Vail Banks, Inc. May 31, 2006
Exhibit
10.1
Vail
Banks, Inc.
May
31,
2006
E.
B.
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Banks, Inc.
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P.O.
Box
6580
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Dear
E.
B.:
This
letter agreement (this “Agreement”) is to confirm the agreements, arrangements
and understandings relating to the payments that you will become entitled
to
receive in connection with the transactions contemplated by the Agreement
and
Plan of Merger (the “Merger Agreement”) by and among U.S. Bancorp, Powder
Acquisition Corp., and Vail Banks, Inc. (the “Company”), dated May 31, 2006. The
agreements, arrangement and understandings contained herein supersede in
their
entirety each of the Change in Control Severance Payment Agreement between
you
and the Company, dated as of November 19, 1999 (the “CIC Agreement”) and the
Compensation Agreement between you and the Company, dated as of January 1,
2004
(the “Compensation Agreement”). The commitments set forth in this letter
agreement are subject to the consummation of the Merger (as defined in the
Merger Agreement). All terms not otherwise defined herein shall have the
meaning
given to them in the Merger Agreement.
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1.
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CIC
Agreement Payment.
Subject to your execution and non-revocation of a release of claims
against the Company and its affiliates in a form mutually agreed
upon
between you and the Company, immediately following the occurrence
of the
Closing, the Company shall make a lump sum cash payment to you
equal to
$463,500 pursuant to Sections 4(a)(i) and 4(a)(iv) of the CIC Agreement
and in full satisfaction of the Company’s obligations under the CIC
Agreement.
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2.
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Compensation
Agreement Payment.
Subject to your execution and non-revocation of a release of claims
against the Company and its affiliates in a form mutually agreed
upon
between you and the Company, and subject to the occurrence of the
Closing,
as of January 2, 2007 or such earlier date that complies with Section
409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations promulgated thereunder, the Company shall make a lump
sum cash
payment to the Executive in an amount equal to $712,737 pursuant
to
Sections 8(a), (c), (d), (i) and (j) of the Compensation Agreement.
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3.
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Benefits.
While you are employed by the Company and its affiliates and for
three
years (or such shorter period of time necessary to comply with
Section
409A of the Code) following your involuntary termination of employment
by
the Company without “Cause” (as defined in Section 11 of the Compensation
Agreement), you will be entitled to receive the benefits described
in
Sections 8(b), (e) and (f) of the Compensation Agreement. The payments
set
forth in paragraph 2 above and the benefits set forth in this paragraph
3
shall be in full satisfaction of the Company’s obligations under the
Compensation Agreement.
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4.
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Section
280G Gross-Up Payment.
Notwithstanding anything to the contrary contained herein, the
provisions
of Section 10 (“Tax Gross Up Payment”) of the Compensation Agreement shall
be incorporated herein by reference, as if restated herein in their
entirety. Section 10 of the Compensation Agreement will apply to
all
payments received by you pursuant to this Agreement. The provisions
of
this Section 4 shall survive the termination of the Compensation
Agreement. The aggregate amount of all Severance Tax Payments and
Gross-Up
Payments (each as defined in the Compensation Agreement) payable
under
Section 10 of the Compensation Agreement are currently expected
to be
approximately $1,873,000.
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5.
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Entire
Agreement.
This Agreement contains the entire understanding of the parties
in respect
of their subject matter and supersedes upon its effectiveness all
other
prior plans, arrangements, agreements and understandings, including,
without limitation, the CIC Agreement and the Compensation Agreement
(the
“Prior Agreements”). The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes
as shall
be required to be withheld pursuant to any applicable law or
regulation.
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In
the
event that the Merger Agreement is terminated, this Agreement shall be void
ab initio
and of
no further force and effect and the Prior Agreements shall remain fully in
effect. This Agreement may not be amended without the prior written consent
of
U.S. Bancorp.
Please
sign below to indicate your acknowledgment and acceptance of the agreements
set
forth herein.
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Very
truly yours,
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VAIL
BANKS, INC.
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By:
/s/
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Name:▇▇▇▇
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Title:Vice
Chairman
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Acknowledged
and Accepted:
/s/
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