EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT
10.7
This
EXECUTIVE
EMPLOYMENT AGREEMENT
(“Agreement”) is made and entered into as of this ___ day of __________, 2007,
by and between Solera National Bank, a national banking association (“Bank”),
Solera National Bancorp. Inc, the Bank Holding Company, (“Company or Bank”) and
Xxxx X. Xxxxxxxx, an individual resident of the State of Colorado
(“Executive”).
WHEREAS,
the
Executive has considerable experience, expertise and training in management
related to banking and services offered by the Bank;
WHEREAS,
the
Bank desires for the Executive to be employed as the Chief Executive Officer
(CEO) of the Bank, and President of Solera National Bancorp, Inc. and Executive
desires to accept employment, subject to and on the terms and conditions set
forth in this Agreement; and
WHEREAS,
both
the Bank and the Executive have read and understood the terms and provisions
set
forth in this Agreement and have been afforded a reasonable opportunity to
review this Agreement with their respective legal counsel.
NOW,
THEREFORE,
in
consideration of the mutual promises and covenants set forth in this Agreement,
the Executive and the Bank agree as follows:
A.
DURATION
1.
This
Agreement shall become effective (the “Effective Date”) upon the date that the
Bank opens for business and, subject to Paragraph
2 below, will expire and terminate by its own terms four years after the
Effective Date, unless earlier terminated as provided herein.
2. Both
the
Bank and the Executive acknowledge and agree that the parties may agree to
continue the employment relationship upon such terms as they may mutually agree.
Following the initial four (4) year term, this Agreement automatically shall
renew annually for an additional one (1) year term unless either party elects
to
terminate this Agreement by sending written notice of non-renewal at least
ninety (90) days prior to the expiration of the then current term. Both parties
acknowledge and agree that, in the event this Agreement does not renew, this
Agreement shall terminate automatically upon the expiration of the then current
term without any additional liability or obligation on the part of either party,
except as expressly provided herein.
B.
COMPENSATION
3. All
payments of salary and other compensation to the Executive shall be payable
in
accordance with the Bank’s ordinary payroll and other policies and
procedures.
a. During
the term of this Agreement, the Bank agrees to pay the Executive a base salary
of not less than $195,000 annually, appropriately prorated for partial months
at
the commencement and end of the term of this Agreement. Additionally, the Bank
agrees to pay the Executive a sign-on bonus of $20,000 within 30 days of the
Effective Date of this Agreement. If this Agreement is terminated for any reason
within 12 months of the Effective Date, the Executive will be required to return
the unearned portion of the sign-on bonus. The sign-on bonus will be earned
ratably over the twelve month period.
b. The
Bank
shall have the right to deduct from any payment of compensation to the Executive
hereunder any federal, state or local taxes required by law to be withheld
with
respect to such payments and any other amounts specifically authorized to be
withheld or deducted by the Executive.
c. During
the term of this Agreement, it is anticipated that the board of directors of
the
Bank (“Board of Directors” or “Board”) or a delegated committee thereof will
adopt an executive incentive bonus plan based upon asset growth, profitability
or other measurements deemed appropriate by the Board or a delegated committee
thereof of the Bank. The Executive will be entitled to participate in such
plan.
The Executive shall also be entitled to participate in any benefit programs
applicable to all employees of the Bank or to executive employees of the Bank
in
accordance with Bank policy and the provisions of said benefit programs. The
Bank will put the above referenced plans into place on or before April 1,
2007.
d. The
Executive shall receive options to purchase 2.5% of the shares issued in the
initial public offering of common stock of the Bank at an exercise price of
$10
per share. The options shall have a term of ten years from the date of issuance,
which shall be the Effective Date, and to the extent permitted by law, shall
be
treated as incentive stock options. So long as the Executive remains employed
by
the Bank, 25% of the options shall vest on the first anniversary date of the
Effective Date and 1/36th
of the
remaining options shall vest monthly over the 36 months following the first
anniversary of the Effective Date; provided, however that the vesting of all
of
the options shall accelerate fully and be deemed to be 100% vested on either
the
date that is (i) immediately prior to a change in control of the Bank (as
defined in the stock option agreement), and (ii) upon the death or permanent
disability of the Executive. The options shall be evidenced by a stock option
agreement, which shall have such terms as are consistent with those set forth
above and such additional terms as may be set forth in the stock option
agreement or the stock option plan pursuant to which the options are granted.
4. The
Bank
shall provide the Executive with a cellular phone and laptop computer for use
in
the performance of his duties and obligations under this Agreement. The Bank
also shall reimburse the Executive for all reasonable expenses, including,
but
not limited to, travel expenses, lodging expenses, and meals and entertainment
expenses, that the Executive may incur in the performance of his duties and
obligations under this Agreement; provided, however, that the Executive shall
be
required to submit receipts or other acceptable documentation to the cashier
of
the Bank or such other officer designated by the Board of Directors to verify
such expenses prior to any reimbursements.
In
addition to the reimbursement of expenses listed in this Paragraph, the Bank
shall pay, or reimburse the Executive, for reasonable initiation fees for trade
association memberships deemed to be acceptable and appropriate and which have
been pre-approved by the Board of Directors.
5. Subject
to the provisions of Paragraph 0
of this
Agreement, the Executive shall be entitled to receive employee and dependent
health insurance, dental insurance, paid sick leave and four (4) weeks of paid
vacation per year, and any additional benefits provided to all Bank employees.
The Executive’s receipt of such benefits shall be in accordance with the Bank’s
employment policies.
6. The
Board
of Directors may determine to provide the Executive with a salary continuation
plan, with such terms as are approved by Executive and the Board of Directors.
7. The
Bank
also shall provide the Executive with term life insurance coverage at the Bank’s
expense in an initial amount of 200% of the Executive’s base salary, and having
a term not less than one year, which life insurance benefit will be provided
only for so long as the Executive is employed by the Bank. If, during the term
of this Agreement, the Bank adopts a plan providing life insurance
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benefits
to other Bank employees and the maximum coverage under such plan exceeds the
maximum permissible coverage provided by this Paragraph, then notwithstanding
the provisions of this Paragraph, the Executive shall be entitled to participate
in the Bank’s life insurance benefit plan to the full extent that it is
available to other Bank employees.
8. The
Board
of Directors or a delegated committee shall review the amount of the Executive’s
compensation, including his base salary, not less than annually and shall
consider increases to such base salary as a result of such review which
increases would be designed to provide reasonable base salary adjustments,
all
in the discretion of the Board of Directors or such committee and consistent
with safe and sound banking practices; provided however that the Executive’s
base salary, bonuses and vacation shall not be less than the amounts set forth
in Paragraphs 3,
4,
and 5
at any
time during the term of this Agreement; provided, however, in the event that
the
Bank’s performance (i.e. as demonstrated by asset growth, profitability or other
measure of performance as set forth above ) does not support the continued
payments of the amounts set forth in Paragraphs 3,
4,
and
5,
then
the Board of Directors shall have the discretion to reduce those amounts in
order to strengthen such performance, but not less than $195,000.
9. All
employee benefits provided to the Executive by the Bank incident to the
Executive’s employment shall be governed by the applicable plan documents,
summary plan descriptions or employment policies, and may be modified, suspended
or revoked at any time, in accordance with the terms and provisions of the
applicable documents.
10. The
parties hereto acknowledge that the compensation set forth herein and the other
covenants and agreements of the Bank contained herein are fair and adequate
compensation for the Executive’s services and for the covenants of the Executive
as set forth herein.
C.
RESPONSIBILITIES
11. The
Executive shall be employed as the Chief Executive Officer (CEO) of the Bank
and
shall faithfully devote his best efforts and his or her primary focus to his
position(s) with the Bank.
12. The
Executive acknowledges and agrees that the duties and responsibilities of the
Executive required by his position as the Chief Executive Officer (CEO) of
the
Bank are wholly within the discretion of its Board of Directors, and may be
modified, or new duties and responsibilities imposed by the Board of Directors,
at any time, without the approval or consent of the Executive. However, these
new duties and responsibilities may not constitute immoral or unlawful acts.
In
addition, the new duties and responsibilities must be consistent with the
Executive’s role as the Chief Executive Officer of a financial
institution.
13. The
Executive acknowledges and agrees that, during the term of this Agreement,
he
has a fiduciary duty of loyalty to the Bank, and that he will not engage in
any
activity during the term of this Agreement, which will or could, in any
significant way, harm the business, business interests, or reputation of the
Bank or the reputation of the Board of Directors.
14. The
Executive shall not directly or indirectly engage in competition with the Bank
at any time during the existence of the employment relationship between the
Bank
and the Executive, and the Executive will not on his own behalf, or as another’s
agent or employee, engage in any of the same or similar duties and/or
Bank-related responsibilities required by the Executive’s position with the
Bank, other than as an employee of the Bank pursuant to this Agreement or as
specifically approved by the Board of Directors. In addition, without the prior
written consent of the Board of Directors, Executive shall not usurp for himself
any corporate opportunity available to the Bank.
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D.
NONINTERFERENCE
15. The
Executive acknowledges that, as part of his employment with the Bank, he will
become familiar with the salary, pay scale, capabilities, experiences, skill
and
desires of the Bank’s employees. The Executive agrees to maintain the
confidentiality of such information. The Executive further covenants and agrees
that, for a period of one year subsequent to the termination of this Agreement,
whether such termination occurs at the insistence of the Bank or the Executive,
the Executive shall not recruit, hire, or attempt to recruit or hire, directly
or by assisting others, any employees of the Bank, nor shall the Executive
contact or communicate with any employees of the Bank for the purpose of
inducing such employees of the Bank to terminate their employment with the
Bank.
For purposes of this covenant, “employees of the Bank” shall refer to employees
who are still actively employed by or were employed by the Bank within the
prior
year at the time of the attempted recruiting or hiring.
16. In
his
position of employment, the Executive will be exposed to confidential
information and trade secrets (hereafter “Proprietary Information”) pertaining
to, or arising from, the business of the Bank and its affiliates (if any).
The
Executive hereby agrees and acknowledges that such Proprietary Information
is
unique and valu-able to the Bank’s business and that the Bank would suffer
irreparable injury if this information were publicly disclosed. Therefore,
the
Executive agrees to keep in strict secrecy and confidence, both during and
after
the period of his employment, any and all Proprietary Information which the
Executive acquires, or to which the Executive has access, during employment
by
the Bank, that has not been publicly disclosed by the Bank, until such time
as
such Proprietary Information becomes generally known to the public other than
pursuant to a breach of this Paragraph 16 by the Executive. The Proprietary
Information covered by this Agreement shall include, but shall not be limited
to: (i) the identities of the Bank’s existing and prospective customers or
clients, including names, addresses, credit status, and pricing levels;
(ii) the buying and selling habits and customs of the Bank’s existing and
prospective customers or clients; (iii) financial information about the
Bank; (iv) product and systems specifications, concepts for new or improved
products and other product or systems data; (v) the identities of, and
special skills possessed by, the Bank’s employees; (vi) the identities of
and pricing information about the Bank’s suppliers and vendors;
(vii) training programs developed by the Bank; (viii) pricing studies,
information and analyses; (ix) current and prospective products and
inventories; (x) financial models, business projections and market studies;
(xi) the Bank’s financial results and business conditions;
(xii) business plans and strategies; (xiii) special processes,
procedures, and services of the Bank and its suppliers and vendors; and
(xiv) computer programs and software developed by the Bank or its
consultants. The
provisions and agreements entered into herein shall survive the term of the
Executive’s employment to the extent reasonably necessary to accomplish their
purpose in protecting the interests of the Bank in any Proprietary Information
disclosed to, or learned by, the Executive while employed.
17. The
Executive expressly represents that he has no agreements with, or obligations
to, any party which conflict, or may conflict, with the inter-ests of the Bank
or with the Executive’s duties as an employee of the Bank. Executive is a party
to an Amended and Restated Change in Control Severance Payment Agreement with
WestStar Bank dated December 8, 2005.
18. The
Executive acknowledges that the special relationship of trust and confidence
between him, the Bank, and its clients and customers creates a high risk and
opportunity for the Executive to misappropriate the relationship and goodwill
existing between the Bank and its clients and customers. The Executive further
acknowledges and agrees that it is fair and reasonable for the Bank to take
steps to protect itself from the risk of such misappropriation. The Executive
further acknowledges that, at the outset of his employment with the Bank and
throughout his employment with the Bank, the Executive will be provided with
access to and informed of Proprietary Information, which will enable him to
benefit from the Bank’s goodwill and know-how.
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19. The
Executive acknowledges that it would be inevitable in the performance of his
duties as a director, officer, employee, investor, agent or consultant of any
person, association, entity, or company which competes with the Bank, or which
intends to or may compete with the Bank, to disclose and/or use Proprietary
Information, as well as to misappropriate the Bank’s goodwill and know-how, to
or for the benefit of such other person, association, entity, or company. The
Executive also acknowledges that, in exchange for the execution of the
non-solicitation restriction set forth in these NONINTERFERENCE provisions,
he
has received substantial, valuable consideration, including:
(i) confidential trade secret and proprietary information relating to the
identity and special needs of the Bank’s current and prospective customers, the
Bank’s current and prospective services, the Bank’s business projections and
market studies, the Bank’s business plans and strategies, the Bank’s studies and
information concerning special services unique to the Bank;
(ii) employment; and (iii) compensation and benefits as described in this
Agreement. The Executive further acknowledges and agrees that this consideration
constitutes fair and adequate consideration for the execution of the
non-solicitation restriction set forth herein.
20. In
consideration for the above-recited valuable consideration, as well as to
protect the vital interests described in these NONINTERFERENCE provisions,
the
Executive understands and agrees that during the continuation of this Agreement
and for a period of one year following the termination of this Agreement by
either party, for any reason (other than for termination of the Executive for
circumstances described in Paragraph 0(e),
below), the Executive will not be or become engaged in any way (directly or
indirectly), as an individual proprietor, beneficiary, trustee, owner, partner,
stockholder, officer, director, executive, investor, lender, sales
representative, or in any other capacity, whatsoever, in any activity or
endeavor which competes or conflicts with the business of the Bank or any of
its
subsidiaries, as such business has been conducted during the years of the
Executive’s employment with the Bank, within twenty (20) miles of the primary
office of Executive upon the termination of Executive’s employment with the
Bank. It is the parties’ desire that these restrictions be enforced to the
fullest extent allowed by law.
21. The
Executive agrees that the restrictions set forth in Paragraph 0
above
are ancillary to an otherwise enforceable agreement, are supported by
independent valuable consideration, and that the limitations as to time,
geographical area, and scope of activity to be restrained by Paragraph
0
are
reasonable and acceptable, and do not impose any greater restraint than is
reasonably necessary to protect the goodwill and other business interests of
the
Bank. The Executive further agrees that such restrictions do not create undue
hardship for him or for the public. The NONINTERFERENCE provisions in this
Section D are not intended to be construed as a general restraint from
engaging in a lawful profession or a general covenant against competition.
Nothing herein will prohibit the Executive’s (i) beneficial ownership of less
than 5% of the publicly traded capital stock of a corporation listed on a
national securities exchange so long as this is not a controlling interest,
or
(ii) ownership of mutual fund investments. The Executive may not avoid the
purpose and intent of this paragraph by engaging in conduct within the
geographically limited area from a remote location through means such as
telecommunications, written correspondence, computer generated or assisted
communications, or other similar methods. The Executive agrees that if, at
some
later date, a court of competent jurisdiction determines that the
non-solicitation agreement set forth in this Section D does not meet the
criteria set forth by applicable law, then such agreement may be reformed by
the
court and enforced to the maximum extent permitted under applicable
law.
The
Executive
understands that his obligations under this Section D shall not be assignable
by
him.
22. The
Executive acknowledges that the covenants set forth in these NONINTERFERENCE
provisions are material conditions to the Bank’s willingness to execute and
deliver this Agreement and to provide Executive the compensation and benefits
and other consideration provided hereunder. The parties agree that the existence
of any claim or cause of action of Executive against the Bank,
whether
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predicated
on this Agreement or otherwise, will not constitute a defense to the enforcement
by the Bank of such covenants. The covenants contained in these NONINTERFERENCE
provisions will not be affected by any breach of any other provision hereof
by
any party hereto. In addition, Executive’s obligations under these
NONINTERFERENCE provisions shall survive the termination of this Agreement
and
Executive’s employment with the Bank. Executive’s obligations under these
NONINTERFERENCE provisions are in addition to, and not in limitation or
preemption of, all other obligations of confidentiality which he may have to
Bank under general legal or equitable principles, or other the Bank
policies.
E.
REMEDIES
23. In
the
event that the Executive violates any of the provisions set forth in this
Agreement relating to NONINTERFERENCE, Executive acknowledges that the Bank
would suffer immediate and irreparable harm and would not have an adequate
remedy at law for money damages. Accordingly, Executive agrees that, without
the
necessity of proving actual damages or posting bond or other security, the
Bank
shall be entitled to temporary or permanent injunction or injunctions to prevent
breaches of such performance and to specific enforcement of such covenants
in
addition to any other remedy to which the Bank may be entitled, at law or in
equity. In such a situation, the parties agree that the Bank may pursue any
remedy available, including declaratory relief, concurrently or consecutively
in
any order as to any breach, violation, or threatened breach or violation of
any
of the provisions set forth in this Agreement relating to NONINTERFERENCE,
and
the pursuit of any particular remedy or remedies shall not be deemed an election
of remedies or waiver of the right to pursue any other remedy.
To the
extent that the provisions of this Paragraph 23 could be read to increase the
geographic, temporal or other scope of the restrictions set forth in this
Agreement relating to NONINTERFERENCE, such reading is not intended by the
parties.
F.
TERMINATION
24. The
Board
of Directors shall be entitled to terminate this Agreement, for any reason,
by
providing the Executive with ninety (90) days written notice of the termination.
However, if this Agreement is terminated by the Bank without Good Cause, as
defined in this Agreement, the Bank shall provide the Executive with the
severance set
forth
in paragraph 0
of this
Agreement. The Executive will not receive any severance payments if the
termination of this Agreement by the Board of Directors is made on the basis
of
Good Cause as defined in Paragraph 25 below. However, if the Executive is
terminated by the Board of Directors under the provisions of paragraph 25(e)
within the first twelve months of this Agreement, the Executive shall be
entitled to a severance payment in a lump sum in an amount equal to the base
salary that would have been due to the Executive had he remained employed for
twelve (12) months following termination.
25. For
purposes of this Agreement,“Good
Cause” shall be defined as the occurrence of one of the following
events:
a. The
determination by the Board of Directors, in the exercise of its reasonable
judgment, that Executive has violated any provision of this Agreement or is
grossly negligent in the performance of his duties hereunder, and has failed
to
cure such violation or the effects of such gross negligence within a reasonable
period after written notice to the Executive by the Bank specifying in
reasonable detail the alleged violation;
b. The
determination by the Board of Directors, in the exercise of its reasonable
judgment, that (i) Executive has failed to follow the policies adopted by the
Board of Directors and has failed to cure such failure within a reasonable
period after written notice to the Executive
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by the Bank specifying in reasonable detail the alleged failure; or (ii) Executive has engaged in such actions or omissions that would constitute unsafe or unsound banking practices;
c. The
Executive is convicted of a misdemeanor involving moral turpitude or a
felony;
d. The
determination by the Board of Directors, in the exercise of its reasonable
judgment, that the Executive has engaged in gross misconduct in the course
and
scope of his employment with the Bank including indecency, immorality, gross
insubordination, dishonesty, unlawful harassment, use of illegal drugs, or
fighting;
e. The
determination by the Board of Directors, in the exercise of its reasonable
judgment and in good faith, that the Executive’s job performance is
substantially unsatisfactory and that Executive has failed to cure such
performance within a reasonable period after written notice to the Executive
by
the Bank specifying in reasonable detail the nature of the unsatisfactory
performance; or
f. The
Executive is prohibited from engaging in the business of banking by any
governmental regulatory agency having jurisdiction over the Bank.
26. Executive
shall be entitled to terminate this Agreement at any time, for any reason,
with
or without cause, by providing ninety (90) days written notice to the Bank.
The
effective date of such resignation shall be the 30th
calendar
day following the date the notice is given or such other later date as may
be
set forth in the notice. Upon Executive’s resignation, Executive shall be
entitled to receive any base salary which has been earned by him through the
effective date of such resignation.
27. If
Executive dies during the term of this Agreement and while in the employ of
the
Bank, this Agreement will terminate automatically, without notice, on the date
of the Executive’s death and the Bank shall not have any further obligation to
Executive or his estate under this Agreement (other than death benefits payable
under any benefit plans to which Executive is a party), except that the Bank
shall pay Executive’s estate that portion of Executive’s base salary accrued
through the date on which Executive’s death occurred plus an additional three
(3) months base salary. To
the
maximum extent, and for the term, permitted by the health benefit provisions
of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of
1986,
if
Executive dies during
the term of this Agreement and while in the employ of the Bank,
the Bank
shall provide or maintain health insurance benefits, at the Bank’s expense, for
Executive’s spouse for a period of twelve (12) months.
28. This
Agreement will terminate immediately, without notice, in the event the Executive
is prevented from performing his duties hereunder by reason of becoming
physically or mentally disabled. For purposes of this Agreement, the term
“disabled” shall have the meaning set forth in the Bank’s long-term disability
plan or, if the Bank has no long-term disability plan in effect at the time
of
the Executive’s disability, then “disabled” shall mean that Executive has become
physically or mentally incapable (excluding infrequent and temporary absences
due to ordinary illness) of performing the essential functions of his duties
under this Agreement for a continuous period of three (3) months, as determined
by the Board of Directors upon the advice of a qualified physician. In the
event
a dispute arises between Executive and the Bank concerning Executive’s physical
or mental ability to continue or return to the performance of his duties, then
Executive shall submit to an examination by two (2) competent physicians
mutually agreeable to the parties. The physicians’ opinions as to the
Executive’s capability to perform his duties will be final and binding. During
any period prior to termination during which the Executive fails to perform
his
duties as a result of incapacity due to physical or mental illness, the
Executive shall continue to receive his full salary at the rate then in effect
for such period until his employment terminates
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pursuant
to this Paragraph 28, provided that payments so made to the Executive during
such period shall be reduced by the sum of the amounts, if any, payable to
the
Executive under any disability benefit plans of the Bank that were not
previously applied to reduce such payment.
In
the
event of a termination pursuant to this Section 28, the Bank shall be relieved
of all its obligations under this Agreement, except that Bank shall pay to
the
Executive, or to his estate in the event of his subsequent death, the
Executive’s base salary under Paragraph 3(a) through the date on which such
termination shall have occurred, reduced during such period by the amount of
any
benefits received by Executive under any disability policy maintained by the
Bank. All such payments to the Executive or to his estate shall be made in
the
same manner as other payroll obligations.
29. Executive
acknowledges that all memoranda, notes, records, reports, manuals, books,
papers, letters, client and customer lists, contracts, software programs,
information and records, drafts of instructions, guides and manuals, and other
documentation (whether in draft or final form), and other sales or financial
information and aids relating to the Bank’s business, and any and all other
documents containing Propriety Information furnished to the Executive by any
representative of the Bank or otherwise acquired or developed by the Executive
in connection with his duties under this Agreement (collectively, the “Recipient
Materials”) shall at all times be the property of the Bank. Within three
calendar days of the termination of this Agreement, the Executive shall return
to the Bank, all Recipient Materials (including all Proprietary Information)
that is in his possession, custody or control.
30.
The
provisions of Paragraphs 15, 16, 20-23, 29-34, 39, 43, 45, 46 and 47 shall
survive the termination of this Agreement.
G.
CHANGE
OF CONTROL
31. The
parties acknowledge that the Executive has agreed to assume the position of
Chief Executive Officer (CEO) and President and to enter into this Agreement
based on his confidence in the current owners of the Bank and the direction
of
the Bank provided by the current Board of Directors. Upon a “Change of Control,”
as defined below, the Executive may, at his option, notify the Bank within
sixty
(60) days following such Change of Control that he intends to terminate this
Agreement based upon the Change of Control.
In
the
event that Executive is terminated by the Bank or its successor, within twelve
(12) months following such Change of Control for any reason other than for
Good
Cause, with the exception of Paragraph 25e, Executive shall be entitled to
elect
to receive as severance the lump sum amount determined pursuant to Paragraph
0
upon
written notice to the Bank, in which case the severance provisions of Paragraph
0
shall
not apply.
32. In
the
event that the Executive elects to terminate this Agreement based upon the
Change of Control, the Bank shall pay to the Executive, within thirty (30)
days
of Bank’s receipt of a notice of the Executive’s election to terminate this
Agreement, a cash lump sum payment equal to 1.99 times his Base Amount and
Bonus
as defined in section 280G(b)(3) of the Internal Revenue Code of 1986, as
amended (“Code”).
In
the
event that any compensation payable under this Agreement is determined to be
a
“parachute payment” subject to the excise tax imposed by Section 4999 of the
Code or any successor provision (the “Excise Tax”), the Bank agrees to pay to
the Executive an additional sum (the “Gross Up”) in an amount such that the net
amount retained by the Executive, after receiving both the payment and the
Gross
Up and after paying: (i) any Excise Tax on the payment and the Gross Up, and
(ii) any federal, state, and local income taxes on the Gross Up, is equal to
the
amount of the payment.
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For
purposes of determining the Gross Up, the Executive shall be deemed to pay
federal, state, and local income taxes at the highest marginal rate of taxation
in his filing status for the calendar year in which the payment is to be made
based upon the Executive’s domicile on the date of the event that triggers the
Excise Tax. The determination of whether such Excise Tax is payable and the
amount of such Excise Tax shall be based upon the opinion of tax counsel
selected by the Bank, subject to the reasonable approval of the Executive.
If
such opinion is not finally accepted by the Internal Revenue Service, then
appropriate adjustments shall be calculated (with additional Gross Up determined
based on the principals outlined in the previous paragraph, if applicable)
by
such tax counsel based upon the final amount of Excise Tax so determined
together with any applicable penalties and interest. The final amount shall
be
paid, if applicable, within thirty (30) days after such calculations are
completed, but in no event later than April 1st
of the
year following the event that triggers the Excise Tax. Such compensation shall
be payable in equal disbursements in accordance with the Bank’s ordinary payroll
policies and procedures.
33. As
used
in this Agreement, a “Change of Control” shall be deemed to have occurred in
each of the following instances:
a. A
reorganization, merger, consolidation or other corporate transaction involving
the Bank (other than the Bank’s initial public offering of common stock), in
each case, with respect to which the shareholders of the Bank, immediately
prior
to such transaction do not, immediately after the transaction, own more than
fifty percent (50%) of the combined voting power of the reorganized, merged
or
consolidated bank’s then outstanding voting securities; provided, however that a
Change of Control shall not be deemed to have occurred upon the formation of
a
holding company for the Bank if each shareholder of the Bank immediately prior
to the formation of the holding company retains substantially the same
percentage ownership of the holding company following such formation as he
or
she owned of the Bank prior the formation.
b. The
sale,
transfer or assignment of all or substantially all of the assets of the Bank
to
any third party.
Notwithstanding
anything contained herein to the contrary, if Executive’s employment is
terminated and he reasonably demonstrates that such termination was at the
request of a third party who has indicated an intention of taking steps
reasonably calculated to effect a Change of Control and who effects a Change
of
Control, or such termination otherwise occurred in connection with, or in
anticipation of, a Change of Control which later actually occurs, then for
all
purposes hereof, a Change of Control shall be deemed to have occurred on the
day
immediately prior to the date of such termination of his
employment.
X.
XXXXXXXXX
34. Except
as
otherwise expressly provided herein, if Bank terminates Executive’s employment
for any reason other than Good Cause (as defined in this Agreement), then
Executive shall be entitled to severance pay in an amount not less than the
base
salary that would have been due the Executive had he remained employed for
twelve (12) months following termination. In the event that the Executive is
entitled to any payment under Section G, above, no payment shall be due under
this Section H.
Any
severance pay due to Executive pursuant to this Section H shall be paid in
a
lump sum in accordance with the terms of normal payroll procedure of the Bank.
Bank will continue to pay Executive’s spouse’s health insurance premiums through
the term of the severance period.
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I.
SEVERABILITY
35. If
any
term or other provision of this Agreement is held to be illegal, invalid or
unenforceable by any rule of law or public policy: (A) such term or provision
shall be fully severable and this Agreement shall be construed and enforced
as
if such illegal, invalid or unenforceable provision were not a part hereof;
(B)
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by such illegal, invalid or unenforceable provision
or
by its severance from this Agreement; and (C) there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and still be legal, valid
and enforceable.
If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only as broad as is enforceable.
J.
WAIVER
36. The
parties acknowledge and agree that the failure of either party to enforce any
provision of this Agreement shall not constitute a waiver of that particular
provision, or of any other provisions of this Agreement.
K.
SUCCESSORS
AND ASSIGNS
37. The
Executive acknowledges and agrees that this Agreement may be assigned by the
Bank to any successor-in-interest and shall inure to the benefit of, and be
fully enforceable by, any successor and/or assignee; and this Agreement will
be
fully binding upon, and may be enforced by the Executive against, any successor
and/or assignee of the Bank.
38. The
Executive acknowledges and agrees that his obligations, duties and
responsibilities under this Agreement are personal and shall not be assignable,
and that this Agreement shall be enforceable by the Executive only. In the
event
of the Executive’s death, this Agreement shall be enforceable by the Executive’s
estate, executors and/or legal representatives, only to the extent provided
herein.
L.
CHOICE
OF LAW
39. THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF COLORADO, WITHOUT
GIVING EFFECT TO PROVISION THEREOF REGARDING CONFLICT OF LAWS. IT IS STIPULATED
THAT COLORADO HAS A COMPELLING STATE INTEREST IN THE SUBJECT MATTER OF THIS
AGREEMENT, AND THAT THE EXECUTIVE HAS OR WILL HAVE REGULAR CONTACT WITH THE
STATE OF COLORADO IN THE PERFORMANCE OF THIS AGREEMENT.
M.
MODIFICATION
40. The
parties acknowledge and agree that this Agreement and the other agreements
and
plans referenced herein constitute the complete and entire agreement between
the
parties; that each executed this Agreement based upon the express terms and
provisions set forth herein; that, in accepting employment with the Bank, the
Executive has not relied on any representations, oral or written, which are
not
set forth in this Agreement; that no previous agreement, either oral or written,
shall have any effect on the terms or provisions of this Agreement; and that
all
previous agreements, either oral or written, are expressly superseded and
revoked by this Agreement. No waiver shall be deemed a continuing waiver
or
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a
waiver
of any subsequent breach or default, either of a similar or different nature,
unless expressly so stated in writing.
41. Except
as
otherwise expressly provided in this Agreement, no conditions, usage of trade,
course of dealing or performance, understanding or agreement purporting to
modify, vary, explain or supplement the terms or conditions of this Agreement
unless hereafter made (i) in
writing, (ii) referencing an express provision in this Agreement,
(iii) signed by the party to be bound, and (iv) in the case of the
Bank, approved by a disinterested majority of the Board of
Directors.
N.
INDEMNIFICATION
42. During
the term of this Agreement, so long as the Executive has demonstrated good
judgment and diligence in performing his duties, the Bank shall indemnify the
Executive against all judgments, penalties, fines, amounts paid in settlement
and reasonable expenses (including, but not limited to, attorneys’ fees)
relating to his employment by the Bank to the fullest extent permissible under
the law, including, without limitation, federal and/or state banking laws and
regulations, the Colorado Banking Code, as amended, the Colorado Corporations
and Associations Act, as amended, and the Bank’s Articles of Incorporation. To
the extent permitted by law, the Bank shall purchase such indemnification
insurance as the Board of Directors may from time to time
determine.
O.
ARBITRATION
43. Any
dispute, controversy, or claim arising out of or relating to this Agreement
or
breach thereof, or arising out of or relating in any way to the employment
of
the Executive or the termination thereof, shall be submitted to arbitration
before a private arbitrator. Judgment upon the award rendered by the arbitrator
may be entered in any court of competent jurisdiction. In reaching his or her
decision, the arbitrator shall have no authority to ignore, change, modify,
add
to or delete from any provision of this Agreement, but instead is limited to
interpreting this Agreement. Notwithstanding the arbitration provisions set
forth in this Agreement, the Executive and the Bank acknowledge and agree that
nothing in this Agreement shall be construed to require the arbitration of
any
claim or controversy arising under the NONINTERFERENCE provisions of this
Agreement. These provisions shall be enforceable by any court of competent
jurisdiction and shall not be subject to this Paragraph of the Agreement. The
Executive and the Bank further acknowledge and agree that nothing in this
Agreement shall be construed to require arbitration of any claim for workers’
compensation or unemployment compensation.
P.
LEGAL
CONSULTATION
44. Each
party acknowledges that it has carefully read this Agreement, that it has had
an
opportunity to consult with his, her or its attorney concerning the meaning,
import and legal significance of this Agreement, that it understands the terms
of the Agreement, that all understandings and agreements between Executive
and
the Bank relating to the subjects covered in this Agreement are contained in
it,
and that it has entered into the Agreement voluntarily and not in reliance
on
any promises or representations by the other than those contained in this
Agreement.
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Q.
MISCELLANEOUS
45. The
Executive shall make himself available, upon the request of the Bank, to testify
or otherwise assist in litigation, arbitration, or other disputes involving
the
Bank, or any of the directors, officers, employees, subsidiaries, or parent
corporations of the Bank, at a reasonable fee during the term of this Agreement
and at any time following the termination of this Agreement, with any fees
and
expenses related to the foregoing to be promptly paid by the Bank.
46. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for in this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the date of termination, or otherwise.
47. In
the
event either party institutes arbitration or litigation to enforce or protect
its rights under this Agreement, the prevailing party in such arbitration or
litigation shall be entitled, in addition to all other relief, to reasonable
attorneys fees, out-of-pocket costs, disbursements, and arbitrator’s fees
relating to such arbitration or litigation.
48. This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, but all of which shall together constitute
one and the same Agreement.
49. The
Bank
shall have no obligation to set aside, earmark or entrust any fund or money
with
which to pay its obligations under this Agreement. The Executive or any
successor-in-interest to the Executive shall be and remain simply a general
creditor of the Bank in the same manner as any other creditor having a general
unsecured claim. For purposes of the Code, the Bank intends this Agreement
to be
an unfunded, unsecured promise to pay on the part of the Bank. For purposes
of
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Bank
intends that this Agreement not be subject to ERISA. If it is deemed subject
to
ERISA, it is intended to be an unfunded arrangement for the benefit of a select
member of management, who is a highly compensated employee of the Bank for
the
purpose of qualifying this Agreement for the “top hat” plan exception under
sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. At no time shall the
Executive have or be deemed to have any lien nor right, title or interest in
or
to any specific investment or to any assets of the Bank. If the Bank elects
to
invest in a life insurance, disability or annuity policy upon the life of the
Executive, then the Executive shall assist the Bank by freely submitting to
a
physical examination and supplying such additional information necessary to
obtain such insurance or annuities.
50. When
a
reference is made in this Agreement to a Paragraph or a Section, such references
shall be to a Paragraph or a Section of this Agreement unless otherwise
indicated. The headings contained
in this Agreement are for convenience of reference only and shall not affect
in
any way the meaning or interpretation of this Agreement. Whenever the words
“include,” “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words “hereof,”
“herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision
in
this Agreement. Each use herein of the masculine, neuter or feminine gender
shall be deemed to include the other genders.
Each
use
herein of the plural shall include the singular and
vice
versa, in each case as the context requires or as is otherwise appropriate.
The
word “or” is used in the inclusive sense. Any agreement or instrument defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement or instrument as from time to time amended, modified or
supplemented, including by waiver or consent.
References to a person are also to its permitted successors or
assigns.
-12-
51. Executive
represents that his service as an employee of the Bank will not violate any
agreement: (i) he has made that prohibits him from disclosing any information
he
acquired prior to him becoming employed by the Bank; or (ii) he has made that
prohibits him from accepting employment with the Bank or that will interfere
with his compliance with the terms of this Agreement. Executive further
represents that he has not previously, and will not in the future, disclose
to
Bank any proprietary information or trade secrets belonging to any previous
employer. Executive acknowledges that the Bank has instructed him not to
disclose to it any proprietary information or trade secrets belonging to any
previous employer.
R.
NOTICES
52. All
notices and other communications required or permitted to be given or delivered
hereunder or by reason of the provisions of this Agreement shall be in writing
and shall be deemed to have been given properly if (a) delivered personally,
(b)
delivered by a recognized overnight courier service, (c) sent by United States
mail, postage prepaid, or (d) sent by facsimile transmission followed by a
confirmation copy delivered by recognized overnight courier service the next
day. Such notices, requests, consents and other communications shall be sent
to
the respective parties as follows (or at such other address for a party as
shall
be specified by like notice to the other party):
If
to the
Bank:
Solera
National Bank
0000
X.
Xxxxxxx Xxx., Xxxxx X
Xxxxxxxx,
XX 00000
Attention:
Chairman
If
to
Executive:
Xxxx
X.
Xxxxxxxx
X.X.
Xxx
0000
Xxxx,
XX
00000
53. Any
notice or other communication given pursuant to this Agreement shall be
effective (i) in the case of personal delivery, telex or facsimile transmission,
when received; (ii) in the case of mail, upon the earlier of actual receipt
or
five (5) business days after deposit with the United States Postal Service,
first class certified or registered mail, postage prepaid, return receipt
requested; and (iii) in the case of a recognized overnight courier service,
one
(1) business day after delivery to the courier service together with all
appropriate fees or charges and instructions for overnight delivery.
[signature
page follows]
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[signature
page to Employment Agreement]
EXECUTED
AS OF THE DATE FIRST WRITTEN ABOVE IN DENVER, COLORADO.
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EXECUTIVE
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WITNESS
|
Print
Name: Xxxx
X. Xxxxxxxx
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Solera
National Bank
|
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|
WITNESS
|
By: |
|
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Name:
Xxxxx
X. Xxxxxx
|
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Title:
Chairman
|
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By:_____________________________________
|
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Name:
___________________________________
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Title:
____________________________________
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