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EHIBIT 10.5 -- EXECUTIVE PROVIDENT BANK OF MARYLAND CHANGE IN CONTROL AGREEMENT
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PROVIDENT BANK OF MARYLAND
CHANGE IN CONTROL AGREEMENT
This AGREEMENT is made effective as of ______________, 1995 by and
between Provident Bank of Maryland (the "Bank"), a Maryland chartered trust
company, with its principal administrative office at 000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx, _____________ ("Executive"), and Provident Bankshares
Corporation (the "Holding Company"), a corporation organized under the laws of
the State of Maryland which is the holding company of the Bank.
WHEREAS, the Bank recognizes the substantial contribution Executive has
made to the Bank and wishes to protect Executive's position therewith for the
period provided in this Agreement; and
WHEREAS, Executive has agreed to serve in the employ of the Bank.
NOW, THEREFORE, in consideration of the contribution and
responsibilities of Executive, and upon the other terms and conditions
hereinafter provided, the parties hereto agree as follows:
1. TERM OF AGREEMENT.
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The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of thirty-six (36) full
calendar months thereafter. Commencing on the date of execution of this
Agreement, the term of this Agreement shall be extended for one day each day
until such time as the board of directors of the Bank (the "Board") or Executive
elects not to extend the term of the Agreement by giving written notice to the
other party in accordance with Section 4 of this Agreement, in which case the
term of this Agreement shall be fixed and shall end on the third anniversary of
the date of such written notice.
2. CHANGE IN CONTROL.
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(a) Upon the occurrence of a Change in Control of the Bank or the
Holding Company (as herein defined) followed by the Termination of Executive's
employment at any time during the term of this Agreement, other than for Cause,
as defined in Section 2(c) hereof, the provisions of Section 3 shall apply.
"Termination" shall mean (i) Executive's dismissal by the Company or the Bank
other than for Cause (as defined herein) or (ii) Executive's voluntary
termination of employment following any demotion, change of title, office or
significant authority, scope of authority or scope of responsibility, reduction
in his annual compensation or benefits, or relocation of his principal place of
employment by more than 20 miles from its location immediately prior to the
Change in Control. If Executive remains employed with the Holding Company or the
Bank following a Change in Control and
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prior to an event of Termination, Executive may voluntarily resign from
employment for any reason after one year following the occurrence of the Change
in Control and receive a reduced benefit, in accordance with the provisions of
Section 3(b); provided that such resignation from employment occurs within the
term of this Agreement. Notwithstanding the above, if Executive terminates
employment upon an event of "Termination" as set forth above, Executive shall
receive full Termination Benefits provided by this Agreement.
(b) For purposes of this Plan, a "Change in Control" of the Bank or
Holding Company shall mean an event of a nature that: (i) would be required to
be reported in response to Item 1(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a Change in
Control of the Bank or the Holding Company within the meaning of the Change in
Bank Control Act and the Rules and Regulations promulgated by the Federal
Deposit Insurance Corporation ("FDIC") at 12 C.F.R. ss. 303.4(a) with respect to
the Bank, and the Board of Governors of the Federal Reserve System ("FRB") at 12
C.F.R. ss. 225.41(b) with respect to the Holding Company, as in effect on the
date hereof; or (iii) without limitation such a Change in Control shall be
deemed to have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank or the Holding Company representing 10% or
more of the Bank's or the Holding Company's outstanding securities except for
any securities of the Bank purchased by the Holding Company or any securities of
the Bank or the Holding Company purchased by any employee benefit plan of the
Bank or the Holding Company, or (B) individuals who constitute the Board on the
date hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any person becoming a director subsequent to
the date hereof whose election was approved by a vote of at least 75% of the
directors comprising the Incumbent Board, or whose nomination for election by
the Holding Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent Board, or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Holding Company or similar transaction occurs in which
the Bank or Holding Company is not the resulting entity, or (D) a solicitation
of stockholders of the Holding Company, by someone other than the current
management of the Holding Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Holding Company or Bank with one
or more corporations, a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Holding Company, or (E) a tender offer is made for 20% or more of the voting
securities of the Bank or Holding Company then outstanding.
(c) Executive shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon Termination for Cause. The term "Termination
for Cause" shall mean termination because of a material loss to the Holding
Company or the Bank caused by the Executive's willful, intentional and continued
failure to substantially perform stated duties
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(other than such failure resulting from incapacity due to physical or mental
illness), personal dishonesty, willful violation of any law, rule, regulation
(other than traffic violations or similar offenses) or final cease and desist
order. For purposes of this Section, no act, or the failure to act, on
Executive's part shall be "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or omission was in the
best interest of the Holding Company or the Bank. Notwithstanding the foregoing,
Executive shall not be deemed to have been Terminated for Cause unless and until
there shall have been delivered to him a copy of a resolution duly adopted by
the affirmative vote of not less than 75% of the members of the Board at a
meeting of the Board called and held for that purpose, finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after the Date of Termination for Cause.
3. TERMINATION BENEFITS.
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(a) Upon the occurrence of a Change in Control (as defined in Section 2)
followed by the Termination of the Executive's employment at any time during the
term of this Agreement, other than for Cause (as defined in Section 2(c)), the
Bank shall pay Executive, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, subject to
certain conditions set forth herein, as severance pay or liquidated damages, or
both, a sum equal to 2.99 times Executive's average annual taxable compensation
for the five most recent taxable years that Executive has been employed by the
Bank as reported on Form W-2 with the Internal Revenue Service ("IRS") or such
lesser number of years in the event that Executive shall have been employed by
the Bank for less than five years. At the election of Executive such payment may
be made in a lump sum or paid in equal monthly installments during the
thirty-six (36) months following Executive's Termination. In the event that no
election is made, payment to Executive will be made on a lump sum basis.
(b) If Executive resigns from employment with the Holding Company or the
Bank after one year following a Change in Control, and prior to an event of
Termination as defined in Section 2(a), Executive shall receive severance
benefits equal to six times Executive's current monthly taxable compensation;
provided that such resignation from employment occurs within the term of this
Agreement. In addition, the Bank shall cause to be continued life, medical and
disability coverage substantially identical to the coverage maintained by the
Bank for Executive prior to his severance, except to the extent such coverage
may be changed in its application to all Bank employees on a nondiscriminatory
basis. Such coverage shall cease upon the earlier of six (6) full calendar
months following Executive's resignation or the date Executive secures
comparable employment by an employer other than the Holding Company or the Bank.
Notwithstanding the above, if Executive terminates employment upon an event of
"Termination" as defined in Section 2(a), Executive shall receive full
Termination Benefits provided by this Agreement.
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(c) Upon the occurrence of a Change in Control of the Bank or the
Holding Company followed at any time during the term of this Agreement by
Executive's Termination of employment, other than for Termination for Cause, the
Bank shall cause to be continued life, medical and disability coverage
substantially identical to the coverage maintained by the Bank for Executive
prior to his severance, except to the extent such coverage may be changed in its
application to all Bank employees on a nondiscriminatory basis. Such coverage
shall cease upon the earlier of the expiration of thirty-six (36) full calendar
months from the Date of Termination or the date Executive secures comparable
employment by an employer other than the Holding Company or the Bank.
(d) Nothing in this Agreement will deprive Executive of the right to
receive benefits due him under or contributed by the Bank or Holding Company on
his behalf pursuant to any retirement, incentive, profit sharing, bonus,
performance, disability or other employee benefit plan maintained by the Holding
Company or its subsidiaries pursuant to the terms and conditions of such plans
on the Executive's behalf unless such benefits are otherwise paid to the
Executive under a separate provision of this Agreement.
(e) As of the effective date of this Agreement, and annually as of the
last business day of December or soon thereafter, Executive shall make the
election referred to in Section 3(a) hereof with respect to whether the amounts
payable under said Section 3(a) shall be paid in a lump sum or on a monthly
basis. Such election shall be irrevocable for the year for which such election
is made and shall continue in effect until the Executive has made his next
annual election.
(f) Notwithstanding the paragraphs of Section 3, in the event that:
(i) the aggregate payments or benefits to be made or
afforded to Executive, which are deemed to be
parachute payments as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the
"Code"), or any successor thereof, (the "Termination
Benefits") would be deemed to include an "excess
parachute payment" under Section 280G of the Code;
and
(ii) if such Termination Benefits were reduced to an
amount (the "Non- Triggering Amount"), the value of
which is one dollar ($1.00) less than an amount
equal to three (3) times Executive's "base amount,"
as determined in accordance with said Section 280G
and the Non- Triggering Amount would be greater than
the aggregate value of the Termination Benefits
(excluding such reduction) minus the amount of tax
required to be paid by the Executive thereon by
Section 4999 of the Code,
then the Termination Benefits shall be reduced to the Non-Triggering Amount. The
allocation of the reduction hereby among the Termination Benefits shall be
determined by the Executive.
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4. NOTICE OF TERMINATION.
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(a) Any purported Termination by the Bank or by Executive in connection
with a Change in Control shall be communicated by Notice of Termination to the
other party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a written notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
(b) Subject to Section 4(c), "Date of Termination" shall mean the date
specified in the Notice of Termination which shall be immediately upon receipt
of such Notice in the case of Termination for Cause and shall not be less than
thirty (30) days from the date such Notice of Termination is given in all other
cases.
(c) If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and
provided further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Bank will continue to pay
Executive his full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to his annual salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section 4(c) are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
5. SOURCE OF PAYMENTS.
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It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or check from the general funds of the Bank.
Further, the Holding Company guarantees such payment and provision of all
amounts and benefits due hereunder to Executive and, if such amounts and
benefits due from the Bank are not timely paid or provided by the Bank, such
amounts and benefits shall be paid or provided by the Holding Company.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
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This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Bank and Executive, except
that this Agreement
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shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
Nothing in this Agreement shall confer upon Executive the right to
continue in the employ of Bank or shall impose on the Bank any obligation to
employ or retain Executive in its employ for any period.
7. NO ATTACHMENT.
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(a) 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 execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Bank, the Holding Company and their respective successors and
assigns.
8. MODIFICATION AND WAIVER.
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(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
9. SEVERABILITY.
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If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
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10. HEADINGS FOR REFERENCE ONLY.
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The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
11. GOVERNING LAW.
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The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Maryland.
12. ARBITRATION.
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Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Bank's main office, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
13. PAYMENT OF COSTS AND LEGAL FEES.
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All reasonable costs and legal fees paid or incurred by Executive
pursuant to any dispute or question of interpretation relating to this Agreement
shall be paid or reimbursed by the Bank (which payments are guaranteed by the
Holding Company pursuant to Section 5 hereof) if Executive is successful
pursuant to a legal judgment, arbitration or settlement.
14. INDEMNIFICATION.
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The Bank shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Maryland law and as provided in the Bank's articles of
incorporation and bylaws against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Bank or the Holding Company (whether or not he continues to be
a director or officer at the time of incurring such expenses or liabilities),
such expenses and liabilities to include, but not be limited to, judgments,
court costs and attorneys' fees and the cost of reasonable settlements.
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15. SUCCESSOR TO THE BANK
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The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
16. SIGNATURES.
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IN WITNESS WHEREOF, Provident Bank and Provident Bankshares Corporation
have caused this Agreement to be executed by their duly authorized officers, and
Executive has signed this Agreement, on the ___ day of _____, 1995.
ATTEST: PROVIDENT BANK OF MARYLAND
_____________________ By:______________________________
Secretary
SEAL
ATTEST: PROVIDENT BANKSHARES CORPORATION
(Guarantor)
___________________________ By:______________________________
Secretary
SEAL
WITNESS:
___________________________ _________________________________
Executive
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