Exhibit 10.13
BOARD CHAIRMAN'S SERVICES AGREEMENT
THIS SERVICE AGREEMENT (hereinafter this "Agreement") is entered into on
this ____ day of ____________________, by and between:
(1) Xxxxxxxx X. Xxxxx, Xx.
00000 Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxx 00000
(hereinafter "Xxxxx") and
(2) Columbia Bancorp
0000 Xxxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
(hereinafter "Columbia Bancorp"), and its subsidiary, The Columbia Bank
(hereinafter "Columbia Bank").
W I T N E S S E T H:
WHEREAS, Columbia Bancorp desires to provide to Xxxxx and Xxxxx desires to
receive from Columbia Bancorp a continuing services agreement so as to retain
and secure Kelly's services as Chairman of the Board of Directors of Columbia
Bancorp and Chairman of the Board of Directors of Columbia Bank, upon the terms
and conditions set forth in this Agreement.
NOW THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Definitions. As used in this Agreement, the following terms have the
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meanings set forth below:
(a) Commencement Date. _________________.
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(b) Bank Regulatory Agency. As used in this Agreement, "Bank
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Regulatory Agency" shall mean any governmental authority, regulatory agency,
ministry, department, statutory corporation, central bank or other body of the
United States or of any other country or of any state or other political
subdivision of any of them having jurisdiction over Columbia Bancorp or any
transaction contemplated, undertaken or proposed to be undertaken by Columbia
Bancorp hereunder or otherwise. Bank Regulatory Agency shall include, but not
necessarily be limited to:
(1) The Federal Deposit Insurance Corporation or any other
federal or state depository insurance organization or fund; and
(2) The Federal Reserve System, the Comptroller of the
Currency, The Maryland Division of Financial Regulation, or any other
federal or state bank regulatory or commissioner's office; and
(3) The Resolution Trust Corporation, the Resolution Funding
Corporation, the Financing Corporation or any other entity created pursuant
to The Financial Institutions Reform, Recovery and Enforcement Act of 1989,
as amended from time to time; and
(4) Any corporation, bridge bank, fund association, or other
entity established, organized, owned (in whole or in part) or controlled by
any of the foregoing; and
(5) Any predecessor, successor or assignee of the foregoing.
2. Term.
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(a) Initial Term. Except as provided for below under "Rights to
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Terminate Agreement", the Initial Term of this Agreement shall expire upon the
expiration of Kelly's current term as a director of Columbia Bancorp.
(1) Renewals and Extensions; Subsequent Annual Terms. After the
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Initial Term of this Agreement, this Agreement shall automatically renew
with the reelection of Xxxxx as BOARD CHAIRMAN in accordance with Columbia
Bancorp's and Columbia Bank's By-Laws and Charter, unless:
(A) Xxxxx provides notice to Columbia Bancorp and Columbia
Bank at least on or before the end of any term that he does not
wish to renew the contract for an additional annual term, in
which event this Agreement will expire at the end of the contract
term in which Xxxxx gives such notice to Columbia Bancorp and
Columbia Bank; or
(B) Xxxxx fails to be reelected as BOARD CHAIRMAN in
accordance with Columbia Bancorp's and Columbia Bank's By-Laws
and Charter.
3. Duties and Authority of Xxxxx.
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(a) Performance of Services. Xxxxx shall discharge his duties as
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Board Chairman to the best of his ability for and on behalf of Columbia Bancorp
and Columbia Bank. Xxxxx shall comply with all laws, statutes, ordinances, rules
and regulations relating to his services and duties. During the term of this
Agreement, Xxxxx shall not at any time or place directly or indirectly engage or
agree to engage in any business or practice related to the banking business with
or for any other person or entity to any extent whatsoever, other than to the
extent required by the terms and conditions of this Agreement.
(b) Constructive Termination. Excepting any action precipitated
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by reason of regulatory requirements as provided in Section 5(b) below,
substantial curtailment of the duties and authority of Xxxxx as Board Chairman
hereunder by Columbia Bancorp and Columbia Bank shall constitute a termination
without cause in breach of this Agreement.
4. Payment Amount; Terms. As full compensation for all services rendered
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to Columbia Bancorp and Columbia Bank pursuant to this Agreement and the
covenants contained herein, Columbia Bancorp and Columbia Bank shall pay to
Xxxxx the following:
(a) Base Compensation. Kelly's base compensation (the "Base
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Compensation") shall be $60,000 per annum. The Board of Directors shall review
such base compensation at least annually and may grant such raises as in its
discretion are deemed warranted.
(1) Base Compensation Rate. Compensation to begin on the
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Commencement Date at the above annual rate.
(2) Method of Payment. Columbia Bancorp and/or Columbia Bank
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shall pay Kelly's said base compensation in equal monthly installments or
more frequently.
(b) Vacation and Leave. Xxxxx shall be entitled to such vacation and
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leave as may be provided for under the current and future leave and vacation
policies of Columbia Bancorp and Columbia Bank for executive officers.
(c) Office Space. Columbia Bancorp will provide customary executive
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office space and executive office support to Xxxxx beginning on the Commencement
Date.
(d) D & O Insurance. Columbia Bancorp and Columbia Bank will provide
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Xxxxx with directors and officers liability insurance coverage on terms
comparable to that provided to Columbia Bancorp's and Columbia Bank's other
officers and directors.
(e) Additional Compensation. Upon the earlier to occur of (i) any sale
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or exchange of stock in Columbia Bancorp with any third party which results in a
change in a controlling interest of Columbia Bancorp, or (ii) five years from
the Commencement Date, Columbia Bancorp shall thereupon immediately pay to Xxxxx
the sum of $200,000 as additional compensation to Xxxxx or his heirs. In
addition, in the event Columbia is required to pay such additional compensation
as a result of a change in a controlling interest of Columbia Bancorp and such a
change in a controlling interest occurs prior to the time when Xxxxx shall have
become fully vested in any stock option plan established for his benefit, Xxxxx
shall thereupon also become immediately vested in all options theretofore issued
to him or accrued to his benefit. For purposes of construing the foregoing, the
term "change in a controlling interest" shall be defined as provided in
applicable Federal Reserve Board regulations.
5. Rights to Terminate Agreement.
(a) Breach or Default Under Agreement. Either party may terminate this
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Agreement for breach or default as provided herein below.
(b) Termination Without Cause/Severance. Xxxxx may terminate this
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Agreement in accordance with Paragraph 2(a)(1)(A), above. Columbia Bancorp and
Columbia Bank may terminate this Agreement in accordance with Paragraph
2(a)(l)(B), above. Otherwise, if Xxxxx is not in breach or default of this
Agreement and Columbia Bancorp or Columbia Bank terminates Kelly's services for
any reason and under any procedures other than those specified in paragraph (c),
below, then Columbia Bancorp or Columbia Bank shall thereupon immediately pay to
Xxxxx the sum of $120,000 as severance compensation to Xxxxx; being equal to
twice his Base Compensation for a 12 month period. In addition, should such
termination occur prior to the time when Xxxxx shall have become fully vested in
any stock option plan established for his benefit, Xxxxx shall thereupon also
become immediately vested in all options theretofore issued to him or accrued to
his benefit.
(c) Termination of Xxxxx With Cause; Procedure.
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(1) Termination of Compensation. If Columbia Bancorp and
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Columbia Bank terminates Xxxxx for cause as set forth in this paragraph,
then the compensation payments provided for herein shall cease.
(2) Definition of Cause. Under this Agreement, "cause" shall be
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defined to be:
(A) Any willful act or action on the part of Xxxxx done
in connection with or associated with the services rendered by Xxxxx
under this Agreement for which a criminal prosecution (other than
traffic and misdemeanor actions) is commenced by the prosecuting
authorities in the jurisdiction in which such act or action occurred.
For the purposes of this Agreement, the commencement of a criminal
prosecution shall be deemed to have occurred upon the filing of a
criminal information against Xxxxx or the indictment of Xxxxx by any
local, state or federal authority.
(B) Any act of theft, fraud, deceit, material
misrepresentation, assault or battery done by Xxxxx in connection with
or associated with the services rendered by Xxxxx to Columbia Bancorp
or Columbia Bank under this Agreement.
(C) Any act, action, failure to act or omission which
constitutes gross misconduct or gross negligence in connection with or
associated with the services rendered by Xxxxx under this Agreement,
provided that the procedures of paragraph 5(c)(3) are followed.
(D) Any termination following a default of this
Agreement by Xxxxx, pursuant to the provisions of Paragraph 10 below.
(E) Any Bank Regulatory Agency action with respect to
this Agreement, or any failure of this Agreement to comply with any
Bank Regulatory Agency requirements.
(3) Procedure for Termination With Cause. The procedure for
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termination with cause shall be as follows:
(A) For any reason specified in paragraph 5(c)(2)(A), Xxxxx
shall be terminated upon the commencement of prosecution, as of the
date of the act to which that paragraph applies.
(B) For any reason specified in Paragraphs 5(c)(2)(B),
5(c)(2)(C), 5(c)(2)(D) or 5(c)(2)(E), unless ordered by or agreed to
differently between Columbia Bancorp and/or Columbia Bank, and a Bank
Regulatory Agency, or unless a criminal prosecution has commenced as
provided in Paragraphs 5(c)(2)(A) and 5(c)(3)(A) above, Columbia
Bancorp and/or Columbia Bank shall give Xxxxx written notice of the
cause alleged to be the basis for Kelly's termination. Xxxxx shall
thereafter have a period of 30 days from the date of the receipt of
Columbia Bancorp's and/or Columbia Bank's written notice in which to
dispute and/or explain the situation(s) referred to in Columbia
Bancorp's and/or Columbia Bank's written noticed, including, if
appropriate, a response to Bank Regulatory Agencies. If Xxxxx does
not respond to Columbia Bancorp's and/or Columbia Bank's notice, Xxxxx
shall be deemed to have agreed to Columbia Bancorp's and/or Columbia
Bank's and/or the Bank Regulatory Agency's allegations and the
termination shall be effective as of the date of Columbia Bancorp's
and/or Columbia Bank's written notice. If Xxxxx disputes the
allegations contained in Columbia Bancorp's and/or Columbia Bank's
and/or the Bank Regulatory Agency's notice, Xxxxx shall notify
Columbia Bancorp and/or Columbia Bank in writing within the time
period set forth above and Columbia Bancorp and/or Columbia Bank and
Xxxxx shall set a meeting to discuss a resolution of the dispute. If
the parties and/or any Bank Regulatory Agency do not reach agreement
as to Kelly's termination, within 45 days of Columbia Bancorp's and/or
Columbia Bank's notice, Columbia Bancorp and/or Columbia Bank, by a
majority of its Board of Directors, shall have the right to terminate
Xxxxx and to discontinue the compensation payments to Xxxxx. If Xxxxx
nevertheless still disagrees that his termination was proper under the
terms of this Agreement, both parties hereto by their execution hereof
agree, unless otherwise ordered by or agreed to differently between
any Bank Regulatory Agency and Columbia Bancorp and/or Columbia Bank,
to submit to binding arbitration under the rules, regulations and
procedures of the American Arbitration Association.
(d) Termination of Agreement by Xxxxx for Cause. If Columbia Bancorp
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and/or Columbia Bank shall become in breach or default of any of the material
provisions hereof, including especially any constructive termination [as
provided in Paragraph 3(b), above] and fails to cure such breach as provided in
Paragraph 10, below, then Xxxxx may, at his option at any time thereafter, elect
to terminate this Agreement for cause, in which event Columbia Bancorp or
Columbia Bank shall thereupon immediately pay to Xxxxx the sum of $60,000 as
severance compensation to Xxxxx; being equal to his Base Compensation for a 12
month period. In addition, should such termination occur prior to the time when
Xxxxx shall have become fully vested in any stock option plan established for
his benefit, Xxxxx shall thereupon also become immediately vested in all options
theretofore issued to him or accrued to his benefit.
(e) Death or Disability. If Xxxxx should be unable to perform his
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professional duties due to disability, then the compensation provided for
hereinabove shall continue at its full level for a period not to exceed 120 days
and, if the disability is temporary, shall resume upon Kelly's return to his
duties hereunder. In the event of Kelly's death, such compensation payments
shall cease.
(f) Survival of Restrictions. In the event of a termination of the
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offer set forth in this Agreement, or in the event of a termination of this
Agreement after acceptance hereof by Xxxxx, all covenants and restrictions
contained herein shall survive the termination and shall continue in full force
and effect as provided for herein.
6. Representations and Warranties of Xxxxx. Xxxxx represents and warrants
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to Columbia Bancorp and Columbia Bank the following:
(a) Information Supplied to Columbia Bancorp and Columbia Bank. All
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information and data, including but not limited to, personal data, work
histories, salaries and responsibilities, represented and provided to Columbia
Bancorp and Columbia Bank by Xxxxx in his application for the position provided
for herein are true and correct in all material respects and Xxxxx has not
stated any facts or circumstances, nor has he failed to disclose any facts or
circumstances to Columbia Bancorp and Columbia Bank the statement or omission of
which would cause Kelly's application to be false or misleading in any material
respect.
(b) Prior Agreements. Xxxxx is not now a party to or bound by any
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employment, consulting or other type of agreement, nor has he been a party to or
bound by any such agreement, which would be breached by, or of which Xxxxx would
be in default, by virtue of any provision contained in this Agreement with
Columbia Bancorp and Columbia Bank, nor is Xxxxx a party to any such agreement
which would compete with or constitute a conflict of interest with this
Agreement and Kelly's duties and obligations to Columbia Bancorp and Columbia
Bank.
(c) Bank Regulatory Agency Approval. To the best of Kelly's knowledge,
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information and belief, there are no facts or circumstances contained in Kelly's
personal or professional history which are likely to, or which in fact will,
cause any Bank Regulatory Agency having jurisdiction over Columbia Bancorp or
Columbia Bank to withdraw, suspend or substantially modify its approval of Xxxxx
as BOARD CHAIRMAN of Columbia Bancorp or Columbia Bank.
7. Representations and Warranties of Columbia Bancorp and Columbia Bank.
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To the best of Columbia Bancorp's and Columbia Bank's knowledge,
information and belief, there are no facts or circumstances to which Columbia
Bancorp or Columbia Bank is privy, which are likely to, or which in fact will,
cause any Bank Regulatory Agency having jurisdiction over Columbia Bancorp or
Columbia Bank to withdraw, suspend or substantially modify its approval of Xxxxx
as BOARD CHAIRMAN of Columbia Bancorp and Columbia Bank.
8. Restrictive Covenants.
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(a) Proprietary Information. Xxxxx acknowledges that upon acceptance
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of this Agreement, Xxxxx will be making use of, acquiring and adding to Columbia
Bancorp's and Columbia Bank's confidential and proprietary information of a
special and unique nature and value relating to such matters as, but not limited
to Columbia Bancorp's and Columbia Bank's business operations, internal
structure, financial affairs, programs, software, systems, procedures, manuals,
confidential reports, and sales and marketing methods, as well as the amount,
nature and type of services, equipment and methods used and preferred by
Columbia Bancorp's and Columbia Bank's suppliers, and customers, all of which
shall be deemed to be confidential information. Xxxxx acknowledges that such
confidential information has been and will continue to be of central importance
to the business of Columbia Bancorp and Columbia Bank and that disclosure of it
or its use by others could cause substantial loss to Columbia Bancorp and
Columbia Bank. In consideration of his anticipated and thereafter continued
contract with Columbia Bancorp and Columbia Bank, upon acceptance hereof, Xxxxx
agrees that during the entire term of this Agreement, and upon and for a period
of two years after such term, Xxxxx shall not, for any purpose whatsoever,
directly or indirectly, divulge, reveal, report, publish, transfer, or disclose
to any person or entity any of such confidential information which was obtained
by Xxxxx as a result of Kelly's services to Columbia Bancorp and Columbia Bank,
nor shall Xxxxx reveal to any person or entity any trade secrets of Columbia
Bancorp or Columbia Bank, but Xxxxx shall hold all of the same confidential and
inviolate. For purposes of construing the foregoing, "proprietary information"
shall not be construed to include information generally available in the public
domain through sources other than Xxxxx.
(b) Property of Columbia Bancorp or Columbia Bank. All contracts,
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agreements, forms, financial books, records, instruments and documents, supplier
lists, memoranda, data, reports, programs, software, tapes, rolodexes, telephone
and address books, letters, research, listings, programming, and any other
instruments, records or documents relating or pertaining to Columbia Bancorp or
Columbia Bank (hereinafter referred to as "Records") shall at all times be and
remain the property of Columbia Bancorp and Columbia Bank. Upon termination or
expiration of the term of this Agreement for any reason whatsoever, Xxxxx shall
return to Columbia Bancorp or Columbia Bank all Records (whether furnished by
Columbia Bancorp, by Columbia Bank, by a third party or prepared by Xxxxx), and
Xxxxx shall neither make nor retain any copies of any such Records after such
termination.
(c) Inventions and Creations. All inventions and other creations,
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whether or not patentable or copyrightable, and all ideas, reports and other
creative works, including, without limitation, innovations, manuals or other
materials, made or conceived in whole or in part by Xxxxx during the term of
this Agreement, which relate in any manner whatsoever to the business, existing
or proposed of Columbia Bancorp, Columbia Bank or any other business or research
development effort in which Columbia Bancorp or any of its subsidiaries or
affiliates engages during the term of this Agreement, will be disclosed promptly
by Xxxxx to Columbia Bancorp and Columbia Bank and shall be the sole and
exclusive property of Columbia Bancorp and Columbia Bank.
(d) Non-Solicitation of Customers and Employees. Xxxxx agrees during
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the term of this Agreement and for a period of two years immediately following
the expiration of the term hereof, that he shall not for his account or on
behalf of any other person or legal entity, hire or solicit to hire any employee
of Columbia Bancorp (or any of its affiliates or subsidiaries) or solicit the
banking business of any person or entity known to him to be a customer of
Columbia Bancorp (or any of its affiliates or subsidiaries).
9. Indemnification. Xxxxx agrees to indemnify and hold harmless Columbia
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Bancorp and Columbia Bank from and against any and all claims made against
Columbia Bancorp and Columbia Bank by any party by virtue of Kelly's past
employment, whether such claims are made by a past employer or by another party
with whom Xxxxx has dealt in the past. Columbia Bancorp and Columbia Bank agree
to indemnify and hold harmless Xxxxx from and against any and all claims made
against Xxxxx arising
directly or indirectly from any fact or matter which contradicts (or as alleged
would contradict) any representation or warranty of Columbia Bancorp and
Columbia Bank hereunder. Promptly after receipt of any party hereto (the
"Indemnitee") of notice of any demand, claim or circumstance which, or which
with the lapse of time, would or might give rise to a claim or the commencement
(or threatened commencement) of any action, proceeding pr investigation (an
"Asserted Liability") that may result in a loss, the Indemnitee shall give
notice thereof (the "Claims Notice") to the other party (the "Indemnifying
Party"). The Claims Notice shall describe the Asserted Liability in reasonable
detail, and shall indicate the amount (estimated, if necessary and to the extent
feasible) of the loss that has been or may be suffered by the Indemnitee. The
Indemnifying Party may elect to assume responsibility for and to compromise or
defend, at its own expense and by its own counsel (which counsel shall be
reasonably satisfactory to the Indemnitee), any Asserted Liability, unless in
the reasonable judgment of the Indemnitee there may be one or more legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Party and, therefore, it is advisable for the
Indemnitee to be represented by separate counsel. Then, in such event, the
Indemnitee shall have the right to employ separate counsel to represent it
(which shall be reasonably satisfactory to the Indemnifying Party), in which
event the fees and disbursements of such counsel shall be subject to
indemnification hereunder. If such Indemnifying Party elects to compromise or
defend such Asserted Liability, it shall within 30 days (or sooner, if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall have no further liability for such
Asserted Liability but shall cooperate, at the expense of the Indemnifying
Party, in the compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided, or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability. If the Indemnifying Party chooses to
defend any claim, the Indemnitee shall make available to the Indemnifying Party
any books, records or other documents within its control that are necessary or
appropriate for such defense.
10. Right to Cure; Default. In the event either party shall be alleged to
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be in breach of this Agreement, written notice shall be given by the other party
and a 10 day opportunity to cure shall be provided. After such 10 day cure
period, if the breach is not cured and remains as alleged, the breaching party
shall be deemed in default and this Agreement may be terminated in the manner
provided in Paragraph 5, above.
11. Entire Agreement. This Agreement represents the entire agreement of
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the parties relating to the services of Xxxxx. All prior negotiations between
the parties are merged into this Agreement and there are no understandings or
agreements other than those incorporated herein.
12. Miscellaneous.
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(a) Severability; Court Enforcement. The parties hereto covenant
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and agree that to the extent any provisions or portion of this Agreement shall
be held, found or deemed to be unreasonable, unlawful or unenforceable, by any
Court of law, then the parties hereto expressly covenant and agree that any such
provision or portion thereof shall be modified to the extent necessary in order
that any such provision or portion thereof shall be legally enforceable to the
fullest extent permitted by applicable law
and that any court of competent jurisdiction shall, and the parties hereto do
hereby expressly authorize any court of competent jurisdiction to, enforce any
such provision or portion thereof or to modify any such provision thereof shall
be enforced by such court to the fullest extent permitted by applicable law.
(b) Waiver. Columbia Bancorp and Columbia Bank and Xxxxx each reserve
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the right to waive any of the terms of this Agreement which benefits the party
waiving same. Any such waiver must be in a writing signed by the party waiving
the same.
(c) Choice of Law. It is the intention of the parties hereto that this
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Agreement shall be governed by the laws of the State of Maryland.
(d) Successors. The terms of this Agreement shall inure to the benefit
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of and be binding upon Columbia Bancorp and Columbia Bank, their successors and
assigns, and upon Xxxxx, his heirs, guardians and personal and legal
representatives.
(e) Gender. The use of the masculine gender herein shall be deemed to
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be or include the feminine gender, wherever appropriate.
(f) Notices. All notices, demands and other communications hereunder
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shall be in writing and shall be deemed to have been duly given if delivered
personally or if sent registered or certified mail, return receipt requested,
properly addressed and postage prepaid to the addresses set forth hereinabove.
(g) Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(h) Headings. The Section and paragraph headings used herein are for
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convenience and reference only and shall not enter into the interpretation
hereof.
(i) Representation by Counsel. The parties hereto acknowledge that
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Xxxxx X. Xxxx, Xx., of the law firm of Piper & Marbury, L.L.P., has acted as
counsel to Columbia Bancorp and Columbia Bank in this matter.
IN WITNESS WHEREOF this Agreement has been executed by the undersigned as
of the day and year first above written.
ATTEST/WITNESS: COLUMBIA BANCORP
_______________________________ By:________________________________
President
THE COLUMBIA BANK
_______________________________ By:________________________________
President
_______________________________ ___________________________________
Xxxxxxxx X. Xxxxx, Xx.
