Ex 10.7
SALIDA BUILDING & LOAN ASSOCIATION
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Employment Agreement with
Xxxxx X. Xxxxxx
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AGREEMENT entered into and effective this_____ day of__________, 1997,
by and between Salida Building & Loan Association (the "Association") and Xxxxx
X. Xxxxxx (the "Employee").
WHEREAS, the Employee has heretofore been employed by the Association
as its Senior Vice President and is experienced in all phases of the business of
the Association; and
WHEREAS, the Board of Directors (the "Board") of the Association
believes it is in the best interests of the Association to enter into this
Agreement with the Employee in order to assure continuity of management of the
Association and to reinforce and encourage the continued attention and
dedication of the Employee to his assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Association and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
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When used anywhere in this Agreement, the following terms shall have
the meaning set forth herein.
(a) "Change in Control" shall mean any one of the following
events: (i) the acquisition of ownership, holding or power to vote more than 25%
of the voting stock of the Association or the Holding Company thereof, (ii) the
acquisition of the ability to control the election of a majority of the
Association's or the Company's Directors, (iii) the acquisition of a controlling
influence over the management or policies of the Association or of the Company
by any person or by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), or (iv) during any period of two
consecutive years, individuals (the "Continuing Directors") who at the beginning
of such period constitute the Board of Directors of the Association or of the
Company (the "Existing Board") cease for any reason to constitute at least
two-thirds thereof, provided that any individual whose election or nomination
for election as a member of the Existing Board was approved by a vote of at
least two-thirds of the Continuing Directors then in office shall be considered
a Continuing Director. For purposes of this paragraph only, the term "person"
refers to an individual or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization or
any other form of entity not specifically listed herein.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to occur solely by reason of a transaction in which the Association
converts to the stock form of organization, or creates an independent holding
company in connection therewith. The decision of the Board as to whether a
Change in Control has occurred shall be conclusive and binding.
(b) "Company" shall mean High Country Bancorp, Inc.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Codess.280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Codess.280G(b)(3).
(e) "Disability" shall mean a physical or mental infirmity
which impairs the Employee's ability to substantially perform his duties under
this Agreement and which results in the Employee becoming eligible for long-term
disability benefits under the Association's long-term disability plan (or, if
the Association has no such plan in effect, which impairs the Employee's ability
to substantially perform his duties under this Agreement for a period of 180
consecutive days).
(f) "Effective Date" shall mean the date referenced in the
opening paragraph of this Agreement.
(g) "Good Reason" shall mean any of the following events, which
has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move his personal residence, or perform his
principal executive functions, more than 30 miles from his primary office as of
the later of the Effective Date and the most recent voluntary relocation by the
Employee; (ii) a material reduction in the Employee's base compensation under
this Agreement as the same may be increased from time to time; (iii) the failure
by the Association or the Company to continue to provide the Employee with
compensation and benefits provided under this Agreement as the same may be
increased from time to time, or with benefits substantially similar to those
provided to him under any of the employee benefit plans in which the Employee
now or hereafter becomes a participant, or the taking of any action by the
Association or the Company which would directly or indirectly reduce any of such
benefits or deprive the Employee of any material fringe benefit enjoyed by him
under this Agreement; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his
position; (v) a failure to reelect the Employee to the Board of Directors of the
Association or the Company, if the Employee has served on such Board at any time
during the term of the Agreement; or (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Association.
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(h) "Just Cause" shall mean, in the good faith determination
of the Association's Board of Directors, the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement. The Employee shall have no right to receive compensation or other
benefits for any period after termination for Just Cause. No act, or failure to
act, on the Employee's part shall be considered "willful" unless he has acted,
or failed to act, with an absence of good faith and without a reasonable belief
that his action or failure to act was in the best interest of the Association
and the Company.
(i) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(j) "Trust" shall mean a grantor trust that is designed in
accordance with Revenue Procedure 92-64 and has a trustee independent of the
Association and the Company.
2. Employment. The Employee is employed as the Senior Vice President
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of the Association. The Employee shall render such administrative and management
services for the Association as are currently rendered and as are customarily
performed by persons situated in a similar executive capacity. The Employee
shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Association. The Employee's other duties
shall be such as the Board may from time to time reasonably direct, including
normal duties as an officer of the Association.
3. Base Compensation. The Association agrees to pay the Employee
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during the term of this Agreement a salary at the rate of $_____ per annum,
payable in cash not less frequently than monthly. The Board shall review, not
less often than annually, the rate of the Employee's salary, and in its sole
discretion may decide to increase his salary.
4. Discretionary Bonuses. The Employee shall participate in an
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equitable manner with all other senior management employees of the Association
in discretionary bonuses that the Board may award from time to time to the
Association's senior management employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses.
5. Participation in Retirement, Medical and Other Plans.
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(a) The Employee shall be eligible to participate in any of the
following plans or programs that the Association may now or in the future
maintain: group hospitalization, disability, health, dental, sick leave, life
insurance, travel and/or accident insurance, auto allowance/auto lease,
retirement, pension, and/or other present or future qualified or nonqualified
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plans provided by the Association, generally which benefits, taken as a whole,
must be at least as favorable as those in effect on the Effective Date.
(b) The Employee shall also be eligible to participate in any
fringe benefits which are or may become available to the Association's senior
management employees, including for example: any stock option or incentive
compensation plans, and any other benefits which are commensurate with the
responsibilities and functions to be performed by the Employee under this
Agreement. The Employee shall be reimbursed for all reasonable out-of-pocket
business expenses which he shall incur in connection with his services under
this Agreement upon substantiation of such expenses in accordance with the
policies of the Association.
6. Term. The Association hereby employs the Employee, and the
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Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending 36 months thereafter (or such
earlier date as is determined in accordance with Section 10 or 12 hereof).
Additionally, on each annual anniversary date from the Effective Date, the
Employee's term of employment shall be extended for an additional one-year
period beyond the then effective expiration date, provided the Board determines
in a duly adopted resolution that the performance of the Employee has met the
Board's requirements and standards, and that this Agreement shall be extended.
Only those members of the Board of Directors who have no personal interest in
this Employment Agreement shall discuss and vote on the approval and subsequent
review of this Agreement.
7. Loyalty; Noncompetition.
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(a) During the period of his employment hereunder and except
for illnesses, reasonable vacation periods, and reasonable leaves of absence,
the Employee shall devote all his full business time, attention, skill, and
efforts to the faithful performance of his duties hereunder; provided, however,
from time to time, Employee may serve on the boards of directors of, and hold
any other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Association or any of its subsidiaries
or affiliates, or unfavorably affect the performance of Employee's duties
pursuant to this Agreement, or will not violate any applicable statute or
regulation. "Full business time" is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers.
During the term of his employment under this Agreement, the Employee shall not
engage in any business or activity contrary to the business affairs or interests
of the Association.
(b) Nothing contained in this Section shall be deemed to
prevent or limit the Employee's right to invest in the capital stock or other
securities of any business dissimilar from that of the Association, or, solely
as a passive or minority investor, in any business.
8. Standards. The Employee shall perform his duties under this
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Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Association will provide Employee with the
working facilities and staff customary for similar executives and necessary for
him to perform his duties.
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9. Vacation and Sick Leave. At such reasonable times as the Board
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shall in its discretion permit, the Employee shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of his employment under
this Agreement, all such voluntary absences to count as vacation time, provided
that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Association.
(b) The Employee shall not receive any additional compensation
from the Association on account of his failure to take a vacation or sick leave,
and the Employee shall not accumulate unused vacation or sick leave from one
fiscal year to the next, except in either case to the extent authorized by the
Board.
(c) In addition to the aforesaid paid vacations, the Employee
shall be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Association for such additional periods
of time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Employee a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual
sick leave benefit as established by the Board.
10. Termination and Termination Pay. Subject to Section 12 hereof, the
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Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.
(b) Disability. (1) The Association may terminate the
Employee's employment after having established the Employee's Disability, in
which event the Employee shall be entitled to the compensation and benefits
provided for under this Agreement for (i) any period during the term of this
Agreement and prior to the establishment of the Employee's Disability during
which the Employee is unable to work due to the physical or mental infirmity,
and (ii) any period of Disability which is prior to the Employee's termination
of employment pursuant to this Section 10(b); provided that any benefits paid
pursuant to the Association's long term disability plan will continue as
provided in such plan without reduction for payments made pursuant to this
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Agreement.
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(2) During any period that the Employee shall receive
disability benefits and to the extent that the Employee shall be physically and
mentally able to do so, he shall furnish such information, assistance and
documents so as to assist in the continued ongoing business of the Association
and, if able, shall make himself available to the Association to undertake
reasonable assignments consistent with his prior position and his physical and
mental health. The Association shall pay all reasonable expenses incident to the
performance of any assignment given to the Employee during the disability
period.
(c) Just Cause. The Board may, by written notice to the
Employee, immediately terminate his employment at any time, for Just Cause. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for Just Cause.
(d) Without Just Cause; Constructive Discharge. The Board may,
by written notice to the Employee, immediately terminate his employment at any
time for a reason other than his Disability or Just Cause, in which event the
Employee shall be entitled to receive the following compensation and benefits
(unless such termination occurs during the Protected Period, in which event the
benefits and compensation provided for in Section 12 shall apply): (i) the
salary provided pursuant to Section 3 hereof, up to the expiration date of this
Agreement, including any renewal term (the "Expiration Date"), plus said salary
for an additional 12-month period, and (ii) at the Employee's election either
(A) cash in an amount equal to the cost to the Employee of obtaining all health,
life, disability and other benefits which the Employee would have been eligible
to participate in through the Expiration Date based upon the benefit levels
substantially equal to those that the Association provided for the Employee at
the date of termination of employment or (B) continued participation under such
Association benefit plans through the Expiration Date, but only to the extent
the Employee continues to qualify for participation therein. All amounts payable
to the Employee shall be paid, at the option of the Employee, either (I) in
periodic payments through the Expiration Date, or (II) in one lump sum within
ten days of such termination.
(e) Good Reason. The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d) hereof in the event
that the Employee voluntarily terminates employment within 90 days of an event
that constitutes Good Reason, (unless such voluntary termination occurs during
the Protected Period, in which event the benefits and compensation provided for
in Section 12 shall apply).
(f) Termination or Suspension Under Federal Law. (1) If the
Employee is removed and/or permanently prohibited from participating in the
conduct of the Association's affairs by an order issued under Sections 8(e)(4)
or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4)
and (g)(1)), all obligations of the Association under this Agreement shall
terminate, as of the effective date of the order, but vested rights of the
parties shall not be affected.
(2) If the Association is in default (as defined in
Section 3(x)(1) of FDIA), all obligations under this Agreement shall terminate
as of the date of default; however, this Paragraph shall not affect the vested
rights of the parties.
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(3) If a notice served under Section 8(e)(3) or (g)(1) of
the FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits
the Employee from participating in the conduct of the Association's affairs, the
Association's obligations under this Agreement shall be suspended as of the date
of such service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Association may in its discretion (i) pay the Employee
all or part of the compensation withheld while its contract obligations were
suspended, and (ii) reinstate (in whole or in part) any of its obligations which
were suspended.
(4) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with both 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder,
and Regulatory Bulletin 27A, but only to the extent required thereunder on the
date any payment is required pursuant to this Agreement.
(g) Voluntary Termination by Employee. Subject to Section 12
hereof, the Employee may voluntarily terminate employment with the Association
during the term of this Agreement, upon at least 90 days' prior written notice
to the Board of Directors, in which case the Employee shall receive only his
compensation, vested rights and employee benefits up to the date of his
termination (unless such termination occurs pursuant to Section 10(d) hereof or
within the Protected Period, in Section 12(a) hereof, in which event the
benefits and compensation provided for in Sections 10(d) or 12, as applicable,
shall apply).
(h) Post-termination Health Insurance. If the Employee's
employment terminates with the Association or the Company for any reason other
than Just Cause, the Employee shall be entitled to purchase from the
Association, at the Employee's own expense which shall not exceed applicable
COBRA rates, family medical insurance under any group health plan that the
Association or the Company maintains for its employees. This right shall be (i)
in addition to, and not in lieu of, any other rights that the Employee has under
this Agreement, and (ii) shall continue until the Employee first becomes
eligible for participation in Medicare.
11. No Mitigation. The Employee shall not be required to mitigate the
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amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
12. Change in Control.
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(a) Trigger Events. The Employee shall be entitled to collect
the severance benefits set forth in Subsection (b) hereof in the event that
either (i) the Employee voluntarily terminates employment for any reason within
the 30-day period beginning on the date of a Change in Control, (ii) the
Employee voluntarily terminates employment within 90 days of an event that both
occurs during the Protected Period and constitutes Good Reason, or (iii) the
Association or the Company or their successor(s) in interest terminate the
Employee's employment without his written consent and for any reason other than
Just Cause during the Protected Period.
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(b) Amount of Severance Benefit. If the Employee becomes
entitled to collect severance benefits pursuant to Section 12(a) hereof, the
Association shall pay the Employee a severance benefit equal to the difference
between the Code ss.280G Maximum and the sum of any other "parachute payments"
as defined under Code ss.280G(b)(2) that the Employee receives on account of the
Change in Control.
The amount payable under this Section 12(b) shall be paid either (i) in
one lump sum within ten days of the later of the date of the Change in Control
and the Employee's last day of employment with the Association or the Company,
or (ii) if prior to the date which is 90 days before the date on which a Change
in Control occurs, the Employee filed a duly executed irrevocable written
election in the form attached hereto as Exhibit "A", payment of such amount
shall be made according to the elected schedule. Deferred amounts shall bear
interest from the date on which they would otherwise be payable until the date
paid at a rate equal to 120% of the applicable federal rate, compounded
semiannually, as determined under Code Section 1274(d) and the regulations
thereunder.
In the event that the Employee, the Association, and the Company
jointly agree that the Employee has collected an amount exceeding the Code
ss.280G Maximum, the parties may agree in writing that such excess shall be
treated as a loan ab initio, which the Employee shall repay to the Association,
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on terms and conditions mutually agreeable to the parties, together with
interest at the applicable federal rate provided for in Section 7872(f)(2)(B) of
the Code.
(c) Funding of Grantor Trust upon Change in Control. Not later
than ten business days after a Change in Control, the Association shall (i)
deposit in a Trust an amount equal to the Code ss.280G Maximum, unless the
Employee has previously provided a written release of any claims under this
Agreement, and (ii) provide the trustee of the Trust with a written direction to
hold said amount and any investment return thereon in a segregated account for
the benefit of the Employee, and to follow the procedures set forth in the next
paragraph as to the payment of such amounts from the Trust. Upon the later of
the Trust's final payment of all amounts payable to the Employee under Section
12(b) of this Agreement or the date 90 days following the expiration of the
Protected Period, the trustee of the Trust shall pay to the Association the
entire balance remaining in the segregated account maintained for the benefit of
the Employee. The Employee shall thereafter have no further interest in the
Trust.
Prior to the date which is 90 days following the expiration of the
Protected Period, the Employee may provide the trustee of the Trust with a
written notice requesting that the trustee pay to the Employee an amount
designated in the notice as being payable pursuant to this Agreement. Within
three business days after receiving said notice, the trustee of the Trust shall
send a copy of the notice to the Association via overnight and registered mail
return receipt requested. Unless prior to the tenth (10th) business day after
mailing said notice to the Association, the Association provides the trustee
with a written notice directing the trustee to withhold payment, on such date
the trustee of the Trust shall pay the Employee the amount designated therein
according to the schedule elected by the Employee pursuant to Section 12(b)
hereof, or in the absence of such an election, payment shall be made
immediately. In the event the Association directs the trustee to
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withhold payment, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Employee pursuant
to this Agreement, and the costs of such arbitration shall be paid by the
Association. The trustee shall choose the arbitrator to settle the dispute, and
such arbitrator shall be bound by the rules of the American Arbitration
Association in making his determination. The parties and the trustee shall be
bound by the results of the arbitration and, within 3 days of the determination
by the arbitrator, the trustee shall pay from the Trust the amounts required to
be paid to the Employee and/or the Association, and in no event shall the
trustee be liable to either party for making the payments as determined by the
arbitrator.
13. Indemnification. The Association and the Company agree that their
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respective Bylaws shall continue to provide for indemnification of directors,
officers, employees and agents of the Association and the Company, including the
Employee during the full term of this Agreement, and to at all times provide
adequate insurance for such purposes.
14. Reimbursement of Employee for Enforcement Proceedings. In the
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event that any dispute arises between the Employee and the Association as to the
terms or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to defend
against any action taken by the Association or the Company, the Employee shall
be reimbursed for all costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, provided that the Employee
obtains either a written settlement or a final judgement by a court of competent
jurisdiction substantially in his favor. Such reimbursement shall be paid within
ten days of Employee's furnishing to the Association written evidence, which may
be in the form, among other things, of a cancelled check or receipt, of any
costs or expenses incurred by the Employee.
15. Federal Income Tax Withholding. The Association may withhold all
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federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation or
ruling.
16. Successors and Assigns.
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(a) Association. This Agreement shall not be assignable by the
Association, provided that this Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Association which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Association.
(b) Employee. Since the Association is contracting for the
unique and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties hereunder without first obtaining
the written consent of the Association; provided, however, that nothing in this
paragraph shall preclude (i) the Employee from designating a beneficiary to
receive any benefit payable hereunder upon his death, or (ii) the executors,
administrators, or other legal representatives of the Employee or his estate
from assigning any rights hereunder to the person or persons entitled thereunto.
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(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
17. Amendments. No amendments or additions to this Agreement shall be
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binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal law, the
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laws of the State of Colorado shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
19. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any understanding
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or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto and shall supersede
any prior agreement between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: SALIDA BUILDING & LOAN ASSOCIATION
By:
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Secretary Its Chairman of the Board
WITNESS:
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Xxxxx X. Xxxxxx
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