Exhibit 10.4
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of ____, 1997 (this
"Agreement") by and between Provident Bankshares Corporation, a Maryland
corporation (the "Company"), and Xxxxxxx X. Xxxxxxxxx (the "Consultant").
WHEREAS, the Company and First Citizens Financial Corporation
("Seller"), a Delaware corporation, have entered into an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of March 10, 1997, pursuant to which,
among other things, Seller shall be merged with and into the Company as of the
Effective Time (as defined in the Merger Agreement);
WHEREAS, in connection with the transactions contemplated by
the Merger Agreement and in recognition of the Consultant's experience and
abilities, the Company desires to assure itself of the services of the
Consultant in accordance with and subject to the terms and conditions provided
herein; and
WHEREAS, the Consultant wishes to perform services for the
Company in accordance with and subject to the terms and conditions provided
herein.
NOW, THEREFORE, in consideration of the mutual premises and
the respective covenants and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Engagement as Consultant. The Company hereby agrees to
engage the Consultant, and the Consultant hereby agrees to perform services for
the Company, on the terms and conditions set forth herein.
2. Term. The Term of this Agreement (the "Term") shall
commence as of the Effective Time (as defined in the Merger Agreement) and
terminate on the third anniversary thereof.
3. Duties. From time to time during the Term, the Consultant
shall perform such services relating to the business of the Company and its
subsidiaries as the Consultant and the Chief Executive Officer or Board
of Directors of the Company shall mutually agree, consistent with those duties
heretofore performed by the Consultant as an officer of Seller. Subject to the
preceding sentence, (i) Consultant shall provide advisory and consulting
services during the term of this Agreement, and will give the Company and its
affiliates the benefit of his special knowledge, skill, contacts and business
experience in the financial institutions industry and (ii) Consultant shall
provide said consultation services to the Company and its affiliates in any
capacity that is responsive to the requests of the Company. Due to Consultant's
long relationship with the Seller and his recognition in the community, his
participation as a consultant in the Company's business will add to the stature
of the Company and its affiliates. The Consultant shall in no event be required
to provide consulting services to the Company for more than 50 hours during any
calendar month. The scheduling of such time shall be mutually agreeable to the
Consultant and the Company. Subject to the Consultant's obligations pursuant to
Section 8 or otherwise hereunder, the Company acknowledges that the Consultant
is permitted to pursue other activities, whether of a personal or business
nature, and, accordingly, may not always be immediately available to the
Company. As of the Effective Time, the Company shall appoint the Consultant to
the Board of Directors of the Company and the Board of Directors of Provident
Bank of Maryland (the "Bank") and shall, during the two-year period following
the Effective Time, use its best efforts to cause the Consultant to be elected
(and, if applicable, reelected) to such Boards. The Consultant shall be deemed
an outside director and shall be entitled to receive all fees and other
compensation to which the Company's outside directors are entitled. During the
Term, the Consultant shall serve as Chairman of the advisory board to be
established pursuant to the Merger Agreement.
4. Place of Performance. The Consultant shall perform his
duties and conduct his business from his primary residence and/or at such other
locations as are reasonably acceptable to him and the Company; PROVIDED,
HOWEVER, that, during the Term, the Consultant shall be provided with the same
office space used by him during his employment as an officer of Seller or
comparable office space at a location in Xxxxxxxxxx County, Maryland reasonably
acceptable to the Consultant and the Company.
5. Independent Contractor. During the term of this Agreement,
the Consultant shall be an independent contractor and not an employee of the
Company and is not entitled to the benefits provided by the Company and/or
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its affiliates to its employees, including but not limited to group insurance
and coverage under any tax-qualified retirement plan; PROVIDED, HOWEVER, that
notwithstanding the foregoing, the Company shall provide to the Consultant the
benefits described in the second sentence of Section 6.7(d) of the Merger
Agreement. Accordingly, Consultant shall be responsible for payment of all
taxes, including Federal and State income tax, Social Security tax, Unemployment
Insurance tax, and any other taxes or business license fees as required.
6. Compensation and Related Matters.
(a) Monthly Consulting Fee. During the Term, the
Company shall pay to the Consultant a monthly consulting fee of $6,875.00 per
month.
(b) Business Expenses. The Consultant shall be
reimbursed by the Company for all reasonable business expenses incurred by him
in connection with his performance of consulting services hereunder upon
submission by the Consultant of receipts and other documentation in accordance
with the Company's normal reimbursement procedures.
7. Termination. The Consultant's engagement as a consultant
hereunder shall terminate without further action by any party hereto upon the
expiration of the Term. This Agreement may also be terminated by the Company
without further obligation other than for fees already earned or as set forth in
the next sentence of this Section 7 if the Consultant engages in any willful
conduct with regard to his obligations to the Company under this Agreement which
is materially injurious to the Company. Upon any termination of the Consultant's
engagement as a consultant hereunder, the parties hereto shall have no further
obligation or liability under this Agreement, except that the Company shall pay
the Consultant all fees and reimburse the Consultant for all reasonable expenses
incurred hereunder prior to the date of termination.
8. Covenant Not to Compete. (a) The Consultant hereby agrees
that, during the Term and for a period of one year thereafter, the Consultant
shall not, whether acting individually or as an officer, director, employee,
agent, stockholder or consultant of any person, firm, corporation, business or
other entity, engage in a business that competes, directly or indirectly, in any
material respect with the business conducted during such period by the Company,
the Seller and their respective subsidiaries; PROVIDED, HOWEVER, that the
Consultant may
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own publicly traded stock of any such person, firm, corporation, business or
other entity constituting not more than 5% of the outstanding shares of such
class of stock.
(b) The Consultant and the Company acknowledge that the
noncompetition provision contained in Section 8(a) above is reasonable and
necessary, in view of the nature of the Company and the Seller, their businesses
and his knowledge thereof, in order to protect the legitimate interests of the
Company and the Seller.
(c) The Consultant agrees that during the Term and for a
period of one year thereafter, he shall not (i) induce any employee of the
Company, the Seller or any of their affiliates to leave the employ of the
Company, the Seller or any of their affiliates or to accept any other employment
or position, or (ii) assist any other person in hiring any such employee,
PROVIDED, HOWEVER, that nothing contained herein shall prevent the Consultant
from responding to or addressing inquiries initiated by employees of the Company
or any of its subsidiaries.
(d) The Consultant agrees that any information received by the
Consultant during any furtherance of the Consultant's obligations under this
Agreement, which concerns the personal, financial or other affairs of the
Company will be treated by the Consultant in full confidence and will not be
revealed to any other individual, partnership, company or other organization
except as may be required by law or by order of any court.
(e) The Company hereby agrees that in the event of any alleged
breach of this Section 8 by the Consultant, the Company shall deliver to the
Consultant a written notice, which notice shall specifically identify the manner
in which the Consultant has allegedly breached this Section 8. Upon receipt of
such notice, Consultant shall have a period of 20 calendar days during which
period he may attempt to cure any such specified breach. The Company hereby
agrees that it shall not seek any judicial remedy or relief in respect of any
such alleged breach until after the expiration of such 20 calendar day period,
and may only seek such judicial remedy or relief in the event any such breach
has not been reasonably cured during such 20 calendar day period.
9. Compliance with Law. In the performance of the services
herein contemplated, the Consultant is an independent contractor with the
authority to control the details of his work. However, the services of the
Consultant are subject to the approval of the Company and
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shall be subject to the Company's general right of supervision to secure the
satisfactory performance thereof. The Consultant agrees to comply with all
federal, state and municipal laws, rules and regulations, as well as all
policies and procedures of the Company, that are now or may in the future become
applicable to the Consultant in connection with his services to the Company.
10. Indemnification. The Company shall indemnify and hold
harmless the Consultant to the full extent permitted by law and the by-laws of
the Company for all expenses, costs, liabilities and legal fees that the
Consultant may incur in the discharge of his duties hereunder, including the
mandatory advancement of and reimbursement for any legal fees and expenses
incurred by the Consultant in enforcing any right or benefit under this
Agreement. Such payments shall be made within 5 days after the Consultant's
request for payment. Any termination or expiration of the Consultant's
engagement as a consultant hereunder or of this Agreement shall have no effect
on the continuing operation of this Section 9.
11. Excise Tax Indemnity.
(a) As long as the Consultant is not in material
breach of this Agreement, in the event that any payment or benefit received or
to be received by the Consultant hereunder (either alone or in conjunction with
any other payment or benefit) becomes subject to an excise tax (the "Excise
Tax") pursuant to section 4999 of the Code, the Company shall promptly pay the
Consultant the amount (the "Gross-Up Payment") that is necessary to place the
Consultant in the same after-tax financial position (taking into account
federal, state and local income, employment and excise taxes) in which he would
have been had no payments hereunder been subject to the Excise Tax. In no event
shall the Company indemnify or provide a Gross-Up Payment for any portion of
such Excise Tax which is attributable to payments that are not specifically made
pursuant to this Agreement.
(b) Each party shall notify the other in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable, but no later than ten business days after such party is
informed in writing of such claim and such party shall apprise the other party
of the nature of such claim and the date on which such claim is requested to be
paid.
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(c) The Company shall bear and pay directly all costs
and expenses (including legal fees and additional interests and penalties)
incurred in connection with any such claim or proceeding, to the extent related
to the Excise Tax, and shall indemnify and hold the Consultant harmless, on an
after tax basis, as provided in Section 11(a), for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses.
12. Successors; Binding Agreement.
(a) The Company shall require any successor to all or
substantially all of the business or assets of the Company, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
(b) This Agreement and all rights of the Consultant
hereunder shall inure to the benefit of and be enforceable by the Consultant's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. This Agreement is personal to and may not
be assigned by the Consultant.
13. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by the notice):
If to the Company:
Xxxxxx X. Xxxxx
General Counsel and
Secretary
If to the Consultant:
Xxxxxxx X. Xxxxxxxxx
[address]
14. Disputes.
(a) Any dispute, controversy or claim arising out of
or relating to this Agreement, including any annexes hereto, or the breach,
termination or validi-
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ty hereof, shall be finally settled by arbitration by one arbitrator in Maryland
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court of competent jurisdiction. The arbitration shall be governed by the
Federal Arbitration Act, 9 U.S.C. Sections 1-16.
(b) In no event shall the Consultant be liable to the
Company on account of any breach or breaches of this Agreement for an aggregate
amount that exceeds the amount paid to the Consultant during the Term under
Section 6(a) hereof.
15. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the parties hereto. No waiver by a party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by the parties which are not set forth expressly in this
Agreement. This Agreement shall be governed and construed in accordance with the
laws of Maryland, without giving effect to the principles of conflicts of law
thereunder.
16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but both of which
together shall constitute one and the same instrument.
17. Enforcement. If any court or arbitrator determines that
any covenant contained in this Agreement, or any part thereof, is unenforceable
for any reason, the duration and/or scope of such provision shall be reduced so
that such provision becomes enforceable and, in its reduced form, such provision
shall then be enforceable and shall be enforced.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
PROVIDENT BANKSHARES CORPORATION
By:
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Name: Xxxx X. Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
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Consultant
