the combined voting power of the Company
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 Common Stock
Outstanding or twenty-five percent (25%) or more of the combined voting
power of Company Voting Securities Outstanding, as the case may be; or
(b) the approval by the shareholders of the Company 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, at the time of such approval by shareholders, 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 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
2
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
Common Stock Outstanding and Company 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
Common Stock Outstanding and Company 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 payment (subject to payment of
all applicable taxes) of the Severance Payment described in (b) below
within ten (10) days 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) The Severance Payment to Executive under subsection (a)
above shall be equal to $390,000.00, minus the difference between the
exercise price for the Shares for which the option has not been
exercised under that certain Stock Option Agreement ("Option"), dated
July 5, 2000, for 10,000 Shares, and the Fair Market Value of the
Shares subject to the Option on the date of Executive's termination of
employment. If the Option has been exercised in whole or in part prior
to Executive's date of termination, the difference between the exercise
price and the Fair Market Value of the Shares for which the Option has
3
been exercised on the date of Executive's termination of employment, or
if greater, the Fiar Market Value of the Shares on the date Executive
sold any such Shares, shall also be used to reduce any payment due
Executive. If Executive has otherwise received payment (whether in
cash, stock or other property) for the value of the Option prior to his
termination of Employment, then the amount received by Executive shall
be used to reduce any payment due Executive under this Section 4. The
Company shall have the authority in good faith to determine the amount
due Executive as a Severance Payment pursuant to this Section 4.
(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
him 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 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.
(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) A material adverse alteration in the nature or
status of Executive's responsibilities from those in effect
immediately prior to the Change in Control, or
(ii) A material reduction by the Company in the
Executive's compensation and benefits as in effect on the date
hereof or as the same may be increased from time to time,
except in connection with a reduction for executives
generally.
(f) The Company agrees that, if the Executive's employment is
terminated and he is entitled to benefits under Section 4(a), he shall
4
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.
5. NOTICE OF TERMINATION. Any termination by the Company or by the
Executive of the Executive's employment 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.
6. 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 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.
7. 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
5
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.
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.
VAIL BANKS, INC.
By:/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, President and CEO
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
