Exhibit 10.2
PROVIDENT BANKSHARES
CORPORATION
CHANGE IN CONTROL
AGREEMENT
This revised AGREEMENT
(“Agreement”) is entered into by and between
Provident Bankshares Corporation (the
“Corporation”), a corporation organized under the laws
of the State of Maryland, with its offices at 114 East Lexington
Street, Baltimore, Maryland and [NAME]
(“Executive”).
WHEREAS, the Board of Directors of
the Corporation provided Executive with an agreement (the
“Prior Agreement”) that set forth the terms and
conditions of payments due to Executive in the event of a Change in
Control (as defined in Section 2(b) of the Prior Agreement and
this Agreement) and the related rights and obligations of each of
the parties.
WHEREAS, Section 409A of the
Internal Revenue Code and the regulations thereunder (the
“Code”) requires that certain provisions of the Prior
Agreement be revised.
WHEREAS, Executive and the Board of
Directors of the Corporation desire to enter into this revised
Agreement to replace the Prior Agreement and to comply with Code
Section 409A.
NOW, THEREFORE, in consideration of
the promises and mutual covenants herein contained, it is hereby
agreed as follows:
(a) This revised Agreement continues
the term of the Prior Agreement, and shall be (i) the initial
term, consisting of the period commencing on the date the Prior
Agreement was originally effective (the “Effective
Date”) and ending on the third anniversary of the Effective
Date, plus (ii) any and all extensions of the initial term
made pursuant to Section 1(b) of this revised
Agreement.
(b) Commencing on the Effective Date
and on each day thereafter, the term under this revised Agreement
shall renew automatically for an additional one (1) day period
beyond the then effective expiration date, without action by any
party, provided that neither the Corporation, on the one hand, nor
Executive, on the other, shall have given at least sixty
(60) days written notice of their desire that the term not
renew. In the case notice is given by one party to the other, the
term of this revised Agreement shall become fixed and shall end on
the third anniversary of the date of the notice.
(c) Notwithstanding anything in this
Section to the contrary, this Agreement shall terminate if
Executive or the Corporation terminates Executive’s
employment prior to a Change in Control.
(a) Upon the occurrence of a Change
in Control (as defined in Section 2(b) of this Agreement),
followed at any time during the term of this Agreement by the
termination of Executive’s employment in accordance with the
terms of this Agreement, other than for Just Cause (as defined in
Section 2(c) of this Agreement), the provisions of
Section 3 of this Agreement shall apply. Upon the occurrence
of a Change in Control, Executive shall have the right to elect to
voluntarily terminate their employment at any time during the term
of this Agreement following an event constituting “Good
Reason.” Following a Change in Control, Executive may also
voluntarily terminate their employment for any reason other than
for Good Reason in accordance with Section 3(b) of this
Agreement. Any termination of employment or resignation under this
Agreement must be a “separation from service,” as
defined under Code Section 409A. For purposes of this
Agreement “Good Reason” and “Change in
Control” have the following meanings:
“Good Reason” means,
unless Executive has consented in writing thereto, the occurrence
following a Change in Control, of any of the following that
constitutes a material negative change in Executive’s
employment relationship for purposes of Code
Section 409A:
(i) the assignment to Executive of
any duties materially inconsistent with Executive’s position,
including any material change in status, title, authority, duties
or responsibilities or any other action that results in a material
diminution in such status, title, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
that is remedied by the Corporation or Executive’s employer
reasonably promptly after receipt of notice thereof given by
Executive;
(ii) a reduction by the Corporation
or Executive’s employer of Executive’s base salary in
effect immediately prior to the Change in Control;
(iii) the relocation of
Executive’s office to a location more than 20 miles farther
away from Executive’s primary residence than the office was
immediately prior to the Change in Control;
(iv) the taking of any action by the
Corporation or any of its affiliates or successors that would
materially adversely affect Executive’s overall compensation
and benefits package, unless such changes to the compensation and
benefits package are made on a non-discriminatory basis to all
employees; or
(v) the failure of the Corporation
or Executive’s employer, or any affiliate that directly or
indirectly owns or controls any affiliate by which Executive is
employed, to obtain the assumption in writing of the
Corporation’s obligation to perform this Agreement by any
successor to all or substantially all of the assets of the
Corporation or such affiliate within thirty (30) days after a
reorganization, merger, consolidation, sale or other disposition of
assets of the Corporation or such affiliate.
2
(b) For purposes of this Agreement,
a “Change in Control” shall be deemed to occur on the
earliest of any of the following events:
(i) Merger : The Corporation
merges into or consolidates with another corporation, or merges
another corporation into the Corporation, and as a result less than
a majority of the combined voting power of the resulting
corporation immediately after the merger or consolidation is held
by persons who were stockholders of the Corporation immediately
before the merger or consolidation; or
(ii) Acquisition of Significant
Share Ownership : The Corporation files, or is required to
file, a report on Schedule 13D or another form or schedule (other
than Schedule 13G) required under Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934, if the schedule discloses that the
filing person or persons acting in concert has or have become the
beneficial owner of 10% or more of a class of the
Corporation’s voting securities, but this clause
(ii) shall not apply to beneficial ownership of the
Corporation’s voting shares held in a fiduciary capacity by
an entity of which the Corporation directly or indirectly
beneficially owns 50% or more of its outstanding voting securities;
or
(iii) Change in Board
Composition : During any period of two consecutive years,
individuals who constitute the Corporation’s Board of
Directors at the beginning of the two-year period cease for any
reason to constitute at least a majority of the Corporation’s
Board of Directors; provided, however, that for purposes of this
clause (iii), each director who is first appointed by the board (or
first nominated by the board for election by the stockholders) by a
vote of at least three-quarters (3/4) of the directors who
were directors at the beginning of the two-year period shall be
deemed to have also been a director at the beginning of such
period; or
(iv) Sale of Assets : The
Corporation sells to a third party all or substantially all of its
assets.
(c) Executive shall not have the
right to receive termination benefits under this Agreement upon
their termination for Just Cause. The term “Just Cause”
shall mean termination because of a material loss to the
Corporation or one of its affiliates caused by Executive’s
willful, intentional and continued failure to substantially perform
stated duties (unless the failure results 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 2(b), no act, or the failure to act, on
Executive’s part shall be considered “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 Corporation or its affiliates. Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated
for Just Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly
3
adopted by the affirmative vote of
three-quarters (3/4) of the entire membership of the Board of
Directors at a meeting of the Board of Directors called and held
for that purpose (after reasonable notice to Executive and an
opportunity for Executive, together with counsel, to be heard
before the Board of Directors), finding that in the good faith
opinion of the Board of Directors, Executive was guilty of conduct
justifying termination for Just Cause and specifying the
particulars thereof in detail. Executive shall not have the right
to receive compensation or other benefits for any period after
termination for Just Cause.
|
|
(a)
|
(i) Upon
Executive’s voluntary resignation from employment for Good
Reason or Executive’s involuntary termination of employment
for any reason other than for Just Cause at any time following a
Change in Control but during the term of this Agreement, the
Corporation shall pay Executive a sum equal to 2.99 times
Executive’s average annual taxable compensation (as reported
in Box 1 of Form W-2) for the five (5) consecutive taxable
years ending immediately prior to the taxable year in which
Executive’s employment terminates; provided, however, that
for this purpose, Executive’s average annual compensation
shall not include any taxable compensation realized by virtue of
Executive’s exercise of stock options or the vesting of
Restricted Stock awarded to Executive. Subject to paragraph (ii),
the Corporation shall make this severance payment to Executive in a
single lump sum (less any required federal, state or local tax
withholdings) within thirty (30) days after the effective date
of Executive’s resignation or termination of employment. In
addition, the Corporation (or its successors) shall provide
continued life and medical insurance coverage to Executive
(substantially identical to the life and medical insurance coverage
provided to Executive (and his dependents) immediately prior to his
severance from employment) for thirty six (36) full calendar
months following the effective date of Executive’s
resignation or termination of employment. In lieu of this continued
life and medical insurance coverage, Executive may elect, no later
than fifteen (15) days prior to Executive’s severance
date, to receive a cash payment equal to thirty six (36) times
the monthly premium amount paid by the Corporation for Executive
(and his dependents) for life and medical insurance coverage for
the calendar month immediately preceding the effective date of
Executive’s resignation or termination of employment. Subject
to paragraph (ii), if Executive makes this election, the
Corporation shall make this payment to Executive in a single lump
sum (less any required federal, state or local tax withholdings)
within thirty (30) days after the effective date of
Executive’s resignation or termination of employment.
Executive understands that if he elects the continued life and
medical insurance coverage instead of the lump sum payment, the
constructive receipt doctrine may require that he nonetheless have
taxable income equal to such lump sum payment.
|
(ii) This paragraph
(ii) applies if (A) Executive’s entitlement to
benefits under paragraph (i) arises on a date that is after
the first anniversary of the date on which a Change in Control
occurs; and (B) Executive is a “Key Employee” (as
defined in Section 3(b)(ii) of this Agreement) as of the date
such entitlement arises. If this
4
paragraph (ii) applies, then to
the extent the Corporation deems it necessary to comply with Code
Section 409A, the portion of the lump sum payment(s) under
paragraph (i) equal to the corresponding amount(s) that would
be payable under subsection (b) (if Executive voluntarily
resigned without Good Reason) shall not be paid until the thirty
(30) day period starting on the date that is six months after
the date of Executive’s resignation or termination under
paragraph (i).
|
|
(b)
|
(i) Upon
Executive’s voluntary resignation from employment for any
reason other than for Good Reason, which resignation is effective
on a date that is after the first anniversary of the date on which
a Change in Control occurs but during the term of this Agreement,
the Corporation shall pay Executive a sum equal to one-half
(1/2) Executive’s annual base salary in effect as of the
effective date of Executive’s resignation. Subject to
paragraph (ii), the Corporation shall make this severance payment
to Executive in a single lump sum (less any required federal, state
or local tax withholdings) within thirty (30) days after the
effective date of Executive’s resignation. In addition, the
Corporation (or its successors) shall provide continued life and
medical insurance coverage to Executive (substantially identical to
the life and medical insurance coverage provided to Executive (and
his dependents) immediately prior to Executive’s severance
from employment) for six (6) full calendar months following
the effective date of Executive’s resignation. In lieu of
this continued life and medical insurance coverage, Executive may
elect, no later than fifteen (15) days prior to
Executive’s severance date, to receive a cash payment equal
to six (6) times the monthly premium amount paid by the
Corporation for Executive (and his dependents) for life and medical
insurance coverage for the calendar month immediately preceding the
effective date of Executive’s resignation. Subject to
paragraph (ii), if Executive makes this election, the Corporation
shall make this payment to Executive in a single lump sum (less any
required federal, state or local tax withholdings) within thirty
(30) days after the effective date of Executive’s
resignation. Executive understands that if he elects the continued
life and medical insurance coverage instead of the lump sum
payment, the constructive receipt doctrine may require that he
nonetheless have taxable income equal to such lump sum payment. An
Executive who voluntarily resigns after engaging in conduct
described in Section 2(c) of this Agreement shall not be
entitled to any of the benefits described in this
Section 3(b)(i).
|
(ii) If Executive is a “Key
Employee” as of the date of resignation, the lump sum
payment(s) under paragraph (i) shall not be paid until the
thirty (30) day period starting on the date that is six months
after the date of resignation. An Executive is a “Key
Employee” for the 12-month period beginning on any
April 1 if the Executive is described in Code
Section 416(i) (using the definition of compensation
under
