Customers Bancorp, Inc.
EX-10.5
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<DESCRIPTION>EX-10.5
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<DIV><FONT size="1" style="font-size:1pt;color:white">  T # 475348 v.2# 2871946  v. 1 CHANGE OF CONTROL AGREEMENT  THIS CHANGE OF CONTROL AGREEMENT (this &quot;Agreement&quot;), made as of May 31,  2022 is by and among CUSTOMERS BANK, a Pennsylvania bank (&quot;Bank&quot;), and Jessie  Velasquez_ an individual (&quot;Executive&quot;). This Agreement and all terms and conditions contained  herein shall become operative only upon the event of a Change of Control as defined in this  Agreement.   Background  Bank wishes to secure the future services of Executive by providing Executive the severance  payments provided in this Agreement as additional incentive to induce Executive to devote  Executive's time and attention to the interests and affairs of the Bank (the &quot;Agreement&quot;).   NOW THEREFORE, in consideration of the mutual promises and agreements set forth herein,  and intending to be legally bound hereby, the parties agree as follows:  1. Employment. Except strictly to such extent (if any) as may be provided in another agreement between Bank and Executive, Executive shall remain an employee at will of the Bank hereafter. This Agreement is not an employment agreement but shall only be interpreted as governing the payment of severance, which may be due to Executive upon termination of Executive's employment with Bank under the specific circumstances described in this Agreement. No provision of this Agreement shall be interpreted to derogate from the power of Bank or its Board of Directors to terminate the employment of the Executive, subject nevertheless to the terms of this Agreement. 2. Compensation. The compensation to be paid by Bank to Executive from time to time, including any fringe benefits or other employee benefits, shall not be governed by this Agreement. This Agreement shall not be deemed to affect the terms of any stock options, employee benefits or other agreements between the Bank and Executive. 3. Severance Payments upon Termination of Employment After a &quot;Change in Control&quot;. This Agreement does not govern any termination of Executive's employment with Bank which occurs prior to a &quot;Change in Control&quot; as defined in subsection (e) of this Section. No inference shall be drawn from any provision of this Section concerning the rights and obligations of the parties in connection with a termination of Executive's employment prior to a Change in Control. (a) Termination by Company for Cause or Not for Cause. If Executive's employment is terminated by Bank  (i) for &quot;Cause&quot; (as defined in subsection (c) of this Section) at any time, or (ii) with or without Cause prior to a Change in Control, Executive shall have no right to any severance under this Agreement due to such termination. If Executive is terminated by Bank other than for Cause within one (1) year after the date of a Change in Control, Executive's right to a severance payment under this Agreement shall be as set forth in subsection (f) of this Section. If Executive is terminated by the Bank within the second year af ter the date of Change of Control, the severance shall be reduced from 200% to 100% of the calculation as set forth in subsection (f)(i) and (ii) of this section. </FONT></DIV>
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<DIV><FONT size="1" style="font-size:1pt;color:white">-2-    (b) Termination by Executive for Good Reason or Not for Good Reason. If Executive  terminates Executive's employment with Bank   (i) prior to a Change in Control, or   (ii) without &quot;Good Reason&quot; (as defined in subsection (d) of this Section) at any  time, Executive shall have no right to any severance under this Agreement  due to such termination. If Executive terminates Executive's employment  with Bank for Good Reason within one (1) year after a transaction resulting  in a Change in Control is consummated, Executive's right to a severance  payment under this Agreement shall be as set forth in subsection (f) of this  Section.     (c)  Definition of &quot;Cause&quot;. For the purpose of this Agreement, &quot;Cause&quot; means actions of   or failure to act by Executive which would authorize the forfeiture of fringe benefits  or other remuneration under Executive's written contract of employment with the  Bank or, if there is no written contract of employment, (I) the willful material failure  to perform the duties to the Bank required of Executive (other than any such failure  resulting from incapacity due to physical or mental illness of Executive or material  changes in the direction and policies of the Board of Directors of Bank), if such  failure continues for thirty (30) days after a written demand for substantial  performance is delivered to Executive by the Bank which specifically identifies the  manner in which it is believed that Executive has failed to attempt to perform his or   her duties here under; (2) the willful engaging by Executive in misconduct materially  injurious to the Bank; (3) receipt by the Bank of a notice (which shall not have been  appealed by Executive or shall have become final and non-appealable) of any  governmental body or entity having jurisdiction over the Bank requiring termination  or removal of Executive from his or her then present position, or receipt of a written  directive or order of any governmental body or entity having jurisdiction over the  Bank (which shall not have been appealed by Executive or shall have become final  and non-appealable) requiring termination or removal of Executive from his or her  then present position; or (4) personal dishonesty, incompetence, willful misconduct,  willful breach of fiduciary duty involving personal profit or conviction of  a felony.   For purposes of this paragraph, no act, or failure to act, on Executive's part shall be  considered &quot;willful&quot; unless done or omitted to be done by Executive in bad faith and  without reasonable belief that his or her action or omission was in the best interest of   Bank. Any act or omission to act by Executive in reliance upon a written opinion of   counsel to Bank shall not be deemed to be willful.    (d)  Definition of &quot;Good Reason&quot;. For purposes of this Agreement, &quot;Good Reason&quot; shall  mean   (i) any reduction in title or an adverse change in Executive's responsibilities or   authority which are inconsistent with, or the assignment to Executive of  duties inconsistent with, Executive's position with the Bank immediately  prior to such action; or   (ii) any reduction in Executive's annual base salary as in effect on the date  hereof or as the same may be increased from time to time, or   (iii) any reassignment of Executive, on a permanent or temporary basis, to an  office located more than 25 miles from the Executive&#8217;s office as of  the date  of this Agreement, unless such reassignment results in the Executive&#8217;s office  being closer to Executive&#8217;s primary residence or does not substantially  increase the average commuting time of the Executive.    </FONT></DIV>
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<DIV><FONT size="1" style="font-size:1pt;color:white">-3-    (e) Definition of &#8220;Change in Control&quot;. For purposes of this Agreement, a &quot;Change in  Control&quot; of the Bank shall mean:   (i) There occurs a merger, consolidation or other business combination or  reorganization to which the Bank is a party, whether or not approved in  advance by the Board of Directors of the Bank, in which (A) the members of   the Board of Directors of the Bank immediately preceding the consummation  of such transaction do not constitute a majority of the members of the Board  of Directors of the resulting corporation and of any parent corporation  thereof immediately after the consummation of such transaction, and (B) the  shareholders of the Bank immediately before such transaction do not hold  more than fifty percent (50%) of the voting power of securities of the  resulting corporation;  (ii) There occurs a sale, exchange, transfer, or other disposition of at least fifty  percent (50%) of the assets of the Bank to another entity, whether or not  approved in advance by the Board of Directors of the Bank (for purpose of  this Agreement, a sale of more than one-half of the branches of the Bank  would constitute a Change in Control, but for purposes of this paragraph,  no  branches or assets will be deemed to have been sold if they are leased back  contemporaneously with or promptly after their sale);  (iii) A plan of liquidation or dissolution is adopted for the Bank; or  (iv) Any &quot;person&quot; or any group of &quot;persons&quot; (as such term is defined in Sections  13(d) and 14(d) of the Exchange Act), as if such provisions were applicable  to the Bank, other than the holders of shares of the Bank's common stock in  existence on the date of the Opening for Business, is or shall become the  ''beneficial owner&quot; (as defined in Rule 13d-3 under the Exchange Act) ,  as if   such rule were applicable to the Bank, directly or indirectly, of securities of   the Bank representing 50% or more of the combined voting power of the  Bank's then outstanding securities.  (v)  For purposes of this agreement, the date of the Change of Control shall be  the calendar date upon which a change of control event occurs.  However,  if   an executive is terminated for other than Cause during the period between  when a written undertaking outlining the principal conditions of a  contemplated change of control transaction (including, but not limited to, a  letter of interest or intent) is executed by the parties and the date of the  Change of Control, the Executive shall be entitled to the same compensation  and benefits as the Executive would have received had the Executive been  terminated in the first year following the Change of Control date.      (f) Severance. If Executive is entitled to severance under subsection (a) or (b) of this  Section, Bank shall pay as severance to Executive the sum of the following amounts  in a single lump sum within 60 days following the date of his termination of  employment, subject to all tax withholding obligations of the Bank:   (i) two hundred percent (200%) of the highest rate of base annual salary that  was payable to or for the benefit of Executive at any time during the 12- month period ending on the date of Executive's termination of employment;  and   (j) (ii) two hundred percent (200%) of the average of the aggregate annual  performance bonuses that have been earned by the Executive for  performance by the Executive during each of the three (3) most recent fiscal  years of the Bank ended with or prior to the date of Executive's termination  of employment. If Executive shall not have been employed by the Bank for   </FONT></DIV>
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<DIV><FONT size="1" style="font-size:1pt;color:white">-4-    three (3) full fiscal years prior to the time the Executive becomes entitled to  severance payments under this Section, the average used shall be  determined based on the number of full and partial fiscal years of  the Bank  in which the Executive was so employed and that have ended with or  prior   to the date of Executive's termination of employment.    (g) Any termination of Executive's employment by Bank or by Executive shall be  communicated by a dated, written notice, signed by the party giving the notice, which  shall   (i) indicate the specific termination provision in this Agreement relied upon;   (ii) 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; and   (iii) specify the effective date of termination. In addition, Executive shall not be  considered to have terminated his employment for Good Reason unless he  provides such written notice to the Bank within 90 days of Executive&#8217;s being  notified or otherwise becoming aware of the initial existence of a condition  creating Good Reason, and upon notice of which the Bank must be provided  a period of at least 30 days during which it may remedy the condition and not  be required to pay the severance payment.    (h) Notwithstanding any provision of this Agreement to the contrary, if, as a result of  a  payment provided for under or pursuant to this Agreement, together with all other  payments in the nature of compensation provided to or for the benefit of the  Executive under any other plans or agreements in connection with a Change in  Control, the Executive becomes subject to excise taxes under Section 4999 of the  Code, then the amount of severance to be paid pursuant to this Agreement shall be  reduced to the maximum amount allowable without causing Executive to become  subject to such excise taxes. Such maximum amount shall be determined by a  registered public accounting firm selected by the Compensation Committee of the  Board of Directors of the Bank, whose determination, absent manifest error, shall be  treated as conclusive and binding.     (i) Executive shall not be required to mitigate the amount of any payment provided for   in this Agreement by seeking other employment or otherwise. The severance  payment provided for in this Agreement shall not be reduced by any compensation or   other payments received by Executive after the date of termination of Executive's  employment from any source.    4. Payment Obligations Absolute. Provided that the preconditions for payment set forth in  this Agreement are fully satisfied, Bank's obligation to pay Executive the severance  payment provided herein shall be absolute and unconditional and shall not be affected by  any circumstances, including, without limitation, any set-off counter claim, recoupment,   defense or other right which Bank may have against Executive. All amounts payable by  Bank hereunder shall be paid without notice or demand.    5. Executive's Covenants. Executive agrees to the restrictions set forth in this Section.    (a) Executive covenants and agrees that Executive will not at any time, either during his  or her employment with the Bank or thereafter, use, disclose or make accessible to  </FONT></DIV>
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<DIV><FONT size="1" style="font-size:1pt;color:white">-5-    any other person, firm, partnership, corporation or any other entity any Confidential  and Proprietary Information (as defined herein), other than to   (i) Executive's attorney or spouse in confidence,   (ii) while employed by the Bank, in the business and for the benefit of the Bank,   or   (iii) when required to do so by a court of competent jurisdiction, any  government agency having supervisory authority over the business of the  Executive or the Bank or any administrative body or legislative body,  including a committee thereof, with jurisdiction. For purposes of this  Agreement, &quot;Confidential and Proprietary Information&quot; shall mean non- public, confidential, and proprietary information provided to the Executive  concerning, without limitation, the Bank's financial condition and/or  results  of operations, statistical data, products, lists of customers or customer  information, information relating to marketing plans, management  development reviews, including information regarding the capabilities and  experience of the Bank's employees, compensation, recruiting and training ,   and human resource policies and procedures, policy and procedure manuals,   together with all materials and documents in any form or medium (including  oral, written, tangible, intangible, or electronic) concerning any of the above,   and other non-public, proprietary and confidential information of the Bank;  provided, however, that Confidential and Proprietary Information shall not  include any information that is known generally to the public or within the  industry other than as a result of unauthorized disclosure by the Executive. I t  is specifically understood and agreed by the Executive that any non-public  information received by the Executive during Executive's employment by the  Bank is deemed Confidential and Proprietary Information for purposes of  this Agreement. In the event the Executive's employment is terminated for  any reason, the Executive shall immediately return to the Bank upon request  all Confidential and Proprietary Information in Executive's possession or  control.     (b) Executive agrees that during his or her employment with the Bank and for a period of  twelve (12) months thereafter, provided that Executive has received or is entitled to  receive severance hereunder, unless the Executive obtains the Bank's prior written  permission, which may be granted or denied at the Bank's sole and absolute  discretion, the Executive shall not:   (i) solicit or divert to any competitor of the Bank or, upon termination of the  Executive's employment with the Bank, accept any business from any  individual or entity that is a customer or a prospective customer of the Bank,   to the extent that such prospective customer was identifiable as such prior  to  the date of the Executive's termination , except that this covenant of non- solicitation shall not apply with respect to anyone who, while having  previously been a customer or prospect of the Bank, is no longer a customer  or prospect of the Bank at the time of the solicitation; or   (ii) Induce or encourage any officer and/or employee of the Bank to leave the  employ of the Bank, hire any individual who was an employee of the Bank as  of the date of the termination of the Executive's, or induce or encourage any  customer, vendor, participant, agent or other business relation of the Bank to  cease or reduce doing business with the Bank or in any way interfere with the  relationship between any such customer, vendor, participant, agent or other  business relation and the Bank.   </FONT></DIV>
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<DIV><FONT size="1" style="font-size:1pt;color:white">-6-      (c) For a period of twelve (12) months,  after any resignation or termination of  Executive's employment for any reason, provided that Executive has received or is  entitled to receive severance hereunder, Executive shall not, directly or indirectly,  within 0 miles from the Executive&#8217;s primary work location as of the Change of  Control date, enter into or engage directly or indirectly in competition with the Bank  or any subsidiary or other company under common control with the Bank, in any  financial services business conducted by the Bank or any such subsidiary at the time  of such resignation or termination, either as an individual on his own or as a partner   or joint venture, or as a director, officer, shareholder, employee, agent, independent  contractor, nor shall Executive assist any other person or entity in engaging directly  or indirectly in such competition.    6. Amendments. No amendments to this Agreement shall be binding unless in writing,  signed by both parties, which states expressly that it amends this Agreement.    7. Notices. Notices under this Agreement shall be deemed sufficient and effective if   (i) in writing and   (ii) either (A) when delivered in person or by facsimile, e-mail, telegraph or  other electronic means capable of being embodied in written form or (B)  forty-eight (48) hours after deposit thereof in the U.S. mails by certif ied or   registered mail, return receipt requested, postage prepaid, addressed to each  party at such party's address first set forth above and, in the case of Bank,  to  the attention of the Chairman of the Board, or to such other notice address as  the party to be notified may have designated by written notice to the sending  party.    8. Prior Agreements. There are no other agreements between Bank and Executive  regarding Executive's employment as of the date of this Agreement. This Agreement is  the entire agreement of the parties with respect to its subject matter and supersedes any  and all prior or contemporaneous discussions, representations, understandings or  agreements regarding its subject matter.    9. Assigns and Successors. The rights and obligations of Bank under this Agreement shall  inure to the benefit of and shall be binding upon the successors and assigns of  Bank and  Executive, provided, however, that Executive shall not assign or anticipate any of his  Rights hereunder, whether by operation of the law or otherwise. For purposes of this  Agreement, &quot;Bank&quot; shall also refer to any successor to Bank, whether such succession  occurs by merger, consolidation, purchase and assumption, sale of assets or otherwise.    10. Executive's Acknowledgement of Terms. Executive acknowledges that he or she has  read the Agreement fully and carefully, understands its terms and it has been entered into  by Executive voluntarily. Executive acknowledges that any payments be made hereunder  will constitute additional compensation to Executive.    </FONT></DIV>
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<DIV><FONT size="1" style="font-size:1pt;color:white">-7-    IN WITNESS WHEREOF, the parties hereto have caused the due execution of this Agreement as  of the date first set forth above.       Attest:           /s/ Andrew Bowman   Print Name: Andrew Bowman  Title: SEVP-CCO  Bank:  CUSTOMERS BANK        By: /s/Carla Leibold     Print Name: Carla Leibold  Title: EVP-CFO  Witness:     /s/Tammy Sibalic     Print Name: Tammy Sibalic  Executive:     /s/ Jessie John D. Velasquez    Print Name: Jessie John D. Velasquez    </FONT></DIV>
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