PROVIDENT BANKSHARES
CORPORATION
2004 EQUITY COMPENSATION
PLAN
The purposes of
this 2004 Equity Compensation Plan are to provide incentives and
rewards to those employees and directors largely responsible for
the success and growth of Provident Bankshares Corporation and its
subsidiary corporations, and to assist all such corporations in
attracting and retaining directors, executives and other key
employees with experience and ability.
“Affiliate” means any “parent
corporation” or “subsidiary corporation” of the
Corporation, as such terms are defined in Sections 424(e) and
424(f) of the Code.
“Award” means one or more of the
following: shares of Common Stock, Restricted Stock Awards,
Options, Stock Appreciation Rights, performance shares, performance
units and any other rights which may be granted to a Participant
under the Plan.
“Board of
Directors” means the board of directors of the
Corporation.
“Change
in Control” means any one of the following events
occurs:
(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;
(ii) Acquisition of Significant Share
Ownership: A report on Schedule 13D or another form or
schedule (other than Schedule 13G) is filed or is required to
be filed 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(s) of 25% or more of a class of the Corporation’s
voting securities, but this clause (b) shall not apply to
beneficial ownership of Corporation voting shares held in a
fiduciary capacity by an entity of which the Corporation directly
or indirectly beneficially owns fifty percent (50%) or more of its
outstanding voting securities;
(iii) Change in Composition of the Board of
Directors: 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 elected by the board (or first nominated by
the board for election by the stockholders) by a vote of at least
three-fourths (3/4) of the directors who were directors at the
beginning of the period shall be deemed to have been a director at
the beginning of the two-year period; or
(iv) Sale
of Assets: The Corporation sells to a third party all or
substantially all of its assets.
“Code” means the Internal Revenue
Code of 1986, as amended.
“Committee” means the Compensation
Committee of the Board of Directors.
“Common
Stock” means the common stock of the Corporation, par value
$1.00 per share.
“Corporation” means Provident
Bankshares Corporation and any entity which succeeds to the
business of Provident Bankshares Corporation.
“Disability” means a permanent and
total disability as defined by Section 72(m)(7) of the
Code.
“Employee” means any person employed
by the Corporation or an Affiliate. Directors who are also employed
by the Corporation or an Affiliate shall be considered Employees
under the Plan.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
“Exercise
Price” means the price at which an individual may purchase a
share of Common Stock pursuant to an Option.
“Fair
Market Value” means the average of the reported highest bid
and lowest ask price of the Common Stock as reported on the Nasdaq
National Market (as published by The Wall Street Journal, if
published) on such date or, if the Common Stock was not traded on
such date, on the immediately preceding day on which the Common
Stock was traded thereon or the last previous date on which a sale
is reported. The Committee also may adopt a different methodology
for determining Fair Market Value with respect to one or more
Awards if a different methodology is necessary or advisable to
secure any intended favorable tax, legal or other treatment for the
particular award(s).
“Option” or “Stock
Option” means a non-statutory stock option not subject to the
requirements of Section 422 of the Code, that is granted to an
individual under the Plan.
“Outside
Director” means a member of the Board(s) of Directors of the
Corporation or an Affiliate who is not also an Employee of the
Corporation or an Affiliate.
“Plan” means this Provident
Bankshares Corporation 2004 Equity Compensation Plan.
“Restricted Stock Award” means
restricted stock granted to an individual pursuant to
Section 6 of the Plan.
“Retirement” means termination of
employment of an individual upon his attaining age 65 or other
normal or early retirement age pursuant to the regular retirement
plan of the Corporation or any Affiliate. “Retirement”
with respect to an Outside Director means retirement as defined in
the by-laws of the Corporation.
“Stock
Appreciation Right” means a right to payment provided in
accordance with Section 6 of the Plan.
(a) The
Committee shall administer the Plan. The Board of Directors or the
Committee may delegate, to the extent permitted by applicable law,
to one or more officers of the Corporation, its powers under this
Plan (a) to designate the officers and employees of the
Corporation who will receive Awards and (b) to determine the
number of Awards to be received by them, pursuant to a resolution
that specifies the total number of rights or options that may be
granted under the delegation, provided that no officer may be
delegated the power to designate himself or herself as a recipient
of such options or rights.
(b) Subject to paragraph (a) of this
Section 3, the Committee shall:
(i) select
the individuals who are to receive grants of Awards under the
Plan;
(ii) determine the type, number, vesting
requirements and other features and conditions of such Awards made
under the Plan;
(iii) interpret the Plan and Award
Agreements (as defined below); and
(iv) make
all other decisions related to the operation of the
Plan.
(c) Each
Award granted under the Plan shall be evidenced by a written
agreement (i.e., an Award Agreement). Each Award Agreement shall
constitute a binding contract between the Corporation or an
Affiliate and the Participant, and every Participant, upon
acceptance of an Award Agreement, shall be bound by the terms and
restrictions of the Plan and the Award Agreement. The terms of each
Award Agreement shall be set in accordance with the Plan, but each
Award Agreement may also include any additional provisions and
restrictions determined by the Committee. In particular, and at a
minimum, the Committee shall set forth in each Award
Agreement:
(i) the
type of Award granted;
(ii) the
Exercise Price of any Option;
(iii) the
number of shares or rights subject to the Award;
(iv) the
expiration date of the Award;
(v) the
manner, time and rate (cumulative or otherwise) of exercise or
vesting of the Award; and
(vi) the
restrictions, if any, placed on the Award, or upon shares which may
be issued upon the exercise or vesting of the Award.
The Chairman of
the Committee, the Chief Executive Officer of the Corporation or
any other designated officer are hereby authorized to execute Award
Agreements on behalf of the Corporation or an Affiliate and to
cause them to be delivered to the Participants of Awards granted
under the Plan.
Subject to the
terms of the Plan, directors, key salaried officers and employees
of the Corporation, or of any Affiliate, as the Committee shall
determine from time to time shall be eligible to participate in the
Plan.
5. Shares
Of Common Stock Subject To The Plan; Share Limits.
5.1 Shares
Available. Subject to the provisions of Section 7, the capital
stock that may be delivered under this Plan shall be shares of the
Corporation’s authorized but unissued Common Stock and any
shares of its Common Stock held as treasury shares.
5.2 Share
Limits. The maximum number of shares of Common Stock that may be
delivered pursuant to Awards granted under this Plan (the
“Share Limit”) is equal to the sum of (a) [Number]
shares, plus (b) the number of any shares subject to stock
options granted under the Corporation’s Amended and Restated
Stock Option Plan (the “Option Plan”) which expire, or
for any reason are cancelled or terminated, after the effective
date of this Plan without being exercised. The following limits
also apply with respect to Awards granted under this
Plan:
(a) The
maximum number of shares of Common Stock subject to those options
and stock appreciation rights that are granted during any calendar
year to any individual under this Plan is [Number]
shares.
(b) The
maximum number of shares of Common Stock subject to all Awards that
are granted during any calendar year to any individual under this
Plan is [Number] shares.
(c) The
maximum number of shares of Common Stock that may be delivered
pursuant to Awards granted under this Plan, other than pursuant to
Options and Stock Appreciation Rights, is [Number]. This limit does
not apply, however, to shares delivered in respect of compensation
earned but deferred.
5.3 Awards
Settled in Cash, Reissue of Awards and Shares. To the extent that
an Award is settled in cash or a form other than shares of Common
Stock, the shares that would have been delivered had there been no
such cash or other settlement shall not be counted against the
shares available for issuance under this Plan. In the event that
shares are delivered in respect of a dividend equivalent, stock
appreciation right, or other award, only the actual number of
shares delivered with respect to the Award shall be counted against
the Share Limits of this Plan. Shares that are subject to or
underlie Awards which expire or for any reason are cancelled or
terminated, are forfeited, fail to vest, or for any other reason
are not paid or delivered under this Plan shall again be available
for subsequent Awards under this Plan. Shares that are exchanged by
a Participant or withheld by the Corporation as full or partial
payment in connection with any Award under this Plan or the Option
Plan (with respect to such a payment in connection with any award
under the Option Plan, only to the extent such transaction occurs
after the effective date of this Plan), as well as any shares
exchanged by a Participant or withheld by the Corporation to
satisfy the tax withholding obligations related to any Award under
this Plan or the Option Plan (with respect to such an exchange or
withholding in connection with any award under the Option Plan,
only to the extent such transaction occurs after the effective date
of this Plan), shall be available for subsequent Awards under this
Plan.
5.4 Reservation
of Shares; No Fractional Shares; Minimum Issue. The Corporation
shall at all times reserve a number of shares of Common Stock
sufficient to cover the Corporation’s obligations and
contingent obligations to deliver shares with respect to Awards
then outstanding under this Plan (exclusive of any dividend
equivalent obligations, to the extent the Corporation has the right
to settle such rights in cash). No fractional shares shall be
delivered under this Plan. The Committee may pay cash in lieu of
any fractional shares in settlements of Awards under this Plan. No
fewer than 100 shares may be purchased on exercise of any Award
(or, in the case of Stock Appreciation Rights or purchase rights,
no fewer than 100 rights may be exercised at any one time) unless
the total number purchased or exercised is the total number at the
time available for purchase or exercise under the Award.
6.1 The
Committee shall determine the type or types of Award(s) to be made
to each selected eligible individual. Awards may be granted singly,
in combination or in tandem. Awards also may be made in combination
or in tandem with, in replacement of, as alternatives to, or as the
payment form for grants or rights under any other employee or
compensation plan of the Corporation. The types of Awards that may
be granted under this Plan are:
The Committee
may, subject to the limitations of this Plan and the availability
of shares of Common Stock reserved but not previously awarded under
the Plan, grant Stock Options to Employees and Outside Directors,
subject to terms and conditions as it may determine, to the extent
that such terms and conditions are consistent with the following
provisions:
(i) Exercise Price. The Exercise Price
shall not be less than one hundred percent (100%) of the Fair
Market Value of the Common Stock on the date of grant.
(ii) Terms
of Options. In no event may an individual exercise an Option, in
whole or in part, more than ten (10) years from the date of
grant.
(iii) Non-Transferability. Unless otherwise
determined by the Committee, an individual may not transfer,
assign, hypothecate, or dispose of an Option in any manner, other
than by will or the laws of intestate succession. The Committee
may, however, in its sole discretion, permit the transfer or
assignment of an Option, if it determines that the transfer or
assignment is for valid estate planning purposes and is permitted
under the Code and Rule 16b-3 of the Exchange Act. For
purposes of this Section 6.1(a), a transfer for valid estate
planning purposes includes, but is not limited to,
transfers:
(1) to a
revocable inter vivos trust, as to which an individual is both
settlor and trustee;
(2) for no
consideration to: (a) any member of the individual’s
Immediate Family; (b) a trust solely for the
benefit
of members of
the individual’s Immediate Family; (c) any partnership
whose only partners are members of the individual’s Immediate
Family; or (d) any limited liability corporation or other
corporate entity whose only members or equity owners are members of
the individual’s Immediate Family.
For purposes of
this Section, “Immediate Family” includes, but is not
necessarily limited to, a Participant’s parents,
grandparents, spouse, children, grandchildren, siblings
(includin
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